Nokia, Microsoft in pact to rival Apple, Google

Feb 11, 2011 By MATTI HUUHTANEN , Associated Press
A man holds a new Windows Phone 7 mobile operating system in New York, New York, 2010. Nokia, the world's largest mobile phone maker, said it was joining forces with US giant Microsoft in a major corporate strategy shake-up that left investors disappointed.

Technology titans Nokia and Microsoft are combining forces to create smart phones that might challenge rivals like Apple and Google and revive their own fortunes in a market they have struggled to keep up with.

Nokia Corp., the world's largest maker of mobile phones, said Friday it plans to use Corp.'s software as the main platform for its in an effort to pull market share away from Apple's and , Google's software for phones and tablets.

Analysts said the deal was a bigger win for Microsoft than Nokia, whose CEO Stephen Elop in a leaked memo this week compared his company to a burning oil platform with "more than one explosion ... fueling a blazing fire around us."

Nokia's share price plunged more than 8 percent to euro7.46 ($10.15) Helsinki after the announcement.

Moving increasingly to providing services for phone users, Nokia and Microsoft "will combine our strengths to deliver an ecosystem with unrivaled global reach and scale," Elop said in a statement on the deal Friday.

Nokia said it will drive the future of Windows Phone, "innovating on top of the platform in areas such as imaging, where Nokia is a market leader."

But Nokia warned that the new strategy would bring "significant uncertainties" and said it expects margins to be hit by strong competition from rivals.

Neil Mawston of London-based Strategy Analytics said Microsoft was the big winner in the partnership, by teaming up with the biggest mobile hardware vendor in the world.

"In terms of expanding their distribution reach, this is a huge win for Microsoft," he said.

For Nokia the deal leaves uncertainty about what will happen to its current Symbian operating platform. Mawston said he expects it to be phased out within two years and "completely, or at least mostly, replaced by Windows Phone."

Although Nokia still is the mobile industry's No. 1, it has suffered from plummeting market share, dropping from a high of 41 percent in 2008 to 31 percent in the last quarter of 2010.

It has also lost its innovative edge in the fiercely competitive top-end sector and is virtually invisible - with a 3 percent share - in the world's largest smart phone market, North America.

Apples' iPhone has set the standard for today's smart phones and Research In Motion Ltd.'s BlackBerrys have become the favorite of the corporate set. More recently, Inc.'s Android software has emerged as the choice for phone makers that want to challenge the iPhone.

"Today, developers, operators and consumers want compelling mobile products, which include not only the device, but the software, services, applications and customer support that make a great experience," Elop said.

Nokia, which claims 1.3 billion daily users of its devices, said it hopes the "broad, strategic partnership" with Microsoft will lead to capturing the next billion users to join the Internet in developing growth markets.

The company said that it will also announce new leadership team and organizational structure "with a clear focus on speed, results and accountability."

"Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward," Elop said, adding that the company was aiming at "regaining our smart phone leadership, reinforcing our mobile device platform and realizing our investments in the future."

Jyrki Ali-Yrkko, from the Research Institute of the Finnish Economy, described Nokia's cooperation with Microsoft as "surprising."

"The strengths will be in Microsoft's strong position in various corporate solutions and server solutions, but its weakness is that Microsoft perhaps doesn't have a broad, user-oriented group of developers like those around Android or Apple," Ali-Yrkko said.

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User comments : 11

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epsi00
4 / 5 (4) Feb 11, 2011
Partnering with Microsoft is the kiss of death for Nokia. There is only one way forward now for Nokia: down.
Eikka
4 / 5 (1) Feb 11, 2011
Nokia had no way out.

Either be Google's servant in producing yet-another-android-phone(tm) where the phones are gradually turning into generic bricks that are all the same, or keep using Symbian that nobody wants to buy no matter how good they make it, or use some half-assed linux variant (Meego) that isn't ready for prime time for a long time and lacks support.

But nobody wants to use Windows in a cellphone either. Elop just played one for the home team to empty the ship of money before it sinks.

They could save themselves by re-inventing their operating system while buying time by selling Windows phones, but with a Microsoft man behind the wheel, fat chance. He'll probably fire half the R&D team and turn it into a generic phone hardware factory for MS.
that_guy
not rated yet Feb 11, 2011
Partnering with Microsoft is the kiss of death for Nokia. There is only one way forward now for Nokia: down.


as opposed to crashing and burning? Better working with a viable third place option than using Symbian, which is total crap no matter how much they seem to work on it, or meego, which never seems to be complete and is always two steps behing. Android is the kiss of death for nokia, because they'll be crushed under the android veterans.

The only right choice would have been webos (Palm/hp) which is reported to be well made, and even better for the 3rd version coming out, and it lacks the MS baggage.
gwrede
1 / 5 (1) Feb 11, 2011
I have used Nokia phones continuously for more than 20 years. My current phone, the N900 will be the last Nokia phone I'll own. It is a truly exceptional piece of hardware, and I hope it will serve me for years without breaking or getting lost.

