Nokia's conundrum: How much pain ahead for an OS switch?

Nokia's conundrum: How much pain ahead for an OS switch?

Summary: Nokia is widely expected to announce some sort of new mobile operating system strategy and plans to build Android and/or Windows Phone 7 devices. The big question is how long Nokia will have to take to retool.

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Nokia on Friday is widely expected to announce some sort of new mobile operating system strategy. At first, it appeared that Nokia was going to take the Android plunge. Then, Microsoft's Windows Phone 7 entered the picture. What all this talk misses is how Nokia will have to sit out the smartphone race to retool.

Should Nokia decide to joint an app ecosystem instead of build one---something that looks increasingly likely---it will face the following issues:

  • How long will Nokia take to come out with new Windows Phone 7/Android phones?
  • Who will buy a Symbian-powered Nokia smartphone in the meantime?
  • Can Nokia weather the market share hit involved with mobile OS uncertainty?

Simply put, Nokia CEO Stephen Elop can have a master plan, but the execution of it will remain tricky. And according to German weekly Wirtschaftswoche, Nokia is about to retool upper management too.

Can Nokia handle a new strategy, management team and operating system? On the operating system front, the closest historical reference to what Nokia may face is Palm. As Palm's prospects weakened in the mid-2000s, the company launched Windows Mobile devices in addition to its Palm OS in 2006. In 2009, the Palm Windows Mobile experiment ended. Palm moved to create its webOS, which at least was attractive enough to get Hewlett-Packard to acquire the company.

In a blog post from 2007, Palm said:

With the launch of our first Windows Mobile product back in early 2006, it's now common knowledge that Palm has two OS platforms (Palm and WinMo). Multiple operating systems allow us to provide choice to our customers, which is important because we have such a diverse customer base. We like them both and don't play favorites...

We know how that multiple OS strategy turned out for Palm. Nokia could sing a similar tune about customer choice and multiple operating systems on Friday. What remains to be seen is whether Nokia's scale---it is much larger than Palm ever was---can make a multiple OS strategy a success.

One thing is clear: Nokia is going to kick off the Mobile World Congress, which runs Feb. 14 to Feb. 17, with some sort of bang. Analysts seem to be betting that Nokia will use Windows Phone 7.

Oppenheimer analyst Ittai Kidron said:

We still look for management to highlight a new tiered approach to its products and operating systems with the addition of Windows Phone a real possibility.

Wedbush analyst Scott Sutherland said:

While Apple and Android-based smartphones, operating systems (OS), and application stores continue to gain market share, we believe Nokia’s potential ecosystem strategy change could be a major disruption to some players in the market. Based upon Q4 data, we remain cautious on Nokia although we believe an ecosystem strategy change could change the company’s fortunes.

Sutherland also adds that Nokia could support both Android and Windows Phone 7, an idea I highlighted before.

While there has been a lot of speculation, we believe Nokia has the size and scale to support Android, Windows Phone 7 (WP7), and its own Symbian/MeeGo OS strategies. We believe the best strategy would be to put more weight behind Android, which would further isolate the RIM OS and impact smaller Android supporters.

Swedbank analyst Jari Honko added "we see Nokia to start making devices for Microsoft rather than to adopt Android OS."

No matter what Nokia decides there will be choppy waters ahead.

Jefferies analyst Peter Misek said:

We find it difficult to believe Nokia will stomach the pain necessary to adopt Android. Windows Phone 7 (WP7) will require effectively an exit for around a year as hardware and ecosystem is retooled. Windows Phone ecosystem is poor according to industry participants. Such an announcement we believe would be a boon to RIM and Apple to take share in Europe. WP7 ecosystem is too far behind and carrier support for WP7 is much weaker than any party realizes.

Will Nokia disrupt the smartphone market or be another circa 2006 Palm?

