Microsoft: Nokia deal will help us understand, aid other Windows Phone OEMs

LAS VEGAS--Microsoft (NASDAQ:MSFT) thinks its deal to acquire partner Nokia's (NYSE:NOK) devices and services business won't alienate other Windows Phone OEMs and will in fact help Microsoft better understand their needs and desires, according to a Windows Phone executive.

As Microsoft works to close its deal with Nokia, how the transaction will affect other OEMs still supporting Windows Phone--including Samsung Electronics, HTC and Huawei--is a major question mark. Nokia already makes around 80 percent of all Windows Phones sold, so the deal could have the potential to undercut a broader hardware partner ecosystem.

In an interview with FierceWireless here at the 2014 Consumer Electronics Show, Windows Phone Director Greg Sullivan dismissed those concerns. "There used to be this notion that a platform provider was either first-party, vertically integrated [company] or third-party horizontal," he said. "The world is different now. And in fact, maybe the best way to be a platform provider is to understand at a very intimate level what it means to be a device manufacturer."

Sullivan said that Microsoft Executive Vice President Terry Myerson, the head of Microsoft's converged operating system division, "thinks broadly about the platform he is engineering for all hardware partners, including Nokia." Sullivan said Microsoft is actively engaged with other Windows Phone partners, and is looking for more, to make sure there is a broad hardware partner ecosystem. The thinking is: "How can we have a relationship as a platform provider with you as a hardware manufacturer that is also special and unique?"

"If we understand…the challenges of building these devices and bringing them to market and delivering what people want," Microsoft can better help its other partners, Sullivan said. Understanding the challenges specific to hardware manufacturers "helps us incorporate those learnings into the platform broadly for anyone who builds."

Sullivan noted that Windows Phone now supports more than 200,000 apps, including Instagram, Vine and Pandora. Further, he said developers are now taking advantage of the unique attributes of Windows Phone. For example, he noted that a specific Pandora station can be pinned to the Windows Phone start screen as a live tile.

To catch up in scale and market share, Sullivan said Microsoft will continue to think about lower-end devices. According to research firm Gartner, Windows Phone captured 3.6 percent of the global smartphone market, tiny compared to Android and iOS, but up from 2.3 percent in the year-ago period. Android had 81.9 percent of the global smartphone market in the third quarter.

However, Sullivan said that most Android devices sold at the low end of the market are nothing like higher-end Android phones with newer software versions. Google (NASDAQ:GOOG) is working to improve that with Android 4.4 KitKat, which was released last fall and is optimized to work on lower-end, lower-memory devices with 512 MB of RAM. Still, KitKat has not yet reached the vast majority of Android phones. Sullivan noted that Microsoft in 2012 it introduced software that could run on phones with 256 MB of RAM.

"I don't think it's controversial to say that a significant portion of the low-end Android devices sold are only marginally smartphones," he said. "They're kind of glorified feature phones." 

Sullivan said Microsoft will have "a range of offerings from the every high end all the way down to affordable devices." 

"A big chunk of the market is in that affordable end of the spectrum," he said. "We intentionally architected our platform so that devices at the lower end of the cost spectrum would perform as good as the expensive ones." He noted that lower-end phones won't have high-resolution screens or cameras, but that "the experience your have on that affordable Windows Phone is essentially equivalent."

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