This morning (Friday Feb 11, 2011 that is) Microsoft and Nokia announced a broad strategic partnership. Nokia will start supporting the Windows Phone mobile operating system as its principal smart phone strategy.
Under the proposed partnership:
- Nokia would adopt Windows Phone as its principal smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.
- Nokia would help drive the future of Windows Phone. Nokia would contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.
- Nokia and Microsoft would closely collaborate on joint marketing initiatives and a shared development roadmap to align on the future evolution of mobile products.
- Bing would power Nokia’s search services across Nokia devices and services, giving customers access to Bing’s next generation search capabilities. Microsoft adCenter would provide search advertising services on Nokia’s line of devices and services.
- Nokia Maps would be a core part of Microsoft’s mapping services. For example, Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a unique local search and advertising experience
- Nokia’s extensive operator billing agreements would make it easier for consumers to purchase Nokia Windows Phone services in countries where credit-card use is low.
- Microsoft development tools would be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem’s global reach.
- Nokia’s content and application store would be integrated with Microsoft Marketplace for a more compelling consumer experience.
What does this mean for RIMM you may ask? Well it definitely doesn’t bode well for the company.
1) For those that have been expecting Microsoft to buy RIMM this is another obstacle for them. Microsoft is very acquisition shy as they prefer to do strategic partnerships over outright takeovers realizing the inevitable issues with antitrust reviews and integrating acquisitions. Now that MSFT is teaming up with NOK, it is even more unlikely to buy RIMM as they are obviously trying to figure out ways to grow Windows Mobile. Also, note that NOK’s market cap is very similar to RIMM’s and yet MSFT still chose to do a partnership.
2) Microsoft is clearly not giving up in Windows mobile. May RIMM advocates have said that MSFT will just give up on its mobile strategy and buy RIMM. This is now clearly not the case.
3) NOK has the largest mobile phone market share in the world. MSFT saw this and also saw NOK struggling with the development of a workable and user-friendly operating system and saw an opportunity to grab market share. If this succeeds it will only strengthen Windows Mobile which will make things even more difficult for RIMM as it becomes even more marginalized.
4) A reorganized NOK will be a tough competitor internationally for RIMM. Lately, RIMM’s US sales and market share have been declining. However, emerging markets have been a bright spot for the company where they have been growing sales and market share largely as a result of the mess that NOK has put themselves in. Now that Stephen Elop (a former Microsoft employee) is at the helm and is reorganizing NOK’s mobile strategy around Windows Mobile they will likely become a much stronger competitor for RIMM. If anything, it will cause people to wait and see what NOK will come up with from the is partnership thereby negatively impacting the one brightspot for RIMM.
The partnership is another nail in the coffin for RIMM. You have been warned.
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