Related:

Topics: Software, Android, Google, Microsoft, Mobility, Nokia, Operating Systems, Windows

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53 comments
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  • Nokia could release a Windows Mobile 6.5 phone

    Crazy? Windows Mobile 6.5 is outselling Windows Phone 7 at least 2:1 worldwide. Yes, it's a ridiculous idea. Yet it is doubly ridiculous to use Windows Phone 7, which is doing even worse.
    Vbitrate
    • That could be a result that there are currently

      @zndac
      twice as many WM6.5 phones then there are WP7, on more carriers at the moment.
      Also, do not forget that CDMA versions of WP7 are not available on Verizon yet, though WM6.5 versions are.
      :|
      Tim Cook
  • RE: Nokia's conundrum: How much pain ahead for an OS switch?

    Nokia moving to supporting dual platforms with both Intel and ARM based devices kinda puts more weight on MS's WP7. But Android has a deal with Intel too. What will it be? Stick with Meego development maybe!<br><br>It will be interesting since the smartest move between Android and WP7 would be Android. Because it's FREE #1 and scalable from feature phones (biggest part of Nokia's market), Smartphones and with Android 3.0 about to do a victory dance on iOS iPad features, I'd go Android in a heartbeat!!! ^_^
    i2fun@...
    • But huge patent liability

      @i2fun@...

      Problem for Android, Google will not stand between OHA partners and potential lawsuits for misappropriated IP.
      Bruizer
      • RE: Nokia's conundrum: How much pain ahead for an OS switch?

        @Bruizer <br><br>"Google will not stand between OHA partners and potential lawsuits for misappropriated IP."<br><br>It's easy to make groundless claims. If you have proof for yours, let's see it.<br><br>Google has filed very tough responses to the suit and offered a boatload of surprisingly harsh counterclaims, including fraud ...or something that sure looks like fraud. In other words, they're taking it very seriously. Based on what they've done so far it's more likely Google will encourage OHA to fight together against Oracle. That's a logical course.
        Justa Notherguy
  • why just one ?

    There is no reason why Nokia has to pick just one. I believe using Android and WinPhone would give them everything they need. I would guess that Microsoft is cooking a deal to have Nokia build them a special line of WinPhones Microsoft would share in the expence of such a deal. plus Nokia can build android based phones. that's a plan I could see happening. after all they are in the buisness of making cell phones. maybe even a tablet could be in the works?
    dpt308
    • RE: Nokia's conundrum: How much pain ahead for an OS switch?

      @dpt308 The rumors are that an Android Tablet is already in the works. As far as them adopting both Android and WP7, that's definitely a possibility. As you may remember Samsung sold phones with Nokia Symbian installed, but dropped them. Though they are still selling phones with both Android and WP7 along with their own Bada OS. So choice isn't necessarily a bad thing and it certainly isn't hurting Samsung being the second largest cellphone maker behind Nokia! :D ....that along with making many of the parts in Nokia's phones!
      i2fun@...
  • RE: Nokia's conundrum: How much pain ahead for an OS switch?

    Signing on with Microsoft wouldn't help in any obvious way and has the potential to make things worse. What has MS done right in mobile, lately? They wasted two years on the KIN phones, blew three years on WP7 and hundreds of millions in advertising for both, but MS has little or nothing to show for any of it.<br><br>Things aren't much different at Nokia. They've wasted three years and millions of Euros on three different operating systems that even they know can't cut the mustard. In the last couple years even their phone hardware has become a problem, with lots of bad publicity on certain phones including flagship models.<br><br>So I can't understand - how is Microsoft supposed to help them? MS offers no hardware expertise, just arbitrary rules for WP7 phones. They aren't any better than Nokia at delivering on time. Nokia will end up wasting another year switching over, meanwhile iPhone and Android will keep eating BOTH their lunches.
    Justa Notherguy
    • RE: Nokia's conundrum: How much pain ahead for an OS switch?

