Macadamian Blog

Nokia and Microsoft to Join Forces?

Last week I attended a presentation by Nokia that outlined how mobile app developers and mobile content publishers can do business with the company. My initial takeaway was that the Nokia phone is quite accessible to organizations that have a large number of C++ developers. Most of their presentation focused on Qt and how it can now be used in the development of all Nokia platforms (such as Symbian, Maemo and MeeGo). This is great news for a company like Macadamian, because we’ve been working on a couple of Qt projects over the past six months.

The presentation also offered a walk-through of how to publish apps to the Ovi Store. The bottom line is that the review process takes 7 to 9 business days and the Ovi Store is rejecting slightly over 30% of the submissions on the first pass.

A Change of Plans

After the presentation, I planned to write a blog that explained all of the above findings in detail. My plans changed, however, when I read an internal memo from Nokia that leaked onto the Internet on February 8th. The memo indicated that things at Nokia could change dramatically by the end of the week! It revealed that the N9 should be the first Nokia device to ship with MeeGo, saying that "…at this rate, by the end of 2011, we might have only one MeeGo product in the market". In their presentation, Nokia had hinted that their CEO would make an announcement at MWC, and most of us assumed that this would be about their anticipated MeeGo Tablet. But, given the contents of the memo and the fact that the CEO only expects one MeeGo device to ship this year, that now seems unlikely.

Windows Phone 7?

The memo fuels the rumour that Nokia will move to WP7 for its phone platform. If the rumours are true, it would be a win-win. The Nokia Ovi Store could give WP7 a shot in the arm.

One of Nokia’s biggest assets is the global reach of its platform. Nokia covers 170+ counties with credit card payment and 99 countries with carrier billing. Their store is translated into 30 languages and their application approval process includes a moderation process that takes into account the regional and cultural differences of each country.

The most surprising statistic released by Nokia is that carrier billing has increased app sales by up to 13x in some markets. In comparison, Android has carrier billing in two countries and the other competitors have none. These agreements take time to negotiate, and most carriers want to take 50% of the app price. If Nokia brings that to another ecosystem, it would increase the app sales drastically.

WP7 vs. Android

On one hand, it would be easier for Nokia to choose Android overWP7 and gain their own application market for their phones. But will developers really want to submit their apps on all of these application market clones? WP7 seems like the most accessible choice.

On the other hand, WP7 is struggling. It did not even surpass Windows Mobile in Q4. Although Microsoft shipped 2 million phones, it took almost two months for Macadamian’s biggest WP7 fan to find the one he wanted. What if Nokia moved to WP7 and started distributing massive amounts of WP7 phones world-wide? It would be a huge gain for Microsoft, giving them the potential to obtain 30% of the World’s smartphone market shares. These potential gains could justify an exclusive deal with Nokia.

According to their memo, Nokia is "standing on a burning platform", and they will either need to jump-ship or perish in the flames. Will they save the value they have, partner up with Microsoft, and create an ecosystem that can compete with iPhone and Android? Macadamian will be watching the situation closely and will keep you posted.