Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

Summary: Nokia's decision to bet its business on Microsoft's Windows Phone 7 is quickly becoming an either-or scenario. Either Windows Phone 7 brings Nokia back to dominance or the company's decline will accelerate.

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Nokia's decision to bet its business on Microsoft's Windows Phone 7 is quickly becoming an either-or scenario. Either Windows Phone 7 brings Nokia back to dominance or the company's decline will accelerate.

Following Nokia's warning that the second quarter and 2011 look bleak, one ZDNet reader summed it up well:

I think this is going to end up one of two ways. This is going to be one of those huge able to turn the Titanic at the last moment and avoid the iceberg and instant runaway success...

or

it is full steam ahead into the iceberg and sinks very quickly.

I don't think there is any middle ground with Nokia's decision to only use Windows Phone 7.

Indeed, there is no middle ground. If we learned anything from Nokia's warning and ensuing conference call it's that the company is under siege by Android devices. On that conference call, Nokia CEO Stephen Elop sounded like a man walking through a dark tunnel to daylight a good 3 miles away. Apparently, Microsoft CEO Steve Ballmer was holding the door open to daylight.

Related: Nokia's Elop: Android is killing us in China, Europe

Elop said the "other side" of Nokia's current Android bloodbath was a "great place." This Windows Phone 7 great place would feature differentiated handsets with retail partners tripping over themselves to sell Nokia devices. This place would also include enthusiastic developers and a unique combination of hardware and software. This great place would also mean that Nokia-Microsoft would be a juggernaut that would make the mobile platform market a three horse race.

We'll see.

Elop said:

We're in a situation where Symbian has increasing competitiveness problems across the market. We're under pressure as it relates to what's the right price point for those devices given the reality of the marketplace. So it's very much at the core about the competitiveness of the products. Now of course, that's the point about our strategy change, because with the Windows Phone initiative, we're quite confident in our ability to have very differentiated products in those market environments. And the early feedback from operators who have seen the first Windows Phone devices, who are making plans for their introduction and so forth, support that point of view as well. So it's managed through a tough transition, but get to the great place that exists on the other side.

Nokia is playing a game of where it has to price Symbian phones cheap so it can preserve the channel relationships to push Windows Phone 7 devices later. Nokia needs its market share as a weapon. Elop added:

We need to worry a great deal about market share. We have to adapt our channel to the changing conditions.

If Nokia can hold the fort, Windows Phone 7's Mango release can bring sexy back to the company. Elop added:

With our target of shipping of Windows Phones in the fourth quarter of 2011, it will be based on the Mango release. So that is what we're doing.

Now as it relates to ensuring that we're on track with Microsoft, and we have teams of engineers who are every day working side by side on the hardware, on the software, on the support services. I have a WP7 phone device with me right now that has Mango running on it and it looks very good. There's work still ahead; there's still bugs and performance and everything that you would expect there to be at this point in the development cycle, but we feel quite confident about the progress.

So there you have it. Elop believes. Most others are doubtful. Jefferies analyst Lee Simpson spoke for the consensus view in a research note:

Multi-year R&D savings programs and remarks on the expected strength of future WP7 handsets are one thing but with further share loss still evident in key markets, we still believe it's too early to talk on turnaround. We believe the move to WP7 handsets will see weak sales again in 2012 as Symbian enters end-of-life.

If Simpson is on target, Nokia's light at the end of the tunnel may come later than 2012.

Topics: Microsoft, Mobility, Nokia, Operating Systems, Software, Telcos, Windows

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51 comments
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  • It WAS a three horse race

    It was Elop that made it a two horse race.
    guihombre
    • Message has been deleted.

      Vbitrate
      • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

        @gjafg Playstation has the PSP and Nintendo has the Gameboy 3DS. Windows Phone 7 won't go away like the KIN did; because unlike the KIN, Windows Phone 7 is the closest thing Microsoft sells to a portable XBOX. It may however never be considered a "grown up" device, or have it's sales inexorably linked to the XBOX, that would prevent it from breaking into the very lucrative "business" markets, it could even become a lead weight around the XBOX's neck MS can't get off. Since Gameboy and PSP are already dominating the portable markets.
        Socratesfoot
      • Billions and billions served

        As Rockhead Goliathson has already explained, people around the world are holding on to their current cell phones, even extending their contracts, as they await the arrival of Nokia phones with Windows on them.

