This Nokia/Microsoft partnership is interesting. At first glance it seems that, although facing challenges, Nokia doesn’t need Microsoft to succeed in the smartphone/mobile market it still has a global 30% marketshare in phones and 32% in OSes. That’s well ahead of second-place manufacturer Samsung at about 18%. Why ally with MS? The latest figures from Gartner, coincidentally released this week, suggest an answer: Android.
Specifically, the astounding 888% growth in 2010 for the Google OS. It’s now No. 2, right behind Nokia’s Symbian OS. And there may even be some internal politics involved, with Nokia’s new CEO Stephen Elop, feeling a need to shake things up with a big strategic move.
The question is, is it the right strategic move? No doubt Nokia has access to all sorts of market trending data that is presumably informing the decision so let’s assume it knows something we don’t. But that doesn’t mean we can’t speculate! To wit, consider that while Nokia is the world No. 1, that’s not actually true in the North American market. Partnering with Microsoft, which does have a firm foothold here in terms of desktop OSes, could lead to leveraging opportunities and piggybacking on the MS brand in ways yet to be seen.
On the other hand, Microsoft remains an also-ran in the smartphone market with its Windows OS failing to turn any heads and its near complete absence from the hot tablet market it’s kind of all Android/Apple iOS/RIM all the time. But of course, that’s where Nokia’s existing strength and installed base may be useful to Microsoft.
But the markets? So far, they no like. Nokia (NYSE: NOK) fell about 14% on the news.
And at least one analyst I spoke to? He no like either. Tuong Huy Nguyen, principal research analyst at Gartner, says the partnership doesn’t leverage whatever strengths the two companies have and will do nothing to reverse Nokia’s ongoing slide. “There are a number of challenges there. And moving forward it’s going to be really tough.”
He predicts Nokia will lose more marketshare in the coming months in the gap between now and when its first phone on Windows 7 is delivered in 2012. And, possibly worse, the company has given up whatever differentiating characteristics it possessed in using a proprietary OS and now become a “me-too” brand with Windows 7 (in the same way that others have done by using Android).
I’ll be poking into this further in the coming days to unpack the strategy and the consequences behind the partnership, so stay tuned.