In a dramatic change of strategy, Nokia announced a plan this morning to make Microsoft’s Windows Phone 7 its default operating system. In the future, Nokia will stop developing operating systems and concentrate on smartphone hardware.
Devices already in the product pipeline will be released, but they will be among that last from this company running the Symbian OS, and there may be only phone ever with the MeeGo OS that Nokia spent the last year or so developing.
In the announcement today, Nokia CEO Stephen Elop pointed out that many of the specifics of this deal are still being negotiated.
The New Partnership
Although all the details have yet to be worked out, the plan is to let each of these companies concentrate on what they do best: Microsoft will develop the Windows Phone operating system, while Nokia will make smartphones to run it.
It’s important to note that Nokia will not be the exclusive provider of devices running Windows Phone, as companies like Samsung, HTC, and LG are also Microsoft licensees. However, these companies are putting more of their attention into developing products based on Google’s Android OS, while all of Nokia’s focus will be on Windows Phone.
Still, in order to to be competitive, Nokia is going to have to work hard to differentiate its products. Microsoft has a relatively restrictive set of hardware requirements for devices running its mobile operating system — its specifies screen sizes and resolutions, processor speeds, and even button placements. This can make it something of a challenge for its licensees to produce products that are significantly different.
Still, Nokia has its strong brand to fall back on, as well as a reputation for offering smartphones with the best cameras available.
Bing is going power Nokia’s search services, while Nokia Maps will become a core part of Microsoft’s mapping services.
Nokia/Microsoft vs. Google and Apple
The agreement announced this morning is designed to bring together a pair of companies into an alliance to take on some very strong competitors.
Nokia is the world’s largest phone maker, but it has run into problems creating successful smartphones. Despite its efforts and many millions spent on research, this company make most of its revenue from featurephones, a product category that’s sliding into decline.
Microsoft has also struggled to make itself relevant in the global smartphone market. Windows Phone 7 is its latest offering in this category, but its only been available for a few months.
Apple, of course, is the maker of the very popular iPhone while Google is the developer of the Android operating system. Although relative newcomers to the smartphone market, phenomenal growth over just a few years has made these companies very significant competitors, to the point where Microsoft and Nokia were becoming increasingly irrelevant.
“I am excited about this partnership with Nokia,” said Steve Ballmer, Microsoft CEO. “The partnership announced today provides incredible scale, vast expertise in hardware and software innovation and a proven ability to execute.”