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Nokia And Microsoft Partner To Form “A Third Ecosystem”

So it’s official: After sending the now famous “burning platform” memo to his employees, Nokia CEO Stephen Elop has his former employer Microsoft as the savior for the declining mobile behemoth. In an open letter, Elop and Microsoft CEO Steve Balmer have announced plans for a strategic partnership to build a ‘new global mobile ecosystem’, of partnering to offer customers what is “a third ecosystem”, in a market that is dominated by Apple and Android.

Need To Know: Nokia-Microsoft Partnership

– Ovi App Store: Nokia’s content and application store (Ovi) will be integrated with Microsoft Marketplace
– Devices: Windows Phone will be Nokia’s primary smartphone, and Nokia will “innovating on top of the platform in areas such as imaging”. Nokia will bring Windows Phone to a larger range of price points, market segments and geographies, and provide its provide hardware and language support expertise to Microsoft. Nokia and Microsoft will closely collaborate on development, with a shared development roadmap
– Search: Bing will power Nokia’s search services across Nokia devices and services
– Symbian: Symbian becomes a franchise platform, though Nokia will try and retain and transition the installed base of 200 million Symbian owners. Nokia expects to sell approximately 150 million more Symbian devices in the years to come.
MeeGo: 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 still plans to ship a MeeGo-related product later this year.
– Maps: Nokia Maps will be a core part of Microsoft’s mapping services, integrated with Bing search and adCenter advertising platform to form a unique local search and advertising experience.
– Advertising: Microsoft adCenter will provide search advertising services on Nokia’s line of devices and services (So that’s that for Navteq’s advertising business?)
– Payments: Nokia’s extensive operator billing agreements will allow customers to purchase “Nokia Windows Phone services in countries where credit-card use is low.”(ED: Is this it, for Ovi?)
– Applications: Microsoft development tools will be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem’s global reach.

The joint statement from Elop and Ballmer is more like a battle cry:

“Today, the battle is moving from one of mobile devices to one of mobile ecosystems, and our strengths here are complementary. Ecosystems thrive when they reach scale, when they are fueled by energy and innovation and when they provide benefits and value to each person or company who participates. This is what we are creating; this is our vision; this is the work we are driving from this day forward.

There are other mobile ecosystems. We will disrupt them.

There will be challenges. We will overcome them.

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Success requires speed. We will be swift.

Together, we see the opportunity, and we have the will, the resources and the drive to succeed.”

Will It Work?

Given that both are heavy, slow moving companies, I think they’re getting a little ahead of themselves. Typically, given such large organizations, it’s difficult for them to learn to work together: large partnerships actually tend to give time for competitors to up their game and grab marketshare. However, integration might not be too much of an issue, since Elop knows how Microsoft works.

Neither company looks like it is going to win the ecosystem battle, and it’s more a case of a distant number three tying up with a has-been. I don’t think this is about resources – both companies have the money, and Nokia has substantive distribution and sourcing might. What they lack is the speed, and that they don’t find favor among developers, who, clearly determine the winner in this battle.

What Our Readers Think

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A couple of days ago, we’d asked our readers what they think Nokia should do. Here’s what some of them had to say on a Nokia-Microsoft partnership, before it was announced:

AntarYaami: Its partly short sighted and appears to be partly vengeful. Nokia still hasn’t decided on a direction of whether they want to be a hardware player or a hardware/software combo (Maemo/Meego/Symbian) player. I only see positives for MSFT in this collaboration. They get an upstart with Nokia’s market reach. If you think about it, smartphone is a smartphone if the developers make something smart to work on it. With this move we will now have developers working on nearly 6 different smartphone platforms which is counter productive for all (except the leaders iOS and Android ofcourse). Had Nokia collaborated with Android, they would have had the opportunity to take the fight to Apple’s doorsteps and competed with HTC, Samsung purely on hardware specs, which they claim to have an upperhand on anyway. It would have encouraged the developer community since they would not have to replicate their apps on a different platform and given them a larger userbase to reach out to.

Either that, or Nokia should stop looking at the current trend of smartphone and bet on something for the next generation. Something completely new. And until then, sell cheap affordable, MeeGo/Symbian phones.

Kushan Mitra : I’ve always felt that Nokia makes fabulous hardware and their cameras and video recorders are the best in the business, but they really lost the bus when it came to developing developers and while they make good hardware they have an extremely confusing product portfolio with far too much choice. Choice is good, too much choice is confusingand does not allow marketing to concentrate on a few devices. I don’t know what Elop should do, going to Google will mean Nokia will be no different than Samsung, Motorola and HTC and competing head-on with all the Chindian vendors, and they do have substantial tie-ups with Microsoft. Maybe, going with Windows Phone 7 could help. Maybe…

Amit Doshi: They make incredible hardware. Their design is fantastic. I think the E71 is still the best looking QWERTY phone ever designed but it was a pig to use with Symbian S60. I would absolutely love to be able to get a Android or WP7 phone on Nokia hardware. I look at my Nexus 1 and I love it but for whats on the inside, the instrument itself is blah. A nokia based Android or WP7 phone would be the best of both worlds. Gorgeous and functional.

Also apps on Symbian are incredible PITA to develop. I’d love to be able to do apps for Nokia using Visual Studio dev tools.

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Karan: I’d go with catalysing (tying up with the Microsoft platform). It has garnered favourable reviews, Microsoft’s formidable cash reserves would come in handy, and could leverage Microsoft’s efforts to move beyond the desktop. This combo also has a good chance of creating an app-store with some uniformity of quality, like Apple.
A problem would be passing on gains to MS in the form of royalties.

The problem with building their own, first, it’d be a long way off, second, success there would be a big IF, and third, the smartphone OS is a classic “platform”…the dominant player would reap the greatest rewards.

Aligning with Android would lead to an erosion of Nokia’s clout. There would be little separating Nokia from HTC, Samsung et al. And the android app-store is too inconsistent (and open) at present. A good chance of a short-term revival, followed by a slow descent into oblivion/irrelevance.

More comments here

What do you think? Will Nokia-Microsoft provide a credible third ecosystem?

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