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What will the Nokia deal mean for Microsoft's other phone-maker partners?

By | February 11, 2011, 5:23am PST

What does a multi-partner ecosystem look like when not all participants are deemed equal?

Giving Windows Phone a huge shot in the arm, the number one worldwide mobile phone vendor Nokia announced a sweeping partnership with Microsoft on February 11. (Yes, I was wrong. I thought Nokia would go Android, a move Nokia CEO Stephen Elop acknowledged today that he considered. Gobble, gobble.)

Nokia didn’t become just another Microsoft handset partner via today’s agreement, like HTC, LG, Samsung and Dell. According to the announcement, Nokia would is going to have direct input on the future of Windows Phone, influencing key areas like maps, imaging and the marketplace. From today’s Microsoft/Nokia announcement:

Nokia will help drive and define the future of Windows Phone. Nokia will contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.”

Microsoft reportedly is paying Nokia hundreds of millions of dollars to secure the deal. In exchange, Nokia has agreed to make Windows Phone its principal smartphone operating system. Nokia, in turn, becomes a key backer of Bing, adCenter, Office Mobile, Visual Studio, Silverlight and XNA.

So if you’re HTC or Samsung, do you keep your eggs in the Windows Phone basket or put more in the Android one? (The smartphone market is now, for the most part, a three-horse race, with partner-free Apple being the third horse.) And what will this mean for Windows Phone customers, in terms of device choice?

The issue is already on people’s minds. Here’s a tweet from CNET’s Stephen Shankland, covering the Nokia-Microsoft press conference this morning:

Microsoft has made much of its decision with Windows Phone 7 to “lock down” the base platform, providing OEMs with less opportunity to customize. That has been seen by most company watchers, developers and customers as a plus and a way for Microsoft to avoid the problems that plagued Windows Mobile (and Android) — specifically too many designs with too little in common. But Microsoft is changing the rules for Nokia and allowing Nokia to customize the WP7 platform. Does that mean Microsoft is going to grant other OEMs the same concessions? (And if not, will that lead them to walk?)

Next week’s Mobile World Congress should be an interesting one. Wish I could be a fly on the wall in Microsoft’s meetings with its partners….

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Mary Jo has covered the tech industry for more than 25 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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Mary-Jo Foley

Freelance journalist/blogger Mary Jo Foley has nothing to disclose. WYSIWYG (what you see is what you get). I do not own Microsoft stock or stock in any of its partners or competitors. I have no business ventures that are sponsored by/funded by Microsoft or any of its partners or competitors.

Biography

Mary-Jo Foley

Mary Jo Foley has covered the tech industry for 25 years for a variety of publications, including ZDNet, eWeek and Baseline. She has kept close tabs on Microsoft strategy, products and technologies for the past 10 years. In the late 1990s, she penned the award-winning "At The Evil Empire" column for ZDNet, and more recently the Microsoft Watch blog for Ziff Davis.

Got a tip? Send her an email with your rants, rumors, tips and tattles. Confidentiality guaranteed.

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RE: What will the Nokia deal mean for Microsoft's other phone-maker partners?
makrekwe29-24353598471777462757714216093602 Updated - 10th Nov
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Dance of the desperates. 2 vendors spurned by the market join together to try to reclaim some of the dominance they both found so comfortable, but gave away by looking more in the mirror than at the customer. Nokia just did it again.
@rebeccaYee

Not exactly. The telecoms firms are a key part of the business model, and in a sense are the primary customers, since they decide what to sell to end users. At least in Europe, the telecoms firms wanted Nokia to go with Windows Phone 7, not Android (or Symbian, or MeeGo).

I might add that the only news I've heard about Windows Phone 7 sales in Europe is the comments from Deutsche Telekom (the biggest telecoms firms in Europe) that they've been ahead of expectations.

