Big Changes in Store for Nokia, Maybe RIM

Over the past few days there have been a flurry of articles and speculation about changes that may be coming to Nokia, as soon as the Mobile World Congress in a week:

Last year Microsoft and Nokia announced an alliance and now, with both companies struggling in mobile, it appears that alliance will become deeper and more strategic, with the world's largest handset maker adopting Windows for some or all of its new high-end smartphones.

I had anticipated that Nokia would build some Android phones for the US market and possibly Europe. But the Microsoft move is more logical given that Nokia CEO Stephen Elop is a former Microsoft executive himself and given the fact of their existing alliance. 

Microsoft's new OS is nicely designed (except for the home screen in my view) but lacks visbility and momentum. Being on Nokia handsets could bring both almost immediately or very quickly. There's also the risk that such a move would fail to halt Nokia's slide or sufficiently boost Windows. 

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Right now the iPhone and Android are absolutely sucking all the consumer attention out of the room for everyone else. It's still possible that Nokia would put out an Android phone or two beside Windows Phones; however Microsoft might try and prevent that as part of any strategic deal between the two. The enemy of my enemy is my friend.

One widely discussed scenario is the outright purchase of Nokia by Microsoft. The former is now worth just over $41 billion -- a costly pill to swallow. However the acquisition of Yahoo would have been worth $44 billion. So Microsoft is not above using its balance sheet when absolutely necessary.

Yet an acquisition would probably be unnecessary if a strategic alliance that put Windows on Nokia smartphones advanced penetration for the operating system. 

For its part RIM will also be compelled to do some radical things to reassert itself.

Its new QNX operating system on the Playbook tablet and later BlackBerry handsets will apparently be able to run Android applications helping RIM play catch-up on the apps front. However embracing Android apps will likely mean the end of the company's own BlackBerry App World; why would developers focus on it when Android apps could reach BlackBerry users?

Does the move to embrace Android apps also suggest that RIM will put out an Android handset? Probably not; RIM will likely maintain its proprietary OS in the wake of the QNX and TAT acquisitions. Regardless, RIM may continue to struggle and will probably see tablet sales disappoint vs. the iPad, Samsung,  Xoom and several others as the tablet market becomes increasingly "noisy."