Mixed analyst reaction to Nokia-Microsoft partnership

Analysts see potential strengths of Nokia-Microsoft, but unsure on long term benefits for Nokia

Tags: Microsoft CorporationNokia Corporation
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Mixed analyst reaction to Nokia-Microsoft partnership Some analysts have questioned whether Nokia would have been better choosing to work with Google's Android OS.
By  Mark Sutton Published  February 11, 2011

Analyst reaction to announcement that Nokia and Microsoft are to partner closely on mobile device development has been mixed.

Telecoms analyst company Ovum felt that it was a good move for both companies, giving Microsoft better reach for sales of Windows Phone 7, and allowing Nokia to get back into competition in the smartphone segment.

Tony Cripps, principal analyst, Ovum said: "This is a bold decision by Nokia but absolutely the right one, both for itself and for Microsoft given the drastically changed landscape for smartphones in the past couple of years. There were few short term options available to the company to help it get back on terms with Apple and especially the Android masses, which in 2011 look set to overtake Nokia in terms of smartphone shipments, bringing with it the full wrath of the investor community."

Another Ovum analyst, Adam Leach, said that while there was an opportunity for Nokia, it would have to differentiate its phones from those of other vendors using Windows Phone 7.

"It's ironic that the sole purpose of Symbian was to stop Microsoft from repeating their domination of the PC market in handsets. Nokia now has the opportunity to cast itself in the role that Intel has taken in the Windows PC market as a mutually beneficial, symbiotic marriage between equals rather than as simply a box shifter," said Leach. "However, there remains a danger that Nokia could end up as merely a vehicle for Microsoft and services should it fail to differentiate from other Windows Phone 7 makers such as HTC, Samsung and LG."

David McQueen, principal analyst with Informa Telecoms & Media was more circumspect, noting that while the potential synergies through areas such as the strength of both brands, complementary strengths to build the ecosystem, ability to reach mobile operators to use as a channel to market, and large marketing budgets to drive sales, it was still a make-or-break strategy.

"There is no question that this partnership will provide scale for Microsoft which has been struggling in the mobile world since the beginning and will offer more competition, which will benefit operators with more options in terms of platforms," said McQueen.

"However, this may not be the best move for Nokia and it is questionable how ‘open' Microsoft will be to work with. Even if Nokia fear Google's dominance, an open platform like Android would allow much more possibilities to Nokia.

"Also, two losers don't make a winner, particularly given their scale and cultural differences. It's hard enough for massive companies to innovate on their own much less with another massive partner with a completely different culture. Whether Steve Ballmer and Elop can be the white knights that the operators are looking for will depend largely on the ability for Nokia and Microsoft to execute their partnership effectively," he added.

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