Nokia’s Tie-Up With Microsoft Won’t Help

Nokia made headlines last week with news that it will produce smartphones featuring Microsoft’s Office for Mobile. But trying to tap the enterprise market with Microsoft’s clunky wireless software won’t do anything to reverse the Finnish company’s slide.

It’s been fascinating to watch Nokia’s smartphone business suck wind even as the space grows some serious legs. Its market share continues to erode, according to new figures from Gartner, and the rest of the field is closing fast. Nokia still claims the lion’s share of the market, but the company is showing no sign of keeping the field at bay.

The Microsoft pact won’t help. The alliance is aimed squarely at the enterprise market RIM dominates, but even the BlackBerry — which not long ago was considered a business-only device — has expanded into low-end business users and even casual consumers. As Apple has proven — and as Kevin C. Tofel recently pointed out — smartphone manufacturers and the software developers who support them must target consumers in the era of the superphone.

Why? Relatively few users need to edit spreadsheets or create Word documents on the go. RIM’s dominance in the enterprise is built on its impressive mobile e-mail service — not its ability to “mobilize” Microsoft-type apps — and plenty of attractive offerings exist for users who do use their phones for basic business computing. Also, users are increasingly choosing which devices they carry, and IT-driven deployments are becoming less common. That’s why we’re seeing the iPhone expand into the business arena — a trend that has actually driven productivity, according to new data from Strategy Analytics.

The thing is, there are so many other areas Nokia should be focusing on instead. It should accelerate work on Symbian^4, a much-needed overhaul that inexplicably isn’t due until the second half of 2010. It should strengthen its relationships with carriers — particularly in the U.S. — so that it doesn’t come to market with an unsubsidized $600 handset, and so it can offer carrier billing for its Ovi Store. And it must continue to improve the Ovi Store by streamlining the user experience, bulking up its library and wooing more developers.

Nokia already has the tools to compete with Apple and RIM; partnering with Microsoft is nothing more than a distraction. It just needs to shuffle its priorities, placing the user experience at the top of the list. Then it needs to execute.

Question of the week

Will Nokia’s partnership with Microsoft boost sales?
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Colin Gibbs

Colin Gibbs

Founder and Principal Peak Mobile Insights

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4 Comments Subscribers to comment
  1. I think you’re right to wonder whether an OS-only business model can compete, Michael, and I think Android’s prospects are pretty good (although not as sky-high as some people believe). But I also think Symbian could become a game-changer again if it gets a complete facelift and if Nokia figures out how to leverage its role as ODM.

  2. Michael Scharf Monday, August 17, 2009

    No, the partnership is too little too late. The real question is whether any software only provider (WinMO, Symbian, or the many forms of Mobile Linux) can overcome the end to end solution provided by Apple and RIM and to a lesser extent Palm and Danger/Microsoft.

    ^^^At the present time, I believe the answer is no, because the OS only business model has one revenue stream as opposed to the multiple streams shared by the “complete solution.” Those revenues come from selling the handsets, as well as carrier subsidies, app store commissions, and so on.^^^

    The only exception might be Android. Google continues to win battles by changing the nature of the field. Search, GMail, etc. are not revenue producing products, rather they are platforms for Google’s primary business – selling ads. With Android (and maybe Chrome on the desktop) Google is building a totally different model for portable computing. Time will only tell if they have the right idea.

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