Within days of its CEO, Stephen Elop's now famous 'burning platform' memo to his employees, Nokia announced a broad strategic partnership with Microsoft to allegedly 'create a new global mobile ecosystem'. And it was clear that the world's biggest phone-maker's survival was at stake.
As part of the deal there is much that the two giants need to come to terms with and the disconnect starts when Steven A. Ballmer, CEO, Microsoft during announcement of the deal said, "Ecosystems thrive when fueled by speed, innovation and scale."
The innovation and scale sought by Balmer seem to be present, but considering that Nokia will not bring a significant portfolio to the market in volume until 2012 one wonders where's the speed? "If the bulk of Nokia's new smartphone portfolio arrives in 2012, Microsoft must rely on other partners to establish Windows Phone 7 in the near term. And by the time sleeping giant Nokia moves, Google's Android and Apple might be too far ahead," says Ian Fogg, Principal Analyst, Forrester Research.
Hemant M Joshi, Partner, Deloitte Haskins & Sells seconds this and says, "Going forward only with MS might be too little now (for Nokia) to win anything when Android phones are eating up market share with every single passing day." And this partnership also fails to throw caution to the competition's winds. "Operating systems like Android are giving even Apple a run for its money, doubling market share to fall in line with Apple at about 40 percent each. Windows and others are hardly looked for by users mainly due to the applications stores with thousands of applications for android and iOS," adds Joshi.
As part of the strategy, Nokia would primarily be using Microsoft's new Windows Phone 7 OS on its mobile devices as its primary smartphone platform while Symbian, Nokia's current mobile platform, will eventually be phased out. This seems queer as Adam Leach, Principal Analyst, Ovum puts it. "It's ironic that the sole purpose of Symbian was to stop Microsoft from repeating their domination of the PC market in handsets," he says.
Despite the apparent differences, the companies said that they will collaborate on development, marketing and their mobile roadmap. "For Microsoft this is nothing less than a coup and the shot in the arm its new Windows Phone 7 platform needed, which despite winning acclaim for its innovative design and user experience has so far failed to set the market alight in terms of sales," says Nick Dillon, Analyst, Ovum.
But all might not be so rosy for Nokia. "There remains a danger that Nokia could end up as merely a vehicle for Microsoft and services should it fail to differentiate from other Windows Phone 7 makers such as HTC, Samsung and LG," warns Adam Leach, Principal Analyst, Ovum.
Nokia, Microsoft Deal A Bold Move: Ovum
And while Nokia tries to play catch up with competition in the smartphone segment, it comes across another stumbling block in the form of 'tablets' that are quickly becoming a rage in consumer tech. Nokia has only confirmed that it will use Windows Phone 7 for smartphones, not other devices and Microsoft has stated that Windows Phone 7 is intended exclusively for smartphones and not for tablets. "Nokia has still to choose a tablet software strategy. But the market is moving fast - virtually all of Nokia's smartphone rivals have now announced a tablet," says Fogg from Forrester Research.
So while this deal has the potential to revive Nokia's fortunes to a certain extent, it better not be the company's only hope for redemption.