      @Justa Notherguy ... Nokia has the hardware expertise, what they need is a modern OS. What I think they see is an overcrowded Android Market that makes it hard to distinguish their products from the rest of the crowd.

      What is lacking in the WP7 market is a high end smart phone. Nokia could supply that hardware and Microsoft would jump through hoops to make that happen.
      kyron.gustafson@...
      • High end smart phone?

        @kyron.gustafson@...
        And what should be the specs of this "high end" phone?

        I was under impression that hardware specs for WP7 are engraved in stone by Microsoft.

        Did I miss something?
        Solid Water
      • RE: Nokia's conundrum: How much pain ahead for an OS switch?

        @Solid Water

        There are a number of <i>minimum requirements</i> and certain interface requirements, but handset vendors can add keyboard, higher-spec camera, various sensors etc. beyond that.
        honeymonster
      • RE: Nokia's conundrum: How much pain ahead for an OS switch?

        @kyron.gustafson@... <br><br>"What is lacking in the WP7 market is a high end smart phone. Nokia could supply that hardware and Microsoft would jump through hoops to make that happen."<br><br>You could say the same thing about Android/Google.<br><br>In fact, Android fans are doing exactly that. On every forum I've been to they show great interest in an Android phone built to Nokia specs. It's much better now, but hardware has been a sore point for Android going all the way back to G1/Dream. I think Google would love to finally have a Gphone that clearly beats Apple's iPhone.<br><br>Motorola, Samsung, and Sony-Ericsson have been successful but nobody has built a killer device. Where's the Android model with a 12mp camera and Carl Zeiss lens? Where's the Android device that takes 30fps video in high def? Where's the ideal media player for Android with a full range of codecs?<br><br>I know WP7 could use that kind of device too, but so what? Is there a giant, untapped market for WP7 that we haven't discovered yet? WP7's only 3 months old and already selling at deep discount. Every Windows Mobile owner I know is middle aged or older - where's the growth upside? Even Cadillac and Lincoln have learned that lesson.<br><br>If Nokia goes for MS it will only prove that they are as stubborn and clueless as their worst detractors have claimed.
        Justa Notherguy
    • Here's how Microsoft could help them...

      @Justa Notherguy MS pays them a hefty amount to put WP7 on the Nokia phones. Enough money can persuade just about anybody.

      MS would tout it as a big win and this would help them to get their phone OS used by a lot more people. Nokia touts WP7 as the phone OS of the future (makes a ton of money from MS) and both companies put on a happy face. Of course neither company would be allowed to comment about the terms of the agreement, so most people figure that Nokia chose MS because of quality of their product.
      K B
      • RE: Nokia's conundrum: How much pain ahead for an OS switch?

        @K B <br><br><i>"MS pays them a hefty amount to put WP7 on the Nokia phones. Enough money can persuade just about anybody."</i><br><br>No way. Nokia has a huge pile of cash, so money's not their problem. <br><br>Yes, Nokia needs UI/UX expertise but they can't get those from a WP7 deal without the enormous added baggage of ...Microsoft. Notice how MS's recent mobile campaigns have been near disasters? Who else would have released those ridiculous KIN phones? Who pays $500 million for ads to sell 2 million WP7 phones?<br><br><i>"MS would tout it as a big win and this would help them to get their phone OS used by a lot more people."</i><br><br>Not enough new people compared to Android and iPhone.<br><br><i>"Nokia touts WP7 as the phone OS of the future (makes a ton of money from MS) and both companies put on a happy face."</i><br><br>Like I said, there's no reason to think money's an issue for Nokia.<br><br>Also, I bet a WP7 deal alienates enough of their current users to offset any potential gain from WP7. Ever read the comments on Nokia fan boards? They are extremely passionate about Nokia/Symbian and think Microsoft is Satan. Maybe they dislike Google too, but they do like the fact that Android is an open OS tied to Linux.<br><br>Worse case with building an Android phone is that they cannibalize their Symbian base. Better than chasing them off to other manufacturers.
        Justa Notherguy
      • RE: Nokia's conundrum: How much pain ahead for an OS switch?

