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The price of Windows Phone: Nokia's evaporating smartphone share

In the last quarter Nokia sold 28.3 million Symbian phones. The average selling price was €156 or approximately $210. That price was down 17% year-on-year.

According to the company,

The 17% year-on-year decline in our converged mobile devices ASPs was mainly driven by general price erosion and an increase in the proportion of lower-priced converged mobile devices sales.

ASP erosion has been a fact of life across all of Nokia’s products for quite some time, checked only by the increasing mix of smartphones. However the smartphones it sells have been consistently positioned for lower price points. This is consistent with Nokia’s long-term goal of serving “billions” of users.

The trouble with the new strategy is that the Windows Phone product lines currently in the market are not likely to be priced in the $200 range. The reason is that the minimum specifications for Windows Phone 7 are:

  • Capacitive, 4-point multi-touch screen with WVGA (480×800) resolution
  • 1 GHz ARM v7 “Cortex/Scorpion” or better processor
  • DirectX9 rendering-capable GPU
  • 256 MB of RAM with at least 8 GB of Flash memory
  • Accelerometer with compass, ambient light sensor, proximity sensor and Assisted GPS
  • 5-megapixel camera with an LED flash

These don’t add up to a product that can be sold profitably at $200. The bill of materials is likely to be in that range (and one has to add $15 for Microsoft).

So there are two possible implications for Nokia’s new smartphone strategy.

  1. Windows Phone will be ported to lower spec/cost hardware to allow the traditional Nokian market growth model to continue and perhaps combat Android proliferation
  2. Nokia’s smartphone portfolio will consist of high-priced products, and exclude mid-to-low price products.

Option 1 is difficult to imagine. The user experience that Microsoft is putting forward as its differentiation depends on significant hardware which is unlikely to become very cheap very soon. It is an interesting exercise to think through however. What would we have to believe for this option to become real?

Option 2 is more likely as Nokia conforms to this a new definition of smartphone as “high-end” only. This seems to be the default option given what is visible to observers today.

If Option 2 is in fact the outcome of the new strategy, then it leaves Nokia very vulnerable to a low-end disruption (after it’s succumbed to a new market disruption.) The $50 smartphone will be reality this year.

Option 2 also most certainly guarantees that Nokia’s current market share of 30% in smartphones is likely to be lost and never regained.

Some might argue that’s no great loss. After all, Apple does very well with low share and high prices. However, Nokia is almost religious about market share. The reason being that scale offers significant purchasing power and logistical leverage. It sustains a cost structure, distribution network and a business model that is central to the company’s core competency. It’s also presumably the reason Microsoft partnered with Nokia in the first place: volumes and wide distribution.

So we’re back to the old question: how does the new deal lead to a thriving ecosystem? Does it depend on vendors other than Nokia? If so how does Nokia benefit from the sale of Samsung phones?

  • http://twitter.com/peter_burke_ceo @peter_burke_ceo

    Actually the minimum hardware to run windows phone is really only a guideline used to get wp7 into the market quickly, and chip sets from qcom on the market rapidly. the strategy is designed to make the entire roll out easy and relatively pain free and simple for msft to execute.

    So we really don't know if wp7 can run on lower end hardware. Because, msft wanted a high end experience for the roll out, and didn't allow builders to build low end devices that would add complexity to the roll out. Most people way WP7 screams on this hardware.

    Even if it were true that WP can't scale down, with the rapid pace of hardware performance improvement, one could imagine that this current set of hardware will in fact be the low end hardware of 2012 or 2013.

    Finally, Elop stated over and over in his talks that Nokia plans to bring WP down market. In fact, given the importance of this decision to go with WP to everyone involved with NOK, they would not have chosen the OS unless they could do that.

    I am not bullish on the NOkia transition to Wp and think it will be miserable for all involved. However, at the other side, by late 2012, I am sure that Nokia will have a wide range of devices at various price points, all running WP.

    regards

    • iosweekly

      late 2012 will be too late for any hope of saving nokias marketshare.

