Nokia partnership good for Microsoft

14 Feb 2011

So, it’s official. Nokia and Microsoft are leaping into bed together to create a whole new mobile ecosystem to challenge the dominance of Apple and Google.

My first impression is this is great news for Microsoft. This is a firm that has always struggled to crack the mobile market, and the benefit of allying with Nokia is clear in terms of the sheer volume of devices the deal opens to the US software giant in new territories throughout the world.

Microsoft also gains access to Nokia’s location services and mapping software, which should help it compete against Google in the overall web market.

The pending Nokia alliance also won’t be exclusive, chief Steve Ballmer revealed, meaning Microsoft will be able to take the knowledge it gleans from the partnership to its other handset vendors.

For Nokia, though, the benefits seem less clear cut.

Ok, so the deal opens the potential for better business in the US, but as one Finnish journalist noted during the press briefing on the pending partnership there’s no guarantee Windows Phone 7 will be a success in that market.

Chief Stephen Elop went to great lengths to emphasize that operators were “all smiles” over the collaboration. Caroline Gabriel at Rethink Wireless noted earlier this week that operators had begged Nokia not to go with Android, however Elop’s comments suggest carriers weren’t top of the agenda when deciding on which firm to partner with.

The Nokia boss revealed the firm had spoken with Google regarding Android, but said the platform would restrict its chance to differentiate its handsets and would move the value out to Google, something that was “concerning to us.”

Admittedly the Microsoft deal offers the potential to create a third mobile ecosystem that, on paper at least, should be a credible threat to Android and iOS. “This is now a three horse race,” Elop declared.

While the alliance has grabbed all of the attention so far this morning, the devil of Nokia’s transformation will be in the details presented to the financial community this afternoon.

Elop has conceded that sweeping staff cuts are in the pipeline in all countries, and revealed the firm has held talks with Finland’s government over the potential impact on employment in the country.

The vendor has committed to re-training schemes for employees shown the door in the country, however Elop said he wouldn’t be relocating “to Hawaii or Silicon Valley.

“Nokia is first, and foremost, a Finnish company,” he told journalists from the country.

However, the firm will look to make savings in its R&D budget, and is in the process of reviewing all its global operations in a bid to cut bureaucracy and ensure it can respond faster to market developments in future.

Elop declared himself an optimist. Only time will tell if his optimism is well placed.

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