The problem with Nokia is not the hardware -- the company makes some of the most solid and reliable handsets available today -- the problem is the operating system. Choosing Microsoft's was a massive gamble, especially given that no other company had managed to take the platform mainstream.
"No one comes into the store and asks for a Windows phone," said an executive in charge of mobile devices for one European operator. "If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell," he added.
And things look bleak for Windows Phone. Yesterday, market research firm Strategy Analytics predicted that 123 million smartphones would be sold in the U.S. during 2012, but Windows Phone would power only 4 percent of those, or less than 5 million.
"Microsoft is making a determined push to crack the United States because it is the most valuable and influential smartphone market in the world. However, Microsoft's U.S. smartphone market share remains relatively niche at present and breaking the stranglehold of leaders Android and Apple will not be easy," Strategy Analytics analyst Neil Mawston said.
Unless Microsoft is either going to continue bailing Nokia out, or is looking for the company to hit rock bottom before making a move to buy it, then Nokia really needs to figure out how it can kick-start smartphone sales. The quickest and easiest way for the company to do that would be to embrace Google's Android platform. It's clear that its partnership with Microsoft it not paying off and has taken a floundering, yet overall promising, company and driven it into the dirt.
It's unclear at present whether there exists a space for a third player in the mobile operating system market space. RIM's BlackBerry is floundering and Microsoft's Windows Phone is spinning its wheels. The market is owned by Google's Android platform and Apple's iOS , and the only route open to Nokia is to embrace the open source platform, or die a painful death -- clinging onto the hope that Windows Phone will go big.