      Only way Nokia could save its marketshare is to run at a loss for 1 – 2 years (maybe with microsoft subsidies?) until its component prices fall enough to turn profits again. Even that is dependant on it getting WP7 phones out this year – unlikely as that is.

      • http://twitter.com/peter_burke_ceo @peter_burke_ceo

        I never suggested his strategy would preserve Nokia market share. Elop realizes he has no hope of saving nokia market share. He inherited an absolute mess of company that was going the wrong way down a one way street. there is nothing anyone could doe about the hopeless situation past CEOs put Nokia in with misguided bets.

        Elop is now tasked with rebuilding nokia into a mobile company that makes sense for the long term future. My prediction stands. By late 2012 he will have a number of WP devices for sale. At that time he can try to rebuild his market share from a much lower level.

    • http://twitter.com/davidchu @davidchu

      This push to the bottom is bad but inevitable for both sides. The price erosion of mobile OSes is probably going to also cause a price erosion for PCs. Microsoft is also feeling price pressures from multiple fronts. Cheaper Macs = cheaper PCs. Cheaper smart phones = cheaper PCs. WinPhone = smaller margins for MS. Everyone is eating at Micrsoft's value proposition.

  • http://twitter.com/alvaradoangel @alvaradoangel

    Elop answer this question in his interview with Engadget, his answer was that they will work with Microsoft to drive the prices down market on smart phones to maintain their market share. He did not give any details as two how they would do this.
    http://www.engadget.com/2011/02/15/the-engadget-i

  • http://twitter.com/trojankitten @trojankitten

    @peter_burke_ceo if Microsoft turns 180 and lets OEMs to use lesser hardware it'll confuse third party developers, which also read these specifications and code for them. As a developer, I'd certainly not like to have to add "Minimum Requirements" on my applications that bury the users with technical slang.

    Nokia might produce a cheap lower end WP hardware that doesn't allow third party apps, but works well with whatever Microsoft has built-in. I hope that's also what Apple plans with their rumored "iPhone Nano".

    The people who'd prefer these cheaper devices aren't going to buy a lot of apps too, so we might as well avoid the confusion by drawing a clear line between them and "smartphones".

    • http://twitter.com/peter_burke_ceo @peter_burke_ceo

      Things change and people adapt. A strategy that was right last year won't be right in 2012. Android seems to handle different form factors and price points just fine. Developers will welcome the change as lower prices for devices mean bigger sales for them. And apple is going to be dealing with the same issues as it releases different form factors and lower price points. the market for devices is ever evolving, and a static analysis just won't do.

      • http://twitter.com/trojankitten @trojankitten

        Android is not something to aspire to if you want happy dev ecosystem. Testing and developing for numerous screen sizes, OS versions and hardware configurations, Android users have less trust in Android Market, due to how badly Google has handled it so far (something they admit themselves).

        "Larger device market share = larger app sales volumes" seems an obvious guess, until you have to take into account all other variables.

    • WaltFrench

      The first consideration for a developer is whether there's a market for the software. Today's outlook for WP7 phones is (IMHO) dismal. So MSFT/NOK have nothing to lose. But in addition to that, the speed and lesser-used features can be worked around or don't matter. Regards the speed, it seems the ARMs race is running so fast that the cheapo CPUs will be of at least adequate speed.

    • unhinged

      This might be the significance of the "exclusive" partnership between Nokia and Microsoft – the ability to run the OS on lower-specced hardware. MS only has to test on and tune for a limited number of devices so the overall performance might be acceptable.

  • http://twitter.com/rurikbradbury @rurikbradbury

    I'd imagine the bill of goods would be less. iSuppli pegs the iPhone 4 bill of goods at $171, including a retina screen more advanced than WVGA, and 16 GB of storage.

    At Nokia's volumes, and given 6 months more of continuous hardware price erosion, wouldn't you imagine a bill of goods at more like $100?

