Nokia May Regret Spurning Android for Microsoft Windows Phone

Nokia CEO Stephen Elop is making a bold, risky bet in choosing Microsoft Windows Phone platform over Google Android. Will it pan out? Analysts mull the move.

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.