Nokia Microsoft Deal And Impact On the Smartphone Ecosystem [Analysis]

Nokia has Elop(ed) with Microsoft and here are the sound reasons (as stated by the two companies)

– Microsoft is not a handset manufacturer. Nokia is. Windows Phone 7, though a great OS needs a much more dedicated focus from a handset manufacturer (distribution network, supply chain etc etc).

– Nokia needs an entry in North American market. Every other attempt has failed. Most importantly, Nokia has miserably failed in smartphone OS market and needs a ready-made OS that is of same league as iOS/Android.

Together they can beat Apple, Google (The Third Ecosystem)..blah blah.

Now, lets look at who gets what

Nokia: Back to revenue numbers (over the next few years). No more fighting the lost Smartphone OS battle. What happens in the long run? Chances of become irrelevant, and loss of mind share (are they the Yahoo of mobile world?).

Microsoft: Winner takes it all. Steve Ballmer has been aggressive with Bing and now, the WP7. The good news is that WP7 is a pretty awesome OS, just that MS needs a lot more developer love and a handset manufacturer company to help them improve the offering. They stand tall in this deal, though it’d be interesting when the first ‘Nokia+WP7’ device comes out (and how much of impact Nokia makes to WP7 user experience).

Question to ponder – Can Nokia maintain its brand identity post this deal (its not M&A, but such deals usually erode the brand value among early adopters/influencer community)? Most importantly, will developers flock to Nokia developer ecosystem (“Developers, Developers, Developers”) or move to Android?

Blackberry/RIM : Isn’t it time for them to fish for a new daddy? Is HP listening? There is no fourth ecosystem, right?

– Android. What happens to manufacturers like Samsung/HTC, who are also manufacturing WP7 phones (Samsung earlier announced that they will focus more on WP7 than Android) ? Will they play second fiddle to Nokia (which as the annoncement states that they will work closely with MS on design/UX etc)? If Samsung/HTC go aggressive on Android, they need to differentiate more – will that lead to fragmentation?


Our Take

This is NOT a handset manufacturing + software game any more. This is now about creating powerful offering around some of those points we talked about recently [read: Mobile Trends 2011–Apps Are The New Web, Communities The New Currency].

  • The DELL – ification of Phones – MS+Nokia has the weight behind it to throw into many phone SKUs at the same time. While Android is looking at the DELL model, MS+Nokia would try to reinvent the story they did with computers with HP etc. As far as the balance goes, this is even. However relatively closed systems like iPhone would get to bear some heat once the biggies enter with their deep pockets
  • Apps are the new web – Microsoft has still not recognized this and to their disadvantage. However this is a step in the right direction. With their combined might and providing an easier development platform (no one knows this better than MS – that’s how they won the PC battle) – they can kick some serious ass. However Google has led the way here and wouldn’t be caught sleeping. Apple again is the clear winner till now – and started the trend in the first place. How they maintain their supremacy is what is going to be the game changer.
  • Communities – the new currency – Nokia always has had a vibrant community. We are not sure how that will shape up after this. Microsoft typically bisects opinions like no one else. Android has the best communities and would surely leverage it. As for communities on FB/ other platforms, Nokia will surely try to leverage the relationship MS has.
  • Software – the new era for telecoms – The game is tied here. Consolidation will however allow all of them to pull their weight with telecoms who have been the most important albatrosses around smartphone necks. Good days ahead for consumers as they  squeeze more out of the telecoms.
  • Open + closed – We are not sure how that would pan out. The jury is still out – and the winners would be the ones leveraging the “+” in open + closed. As of now, Android seems to be the most open and iPhone the most closed – we would however think Android has an edge in managing the ecosystem better and making the best of the opportunity.
  • Experience ecosystems – Again Apple has led the way here. Microsoft has one part of this solved (in terms of computers). However in the past they have always thought incremental – building on top of existing products which themselves were built on tattered remnants of earlier ones. And they have come up with amazingly crappy products like Windows Mobile Sync etc. (for 6.5 and above). This is a great opportunity to rethink a few of these interfaces (including leveraging the cloud better – and Google is kickass in that). As of now Apple wins hands down here though.
  • Developers – Developers – For those of you who haven’t heard Steve Ballmer burst an artery singing the sing for Developers (video embedded below). Microsoft believes strongly in developers and engineering – not only inside but also to grow as a platform. They will, we are sure come up with a compelling platform for developers to develop on as well as a huge range of phones on it. The future is going to be easy and exciting for developers.

What’s your opinion on Nok + MSFT deal? How does this impact the ecosystem?
Video: The Famous Developers, Developers, Developers

[Written by Pratyush and Ashish]

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