Nokia, Microsoft & HTC (Or: Why Change is Good)
5.0By Nigel Chiwaya February 11, 2011 02:15 PM
Forgive me, folks. I try not to go off topic often here, but today's Microsoft and Nokia news was too big to ignore. If you bear with me, I'll tie HTC into it. Scout's honor.
Nokia and Microsoft entered a strategic alliance today on Windows Phone 7, Bing, Xbox Live and more. With the deal, Nokia ditches their aging Symbian platform in favor of Microsft's agile new Windows Phone 7 operating system. Some people think this is a bad thing. I don't, and here's why:
The emperor was crumbling
I don't think anyone out there will say that Nokia was in good shape. Yes, they sell a boatload of phones and they have huge mobile market share, but like we learned this week, market share isn't everything. And even if it was, Nokia's market and profit shares have been slipping steadily over the past five years.
To put it simply, they're in deep doo-doo.
They were in trouble because they stuck with Symbian for far too long. Content to milk their aging mobile operating system for all it worth, Nokia hasn't been the source of a lot of innovation and excitement in the smartphone space in a while.
They weren't the first to reach this point
Palm, Research In Motion and Microsoft have all faced this point. Palm got fat off of the wondrous Palm OS platform in the early part of the last decade. Then, when Apple came out and lapped them with the iPhone, they took so long to respond that when they finally did, the game was just about over. WebOS is a remarkable platform, but Palm was no longer the giant it once was, and they didn't have the strength to push the OS. Palm ended up being bought by HP last year, and only two days ago did we see the fruits of that marriage.
RIM is in a similar predicament. They fattened up on their enterprise friendly Blackberry OS platform and were once the darlings of the mobile space. However, once again, when the iPhone came out (followed by Android, webOS, and Windows Phone 7), they have been slow to respond. Slowly but surely they're facing the same problems that Palm did: how do you reinvent yourself without scaring off your existing user base? They haven't responded yet (because I don't count the QNX-powered Playbook as a response until that same OS hits smartphones).
That brings us to Microsoft. Just like the previous two, they had a solid workhorse OS in Windows Mobile. And just like the previous two they were lapped by the iPhone and Android. It took Microsoft three years to respond properly with Windows Phone 7 and although operating system is solid, sales have been stagnant and the death watch (unfairly) has been on.
Nokia's taking a different route than the the companies mentioned above. Instead of trying to reinvent the wheel (or in this case, wasting time and effort on their Meego platform), they're taking the fruits of Microsoft's labor and slapping it onto their hardware. This is going to be a win-win for both companies.
Nokia gets into the US and gets an OS that doesn't suck
Nokia finally will have a presence in the United States. Not only that, but they won't have to go through the pain of introducing American users to their operating system, we already know about Windows Phone 7 (we may not use it, but we've seen the ads). Even if they don't sell a lot of phones in the US, it'll still be better than the next-to-nothing that they currently have.
Nokia also gets the benefits of Microsoft's solid-but-young operating system: Xbox Live, Zune, Bing. It's all going to be there for Nokia users. And let's not forget Microsoft's app store. It may not be as big as Apple or Google's, but it's about to hit 8,000 apps (either today or tomorrow) and it picks up another 500 every week. That's insanely fast growth; don't forget that the OS hasn't even been out six months yet.
Microsoft gets scale
For Microsoft, this is a dream come true. Nokia's massive market share and killer hardware suddenly becomes theirs as well. Of course, there's no gaurantee that everyone that bought a Symbian Nokia phone will by a WP7 Nokia phone, but bear with me. Nokia can still roll out of bed and sell 7 kabillion smartphones. You know how you barely see anyone with a Windows Phone 7 device right now? That's about to change.
Why didn't they go Android?
Only Nokia knows for sure. Perhaps they felt the Android err….market was too crowded. Everyone and their mother makes an Android phone. With Windows Phone 7 it won't be as competitive.
Perhaps they wanted to be the ones to legitimize Windows Phone 7, in much the same way that HTC and Motorola legitimized Android.
I don't think we'll ever truly know. But in reality, I think either choice would've been good for them.
So where does this leave HTC?
For the most part it doesn't really affect HTC. That's why I was surprised that anyone needed confirmation that they still planed to produced Windows Phones. Of course they will.
If anything, this is a good thing for HTC. More people will get exposed to the Windows Phone 7 platform. I think it'll be much the same as the situation with the original Motorola Droid, Nokia will help create demand for Windows Phones that will trickle down to other manufacturers.
Of course, even if it fails horribly and both Nokia and Microsoft crash and burn, I don't think HTC will be too badly affected, because, simply, Windows Phone 7 isn't the most profitable part of their business.
So to sum up, Nokia wins, Microsoft REALLY wins, and HTC can smirk because even they're going to win.
What do you think? Is the Nokia/Microsoft partnership a good idea? Where does it leave HTC? Let us know in the comments.
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