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"Strategic partnership" between Nokia and Microsoft - Official

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As Scott McNealy would say, this merger is like two garbage trucks colliding.
Nokia should have gone Android and built their innovations on top of it. Instead they have resigned themselves to a low margin generic WP7 phone hardware maker business. MS is going to decide how much profit Nokia is allowed to keep.
 
What makes WP7 so much more low margin than Android? Sure, Microsoft typically charges a license fee per unit, but at the same time, you get a lot more support - all of those "innovations" you're talking about require thousands of developer hours that don't exactly come free, not to mention the amount of testing Microsoft does with the phones before they're released. If you looked at HTC's books, and took into account the amount of work they do for Sense, I highly doubt their profit margins for their Android devices are much different than their WP7 devices.

Its also amusing that people gnash their teeth about how they want stock Android, but now they criticize Nokia for this decision because they have to stick with stock WP7.
 
http://www.engadget.com/2011/02/11/exclusive-nokias-windows-phone-7-concept-revealed/
11x0211nokiaconcept.jpg
 
As Scott McNealy would say, this merger is like two garbage trucks colliding.
Nokia should have gone Android and built their innovations on top of it. Instead they have resigned themselves to a low margin generic WP7 phone hardware maker business. MS is going to decide how much profit Nokia is allowed to keep.

If Nokia hardware is garbage, then words can't describe the crap Samsung and LG sell. 😀

And Windows makes more sense for the business market. The only company giving employees Android phones is Google.
 
using android would have been a guaranteed success. wp7 is unproven in the market so far. at the very least why not make android and wp7 phone like htc and samsung? it sounds like they let their former ms exec sell them down the river
 
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If Nokia hardware is garbage, then words can't describe the crap Samsung and LG sell. 😀

And Windows makes more sense for the business market. The only company giving employees Android phones is Google.

Businesses are switching from giving their employees phones to reimbursing them for purchases of personal phones and plans that are partially used for business. So what makes sense for business market is what makes sense for personal phone market + the ability to run productivity software. I would argue that from that point of view, Android is much better suited to the task than WP7.
 
What makes WP7 so much more low margin than Android? Sure, Microsoft typically charges a license fee per unit, but at the same time, you get a lot more support - all of those "innovations" you're talking about require thousands of developer hours that don't exactly come free, not to mention the amount of testing Microsoft does with the phones before they're released. If you looked at HTC's books, and took into account the amount of work they do for Sense, I highly doubt their profit margins for their Android devices are much different than their WP7 devices.

Its also amusing that people gnash their teeth about how they want stock Android, but now they criticize Nokia for this decision because they have to stick with stock WP7.

2 years from now, smartphones are going to be commodities. Ultimately it's just a battery, a chip set, and a screen. If you got a bunch of companies making essentially identical devices with access to the same components, there is no pricing power to create the higher margins on the hardware, unless you are also a component manufacturer like LG and Samsung. The way to create higher margins is to differentiate on software. If you hand over the software to another company, guess what, they are going to keep the majority of the margins for themselves, and only cut Nokia enough to keep them alive. Compare how much profit MS makes off Windows to how much profit Dell makes off Windows boxes. Nokia is signing up to be the DELL of smartphones.
 
2 years from now, smartphones are going to be commodities. Ultimately it's just a battery, a chip set, and a screen. If you got a bunch of companies making essentially identical devices with access to the same components, there is no pricing power to create the higher margins on the hardware, unless you are also a component manufacturer like LG and Samsung. The way to create higher margins is to differentiate on software. If you hand over the software to another company, guess what, they are going to keep the majority of the margins for themselves, and only cut Nokia enough to keep them alive. Compare how much profit MS makes off Windows to how much profit Dell makes off Windows boxes. Nokia is signing up to be the DELL of smartphones.

Nokia execs would argue exactly the opposite, that making android phones is analogous to being a pc maker. We don't know the exact terms of Nokia's deal with MS, it's possible that they got some special concessions that other manufacturers didn't get. I'm sure whatever MS gave them is more than Google was willing to because MS has more to gain from the relationship.

All things being equal I think its better to be parters with MS than Google in the smartphone market. Of course all things are not equal and if WP7 tanks (which I think is more likely than not) Nokia just signed its own death warrant.
 