    • http://twitter.com/Niilolainen @Niilolainen

      I trust iSuppli to tell me what is in a phone, but not how much it costs. So don't give too much credence to the $171. Their component pricing estimates are often wildly inaccurate (usually on the high side as they often use vendor list pricing without volume adjustments).

      But the point you make about Nokia being able to drive lower BOM through purchasing power is entirely valid.

    • asymco

      Nokia's volumes? What volumes? The price target is not the iPhone. It's Android devices and they're going to $50 ASP.

      • anonymous

        $50 ASP? Specs please? Resistive screen, 1MP camera, 256MB RAM, 400MHz processor and sub-optimal user experience !

        There is some marketing BS too by some companies. So don't take it seriously.

      • handleym

        The point above needs to be stressed. I suspect many of the Android boosters have never actually used a truly low-end Android device. It is astonishing how truly crappy these devices are. You have to hold down for a noticeable period of time to get clicks to register, the screen registration is just awful (and varies from one part of the screen to another) so you completely lose the illusion that you are physically interacting with the software, rather you are carefully and slowly trying to move your finger to where the touch will actually register.

        Now I don't know — is this a sort of tradeoff that the poor in Vietnam are willing to make? Perhaps. But I'm damn sure that a person desperate enough to buy one of these devices is going to be populating it with pirated content, and that includes apps, so he's not much of a useful market for developers.

        Sure, if Nokia (or Huawei or whoever) bring these devices to India and Vietnam and Uruguay, they are doing great work in making the world a better place. But they're not going to get crazy rich doing so, and no-one within their eco-system, least of all developers, is going to get crazy-rich either.

      • http://twitter.com/aegisdesign @aegisdesign

        The cheapest so far is the £150 (SIM Free inc VAT) Huawei IDEOS phone. 256MB RAM, 528Mhz ARM11, no SD card storage, 320×240 screen.

        You can get ZTE Blades with better spec in the UK locked to a carrier but PAYG for about £100. Unlocking is relatively simple of course.

      • asymco

        ZTE Blade is €95 in Finland today.

      • http://twitter.com/aegisdesign @aegisdesign

        SIM Free? or locked to a carrier?

      • handleym

        Not at all. You can go quite a bit lower.Consider, eg the pandigital novel, whose scathing review here is still altogether too kind <a href="http://www.engadget.com/2010/08/20/pandigital-novel-review/http://www.engadget.com/2010/08/20/pandigital-nov… />This POS, selling at $180 when released, is now available at clearance in various places for around $80.

      • http://twitter.com/aegisdesign @aegisdesign

        That's an eBook reader.

        The Huawei IDEOS was, according to them, the first $100 Android phone. It's on sale in Kenya for about that. In the UK however it's £150 and it looks a bit silly next to a ZTE Blade for £99 that you can unlock easily yourself.

    • WaltFrench

      I think this is a great starting point. The most expensive parts in the iPhone? Flash&RAM, and that gorgeous, premium screen. To get to a minimum-priced phone, the screen size/rez can be cut in half, maybe the color accuracy/brightness sacrificed; the Flash can be cut by half or more. Two unchallenging changes & you've cut the price by 20%.

      The CPU was #7 on the list, IIRC. There's not much benefit from downclocking it, and probably some visible performance hits; that bodes for a 600 MHz or faster CPU that should work fine with well-optimized software. (Android pre-Froyo had a large overhead that made those versions sluggish; I don't know about the quality of the MS code but presume they know the territory about as well as anybody.)

      More cuts still needed, obviously; "value engineering" is not for the faint of heart. But if Apple can get the parts glued together for $8 or $10 per device, Nokia wouldn't have to be at too much of a competitive disadvantage against the Android horde. They still have a raft of competitive advantages to withstand a race to the bottom.

      [addendum] And they're going to need to cash in on every one of them if they're going to add value over the bottom-of-the-barrel phones, while not costing at the level of today's best-featured phones.

