Nokia-Microsoft smartphone alliance doubted by insiders, markets

nokia windows phone 7

The Nokia-Microsoft alliance creates a smartphone Titanic that many analysts believe will suffer the same fate as the star-crossed ocean liner. Image: Wikimedia Commons

Nokia announced a smartphone alliance with Microsoft Friday. Nokia will ditch its successful, but declining Symbian OS for Microsoft’s Windows Phone 7. Analysts questioned Nokia’s move, and Nokia stock dropped 14 percent on the news.

Inside the Nokia-Microsoft alliance

The Nokia-Microsoft smartphone alliance has left industry experts wondering why the largest handset maker in the world would have anything to do with Microsoft. Nokia will be replacing its Symbian OS, which was the industry leader with a 36.6 market share in the fourth quarter of 2010, with Windows Phone 7. Windows Phone 7 has so few users it doesn’t show up on a list that includes Android with a 25.5 percent market share and iOS at 16.7 percent. Nokia said Windows Phone 7 will now be its “principle smartphone strategy.” Microsoft and Nokia will team up to develop and market smartphones. Microsoft’s Bing will be the default search engine on Nokia phones. Nokia’s Maps will be integrated into Microsoft services.

Microsoft benefits at Nokia’s expense

Analysts are saying that the partnership is good for Microsoft and bad for Nokia. Microsoft gets to plug into one of the largest mobile phone distribution networks in the world. But Nokia gets Windows Phone 7, a mobile operating system that, compared to Android and Apple, was virtually dead on arrival. Some insiders suggest that the Nokia/Windows Phone 7 arrangement is a conspiracy that began when Stephan Elop left Microsoft in September to become CEO of Nokia. The smartphone partnership is characterized as subversion that gives Microsoft big-time smartphone development capability without the hassle of actually trying to buy Nokia.

Investors doubt alliance will succeed

When the Microsoft-Nokia smartphone partnership was announced, Nokia stock plunged 14 percent, the steepest drop in Nokia shares since July 16. Analysts are saying that Nokia has given itself away for free and ceded the smartphone market to Google and Apple. Nokia Windows Phone 7 handsets won’t hit the market until 2012. Symbian will die on the vine while Android and Apple’s iOS continue to advance. Microsoft is accustomed to slapping operating systems on third party hardware. But Nokia has always developed its own OS. The difficulty Nokia faces is being compared to Apple replacing iOS with webOS on the iPhone. Unthinkable.


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