Nokia Makes Its Choice: Windows Phone

All over the technosphere this morning is the news of Nokia's deal with Microsoft: Nokia will compete with the iPhone and Android by using Windows to power its smartphones.

This came as no surprise and had been speculated about for months. Here are the high-level bullets and general outline of the deal:

  • Nokia would adopt Windows Phone as its principal smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.
  • Nokia would help drive the future of Windows Phone. Nokia would contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.
  • Nokia and Microsoft would closely collaborate on joint marketing initiatives and a shared development roadmap to align on the future evolution of mobile products.
  • Bing would power Nokia’s search services across Nokia devices and services, giving customers access to Bing’s next generation search capabilities. Microsoft adCenter would provide search advertising services on Nokia’s line of devices and services.
  • Nokia Maps would be a core part of Microsoft’s mapping services. For example, Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a unique local search and advertising experience
  • Nokia’s extensive operator billing agreements would make it easier for consumers to purchase Nokia Windows Phone services in countries where credit-card use is low.
  • Microsoft development tools would be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem’s global reach.
  • Nokia’s content and application store would be integrated with Microsoft Marketplace for a more compelling consumer experience.

Nokia chose Microsoft's operating system in part because it was credible and because Nokia CEO Steven Elop is a former Microsoft employee and has a good relationship with the company. He may have also been offered "hundreds of millions" in support from Microsoft (and to not adopt Android):

Most Nokia smartphones run on the much-criticized Symbian operating system. To get Nokia to switch, Google and Microsoft are offering hundreds of millions of dollars worth of engineering assistance and marketing support, according to a person who has done consulting for the company and was told of the talks. 

Android might have been a better choice for Nokia from a consumer standpoint; Android has more traction, more apps and bigger developer ecosystem and so on. However adopting Android would have turned Nokia into "a commodity" provider of Android devices. It would have diluted Nokia's brand. With Windows Nokia can retain some measure of "proprietary uniqueness."

It will be very interesting to see how Asian Windows Phone partners (e.g., HTC, Samsung) react. My guess is that Windows Phones have not sold well for them vs. Android. This move may alienate them somewhat. I'm speculating. 

The Nokia-Microsoft deal is probably better for Microsoft than it is for Nokia as my comments above suggest. However the interests of the two companies are well-aligned; they sink or swim together. I suspect, in the end, this will marginally boost Windows' share of the smartphone market and will arrest Nokia's slide to some degree. 

I doubt whether it will be the "game changer" that both companies are looking for however. 

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