    • Hamranhansenhansen

      Ugh. iSuppli. Keep in mind they think software costs $0, and it most certainly does not. There is firmware, operating system software, and applications that have to be paid for.

      • WaltFrench

        Ugh. False. Every time I've seen their figures, they've been accompanied by something like, “keep in mind that these figures do not include software, licensing and overhead.”

  • SpragueD

    So, it is "difficult to imagine" that a company that has successfully ported its operating system to netbooks and super computers and everything in between is incapable of creating a version of its mobile OS for low-end hardware? Really? Seriously?

    • asymco

      Microsoft did not manage to move its Windows Mobile operating system to capacitive touch screens. Seriously.

    • iosweekly

      You mean like the great user-experience MS gives us when we try to use windows on low power netbooks? They've only been working on that OS for how many decades?

      • WaltFrench

        Microsoft has been living in a fool's paradise where they essentially had an entrenched customer set (the Enterprise IT shops) who presented MS with non-competitive RFPs. Need more speed? That's incentive for Intel to make more money. They were trying to figure out their internet, and cloud strategy.

        I don't know if they yet realize what Gassée called Ballmer getting the second envelope and that the phone group is in a fight for its existence. I certainly haven't seen it. But Elop might put the bug in their ear if he really wants to succeed.

  • http://twitter.com/dotkomblog @dotkomblog

    Elop's answer to the gap at low and mid price points is the continuing support of Symbian in the coming years, ie. the 150 million new devices sold to extraterrestrial lifeforms. So at least they have a plan for that…

  • kaveman

    I believe the total bill of material will be more around $100-120 by the time Nokia brings its WP7 phone to market in 2012 (especially with Nokia's market share/scale as mentioned in the post). Nokia's scale and market reach will bring more meaningful developer interest to the WP7 ecosystem this year.

    • dms

      If the 2010 iPhone BOM is around $150-175, then I suspect that could drop to something like $50-75 by mid 2012. So Nokia could very well launch a "mid-tier" smart phone for around $100-125. This would at least get Nokia in the ball park.

  • Yowsers

    Have MSFT and NOK defined what ecosystem elements will be allowed or not? NOK will certainly keep trying to build and promote their own ecosystem elements (music, maps, navigation, apps, etc.), but MSFT is doing the same. If the WinPhone deal doesn't specifically block MSFT's offering, then NOK has potentially ceded a certain amount of the ecosystem to MSFT. A balkanized ecosystem like this might work — somewhat.

    Competing with iOS's tight integration and Google's service offerings may require some manner of user data independence (that is, operable whether the user accesses NOK, MSFT or other vendor's ecosystem elements). The user data would likely be hosted somewhere and then pulled down when changing devices, upgrading OS's or using new/upgraded apps. Many users may not care for all that, but the more advanced users will.

  • http://twitter.com/Niilolainen @Niilolainen

    Picking up on where @rurikbradbury left off then Nokia may be able to drive a *much* lower BOM cost than other vendors due to their enormous purchasing power, which is not just derived from their smartphone shipments, but also the dumbphone shipments. There is much overlap in the supplier base for these two categories.

    Taking stuff to the masses is what Nokia has done superbly since the mid 1990s. They know how to manage their suppliers and BOM cost to preserve gross margin despite eroding ASP very very well.

    I'd say that whatever they bring to market has an excellent chance of being lower cost than the competition, the question marks are all around the ASP they can achieve.

    • r00tabega

      Although I'd agree with you on Nokia's experience, you do have to contend with the fact that in positioning WP7 vs. non-Google Android (ie, not using the Google apps and marketplace), WP7 will add a significant markup unless they create a WP7-lite (given the dozens of flavors of even the latest windows 7, this is highly possible).

      So Nokia could lower their costs easily except for WP7 (currently)… Android (sans Google) is $0.

