Counterpoint: Nok-Win Is a Win-Win

{complink 3847|Nokia Corp.} CEO Stephen Elop knows exactly how to drive up sales for the ailing company. Bolaji Ojo's latest blog post suggests a “Nokia-Microsoft tie-up in the smartphone operating system sector is not in either company's best interests.” I disagree. (See: Nok-Win a No-Win Combination.)

Application developers disagree, too. For starters, Nokia will tap Microsoft's software developers' network. Data from analytics firm Flurry suggests software developers like the Nokia-Microsoft pact, because the majority stepped up development for new applications running on Windows Phone 7.

Flurry, which began measuring analytics supports for the operating system five weeks ago, released measurements on Friday, February 11, identifying a 66 percent increase in project starts, compared with the prior week. To determine the increase and impact, Flurry studied new project starts for the first five weeks of support for Android, BlackBerry, and Windows Phone 7 platforms. The Windows Phone 7 figures, normalized to show percentages vs. actual numbers, clearly outpaced rivals by the fifth week. This is how Flurry put it in a blog post:

    Prior to today’s announcement, many questioned the viability of Windows Phone 7 as an operating system that developers would support. There was doubt that Microsoft as a company could muster enough momentum to gain relevance at this stage in the mobile platform race. From Flurry’s point of view, this week’s spike in Windows Phone 7 developer activity shows that developers not only believe Nokia has given Microsoft Windows Phone7 a shot in the arm, but also that Nokia and Microsoft together can build a viable ecosystem.

Flurry records a new project start when a developer adds the Flurry software developer kit (SDK) to a pre-released application, and about 38,000 developers have created projects, according to the blog post.

Nokia-Induced Flurry for Windows OS

Nokia's content and application store, Ovi, will integrate with Microsoft's Marketplace to provide more options for consumers. The new Nokia company structure involves two main business units — Smart Devices and Mobile Phones — led by Jo Harlow and Mary McDowell, respectively. Within one of these division developers will find Services and Developer Experience, led in the interim by Tero Ojanpera. It will focus on services portfolio, developer offering, developer relations, and integration of partner service offerings.

Still, when it comes to mobile application development the numbers suggest catching up could take some time. Microsoft historically held the lead in application development for the PC, but trails when it comes to mobile. Launched in 2009, Microsoft’s app store for mobile offers about 8,000 applications, compared with the Apple App Store's at about 350,000 and Android's approximately 200,000.

It's easy for me to see how the Microsoft-Nokia combination will create a network of developers for business applications, geared toward mobile use. Not only will the Microsoft-Nokia partnership create support for a mobile developer network, but also for mobile advertising and electronic payment systems.

Nokia, one of several companies to form the NFC Forum, which supports near field communication (NFC) application development, took the lead in electronic payments. Google CEO Eric Schmidt last year said the tech company would build NFC compatibility into its mobile operating system, Android.

Along with Nokia, Sony and NXP Semiconductors co-founded the NFC Forum, which aims to make mobile devices the standard for sharing information with a tap of the smartphone or by holding it within a few inches of the downloadable content. The technology being pushed for electronic payments in point-of-sale terminals, public transportation, and sports stadiums also has a role in advertising.

Microsoft Advertising and other ad agencies will no doubt tap the technology for ad campaigns. An executive with NXP Semiconductors once described the technology as a “shortcut between advertising and consumers” that will one day replace 2D barcodes. We also talked about authenticating check-ins on sites like Facebook and Foursquare — but what about building an automatic check-in service for products headed through the supply chain? Would it become more accurate and replace radio frequency identification (RFID) technology?

14 comments on “Counterpoint: Nok-Win Is a Win-Win

  1. mfbertozzi
    February 15, 2011

    Here we are Laurie, this is the point. As mentioned very recently (yesterday on this board between me and Bolaji and other people of course), stock market reaction to Nok-Win was quite negative, but we don't understimate how many developers communities working on Microsoft since a long ago could bring tremendous positive impact on Nok-Win apps. Just to give you an example…are we are of the effort required to develop ads on Win instead of other OS? Rgds

  2. DataCrunch
    February 15, 2011

    Laurie, I agree that this deal is a potential win-win.  Nokia and Microsoft are two giants to looking to reclaim their dominance in the mobile space.  For Nokia this is a matter of survival and the stakes for Microsoft could not be bigger as well.  These two companies are now more than ever motivated to make this a success.  I also found the Flurry chart very interesting.

