Friday, October 19, 2012

Nokia is more focused on ecosystem growth than WP8 competition

Nokia CEO Stephen Elop recently said on an investor call that Nokia is not worried by potential competition from partner Microsoft if they would release a "Surface Phone". Elop said that this could instead be a boost to the WP8 device ecosystem.

Apparently Elop said "We're encouraging of HTC and Samsung and Microsoft to have devices in the market and to be making whatever investments that helps spur the ecosystem on".

I think this is spot on when it comes to an understanding of the Nokia/Microsoft WP8 predicament. I read this as Elop understanding that at the current market share of WP, Nokia is much better off with added competition which would act as a "sign of approval" for the WP8 platform. Any kind of assistance Microsoft and Nokia can get to push this ecosystem is going to benefit Nokia far more than the potential harm increased competition can bring.

If this would happen and WP8 becomes a success, I'm sure Elop is confident that Nokia can carve out a significant share of the premium segment within that ecosystem and become successful. 

Nokia also seem confident that the wireless carriers will help them pushing WP8 devices to avoid an Apple/Android duopoly. I agree with the analysis that the interests of the wireless carriers and Nokia/Microsoft are aligned on this matter and that the carriers will in fact help Nokia and Microsoft market their devices. However, I am uncertain whether this will have the effect Nokia/MS as well as the carriers are hoping for.

The irony here is that Nokia has historically been blamed for being very heavy handed with wireless carriers in the past, leading to a testy relationship when Nokia was at the top. Now when they both can and want to work together, the pull of the carriers have significantly weakened (which of course was Nokias goal back in the day).

I believe that the power the wireless carriers have to affect consumer behavior (i.e. which smartphone to buy) has decreased significantly over the past years, at least in the premium segment. One sign that this could indeed be the case, is that consumers have flocked to carriers which sell the iPhone, while the unlucky carriers bleed customers at a steady rate.

The Apple iPhone phenomenon might be a special case but I do think it is evidence that customer loyalty to wireless carriers only go so far which could mean that the reverse is true as well, carriers only have so much influence over consumer handset choices. The iPhone was not a success because of AT&T but more likely, in spite of AT&T, if you look at it from a consumer purchasing decision perspective.

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