Nokia and Microsoft only works if Samsung, HTC and LG clear off

by Scott Bicheno on 11 February 2011, 12:55

Tags: Microsoft (NASDAQ:MSFT), Nokia (NYSE:NOK)

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A quick look at the initial response to the announcement of Nokia's smartphone partnership with Microsoft says a lot about the respective media. The mainstream have gone for straight reporting, the blogosphere has asked some questions, while social media is generally full of scoffing as part-time experts jostle to out smart-arse each other.

As the headline of this piece states, I think the success or failure of this partnership comes down to exclusivity. While Nokia has to share WP7 with Samsung, HTC and LG it's exposed to exactly the kind of commoditisation Elop fears, but if Nokia is the only handset-maker you can get WP7 on, it has a unique selling point.

Furthermore, while the two Steves talked a good game about all the great things their respective engineering teams are going to do together, surely the presence of these other OEMs will be a massive distraction for both. Microsoft still has to adequately support other partners, and Nokia will have to focus on differentiating from other WP7 handsets first and foremost.

Elop said the mobile ecosystem (I prefer platform) environment is now a three horse race. To run with that metaphor: Elop now looks like a Microsoft Trojan Horse inside Nokia. Within months of coming on board from Microsoft he has virtually merged the two companies, and given WP7 a much-needed boost.

But while old-school Nokia loyalists wail and cry foul, he has also brought the kind of instant influence over Microsoft that few other potential CEOs could have. You could see up on stage how close the two men are, and anyone who thinks this isn't the beginning of the end for the other OEMs on WP7 is grossly underestimating the importance of personal relationships, even at the highest level.

So I think this is the Stephen and Steve show. BBC business journo Robert Peston wrote a blog post on the deal saying that, while he's not qualified to comment on the techie side of things, he had serious concerns about the ability of two such large and geographically separate companies to collaborate in the way that's being promised.

The only way it can work is if Elop and Ballmer are singing, word-for-word, from the same hymn sheet. If their relationship holds up then this partnership will too. And the stronger Ballmer's relationship is with Elop, the weaker it must be with his counterparts at Samsung, HTC and LG.

It's looking like all the mobile OEMs (bar Apple, of course) will be launching new handsets at MWC next week. We know Samsung and SE will launch Android handsets and we expect the LG and HTC launches to be Android too. Meanwhile Moto will be demonstrating its Android tablet.

If Nokia launches a WP7 handset this Sunday, which I expect it to do, then that will say everything you need to know about WP7. The other OEMs are at best half-hearted about WP7 already, and most of their energies are already focused on Android. I think this deal is exclusive, it's just a matter of Microsoft paying off the other guys to abandon whatever arrangements they have with each other.

Once that's done, the tricky bit is how the two companies divide revenues from the platform. Nokia will presumably be paying a negligible amount to license WP7, because both companies know the real goldmine is apps and services. There's a lot of overlap with things like Ovi, Navteq, etc duplicated to some extent within Microsoft.

But I back Stephen and Steve to be able to resolve these matters swiftly and amicably. I think Nokiasoft will be the third platform and will compete well. Nokia will make some sexy handsets and the app/services ecosystem will grow. So my initial feeling about this deal is cautious optimism, and relief that it guarantees Apple and Google won't have everything their own way.


HEXUS Forums :: 23 Comments

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Hmm Scott. Whilst we know MS has a long history of stabbing partners in the back, just look at previous music DRM for instance, I don't think they would benefit from getting rid of HTC and Samsung.

I wouldn't call the hardware half arsed either, its easily up there with the average/high end, the thing is the for the platform they wanted to fix certain things, Snapdragon, certain clock speeds etc.

All the differentiatation we've seen so far is screen size (resolution is fixed) stands and speakers really. Oh and AMOLED from samsung. The thing is getting a write once run anywhere platform that keeps the QA costs down means they have to be very similiar in a lot of respects.

As such I can see from Nokia's POV that his comment about Andriod differentiation is utter crap, when its much harder to do that on WP7.

However I don't see what MS would gain by making this deal exclusive. Unless we are going to see a massive price shift in the handsets in 6 months time or something, £100 WP7 would be incredibly tempting, even in its current limited state.

As such I'd have to really disagree, I can't see what MS would get out of an exclusivity deal, Nokia is really loosing the higher end market, they have nothing, Meego is a sick joke which everyone except the most devout fanboy knows, symbian really feels like it was written by some graddies who had no experiance.

If Nokia get a close relationship, help develope ideas on some of the core apps, have access to MS devs working with the unrestricted API, yes, I could see the mutual benefit. But just exclusive, no way!
1. I don't think Nokia would have gone for it unless it was exclusive
2. The WP7 handsets from other OEMs are fine, but I don't think their heart is in it
3. What's good for Nokia is now good for Microsoft in the mobile space and I don't think Microsoft has much to lose by ditching the rest
4. The differentiation comment is not crap if Elop really knows the other guys are history on WP7
5. What's good for Nokia is now good for Microsoft
6. What's good for Nokia is now good for Microsoft
WP7 - to me at least - makes a whole lot of sense for Nokia. After all, Nokia seem to pitch quite hard for the businessman's dollar and so WP7 is probably the best competition for Blackberry.
(Oh, and before the iOS fanboys dive in - don't - iPhone integration with Exchange etc sucks badly. iPhones are for the marketing department).

What's it going to take for them to kill that stinking corpse that is Symbian - guys it's just plain awful, let it die with a pinprick of dignity please! I'll admit there was some nice bits of my old N95 that I liked, (mainly the hardware design), but the rest of the software was just too awful.

Meego is a sick joke which everyone except the most devout fanboy knows
Oh dear, yet another “ooo, isn't Meego awful” jibe. I don't count myself as a fanboy but I've got Meego dual booting with Ubuntu NR on an Acer Aspire One, and it's the Meego partition that usually gets booted. I just find it a hassle-free experience (although I had some real “fun” with the update process when I first put v1.0 on there), and it's pretty easy to just get done what I want. :p So yes, I'm a bit disappointed - would have liked to perhaps see a Meego successor to my old Nokia 770 internet tablet.
symbian really feels like it was written by some graddies who had no experiance.
See, it's not just me who hates Symbian! :D

I don't think I'll ever buy a WP7 device (too late for me, too much time invested in Android) but I'll be fascinated to see if Nokia can generate a couple of good high-end smartphones. (Liked my N95, and I've still got a Nokia 2330 dumbphone - it's a great little device).
Thank you for the analysis, i agree that nokia will end up squeezing the other win7 players out, otherwise the move will fail to differentiate them from the ‘competition’.

This remains an utterly cretinous move however.

Meego no longer a platform = stupid stupid idea!
No QT on nokia Win7 phones = stupid stupid idea!

How does nokia manage to be this incompetent? It has thrown away its one real differentiation in owning the most open platform, and it has thrown away its one real developer advantage in using QT's cross-platform abilities.

I would still prefer to have a Meego device but after today's symphony of unmitigated cretinism i simply don't trust Nokia to execute it competently. What will i buy next? Android probably.
Nokia must get exclusive for Microsoft WP7 or else it is really just plain stupid.

Given there is no real competitor against business users, they can try to attack that market but I doubt they will. Nokia and Microsoft wants the consumer market.