Nokia doesn't need to be partners with Google to make an Android phone. Android is open source. Nokia could just take the Android source code and build its own value on top of it.
 
Nokia doesn't need to be partners with Google to make an Android phone. Android is open source. Nokia could just take the Android source code and build its own value on top of it.

Well, they COULD have, before they got in bed with Microsoft. I have no doubt that one of the stipulations in their contract is they wont use any other OS for their new smartphones.
 
Nokia doesn't need to be partners with Google to make an Android phone. Android is open source. Nokia could just take the Android source code and build its own value on top of it.

I think the strategy of software differentiation on Android is bound to fail for everyone thats trying it. Differentiation only adds value if it satisfies some need better than the undifferentiated product. None of the Android skins do this to a significant degree. Most people agree they destroy value by making the phones worse. This problem will get will become more and more problematic as android matures and there are less "holes" to fill. In the long run the only winners are consumers and Google. From Nokia's standpoint entering this game as this late stage is hopeless.

Nokia execs are probably thinking that they are better off negotiating a deal with MS than entering the Android market where as you said profits will be competed down to zero. They think it will be better to be at MS's mercy than the mercy of a market that is almost perfectly competitive.

Obviously these are both bad options but both are still better for Nokia than continuing on its current course.
 
If Nokia hardware is garbage, then words can't describe the crap Samsung and LG sell. 😀

And Windows makes more sense for the business market. The only company giving employees Android phones is Google.

Nokia has always made well built handsets that can take a lot of damage. The phone I had before this one was a Nokia E51 with Symbian on it. It was a tank that took a ton of abuse plus they know how to make a great camera on their phones as well. If Nokia made Android phones I would have loved to get one of them but I won't go WP7.

It's just that with WP7, they can't really differentiate themselves much since there's strict requirements of what the phones have to be.
 
Elop did the only thing he could do, imo. What were his choices? Endorse the current strategy but do a better job? Maybe that would have worked three years ago, but now the company is behind and getting their lunch eaten, and has already proven that it can't deliver Symbian enhancements or Meego products anywhere near fast enough. So that left becoming a me-too player in the Android market, and one that is a couple years behind the leader, or throwing its lot in with a company that has a proven ability to build a community and a market, and the cash to back up its strategy. I'm willing to bet that he and the board have been talking about this strategy shift since he was hired.
 
I think the strategy of software differentiation on Android is bound to fail for everyone thats trying it. Differentiation only adds value if it satisfies some need better than the undifferentiated product. None of the Android skins do this to a significant degree. Most people agree they destroy value by making the phones worse. This problem will get will become more and more problematic as android matures and there are less "holes" to fill. In the long run the only winners are consumers and Google. From Nokia's standpoint entering this game as this late stage is hopeless.

Nokia execs are probably thinking that they are better off negotiating a deal with MS than entering the Android market where as you said profits will be competed down to zero. They think it will be better to be at MS's mercy than the mercy of a market that is almost perfectly competitive.

Obviously these are both bad options but both are still better for Nokia than continuing on its current course.

If Nokia cannot add value over stock Android, then it's not going to matter if they are using WP7 or Android as a starting point. If consumers don't like Nokia add-ons, they aren't going to buy Nokia phones, regardless the OS they are based on.
But at least with Android they have access to an established ecosystem of apps, and don't need to pay anything for the base OS, which is open source. With WP7, they are betting on a lagging ecosystem and it's going to cost them money in OS license fees that would have been a large chunk their profit to place that bet.
 
HP bought Palm for $1.2B TOTAL, and got WebOS.
Nokia spent $4B PER YEAR on R&D and has NOTHING. Today their valuation dropped $5.5B.
Nokia should have outbid HP and bought Palm. Then they would be coming out with serious iPhone and iPad competitors this year and reaping the rewards. Instead they are going to be coming up with me-too phones in a me-too ecosystem, with MS first in line for a big chunk of the profit.
 