      • http://twitter.com/Niilolainen @Niilolainen

        Good point: they have to cover the license fee, but (and this is wild speculation), that could be wrapped up in Elop's hand-wavey 'value flows' ie NOK pays MS $15 per phone as a starting point, but then MSoft will use Navteq, maybe NOK will also get a rev share on Bing from Nokia handsets etc. Make sense?

        In terms of BOM cost, I don't think NOK will be at a disadvantage unless M'Soft screw up the OS in terms of what kind of minimum system requirements it needs vs Android to give a similar UX.

  • HTG

    It's possible that MSFT would have cut a deal with NOK to allow it to reduce the specs on its WP7 phones in order to get the volume… to support its own eco-system MSFT needs to have volume – I can't see MSFT going down the track of allowing NOK to compete with $50 Android phones at the moment as both companies need a differentiator.

    it would seem that Android will become the new Symbian – destined to low end (relatively speaking) phones where the current state of the art in smart-phones will in a few years become the state of the art for feature-phones.

    So NOK and MSFT want to pitch above that, but not too far above – after all both are driving for market share, most likely at the expense of profit per handset with the aim of picking up the overall profit through volume… As for market share, well lets see how the consumers that to these new phones.

    Thus far WP7 hasn't exactly set the world on fire and MSFT does have a pretty solid track record of butchering its partners and joint ventures. The whole thing could easily implode before it really gets going.

    • http://twitter.com/peter_burke_ceo @peter_burke_ceo

      except Android is not "destined" for the low end. it's destined for "every" end.

  • http://twitter.com/BrianSHall @BrianSHall

    Excellent analysis! Thanks.

  • http://twitter.com/Carniphage @Carniphage

    It seems that Symbian, as the oldest smartphone platform, has arrived at commodity status before the other platforms. (Even Android) And this meant that Nokia has had to live with a 5% margin that was never going to improve.

    My guess is that Nokia believe that WP7 devices will command a much higher margin. As Apple demonstrates, fewer sales with higher margins results in greater profits.

    The spanner in the works is the rather weak start of WP7. Will Nokia's close ties with distributors allow it to shift enough devices?

    C.

  • Omar

    Most smart phones of this caliber that have over 1GHZ processors and 5MP camera’s tend to command a much higher price point than the proposed $50.00 mark I hear being thrown around. Even by next year the technology will improve and I doubt the price will be where it’s plausible to manufacture a full featured smart phone below $150.00 with full user experience intact. Next year will be interesting for NOK/MSFT indeed.

  • http://twitter.com/aegisdesign @aegisdesign

    It has to be noted that Elop has been careful not to mention Windows Phone 7. He's always said "Windows Phone". I would think Nokia are working with MS to get the spec right on a lower spec 'Windows Phone'.

    Clearly S40 is also going to get more smartphone abilities at the low end and it's requirements are lower than Android. How much that matters I don't know. Would consumers rather have a pimped up featurephone OS that ran well or a full smartphone OS that limped?

    Symbian is dead obviously in the new Nokia world and has no place anywhere other than to 'harvest' the 'franchise'.

    It's ironic that stats today were showing that Ovi Store generated more revenue last year than Android Marketplace and Microsoft's Market isn't even a blip on the radar.
    http://news.cnet.com/8301-13579_3-20032012-37.htm

    • eyez00

      @aegisdesign >>Elop has been careful not to mention Windows Phone 7. He's always said "Windows Phone".I would think Nokia are working with MS to get the spec right on a lower spec 'Windows Phone'. <<

      Mmmmm. I was guessing he meant "Windows Phone 8" for 2012.

      • FalKirk

        I was thinking the same thing.

      • Hamranhansenhansen

        Yeah, but how different will 8 be from 7 by 2012, given that it took Microsoft from early 2007 to late 2011 (basically 4 years) to go from 6 to 7?

