Immediately after Microsoft and Nokia on Aug. 12 announced a deal to load a mobile version of Microsoft Office onto Nokia smartphones, debates erupted online as to what the alliance would mean for Microsoft Windows Mobile, Redmond’s own mobile operating system.
Under the terms of the agreement, the mobile Microsoft Office applications will come preloaded on Nokia Eseries smartphones, allowing out-of-the-box functionality for the business-centric devices. Nokia and Microsoft plan to later port the application platform onto other smartphones.
That porting of Office functionality onto a competing mobile operating system has led some analysts to the conclusion that, while the alliance will allow both Microsoft and Nokia to compete more heartily against Research In Motion, it leaves Windows Mobile somewhat isolated.
Even before the announcement, Microsoft seemed to b e designing the upcoming version of its mobile operating system, Windows Mobile 6.5, with the intention of making an aggressive unilateral push to compete against the Apple iPhone, Palm Pre and other smartphones. Windows Mobile 6.5’s new features include improved touch capabilities, allowing the user to navigate through tapping and other gestures, as well as customizable widgets.
But certain analysts now see Microsoft as retreating a bit from its original intention of going it alone in the mobile arena, particularly with regard to the enterprise.
“I see [the Nokia agreement] as a tacit admission from Microsoft that WinMo [Windows Mobile] hasn’t made the grade,” Nick Jones, an analyst with Gartner, wrote in a blog post following the joint announcement. “Imagine you’re Steve Ballmer, and in two years’ time WinMo was still fourth in smartphone market share. How much longer do you keep throwing money at it?”
In an interview with company spokespeople following the announcement, neither Microsoft nor Nokia would comment on any structuring within the deal that would allow the mobile Office side to proceed without being affected by competition on the OS side of the equation. With both Nokia and Microsoft feeling pressure from Apple and RIM in the marketplace, however, the alliance may take priority over other concerns.
Why Microsoft Would Stick with Windows Mobile
An August report from research company Gartner found that, while industrywide smartphone sales increased by 27 percent during the second quarter of 2009, Nokia experienced decidedly softer-than-expected results for its newly launched N97 smartphone. Nokia and Microsoft both saw their shares of the smartphone OS market decline, to 51 percent and 9 percent, respectively.
Despite Windows Mobile’s tiny market share, a number of analysts said they see Microsoft sticking with the OS.
“I don’t think the news necessarily hurts OEMs who have historically produced [Windows Mobile] devices, except that they can now expect stronger competition from Nokia,” Chris Schreck, an analyst with IMS Research, said in an e-mail to eWEEK. “The tight integration with Microsoft products is especially important as Nokia eyes the North American smartphone market, where Windows Mobile is strongest.”
Nor does Schreck think that a mobile version of Office will necessarily hurt Microsoft Mobile’s market share, at least initially.
“I don’t necessarily expect any OEMs to drop Windows Mobile tomorrow just because of this announcement,” Schreck said. “There is a huge investment in supporting a platform, whether open source or not, so those decisions tend to happen slowly.”
He added, “However, if an OEM was wondering what platforms to support five years from now, the argument for continuing to pay royalties to license Windows Mobile just got a little bit weaker.”
Other analysts see the deal as potentially successful only if Nokia and Microsoft can overcome substantial challenges to preserving or gaining market share.
“It may ultimately blunt some of the market advantage that BlackBerry has in the enterprise, and may also thwart some of the up-and-comers,” Jack Gold, an analyst with J.Gold Associates, said in an Aug. 12 research note. “However, it will be incumbent on both Microsoft and Nokia to implement a sound extension to these primary steps if this partnership is to fulfill its full potential.”
Gold added, “Microsoft will need to establish itself as an interconnectivity and management technology leader across all platforms to be successful.”
Perhaps the surest sign that Microsoft intends to continue backing Windows Mobile, at least for now, is the launch of Windows Marketplace for Mobile in fall 2009. Microsoft opened Windows Marketplace for Mobile to developer submissions on July 27, and said it would include a dedicated Business section for enterprise applications. The evident hope is that Windows Mobile will have a large enough portfolio of applications at launch to challenge Palm’s App Catalog-although catching up to Apple’s App Store, which has over 65,000 applications, may prove impossible in the short term.