A partnership announced this month between Nokia Corp. (NYSE: NOK) and Microsoft Corp. (Nasdaq: MSFT) may provide a boost to midmarket enterprises looking to empower the mobile workforce and secure their IT.
And while there are those who scoff at the notion of a "MicroKia" or a "NokiaSoft" taking on the world of smartphones, both Microsoft and Nokia are great at serving midtier enterprises. Together the companies are betting they can claim some serious mobile real estate against the established BlackBerry (Nasdaq: RIMM; Toronto: RIM) BlackBerry, the upstart Google (Nasdaq: GOOG) Android players, and the juggernaut that continues to be Apple Inc. (Nasdaq: AAPL).
Steve Ballmer (who pronounces Nokia accurately) and Stephen Elop (a former Microsoft VP of its Business Division) outlined their strategy last week: The overall theme is that Nokia will adopt Windows Phone as its primary smartphone operating system.
The joint venture helps promote Nokia handsets in North America and Microsoft's Windows Phone operating system everywhere else. However, each company has much to overcome after failing to grasp the hearts and minds of smartphone buyers.
Nokia's share of the handset market fell to 28.9 percent last year from 36.4 percent in 2009, according to recent numbers posted by analyst firm Gartner Inc. The reason continues to be competitive pressure from Android development, and the rising challenge from low-cost handset makers such as ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763), G'Five, and Huawei Technologies Co. Ltd.
Microsoft says it's sold more than 2 million Windows Phone 7 devices since its launch in 2010 but has suffered from fits and starts in its smartphone development since the shift from Windows Mobile. That includes Microsoft's inability to produce its own hardware. (Yes, Kin smartphone, I am looking at you.)
Still, Windows on a Nokia device does not mean the death of Nokia's development of Symbian Ltd. nor the rejection of the Linux-based MeeGo OS. What it does mean is that both companies are serious about competing and, in my view, have advantages in three key areas:
- Microsoft will continue to invest in the development of Windows Phone and cloud services.
- Nokia will contribute its expertise on hardware design and language support, and help bring Windows Phone to a larger range of price points, market segments, and geographies.
- Microsoft development tools will be used to create applications to run on Nokia Windows Phones.
These three advantages piggyback off of established connections that Microsoft and Nokia have made in the midmarket. Microsoft's midmarket strategy includes Microsoft System Center, comprising Microsoft System Center Mobile Device Manager, System Center Configuration Manager, and System Center Operations Manager. Midtier companies, which are investigating mobile applications in the cloud, will no doubt be pitched on how Windows Phone can help reduce operations spending and increase security.
Similarly, Nokia serves midsized enterprises all around the globe by selling a range of handsets, IP VPN gateways, SSL VPN hardware, client management software, and security products. These are all off-the-shelf solutions midmarket CIOs can understand.
Then there is the question of development. Under its Ovi for Business app store, Nokia provides access to Microsoft QuickOffice and Mail for Microsoft Exchange as well as midmarket applications such as Salesforce, iPass, F5 mobile security, and Call Center for Cisco. Nokia also claims a healthy developer community -- 400,000 strong -- and 3 million application downloaded per day. Microsoft's Marketplace includes 6,500 apps and upwards of 24,000 registered developers.
Other factors helping the Nokia/Microsoft partnership include heavy use of Java (which may make the transition easier for developers) and continued support for Symbian and Windows Mobile devices, while both Microsoft's and Nokia's sales teams learn how to pitch Windows Phone 7.
So while the Microsoft/Nokia partnership may look like two losers holding hands in a race, the reality is that they have already established themselves as valuable assets to midmarket enterprises, and their joint efforts could prove helpful in producing new midmarket solutions.
— Michael Singer Senior Editor, Internet Evolution, Moderator of the Executive Clan and Midmarket Clan.