If sales have been relatively low in the US (which it sounds like they may have been), all of the bizarre standards used by the various US telecoms firms may have something to do with it. I understand that the biggest telecoms firm in the US aren't even selling WP7 phones yet, because they don't use the normal GSM standard, so can't sell normal phones and have to wait for custom models?
@WilErz Correct! The USA is NOT a major player in global telecoms. It totally missed GSM and as a result is still about a decade behind Asia and a few years behind Europe. The coming of 4G/LTE will wipe out the US telecoms sector since there will be no concept of 'premium' customers. Those with the largest number of subscribers will win. Simple. So say hello to Vodafone and China Mobile - the future of the USA.
@rebeccaYee

rebeccaYee = DonnieBoy with a different name
It means their partners have increased competition. Not so much in the OS but in the hardware. You now have 4 hardware vendors who are able take advantage of WP7 capabilities. The main thing now will be which one of these vendors is going to produce the best hardware for WP7.
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It simply means more competition
Mr. Dee 11th Feb 2011
If I were HTC, Samsung and other mobile hardware partners, I should not look at this in any envious way. The fact they have the choice of running either WP7 or Android should keep them quite. There was already competition between different hardware brands: HTC vs DELL vs Samsung. So adding Nokia to the mix is not gonna be the end of the world. Remember, its also to their advantage, since Nokia seems to be going exclusive with WP7, while DELL, Samsung, HTC still have the option of carrying their smart phones with either WP7 or Android. This is just a deal so far, so the problem for Nokia and Microsoft, the competition is still ahead.
The pitiful effort the other handset makers were putting into WP7 could have been one of the driving forces to make Microsoft really go after this deal. Lack of compelling handsets has been one of the biggest complaints of WP7 so far. But WP7 will be more successful now and it will take more market share away from Apple where they can?t compete so it could be good for them too but only if they put in the effort to pick up their game some.
@Mythos7
exactly...( the lack of compelling handsets ).
What this tells me is that Nokia has a lot more to offer to WP7 than 'just another handset'. Nokia has their own set of 'experiences' that are Nokia specific that they will integrate with WP7. HTC and Samsung doesn't have their own "mapping" system, for example.
@Mythos7 Lack of compelling handsets? I'm genuinely intrigued by that statement. I have a HD7 and I'm "delighted" with it. Just out of polite interest, what would constitute a compelling handset in your opinion?
@spc1972

The HD7 is decent but it needs a better screen (its size is nice), something far better than a 1230 mAh battery and a dual core processor would be nice also.

You're delighted with your HD7 because it has WP7 on it but it could have been better.
@Mythos7..Totally agree. HTC, Samsung, and LG basically 'phoned in' their handset designs; they made no effort to be distinctive with regards to the look of their devices. With the exception of LG, they simply repackaged their current Android OS offerings. LG's handsets had no aesthetic appeal, which I think is the primary reason their handsets did not sell very well. Dell was the only OEM, in my opinion, that bought something 'fresh' to the mix and the Dell Venue Pro compliments WP7 quite nicely. With Nokia, and their unique phone designs (among other things), Microsoft has a winner.
@1019902735
manufacturers only can only match Android devices hardwarewise, as we see. At their best, they can match Android effort, because for them, where is Android, is where the beacon is.
For manufacturers Win7 is a second class citizen. In fact, Android through the last years, steadily almost anihilated WM marker share.
So enter Nokia. Through dubious tactics (see angry manifestations of Nokia employees), they bought back market share. So now we have MS/Nokia vs all the rest on Android.
This will only extend the life of WM as a viable platform furthermore; I would say that the market is frozen already, considering the development of other W7 models by most manufacturers. This considering how many new models has been delivered.
For Nokia it represent the Kiss of Death. Same happened to Silicon Graphics, once a leader & a respected high end workstation provider until turning to Windows.
Same happened to Palm, once a leader and a respected innovater, until they turned to Windows.
I keep hearing about 'why go with WP7 because they will have trouble differentiating themselves from other phones'????
Am I missing something?? The last time I looked "every" android phone 'looks' exactly the same .
Different screen sizes and cpu/ram, but the 'experience' is the same.
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The deal sounds great ...
P. Douglas 11th Feb 2011
... to me. My main concern is, does this introduce two tiers of partnerships in the Windows Phone ecosystem? Nokia will be able to change virtually anything it wants in WP7, while MS' other partners will be significantly limited. It should be interesting to see how things work out. My guess is that MS will use Nokie's partnership to learn how it should adapt WP7 to work on low end, to high end smartphones - then use that knowledge to craft its general WP7 strategy.
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What does it mean for Bing Maps?
daboochmeister 11th Feb 2011
MS has a large investment in maps, and is competing with Google directly in that space ... I find it hard to believe they'd cede that whole thing on the mobile front to Nokia's products. I know they already have a partnership on the NavTeq level, but still ...
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Better for HTC and Samsung
YukioCowboy 11th Feb 2011
The Nokia deal makes it more likely that WP7 will be widespread and in demand, so this makes the choice easier for HTC and Samsung to continue offering models which support WP7 too. If they want to compete, perhaps they'll offer even more WP7-compatible models.
Hardware competition will heat up as it has with Android Hardware. Good news for us.
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If I were HTC or Samsung...
jk_10 11th Feb 2011
I would kill Android all together, because Android is dead. not because today's event, I said that a few months ago. Android will die with or without Nokia making WP7.
@jk_10
Yep. Android is dead. The best selling smartphone OS is dead.
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android is dead regardless...
jk_10 11th Feb 2011
@Droid101 but you still have about year to enjoy it. good luck with that!
@Droid101 Android is going to be tied up in legal problems with Microsoft suing them for numerous patent violations. Word is that it's true, and Google may very well have to pay Microsoft a royalty for every Android handset they sell.
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Android RIP
Major Plonquer Updated - 12th Feb 2011
@Droid101