  • BobShaw

    The dividing line between smartphones and dumbphones or feature phones is blurring very fast with more feature/functionality added to dumbphones to make it smart without significant accompanying increase in price of dumbphones. Also It is not just the cost of smartphone that is the factor in its adoption. The cost and availability of bandwith is a bigger determining factor in adoption of smart phones especially outside North America. Not to forget the other disadvantage of smartphones over dumbphones e.g. shorter battery life, bigger form factor etc. Finally the high end smartphones have overshot the needs of the average user in terms of feature/functionality based on the available information about the uses of smart phones at present. In order to sustain the market share of high end smartphones some new compelling uses needs to be created. Who knows this may be the reason behind Nokia's decision to go with Windows Phone.

    • handleym

      "Finally the high end smartphones have overshot the needs of the average user in terms of feature/functionality based on the available information about the uses of smart phones at present. "

      I don't think this is quite true. I think there is ample scope for "assistant" tasks by smartphones that require a lot more computation than is currently available. These are tasks like voice recognition and translation of speech/spoken word.

      Unfortunately we (that is society as a whole) are rather screwed here.
      The company most likely to create a decent UI for voice recognition as an integral part of the phone experience (Apple) hates the company most likely to put together the low level tech for making voice recognition work well (Google). Meanwhile, the environments where translation would be most useful (when one is traveling) are largely unexploitable because of the US carriers' ongoing insistence on carrier-locked smartphones that can't have their SIMs swapped when one is traveling.

      Even in something as simple as better photography, any iPhone 4 user will tell you that HDR is (currently) sufficiently slow as to be frequently useless.

      I've no idea how this will play out. I'd like to see an aggressive Apple insisting in the next round of contracts for iPhone5 that carrier locking is banned. I'd like to see Apple making some sort of side deal with Google (presumably with money changing hands) to get access to Google's voice recognition technology. I'd like to see a bunch of things. I do, however, think it is Apple and Google driving this.

      Apple wants to give people an ongoing reason to buy the iPhone 5, 6 and 7. Given how sweet the 4 is, this is a challenge, and Apple is well aware that it is not solved, for Apple's customers, by techno-porn trumpeting that the new iPhone has 4 out-of-order cores, dual LPDDR2 channels, and a new, twice-as-fast, flash controller. So Apple has to get SW that challenges these specs.

      Meanwhile Google geeks just think it would be totally cool (as indeed it would be) to have a phone that can take a photo of an item in a Chinese grocery store and tell you what it is in English. (Yeah yeah, apps like that supposedly already exist on iPhone. Pleco is completely useless. I'm interested here in this functionality that AXTUALLY WORKS).

      Could you do even more interesting things? Perhaps. Would it be feasible to have an IR variable-frequency laser in every phone, along with a detector, so that one could aim the phone at a block of matter, have it run a spectrogram, and give you some sort of useful analysis of what molecules are in the matter?

      Could you have the phone as an always-on black-box, constantly recording the last 5 min of audio, then, when an unexpected g-force is detected, automatically calling a friend and sending that audio to a repository? (SImilar for maybe detecting heartbeat and similar vitals?) Power issues of course, but maybe soon enough we can have the phone harvesting low levels of power from ambient light and from motion in the pocket?

      Of the other contenders, MS, Nokia, RIM, HP, get serious. I don't expect any of them to provide anything interesting in the nearish future as to how better to meet users' needs and thereby use up more CPU, and to be honest, you don't either.

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  • tim73

    I still don't understand why Nokia chose Microsoft. Microsoft has a habit to stab you in the back the minute they get a chance. Developers also liked Qt and Meego, the ecosystem was already there and growing fast.

    They were/still are as enthusiastic as iPhone coders. Go look at younger developers and you'll see, they usually has Ubuntu or some other Linux distribution in their PCs and despise Windows. Few will switch to Windows programming if given chance to do something else.

    Nokia could be next Commodore, company money men making "good" short term deals, playing their "clever" financial games and ignoring their own engineers. That will ultimately destroy the future of the company.

