Nokia outlined its highly anticipated strategic overhaul, including a decision to use Microsoft's Windows Phone 7 as its primary platform. The importance of this deal can't be understated for Microsoft. Nokia's distribution will make Windows Phone 7 a top 3 platform.
Simply put, Microsoft just bought itself global distribution with Nokia. It remains to be seen how this strategy works out for Nokia---an effort to launch Android and Windows Phone 7 devices may have been better---but it's a clear win for Microsoft (even though the deal is non-exclusive). The software giant just ensured that it will be a major mobile player.
The inability of Nokia to spread its bets---it was too complicated---means Microsoft is a guaranteed mobile giant. The deal will work out for Microsoft for sure. Why? Microsoft CEO Steve Ballmer just bought mobile distribution. What Yahoo is to Bing, Nokia is to Windows Phone 7.
"The game has changed from a war of devices to a war of ecosystems," said Nokia CEO Stephen Elop at his press conference. "We have an opportunity to disrupt the trajectory in the mobile ecosystem. Together we will deliver great mobile products."
Ballmer said Microsoft and Nokia "can work together in a different kind of a way." Nokia and Microsoft engineers will collaborate. Nokia will bring its hardware expertise to the partnership and help develop Windows Phone 7. Both Ballmer and Elop noted that the partnership will yield some enterprise friendly developments.
At the press conference, Elop outlined how the Microsoft partnership is good for Nokia. Then Elop delivered the understatement of 2011.
"We believe this partnership is also good for Microsoft."
Gee, ya think Stephen? The mobile standings via Gartner tell the tale:
Let's assume that over the next three years Nokia's Symbian operating system largely gets replaced by Windows Phone 7. If that's the case, Microsoft garners about 30 percent market share. I'm going to assume some market share leakage. At the very least, Microsoft winds up with 20 percent market share. Add it up and Microsoft just ensured there's a four-horse mobile OS race short term: Android, Apple's iOS, RIM and Windows Phone 7. If you assume RIM winds up with Android somehow, then it's a three-horse race. Elop said "this is now a three horse race."
If Android won over Nokia it would have been game, set, match for the mobile platform race. Google would have won.
Nokia shipped more than 461 mobile units in 2010. No one even comes close to that many devices. Microsoft will ride along with most of those devices.
In a nutshell, Nokia will:
Focus on Windows Phone and Microsoft's ecosystem---Bings, Xbox Live and Office.
MeeGo will ship, but largely be a learning experience for Nokia.
Install a new leadership team.
Structure the company to focus on smart devices and mobile phones---a move that makes a lot of sense.
Elop said Nokia and Microsoft have been on a journey on the mobile front. A few specifics are yet to be determined, but Ballmer and Elop have promised to disrupt, overcome challenges and be speedy.
Ballmer has taken a lot of heat for missing the mobile curve. Today, Microsoft got itself back in the game with this Nokia partnership.