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Comment by credo | Hacker News Reader

>>"A decision to swing to Android would have tilted the mobile ecosystem in the direction of a duopoly, but we wanted to create a challenger," he said.

It looks like he didn't explain why they wanted to create a "challenger".

imo having three dominant players is better than having two dominant players. However, it would have been great to get Elop's thoughts on what benefits Nokia would get from creating a "challenger" and why a "duopoly" was not good for Nokia.

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I think the Nokia decision was the right one for Nokia, but the given reasons are BS.

Basically Nokia could have ended the smartphone war by joining with Android. But ironically, that makes them more valuable to Microsoft. This is just the same as Microsoft paying people to build apps for WP7, paying Verizon to use Bing, or paying devs not to release games on PS3 but on a massive, multi-billion dollar scale. It's a bit tragic when the greatest value your company can offer is to be paid to not join the dominant ecosystem in exchange for a cut of a desperate monopolist's war chest, but that's why you need to bring outsiders with no emotional attachment to your products in to do it.

So basically he wanted to "create a challenger" because Microsoft would pay them handsomely to do so. And if it doesn't work out, it's not like Android is going anywhere, so they've got a Plan B. (Though to be honest I think they're currently splitting the company into two pieces, the bit that will wring any remaining revenue from Symbian then close, and the bit that Microsoft will buy once they've sacked anyone Microsoft doesn't need. Microsoft will then try the PlaysForSure -> Zune thing again.)

that makes them more valuable to Microsoft ... because Microsoft would pay them handsomely to do so

So why did Nokia not get a better deal from Microsoft? The drop in Nokia's shares wasn't because they went for WP7, it's because they didn't get any kind of exclusivity deal.

I'm not really sure we know what kind of deal they got; a lot depends on how those "billions of dollars" of payments are structured.

For instance, the maps licensing deal: does this mean that Nokia will be getting royalties (for the mapping software) on sales of other manufacturers' handsets? If so, they haven't got an exclusive, but they do have a favored position.

EDIT: if it's just advertising services, on the other hand, which is all Elop explicitly mentioned, then this does look pretty raw.

About details: agreed. But you'd think Nokia would say something concrete about how great the deal is, given their shareholder's mood at the moment. What's the plan? Use the billions to make a surprise dividend?

Maps is the kind of thing analysts were looking at. But I understood the deal as saying that MS would have a special search interface for Nokia users that integrated with Maps, not that WP7 would syndicate the service. That would be in the category of "less that complete surrender over UI".

Gosh you mean all those lawsuits did not work?

Nokia has shown it was incapable of creating a challenger as it resorted to lawsuits rather than change. Without MS firing middle management will not happen with MS paying Nokia either. Its Siemens Handset biz replayed out again.

Desperate monopolist? They have 5% market share on mobile.

They are a monopolist because most of the world depends on Windows and Office.

They are desperate because they know that in the long run, Windows and Office will be irrelevant.

Leveraging their market share on the desktop to grow their market share on mobile.

I think Nokia wants to be a major player in the WP7 ecosystem rather than a minor player in the Android ecosystem. In an Android/Apple 'duopoly' every hardware maker except Apple has basically the same OS/app offering and Nokia would be playing catch-up against established android offerings - that is very scary to Nokia. The alternative is to partner with Microsoft and aim to be a major player in a 'third way' ecosystem. Really this isn't about how many ecosystems, its about the size of Nokia's slice of the ecosystem they chose. So they're taking the risk that WP7 will become a viable platform over the risk that they'd be a bit player in an Android world.

I heard that a lot, but - I'm not sure that I agree. There are other manufacturers of WP7 handsets already. Nokia needs to set itself apart, and I have troubles understanding how.

WP7 phones have rather tight hardware requirements [1] that to a degree influence the general handset. I fail yet to see how Nokia can top that (Maybe coming up with a better Camera/Zeiss optic. Maybe putting quite a lot more power in the handset - but the first option would be more for a niche imo and the second would cut into margins if you want to be competitive).

Sure, it's all just speculation until we see their first devices. But at this point I remain unconvinced that Nokia can differ enough to dominate the WP7 platform.

1: http://en.wikipedia.org/wiki/Windows_Phone_7#Hardware

Nokia are able to customise Windows Phone 7 when other OEMs can't, and will presumably be the preferred partner when developing new versions. This might seem minor, but it isn't: think of the root cause of HTC's Android marketshare.

There are plenty of other perks MS can offer Nokia too. Windows Phone 7 ads that prominently show Nokia phones being the most obvious. This is likely worth hundreds of millions of dollars in its own.

I suspect Nokia will continue MeeGo development in case the Windows deal fails, so they have an alternative platform to fall back on. The potential for Android-compatible MeeGo handsets being rolled out at a moment's notice should keep MS in check.

One problem with this logic: they're expected to ship in late 2011 at the earliest. By that time, other manufacturers will have had WP7 phones out for a year, which is a pretty long time in this space. They're late entrants to a crowded field either way.

Have you heard the expression "It's better to have a piece of a bigger pie, than to have a small pie"?

Nokia wouldn't be a minor player in the Android ecosystem. That's ridiculous. If they executed quickly and release some good Android phones within a year, they'd become relevant again. With their power, they could even beat Samsung, which is going to become the biggest Android phone manufacturer.

Of course they'd still need to compete well hardware wise. This decision seems to me like they need software differentiation because they know they can't compete well enough on hardware anymore.

By the time Nokia makes a few WP7 phones and sells them, Samsung will sell a lot more Android phones. I expect Samsung to become the #1 phone manufacturer within 2-3 years. This won't happen only because Samsung is growing, but because Nokia will sell a lot less Symbian units, due to competition in the mid and low end from Asian manufacturers.

Nokia would ideally like to have an iOS of its own, either proprietary to Nokia phones or offered to other manufacturers but controlled (to whatever extent) by Nokia. Failing that, it would at least like to be "suited" again the next time it chooses a smartphone OS in a few years. Throwing its weight behind Android would make Android the de-facto standard, and that would probably close off those possibilities. (Though Android can likely make it to de-facto standard status without Nokia's help.)

First a burning platform, now the challenger, this guy Elop really wants to go down in flames.

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