CES: Nokia + Microsoft = A Step in the Right Direction


I spent a lot of time with Nokia folks this year at CES.
In a market where a lot of companies felt like they were treading water (or starting to drown), Nokia reps seemed genuinely excited about the future.

They should. I think they’re finally on the right track to become relevant in the United States again. I have very fond memories of using Nokia hardware. My first cell phone was a Nokia. My first camera phone was a Nokia. My first mobile internet device was a Nokia. However, just as I was getting into business computing, Nokia kinda disappeared on me. They remained a powerful force around the rest of the world, but they abandoned us Americans.

Microsoft has been in a similar position of late. I was a fan of Windows Mobile. It wasn’t a pretty OS, but it’s functionality was unmatched. Even today, there are things my WinMo 6 handset can do that I struggle to find solutions for on Android and iOS. However, updating it came with a lot of baggage–and Microsoft ultimately made the right decision in completely re-tooling the OS and starting from scratch, inspired by their critical success with the Metro UI on the Zune.

So where does that leave us?
Former mobile OS giant with very little visibility in the smartphone market, and former hardware champion with very little visibility in the current USA market. On paper this sounds like an epic “HP + Palm” failure in the making, and there’s recently been a NUMBER of editorials predicting this failure.

Call me an optimist, but I’m going to say they’re all wrong. I’m pretty confident that by the end of 2012, Microsoft powered handsets will be in a strong third place, poaching a little from Android and a LOT from RIM. Of those phones sold, Nokia will be taking a significant chunk of the WinPhone mindshare.

So why are Nokia folks so excited?
They finally have an ecosystem. This is the main reason for the webOS crash. It no longer matters if you have amazing software, or great hardware specs, if you don’t have a total ecosystem for your products–from OS to hardware, apps, accessories, and support–then the consumer is not interested. Apple built their dominance over a decade, first with the iPod, then with iTunes, then by tying together all of their product lines. Amazing one-off devices just don’t cut it any more.

What did we learn from the Kindle and Nook launches?

People like cheap tablets? Nope. There have been plenty of cheap devices. Instead, people want to open the box and USE their gear. They don’t want to open a box, then look for apps that might help them use their gear. They want an ecosystem. They don’t want to take a risk on eventually getting support–they’re paying for that up front with the purchase of the device.

Microsoft gives Nokia an infrastructure they never could’ve built on their own.
Sure. MS often gets a bad rap from consumers. People complain about Windows, and I still don’t think the company has escaped its Vista problems. However, ask someone about their XBOX, and they’ll probably rave about it. This is the Microsoft people tend to forget is a part of the same “stodgy” company that makes a desktop OS.

Nokia just threw their chips in with the premier social gaming service, which just so happens to be the same company which still dominates the office productivity market.

Their booth was HOPPING at CES. Next to the Kodak booth (which felt like a eulogy) and compared to the RIM booth (which felt like you were walking the green mile), Nokia was a buzz. Every rep was occupied, every single one. Getting people hands on time with new phones, showing off an incredible range of in house accessories, and doing a much better job of talking up the Microsoft ecosystem than any other handset manufacturer–it all felt really fresh.

I even got a picture of my buddy Mike Macias chatting up Nokia CEO Stephen Elop while walking the show floor.

Microsoft’s ethic for phones matches Nokia’s.

Neither company seems all that interested in throwing uber-powerful hardware at their phones. Microsoft’s build specifications are extremely strict, and prevent the use of exotic hardware, like dual core processors. Nokia has a history of streamlining internals for better battery life. We’re talking tech peanut butter and jelly.

I think Microsoft may be on to something here. By keeping the hardware requirements this strict, they’re leveling the playing field for the consumer experience. Some might find this boring, but I think it’s a minor revolution. Even the lowest end, entry level phone will have a satisfyingly smooth user experience. Spending the week playing with a Lumia 710 (review coming soon), it never lagged or chugged or crashed. The hardware inside is almost exactly what you’ll find inside the 800 or 900 “premier” line of phones.

Seen another way, you wont be “punished” for using an entry level device. Unlike Android, where you have to throw more hardware at the OS for a slick experience (which is often hamstrung by manufacturer and carrier mods), a customer using a $50 phone wont be left out in the cold, and the Lumia 710 consistently shames mid-range and even a few high-end Android devices in actual use.

What makes a device high-end then?

All of the icing: build materials, screen tech, size, storage, radios, and design are now what will differentiate low end from high end–but everyone will still be able to participate with OS features and the Microsoft ecosystem. Microsoft is on track to make hardware irrelevant in a way that Apple never could.

Nokia stands to benefit from this the most. HTC is probably their primary competition in the WP7 arena, but they’ve been fighting an Android specs war for so long, I’m not sure they’ll be able to communicate the benefits of WP7. Even now with the release of the Titan II, most people are talking about the 16MP camera and screen size. With a new Android phone out practically every week, Droids will continue to dominate the hardware discussion. You need to find different ways to differentiate WP7, especially since the first round of phones were really recycled Android handsets. Nokia has a long history of releasing compelling and unique hardware.

Infrastructure means access.

Windows Phone may also benefit from some excellent timing. These devices can’t do anything without data. AT&T is a little sore right now. They lost out on the ability to buy up T-Mobile, and they’re late to market with LTE. T-Mobile is still using a fast 3G, and is so small a player that they often lag behind the big boys in getting exciting new handsets. The iPhone no longer helps AT&T, and T-Mo doesn’t get a Nexus this round. These companies need a new player, a market disruptor.

AT&T needs premier devices to get people excited about LTE since Verizon already has a stable of high-end devices, and T-Mo needs interesting entry, and mid-range devices since their main tactic is being cost competitive. WP7 handily provides solutions for both. I’m hoping we’ll see similar adoption on Sprint once their LTE network starts getting off the ground.

Samsung is dominating the Android landscape right now (getting two Nexus devices in a row), and Motorola will start to become more integrated into the Google ecosystem. HTC has seen sales slip over this past year, and Nokia is energized.

I think a lot of us are ready to see a tech shake up for 2012, and personally, I hope to see Nokia on top.

Um… On top of third place that is…