Nokia and Microsoft Partner UpNokia and Microsoft Partner Up

The Nokia/Microsoft combination might still fail in the US market, but it's a big world out there, and the US share of the international smartphone market is only 21%.

Microsoft's Steve Ballmer joined Nokia CEO (and Microsoft alumnus) Stephen Elop and announced today that Microsoft's Phone 7 operating system would serve as Nokia's primary smartphone platform going forward. Nokia did not indicate when their first Phone 7 would be introduced, but they identified Symbian as "a franchise platform, leveraging previous investments to harvest additional value."

Elop, who was brought in to run Nokia last September, is clearly looking to get the company back on the fast track. In an internal memo secured by Engadget and reported in Business Week he observed that his company "poured gasoline on our own burning platform" by being unprepared for the changes in the smartphones market. He went on to say "At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, 'the time that it takes us to polish a PowerPoint presentation'"--Ouch!

Looking at the trends in the worldwide smartphone market, the alliance seems a good move for both companies. Symbian remains the world leader in smartphone operating systems with better than twice the sales of the iconic iPhone. However, the trend line for Symbian is clearly downward, and the share being reported for Microsoft is primarily the aging Windows Mobile rather than the recently introduced Phone 7.

Getting the nod from the world's largest handset maker is indeed a coup for Microsoft, but the impact on Microsoft's Lync unified communications product is not as clear. When Phone 7 was introduced last year I asked the Microsoft spokesman if they planned to have a Lync client for it and he failed to recognize "Lync" as a Microsoft product. So while Lync is big news for us, it clearly isn't a major factor in Microsoft's consumer business.

With the central consumer focus in the smartphone market, Nokia stands to sell a lot more handsets (and slow the growth of rivals iPhone and Android) by latching on to a hot consumer trend than they ever would selling a mobile UC offering. The Nokia/Microsoft combination might still fail in the US market, but it's a big world out there, and the US share of the international smartphone market is only 21%.

Nokia will have a representative speaking on our mobile devices panel at Enterprise Connect next month, and you can be that the Phone 7 plans will come up.