Nokia Will Make Microsoft Windows Phone 7 a Powerhouse-Outside of the U.S.

News Analysis: Outside of the United States, Nokia is a major player in the wireless landscape; its phones are ubiquitous. This may prove to be a decisive advantage for Microsoft as the two companies strive to make Windows Phone 7 a top player in the global wireless market.

In the world of mobile communications, the world is divided into two basic places: the United States and everywhere else. While I hate to think of this as an Us versus Them situation, that's actually what it is. The reason ultimately boils down to relatively little competition in the way phones are sold in the United States, and in how wireless companies operate. 

In the United States, for example, you see a nearly even divide between CDMA and GSM phones. Outside of North America, CDMA hardly exists. Just about everyone uses GSM, the frequencies are mostly compatible, and the carriers don't have nearly the leverage on handset selection as they do in the U.S. 

Visit a mobile phone store outside the U.S., for example, and you'll find phones, but you'll find either no carrier presence at all or you'll find that the store will carry SIM cards for several carriers. While the carriers do have their own phone stores, they don't have the dominance that they have in the U.S. Even the process of adding money to your SIM card is divorced from the carriers. When I was in Germany covering CeBIT, I added money to my German T-Mobile SIM card by going to the Shell service station across the street from my hotel. 

This nearly total disconnect between phones and carriers means that there are a lot more phones available outside the U.S. In addition, the differences in economic circumstances and social communications are different from what happens in the U.S. In India, for example, there is an entire social network based not on Web browsing as you do with Facebook, but on SMS messages. 

This is the world that phone makers compete in outside the U.S. and this is why Nokia has become such a huge player. In the U.S., most of the competition seems to be centered around smartphones. Elsewhere, most people can't afford an iPhone or a BlackBerry. They need a phone with some features, but it has to be affordable. Nokia is a major player in this global phone market, and its Symbian operating system is a major part of Nokia phones. 

This outside-the-U.S. phone market is now changing. Nokia, which has long been the biggest European phone company, has decided to move ahead with Windows Phone 7 from Microsoft. This is the phone OS that will power the smartphones and in many cases the higher-end feature phones in the rest of the world. As a result, recent reports that Windows Phone 7 may be a dominant player might not be too far off the mark.