HP bought Palm for $1.2B TOTAL, and got WebOS.
Nokia spent $4B PER YEAR on R&D and has NOTHING. Today their valuation dropped $5.5B.
Nokia should have outbid HP and bought Palm. Then they would be coming out with serious iPhone and iPad competitors this year and reaping the rewards. Instead they are going to be coming up with me-too phones in a me-too ecosystem, with MS first in line for a big chunk of the profit.

The biggest fail of going with Windows Phone 7:
All the work/research they put into Symbian UI, anything relating to Meego, and the entire QT framework goes out the Window, and all talent has to start from square one learning how to do...anything with Windows Phone 7. At least with Android, all the UI stuff they did could have been easily bolted on, it would have been Meego but without whatever is holding up Meego from hitting the market.

And really, Nokia messed up not putting more investment into Maemo/Meego sooner, and they were crazy to invest so much in Symbian for so little advancement.
 
HP bought Palm for $1.2B TOTAL, and got WebOS.
Nokia spent $4B PER YEAR on R&D and has NOTHING. Today their valuation dropped $5.5B.
Nokia should have outbid HP and bought Palm. Then they would be coming out with serious iPhone and iPad competitors this year and reaping the rewards. Instead they are going to be coming up with me-too phones in a me-too ecosystem, with MS first in line for a big chunk of the profit.

I totally agree with this.
Nokia hardware + WebOS = perfection.
All HP did was made bigger Pre phones.
 
I think they were spending roughly $1B per year on Symbian out of the $4B R&D budget. That's serious fail considering the state Symbian is in. I find the news of roughly 1000-1500 Nokia employees who were working on Nokia OS's walking out of work hilarious. I'm not saying that I find the idea of a lot of people being laid off funny. I think it's sad. But seriously, if you were doing such a great job Nokia would still be on top. Symbian would still be the #1 smart phone OS. Your job wouldn't be in jeopardy.

I also agree with a previous poster who said Nokia should have bought Palm. Another failure on Nokia's part.

As much as I think Nokia is at least on the path to recovery, at the same time, looking back at most Microsoft partnerships, it doesn't look great for Nokia. Most past MS partnerships have left MS dominant and the other partner in a position to be swallowed up or weakened.
 
I'm hoping for WP7 to come out on top, and go neck and neck with iOS... Frankly, I'm not a big fan of Android...

I think mainly because out of all the OS's I've had, Android feels the least polished.
 
I'm hoping for WP7 to come out on top, and go neck and neck with iOS... Frankly, I'm not a big fan of Android...

I think mainly because out of all the OS's I've had, Android feels the least polished.

Well, with Nokia (the worlds number one manufacturer) now using WP7 your dream might actually come true.
 
The biggest fail of going with Windows Phone 7:
All the work/research they put into Symbian UI, anything relating to Meego, and the entire QT framework goes out the Window, and all talent has to start from square one learning how to do...anything with Windows Phone 7.

The Window Phone 7 tech stack is immediately accessible to every .Net programmer who already understands C#, WPF, and Silverlight. That's a pretty good talent pool to start building on.
 
Yesterday's announcement by Nokia that it's switching to Windows Phone 7 as its primary smartphone platform has already had, and will continue to have, great repercussions for plenty of parties besides the Finnish company and its new best bud Microsoft. One of the biggest effects of that deal was that Nokia now no longer considers MeeGo -- the open-source OS it was co-developing with Intel -- an item of priority, classifying it as a "learning project." No prizes for guessing Intel's nowhere near happy about that, but would you have also guessed Nokia kept Chipzilla in the dark about its new direction until the day it announced it to the world? Such is the word from TechCrunch's well placed sources, who also say that Nokia dedicated only a three-man external team to the development of UI customizations for MeeGo. Not exactly the hugest investment in the world, we'd say, and when you consider Nokia and Microsoft already have concept devices drawn up, you've got to think plans to abandon MeeGo as a sincere flagship strategy were materializing in Espoo a long time before this event. It would probably have been nice to tell Intel, though, just to be classy. Hit the source link for more detail, including confirmation that Nokia's N9-00, its first planned MeeGo device, was canned -- apparently due to complaints from operators about its hinge.

Ouch, that's pretty messed up of Nokia.

http://www.engadget.com/2011/02/12/nokias-marginalization-of-meego-came-as-a-surprise-to-intel/
 
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