Nokia had little choice in how it executed its Windows Phone strategy, according to an IDC analyst. That comes despite current criticisms over Nokia's execution.
bleeding smartphone market share ahead of releasing its first Windows Phone
devices, leading some analysts to question whether its deal with Microsoft will
eventually pay off.
But for those
questioning Nokia's current strategy-i.e., to announce the aforementioned deal,
and then wait a few quarters until releasing Windows Phone devices into the
market-at least one analyst is suggesting the Finnish phone maker really didn't
have a choice.
"Nokia had to
announce early its adoption of the Windows Phone platform because it had to
take important cost write-downs in R&D that would have been impossible to
hide," IDC analyst Al Hilwa wrote in a July 25 research note.
Microsoft and Nokia had managed to keep the deal a secret, he added, Nokia
would have still faced significant declines in its smartphone market share.
"For one thing, the Symbian R&D albatross would have continued to hobble
Nokia's profitability and its ability to make change," he wrote, "for another
thing, the platform dithering and in-fighting would have continued and leaked
He also hinted
at the possibility that the deal could still result in a "successful, focused
and growing Nokia." That's despite the company's current declines in net sales
and operating profit.
There was a
time in the not-too-distant past when Nokia still held the lion's share of the
global market for phones. However, facing competition from the likes of the
Apple iPhone and Google Android, Nokia has lost ground in both high- and
low-end market segments. CEO Stephen Elop's solution was to abandon the
company's homegrown Symbian operating system in favor of Windows Phone, even
though the latter is also suffering from a notable lack of marketplace
challenges we are facing during our strategic transformation manifested in a
greater-than-expected way in Q2 2011," Elop wrote in a July 21 statement accompanying
his company's latest quarterly results. "However, even within the quarter, I
believe our actions to mitigate the impact of these challenges have started to
have a positive impact on the underlying health of our business."
In June, Elop
offered an audience a glimpse of what looked like a Nokia N9 smartphone running
Windows Phone. The N9, which currently runs a MeeGo operating system slated for
mothballing by Nokia, married a curved 3.9-inch AMOLED (active-matrix organic
LED) screen to a body engineered from a single piece of polycarbonate.
Presumably, other devices are in the pipeline, as well.
locked into its current strategy-if you subscribe to Hilwa's theory-Nokia has
little choice but to hitch itself to Microsoft's wagon. For its part, Microsoft
hopes that its upcoming "Mango" update will increase Windows Phone's appeal to
its target audience. It's a huge bet for both companies, one made harder when
you consider how its rivals will have new, ultra-advanced devices hitting the
market right around the time of Nokia's Windows Phone-including, presumably,
Apple's iPhone 5.
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Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.