Could an Alliance With Microsoft Reverse Nokia's Smartphone Slump?

Nokia Microsoft

There's a lot of current speculation that Nokia may be partnering with Microsoft to jolt its smartphone offerings—vital for the phone giant's future. But does this alliance make sense?

The New York Times is reporting on the rumors today, and notes that for four days in a row now Nokia's share price has hiked gently upward based on nothing but the strength of these whispers. The scuttlebutt is that Nokia may adopt Microsoft's new Windows Phone 7 operating system for its smartphones, either as a partner or a complete replacement for Nokia's own struggling smartphone operating systems.

The crux of the argument is that Nokia is being very swiftly left behind by Apple's iPhone iOS, Google's Android OS, and even RIM's new BlackBerry 6 OS—all three are very user-friendly, touchscreen-centric advanced operating systems that work with a smoothness and graphical finesse that makes Nokia's efforts to keep up look positively 20th century. Whatever Nokia's spending its billions of dollars of R&D money on, it's obviously not been on the right kind of OS innovation, and this is crippling the smartphone hopes of the world's biggest cell phone maker.

The alliance rumors are based on a few factual nuggets: Nokia's new chief executive, Stephen Elop, was formerly a Microsoft man. Speaking to analysts at the end of January, Elop noted Nokia was going to develop targeted strategies for its low, medium, and high-price phone businesses—including the fact Nokia could "create and/or join other ecosystems." Yesterday, Nokia dedicated a new office in Silicon Valley, and revealed it was recruiting local developers for new projects. And Elop has indicated he'll be making a major speech to investors on February 11th, in London.

Could this be the reveal of a Nokia-Microsoft alliance, heralding the arrival of Windows on Nokia phones—and possibly the abandonment of the aging Symbian and the newer Meego phone operating systems? It could be.

But this move would radically transform Nokia from an industry leader (which it still is, in some ways) to being merely another vanilla smartphone manufacturer, joining the ranks of LG, Samsung, HTC, Motorola, and others who put together the hardware to support Android and Windows Phone 7. Nokia would bring its own design style and its quality production reputation to Windows smartphones—sure—but when consumers browse the shelves at phone stores, the Nokia devices will merely be another flavor of Windows phone to consider and one, now that Nokia seems tired and old, totally lacks the high-gloss sheen of Apple's iPhone.

On the other hand, Nokia is a name that most consumers are aware of, and an alliance with MS could propel Windows Phone 7 to more success than the limited amount it's had so far. The new MS operating system is much-praised, and it would enable Nokia to really compete on the same level as peer smartphone makers. And with Nokia dominating sales of dumbphones pretty much everywhere in the world apart from the U.S., Microsoft could easily see big opportunities for accessing new markets—ones that perhaps haven't really embraced the smartphone yet, or for whom the high price of Apple's spotlight-hogging iPhone is a big barrier.

It all depends on if Elop has convinced the Nokia board it needs to re-jigger its entire company thinking to smartphone manufacturer, rather than smartphone developer. We'll find out next week.

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1 Comments

  • ideafaktory

    Funny, I know I'm not clairvoyant (based on past lottery winnings), but I just wrote semi-satirically about this on my blog yesterday: 'How Microsoft Can Beat iPhone & Android'. I do think this partnership is part of the answer. I laid out a whole strategy, including this partnership and ones with Sony and Nintendo. Windows Phone can work - if Microsoft focuses tightly on 3 segments - gaming, business and multimedia. You can check out the rest of my amusing, unsolicited advice at: http://www.ideafaktory.com/201...

    Enjoy