Nokia marries Microsoft, commits to WP7

As widely expected, Nokia has announced a “broad strategic partnership” with Microsoft, betting that the low-flying Windows Phone 7 platform can halt its slide.

It makes sense in that Microsoft is a software company, and Nokia desperately needs help in software. Indeed, the software development process is so beyond clearly its own competencies that Elop had no choice but to seek outside.

The financials of the deal have not been revealed, but reportedly both Microsoft and Google offered “hundreds of millions of dollars worth of engineering assistance and marketing support.”

Nokia’s statement asserts:

With Windows Phone as its primary smartphone platform, Nokia would help drive the future of the platform by leveraging its expertise on hardware optimization, software customization, language support and scale.

But Microsoft’s smartphone market share fell by more than half last year to just 4.2%, according to Gartner. Windows Phone 7, released in October, may have enjoyed an early bump in sales, but it is still well below the radar for consumers and developers.

Elop and Ballmer offer brave words about creating scale and disrupting “other mobile ecosystems,” but without specifying how this will come about.

Presumably the deal means Symbian has finally been put out to pasture, although Nokia camouflages this in dense corporate-speak:

With Nokia's planned move to Windows Phone as its primary smartphone platform, Symbian becomes a franchise platform, leveraging previous investments to harvest additional value.

MeeGo, the planned Nokia-Intel platform which is way behind schedule, will now become “an open-source, mobile operating system project” with “increased emphasis on longer-term market exploration of next-generation devices.”  The first MeeGo product is likely to ship this year.

As well as the partnership with MS, Elop also unveiled a company restructure – the fifth in five years.

In any case, both moves, announced at the start of Nokia’s capital markets day, left investors underwhelmed. Nokia’s NYSE stock fell 95c, or just under 10%, in after-hours trade.

The age of the smartphone

Yesterday I mentioned the arrival of the sub-$100 Android smartphone as just one more headache for Nokia.

Taiwan and mainland Chinese design houses are offering turnkey chip and OS solutions to OEMs at $100 and less, promising to jump-start demand for Web-friendly Android-based devices in developing markets, where Nokia now sells most of its phones.

Now Apple’s getting in on the act. Bloomberg reports that a smaller, low-cost version of the iPhone is in production inside the Cupertino hit machine. Apple is aiming to get the device – which would sell for around $200 – to the market by the mid-year.

The Bloomberg story also confirms GigaOm’s scoop three months ago that Apple is planning its own universal SIM card that would enable consumers to enjoy access to multiple mobile operators via iTunes. That’s a huge development for the mobile industry – will post more on that later.

It just remains to be pointed out that the age of the mass market smartphone is here; consumers actually bought more smartphones than PCs in the last quarter of 2010.

We’ll hear a lot more about low-cost smartphones at the annual mobile industry confab in Barcelona next week.



Elop's shock treatment may be too late to save Nokia

Nokia. Where were we?

Oh yeah, its market share has fallen by a quarter in the last two years.

And its CEO, who’s reportedly planning to defenestrate much of the top executive suite and deploy Microsoft’s Windows Phone 7, has called on the shrinking giant to make a “radical change” in its behaviour.

Elop’s already-infamous “burning platform” email – clearly intended to be leaked - echoes pretty much what every analyst has been saying:

The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

Nokia is being squeezed from above and below. As FT's Richard Waters puts it:

Nokia also faces an attack on its hardware margins from Chinese suppliers selling to emerging markets. Unlike IBM two decades ago, however, it finds the high ground of software and services already occupied – in this case, by Apple and Google. And Nokia’s own attempts at services, with moves such as its $8bn acquisition of mapping company Navteq and its “Comes with music” phones, have largely failed.

Just today Digitimes reports that China-based handset vendors are prepping sub-$100 Android smartphones in the BRIC markets.

Laments Elop:

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.

It’s the right message, but may be too late. Indeed, if Nokia truly thinks WP7 is the answer, the burning platform may be destined to sink.

China's soaring patent filings

The China patent bandwagon rolls on.

It is now the world’s fastest-growing source of patent applications and has overtaken Korea to become the fourth biggest, according to the World Intellectual Property Organization (WIPO).

The volume of Chinese patent applications grew 56% last year, accounting for nearly 60% of the net growth in filings under the Patent Cooperation Treaty (PCT), WIPO’s 2010 figures show.

By comparison, total US and UK filings declined for the third year in a row.

The raw numbers disguise the much thinner quality of Chinese technologies. Most of the filings are under the utility model, which offers a lower patent threshold and is for a shorter term – typically seven to ten years, compared with 20 years for a full patent.

The utility model is available in China, Japan and Germany, though not in the US or the UK.

China accounted for most UM activity worldwide in 2009, with applications up 38% (2010 figures are not yet available).

For anxious Americans fretting over the mounting number of Sputnik moments, this may be lukewarm comfort.

Thomson Reuters last October predicted that China would overtake the US and Japan for the largest number of (domestic) patent applications in 2011. While most of these would be UM filings, China is expected to reach the milestone this year, a year ahead of the original 2008 forecast.

Americans may also be alarmed that last year, for the first time, the US Patent and Trademark Office granted most patents to non-residents that residents.

The WIPO list once more puts Japan’s Panasonic Corp. at the top of its corporate rankings, with 2,154 applications last year, followed by Chinese telecom vendor ZTE (1,863), Qualcomm third (1,677) and ZTE rival Huawei in fourth place (1,528).

One for the utopians?

The release of Google marketing exec Wael Ghonim two days ago reignited Egypt's political drama and also underscored the role of digital technologies in fueling the protests.

Ghonim, who had been detained for 12 days, confirmed he was the creator of the “We Are All Khaled Said” Facebook page that built support for the protests ahead of January 25 start. It now has 430,000 followers.

His re-appearance on Monday, and his modest, inspiring manner, helped attract the biggest rally yesterday since demonstrators first hit the streets two weeks ago.

His apparent ability to shift events lends weight to the "cyber-utopians" who believe the power of the Web is driving the protests.

Not that they haven't oversold the power of the Net, as critics claim. People have long risen against despots without the help of Facebook, and it's true that the web shutdown last week did not keep them away from Tahrir Square.

But it's equally true that there are poor and desperate people the world over who are not confronting their oppressors in the streets.

Poverty and anger over corruption are surely the root causes of the dramatic events on the Nile, and doubtless Tunisia was the spark.

But modern ICTs are a force multiplier. We're talkng not just Twitter and the Web, but about the mobile phone: Egypt has 14m Web users and more than 60m mobile subs. 

The numbers further tell the story. As well as those who have joined Ghonim's original Facebook page, another 130,000 have followed the “I delegate Ghonim” page, representing a direct intervention into the stalled political process. 

A Facebook page is not a revolution, but it is impossible to imagine the Arab uprisings of 2010 without the Internet and the handset.