Some drastic change of direction is about to take place in Nokia’s smartphone strategy. We can predict this because Nokia has shut down the Symbian Foundation. What we can’t tell yet is what direction they’ll jump, and there are at least four somewhat plausible scenarios. I’m going to list them in what I think are roughly decreasing order of probability and then explain my reasoning.
Case Android: Nokia takes up Android.
Case MeeGo: Nokia implements MeeGo across its whole product line.
Case Windows: The Microsoft alumnus now running the company brings in Windows Phone 7.
Case Unsymbian: Nokia tries to build a next-generation smartphone OS in-house based on the closed codebase it acquired along with Symbian, Inc..
Given that HP is holding WebOS pretty close to its chest and Blackberry actively doesn’t want any other hardware vendor running its software stack, I think that pretty much exhausts the possibilities. Now let’s try to figure odds.
Case Unsymbian seems the least likely to me on time-to-market grounds. We’d be looking at a multi-year development effort, and Nokia hasn’t got time for that with Android breathing down its neck. People who think this case is even possible are forgetting the reason Nokia booted up the Symbian foundation in the first place – they did a cost analysis and concluded they couldn’t afford the engineering hours needed to port Symbian to all the hardware they needed to support. (I had this straight from a Symbian executive, face-to-face, around 2002.)
Nokia’s management has been veering from blunder to blunder recently, so it’s just possible they’ve forgotten what they once understood about the economics. But the development-cost problem hemming in their strategic choices has only become crueller in the last eight years as product cycles have shortened. If they bet the company on Case Unsymbian, what you’ll see is mighty thrashing for a year or two followed by collapse.
Case Windows is a currently popular conspiracy theory. According to this one, ex-Microsoftie Stephen Elop will push the company he now runs into adopting Windows Phone 7, offering Nokia a plausible way out of its software problem and handing his true dark masters at Microsoft a huge chunk of market share into the bargain.
The trouble with this theory is that it wouldn’t actually solve any business problem at all – not for Nokia, anyway. WP7 would incur the same porting costs as Unsymbian, with the added negative that at the end of the day Microsoft and not Symbian would control the codebase. I can’t imagine Nokia’s big shareholders tolerating this for a Helsinki minute — not when early indications are that Microsoft WP7 will make only about about 2% market share this season. Once again, time is the problem; Android is eating Nokia’s lunch so fast that they can’t afford to wait long enough for WP7 to become an actual consumer draw, assuming it ever does.
But every report I’ve seen says WP7 stinks like a dead mackerel; there’s simply nothing there that can compete with Android. If Elop somehow succeeds in ramming it into Nokia on a wish and a promise, I expect that both he and WP7 will be outta there within a year. (But that would probably be long enough to leave Nokia circling the drain anyway.)
Case MeeGo actually seems the most plausible to me right now, under the assumption that Nokia management hasn’t gone utterly brain-dead. They need a state-of the art smartphone OS, they need to be able to co-opt more developers and porting engineers than they can afford to hire, and they want something that’s not Android in order to maintain some product differentiation. Process of elimination…and after all, MeeGo is partly descended from the Nokia Maemo codebase.
Notwithstanding the above argument, I think Case Android is still pretty likely. As I’ve pointed out a couple of times in a couple of ways, time-to-market pressure has to be the most serious one Nokia is feeling. At present rates of Android uptake worldwide, Nokia certainly doesn’t have a year to assemble a viable alternative; they probably don’t have six months, and may not have even three.
Then there’s this: Case MeeGo involves more NRE than Case Android would; the MeeGo codebase is simply not as mature. Even if Nokia decides it can afford the longer time to market, that would be handing HTC and the other Taiwanese handset makers a cost advantage that would prove decisive. Nokia’s past as a manufacturer emphasizing volume and low cost is a problem here; the Taiwanese armed with Android can probably beat it at that game, and Nokia doesn’t really know how to play any other.
I’ll wrap up by observing that Nokia’s long-term prognosis seems poor to me under any of these scenarios, including Case Android. The business model that mode them #1 worldwide in the dumb-phone era has broken, and I do not see a plausible path for them back to the top of the heap. The handset future belongs to HTC and its shadowy kin and competitors on the Chinese mainland; in that future, Nokia is at best an also-ran with shrinking profit margins.