Nokia gets in bed with Microsoft

It’s biggest mistake or its biggest accomplishment to date?

IF NOKIAS CURRENT stock price is anything to go by, its move to sign up for Microsoft’s Windows Phone 7 mobile operating system doesn’t appear to have gone down well with its investors, as Nokia’s stock price has tanked almost 14 percent. Stephen Elop announced together with Steve Ballmer earlier today that the two companies are going to join forces – pending approvals from the board of directors etc. – but is this going to be the return of Nokia in the smartphone market space or will it be the final nail in the coffin?

Apparently Nokia was in talks with Google about its Android OS, but Nokia figured that Android “would have difficulty differentiating within that ecosystem” and the “commoditization risk was very high – prices, profits, everything being pushed down, value being moved out to Google which was concerning to us.” Apparently Microsoft offered a better deal somehow and part of this deal appears to involve Nokia’s Ovi Map service which if the deal goes through will be part of Microsoft’s Bing map service on all Windows Phone 7 devices and potentially any device that can access Bing maps.

Nokia will also get access to all of the Windows Phone 7 features, although apart from the Xbox Live! Integration we can’t really see much value to be had here, at least not in the terms of unique features on offer. However, interestingly Nokia seems to have been given the option to customize Windows Phone 7, something that so far none of Microsoft’s other Windows Phone 7 partners have been given. This doesn’t mean that Nokia will take advantage of this option, at least not straight away, but this option seems to be a fairly big submission from Microsoft.

During the presentation earlier today, Steve Ballmer talked a lot about hardware features, specifically what Nokia could bring to the table. He seemed excited about the benefits that Nokia’s imaging expertise would bring to the Windows Phone 7 platform, although it’s likely that it’ll remain exclusive to Nokia’s handsets. It’s not hard to see why Microsoft is excited about this deal, but we just can’t help to wonder how sensible this move was on Nokia’s behalf.

What is also worrying is that Nokia is expecting to lay off a fair share of its staff, although this won’t happen overnight, but as the company transitions from Symbian to Windows Phone 7 on its high-end devices, the Symbian R&D engineers are simply not going to have a place at the company any more. We’re already hearing murmurs about staff at Nokia finding that their current position is no longer needed and they don’t know what will happen in the long or short term.

As for Nokia’s co-operation with Intel, well, we don’t really know what will happen to MeeGo, but it’s clear that it’s not a mainstream platform for Nokia and never will be as the company is only planning a single device this year and seemingly after that the company will terminate the project. MeeGo is unlikely to die because of this, but unless there’s another mobile phone manufacturer out there willing to pick up the torch, we can’t see MeeGo being a long lived software platform on ARM processors.

As for Nokia’s first Windows Phone 7 devices, well, the two companies claimed to have had engineers working together for quite some time already and although we don’t expect an announcement of a ready retail device at Nokia’s press conference at the Mobile World Congress on Sunday night in Barcelona, we do expect to see some engineering devices on display. Pictures of what is thought to be exactly these devices have already leaked on Engadget and look fairly typically Nokia in terms of design, although with the Windows Phone 7 three button layout and a larger than usual screen for the company.

We’ll be at Nokia’s press conference and bring you the latest news and developments as they happen, but we doubt there’ll be any earth shattering announcements at the event. We can’t but wonder if this really was the right move for Nokia, as the company had other options and it would be interesting to know if Nokia got in touch with HP, Apple and RIM beyond Microsoft and Google. Steven Elop seems to think it’s a three platform race, but it’s still early days and anything can happen. It’s actually quite amusing to see the two current losers in the industry teaming up to create a partnership that no-one seems to believe in outside of the companies themselves and barely that.S|A

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