Biggest loser in Microsoft/Nokia deal is Intel

By | February 11, 2011, 7:12am PST

Summary: Analysts are stepping up with thoughts on who the biggest winner is in the Microsoft/Nokia deal announced today, but what strikes me is how Intel has just been thrown under the bus.

Microsoft and Nokia shook up the mobile world with today’s announcement of a strategic partnership that will see Windows Phone 7 adopted by Nokia as its platform going forward for high-end smartphones. Analysts are stepping up with thoughts on who the biggest winner is in this deal, but what strikes me is how Intel has just been thrown under the bus.

Intel has been floundering for years in its efforts to break into the mobile smartphone space, but with no luck. Its processors have been passed over by smartphone makers in favor of Qualcomm’s Snapdragon and other ARM-based solutions. Nvidia is set to take a major role in the smartphone sector with its Tegra 2 processors, further pushing Intel to the back of the pack.

The Nokia/ Intel strategic partnership a while back to create the Meego smartphone platform was Intel’s effort to partner with a handset maker, but more importantly to develop a platform that was optimized for Intel’s mobile chips. The company was failing in efforts to get OEMs to adopt Intel chips, so it made sense to create a platform optimized for them. Intel executives must be in emergency meetings today trying to figure out where it goes from here given Nokia’s ditching of the Meego platform.

Sure, Nokia says it will continue to work with Meego, but the writing is on the wall. The company will be using Windows Phone 7 on its flagship smartphones going forward, not Meego. That leaves Intel with millions of dollars worth of egg on its collective faces.

The smartphone space may now be “a three horse race“, but with its chipsets missing from all of the player’s handsets Intel is definitely the biggest loser in the Nokia/ Microsoft deal.

Image credit Intel

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James Kendrick has been using mobile devices since they weighed 30 pounds, and has been sharing his insights on mobile technology for almost that long.

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James Kendrick

James Kendrick has been using mobile devices since they weighed 30 pounds, and has been sharing his insights on mobile technology for almost that long. Prior to joining ZDNet, James was the Founding Editor of jkOnTheRun, a CNET Top 100 Tech Blog that was acquired by GigaOM in 2008 and is now part of that prestigious tech network. James' writing has appeared in many print publications: Smartphone and Pocket PC Magazine, Information Week and Laptop Magazine to name a few. James' coverage of the mobile technology sector has regularly appeared in the New York Times, Salon.com and CNN/ Fortune online. Not just a writer, James has filmed numerous video reviews and how-tos that have garnered well over a million viewers. He has appeared on local news segments and been interviewed by the Associated Press on mobile technology topics. Additionally, James has been podcasting about mobile technology for years.

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RE: Biggest loser in Microsoft/Nokia deal is Intel
FAULKNE 13th Oct
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you are saying that
Linux Geek 11th Feb 2011
windoze mobile 7 does not support Inhell chips?
May be Inhell should have been part of the M$-Nokia deal with bribes to switch to its chips.
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@Linux Geek

After reading that gibberish I had to laugh out loud at the nickname. So. Very. Perfect. +1
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Last time Intel was on the other side
Robert Hahn 11th Feb 2011
One of the things that killed all the minicomputer makers, and all the mainframe makers except IBM, was their insistence on treating their proprietary instruction set (whatever it was) as if it had been handed to them on stone tablets by Moses himself.

It was like pulling teeth to get any of them to build a machine that wasn't a "microVAX" or a "microNOVA" or a "microNCR". In the end virtually all of them built an Intel-based "IBM clone," but it was too late. Today they are either gone from the world or shadows of their former selves.

As for Intel: they have great engineers, world-class fabs, tremendous know-how, and distribution from Memphis to Mumbai. If they could get past the idea that the x86 instruction set was handed to them on tablets by Moses, they could make some "insanely great" ARM chips.

Will they? Probably not. I don't know what causes this disease, but it's how Nature rids the world of companies that have gotten sclerotic in their old age.
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@Robert Hahn

good writing, like it!
@Robert Hahn

I think you're right, and that the same thing can be seen in software, with APIs. The two most prominent sets of APIs are of course Win32 (and Win16 before it) and Posix/X11. Microsoft's earlier mobile OSes tried to shoehorn Win32 into a mobile, and I was absolutely gobsmacked to read that MeeGo uses an X server to display graphics -- an X server on a mobile phone!