Later, it will join the likes of my HP-25 calculator, my HP 95LX PDA, and my HP-28s calculator, each of which have served me for more than a decade and have brought me lasting value in the field, beyond my wildest expectations.

Just as today I can't buy a decent calculator nor a truly usable PDA, I don't think I'll ever find another smartphone I'd be happy with.

PS: on stage, Ballmer looked just voracious. He really billowed and towered next to boy Elop, looking like he had a tough time not eating Elop just as an appetizer before devouring Nokia. Boy, do I hope I was seeing things...
sherriffwoody
5 / 5 (1) Feb 12, 2011
Nokia had no way out.

, or use some half-assed linux variant (Meego) that isn't ready for prime time for a long time and lacks support.
.


I think you'll find meego is gaining a lot of support and is now on the verge of being able to run all andriod apps. And its the only true portable computer OS on any portable device, iOS and andriod are still locked down OS's running predefined apps. Can you take any linux program/app in the world and run it on andriod or any apple program and run it on iOS - no. But this is a capability that meego does have. I don't think its half assed at all, but they are stuffing around realeasing it
Eikka
not rated yet Feb 12, 2011

I think you'll find meego is gaining a lot of support and is now on the verge of being able to run all andriod apps.


Yeah, like every year is the Year of Desktop Linux, and it never gains more than 1% market share because all the fundamental problems are still there. Meego is an Android-me-too! just like Ubuntu is an OSX-wannabe that's never going to be as good. Google has several years and billions of dollars worth of R&D for a headstart.

Choosing Windows or Android was a choise of lesser of two evils. With windows, Microsoft dictates the hardware and Nokia simply makes it. With Android, cost dictates the hardware because the field is so highly competetive that everybody is doing generic cheap phones that all work essentially the same because they all run Android.
Eikka
not rated yet Feb 12, 2011
There's a parallel in PCs. There is no great difference in quality between different brands of laptops - they all have an average probability of 20% to break on you within three years of purchase. Even Apple is perfectly average in this respect, because they don't have to do any better. Nobody can tell the difference.

That's because they all run the same operating systems and the same software, so there's no practical difference in which machine you buy. They all do the same thing.

That prohibits manufacturers from making good computers, because very few customers are willing to pay more for quality that they can't verify until after several years.

This is the path that cellphones will take as well under Android. The hardware becomes irrelevant, so companies like Nokia can't exist anymore. The brand withers away and becomes just another generic thing.
cl0id
not rated yet Feb 12, 2011
So Nokia's going with Windows Phone 7, not Android, for its future smartphones. In other words you can continue to ignore Nokia.

Since Nokia is a rival to Samsung, HTC, Sony Ericsson etc and Nokia in effect receives preferential relationship with MS, will these company's continue developing Hardware for Windows Phone? Why would they since Android is so popular and shows no signs of slowing down.
Alcedine
not rated yet Feb 12, 2011
Nokia had no way out.

Either be Google's servant in producing yet-another-android-phone(tm) where the phones are gradually turning into generic bricks that are all the same, or keep using Symbian that nobody wants to buy no matter how good they make it, or use some half-assed linux variant (Meego) that isn't ready for prime time for a long time and lacks support.
They make hardware, which in this case means platforms for software to run on. That shouldn't be a shame, if the software is good. Furthermore, there's a lot of room for a phone manufacturer to distinguish itself in terms of look-and-feel, extra functionality and smoothness of operation. What I don't understand is the apparent need to be "special" purely for its own sake. I'd make a quip on how bright that is, but I guess it more or less makes itself.
Eikka
not rated yet Feb 12, 2011
They make hardware, which in this case means platforms for software to run on. That shouldn't be a shame, if the software is good. Furthermore, there's a lot of room for a phone manufacturer to distinguish itself in terms of look-and-feel, extra functionality and smoothness of operation.


Except that in this case, Microsoft puts constraints on what the hardware is, not Nokia. If Microsoft doesn't support a functionality, Nokia can't put it in the phone.

As a hardware manufacturer, they're doomed to produce generic phones just like laptop makers make generic laptops that are basically all the same - different size, different color, slightly different box, but the insides doesn't deviate at all from what Windows can operate on. As such, it makes little difference whether you buy Acer or Asus, Nokia or HTC. Most will buy the cheapest.

Nokia has no power anymore how their phones behave. All they can do is toss a faster processor at it, and wrap it all up in a nice looking case.
Alcedine
not rated yet Feb 13, 2011
Well, yes, which is why I'd have liked to see Nokia going with Google (I'm going out on a limb and assuming their OS is more capable of accommodating for new iron.

As an aside, I think you're underestimating the spectrum of quality that PC hardware has, even beyond the GHz. It doesn't take you years to find out that your laptop manufacturer has skimped on the graphics hardware when you notice serious shortcomings when displaying 720p video on an external monitor, or that the cooling machinery is inadequately designed when too many tabs in your browser cause the machine to burn up on your lap and the fan scream loud enough to wake the dead. Admittedly, it's a moot point when the customer hasn't the awareness or energy to look into these things before purchase; still, these disparities exist, and are crucial for many applications.