The news of Nokia’s partnership with Microsoft seems to be sinking in at Mobile World Congress. Nokia’s CEO Stephen Elop continues to appear throughout the event to again tell people why this move makes sense. He’s confident in his messaging and delivering it clearly but his enthusiastic explanations don’t do the scope of the announcement justice.
Elop declared at Monday’s keynote presentation: "A battle of devices is shifting to a war of ecosystems.”
This signals a move in the market that has been coming into focus in 2010 with the emergence of Android as a true force in the smartphone market. Throughout Mobile World Congress, Elop has been banging the “three-horse race” messaging hard and Windows Phone 7 with Nokia’s reach will create a third combatant in the smartphone market. This will be a definite but distant third player and one that will have to make a pretty drastic statement when they finally bring a device to market.
Jo Harlow, senior vice president marketing at Nokia Mobile Phones, has hinted that this will be within 2011 but her statement was definitely not a guarantee.
What has been interesting since the initial announcement Friday night, where Elop said he’d been on the phone with European operators reassuring them, is the operator-friendly message that Elop has been emphasizing. Elop seems to be carving the smartphone market up and putting Nokia on the side of the operator and its business model.
Operators are in a unique position and need all of the help they can get to retain revenue and take some control back in the market they brought to life. If you are an operator you see Apple taking market share in areas you’d like to excel in while Google has seen Android explode in 2010 and at the same time a revenue hog on the web. In the smartphone market these two players are in a luxurious position as operators grasp at different ways to answer the “dumb pipe” question.
Nokia and Microsoft have the opportunity to be the shoulder to cry for operators that have seen opportunities squander elsewhere. iPhone is established and Android is a force in the market as we have seen throughout Mobile World Congress with this additional platform creating, what Nokia says, will be more competition and choice for operators.
Elop explicitly addressed the operator community during the Microsoft keynote on Monday and let them know that Nokia’s new partnership will create the most operator-friendly smartphone platform in the market. He added that Nokia and Microsoft would help operators to retain and drive revenue, which aren’t likely goals for Apple.
Elop said: “We understand what it means to be friendly to operators."
This kind of messaging plays into Nokia’s history of strong partnerships with its operator partners and broadly makes sense but looking at another aspectof Nokia’s business you wonder if Nokia needs to focus on the smartphone market. The company has shown its strength around the world with feature phones and is still a force in the market even though it may not appear to be an innovator any longer.
Peters Suh, CEO of Wholesale Applications Community (WAC) noted in an application-focused keynote panel that Nokia has between 30%-40% global market share in handsets, which he then followed up by saying, “but I’m not sure that the smartphone market is a global phenomenon”. This is a fair statement as emerging markets with limited mobile coverage may struggle to take advantage of advanced features.
Feature Phones Not Its Future?
Suh was highlighting that perhaps this doesn’t play to Nokia’s overall position or strengths in the mobile market. It may not want to play the role of emerging market or feature phone vendor but that may be what it is good at. Nokia has been looking for an identity for some time and this move has not brought anymore clarity into play.
What is clear is Elop may be playing to operators now but eventually Nokia will need to attract consumers and prove to them that its Windows Phone 7 devices are not just operator friendly but customer friendly as well.