        In other news, I have a great deal on a bridge I'd like to sell you.
        Robert Hahn
      • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

        @gjafg
        And you wonder why Microsoft will not release the activation numbers? They have the exact number of phones activated, but insist on proclaiming how many license stickers they ship. I have heard the ratio is anywhere between 13% and 22% of the shipped license stickers are activated (the difference being how many are returned within the first week). If it were any other phone/tablet/device, the Windows apologists would be claiming it to be an utter failure.
        Rick_K
      • better to buy a winner

        @gjafg Its better to buy a winner, no matter what, than something you like. that's why TV keeps playing the same shows over and over. It likes a winner and so do we, no matter how boring or the same. This is true in almost all cases. We like open source, even though its difficult to deal with, no docs and extremely fractured. Open source is a winner. We like iOS even though its just a bunch of icons on a touch screen with a poor phone. iOS is a winner. We like Linux even though Linux has a hundred flavors (including Android) and trying to find someone who knows "your" way of doing Linux is almost impossible. Linux is a winner. We like to call other people losers for being different than us even though that's called sexism, racism or nationalism. But we're cool; we're winners.

        I have an IPhone because it was first and I see no reason to change. But it really is just a screen full of icons. Its the same reason I use Windows PCs.
        A Gray
      • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

        @Rick_K There is no activation thing in WP7.
        abhinavkmr
      • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

        @abhinav.kumar.in@?
        Any cellphone needs to be activated to work. Apple has the numbers, Google has the numbers, but Microsoft refuses to tell how many are actively being used. Microsoft only announces license stickers, which means literally nothing. To have 2.5 million license stickers shipped in 6 months, compared to activating 2.2 million iPhones in 6 weeks shows how pathetic WP7SOS phones are.
        Rick_K
      • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

        @Rick_K

        <i>I have heard the ratio is anywhere between 13% and 22% of the shipped license stickers are activated (the difference being how many are returned within the first week).</i>

        "You heard". Uh huh.

        That is counter to both manufacturing process and the available data on Facebook.

        There is plenty of factual information to troll with, without making things up.
        SlithyTove
    • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

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      nplmilk
  • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

    Android lost market share in the U.S. last month
    http://tiny.cc/oufzx
    centurions83
    • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

      @centurions83 Personally, I don't think that's the issue here. I'm sure many have to feel like I do that no matter how good Windows Phone 7 "might or might not be", we just don't WANT Microsoft in the phone market. The type of crap MS pulls with the Windows OS/Office/IE lock in is something that in the phone market would be devastating when combined with the provider lock in and hardware lock in. It would be everything everyone hates about Google AND everything everyone hates about Apple in one locked down, data mining, feature itemized, device...
      Socratesfoot
    • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

      @centurions83
      You do realize that the market is still growing right? Also, according to those reports, RIM picked up most of the space, not MS.
      hoaxoner
    • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

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      nplmilk
  • indeed

    A huge bet!! - it is a high risk strategy betting the company on a new OS struggling to gain market share. MS could be the eventual winners buying nokia in a few years for a fraction of it's price at the peak.

    On the plus side wp7 will eventually do well - there is enough resource behind it to almost guarantee this.
    RonanSail
    • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

      @RonanSail
      <i>MS could be the eventual winners buying nokia in a few years for a fraction of it's price at the peak. </i>

      This seems to be a common thought about Nokiasoft. First they hire a Microsoft department head, then they throw away everything other than Microsoft to bet their company on? What is the stock value of Nokia today? I believe it is trading at around $7 a share, if this keeps up it might actually be a deal Microsoft cannot turn down (well once the stock hits $2 a share). What would be real funny is: if Apple were to sneak in, buy Nokia, and shutter the company.
      Rick_K
      • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

        @Rick_K No one who proposes this ever answers this: WHY would Microsoft want to buy Nokia? Microsoft isn't a hardware company. This makes as much sense as Google buying HTC or Motorola just because they use Android.
        jgm@...
      • An Apple takeover of Nokia would require approval by regulators

        @ Rick_K

        The odds of regulators approving an Apple takeover of Nokia are essentially nil. The other thing, of course, is that Elop isn't a dictator. Nokia's board have to approve his decisions, so for the conspiracy theories to work out, Microsoft would have had to somehow get them on side.
        WilErz
  • RE: Nokia's big bet: Microsoft's Windows Phone 7 on 'other side' can save it

    It's a big bet really...
    arohatech1
  • Message has been deleted.

    shellcodes_coder