Post date: Feb 12, 2011 2:8:25 AM
As of the writing of this entry, Nokia share price is down 14%. That is to be expected from their announcement of adopting Windows as a platform. The change-in-direction totally disheartened Nokia share-holders and developers, and having enough of Nokia's continuous about turns, Nokia share is being dumped.
To start with, Nokia had 3 Operating Systems. Symbian, Maemo and Meego.
Symbian is/was the front-runner taking 35% of the market. But Symbian is being phased-out because the other systems cater more easily for advanced resource hungry apps. Initially Maemo was born to do this but sometime in 2010, Nokia announced a jv with Intel to focus on Meego which would replace both Nokia's Maemo and Intel's Moblin. This made sense because it would ultimately mean the support from 2 industry giants for one system and this meant the sky would be the limit So people forgot about the sacrifice of Maemo and carried on with their lives. Symbian on the way out, Meego on the way in.
When the Windows announcement came, THAT made no sense. Nokia needed to reduce the number of systems, NOT increase the number of systems. Nokia immediately dropping support for Symbian and Maemo devices is out of the question and would in addition to the investors and app developers pissed off, Nokia would alienate Nokia hardware customers! The problem is now not specifically about operating systems, but everybody, investors, app developers and customers, are tired of second guessing Nokia.
It gets worse. I am only talking about it from the perspective of people involved with Nokia. From the Microsoft side, this is a FANTASTIC deal! Windows Phone 7 has hitherto only been on hardware made by manufacturers who made nearly every other system. So there was no hardware differentiation for Microsoft. These same hardware manufacturers would baulk at paying MS licensing fees if the demand didn't justify the investment and could easily switch to any of the other platforms. With Nokia, having sacrificed its Meego ambitions, Nokia would NOT be able to switch and is essentially tied in to the Microsoft solution. Further, Microsoft would not just gain any old hardware manufacturer, this came with the Nokia brand-name!
MS makes its money from licensing the use of its software which includes operating systems. I do not know the specifics of the deal but it looks as though MS would gain a revenue source from this. Question is what revenue does Nokia gain? The expectation was for the Meego line to kick-off at the end of the year. Now the question is who will manufacture the Meego hardware? With the Microsoft deal, Nokia handsets and netbooks will be further delayed, further delaying revenue. And that is not to talk about the investments that were already made in Meego. So really, I find it very hard to see what advantages Nokia gained from this deal, and apparently so do many investors.
As of this entry,
Nokia is down 13.97% on the NYSE (even lower on the European exchanges)
MIcrosoft down 0.91% on Nasdaq