        @Justa Notherguy

        ?Like I said, there's no reason to think money's an issue for Nokia.?

        I think Nokia would have issue with that comment; they are most certainly in business for the money.

        Also, I wouldn?t wonder that they might question Google?s stance on proprietary formats such as H.264. Because Nokia likes proprietary (especially when it comes to their IP).

        I think Symbian will stay around until Nokia is satisfied with the WP7 integration. This should keep the Symbian camp happy.

        Now as regards KIN, Microsoft?s pulling the plug was the right idea when Verizon created a data plan that was going to kill the phone anyway. It was an interesting concept in linking social networks to the mobile world. It would be interesting to learn how the synergy between Verizon and Microsoft broke down in the end (much as the synergy between IBM and Microsoft crumbled under OS2).

        At any rate Microsoft always had its focus on WP7. In the end KIN proved to be just a distraction.

        I see Android as Google?s foil to the iPhone. Despite the protests of Android fanboys, I don?t think Google sees Microsoft at the evil empire they do. WP7 is a much more approachable platform for Google in comparison to iOS.

        Microsoft provides a fairly open OS (as regards access) with good development tools. They have business concerns that seem offensive to open source proponents, but seem reasonable to me.

        As a business partner for OEMs Microsoft?s mantra seems to be: you make great hardware, we?ll make a great OS. I think this is a philosophy that Nokia finds appealing.
        kyron.gustafson@...
  • Microsoft wishful thinking

    Why would they switch to WP7 other than Elop? They don't gain anything by it.<br><br>I think Microsoft analysts are reading too much into the Microsoft Nokia agreement. Previously this has turned out to be support for Exchange, or adding their search engine to the browser or similar. Minor cooperation things.<br><br>I think MS analysts are hoping Nokia will ride to WP7's rescue, since WP7 doesn't offer anything that Nokia don't already have.<br><br>Nokia need major apps (like that Google Goggles idea that sold people on Android), and WP7 doesn't give them that.
    guihombre
    • guihombre, the wishful thinking appears to be on your end.

      @guihombre, why you are so afraid of WP7 is beyond comprehension.<br><br>Why is it that you hope and pray that other companies do not adopt WP7 moving forward?<br><br>Are you a low level Android developer, lacking in coding skills for competing operating systems? Do you work for Google, or own their stock, or do you fear WP7 sales will take away from Android sales?<br><br>You appear to harbor alot of fear, and it shows in your posts.<br><br>Very unhealthy for you.<br><img border="0" src="http://www.cnet.com/i/mb/emoticons/plain.gif" alt="plain">
      Tim Cook
  • RE: Nokia's conundrum: How much pain ahead for an OS switch?

    WP7 exclusive on Nokia would mean death for Nokia. Android or a mixed platform make the most sense. A partnership with HP however using WebOS might also work.
    Socratesfoot
  • RE: Nokia's conundrum: How much pain ahead for an OS switch?

    Nokia would be smarter to use Android, over Windows phone 7 series. There are a few reasons this makes sense.
    1) Non assertion of hardware patents. How long would it take for Nokia?s IP to be stolen by Microsoft? I am willing to bet less than a week.
    2) Why would you hitch you wagon to a mule, when you can hitch it to a horse? I honestly believe that Android has legs and Windows phone 7 series OS does not. With the tepid sales of Microsoft?s latest attempt at a phone OS, the smart money says to avoid it. No sense in being another ?Plays for Sure? victim.

    I would seriously be on the lookout, as we may see a Zunephone in the next two years. Microsoft has pulled this trick on its partners before, why not do it again?
    Rick_K
    • Trouble with Android is the potential for a Google Phone

      @Rick_K

      And complete lack of patent protection.
      Bruizer