∞ Nokia adopts Windows Phone 7 as "primary smartphone strategy"

In a joint statement, Nokia and Microsoft announced Nokia will henceforth adopt Windows Phone 7 as its “primary smartphone strategy.” The two companies are seeking strategies that will keep them relevant in the smartphone market as Apple and Android continue to march towards domination.

[ad#Google Adsense 300×250 in story]Specific details are still in the planning stages, but in a joint letter attributed to Nokia CEO Stephen Elop and Microsoft CEO Steve Ballmer, the companies announced that Nokia will “help drive and define” the Windows Phone platform.

Microsoft is counting on Nokia’s expertise in hardware design, language support and broad market reach to help deploy Windows Phone into market segments it hasn’t been able to reach yet. What’s more, Microsoft’s Bing search engine wil be featured on Nokia devices, and Nokia will rely on Microsoft adCenter for advertising services.

in return, Microsoft will use Nokia Maps for mapping services; Microsoft is also expecting Nokia’s billing arrangements with local cell phone operators to help consumers access Windows Phone services in countries where credit card use is low. Nokia’s content and application store, known as Ovi, will be “integrated with Microsoft Marketplace.”

Nokia remains the top smartphone vendor in the world, according to a recent report by market research firm IDC, with 28 percent of the worldwide market. The company shipped 28.3 million units worldwide in the fourth calendar quarter of 2010. Apple is number two with 16.1 percent market share, followed by Research In Motion (RIM), makers of Blackberry devices, and Samsung.

While Nokia showed positive year over year growth, its lead slipped dramatically from the same quarter a year ago, when it held 38.6 percent marketshare. The company recently reported a significant drop in fourth-quarter earnings, as well.

The news of Nokia’s partnership with Microsoft comes days after tech site Engadget posted an internal Nokia e-mail purportedly written by Nokia CEO Stephen Elop, describing Nokia’s diminishing position in the smartphone market in brutally honest terms, likening the company’s prospects to that of a worker on a burning oil rig faced with the choice of burning to death or jumping in the ocean.

Stephen Elop stepped into the top role at Nokia in September, 2010. Canadian Elop replaced Olli-Pekka Kallasvuo to run the Finnish telecom giant. Prior to Nokia, Elop headed Microsoft’s Business Division, where he was responsible for Microsoft Office. Elop was Macromedia’s CEO prior to its acquisition by Adobe.

  • I hope this will work out for both companies. Nokia isn’t strong on the software side and Microsoft is still trying to get back into the game. Having been able to try a few Windows Phone 7 smartphones, I was positively surprised about how well this UI paradigm works.

    Both companies have to go all out, if they want to continue to matter in this market. They better lock the red pencil away for a year and start investing money. But most of all: Both companies need to get of their high horses and accept that they’re the ones playing catch-up.

    • Peter Cohen

      I think that letter Engadget posted makes it abundantly clear that Nokia’s CEO, anyway, understands that they’re playing catch-up. I’m not sure it’s really in Ballmer’s DNA to admit weakness, however.

      • I think you’re right about both companies.

        In this case, though, I’m more worried about Nokia because of something I’ve read about the way Nokia used to (and maybe still does) design handsets (I’ve read this more than once over the years): The Nokias hardware division is too influential in the process of designing a handset.

        Example: Software and hardware engineering decided on certain goals and a loose spec sheet for a new device. Both divisions worked under that premise for a while with the software building the OS and UI expecting the agreed-upon hardware capabilities. Then the hardware division made the decision to change something (e.g. lower the processing power of the phone) and the software team had no say. They had to pick up the piece of their work and sometimes start from scratch.

        I wish I had a source to back this up. Once I was told this personally by a Nokia representative, back when I worked in retail; around the time the first Symbian Series 60 phones were thrown on the market.

        What Elop said in his letter was spot-on —assuming that was him — but he needs to make people inside the company really understand it, which will involve letting-go people in the upper management.

  • Guest