Nokia-Microsoft deal 'good' for developers and operators

Nokia and Microsoft's smartphone tie-in will benefit developers, publishers and mobile operators, the companies said as they explained the rationale behind the deal
Written by David Meyer, Contributor

Nokia's adoption of Windows Phone 7 as its primary smartphone platform will work in the interests of application developers, mobile operators and content publishers, company chief Stephen Elop said at an investor conference on Friday.

Nokia Microsoft deal

The Nokia-Microsoft partnership is "good for developers and publishers", Nokia's chief Stephen Elop said, pictured with Microsoft's Steve Ballmer. Photo credit: David Meyer

A couple of hours after Nokia announced the tie-in at Nokia's Capital Markets Day in London, Elop said Windows Phone 7 developers would particularly benefit from the deal, which will see Nokia abandon its historical focus on Symbian and drop the idea of basing high-end phones on MeeGo. Analysts said the announcement confirms Symbian is no longer worth developers' attention at all.

"The entire smartphone market is growing rapidly, and we should be setting the pace," Elop said. "The game has changed from a battle of devices to a war of ecosystems.

"This is good for developers and publishers. They can take the skills they already have for Windows and Windows-related platforms and apply them to this [new ecosystem]. It gives them access to Nokia's global scale," he said.

The entire smartphone market is growing rapidly, and we should be setting the pace. The game has changed from a battle of devices to a war of ecosystems.
– Stephen Elop, Nokia

Suggesting that the Nokia-Microsoft deal means the smartphone market is now a "three-horse race" — the 'horses' being Windows Phone 7, Google's Android and Apple's iOS — Elop said operators had reacted positively when Nokia told them of the new arrangement, as they have needed a "credible alternative" to Google and Apple's operating systems.

"One of the things I heard from a European operator was, 'thank you; we are all smiles'," said Elop, who moved to Nokia from Microsoft in September. He explained that Nokia's Symbian expertise will be used to "help Microsoft go downscale" and address a wider market around the world.

Symbian is 'dead'

Ian Fogg, a Forrester analyst, said that Nokia is right to keep Symbian going for a while, as it "can't suddenly stop supporting" the hundreds of millions of Symbian handsets that are in use. However, he said, the Microsoft tie-in means Symbian is "essentially dead as a smartphone platform".

"That leaves open the possibility that [Symbian] will continue as a super-feature-phone platform," Fogg told ZDNet UK, adding that this will fit in with the fact that developers have already started abandoning the platform. "Symbian has already lost developer mindshare. This will confirm what most developers already believed."

Fogg pointed out that Nokia will have to release a Windows Phone soon, as the news on Friday "undermines all the current smartphones Nokia has on sale".

"Nokia has to move very quickly on Windows Phone 7 devices, or they risk slumping sales," Fogg said. "Today they didn't even give an approximate date as to when they expect the first Nokia Windows Phone 7 phones to ship."

Ovum analyst Tony Cripps agreed about Nokia's need for speed, saying that "if there wasn't more than one [Nokia Windows Phone 7 handset] by mid-year, you might start wondering whether the partnership was working out".

Win for Microsoft

Fogg characterised the deal as a "big win for Microsoft". He noted that the US software maker has "signed up the largest handset maker by volume by far" and has gained a partner that will focus on Windows Phone 7. Microsoft's existing Windows Phone 7 manufacturers, such as LG, HTC and Samsung, are all significantly invested in Android as well, he pointed out.

For his part, Microsoft chief executive Steve Ballmer said at the event that his company has...

...seen "strong engagement" from Windows Phone 7 developers so far, with 8,000 applications already in its marketplace.

Ballmer said Nokia's "global expertise and focus on all price points and market segments will benefit Windows Phone broadly and Nokia's Windows Phones specifically".

"We are very excited to work with Nokia's engineers, who have some of the most exciting image technologies anywhere in the world, to bring those technologies to Nokia Windows Phones," Ballmer said. "The Windows Phone ecosystem should ensure more innovation in the market, more choice for consumers and better opportunities for developers and service providers to showcase the enhancements they're making to their networks."

The precise terms of the deal between Nokia and Microsoft remain confidential. All Elop would say on the matter is that "the agreement does respect the fact that Windows Phone is a royalty-bearing product, but it also respects the unique value [Nokia brings] to the ecosystem".

Avoiding Android

Nokia decided not to adopt Android, which is royalty free, because the phone maker "would have difficulties differentiating within that ecosystem", Elop said. He argued that the "commoditisation risk was very high" if the company had taken that option.

"[With Android] the value is being moved out to Google, essentially, which was concerning to us," Elop explained, suggesting that Microsoft had provided the "best option to build and lead and fight".

IDC analyst John Delaney said he got the sense that Nokia "spoke to Google, but not for very long".

He also suggested that an unstated reason for avoiding the Google-backed open-source OS was "if they were to go with Android, there would be no glossing over that they're implicitly recognising the superiority of another software company".

"With Microsoft, they can spin it as the extention of an existing relationship," Delaney told ZDNet UK, referring to the companies' long-standing partnership on mobile office productivity software.

Reading between the lines, if they do anything with MeeGo, it won't be smartphones.
– John Delaney, IDC

MeeGo's future

Nokia will ship its first MeeGo device this year "as an opportunity to learn... about some of the wonderful work we've done around user experience", Elop said. After that, it will ask the MeeGo team to move its attention to "future platforms", he added.

"Reading between the lines, if they do anything with MeeGo, it won't be smartphones," Delaney said, warning that it would be premature to assume that the company was planning a MeeGo tablet.

"One of the things Nokia doesn't have any play for is the connected home," Delaney noted. "Microsoft does, in Windows Media Centre, but it's not a very strong play."

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