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Posted at 8:59 AM ET, 02/11/2011

Nokia to adopt Microsoft's Windows Phone 7, scuttling Symbian

By Rob Pegoraro

A company that once stood atop the mobile-phone market is throwing in its lot with ... another company that once stood atop the mobile-phone market. Nokia announced this morning that it will adopt Microsoft's Windows Phone 7 software in place of its homegrown Symbian. In the bargain, Nokia will contribute some of its own software and hardware, such as mapping technologies, to the smartphone operating system Microsoft launched last year to replace the failed Windows Mobile.

nokia_history_phones.jpg

A Microsoft press release and an open letter from Nokia chief executive Stephen Elop and his Microsoft counterpart Steve Ballmer give the outlines of this deal.

But the document you should read first is the memo Elop sent to Nokia employees earlier, which Engadget obtained and posted on Tuesday. In it, Elop tells his employees -- in language rarely used by executives anxious to keep their jobs -- that they've been Doing It Wrong for too many years. Sample quotes:

We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.
The first iPhone shipped in 2007, and we still don't have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.
I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven't been delivering innovation fast enough. We're not collaborating internally.

The memo -- which opened with a cheery anecdote about a North Sea oil-rig worker who had to choose between burning to death as a fire swept across his rig's platform or jumping into the freezing ocean almost 100 feet below -- concluded "Nokia, our platform is burning."

In this case, Nokia is jumping -- leaving its Symbian platform to sink. A second software system, the Linux-based MeeGo it's been developing with Intel for use on tablets and other gadgets, looks to become a side project at best.

At a briefing in London, Elop told reporters that Nokia also considered Google's Android but didn't feel it could differentiate its own phones from all the other Android hardware in the market and on the way. Elop suggested that Nokia's arrangement with Microsoft gives it more latitude to customize Windows Phone 7 than other vendors and said that Nokia will be shipping a variety of WP7 phones by next year.

It is a devastating comedown for Nokia. This company pioneered numerous innovative technologies but kept fumbling its usability, often thanks to poor software-design choices. To name three Nokia products I've tried: In retrospect its N770 tablet could be an iPad prototype; its Symbian-based E62 smartphone, with its array of add-on programs and capable Web browser, outlines ideas that Apple and Google developed to fruition; the high-resolution camera on its N93 phone suggested that phones could take "real" pictures long before iPhone users began posting their shots to Flickr and other picture-sharing sites.

Nokia also knew that it had to try to sell its story directly to consumers, investing in some of the most expensive real estate in America to open a flagship store on 57th Street in midtown Manhattan. That retail palace was a piece of work -- complete with a VIP-esque level on the top devoted to Nokia's pricey, blinged-out Vertu line of phones.

Now, nobody remembers Vertu and that store itself is history, having been closed last May.

Nokia promises better things. But if it couldn't integrate its own software with its own hardware in a way that surprised and delighted customers, can it do any better with Microsoft's operating system? And can it also catch up with the experienced, more successful phone vendors -- the likes of HTC and Samsung -- that have already brought their talents to Windows Phone 7? Nokia may have escaped immolation, but dog paddling in the frigid North Sea is not a great place to be either.

By Rob Pegoraro  | February 11, 2011; 8:59 AM ET
Categories:  Mobile  
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Comments

Brick life preserver

Didn't realize Nokia was this desperate; it just jumped from a "burning platform" to a sinking one: bagging Open Source Symbian for MS's failed clunker of a mobile OS. Bad Idea.

Agree with Ballmer's statement that "(e)cosystems thrive when fueled by speed, innovation, and scale", but Dinosaur MS brings none of those three (not even scale in mobile). He's grasping for mobile market share to offset losses in their long-lost PC software and failed cloud strategies. Bing? Please. MS retail stores? C'mon.

Hope Nokia wakes up and bails before signing a definitive agreement for this combined turkey.

Posted by: ChiGuy1 | February 11, 2011 10:03 AM | Report abuse

Meego already was a side project at best. I can count the number of products that use it on one finger.

