Nokia's Android X range: Will this be madness or genius for Microsoft?

Through Nokia, Microsoft has just set its sights set on emerging markets and it's hoping to use Android to win new converts. Is this history repeating itself?
Written by Jo Best, Contributor

First it was Symbian. Then it was MeeGo. Then it was Windows Phone. Now it's Android. When it comes to smartphone operating systems, you can't accuse Nokia of being afraid to try new things.

Today at Mobile World Congress, Nokia announced the launch of three Android devices, the X, X+ and XL.

The trio will run on the Android Open Source Project (AOSP) version of Android – that's Android with all the Google service bits stripped out to you and me – with Microsoft services in their place and a new UI that features some of Nokia's old favourites in the form of a tiles (a nod to Windows Phone) and Fastlane (a la Asha).

Why? According to Stephen Elop, Nokia's current devices head and soon-to-be Microsoft's, the X family is a gateway range – by giving users in emerging markets a bit of Android with a little Microsoft thrown in, the company is hoping those users will graduate up to Windows Phone later on down the line when they're properly hooked on smartphones.

Looking at the decision to launch the X range, it's not immediately apparent if the move is madness or genius.

Nokia's (and therefore shortly Microsoft's) traditional emerging markets lines have been struggling of late: while Nokia's non-smartphones are still selling in their tens of millions, sales have been starting to drop in the face of competition from sub-$100 Android devices.

The importance of apps

It looks like Nokia decided it couldn't beat them, so it might as well join them. According to Elop, launching devices on Android meant Nokia could take advantage of app ecosystem already build up around the OS.

But instead of taking Google's Android wholesale, Nokia has gone for its own forked version with lots of Microsoft elements on top.

As it's using AOSP rather than the Google Mobile Services version of Android, the X range won't feature any of the traditional Google services normally found on Android either — no Play, no Google Maps, no integrated Google search and so on.

That's both a blessing and a curse for the X range: the phones won't come with some of the elements that make Android so compelling, but it also gives Nokia and Microsoft a chance to replace them with its own equivalents, or those of its partners: there's Bing search integrated into Nokia's Xpress browser, OneDrive and Skype. There's Nokia's Here supplying the maps, for example, and there's Yandex to replace Play.

Nokia has also already got some of its own apps ready to download for the X range — think Facebook, Spotify, Skype — and they'll be linked to from the Nokia store that comes on the X devices.

Those are sensible ways to address the app question that will inexorably dog the range, but the broader question around developer support remains. While Elop promised Android developers could port their existing apps to the X range "in a matter of hours", I can't imagine too many will take him up on the offer of doing so for the sake of three phones with unknown numbers of users. After all, not too many have done so for Windows Phone, which has millions of users worldwide, and that lack of app ecosystem is still hampering the OS to this day.

The fight for growth markets

There's no question targeting emerging markets is a sensible strategy for Nokia-Microsoft, and taking on the cheap Android makers is absolutely a sound plan. But whether the X is the way to do that is unclear.

For users in emerging markets moving from a feature phone to their first smartphone, does OS really figure in the buying decision? Price and user experience are likely to be more important factors for choosing one handset over a competitor's.

According to Elop, the X range will serve as a way of introducing new users to Microsoft software before moving them up the stack onto Windows Phone devices, the company's real focus.

In releasing the X range, Nokia (and so Microsoft) may have got itself in a double bind: if the user experience with the X is good enough and the price is right, what impetus does the user have to migrate to Windows Phone? If on the other hand it's not ideal, why would that user want another product from that company?

To persuade users to gradually make the transition from Nokia feature phone devices to handsets running Windows Phone, Microsoft will bring out cheaper and cheaper Lumias, and sell the already rather reasonable X family — costing from €89 to €109 — at cheaper price points still.  

That means the price differential between the most expensive X and the cheapest Lumia isn't huge, nor is the gap between the cheapest X and the most expensive Asha. With common UI elements and apps across all the OSes, and no huge leaps in price from one to the other, it's hard to see what tools Microsoft will have at its disposal to persuade users to move from one OS to the other in future, once the Nokia acquisition is complete.

The X strategy feels a little like Nokia going back to the future: in adopting Windows Phone, it threw its own OS under the bus, hoping to make money and build loyalty putting its own software on top of someone else's operating system. Which, I can't help but think, does have parallels with what it is doing here.

And if the X range takes off, that gives Microsoft four OSes to support once the acquisition closes — Windows Phone, AOSP, Series 40 and its Asha OS offspring. Wasn't a profusion of OSes one of the reasons Nokia cited for adopting Windows Phone in the first place – having flirted with Symbian, MeeGo, Meltemi and Series 40 to address all price points, didn't Nokia find the we'll-be-all-OSes-to-all people idea unworkable?

Think back to the N9: Nokia's first and only device running MeeGo, the N9 was killed off to allow Nokia to focus on more established OSes rather than work to build support for a new, alternative operating system.

While it's tempting to see the X as the tail-end of Nokia as independent company, it makes far more sense to see it as the first steps for Microsoft as a device maker. As such, I wonder if the same fate awaits the X range. Many industry watchers say under Microsoft's aegis, the X range will be killed off. It's not that simple, however, as ZDNet's Mary Jo Foley points out: Microsoft may well decide to keep the X device line going, meaning the problems with the range aren't simply going to go away overnight.

I can't help but think Microsoft has the tools to be successful in emerging markets already at its disposal and may not need X going forward. If Asha, Windows Phone and ASOP X devices are getting closer in price, why not go all out on Windows Phone, take a hit on the price per licence in favour of locking users into the ecosystem for the long term?

Every time Microsoft asks users to make a move from one of its OSes to another, it gives a user pause to think whether to go for a new OS on Microsoft, or on someone else's platform. If it got on them on Windows Phone at the earliest opportunity, their upgrade path would be simpler, and there would be far fewer chances for them to leave for a rival's offerings.

Then, with Nokia's historical device-manufacturing expertise, it could use hardware elements as the means of getting users to trade up for more expensive devices. Hardware has been sorely lacking in innovation for some time now, meaning the time is ripe for it to be used as a differentiator once again. Take the 1020, for example: it generated a fair amount of buzz due to its market-beating camera. If anyone can make hardware interesting, it should be Nokia.

Mobile is hugely important to Microsoft and will only be more so in the future. Getting its OS strategy right is no small part of remaining relevant in a market that Google and Apple have claimed for themselves. If it continues to hedge its bets with the X range, Microsoft won't have learned the lessons that Nokia was forced to some years ago. And we all know how that worked out.

More on Nokia and Android

Correction: This article stated Stephen Elop is the current head of Microsoft's devices head. He will assume this role role once the acquisition of Nokia's devices unit closes later this quarter.

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