Nokia has decided to throw in the towel on Symbian and MeeGo and adopt Microsoft’s WP7 as the company’s main smartphone platform. During a presentation in London this morning, Nokia outlined its new strategic direction, which includes an extensive partnership with Microsoft, as well as a massive reorganization of leadership.
Under the proposed partnership Nokia will adopt Windows Phone as its principal smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia feels it has a strong lead.
Nokia believes its scale and global customer base also can help bring Windows Phone to a larger range of price points, market segments and geographies. The two companies say they will collaborate on marketing and a shared development roadmap.
Right off the bat, Nokia announced that Microsoft’s Bing search engine will power its search services and Nokia Maps, which are tied to the company’s Navteq assets, will become Microsoft’s mapping services. For example, Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a local search and advertising experience.
Originally, Nokia had planned on building its high-end smarpthone devices around the company’s MeeGo platform, but Elop said there were fears that the company could not build an ecosystem around that platform fast enough, if it were to have any realistic hope of competing with Apple and Google, both of which have a considerable lead in the high-end smartphone market.
Under the new strategy, MeeGo becomes an open-source, mobile operating system project. MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences. Nokia says it still plans to ship a MeeGo-related product later this year.
Nokia says that Symbian will be franchised out to “harvest additional value.” The company says it will work to retain and transition its installed base of 200 million Symbian owners. Nokia expects to sell approximately 150 million more Symbian devices in the years to come.
The new strategy comes with a major reorganization of leadership. The Nokia Leadership Team, previously the Group Executive Board, will consist of the following members: Stephen Elop, Esko Aho, Juha Akras, Jerri DeVard, Colin Giles, Rich Green, Jo Harlow, Timo Ihamuotila, Mary McDowell, Kai Oistamo, Tero Ojanpera, Louise Pentland and Niklas Savander.
As of April 1, Nokia will have a new company structure, which features two distinct business units: Smart Devices and Mobile Phones. They will focus on Nokia’s key business areas: high-end smartphones and mass-market mobile phones. Each unit will have profit-and-loss responsibility and end-to-end accountability for the full consumer experience, including product development, product management and product marketing.
David McQueen, principal analyst at Informa Telecoms & Media says the partnership marks a “make-or-break” strategy for both Microsoft and Nokia. McQueen says Nokia and Microsoft are two of the best-known brands in consumer electronics and have the combined resources to “change the landscape of mobile converged devices in the future.”
“There is no question that this partnership will provide scale for Microsoft which has been struggling in the mobile world since the beginning and will offer more competition, which will benefit operators (more options in terms of platforms),” McQueen wrote in research notes today.
But he says Nokia could be the one left underserved. “This may not be the best move for Nokia and it is questionable how “open” Microsoft will be to work with. Even if Nokia fears Google’s dominance, an open platform like Android would allow much more possibilities to Nokia,” McQueen says.
Jeff Kagan, wireless analyst, says that ultimately it will the success or failure of the venture will depend on how well Microsoft and Nokia work together. He says that Elop’s resume could help facilitate the process. “Elop has history with Microsoft and that is the best part of this news. Perhaps they can make this work,” Kagan says.
Al Hilwa, program director of applications development software for IDC, says he was surprised by the extent of the partnership and says if all goes well, Nokia and Microsoft could get even closer. “If 12 months from now the combined hardware and software of these two firms has taken hold, gaining traction and share, I suspect that an all-out merger may be in the cards!” Hilwa said.
Investors did not appear to like what they saw. Nokia stock plunged 13 percent and was trading at $9.44 in early trading.