Yes - Google will likely have to pay license fees to both Microsoft and Oracle. That will be very funny imdeed. Bill Gates and Larry Elllison will make more money out of Android than Google will. hahahahaha

Serves Google right for stealing software and calling it their own.
  • Flagged
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Remember Symbian
WilErz 11th Feb 2011
In the Symbian ecosystem, Nokia were clearly in charge, but a number of other mobile producers were willing to go along when it was successful. I should imagine many of them will be willing to go along with a successful Windows Phone 7 ecosystem where Nokia are the leader too.
I don't think it matters to be honest, those oem's will put out whatever products make them money. Nokia needs a partner, they have services and features that are heavily embedded in their devices that their customers rely on.
It could be me, but that is not what I read in the statements. When they (MS and Nokia) say they "Nokia will help drive and define the future of Windows Phone.", I don't see that as saying Nokia will be able to customize the wp7 os AFTER it is released, but that they will contribute design and technology to the os development BEFORE release. It still is in line with keeping the look and function of the os across brands and makes, and still in line with limiting oem customization.

The statements do not imply, at least as I read them, that Nokia will not be just as limited in customizing the os after release from Microsoft as LG, Samsung, and HTC; they will all get the same code.
@mharr Basically Microsoft will have the opportunity to plunder Nokia?s IP, while Microsoft uses Nokia?s IP in lawsuits to harm the competition. Kind of like the Microsoft AOL deal, if you?re old enough to remember that one. At first Microsoft paid for every AOL user that used Internet Explorer, once Internet Explorer got big enough Microsoft charged AOL twice what it previously paid AOL to have the icon on the windows desktop. Typical Microsoft strategy: use a partner to gain an advantage, then turn around and screw the partner.
So did I miss something? Were does it say that Nokia will be able to make changes to the core? I took it to mean Nokia would have input into the direction of WP7, but anything they help add will be part of core all carriers will get.

If not, then as a developer I will have to write 2 versions of apps I write - 1 for Nokia & 1 for all others. That is what doomed MS Mobile, and that is the main reason that locked it down. People hate Android because each carrier has their own version, thus delaying updates so that is one advantage WP7 has over Android. They would be stupid to have that advantage up, by "forking" it already.

Hoping whatever Nokia contributes goes to the core for everyone, developers & carriers.
Do you realize that they also treat Microsoft inequal?
HTC, LG, Dell, ASUS, Samsung, etc are all making a lot of Android phones, a whole lot more than WP7 handsets. And compared to NOKIA, they are all totally dwarfed in terms of SmartPhone market or phone market in general, even combined. And Nokia goes all in with WP7. So how can you expect them to be treated equal? And I think all handset should and will realize that. So do you?
Seems some people in Redmond and elsewhere have a short memory. We've been here before - albeit a while ago. But the similarities are staggering.

