Is there room in Apple and Google's two-horse race for Nokia and Microsoft? Perhaps, if the pair move quickly, say analysts.
Part of Nokia
CEO Stephen Elop's big plan to save the ailing Finnish phone maker is to join
with Microsoft in a strategic alliance, a key component of which involves
adopting the software giant's Windows Phone 7 operating system in place of
Symbian and the MeeGo OS Nokia has been developing with Intel.
Tack sharp and
eloquent, Elop left Microsoft to become Nokia's CEO in September, but since
then has been publicly quiet about his plans to restore the brand, which, after
consecutive fiscal quarters of losing market share, last quarter finally gave
up its long-held title as the world's leading phone platform to Google's
Android. With the broad strokes of a plan now revealed, the remaining questions include whether it's the right
decision, what the risks are and who stands to benefit.
Elop made his
announcement during a much-anticipated press conference in London on Feb. 11.
He shared the stage with Microsoft CEO Steve Ballmer whose company-like Elop's-has
been looking to gain traction in the heated smartphone space currently
dominated by Apple's iPhone lineup and smartphones running Google's Android OS.
"Mr. Elop has
probably made his biggest decision of his career, and for all intents and
purposes it appears to be the right one," IDC analyst Al Hilwa said in a Feb.
partnership a natural one, given the strengths of each partner, Hilwa called
Nokia's decision an "incredible vote of confidence" for Microsoft's new
platform-introduced a year ago at the 2010 Mobile World Congress. From here,
Hilwa said, "the two companies have quite a bit of work to catch up with Apple
and Google and must therefore execute with amazing speed and without stumbles."
however, that in the long run, Microsoft will need a stronger hardware partner
to compete against Apple and BlackBerry maker Research In Motion and "make
headway against the ubiquitously sourced Android."
Elop, during a
question-and-answer portion of the presentation, said that Nokia did consider
working with Android, but in the end feared the company would have difficulty
differentiating itself-a point that EndPoint Technologies analyst Roger Kay
Microsoft, Kay told eWEEK, "gives Nokia a distinction," while pairing with
Google would have made it "just another Android supplier, and where's the
differentiator in that? I think [the alliance with Microsoft] is a pretty smart
move all around."
Company analyst Mark McKechnie in a Feb. 11 note to investors, said Elop's
decision to "go with his old employer" makes sense, though tying "an incomplete
operating system with an ailing handset design company is a very risky
proposition." In response to Elop's remark in a press statement that "it's now
a three-horse race," McKechnie wrote in his note, "There is no change to our
overall view of the space. ... The smartphone battle is a two-horse race, with a
challenging battle for third."
added that RIM and Hewlett-Packard, with the mobile devices and WebOS operating
system acquired last year from Palm, were nonetheless also still in the race,
and IDC's Hilwa similarly added that HP showed Feb. 10, when it introduced a tablet and two smartphones
running Palm's WebOS, that it
still has "quite a bit of fight in it."
Hyers, with Technology Business Research, pointed out that the carriers would certainly
welcome a third major competitor.
operators are becoming increasingly concerned about the growing dominance of
Google's Android of the smartphone ecosystem, and they are concerned that an
Apple/Google duopoly reduces their ability to influence and profit from growth
in mobile data and services," Hyers told eWEEK. "Carriers will welcome a strong
third smartphone platform with open arms. It helps that both Microsoft and
Nokia are currently underdogs in smartphones (my how things have changed since
2007!) and will therefore not be able to dictate terms to the carriers.
now, Hyers said, is how quickly these two can get a product to market. Despite
their insistence in a joint press statement that the core competencies of each
offer an opportunity for a "rapid time-to-market execution," Hyers said instead
that "neither Nokia nor Microsoft has a record as a fast-mover in the
Technologies' Kay, calling that the smartphone market "probably the
fastest-moving market"-faster even than the video-game market-said the pair
"really have to move quite quickly."
nor Ballmer would estimate a time frame, though Ballmer offered, "Our belief is
that we can move faster through this partnership than what we've ever done
beneficiaries of the announcement, Elop had much to say. "We believe this is
good for Nokia," he explained, continuing:
a next-generation platform upon which we can attach our innovation. It gives us
an opportunity to jointly lead a new and leading ecosystem in the marketplace.
It gives us the opportunity to focus our investments where we can best
differentiate. It gives us a faster path to the United States market place. And
it gives us a broader opportunity to take advantage of our location-based
assets including Navteq. In short, products that are more competitive.
He said the
alliance was a good one for Microsoft, which will benefit from Nokia's global
reach and assets, as well as for developers and publishers, as it, in short,
"makes it easier for them to make money and gives them access to Nokia's global
added, "We believe this is good for consumers. And at the end of the day, we
believe it is that which is most important."
Nokia/Microsoft relationship may be so beneficial, in fact, said IDC's Hilwa,
that "if 12 months from now the combined hardware and software of these two
firms has taken hold, gaining traction and share, I suspect that an all-out
merger may be in the cards!"
Michelle Maisto has been covering the enterprise mobility space for a decade, beginning with Knowledge Management, Field Force Automation and eCRM, and most recently as the editor-in-chief of Mobile Enterprise magazine. She earned an MFA in nonfiction writing from Columbia University, and in her spare time obsesses about food. Her first book, The Gastronomy of Marriage, if forthcoming from Random House in September 2009.