Why Microsoft Gains From Nokia’s Android-Based Normandy

Nokia will announce an Android phone at Mobile World Congress (MWC) according to a Wall Street Journal report – which predicts a low-cost smartphone running a forked version of the Google’ smartphone operating system.

After years of loyalty to its own Symbian OS, Nokia entered a partnership with Microsoft in February 2011, and since then its high-end smartphones have run the Windows Phone OS. In September 2013, with Nokia’s financials faltering even as its smartphone sales line was beginning to find an audience, Microsoft purchased Nokia’s Devices & Services business for $7.4 billion (£4.6bn).

Is Nokia being disloyal?

Before the announcement, rumours of a sale persisted for months, and it was widely expected that if the companies couldn’t reach an agreement — the selling price was the sticking point, according to multiple reports — Nokia would turn to the more popular and top-selling Android.

However, even after the purchase it appears that Nokia is preparing to offer Android smartphones.

“Microsoft appears willing to outsource part of its phone lineup to Android to boost volumes and support its handset manufacturing operation,” the Wall Street Journal reported. “Higher sales would help cover the high cost of competing in a smartphone industry dominated by Google, Apple and Samsung…”

According to the Journal, the Android phone was already in development when the pair completed their negotiations. The smartphone will reportedly will feature digital services created by Nokia and Microsoft, as well as Here (Nokia’s mapping suite), the streaming music service MixRadio and access to a Nokia app store. Like Amazon’s Android-based Kindle Fire tablets, the Nokia Android phones won’t access the Google Play storefront or certain Google-developed features, said the report.

It’s expected that the phone will be introduced at the Mobile World Congress trade show, which opens on 24 February in Barcelona.

Android could take Microsoft to new places

“The rumoured Android phone strikes me as giving Microsoft and Nokia a way to reach new market segments while pushing Microsoft services and software,” Ken Hyers, a senior analyst with Strategy Analytics, told eWEEK.

Hyers was among those who thought that if a deal couldn’t be reached with Microsoft, it would be “rational” for Nokia to turn to Android. However, he’d noted that Nokia wouldn’t want to risk losing the $250 million “platform support” payments that Microsoft was making to Nokia each quarter.

“It’s potentially the best of both worlds for both companies,” Hyers said of the Android-under-Microsoft’s-roof rumors, “as they could expand their market share while still offering the same core services. I’ll be very interested to see how this plays out.”

Microsoft welcomed a new CEO, Satya Nadella, las week. In a webcast during his first day on the job, Nadella, a 22-year Microsoft veteran, said Microsoft’s strategy will be all about “devices and services,” and Microsoft will be defined by a “mobile first, cloud first” world.

Suggesting he’s open to big changes—and acknowledging the mantle he not only picked up but needs to run with — Nadella said that the business Microsoft is in “doesn’t really respect tradition and what we’ve done in the past, it’s all about innovation going forward.”

Commenting on the Nadella appointment, analyst Jack Gold, with J. Gold Associates, suggested that Nadella is unlikely to win when it comes to mobile, and he doesn’t need to.

Thanks to its licensing deals, said Gold, “Microsoft today makes a lot more money on Android than Windows Phone.”

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Originally published on eWeek.