Nokia’s Jump To Microsoft Could Be A Death Leap

Nokia’s decision to make Windows Phone its primary smartphone platform is a bold move, and shows that Nokia is willing to take drastic measures to get back on level terms with Apple and Android. But Windows Phone 7 is a dead duck that is unlikely to give Nokia the boost it desperately needs.

During a joint news conference in London, Nokia CEO Stephen Elop said that Microsoft represented “the best opportunity to build and lead and fight through a new ecosystem,” and that the two companies have “remarkably complementary assets”. He said that, while he had considered adopting the Android platform, going to Google “felt a little bit like giving up and not enough like fighting back”.

“We absolutely spent time with our colleagues at Google. We explored the opportunity with the Google ecosystem and indeed it’s moving very quickly, it’s gaining share, there are some attractive elements to it,” he said. “However, our fundamental belief is that we would have difficulty differentiating within that ecosystem.”

Standing out from the crowd

Android does indeed have its fingers in lots of pies, with HTC, Sony Ericsson, Samsung, LG and Motorola – among others – all cashing in on the popularity of Google’s mobile platform. However, to fight against the tide and opt for a platform with a poor US market share is a risky decision.

Nokia knows the risk it is taking. In a memo leaked to technology blog Engadget on Wednesday, Elop likened the company’s position to that of a man on a burning oil rig, faced with certain death or a 30m drop into icy water, and spoke of taking “a bold and brave step into an uncertain future”.

The key problem for Nokia is that its deal with Microsoft is not exclusive. Regardless of how people feel about Windows Phone, Microsoft has forged allegiances with a number of handset makers, meaning that any improvements that Nokia brings to the platform will also be felt by its competitors.

Elop did claim that Nokia has “very clear plans that will allow us to differentiate within the Windows Phone ecosystem”.

He later made it clear that these plans do not include the foolish option of building a Nokia-only front-end on top of Windows Phone, using its Qt cross-platform tools. “Our first priority is the ecosystem,” said Elop, and that means keeping WinPho’s look and feel, and using Microsoft tools like Silverlight.

The whole point of an ecosystem is commonality, and Microsoft will be reluctant to restrict any major improvements to Windows Phone to a single manufacturer. The only concrete improvement Elop suggested was Nokia’s strength in cameras and imaging – admittedly well shown-off in recent phones such as the N8.

As Ovum analyst Adam Leach points out: “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.”

Microsoft to gain more

It seems that Microsoft has a lot more to gain from this alliance than Nokia. It is somewhat ironic that Symbian was originally created – way back in 1998 – to prevent Microsoft from repeating its domination of the PC market in mobile devices.

This allegiance represents the ultimate triumph of Microsoft over Symbian, a somewhat Pyrrhic victory, given that the then undreamt-of  iPhone and Android platforms have stolen several marches on both of them.

The non-exclusive deal does at least allow Nokia to continue its development of MeeGo – the open source operating system formed last year by the merger of Nokia and Intel’s Linux-based platforms Maemo and Moblin, which is now turned into a sort of sandbox to try out new stuff that might come in handy in the future.

However, MeeGo was described earlier this year as “the biggest joke in the tech industry” by analyst Adnaan Ahmad, and Elop himself said that development on the platform was moving too slowly. He said that Nokia still intends to ship its first MeeGo device in 2011, but stressed that it was “not the beginning of another smartphone broad platform strategy” but “an opportunity to learn”.

It will be fascinating to see how this new alliance pans out. I think a lot depends on whether the combined forces of Microsoft and Nokia breed an application ecosystem to rival that of Apple and Android – my guess is that they will not.

However, Windows Phone is undoubtedly a better bet on this front than Symbian, and both companies have stressed their dedication to building a developer ecosystem to leverage Nokia’s global presence.

Whether or not their gamble pays off, you’ve go to respect Nokia for taking the icy plunge.