Nokia-Microsoft pact seen creating Google rival

BARCELONA Tue Feb 15, 2011 11:37am EST

Nokia chief executive Stephen Elop (L) speaks, watched by Microsoft chief executive Steve Ballmer at a Nokia event in London February 11, 2011. REUTERS/Luke MacGregor

Nokia chief executive Stephen Elop (L) speaks, watched by Microsoft chief executive Steve Ballmer at a Nokia event in London February 11, 2011.

Credit: Reuters/Luke MacGregor

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BARCELONA (Reuters) - Wireless industry executives mostly lauded the alliance between Nokia and Microsoft as good for competition and innovation, despite the stock market's disdain for the deal.

The partnership between the two giants -- which creates a more formidable rival to Google's mobile operating system Android -- was announced last week, and at the ongoing Mobile World Congress in Barcelona industry players have been trying to assess its impact.

While Nokia shares have tumbled more than 20 percent since announcing the deal -- touching their lowest since 1998 earlier on Tuesday -- handset and chip makers have come out in support of the alliance as a way to keep alive competing mobile software platforms and prevent the commoditization that has depressed company valuations and margins in the PC world.

"Competition always helps ... Having an extra strong supplier is good for the industry," Warren East, chief executive of chip designer ARM Holdings, told Reuters.

Operating systems have emerged as the key battlefield for dominance of the world's smartphone market.

Nokia has lost ground in recent years to Apple's iPhone, which has its own operating system, as well as Google's Android software, which ended the 10-year reign of Nokia's Symbian as the pre-eminent smartphone platform last quarter.

Microsoft's Windows Phone 7 had a market share of just 2 percent in the last quarter, but with the help of Nokia, the world's largest smartphone maker by volume, that could improve significantly.

BRUSHING OFF FEARS

Initially, the announcement raised fears the phone makers using Microsoft software would abandon the platform, but those early fears appear unfounded.

Samsung said the deal would have no effect on its plans for Windows Phone 7, which it already uses in its phones.

Taiwan's HTC, the fifth-biggest maker of smartphones, uses both Android and Microsoft operating systems on its products and was upbeat about the deal.

"We've been working with Microsoft for over a decade," said HTC Chief Executive Peter Chou in a speech. "We're a lead partner on Windows Phone 7. We are positive, because this combination for sure will make the ecosystem stronger."

CEO of personal computer and tablet maker Acer Gianfranco Lanci also said the alliance was good for companies that make devices.

The deal could be a windfall for Qualcomm, the sole provider of chips for Windows Phone 7, as it sells little to Nokia today.

"We are excited about that opportunity," Qualcomm CEO Paul Jacobs said in an interview with Reuters, adding it was too early to count chickens.

Jacobs also said the alliance was good for the mobile industry: "It's good to have another strong operating system out there."

Some industry players -- like Ericsson CEO Hans Vestberg -- said it was too soon to tell how its handset joint venture with Sony would be affected by the change.

Telecom operators at the show have been more neutral on the partnership, in part because the software battle doesn't really affect their profits.

(Reporting by Tarmo Virki, Georgina Prodhan and Leila Abboud; Editing by Will Waterman)

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Comments (3)
plint6 wrote:
Nokia, almost game over. show what you got. NOW!!! (or never)

Nokia should come with something te very soonest. The reason is simple, the offer for high quality communication devices is hugh, gigantic, massive and immense. Just look at what competitors have to offer, for example, at the MWC 2011 in Barcelona.

Thus, why should consumers wait for Nokia? Even die hard Nokia fans cannot wait anymore. Why? Because they love high quality devices/smartphones and there is lots of it to choose from, NOW, at this very moment. A big negative point from Nokia is that they cannot give a specific date for introducing….just something.

I am very confident that Nokia will come with a range of new and competitive devices in the early second quarter of 2011. And if not, they sould come with a new, fresh and astonishing upgrade of its Symbian3 platform. Just to show what they can. Overall, it is important for Nokia to come up with ….something… very soon.

A lifeless Nokia is a hugh market for competitors,….even for big old Microsoft.

Feb 15, 2011 2:21pm EST  --  Report as abuse
Won’t Nokia suffer from the same disaster it suffered at the low-end mobile phones segment: erosion of price competitiveness?

Already Samsung and HTC make Windows phones and a host of others will also be making Windows phones soon. Profit margins will narrow down even at the high-end soon due to stiff cut-throat price competition from Apple and Google’s Android phones which Nokia will not be able stand just as it happened at the low-end even with its huge production scale, distribution, logistics etc. benefits in its favour. How will it be different this time at the high-end with this Nokia-Microsoft link?

Brand loyalty is already ancient history according to a recent Gartner research report. Consumers don’t care. High end smartphones will also soon become commodities. Just wait, when Apple launches its cheaper version of the iPhone soon. How will Nokia compete with that then?

It would have been an entirely different ball game if Nokia had got exclusive rights to make the Windows 7 phones. Now Nokia will have to compete in the same marketplace with so many other makers of the same stuff.

Nokia- Microsoft joining hands: a bad idea. The last nail in Nokia’s coffin.

Have I overlooked some goodies others can see in this marriage of two losers?

Feb 15, 2011 8:02pm EST  --  Report as abuse
philg54 wrote:
When you can correctly answer the question as to how Nokia got into this position in the first place you will not be able answer the question as to whether Nokia’s marriage to Microsoft will work.

Feb 18, 2011 11:10pm EST  --  Report as abuse
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