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11
Feb
2011

Nokia, Microsoft tie-up: just another Friday morning...

POSTED BY Global Administrator
OK, so there I was, making sure that all the paraphernalia was sorted for Barcelona – registration documents to hand, briefings arranged, suits picked up from dry cleaners, Valentine’s presents purchased – and into the pre-Congress maelstrom comes this little announcement from Nokia that it will be embracing the Windows 7 operating system for its smartphones.

So, a nice quiet Friday morning then.

The “strategic partnership” between Nokia and Microsoft also includes, inter alia, Meego becoming an open source platform, Symbian becoming a “franchise platform” and – a development that certainly caused this analyst to raise an eyebrow – the Ovi Store application store will be integrated with Microsoft Marketplace “for a more compelling consumer experience”. There is more of this – three press releases’ worth – but this, I think, will do for starters, because my head is already spinning with the implications that this entails, and considering any more dramatic announcements might well make it explode.

Question one, then: what’s in it for Nokia? I think it’s fair to say that, even before Stephen Elop’s forthright prognostications on Nokia’s situation were leaked to a grateful Internet, most readers recognised that Nokia had struggled to match the innovation of Apple and Google, a struggle clearly delineated in Symbian’s diminishing share of the OS market: as recently as 2009, this stood at around 45%, but as its main rivals saw an upsurge in shipments this fell to just over 30% by the fourth quarter of 2010. From Nokia’s perspective, the hope must be that embracing the Windows OS, offering consumers options like Microsoft Office and leveraging the not inconsiderable Microsoft brand strength will serve to reinvigorate its smartphone division; faced with the choice of either buddying up with a former rival or else standing by and watching other competitors sail off into the distance, Nokia has at least taken the proactive route.

Question number two: what does this mean for Symbian and Meego? In one of the press releases, Nokia anticipated a further “150 million Symbian devices in the years to come”. The problem is that with Nokia coming out so clearly behind Windows 7, developers (and consumers) will infer that this means that resource now allocated to Symbian will be transferred to Windows; the announcement is hardly a ringing endorsement of the in-house OS, and the upshot is likely to result in even fewer applications and services being developed for Symbian. As for Meego, Nokia has there will be “increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences.” At best, Meego has shifted from a medium to a long-term option; at worst, the shift in focus to Windows could see that platform being put on ice, or even quietly shelved.

Question number three: why has Nokia agreed to the Ovi Store being effectively folded into the Windows Marketplace? Twelve months ago, with the Ovi Store still struggling to gain traction, this tie-up might have been more understandable, but with the Ovi Store now doing 4 million downloads per day across 190 markets, Nokia had apparently overcome those teething troubles to produce a credible storefront with fairly strong customer retention. Furthermore, Nokia had put an enormous amount of resource into promoting Ovi as its content brand: across the three press releases (if one excludes the stock “about Nokia” paragraphs at the end), Ovi did not merit a single mention: this would seem to suggest that Ovi’s days are numbered.

Question number four: what does this mean for Microsoft? Broad smiles on executive faces. Windows has seen its own share of the smartphone OS market tumble in the face of the Apple/Google onslaught – it is now less than 5% - but this tie-up offers it the opportunity to regain lost ground. Similarly, the Microsoft Marketplace – currently a poor relation in the app store stakes – should soon find itself with a much larger potential user base.

 It is fair to say that the implications of this partnership will be felt across the mobile ecosystem for several years to come. But in the meantime, I must finish packing for Barcelona…