Nokia Urged To Adopt Windows Phone 7

An investment banker has called on Nokia CEO Stephen Elop to adopt Microsoft’s Windows Phone 7, at the Finnish giant’s investor day next week, on the eve of Mobile World Congress (MWC)

The letter from London-based Berenberg Bank analyst Adnaan Ahmad, also reportedly urged Nokia to abandon its Linux-based operating system MeeGo, which it is developing in conjunction with Intel.

A copy of the tongue-in-cheek letter, dated 2 February, was obtained by the Financial Times and can be viewed here.

Time For Change

Ahmad suggests that if the two companies teamed up, they could mount a stronger challenge to the likes of Android and Apple. Ahmad also warned about the dangers facing “slow moving incumbents”.

“I know you are both sick and tired of hearing how great and innovative Apple and Android (Google) ecosystems are, and that they have hundreds of thousands of applications, growing revenue at 50 percent plus per annum and gaining market share globally,” said Ahmad. “I remember the days when Nokia (with Jorma Olilla at the helm) ruled the roost, European market share was above 50 percent and US market share was in the 35 percent range. Well, those days are long gone, and as you so sweetly put it, Stephen, in your recent Q4 earnings release, ’Nokia faces some significant challenges in our competitiveness and our execution. In short, the industry changed, and now it’s time for Nokia to change faster’.”

Ahmad also had a few words for Steve Ballmer about Windows Phone 7.

“Microsoft also faces very big strategic challenges as smartphones and tablets attack your highly profitable installed base business. Windows Phone 7 (WP7) is good, but let’s be serious, guys: two million units in Q4 in a ~100m market; that is just not going to cut it,” said Ahmad, echoing widespread secpticism about WP7.

MeeGo Joke

Ahmad said that Nokia should avoid Android. “Android is a no-go for now. This may have been a good idea one to two years ago, but it is not today. You will never be able to catch up with Samsung, which should rule the Android show midterm. And that market is going to get even more crowded with China Inc (ZTE, Huawei et al) joining Sony Ericsson, HTC, Motorola and PC vendors,” wrote Ahmad. “And more significantly, how is anyone going to differentiate on Android long-term?”

Ahmad urged Elop to go to his former boss Steve Ballmer and get him to agree to an exclusive deal for Windows Phone 7 – although presumably Microsoft has already entered into legally binding contracts with existing Windows Phone 7 handset makers such as HTC and Dell.

He also called on Nokia to drop MeeGo with some harsh words. “It’s the biggest joke in the tech industry right now and will put you even further behind Apple and Google,” said Ahmad.

He also advised Nokia to move Symbian to the low-to-mid-range smartphone market as quickly as possible.

Decision Time

Recent research from Canaly found that Android, for the first time, is now the top selling smartphone operating system.

Of course, Nokia is still the biggest handset maker in the world, but it has a real challenge on its hands to try and safeguard its diminishing lead against the likes of Android and Apple.

And for some months now there have been persistent rumours that Nokia is considering Windows Phone 7. The operating system has gathered mostly positive reviews, but there is an ongoing question mark over actual sales numbers, not helped by the limited stock when its was launched in October last year.

But more recently there have been hints that Nokia boss Stephen Elop is also considering Android.

All eyes will now turn to Nokia’s Capital Markets Day on 11 February for investors, where it is predicted that the Finnish handset maker will make some form of statement about its choices of mobile platform going forward.