Nokia May Regret Spurning Android for Microsoft Windows Phone

By Clint Boulton  |  Posted 2011-02-12

Nokia May Regret Spurning Android for Microsoft Windows Phone

Nokia CEO Stephen Elop bet the future of the Finnish phone maker Feb. 11 when he unveiled the plan to make Microsoft Windows Phone the centerpiece of the company's smartphone strategy going forward.

With its smartphone market share falling-Google's Android platform out shipped Nokia's Symbian in the fourth quarter of 2010-the thinking was that Elop would pick Windows Phone 7 or Google's Android as the core platform to power its popular handsets.

Microsoft won that privilege, leading Google Vice President Vic Gundotra to proclaim before Nokia's Capital Markets Day announcement that "two turkeys do not make an eagle."

Asked at the announcement why he picked Microsoft over Android, Elop said: "Our fundamental belief is we would have difficulty differentiating. The commoditization risk was very high."

Elop makes a good point. There are a lot of companies producing Android phones, and Elop fears Android-based Nokia handsets would have a hard time standing out and therefore gaining serious market share in a sector where there are well over 100 Android smartphones.

On the other hand, there are also a lot of consumers buying these smartphones from the likes of Samsung, HTC, Motorola and LG. Canalys reported that Android handsets accounted for 33.3 million of the 101.2 million smartphones shipped worldwide in the fourth quarter of 2010.

Considering that, Android has risen to claim anywhere from 20 percent to 30 percent smartphone market share (depending on whose research one favors). 

This is a huge, gutsy bet. Rather than embrace Android as a company-saving platform, a strategy that has served Motorola Mobility well, Nokia has chosen Microsoft, whose WP7 allegedly shipped a meager 2 million units to date. Anecdotal evidence about Windows Phone 7 devices from AT&T and T-Mobile retail stores does not bode well for the platform.

Elop appears to be counting on the fact that Nokia, with its big brand and massive engagement overseas, will thrust WP7 to a position of power among Android, Apple iOS and RIM Blackberry.

Nokias Risky Move

Some tech analysts are skeptical about the move.

Independent analyst Jack Gold told eWEEK he sees the partnership as a pact between two needy companies, rather than an alliance of strong players in the industry.

"Both of them need each other for credibility," Gold said, adding that Microsoft needs Nokia to build devices in volume; Nokia needs a serious OS. "But it's not clear either partner will get what it wants out of this," he said. "And I'm not sure customers of current Nokia will be very happy, leaving an opening for loyal Nokia users to move to other platforms (such as Android, iPhone or even Blackberry)."

Current Analysis analyst Avi Greengart told eWEEK it's hard to understate the risk. "Nokia is betting its future here, and will need to transform into a very different-and in some ways less ambitious-company."

That is, a company beholden to WP7. This is a platform that, while technically sound and eye-pleasing, is unproven and untested in a market where Apple iOS and Android have been shipping iPhones and Droids and Galaxy S devices, respectively, like hotcakes.

Not everyone is so bearish on the pact. IDC analyst Kevin Restivo told eWEEK Nokia is still the No. 1 smartphone maker, despite its struggles with execution and building a modern smartphone platform to compete with Android and iOS.

With Elop as a longtime Microsoft employee, Nokia can forge a tighter bond than it could with the open-source Android platform, where relationships lend themselves to freestyling.

Microsoft and Nokia will put joint marketing and research and development into the mix so that each company has "real skin in the game" to make and sell quality handsets, Restivo said.

Consumers just need to buy them. With Android showing no sign of slowing and Apple's iPhone now on Verizon, this will certainly be a challenge.

Of course, the best move Nokia and Elop may have made is to ensure the deal is non-exclusive. If Windows Phone 7 doesn't work out, there's always Android.




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