• The Nokia and Microsoft Hookup - Winners and Losers

    Last week Nokia and Microsoft finally took the wraps off the much rumored cooperation on a common PDAPhone / Smartphone strategy. Both found themselves as an "also ran" when the dust settled at the end of 2010. Microsoft had barely hung on to a position in market share comparisons, and Nokia still had a sizable piece of the pie but soley based on the Symbian platform which was rapidly losing footing in the race against the newer platforms (Android, iOS, and a revitalized Blackberry). So its not public - Nokia will abandon their own efforts with Symbian and the MeeGo venture, and will partner exclusively with Microsoft. So how do all the players make out with this new venture.

    Microsoft - Without a doubt, Microsoft is by far the biggest winner in this announcement. They were very late to the dance, and were trying to get the hardware makers to dance when they were already producing hits with Google's Android OS... which by the way is open source. Only a handful of handsets are on the market at this point for Windows Phone 7, and they are still lacking a lot of features. Nokia is still the largest worldwide producer of cellphones and now a significant share of them will be carrying Microsoft's OS. This will instantly boost Microsoft's share... once Nokia actually has products. One big question is how long that will take? It will also be curious to see how this plays out in the US market where Nokia has struggled to get any of their PDAPhones to be adopted by carriers.

    Nokia - Nokia is a big loser in this partnership by reducing themselves to an OEM hardware producer. Software is the higher value component of a PDAPhone... the hardware is ultimately going to be a commodity over time. Nokia was the leader with the first generation of PDAPhone platforms... Symbian had more share than Microsoft and Palm. With this announcement, the final nail in the coffin of the original big three is in place. Its a new era. Nokia is also admitting that there software developers are unable to compete, and that they've wasted a lot of money trying to build their own platform for no return.

    Apple - Nokia has acknowledged that Apple's iPhone started the death spiral of their efforts with Symbian. They were unable to compete with the touch centric model and the momentum that Apple created when tehy brought PDAPhones from the world of geeks to the masses. This gives Apple a nod in the winner category here as the bellwether of the market, but at the same time it assembles a formidable competitor if it works. Apple I'm sure isn't worried, as they have never worried too much about what the rest of the world is doing... they decide what they are going to do and then execute it well.

    HTC - HTC has been one of the leading producers of PDAPhone hardware for many years, and they are unlikely to ever come out on the short end of something like this. I believe that this will push HTC more to the Google Android camp and by concentrating their efforts in that space they will likely end up producing some amazing Android products. Recall that they their Touch which mimicked a lot of the iPhones capabilities with Windows Mobile. If anything, they become spread to thin by trying to produce for everything, but with Nokia having a leg up with Microsoft, they gain by focus.

    RIM - Its a little early to tell how this affects RIM, but it cold actually hurt them. Of the three - Apple, Google, and RIM - RIM is the one that is on a negative share path. Microsoft has the strongest enterprise play against them with the huge Exchange install base. If Microsoft and Nokia can actually cooperate and work as one, they will be able to drive gains in the enterprise space. If they can't act as one, then RIM wins big because Microsoft will most likely lose the focus of other OEMs.

    HP - With their first batch of WebOS announcements out of the way, HP now has a lot to prove. They are in worse shape than Microsoft was with regard to market share. They fell off most comparison charts last year and there is not a lot to draw developers to their platform. I see HP as a loser in this announcement primarily because a market can only support a certain number of players. Apple, Google, and RIM are established and competing well. The Nokia deal will push Microsoft up the share curve quite a bit. So then will the market support a five way race? I don't really think so.

    Intel - Intel is a big loser in this, but its not probably going to affect them a great deal in the near term. They were counting on a partnership with Nokia and the MeeGo platform to boost their wireless share. This announcement essentially reduces MeeGo to a big experiment and in my mind dooms the idea of Linux on a handheld device. Linux will continue to be the platform of servers, and that's all.

    ARM - ARM's dominance on mobile devices is safe. Nokia was potentially going to be moving to Intel, but that is over. ARM wins.

    - The Symbian platform is pretty much history now, if there was any doubt before this partnership. I would expect Symbian developers to be abandoning the platform pretty rapidly and getting onboard with one of the growing platforms. Symbian loses big.

    So what do you think? Did I get it right? All of this is highly dependent on whether two industry giants can actually cooperate together on this. There have been many a joint venture that went up in smoke with a lot of wasted energy because of things like egos, culture, technology, etc.. I think there is plenty of opportunity for this to fail in execution so we'll have to wait and see how long it takes for any products to see the light of day, and who ends up controlling things in this partnership.