10 Things you need to know about today's deal between Microsoft and Nokia
The mobile world's biggest hardware maker will be pairing with the computer world's bigest software maker to start making Nokia Windows Phones. Here are ten things about the pairing that you need to know before the partnership begins releasing any products.
1. It will take two years before Windows Phone even makes up half of Nokia's product mix
Nokia plans to gradually introduce Windows Phone into its product lineup while phasing out Symbian and slightly decreasing the amount of feature phones it produces. Eventually, Nokia expects to make Windows Phone-powered devices its largest product segment, but the company has said that will take two years or more, and its "Smart Devices" will make up a different business unit from its "Mobile Phones."
2. Nokia Maps is becoming part of Bing
American consumers are largely unaware of the Nokia Maps experience, which is somewhat interesting, since it has always been powered by Chicago-based company Navteq, which Nokia acquired in 2007 for $8.1 billion.
With the inclusion of Navteq's map data, Bing Maps will have access to high quality traffic information, mapping data, and 3D geospatial imagery.
3. Windows Marketplace and the Ovi Store will combine
In the joint announcement from Microsoft and Nokia today, the companies said Nokia's content and application store will be integrated with Microsoft Marketplace. Naturally, this doesn't mean much at first since the two stores offer content on two different platforms, however Matt Bencke wrote in the Windows team blog today that there will be "more details to share about the marketplace strategy in the future, but our intent is to build upon the best of what both companies offer today."
4. App Developers: Carrier billing for Windows Phone apps will expand by magnitudes
Nokia's 6-K filing with the Securities and Exchange Commission today highlighted an important part about this deal; that Nokia's operator billing agreements in more than 190 markets will make it easier for customers to purchase Windows Phone apps in countries with low credit card use. So not only will windows phones become more widely available globally, but they'll also be more accommodating to regional buying habits.
5. Nokia gets a strong U.S. marketing force
Microsoft spends a lot of money on U.S. advertising, and frequently manages to approve some very memorable campaigns. But Nokia has not, and the company is fully aware of the repercussions of this.
Indeed, in Nokia's 2010 20F SEC filing, the company said, "Insufficient investments in marketing and brand building could also erode the value of the Nokia brand. Any...failure to optimize the Nokia brand in the marketing of our mobile devices could have a material adverse effect on our capacity to retain our current customers and consumers and attract new customers and consumers and on our business, sales and results of operations."
With Microsoft's help, there will be a big increase in Nokia's U.S. presence.
6. Windows Phones will begin to vary in specs, especially in the camera department
Microsoft's strategy with the first generation of Windows Phones was to have very strict guidelines for hardware manufacturers. Indeed, every one of the first 10 WP7 devices had nearly identical specs, with a 1GHz processor and 5 megapixel image sensor.
But Nokia has one of the highest resolution image sensors on the market, and is eager to utilize it with Windows Phone.
7. Microsoft's adCenter audience will explode
According to comScore data from November 2010, Microsoft's adCenter reaches 23% of the U.S. online market, and in 2009 adCenter scored a deal to provide Bing and mobile advertisements to Verizon Wireless customers. But these are both tiny in comparison to today's deal with Nokia. adCenter will provide search ads for the totality of Nokia's devices and services, giving it an estimated 38% of the world's mobile audience.
8. Nokia's Research and Development arm could shrink significantly
Nokia has scaled back its domestic workforce several times in the last three years, and Finnish Minister for Economic Affairs Mauri Pekkarinen expects this shift in software development to be "far and away the biggest structural change that Finland has ever seen in the new technology sector," that could result in thousands being laid off. While this would be a bad thing for the Finnish economy in the near term, it would greatly reduce Nokia's operating expenses and ultimately cause a reorganization in the company's employment opportunities.
9. Windows Phone 7 development will accelerate
With the addition of the world's leading handset manufacturer as an exclusive hardware partner, Windows Phone 7 will be given greater exposure in markets where it has not yet taken root. Furthermore, the companies haven't yet established what sort of devices Nokia will be making, and there could be significant opportunities in language expansion and localization for WP7 developers using Visual Studio 2010, Expression 4, Silverlight and the XNA framework.
10. This is mutually beneficial for Nokia and Microsoft
My colleague Joe Wilcox believes that Microsoft was the main beneficiary of this deal, and that Nokia could be signing its own death warrant by signing up to license Windows, but both companies have tremendous resources behind them that are actually quite complementary. The main challenge for both will be in bringing a product to market with the necessary expedience.