  3. eemom
    February 15, 2011

    Obviously only time will tell if this is truly a win-win.  It is great that developers are working on the Windows 7 platform but here are my concerns.  1) When will Nokia release the first Windows 7 based product? They were not promising that it would happen this year.  Once released, how far behind will Nokia be in this market?  Can they catch up to the Apple's 350K apps or Androids 200k apps?  Also, we have to assume that Apple and Google will not be standing still and their market presence will be more solidified in year's time.

    As I mentioned before, Nokia has a steep hill to climb.  Can they be successful as the third player in this market?  Nokia and Microsoft have to come up with a product that will wow consumers and persuade them to switch from their current platforms.

  4. Parser
    February 15, 2011

    From Microsoft point of view this is the best move. They could not, so far, break through the market place with Windows Phone 7. Tapping to Nokia will make it possible. Nokia is known, in general as reputable company, and has stores and support all over the world. Considering all of these factors the power to success and establish the third equal option for the consumer is very strong.

    The questing remains: Will buyers be convinced to follow them?

  5. bolaji ojo
    February 15, 2011

    Again, you put your finger on the key questions here. Laurie describes here how this situation benefits Microsoft. Developers are rushing now to support Windows 7. They were not doing so before but now they have the incentive of developing applications for the millions of smartphones being shifted over from Nokia. Great. Score one for Microsoft. How exactly does this benefit Nokia? That's the missing link and the company has not made the case and I just don't buy it. You can fault the equity market for a lot of things but it has a tendency in the long run to get things right and it doesn't like the way this sounds for Nokia.

  6. bolaji ojo
    February 15, 2011

    Laurie, You cite some great stuff that shows Microsoft benefitting from this arrangement and I yield on that. But my point is that this is not to Nokia's advantage. How exactly does this benefit Nokia is the ringing question the investment community is asking. True, developers are now embracing Microsoft's Windows perhaps with the same passion they had for Symbian but Nokia does not own Windows 7. Microsoft does.

    Aside from the promised “billions,” I still don't see the overwhelming advantage of this deal for Nokia. Sadly, the company is going to spend the next two years porting its devices over to Windows 7 but the competition is not standing still. I hope you are right for the sake of the industry, consumers, suppliers, the contractors and Nokia employees. If I work at any of these companies I will be evaluating each contract with Nokia and trying to understand what these changes mean for our long-term relationship with the company. On the other hand, if I was supporting Windows 7 before with two developers, I will be shifting three more to the platform.

  7. Hardcore
    February 15, 2011

    Nokia took a 17% dive over the last couple of days:

    It looks like investors are prepared to continue letting it fall; really > $17 billion wiped off stock in a couple of days is no laughing matter.

    As regards developers, the windows mobile phone OS offering is quite poor and both companies are going to need some serious man-hours to get this thing up to modern standards, it is completely irrelevant as to how many developers are working under the OS because ultimately they are bound by the functionality of what the OS provides and the way it accesses the underlying hardware. (Apple, supply both the hardware and the OS, therefore the integration is of a much higher standard. Apple does not have to worry about multiple product lines from multiple suppliers)

    Whilst on a discussion of Windows mobile OS related issues,  a major problem is the lack of multi-threadding.(remember how much of a problem that caused apple with their users complaining, even Nokia  initially slagged apple down for non-multitasking and yet they have gone the same way).

    A further issue for the new partnership is going to be getting multi-threadding working under the windows mobile system, Microsoft have had problems previously with pre-emptive threading, which is possibly why the OS is not fully enabled to handle it.

    Nokia engineers are going to have their work cut out in the following year, because it is not going to be a case of just throwing Microsofts OS onto existing Nokia hardware, in many cases  the hardware is not physically compatible with the existing Microsoft offering.

    Unfortunately with the speed Nokia has been working in the past, we may be looking at a more than a year to fully integrate the Microsoft OS into current Nokia kit. Until that time it is likely that Nokia will be selling hardware that is of the same interface quality to other Microsoft customers running this OS interface.

    So certainly in the next year Nokia are really going to have a rough time of it, I don't see the share price recovering in the short term, until Nokia has something that is at least mildly competitive to Apples offering, but certainly better that the run of the mill  phone product currently running the Microsoft OS.