Microsoft seem to have recovered from the disease, with their focus on Silverlight, HTML5 and XNA. Even if Windows Phone 7 uses a Win32 API beneath these, it can now safely be ignored. Similarly, iOS and Android use Unix-like cores (Mach/BSD and Linux, respectively), but implement modern APIs on top of them.
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Nokia is the biggest loser
guihombre 11th Feb 2011
They had QT Designer, a brilliant development platform, they had some of the best hardware, market share a quality reputation.

What they didn't have was an up to date OS, Symbian had been left to rot, they'd switched focus to one OS after another, Meego being the latest.

They have the staff to deliver the kind of wow factor Xperia delivers, yet somehow failed to empower them.

The switch means they're competing with a not-so-popular phone OS, a not-so-popular search engine, a not-so-popular-maps, and suppose they succeed... they don't own any of it! They can't even add features to their phones not found in other WP7 phones because they need MS to add support first!

What a disappointment.
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@guihombre "QT Designer, a brilliant development platform"? Are you kidding? Even Linux developers prefer GTK over QT. OpenOffice, Chrome, Firefox all use GTK. Redhat, Suse, Ubuntu all use GNOME.
WP7 is a great OS and grows at a much faster rate than iOS, Android. Think of the market share and app number three months after these two OSes were released.
Did you know that Google search market shared decreased to 64% and Bing went up to 24%.
Did you know that Nokia's Ovi map is fantastic and will integrated into Bing map?
Did you ever heard of Xbox Live, Visual Studio, Zune?
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@UseYourHead WP7 is a great OS? where?
@guihombre undoubtly Nokia is the biggest loser, but maybe Nokia users would be more losers than them? an user become a loser when they choose to buy hardware with Microsoft oem/firmware crap inside
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@UseYourHead
mmmm...... microsoft?s lover?
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@UseYourHead
mmmm...... microsoft?s lover?
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@guihombre @nitrofurano
Guys, seriously if you have used a WP7 device - just from a straight up UI perspective it is quiet possibly the best mobile phone available. I know Palm OS users would contest this...

This is about putting a solid offering on the table which compells users to buy.
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RE: Biggest loser in Microsoft/Nokia deal is Intel
Loverock Davidson 11th Feb 2011
Intel chose the wrong OS.
@Loverock Davidson

So did Nokia.

Then again a dying handset maker and a DOA OS are a match made in Heaven.
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RE: Biggest loser in Microsoft/Nokia deal is Intel
Loverock Davidson 11th Feb 2011
@itguy08
Exactly! Nokia + Intel + Meego = DOA.
Which is why Nokia moved to WP7. At least Nokia was smart enough to know when to switch.
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which is why they did not use Android
Mister Spock 11th Feb 2011
@itguy08, so it would appear that you actually "got one correct".
plain
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@itguy08 yes, nokia is shooting their feet - i were about buying Nokia, but after seeing all this, they surelly lose customers, not only me.
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What about Nokia sharhelders?
none none 11th Feb 2011
Fourteen percent of Nokia's value just went up in smoke.
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@none none
Knee jerk reaction in the market.
From smartphones people want 1. good hardware and 2. apps. Nokia can do #1 but they struggle with #2. Here Windows phone has great potential as it is new platform that is not too crowded yet and it comes with app store and lots of developers. Going to android would be suicide for nokia but with windows phone they have a chance.
Let's hope they do not screw up and start building phones in a few months and not years.
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when MS announced that they're finishing up with an ARM version of Windows.