Posted by: hesaid | February 11, 2011 11:00 AM | Report abuse

"Burning Platform"

BTW: Elop's "burning oil platform" anecdote recycles a mid-1990's concept sold by Noel Tichy, a self-styled, highly-paid U Mich mgmt guru back in the day. A more violent variant of "boiled frog", it was widely used as cover for mass firings in a wide range of industries, and it's so old and discredited that nobody even remembers it today.

Posted by: ChiGuy1 | February 11, 2011 11:04 AM | Report abuse

Nokia needs help. Instead of going with a winner, like Google, they have decided to join another failing company. Both Nokia and MS are too big, too slow, and too clueless. How can joining them together come up with something more than the sum of their failing parts? If I were a Nokia employee, I would be signing up on Linkedin.

Posted by: barbablanca1 | February 11, 2011 11:33 AM | Report abuse

Bad choice!! I would love to go back to the quality of Nokia phones - but with an Android OS. Nokias are the best handsets - best call quality, coolest features (the photos from an N95 still have no rivals), but going with Windows - duh, what are they thinking (drinking?) up there in Finland?

Posted by: suzyf921 | February 11, 2011 11:36 AM | Report abuse

If I wanted to differentiate I'd want to differentiate on the current #2-3 platform, which is Android, rather than the current #nth platform which is Windows Phone 7. Elop has started Nokia way behind at the start of this race and betting the company on it.

Posted by: JohnE2 | February 11, 2011 11:43 AM | Report abuse

Just another sign of the times...Fundamental shifts in the IT business models are catching up with these major tech icons...Can Microsoft and Nokia re-invent themselves like IBM has done...?Remains to be seen but nothing lasts forever...Interesting side note is the eWeek article on how many Microsoft veterans have abandoned ship in the last 12 months. At least the insiders have already figured this out...

Posted by: terp34 | February 11, 2011 12:05 PM | Report abuse

The saddest news of the week. As an owner of an N900 (the best phone I've had by far) I feel betrayed by Nokia.
Mr Elop: you can wave another customer goodbye. My next phone will not be a Nokia

Posted by: izzeym | February 11, 2011 12:47 PM | Report abuse

Nokia, as much as I dislike Symbian, I think you're making a mistake by not going with Google! I own the N97 and absolutely love it, but Symbian has been a real drag.

Posted by: Skyrider777 | February 11, 2011 3:37 PM | Report abuse

"General" Elop brings up the first iPhone in 2007 and mentions "a series of misses". He has been with Nokia HOW LONG now? Six months? His missive refers to "the benefit of hindsight". Well he certainly has that, and he is not taking any responsibility. He is purveying gloom and doom, but not how he and his old pal Steverino are going to save the company.

I don’t suppose this shotgun marriage was arranged because Elop is an alum of Microsoft, which he left once he realized he was out of his depth there. He has now demonstrated that he is still out of his depth at Nokia. Probably hasn’t learned any Finnish yet. Probably expects them to all learn to speak Canadian.

Nokia’s board needs to give Elop his walking papers pronto before he reduces the company to a penny stock. Do I smell takeover bait?

Posted by: 54Stratocaster | February 11, 2011 7:15 PM | Report abuse

I have been a loyal Nokia customer since 1997. I have own countless number of Nokia phones over the years. I currently own the N900. Elop decision to go with WP7 is a disappointment to say the least. I had a premonition that Elop will steer Nokia towards MS but little did I realize it will be this fast. Nokia should have tucked it pride in and go with Android instead of WP7.

I hate to abandon Nokia after been a loyal customer for over 13 years but Elop's decision to go with WP7 is not the best decision for Nokia and its customers. This decision will alienate a lot of loyal Nokia customers who believe in open platform.

My next phone will not be a Nokia if the decision to go with WP7 stands. Nokia has just lost a very loyal customer.

Bisi

Posted by: ade_bisi | February 11, 2011 9:25 PM | Report abuse

Who is going to give up an Android or iPhone to buy a Nokia Windows7. No one.

Posted by: Celtic | February 12, 2011 3:02 AM | Report abuse

I love my 5800 express music as it is much like aspects of I-phone and I can stay away from AT2. I am an avid apple user, but have used 4 generations of Nokia phones. If Nokia adopes W7, this is the last Nokia I will own. I will move to I-phone. Wake up to new ideas! The bottom line in technology is not consolidation and draining the blood from old companies, but young and vibrant ideas, inovation (I am 71.). Nokia, please wake up.

