Nokia just debuted and Android phone. And the world is still turning.
This, on the surface, doesn’t make an ounce of sense. Nokia is, after all, the chief proponent of Microsoft’s Windows Phone operating system, going all-in with the platform in a strategic alliance that began in early 2011. The relationship was so close that Microsoft eventually decided to buy Nokia’s hardware business, a deal that should close in the next few months.
As of today, that business includes the Nokia X, a phone that runs Android, the platform operated by Microsoft arch-nemesis Google. By launching an Android phone, Nokia has invited questions about its commitment to Windows Phone and even the viability of Microsoft’s platform in general. That’s a very odd thing for such a close strategic partner to do.
But Nokia isn’t worried about how it looks to release an Android phone because it’s got something much bigger to worry about: Windows Phone hasn’t been the powerful engine for its phones that it was supposed to be. The company’s smartphone sales recently took a nosedive, declining 7% during the typically strong holiday buying season and 29% year-over-year.
The Long Road for Windows Phone
Despite recent signs of life, Windows Phone’s market share is only at about 4% worldwide, and Nokia phones barely register on smartphone tallies. Those are tough numbers to look at for a company whose name was once synonymous with the cellphone in some countries.
And it’s in exactly those countries where Nokia is struggling to convince people to go Windows Phone. And no wonder: Windows Phone’s app catalog still pales in comparison to Android, and Android smartphones are available in places like India for prices as cheap as $50. By contrast the cheapest Lumia (the 520) goes for about $135. Why buy the pricey Lumia when it can’t even run a proper YouTube app?
As good smartphones get even cheaper, everyone predicts millions in the developing world to whip up devices over the next couple of years. Nokia is out of time: It can’t afford to wait any longer for the Windows Phone Store to app up Nokia is out of time: It can’t afford to wait any longer for the Windows Phone Store to app up — it needs a phone with a robust app catalog to offer those people now. Thus, the Nokia X. And it costs just $120. Take that, Android!
Except it is Android. To defeat its enemy, Nokia has become it. You may remember BlackBerry trying a variation of this strategy, with BlackBerry 10 able to run Android apps, albeit in often kludgey ways. BlackBerry failed for many reasons, but its adoption of Android didn’t help.
Nokia’s Master Plan
Nokia is floating in a different boat, though, and it’s adopting Android in a completely different way. For starters, this is a forked version of Android, similar to what Amazon has done with its Kindle Fire tablets. All Google services are replaced with Nokia and Microsoft services (Here Maps for Google Maps, Outlook for Gmail, etc.). Even the user interface looks very Windows Phone.
Another thing Nokia has going for it: brand goodwill. Although Nokia smartphones are still a rarity in most places, when all mobile phones are included, the company’s market share is No. 2 overall (after Samsung), according to IDC. If you like your Nokia feature phone, and the company drops a cheap Android number in front of you with all the apps you want, there’s a good chance you’ll give it first pick.
Or so Nokia’s logic goes. The final piece of the puzzle is actually the person’s next phone, the one they buy 6 months, a year, or two years after the Nokia X. The mission of Nokia’s Android double-agent is to sow the seeds of a Lumia fan into its owner through deep connections to that ecosystem’s services: Bing, Here Maps, OneDrive, Outlook, Skype and others. When it comes time to upgrade, Nokia will do everything it can to steer them toward a Lumia.
Assuming lots of people buy the Nokia X, assuming Windows Phone’s app catalog accelerates big time, and assuming Nokia’s and Microsoft’s services are good enough to win loyal fans, Windows Phone may finally get the rocket sled it needs to really be a leader in the smartphone race.
That’s a lot of assumptions. If any part of that chain breaks, Lumia and Windows Phone are in trouble, and the forked flavor of Android that’s in the Nokia X could end up becoming Microsoft’s mobile OS of choice.
In other words, Nokia, there’s still a lot to worry about.
By Pete Pachal