    • Hamranhansenhansen

      This is true of many companies. People come in and think quarter to quarter and gut a company's future. Elop was working for Microsoft for many years, where they are brainwashed into thinking Microsoft is not only important, but is the center of the universe. He is probably shocked the Nokia stock price fell so much upon the announcement.

      • Simon

        No Elop worked there for less than two years. He was mostly Macromedia & Adobe man. Why do people make up facts to support their preconceived notion?

      • Simon

        I made an error there myself, that should've been less than "three" years.

        Also forgot to mention Elop worked at Boston chicken for 6 years. Now that's something more intriguing!

    • http://twitter.com/aegisdesign @aegisdesign

      Simple. Microsoft paid Nokia more money than Google did to go with them. Condition of deal presumably to screw over your developers and the open source community.

      So says Paul Otelli – http://www.reuters.com/article/2011/02/17/us-inte

    • unhinged

      Engineers are not businesspeople. I'm not saying you should always ignore them, but you cannot rely on the ideas of a single group to control a company.

      Look at Apple with the choice of PPC vs x86 – technically superior from an engineering standpoint, but too different to the vast majority of other computers. Nokia seems to be also paying the price for being engineer-dominated – the game has changed and the engineers can't cope.

  • tim73

    The initial reaction from developers was a big WTF. That is not a good sign at all. Subcontractors have also put a lot of effort to Symbian, lately to Qt and Meego. They are really pissed off. Embedded markets are also where Linux is very strong so they could switch to do something else. Or go to Android or iPhone camp.

    Unless MicroNokia comes up with something "sexy", something really new and give all the development tools for free (which they won't except the express versions), the MicroNokia has about snowball's chance in Hell of success. This could the biggest and stupidest industrial policy decision made in Finland.

    • http://twitter.com/aegisdesign @aegisdesign

      Nokia are today giving developers E7s and 'when available' a Nokia Windows Phone device to try and keep their developers.

      Meanwhile, installing Qt apps on Android just got a whole lot easier…
      http://www.youtube.com/watch?v=VvDDu9GXoLI

  • lbo50fi

    IMHO this partnership is the only way either company could go forward. Outside of the USA, NOKIA is still a name to be reckoned with. Both companies have the potential to produce excellent products together.

    Remember there are over a billion people on the planet using MSFT software and close to that using NOKIA phones. Neither company is a start-up and neither company is poor. Investors are rarely happy with their investments and their analysts only know as much as the companies they are invested in want to tell them. Except in this case the majority of institutional investors were crying out for NOKIA to do something like this.

    Even the recent "We Want Elop's Head" protest has turned out to be not 8 disgruntled minority shareholders but one bored iPhone user/engineer who did it as a prank!

    Here in Finland, now that the dust has settled, the consensus is moving towards the affirmative.

    Much of the commentary I have read on the Web is emotional and let's face it, unless you are on the boards of either company you don't know what they are planning.

    The next 12 months will be interesting, to say the least.

    • tim73

      First MicroNokia phone maybe realistically 12 months away? So developers and subcontractors are going to wait 12 months, without any revenue from the projects? Get real! Meanwhile, the number of Android applications is exploding and you can create instant revenues from there. There are now well over 250000 apps and many of them are also free. How the hell they are going to compete against that kind of massive numbers of apps. Plus the fact 500-1000 new ones coming every DAY!

      Idiotic Nokia management just gave 12-24 months more time to the competitors and that is a long time. They got already a decent chance with Qt and/or Meego but now the coder base for Windows Phone will be severely limited, only to in-house and most loyal subcontractors. They arrogantly ignored their own engineers and subcontractors.

      Microsoft also has a habit giving quite useless express tools for free but if you want to actually do something, you have to pay a lot for the tools. Competing platforms are offering pretty much everything for free. Microsoft has not evolved since 2000 at all.

