Nokia and Microsoft have confirmed a widespread rumour of a strategic partnership that will see Nokia adopt Windows Phone as its primary smartphone strategy, Bing as its search engine, and fold its Ovi store into Microsoft's online Marketplace.
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Both companies have been losing market share to iPhone and Android in the lucrative smartphone market. According to Gartner, Microsoft's share of the mobile operating system market halved from 8.7% to 4.2%, while Nokia's share of the handset market fell from 36.4% to 28.9%.
The deal means Symbian will become a "franchise platform" where developers can aim at 200 million Symbian owners, with another 150 million to come, Nokia said.
Nokia will make MeeGo, its new top-end operating system, an open-source mobile operating system project. "MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences. Nokia still plans to ship a MeeGo-related product later this year," the company said.
Nokia expects the mobile device market to grow, driven by smartphone sales, but for margins to shrink due to competition. It declined to provide future guidance because of the uncertainties that result from the announcement, but said it expects 2011 and 2012 to be transition years, as the company invests to build the planned winning ecosystem with Microsoft. After that it expects devices and services net sales to grow faster than the market and operating margin to be 10% or more.
An open letter from CEOs Steve Ballmer for Microsoft and Stephen Elop for Nokia said the deal, whose details are still being worked out, means that:
- Nokia will adopt Windows Phone as its primary smartphone strategy, innovating on top of the platform in areas such as imaging
- Nokia will help drive and define the future of Windows Phone. Nokia will 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 will closely collaborate on development, joint marketing initiatives and a shared development roadmap
- Bing will power Nokia's search services across Nokia devices and services, giving customers access to Bing's next-generation search capabilities. Microsoft Adcenter will provide search advertising services on Nokia's line of devices and services
- Nokia Maps will be integrated with Bing and Adcenter advertising platform to provide local search and advertising delivery
- Nokia's content and application store will be integrated with Microsoft Marketplace for a more compelling consumer experience.
The CEOs said the mobile battle was moving from one about devices to one about ecosystems. "Our strengths here are complementary," they said.
"There are other mobile ecosystems: we will disrupt them. There will be challenges: we will overcome them. Success requires speed: we will be swift. Together, we see the opportunity, and we have the will, the resources and the drive to succeed."