Original article: Nokia concedes high risks of WP7 strategy
Nokia acknowledges WP7 risks
Nokia has outlined the risks of its decision to partner with Microsoft in a regulatory filing that highlights many of the issues raised by critics over the past few weeks, primarily the hiatus period before it can launch devices running Windows Phone 7 - a period that condemns the company to another year in the smartphone wilderness.
Rivals will be quick to take advantage, particularly Nokia's closest competitors Samsung, which has launched a program to woo Symbian developers to its home grown apps platform, bada.
While Samsung's flagship Galaxy family runs Android, the bada-based Wave range has also contributed significantly to the Korean giant's recent success in smartphones. It is geared to mass market smartphones with ease of use a priority in its widget oriented user interface. It is also susceptible to customization by carriers, and these characteristics make it a good fit for Symbian developers.
Samsung denied it had a formal program of strategic hiring from Nokia, despite reports that it has sent a letter to a group of Indian engineers working for Nokia welcoming them to the bada world. Many believe the letter is the prelude to a broader campaign to boost bada's skills base courtesy of Nokia and the wider Symbian community.
Moves by rivals to manoeuvre their operating systems into the space left by Symbian will be one of Nokia's key challenges until it can launch its WP7 range, which will be late 2011 at the earliest (though it will have its MeeGo device before then). And of course, that timeframe lengthens if the first WP7 product fails to be a knock-out.
In the SEC filing, Nokia concedes it will take until 2013 for WP7 to power the majority of its smartphone portfolio, stating. "We expect the transition to Windows Phone as our primary smartphone platform to take about two years."
Other risks highlighted by Nokia include the relative immaturity of WP7. "The Windows Phone platform is a very recent, largely unproven addition to the market focused solely on high end smartphones with currently very low adoption and consumer awareness relative to the Android and Apple platforms, and the proposed Microsoft partnership may not succeed in developing it into a sufficiently broad competitive smartphone platform," says the document, which acknowledges that other "more competitive alternatives" might have delivered market share more rapidly. However, the Microsoft deal provides a way for Nokia to build a whole new ecosystem in which it has the lead role and can differentiate itself (implying this would not have been the case with Android).
Another identified risk is that the deal could erode Nokia's brand identity in areas such as China, where it is strong, and fail to enhance it in weak markets, notably the US. Another challenge will be to create a profit model around a platform for which Nokia must pay royalties. And Nokia also warns that it will have internal challenges to change its working methods and its culture, in order to collaborate effectively with Microsoft.