In 1981 IBM selected Microsoft as the supplier of choice for the OS for their new PC. The other players in those days were Apple and Digital Research (DRI). Apple refused to license their software to third parties. DRI were the 'techies' favorite since MS didn't have an OS at that time (not counting Xenix). They had difficulty dealing with IBM and were eventually discounted and discarded.

Look at the result. Apple marginalised themselves by refusing to license out and are today a small niche player in global market for PCs ~2.5% although they are still aplayer in the USA ~8.5%.

Digital Research were haughty and refused to work with IBM. They are today no more.

Microsoft were the inadvertant winner. The success of the IBM PC inspired clone manufacturers. Volumes went up. Prices went down. Volumes went higher in a virtuous circle. Monopoly became a real problem.

Apple survived (barely for a while and needed to be bailed out by MS at one point) and are still a niche player today.

Now look at what happened this week. The world's largest mobile handset company selected MS as their OS vendor. Apple still don't license their software to third parties. And Google are filling the shoes of DRI.

The other factor that drove Nokia to select MS is that MS have total control of their software. Google don't. Google use on open source model which states that you can use the software, give it away and even sell it. But if you improve the software you must make the improvements available to the community - free of charge. Not exactly a stable platform for a long term product development strategy and Nokia were 100% correct in discarding it.

So in 2-3 decades we may well be looking back at precisely the same result and history will likely repeat itself. Microsoft will likely dominate the sector and only the major hardware brands will be left standing. With such large-volume clients as Nokia, Samsung, LG and Dell, volumes will increase and component prices will drop. WP7 handset prices will decrease in price and sales volumes will soar. Just like PCs.

Apple will likely still be around - more as a fashion icon than a useful device.

But the BIG loser will be Google. Google are today the DRI of the mobile age.

The REAL questiion we should be asking is why, oh why, did Apple make exactly the same mistake it did in the 1980s?
@Major Plonquer Got to love the MS revisionist history. First problem with your fantasy: IBM was a bit arrogant at the time. if they werent then Microsoft would not have a monopoly to abuse. Microsoft did not even write the original MS DOS (They rebranded Q-DOS, created by Seattle Computing). IBM then did the finite tweaks to make it work on their hardware. Once that happened Microsoft sold it to anyone that would pay to build an IBM Clone. There have been rumors that Microsoft aided in the reverse engineering" of the IBM BIOS, and i wouldnt put it past them.

In the late 70s Apple engineers for a tour of the Research facility P.A.R.C. (Palo Alto Research Center) which is part of Xerox. Apple paid for a license to use concepts that were designed by the scientists at P.A.R.C. This is where the origins of the Macintosh computer came from. In 1982 Steve Jobs asked a fellow computer geek (Bill Gates) to write applications for his new OS. Upon seeing this new OS Bill knew that his current strategy of a DOS prompt would not cut it when compared to a more modern OS. Being Bills father was a lawyer in the biggest law firm in Seattle, Microsoft was able to slip in a clause that would allow them to steal concepts from the new os developed by Apple. A year after the Macintosh was unveiled, Microsoft came out with windows (referring to a winding GUI on top of DOS. At around the same tome period IBM came up with a vision for a competitive OS (IBM Warp) and elicited the help of Microsoft to develop the new OS. Right about the time OS 2 Warp was ready for release Microsoft dissolved the partnership and took the jointly developed OS and relabeled it Windows NT. In the late early 90s Apple create a video player QuickTime video player. A company named San Francisco Canyon was contracted to make a port to windows for a playback only version of QuickTime. Intel contacted San Francisco Canyon for help with a Windows video player (Video for Windows) Given that there was no call for a cleanroom approach and an unrealistically short time to deliver the product, San Francisco Crayon simply delivered Apple's code to Intel, which then licensed it to Microsoft. Windows Media Player is a direct copy of QuickTime. In the 90s A company named Cassidy and Greene created a program named Sound Jam, as a music player on Macintosh systems. Apple was so pleased with the program that they bought the rights to Sound Jam and hired the lead programmer. This product was later renamed iTunes. The windows version of iTunes does not have the ability to use the special hidden APIs" that Windows Media Player uses, thus does not have the ability to work as efficiently.