Posted by: fmreuter3 | February 12, 2011 8:00 AM | Report abuse

Nice to see Nokia sped up its slow death by hammering the last nail into its coffin using the MS Phone 7 garbage.

Posted by: sayNo2MS | February 12, 2011 8:22 AM | Report abuse

The idea that there is some special requirement to match software to particular hardware is totally wrong. All the people who rant on about it in the media just don't have any idea about how a computer actually works. Nokia was successful with its own software in a niche market. Its chances of competing with its own software in a market that includes all of the world's major software creators was close to zero. Recognizing the need to give up that strategy is a big step forward. Microsoft is clearly under large pressure to focus a large marketing effort on creating a substantial wave of adoption for Windows Phone 7 over the next year or two. Trying to ride that wave is a reasonable strategy for Nokia. But, even at best, it is hard to imagine that wave will be large enough to get Nokia back to anywhere near the position they have been used to in the phone market. The reality of today's smart phones is that they use very powerful processors that are more than able to run a general purpose operating system like Linux. That operating system is designed to abstract any special characteristics of the hardware so that user interfaces can be created with general purpose software like .Net and Java. Apple may continue to get by with a closed hardware software system. But, any other phone maker that wants a large share of the phone market is going to have to run all of the software that different users want. It may turn out that Silverlight applications find a place in the hearts of some sizeable user population. But, there is very little chance of Silverlight displacing Android. To be any kind of significant participant in the phone market, Nokia will sooner or later have to accept the reality that they cannot ignore Android.

Posted by: dnjake | February 12, 2011 9:11 AM | Report abuse

I'll bet everyone here who is slamming Windows Phone 7 has never touched it. Even some of the Apple fanboys I know who have actually used it generally say it is good and appreciate that, unlike Android, it is not an IOS clone. And it is nothing like the older Windows Mobile (which, contrary to the authors assertion is not a "failed" operating system any more than older versions of Windows or Apple's OS'es are failed - it is simply past its prime. It held a good market share for several years).

I switched from my iPod to a Zune because I preferred the interface and will do the same on my phone.

That said, WP7 may simply be too late to capture a significant share of the market to make a difference in the long run. There is not enough of an ecosystem around it. Time will tell if WP7 ends up being a life preserver or a brick. Both companies are now in the same lifeboat on a rough sea.

In any case reasonable Apple and Android owners want Microsoft to succeed if only for one reason - competition will keep prices down for everybody.

Posted by: Narnian | February 12, 2011 11:59 AM | Report abuse

Like a pair of alcoholic's, marrying for campanionship. Two dying companies, joining togethe for whatever reason does not a wnner make.

Posted by: mibrooks27 | February 12, 2011 2:42 PM | Report abuse

@narnian re: WM7 not a "failed OS":

As of 1/31, WM mkt share= 4%; WM7= 2% (same as PalmOS). If that ain't "failed", what do YOU think would be?

Enjoy yer Zune.

http://www.wpcentral.com/windows-phone-7-lagging-behind-windows-mobile-market-share-so-what

Posted by: ChiGuy1 | February 12, 2011 3:24 PM | Report abuse

Nokia has been in denial a long time.

Actually, I think that Elop is correct that going with Android would not be a good move. What would be the point? Profit margins on those phones are going to be extremely thin given the lesser ability to have product differentiation.

Even the famed Droid has done very little for Motorola. Why would Android save Nokia?

Posted by: jkh1970 | February 12, 2011 9:31 PM | Report abuse

Really interesting post. I think that this could be a right choice for Nokia. Read also: Nokia adopt Windows Phone 7

Posted by: squacy | February 14, 2011 8:50 AM | Report abuse

Chase today announced a strategic agreement with Mitek Systems, Inc., a developer of advanced-image analytics and mobile-document-capture applications, to develop a suite of innovative image-capture solutions across multiple smartphone operating systems:

http://www.pymnts.com/chase-announces-strategic-agreement-with-mitek-systems-20110214005484/

Posted by: DC5Jenn | February 14, 2011 9:36 AM | Report abuse

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