Nokia and Microsoft team up for mobile revival

Nokia Corp. has done the unexpected. Never mind, the news already leaked. The world’s largest handset manufacturer has taken its search for a modern smart phone operating system outside its ranks and inked a wide-ranging deal with Microsoft Corp. to make Windows Phone the flagship platform for Nokia’s high-end devices going forward.
While many would argue that the move is necessary, it is still an idea that would have been written off as nonsense only a couple years ago. Microsoft and Nokia have shared many of the same problems on the platform and device front — of course these shortcomings were only highlighted once Apple Inc. and Google Inc. introduced their mobile operating systems.
The plan these two companies are setting out is grand: “combine assets and develop innovative mobile products on an unprecedented scale.” Microsoft and Nokia want to own and “create a new global mobile ecosystem.”
Under the plan, Nokia would adopt Windows Phone 7 as its primary smart-phone strategy and build on top of the platform in areas such as imaging. Nokia also plans to “help drive the future of Windows Phone” and “contribute expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.” Finally, the companies plan to collaborate closely on marketing initiatives and a “shared development roadmap to align on the future evolution of mobile products.”
Nokia and Microsoft are confident that the deal will give operators and developers an unrivaled platform and create an opportunity for “rapid time to market execution.”
“Today, developers, operators and consumers want compelling mobile products, which include not only the device, but the software, services, applications and customer support that make a great experience,” Stephen Elop, president and CEO at Nokia, said at a joint news conference in London. “Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It’s now a three-horse race.”
Microsoft CEO Steve Ballmer added: “Ecosystems thrive when fueled by speed, innovation and scale. The partnership announced today provides incredible scale, vast expertise in hardware and software innovation and a proven ability to execute.”
NPD analyst Ross Rubin said: “The first wave of WP7 handsets was not differentiated enough from Android lineup, but this Nokia partnership is a great opportunity to change that.”
David McQueen, analyst at Informa Telecoms & Media, drew similar lines, thoughhe framed the deal as a “make-or-break strategy” for both companies.
“There is no question that this partnership will provide scale for Microsoft which has been struggling in the mobile world since the beginning and will offer more competition, which will benefit operators (more options in terms of platforms),” he wrote. “However, this may not be the best move for Nokia and it is questionable how ‘open’ Microsoft will be to work with. Even if Nokia fears Google’s dominance, an open platform like Android would allow much more possibilities to Nokia.”
McQueen continued: “Also, two losers don’t make a winner, particularly given their scale and cultural differences. It’s hard enough for massive companies to innovate on their own much less with another massive partner with a completely different culture.”
Without a doubt, the biggest losers in this deal are the Symbian and Meego platforms, which are sure to face increased pressure once the Windows Phone OS carries lower build costs and competes in the lower smart-phone tiers.