Around the time that Steve Jobs returned to Apple, The case of Microsoft stealing code for QuickTime was going through court, and Microsoft offered to settle out of court. The settlement included the purchase of $150 million in non voting Apple stock and an agreement to produce Microsoft Office for a period of 5 years. The spin doctors at Microsoft released a press release claiming that Microsoft bailed out Apple. Essentially the press release was meant to help derail the Anti-Trust charges Microsoft was being investigated for.

Microsoft has a long history of stealing other companies IP, and claiming as their own. To date that practice has not changed. The time honored practice of Embrace, Extend and Extinguish, is about the only Microsoft Innovation that has proven to be successful for Microsoft. Now Microsoft and Nokia have entered into an agreement, where Nokia will fix Windows phone 7 series OS. Microsoft will, leverage those improvements and sell them to other OEMs. In the End Nokia will get stabbed in the back, just like IBM (and many other Microsoft partners) got stabbed in the back by Microsoft.
@Rick_K

Sorry pal, but I was there at the time. It was Apple that did the backstabbing when the two companies agreed to codevelop the Mac software. After agreeing to support MS Word, Apple secretly developed that wonderful program Macwrite and bundled it free with the Mac.

FYI: Microsoft wrote the original PC BIOS. As it was IBM's IP they sent all the clone manufacturers to Phoenix and had Neil Colvin develop BIOSes for them.

Get your facts right. There will be a VERY good book about all this released some time soon - but not while Jobs is ill as a mark of respect.
Seems some people in Redmond and elsewhere have a short memory. We've been here before - albeit a while ago. But the similarities are staggering.

In 1981 IBM selected Microsoft as the supplier of choice for the OS for their new PC. The other players in those days were Apple and Digital Research (DRI). Apple refused to license their software to third parties. DRI were the 'techies' favorite since MS didn't have an OS at that time (not counting Xenix). They had difficulty dealing with IBM and were eventually discounted and discarded.

Look at the result. Apple marginalised themselves by refusing to license out and are today a small niche player in global market for PCs ~2.5% although they are still aplayer in the USA ~8.5%.

Digital Research were haughty and refused to work with IBM. They are today no more.

Microsoft were the inadvertant winner. The success of the IBM PC inspired clone manufacturers. Volumes went up. Prices went down. Volumes went higher in a virtuous circle. Monopoly became a real problem.

Apple survived (barely for a while and needed to be bailed out by MS at one point) and are still a niche player today.

Now look at what happened this week. The world's largest mobile handset company selected MS as their OS vendor. Apple still don't license their software to third parties. And Google are filling the shoes of DRI.

The other factor that drove Nokia to select MS is that MS have total control of their software. Google don't. Google use on open source model which states that you can use the software, give it away and even sell it. But if you improve the software you must make the improvements available to the community - free of charge. Not exactly a stable platform for a long term product development strategy and Nokia were 100% correct in discarding it.

So in 2-3 decades we may well be looking back at precisely the same result and history will likely repeat itself. Microsoft will likely dominate the sector and only the major hardware brands will be left standing. With such large-volume clients as Nokia, Samsung, LG and Dell, volumes will increase and component prices will drop. WP7 handset prices will decrease in price and sales volumes will soar. Just like PCs.

Apple will likely still be around - more as a fashion icon than a useful device.

But the BIG loser will be Google. Google are today the DRI of the mobile age.

The REAL questiion we should be asking is why, oh why, did Apple make exactly the same mistake it ain the 1980s?
All I know about alliances tells me "principal partner", like "go-to", "preferred" and the like is a temporary situation that sets other partnerships evolving.

If this holds, other current (and future!) WP7 phone makers and other mobile platform providers will craft similar, yet quite different deals.

In the end, this will mean more competition among handset manufacturers and among mobile platform suppliers.

And that is good, isn't it?
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RE: What will the Nokia deal mean for Microsoft's other phone-maker partners?
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RE: What will the Nokia deal mean for Microsoft's other phone-maker partners?
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RE: What will the Nokia deal mean for Microsoft's other phone-maker partners?
makrekwe29-24353598471777462757714216093602 Updated - 10th Nov
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