  8. Laurie Sullivan
    February 15, 2011

    Bolaji – not sure if you have had a chance lately to use some of Nokia's phones. In a word–awesome. That's the word I use to describe most of Nokia's phones. The picture quality is fantastic, sound great, design – well done. I'm not sure what the issues are in the U.S. when it comes to carriers picking up some of the higher priced phones. Maybe that's the problem, the phones that have really nice features are priced too high for the North American market. I had a chance to test a few at the Nokia Live theater with it opened in L.A. I was impressed. I think each company will play off the other's strengths. 

  9. Laurie Sullivan
    February 15, 2011

    Hardcore – thanks for your insight. I agree. Investors don't like the deal. I do. It was either Nokia and Microsoft or Nokia and Google. Google's CEO Eric Schmidt said at the MWC today he wished Nokia would have went with Android. But Nokia didn't. Would it have made a difference? Maybe. Nokia and Microsoft will have integration issues. It will take time. But Nokia began as a rubber manufacture. It managed to survive and transform into a telecommunications company. I think it will survive this one, too.

  10. Parser
    February 16, 2011

    US market is not open to high priced Nokia phones… and so on. Maybe they contain some patent infringement against Apple? There are more relatively subtle things, which makes Nokia success with Windows 7 in question. I hope they will stay in business just to keep competition going and force Apple to compromise. Definitely there are some people who would buy MS software over anything else. For Nokia to succeed they have to develop some proprietary software functions, which communicates with MS servers and MS software in such a way no other software does. More they have to create an iPad look alike with all these features in a very short time even if it is not finished it has to be on the market within 6 months or less. It would do good if they would come up with something totally new and inventive like Apple did in last 5 years. This takes real brain storming and management flexibility. Good luck Nokia and I personally stay with Apple.

  11. elctrnx_lyf
    February 16, 2011

    I feel Nokia going with microsoft will definitely gives an opprtunity for both the companies. As Eric said Google would be on cloud nine if Nokia chosen Android instead of windows as OS for their mobiles. There is a tough time ahead for nokia and micsrosoft should help them and support them in all the ways to bring out a high quality smart phones required for the future. One great positive out of this deal is for the mobile app developers. ho ho … now you have windows mobile along with Android and Apple iOS

  12. Hardcore
    February 17, 2011


    I'm a Nokia user, will never have an IPhone so i'm hardly biased in apples favor, I've even stripped down Nokia equipment  and can say it is significantly ahead of most of the competition, but the OS just sucks compared to what is currently available (Which is why they recently bought out a company providing a GUI layer)

    I don't think it would ever have been Apple & Nokia, that would require apple releasing hardware details to a competitor, who would then cut into their market share, possible even produce products that were better in some respects.(Nokia have better Antenna designs, you can see this is Hong Kong, where Nokia will even perform in underground locations, long after other brands 'wimp' out.)

    I'm still of the mind that Nokia must be mad to tie up with Microsoft for the OS, and have the feeling that Nokia will be forced to back out at some point in the future.

    They will then be forced to regain ground by trying to re-develop a viable mobile environment.(hell for 17 billion(lost in share devaluation), they could have had one kick ass OS development team.)

    Nokia needs a 'knife', someone who will come in and cut through all the layers of internal bullshit and get things moving in a lean and efficient manner, again this is why  Jobs is so efficient , autocratic management sometimes has its benefits but that may come to an end if jobs is forced to step-down due to poor health ,the result would be management by meeting where a group mentality dictates the future direction, which is exactly where Nokia have gone wrong.



  13. itguyphil
    February 17, 2011

    I know someone that works for Nvidia and works on the newest smartphone processors so he knows the potential for the Nokia devices very well. But what he says is that he junks most of them because the OS is terrible. It barely leverages the power of the hardware and is dreadful when it comes to performing any type of resource-intensive tasks. he said the 2 Nokia's he owns are coasters right now.

  14. Himanshugupta
    February 17, 2011

    Laurie, i think the same way. the partnership of Nok-Win is a good decision from both company's point of view. In short term, this decision will immensely help Microsoft as developers will embrace it now. In long term, Nokia will be able to differentiate its products from competitors. As far as the stock market goes, investers do not like when company takes decisions based on long term planning as the risk goes up.

    Its surprising to find how other company's CEOs are reacting to the news. Not only Google's CEO Eric Schmidth said publically thay Nokia should have gone with Android but Intel's chief Paul Otellini also said the same. I do not know what is the reasoning behind?

    And about your comment about the Nokia mobiles, you are bang on target. The hardware is one of the best in the market. If they can manage to keep the software at the same quality the Nokia can find its old days back.

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