On Microsoft and Nokia
Steve Ballmer, Microsoft CEO, on the Microsoft-Nokia deal:
Ecosystems thrive when fueled by speed, innovation and scale. The partnership announced today provides incredible scale, vast expertise in hardware and software innovation and a proven ability to execute.
According to Gartner, Nokia sold 461.3 million phones world-wide in 2010. This is an enormous figure – almost one in three phones, world wide, sports a Nokia logo. For every ten phones Nokia sells, Apple manages to sell just one iPhone. Meanwhile, despite shipping a lot of phones to wholesalers in the numbers Microsoft chooses to share (and make a lot of noise about), there’s strong anecdotal evidence that WP7 has not clicked with consumers yet.
There seems to be some belief that Nokia can somehow bring their enormous sale volume to bear on Windows Phone 7. Take Microsoft’s promising OS (hampered by poor sales) and wed it to Nokia’s huge sales figures (hampered by lack of a desirable OS). Marriage made in heaven, right?
Well, maybe not. I think many people are overestimating the influence Nokia can have on Windows Phone 7’s immediate future.
Windows Phone 7 launched in October 2010 with ten handsets from four OEMs: five from HTC, one from Dell, and two each from LG and Samsung. These are not companies with no idea about designing modern smartphones. Samsung and LG are the largest makers of Android phones, by volume. HTC are the design shop that managed to almost single-handedly keep Windows Mobile 5 and 6 alive, as well as the company who designed the influential Nexus One handset for Google.
These are not idiots – in fact, you could say they have “vast expertise in hardware and… a proven ability to execute”, and they designed a decent clutch of phones for WP7. Nokia’s handsets are constrained by the same rules of physics, component supply, and material costs as these everyone else. It is foolish to imagine they are going to immediately come up with some blockbuster handset to reverse WP7’s fortunes in the marketplace.
So what about Nokia’s huge sales volumes and brand strength? Well, let’s revisit those 461.3 million phones in 2010. Gartner state that only 111.5 million are smartphones – so about 76% of Nokia’s sales were featurephones and dumbphones. Gartner don’t state how they differentiate “smartphone” OSs but I suspect they are classing Symbian Series 30 and Series 40 as non-smartphone OSs, which isn’t necessarily unfair. S40 is a pared-down OS with no multitasking, a highly restricted web browser, or third party API for native apps beyond some very limited Java ME support. It’s barely more capable than the old embedded OSs Nokia has been using for more than a decade.
These non-smartphone sales will be primarily to cost-conscious consumers and those in less developed countries. It’s a healthy market segment for Nokia, but I’d argue that it’s also a market segment that is entirely inaccessible to Windows Phone 7. WP7 has exacting hardware requirements, including:
- a 480x800 resolution screen with capacitive touch sensors
- 1GHz ARM7 CPU
- DirectX 9 capable GPU
- 256 MB RAM, 8 GB Flash memory
- Various sensors – accelerometer, compass, ambient light level, proximity, assisted GPS
- 5 MP camera with LED flash
- FM radio tuner
- 6 hardware buttons
Clearly, it’s going to be some time before even a relatively upmarket $99-upfront no-contract phone can hope to meet those specifications, let alone the huge variety of models Nokia sells below this price point. Indeed, a review of Nokia system specifications even shows that most of the 111.5 million “smartphones” Nokia sold last year are far below this specification.
Nokia maintains a massive market share world-wide and vast numbers of talented designers, but the bulk of their strength is in areas that do not intersect with the high end smartphones that Windows Phone 7 is designed for. Samsung, LG and HTC failed to make a Windows Phone 7 handset that set the world alight; it’s far from guaranteed that Nokia can succeed where others failed. Indeed, an early leak of Nokia’s WP7 prototypes shows Just Another Modern Smartphone.
Contrary to many industry watcher’s opinions, I think it’s far from clear that this move will elevate Windows Phone 7 to the level of mindshare enjoyed by Android and iOS. Ballmer may be parading in fancy new clothes, but they’re cut from the same cloth as everyone else’s.
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