On the 11 February this year, Nokia’s new CEO Stephen Elop and Microsoft’s CEO Steve Ballmer published an open letter detailing what they called ‘a broad strategic partnership’ between the two companies, which would ‘combine [our] respective strengths and build a new global mobile ecosystem’. Aside from Nokia’s adoption of Microsoft’s Windows Phone 7 software, the partnership also involved the merging of Nokia Maps and Bing, plus provide Microsoft with access to Nokia’s relationship with global networks.
Although we’re still waiting for the first fruits of this pairing, apart from the impending launch of the next-gen iPhone, the Nokia/Microsoft partnership has to be the most talked about development in the mobile industry this year.
The fact both Nokia and Microsoft were struggling to adapt in the new mobile world doesn’t necessarily bode well for the future, and while the momentum seems to be there, and a lot of people want to see them succeed, this exciting partnership could still go either way.
We wonder just how many other manufacturers are watching thinking the same thing, but for different reasons. If Nokia and Microsoft’s Windows Phone project takes off, will it start a new wave of partnerships in the mobile sector?
No More Divide and Conquer?
Microsoft and Nokia aren’t the first pairing in the mobile world. Sony and Ericsson did something very similar back in 2001 and despite a few bumps in the road, have gone on to make some of the most successful mobile phones of the past five years. Nokia has also given it a try recently, teaming up with Intel to create Maemo, but the less said about that the better.
More than 20 manufacturers belong to the Open Handset Alliance, a group dedicated to building cheaper, innovative and open mobile phones using Android, plus manufacturers regularly team up with networks to launch dedicated devices with shared or even non-existent branding. For example, ZTE and Huawei both work with Orange and Vodafone, HTC worked with both T-Mobile and Google to make the G1, while INQ has cooperated with Skype and Facebook to create very focused devices.
The advantages are obvious: further reach into new markets, access to extensive customer bases, massive marketing budgets and shared technology are just a few reasons why a smaller company would join hands with an industry behemoth.
These examples are almost entirely of industry peers getting together for mutual gain. After all, networks need the manufacturers and vice-versa; they’re hardly going to miss the chance to work closer together for a while.
But the mobile industry is expanding at such a rate, these incestuous relationships won’t make sense forever; and without expansion, companies run the risk of getting left behind. So who will we see partnering with whom over the coming years?
Smartphones are all about keeping connected and in touch while on the move, therefore it makes sense for them to become better integrated with the most popular form of transport – the car. Fine, cars either come with or have the option to add features such as Bluetooth for wireless calling, built-in GPS units and iPod compatibility; but why bother doing all this when a high percentage of customers have all that on their smartphones already.
Docking your smartphone with your car’s entertainment system makes perfect sense, however to make this as seamless and user friendly as possible, joint partnerships will have to be made. Microsoft has already explored this with Sync, a Ford factory installed system loaded with Windows which features voice activation, audible alerts and SMS reading, plus ‘AppLink’ which links buttons on the steering wheel with certain smartphone apps such as Stitcher Radio and even Twitter.
Taking the integration with smartphones and cars a step further is the Car Connectivity Consortium, where car manufacturers such as VW/Audi, Honda and Toyota have joined up with Nokia, Samsung and a few others to create a common connectivity standard between phones and cars. One thing the consortium is working towards is the introduction of NFC into cars via a smartphone – something which BMW put into its ‘car key of the future‘ concept – to enable payments to be made from within the car. No more stopping for tolls or buying a dedicated road pass – it could all be done via your phone.
By combining the smartphone with a smart in-car entertainment system, it would also bring a wealth of opportunities to that other successful industry partnership – mobile app developers. Developers already work closely with manufacturers thanks to the proliferation of closed ecosystems, and pulling a key automotive manufacturer into the same camp would be quite a coup. Hyundai recently provided their owners manual and the ability to schedule servicing on an iPad, so how long before we get an integrated Android or iOS system, complete with apps, in a new car?
Saab is one of a few doing just that, with their new iQon entertainment system featuring an 8-inch touchscreen and Android OS complete with various relevant apps, plus an open API for app developers to use.
Looking even further into the future we could see a complete blurring of the line between network, car, smartphone and manufacturer. If Google’s driver-less car is a success, is it really beyond the realms of possibility for it to get a dedicated Nexus phone or tablet and network support? Plus, the rumour of an Apple iCar is one which rears its head every so often…
Mobile Manufacturers and Networks, the Logical Next Step
While cars are an extension of your smartphone’s functionality (or the other way around if you prefer), what about manufacturers going the whole way and partnering – in the Sony/Ericsson sense of the word – with a network. Think about it, if you make a desirable enough phone, why not tailor it for your own network too?
Apple has already half explored this notion, as the iPhone was developed with, and exclusive to, the AT&T network in the USA. Since then they’ve expanded to include Verizon in the US, and their exclusive deals in Europe have long since expired, but what would the iPhone have been like without AT&T’s input?
We imagine the prospect of a network buyout has crossed their minds several times too – after all, it would be the ultimate in customer control, something which Apple adores; but we’re not sure the anti-trust commissions would look favourably on such a deal.
So, instead of buyouts, what about setting up their own network? An Apple patent for their own MVNO has been spotted, and Nokia has been linked with MVNO projects in both India and Japan; two key territories for the manufacturer. Of course, an MVNO needs a network, providing the beginnings of another very strong partnership.
Who is Ripe for a Partnership Deal?
If Nokia and Microsoft strike gold, or are at least partially successful, who will be looking for a deal next? The most obvious name is RIM, a company rapidly following Nokia’s plunge into obscurity, who need to do something – anything – to stay relevant outside of the USA.
But it’s not just those who are struggling who could benefit from a friend. Several mobile manufacturers want to break into the US and European markets, and a good way to do this is by partnering with a network. However, to make an impression it needs to be a real joint effort to ensure people take notice, and go beyond anything we’ve seen so far. ZTE’s along the right lines with their Orange deal, but it’s definitely swayed in Orange’s favour at the moment.
As the smartphone industry continues to expand and becomes more deeply integrated into people’s lives, the more likely these cross-industry partnerships will become. Nokia and Microsoft, everyone’s watching you.