Nokia: Windows Phone 7 to be market challenger

CEO says the smartphone maker chose to partner software giant, instead of Google, to prevent Android from monopolizing market, and adds decision supported by telcos.

BARCELONA--The Nokia-Microsoft partnership will make Windows Phone 7 a third challenger in the current mobile operating system market, says Nokia CEO, who adds that the decision is welcomed by telcos as it will give users choice.

In a press briefing here Sunday evening, Nokia CEO Stephen Elop acknowledged that both Microsoft and Google had courted the Finnish company to ink a partnership, before the phonemaker chose the Windows Phone 7 platform instead of Google Android.

The collaboration will place Windows Phone 7 a strong third challenger in the smartphone market currently dominated by Apple iOS and Android, said Elop.

Citing his discussions with telcos, he said the decision to create another challenger in the market is well received by mobile operators as it will bring more handsets into the market and offer consumers more choice.

If Nokia had decided to go with Android, the collaboration could make the Google OS a "monopoly" due to the platform's market share and Nokia's strong footprint in the smartphone market, he said.

Elop clarified that the partnership does not make Nokia an OEM (original equipment manufacturer). Instead, the smartphone maker will contribute a variety of services such as the Ovi Store and location-based functionality to the Windows mobile platform which can be deployed by other Windows Phone 7 handset manufacturers.

He added that Microsoft will bring its Bing search engine, mobile ads and Xbox integration to Nokia's handsets. The value transfer to Nokia is estimated to be "in the billions" of dollars, he said.

The Finnish company is currently working on new concepts of Windows Phone 7 handsets, revealed Elop but did not give a specific launch date for these devices, saying that the company wants to first ensure the products' commercial viability.

Asked if he sees Research in Motion's enterprise-targeted BlackBerry as a competitor, Elop said the Nokia-Microsoft partnership will be a strong rival to the Canadian phonemaker due to the relationship with the Microsoft Office creator and Nokia's experience in Symbian and E-series phones.

During the media briefing, the CEO also touched on Nokia's efforts in regaining its footprint in the smartphone market, noting that the company is working on the low-end segment of the market. He said the company will be bringing "fresh" features to these handsets as well as country-targeted efforts such as dual-SIM phones for markets such as India.

"Bold decision" but right
In a research note Monday on the Nokia-Microsoft partnership, Ovum's principal analyst Tony Cripps noted that there were limited short-term options available for the Finnish company to catch up with the growth of iOS and Android. In particular, the Google mobile platform had looked set to bypass Nokia in terms of smartphone shipments, Cripps said.

"This is a bold decision by Nokia but absolutely the right one, both for itself and for Microsoft given the drastically changed landscape for smartphones in the past couple of years," the analyst said.

Adam Leach, also a principal analyst at Ovum, said in the same report: "It's ironic that the sole purpose of Symbian was to stop Microsoft from repeating its domination of the PC market in handsets.

"Nokia now has the opportunity to cast itself in the role that Intel has taken in the Windows PC market as a mutually beneficial, symbiotic marriage between equals rather than as simply a box-shifter."

Leach, however, noted that there are still potential risks that Nokia could become "merely a vehicle" for Microsoft and its services should the Finnish company fail to differentiate itself from other Windows Phone 7 makers such as HTC, Samsung and LG.

Ovum' analyst Nick Dillon added: "For Microsoft, this is nothing less than a coup and the shot in the arm its new Windows Phone 7 platform needed, which despite winning acclaim for its innovative design and user experience has so far failed to set the market alight in terms of sales."

Liau Yun Qing of ZDNet Asia reported from the sidelines of the Mobile World Congress 2011 in Barcelona, Spain.