Nokia and its Window’d risks
While reporting to the Securities and Exchange commission, Nokia has laid out its risks and benefits of getting into an alliance with Microsoft for the Windows phone 7 engagement.
Immaturity and market segmentation
Nokia is going to rely on a platform that’s at a very nascent stage. Windows phone 7 is yet to prove its ability in the larger market. Also its focused on high-end smartphones. Nokia is widely known for its mid segment mobile and Windows phone 7 may not support that image. The high-end segment of the market is already dominated by Android and Apple and the competition would be very stiff.
The transition from existing platform to Symbian would mean that Nokia has to forgo all its research and analysis on Symbian and it would lose heavily on competition front. Existing Symbian users may give up and potential users may not go for Symbian devices owing to uncertainty of support from Nokia. Also other research platforms like meego would face the thread of being shelved. 2 years are quite a long transition time in the mobile industry which operates in dog years. In two years time anything could happen and both the companies could be lost in the whirlpool.
Nokia also admits that its brand identity may be eclipsed and affected by Microsoft in markets where they have a strong presence like China. In markets where Nokia brand is weak, the branding strength may not grow at all.
Financially Nokia may not be heading towards a profitable engagement. The windows platform is royalty based and owing to higher cost of sales and reduction in its own OS R&D costs, the business model may not turn out to be as profitable as it would be for Microsoft.
Nokia and Windows Phone 7 are heading into uncharted territory and the next two years and the market conditions are going to be highly unpredictable.