The case in favor of Nokia-Microsoft

While I admit that this is primarily a WP7 secton, we aren’t here to post everything colored by ‘I love Microsoft’ colour’. So to say, we aren’t Nokia or WP7 fanboys, though our experience says we will have a tough time proving that to many.

We have heard enough against Nokia tying up with Microsoft. Ranging from Microsoft buys Nokia for $0 billion to reaction from former Nokia man Aji Jaasaki. But here I would like to present the case in favor of Nokia!

Nokia has been in a down slide in terms of mind share in the top end mobile space and at the same time its clear that their bottom-line isn’t doing great either. Apple makes more money (profits) from the iPhone alone than what Nokia does from its entire mobile handsets business. So in Elops own words, Apple has the top end of the market to itself and the chinese phones branded by local players are eating a huge chunk of the low-end phones market.

Looking at the best Nokia out there, the N8 (and the E7), its clear that Symbian 3 isn’t any match for iOS or Android. The touch experience isn’t there and the apps ecosystem for the same isn’t cool either. so what does Nokia do? Well they did. Merge Maemo with Moblin last year and started MeeGo. But a year down the line they have no handsets out. They started speaking to Microsoft 4 months back (google as well). Hold that there.

So whats the whole smartphone race today? We have major touch based Oses out there like iOS 4, webOS 3, Honeycomb / Android, QNX etc. some of them are more matured while others a coming up. But in 2-3 years from now, all of them would have settled and made a mark for themselves, and what will make a difference to that situation would be the ecosystem built around the OS.

A year back the prime reason to buy an iPhone was the apps ecosystem it had. It was unmatchable. But slowly Android has caught up, others are doping their bit. Once these platforms have a few hundred subscribers, there would be other innovations that would come in. We already know that NFC would be good and paper less currency would get a new meaning at the same time. Building a service over a matured ecosystem means higher adoption and that’s all service providers would care for (eventually even the consumers with major services being the driving force).

Now Nokia already figured out that a) the premium market has the real money now. Apple’s profits prove that. So fighting the low end game is less important than the high end where they are lacking b) they figured that MeeGo wasn’t flying immediately. They needed to pace ahead of the competition with some momentum. The best alternative to iOS has been Android and webOS so far. While Android can be (and was) considered by Nokia, webOS of course is proprietary to Palm / HP.

Another platform that Nokia considered was Windows Phone 7. Microsoft has pushed out wp7 recently and that has had little momentum so far. If you read my review of WP7, you would realize that its a refreshed OS and the only issue with it is the maturity. It’s just not old enough! But it’s good, intuitive and certainly would be able to match up with iOS and others if Microsoft can get the developers and rollout good updates. So far WP7 has 8000 apps and the first lot of devices are out in our hands. An update is due and the roadmap that Microsoft then places in front of us is what Nokia is probably betting on.

Why does Nokia need Microsoft?

No other platform but WP7 will have the marketing and development backup / exclusivity that Microsoft can offer Nokia. At the same time Nokia sure cant expect Google to merge its ecosystem with Nokia and share money. Microsoft has surely been flexible. If we look back at figures of 500 million that Microsoft was reportedly spending in pushing out WP7 on launch, they sure have lot more to give if Nokia makes Windows Phone 7 its primary platform!

Be it apps, maps or future options like NFC. The only other player in the market who is desperate enough and is big enough to partner with is Microsoft and Nokia did it. Also consider the fact that Microsoft has a strong presence in US (the biggest market for smart phones), which is a market Nokia wants to tap.

Why does Microsoft need Nokia?

Microsoft has good hardware makers like HTC, Samsung and LG working with it. Acerbic, Sony Ericsson might also come in at some point. But what they need is a partner like Nokia who can bring more than just that. Nokia arguably has the widest distribution network to push out windows phone 7 to the masses. Not to forget it has A huge install base and loyalty for itself. Unlike Android makers where the attachment is more to the platform than the handset maker.

A big factor for Microsoft is that all of the current WP7 makers (and the potential future ones) have Android on offer. And it certainly would be a priority for them. This makes Microsofts role in promoting WP7 tougher. While its the white horse for Microsoft, it’s an alternative offering for the manufacturers.

Are they a winning combination?

That my dear, time will tell. But IMO saying that its the end of Nokia Raj isn’t the right way to look at this deal. Yes Nokia is suffering, has a long uphill battle and chances are perhaps low. But tying up with Microsoft isn’t making the situation worse. It’s a positive step forward.