      • Hamranhansenhansen

        Android's apps are such low quality, though. They are baby Java applets. I haven't seen a single one that couldn't be done in HTML5. Apple is the only mobile maker with a PC class application platform, and Microsoft at least has a chance to create a PC class application platform. Whoever is the second mobile maker to do so will have a huge advantage. The PC class app platform is the main advantage of iOS.

      • lbo50fi

        You are still looking at this from a Mobile-only viewpoint. Technologies are converging and with all due respect neither you nor I know what will happen next. As to Android Apps, no one is making a living out of them, so far. Furthermore, Google make nothing from Android either. At least not until they can distribute Ads through it.
        MEEGO is still alive and as far as I understand was aimed more at the IVI market – I did read that Ford, GM and Renault have signed up, naming it as their preferred platform for In Vehicle Infotainment.

        As to "getting real", what does that actually mean ;-)

  • Jeremy Wa

    Of course there are these problems which are important.

    Far more important is the organizational friction that will arise because one company (MSFT) is the conquering hero (providing cash!) and the other is now the subject. Will the legendary MSFT arrogance arise? Do birds sing in the forest?

    Prediction: it will be years (say 2015…) before MicroKia has a device comparable to Apple or google. MicroKia has large legacy issues that will not get settled easily and quickly. It is AT LEAST two years behind today. It will compete against organizations that are smoothly functioning (especially, especially, especially Apple). MSFT has never had the capability to deliver truly innovative and world class products (examples: Vista, Zune, Kin, etc.) on time and on budget.

    Will it get any easier doing that in concert with Nokia?

    MicroKia will become a vast, festering sinkhole of uselessness, a Kin on a grand scale a kind of (dare I use the phrase?) PlaysForSure.

  • David Weintraub

    Option #1 is much more likely.

    What woke Nokia up from its slumber wasn’t the Android proliferation. It wasn’t the iPhone. It wasn’t the failure of Symbian with Qt to make a dent. For those, Nokia can claim they still have time to perfect everything. They have a big share of the market. They can make it work!

    No, what Nokia saw were those Chinese firms coming out of nowhere and making $100 and $50 Android phones. That’s Nokia’s price range for 70% of their phone sales. That would drive Nokia into the ground in a matter of weeks. Sales would fall to zilch by the end of the month.

    It’s why Nokia is using Windows and not Android. Doing Android means competing with $100 and $50 Android phones. Doing Windows means competing with $500 iPhones and Blackberries.

    Nokia would have liked to do their own OS, but they simply don’t have time before the flood comes and drives them out of their market. Meego is at least a year away from release and Simbian with Qt still needs lots of work. If Nokia thought they had 12 months, they would have never jumped on Windows. After all, RIM, HP, and Apple are all going to do their own OS and are likely to be successful.

    WP7 is a pretty decent OS, and its too bad that Microsoft won’t let it compete on the tablet market. WP7 needs work (it’s where iOS was back 3 years ago), but it shows promise. The XBox and Zune Music/Video integration is their Trump card. At least they have a music and video service (unlike RIM and Android).

    The problem Microsoft has is that it must dominate, or else it loses. HP/Palm can do quite well with 10% of the Smartphone/Tablet market. Even RIM can be a competitor with 10%. However, if WP7 can only get 10% of the market, it’ll be considered a failure.

    The best hope for Nokia and Microsoft is that there’s some major security breach with Android and 80% of the Android phones never get updated with the security patch that Google puts out. That’s Android’s true weakness and will show the strength of WP7 which can be updated in such circumstances (just like WebOS, iOS, and RIM can).

  • Wilbur

    Other speculation, by ESR http://esr.ibiblio.org/?p=2961

  • Psymac

    How disruptive will it be when Apple decides to offer a very much cheaper iPhone later this year, as many have speculated? Do they then take now the middle as well as high end share?

    And why would Apple (or anyone else) be concerned about WP7, when has Microsoft ever been able to deliver a superior UI? Zune in dirt brown anyone?

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