Imagine that.
@none none

I think the hit to Nokia's share price was mostly a reaction to what was revealed about Nokia's current situation, combined with the lack of details about Nokia's plans. Apparently margins on existing Symbian-based mobiles will be smaller than analysts had expected, and it will take two years to fully transition from Symbian to Windows Phone 7. On top of that, vital details like whether or not Nokia will get part of search-related Bing revenues from Nokia WP7 devices weren't explained.
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I think WIn Ce 7 support x86.
My thoughts are with HP (webOS) and RIM (QNX) ecosystem.
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It does
Joe_Raby 11th Feb 2011
@game4monster

However, unless Microsoft transplants the Compact 7 core into Windows Phone (which is unlikely to happen in the current OS due to timeframes), Compact 7 will likely not amount to much with Windows "8" supporting ARM. If Microsoft designs an alternate UI for tablets in Windows 8, it will likely just be offered in an embedded version with that UI as the default, and OEM's will be able to strip out the components of the OS that don't make sense to have on their hardware. I don't foresee a future in Windows Embedded Compact.
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Still on the fence
Robert Hahn 11th Feb 2011
I'm still not persuaded that this deal will have a chance to go through. I think that HP, for strategic reasons, will acquire one of the large-but-ailing handset makers... and it will do so sooner rather than later.

It can't really let this hardware segment get away if it wants to remain one of the premiere vendors of computer technology. "Phones" are only going to get more powerful, and more capable of becoming substitutes for things that HP sells a lot of now. If HP wants to remain in the computer business, it needs to be in the "phone" business, because in not too many years no one will be able to tell the difference.

Nokia is not that expensive right now (market cap down to $50 bill, down from $250B at one time) and in fact their stock is tanking on this very news. Undervalued companies are takeover targets. If HP wants a handset maker, Nokia might fit the bill.

Secondly, HP is pitching the idea of WebOS everywhere-- even on its PC line that today run Windows. That only happens if WebOS develops an "App ecosystem" that rivals the one on Windows. And that only happens if App developers perceive there to be a huge market in WebOS apps, which is not something that HP can deliver today precisely because they are zeroes in the handset market where the "tens of millions of units" fun takes place. Buying Nokia and cramming WebOS onto its phones solves that problem. In one stroke it makes WebOS a major player in the mobile 'ecosystem' space. Such a move would also drive a stake through Win Phone 7, which without Nokia is likely to end up an "also ran" alongside Android and iOS.

The other obvious handset "takeover target" is Moto Mobility, which needs a huge corporate parent to stay in the game. Without all the other parts of Motorola subsidizing it, it hasn't got long to score a Big Win. Without one, it can't play in a league with Apple, Samsung, and the rest.
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@Robert Hahn
IMHO. Putting WebOS on smartphones didn't work for Palm, why did HP think they'll do a better job? If HP managed to purchase Nokia and put WebOS in all their phones, Nokia would suffer the same fate as Palm, to be honest.
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@John Zern

Yeah, I was a bit baffled by that too.

Not many people knew Objective-C but jumped in because the iPhone went huge, being the first smartphone worth owning by the masses.

Android had the virtue of developers jumping in to be first on the "other" ecosystem where they might be swamped in Apple's.

WP7 has incredibly low barrier to entry for development for the existing legion of .net developers so a lot of developers are happy to jump in as a what-the-hell-lark, even with the risk of the platform maybe not taking off.

HP WebOS has none of that. High barrier to entry, high risk of the platform stagnating, and everyone who was willing to learn a new dev environment has already chosen Android or iOS.
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@Robert Hahn
I think it is harder for HP + Palm than for Nokia + MS. Main difference here is developer support. MS has fantastic developer tools and windows phone appstore is growing fast where HP and Palm do not have that advantage. HP may have "ecosystem" but if developers do not come they can stay in their own ecosystem and enjoy it alone.
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Nothing to hammer
Robert Hahn 11th Feb 2011
Tools are nice, but in the end developers go where the money is. I totally agree that if HP relies on its own tablet sales, and whatever 'phone' volume it can get with Palm-ish offerings, then WebOS will never have a large enough installed base to really get developers interested. That's why HP needs to buy a handset maker that already has massive volume. Only that can get the tens of millions of units out there to convince developers that they can make money doing WebOS apps. MS has 'fantastic developer tools' NOW. You shoulda seen 'em when I was writing Windows 3.1 apps. They sucked. But that didn't stop anybody from writing for Windows because people could smell the money.
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@Robert Hahn
Yeah, during Windows 3.1 time, no body had better tools, not even Borland. Everyone sucked. This is technology and evolves over the time. Companies learn and progress just like we do.
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@Robert Hahn

But there is no money in webOS, and no tools. So why would developers adopt it? At least WP7 has the best in the industry tools.
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I wondering if this means Nokia will be using Qualcomm chips moving forward?
WP7 runs on x86. All WP7 apps run on x86. In the emulator.

