The Nokisoft fall-out

OK, so the deal is done. Nokia partners with Microsoft and trades in MeeGo for Windows Phone 7, I failed my test as a mobile analyst, and 2011 will make 2010 look like child’s play when it comes to disruption. Here’s a quick reaction to those aspects I find most interesting. No claim to completeness here.

For web developers this is bad news. Windows Phone 7 has the worst default browser of all modern smartphone OSs: IE7 (though, in fairness, Microsoft is working on an IE9 port). MeeGo was supposed to have a Gecko-based default browser, just as its precursor Maemo did.

Facts first. Read the press releases here and here. Gist:

  1. Nokia will make Windows Phone 7 its primary smartphone platform, but not right now. No devices have been announced.
  2. “MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences” MeeGo will be open-sourced, and there may be one test device in 2011. Effectively Nokia abandons it as a major OS — for now.
  3. Symbian “becomes a franchise platform,” whatever the fuck that may mean. It won’t go away right now, but it doesn’t have a bright future ahead of it, either.
  4. Not a word about S40, not even from the analysts.
  5. Not a word about Qt, the common interface layer that was supposed to make cross-platform Symbian/MeeGo apps possible. This is not good.
  6. “Nokia’s extensive operator billing agreements would make it easier for consumers to purchase Nokia Windows Phone services in countries where credit-card use is low.” Right strategy, wrong platform. Countries where credit-card use is low can’t afford many Nokisoft phones.
  7. No senior staff shake-up. That’s an odd one — everybody expected at least something to happen.
  8. There will be lay-offs, however.

The deal

What Nokia needed most of all was placate the financial world and the US-dominated blogosphere, and that’s something this deal might conceivably do. Investors and analysts demanded action, and they get it. At the very least there will be a 6-to-9 months truce period during which people will give Nokia the benefit of the doubt again. The price Nokia pays is confusing its OS strategy and giving away lots of stuff to Microsoft.

Nokia still has a very strong position in the market — not because of the excellence of their OSs but because of their relations with operators, which are the ones that dole out subsidies and thus decide which phones are going to be hits and which ones aren’t. Nobody has analysed the impact of the announcement on the operators yet.

So Nokia gives Microsoft a lot, which makes the deal an excellent one for the Redmond giant that desperately tries to claw its way into the mobile market. Conversely, Microsoft gives Nokia a lot less — well, OK, an OS that may be slightly less delayed than MeeGo, but that’s about it. (There are some deals on Bing search results, but does Nokia really need those?)

Platform strategy

Before the current shake-up, this is how Nokia’s platform strategy looked:

  1. MeeGo will serve as high-end OS that can compete with iOS and Android.
  2. S40 will continue to serve as low-end OS.
  3. Symbian is stuck in the middle. It won’t go away right now, but it will slowly be squeezed between MeeGo and S40. That’s good, because developers are becoming fed up with it, and it can’t keep up with the changing times.
  4. Qt will create a common interface layer for Symbian and MeeGo (and maybe also S40) that makes cross-OS apps possible.

High end

All in all this struck me as a pretty decent strategy. However, it assumed that MeeGo devices would become available in early 2011 (right now, in other words), and that seems to be the problem. This week the news came out that the N9, originally slated to be unveiled at MWC next week, was canceled.

In other words, there’s still no MeeGo device, a year after the original announcement around the previous MWC. That’s part of the reason, I guess, for bringing Phone 7 into the mix. Problem is, Microsoft has a way of delaying products time and again, too. Phone 7 was delayed for half a year, though it did hit the market before Christmas, which is something.

So strategy-wise we can swap in Windows Phone 7 for MeeGo, and continue to wait. In the short term the alliance doesn’t net Nokia anything. We could assume, however, that a Phone 7 device will be ready faster than a MeeGo one. Still, if I read things correctly not much will happen in 2011.

Low end

As to the low end, the new Mobile Phones business unit, which does not handle MeeGo, Symbian, or Phone 7,

will drive Nokia’s “web for the next billion” strategy. Mobile Phones will leverage its innovation and strength in growth markets to connect the next billion people and bring them affordable access to the Internet and applications.

No OS is mentioned, but I assume it will be S40. According to this comment S40 generates about 75% of Nokia’s revenue, and it’s already there and even sports a decent browser for such a memory-challenged system, so it would make no sense to replace it. (Then again, I said the same about MeeGo, and see how right I was.)


As to Qt, yesterday Simon Judge pointed out it already works on Windows Phone 7 (or rather, on the underlying Windows CE), which makes Nokia’s complete failure to mention it a very bad sign. Apparently, part of the deal is that Nokia’s developers are going to fill Microsoft’s app portfolio, and not Nokia’s. The question remains whether Symbian developers are willing to switch to Silverlight.

And of course the unique disadvantage of Phone 7 is that it’s the single modern platform where a web-based app strategy will not work due to lack of good browsers. As far as I know nobody in the browsing industry is contemplating the creation of an alternative for IE7 Mobile (except for Microsoft itself).

So app-wise this is a very bad move on the part of Nokia.

Crystal-ball gazing

If I were forced to judge the long-term strategy, I’d say it amounts to Nokia temporarily using Windows Phone 7 before possibly returning to a (by then seriously ready to roll) MeeGo. Let’s say two to three years.

Why? In the current market a top-tier device vendor cannot survive without owning an operating system. Nokia’s closest competitors in the smartphone industry all have one: iOS (Apple), BlackBerry (RIM), and bada (Samsung). Without MeeGo, Nokia gets in the same tight spot as HTC, LG, Sony Ericsson, and the rest of the minor smartphone vendors, who’re forced to use either Android or Windows Phone 7 for lack of their own OS, and thus become beholden to Google or Microsoft. That’s not a winning strategy.

Then again, this assumes that the mobile market of 2013 or 2014 will resemble today’s, and that’s far from certain. Besides, I don’t exactly have a good track record for predicting Nokia’s moves, so even though all this sounds reasonable it might be completely off.

This is the blog of Peter-Paul Koch, web developer, consultant, and trainer. You can also follow him on Twitter or Mastodon.
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