Today’s announcement is a major boon for Microsoft, which has seen a slow start to sales of Windows Phone 7 since it launched in the fall. It also is a significant turning point for Nokia. While still the world’s largest phone maker, the company has seen its share diminish as its operating system, Symbian, has fallen behind Google’s platform, Android.
Microsoft and Nokia have shared interest in competing against Apple and Google. The ties go deeper. Nokia’s chief executive is Stephen Elop, the former president of Microsoft’s Business division.
In an open letter written by Microsoft Chief Executive Steve Ballmer and Elop, the two said, “There are other mobile ecosystems. We will disrupt them.”
Elop and Ballmer both spoke at a news briefing in London Friday that was broadcast on the Internet. “This partnership with Nokia will accelerate, dramatically accelerate, the development of a vibrant, strong Windows Phone ecosystem,” Ballmer said.
The partnership brings together software from Microsoft and phones from Nokia. The two companies say they will combine services, such as Nokia Maps with Microsoft’s search engine, Bing, and ad platform, AdCenter. Microsoft would provide software tools to developers building for Nokia phones. Nokia will also play a significant role in the future development of the Windows Phone operating system. The Nokia application marketplace will also be added to the Windows Phone app market.
Elop said he considered staying on Nokia’s current development path with Symbian and a new system, Meego, but thinks Windows Phone 7 offered a faster path. He said Nokia also met with Google to discuss Android, but concluded, “we would have difficulty differentiating within that ecosystem,” he said at the news conference.
Will Stofega, an analyst at research firm IDC, said. “It did show it was a very careful and considered move” to go with Microsoft, he said. “It shows to me he really did a lot of due diligence. I think it inspires confidence going forward.”
Stofega said for the partnership to be successful, “They will need to be very, very aggressive in their time to market.” Elop declined to say at the news conference when the first Nokia phone running Windows Phone 7 would be introduced.
Nokia will continue to support Symbian in its lower-end phones, which is the market leader among mobile operating systems, installed on 1.1 billion phones. But it does remove Symbian as a continuing competitive force on smartphones, a market now featuring Windows Phone 7, Apple’s iPhone, Google Android and Research in Motion BlackBerry. Hewlett Packard is also focused on building out the market for WebOS on mobile phones.
Nokia and Microsoft still need to finalize a definitive agreement.
Elop also announced a major reorganization, dividing the company into Smart Devices and Mobile Phones, and shuffled its senior managers.
Microsoft stock is down 27 cents in interday trading, at $27.26 per share.