AT&T's de la Vega: Microsoft plus Nokia makes a 'viable third ecosystem'

SEATTLE—Microsoft's (NASDAQ:MSFT) $7.2 billion purchase of Nokia's (NYSE:NOK) devices business is good for the industry and may accelerate the Windows Phone platform, according to a top executive at AT&T Mobility (NYSE:T).

During the Mobile Future Forward conference here Tuesday, AT&T Mobility CEO Ralph de la Vega said that he thinks the Microsoft/Nokia combination is a positive move.  "If you look at the assets of Microsoft and Nokia, there's no reason the combination can't produce a viable third ecosystem," de le Vega said. "I'm excited to see that happen and I hope it accelerates the adoption of Microsoft Windows, which I think is a great operating system and this combination makes it better."

Like AT&T, Sprint (NYSE:S) is also rooting for Windows Phone. "I'm excited about [Windows Phone] and I hope it gets 10 plus percent market share because many people in our industry think that's necessary," said Steve Elfman, president of network operations and wholesale at Sprint.

Elfman's reference to the 10 percent market share was echoed by Hank Skorny, general manager of Intel's software services group.  Skorny said that to be a truly competitive platform, that third place OS would need around 10 percent to 15 percent market share. According to Garner, Windows Phone currently has about 3.3 percent global market share, which is far below Android's 79 percent of the market and iOS' 14.2 percent.

Still, many executives at the conference, even one from Microsoft, acknowledge the challenges Windows Phone has faced and will continue to face.  "I think that app development from my point of view has taken longer than I thought," de la Vega said. "They still need a few more apps, like Instagram. That will come and over time it will be a very strong ecosystem."

Getting the kinds of apps that users want is a chicken and egg problem, said Thom Gruhler, chief marketing officer, OS, for Microsoft. Developers tell him that once Windows Phone gets to 10 percent market share, they'll start developing for it.

In the meantime, developers also are telling Microsoft that a single app store, a better system for transactions and easier to use code will make them more likely to develop for the platform. "That's just the direction we're heading," he said.

The lack of developers is one reason that Telefonica isn't quite as excited about the Windows Phone prospect as some of its peers. "Developers go to where the money is, and the money is with iOS and Android," said Tracy Isacke, director of business development and investments for Telefonica. "It's very difficult for other OSes to become interesting."

Instead, Telefonica is betting on the Firefox mobile platform. Firefox already has a loyal group of developers and encouraging them to transfer their focus to mobile is easier than trying to convince developers to build their apps on an additional platform, she said.

If Microsoft, combined with Nokia, settles solidly into the number three position, it will be a far cry from the position Nokia once had. "Nokia was my No. 1 supplier in 2004," de la Vega said, referring to when he worked at Cingular. "Then we went to buying zero from them. How does that happen? You just missed the window for products in the U.S."

He blames Nokia for missing the step to 3G and popular phone form factors in the U.S. for its downfall.Microsoft isn't just gunning for the third position, however. Gruhler cited research from Kantar predicting that Windows Phone will hit the No. 2 position, ahead of iOS, by 2015, with around 17 percent market share.

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