Microsoft and Nokia's recent Windows Phone deal will allow them to dominate the market within a few years, according to some analysts. But there are hurdles.
A small but
well-publicized set of research notes has predicted that Windows Phone will
come to dominate the smartphone market in coming years, fighting Google Android
to a standstill and forcing Apple's iOS onto a long, slow decline.
One such note,
from Pyramid Research, features Windows Phone scratching out a narrow lead in
the global smartphone market within the next two years.
that Nokia and Microsoft are a very powerful tandem, and that will show in its
full force by 2013," Stela Bokun, senior analyst with Pyramid Research, wrote
in a May 9 missive
. "Lower price of the devices will
be the crucial prerequisite for the expansion of WP models. Nokia knows it and
Microsoft knows it, and I am sure they will act on it quickly."
Nokia is "big
enough and strong enough to take on a couple of painful hits and come out of
the struggle stronger than ever," she added. "Don't forget that while being
late to the party is rude, everybody gets to see you enter the room. When Nokia
-enters the room' with new WP-based devices, there will likely be much traction
about its new -clothes and shoes,' which will be a good jump start for the new
era of WP devices."
features a slowing in Android's growth, with Apple's iOS and Research In
Motion's BlackBerry franchises suffering the collateral damage of Google duking
it out with Microsoft. "While RIM and Apple are powerful players in the
smartphone market, their desire to limit their mobile operating systems to
their own hardware has antagonized large manufacturers, such as Samsung, LG and
Nokia," she wrote, "who have the capacity to enjoy the benefits of economies of
scale and whose devices account for an overwhelming portion of the smartphone
research firm IDC suggested in March that Windows Phone will surpass both
BlackBerry and iOS to become the second-ranked smartphone operating system in
the world by 2015, largely thanks to that Nokia partnership. IDC's research
note pegged Android's share of the market in 2015 at 45.4 percent, followed by
Windows Phone with 20.9 percent, Apple's iOS with 15.3 percent, RIM's
BlackBerry with 13.7 percent and Symbian with 0.2 percent.
Should any of
these predictions come to pass, it would represent a substantial reversal from
Microsoft's current fortunes in the smartphone space. In a May 6 research note,
comScore suggested that Microsoft's percentage of the U.S. smartphone market
dipped from 8.4 percent to 7.5 percent between December 2010 and March-good for
fourth place behind Google, RIM and Apple. At the same time, new data from The
Nielsen Company suggests that 6 percent of consumers indicated they wanted a
Windows Mobile/Windows Phone smartphone as their next device, compared with 31
percent for Android, 30 percent for Apple's iOS and 11 percent for BlackBerry.
situation to reverse, and for Microsoft to gain such enormous benefits from the
Nokia deal, certain things need to happen.
First, Microsoft and Nokia need to actually produce
At the moment,
Windows Phone is calibrated as a higher-end smartphone with stringent minimum
hardware requirements. Nokia wants and needs a low-cost alternative to its
Symbian ecosystem, but to replace it with Windows Phone would require the
Microsoft platform essentially alter its most fundamental DNA-and that will
necessarily take time, effort and more than a few mistakes along the way.
Considering that hurdle, and how Nokia-Windows phones even aren't expected to
launch until 2012, it would be remarkable if the companies managed to design a
low-end phone line capable of total market saturation by 2013-especially in the
face of severe headwinds from Android, iOS and every other smartphone maker on
Not to mention, Microsoft and Nokia need to actually execute
acknowledged the potential risks of its Microsoft partnership in its publicly
released Form 20-F 2010 report
: "If we fail to
finalize our partnership with Microsoft, or the benefits of that partnership do
not materialize as expected, we will have limited our options and more
competitive alternatives may not be available to us in a timely manner, if at
all," reads one section. "Our expected transition to the Windows Phone platform
may prove to be too long to compete in the smartphone market longer term."
and Microsoft signed the agreement. That leaves everything else
to be done.
Nokia won't help Microsoft in the U.S. smartphone market.
bring global scale to Windows Phone. But it's a radically different story in
the United States. According to comScore, Nokia fails to place in the top-five
rankings of either OEMs or smartphone platforms. In the OEM scenario, that
ranks it behind Samsung, LG, Motorola and others. In platforms, it lags even
Palm. Despite some possible benefits from the Nokia deal in international
markets, Microsoft will likely have to continue to fight on its own for U.S.
There's no guarantee of carryover.
behind analyst optimism for the Nokia-Microsoft deal is the assumption that
Symbian's market share will port to that of Windows Phone with little to no
attrition-or, at least, no attrition that can't be subsequently made up.
However, Symbian is already struggling to keep its position among burgeoning
competitors like Android, and no hard data can predict whether its current user
base will stick around in large numbers for Windows Phone.
words, the Nokia-Microsoft partnership might guarantee some additional market share
for Windows Phone, and may even allow it to emerge as a massive force within
the smartphone arena. But fast dominance of the space is by no means guaranteed.