Nokia Announces Plans to Adopt Phone 7

Despite all the experts saying that if Nokia were deciding on adopting either the Windows Phone 7 smartphone operating system (from Microsoft) or the Android smartphone operating system (from Google) then they would ‘go with the strength’ and Nokia would adopt the current smartphone operating system leader—Google’s Android. Or maybe they would adopt both. No way they would only go with Phone 7. Wrong!

[[Click on the following graphic to go to the Engadget.com video of the press conference joint announcement by Nokia and Microsoft—Use Ctrl+Click to open it in a new Tab]]

Nokia announced in London on February 11th that they will be rapidly and aggressively adopting the Windows Phone 7 operating system and that, to this end, they have already been working with Microsoft technical resources for six months leading up to this point.

I did a post on this possible outcome on the 5th Feb (here). My view then was that I could see one  huge reason why Nokia might pick the Phone 7 operating system and not Android; that reason being that with the Phone 7 option Nokia would give themselves a double pass into the massive lucrative world of the corporate mobile phone (cell phone, for my American readers) users.

The first pass being that Phone 7 is of huge interest to corporates—of significantly more interest than Android (see my previous posting for more on that point).

The second pass is that Microsoft basically owns the corporate world when it comes to infrastructure operating systems and tools. According to Gartner 97 percent of Enterprises use and depend on Microsoft infrastructure (operating systems, databases, deployment systems) and tools (mainly Microsoft Office and Internet Explorer). Ditto for about 80 percent of medium to large businesses. Only when you get down to small businesses does the Microsoft infrastructure services share drop away significantly. Nokia will be able to leverage this market share catchment area via Microsoft to target and move its mobile phones into the enterprise and large business areas.

Another contributing factor here is that the previous mobile phone darling of the enterprise and large business sectors, RIM’s Blackberry, is losing favour rapidly. However this fall in grace from the enterprise market is being offset by an increase in consumer purchases of Blackberry’s which, on balance, is actually pushing RIM’s market share up marginally.

It is obvious that the European share market was not seeing the upsides of Nokia’s announcement. Nokia’s share price fell a whopping 14.2 percent after making this announcement.

I think this move by Nokia is a master stroke. However it seems I might be alone in this thinking. I have already read five articles where some very well known IT industry columnists think Nokia have not made a good decision. If you are interested in checking any of these out then try Steve Lohr’s item at the New York Times or one one of my favourites, and also a regular TWiT, John C. Dvorak’s posting at PC Magazine. Following is a snippet from the John C. Dvorak column (click to go to the column).

My thinking is:

• People who like Nokia will still buy Nokia (I know people in this club).
• A large percentage of ex-Nokia people who have moved away from Nokia because of the tired and clunky non-smartphone Symbian operating system are likely to come back as the Nokia Phone 7 devices hit the market.
• Nobody knows the mobile phone business like Nokia.
• Nobody has the solid geographic market coverage that Nokia has (India, Africa, all of Europe, Japan, China, Russia, the Middle East).
• Now, with Phone7, many enterprises and large businesses can seriously consider Nokia when setting internal standards for mobile phones, whereas previously Nokia were not even on most standards short lists.
• Moving forward Microsoft are highly likely to make changes to back-end systems (used by corporates) to support Phone 7 even better than it is supported now, making it even more interesting to enterprises and large businesses.

The bottom line is that the computer industry, and I include smartphones in this broad categorisation, is very fickle and it is difficult to predict the buying public.

At this point I seem to be one of the very few who think Nokia have made a good decision here. There are all sorts of things that could go wrong, such as RIM BlackBerry bringing out a killer smartphone for enterprises and large businesses that flattens Nokia’s in-roads into those markets, but—as things stand right now—I think this move gives Nokia a reasonably good chance at staying Number One in mobile phones for a few more years at least.

I was about to update my mobile phone to an Android based phone (the Motorola Defy), but now I think I will wait and see what Nokia are going to release and how long before it makes it to the market.