Adding the Intel Medfield as a new HW platform would be the easiest thing under the Sun for MS.
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Both companies down on the news- MSFT 1%, nokia whooping 14. Market does not trust those folks.
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@kirovs@...

What the market doesn't trust is uncertainty. Before this deal, Nokia was fairly quantifiable: a powerful, but declining phone giant with easy to chart revenues.

Now, "the market" doesn't know what to think and will probably remain a little suspicious until the first of the products launch and they can gauge the potential for success and revenue.
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@kirovs@... so with your logic they don't trust Apple either?
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look whos the one getting run over. Of course it's not intels fault, they couldnt get out of the road because they'd just been hit by the apple A4 bus and then again by the W8ARM bus. memo to intel - time to take all those who talked you into betting on linux and put them on "special projects". then go to ms and make a deal get into the next WP chasis spec
@Johnny Vegas

Absolutely. Whatever madness led Intel to embrace Linux when the single biggest advantage of x86 is that it runs Microsoft Windows, they need to recover from it now. Windows 8 on Arm may be the shock that does it.
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RE: Biggest loser in Microsoft/Nokia deal is Intel
Alan Smithie Updated - 12th Feb 2011
@Johnny Vegas

Intel still have a trick or two up their sleeve, I think you may see Meego come with their chip sets, embedded a la Splashtop.
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its already time to let webos go. yes it was a very bad buy but you have to put that behind you. blame it on hurds "lack of pants/focus" and go partner with ms. you still have time to acheive mobile relevence if you jump while the rescue helicopter are still here...
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@Johnny Vegas I was baffled by HP's decision to buy Palm.
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This knife in the back of MeeGo (on x86 or anywhere else) looks to be just more evidence that selling off its ARM business (StrongARM/XScale) was among Intel's worst business decisions of the past 10 years.
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This knife in the back of MeeGo, on x86 or ARM, looks to be yet more evidence that selling off its ARM business (StrongARM/XScale) was Intel's worst business decision of the past decade.
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Intel not blinking
Dietrich T. Schmitz, ~ Your Linux Advocate 11th Feb 2011
Fyi:
h-t-t-p://blog.laptopmag.com/intel-were-not-blinking-on-meego

As far as Intel is concerned, Meego development is still on including for smartphones.
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Let go of your fear, Mr. Schmitz
Mister Spock 11th Feb 2011
it really can not be good for you.
plain
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Beam me up!
Dietrich T. Schmitz, ~ Your Linux Advocate 12th Feb 2011
@Mister Spock
Nt
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hEh Intel ?

The merger with M$ is a guarantee that I and many with
me, never will buy a Nokia hand set ever again.

This from a devoted, former Nokia fan,
Now a satified Android user.
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Dear Oh Dear
Alan Smithie 12th Feb 2011
Microsoft should have bought Nokia and taken their tablet and smart phone systems exclusively in house to control both the hardware and software like Apple, positioning it as a mature premium business brand and the high margins that go with it. Google has learned from MS's strategy with the IBM PC and refined that model to take the commodity ground from MS pressurizing it's traditional licensing fees.
For all the calls of competition, this is actually a reduction of competition. In the end not only will Nokia lose, but Nokia?s customers will lose. 1,000 of Nokia employees walked out in protest, and are most likely going to make up 40% of the layoffs planned this year. I don?t see how laying off thousands of workers is going to help the economy, in Finland. Those thousands of workers will be replaced by people from Taiwan and India, where Microsoft has large workforces. Expect the hardware quality of Nokia phones to go down while the company cuts corners to make these phones work with Windows phone 7 series OS.
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