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Nokia’s Android Plans Pushed Microsoft Into Acquisition Deal

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February 11th, 2011. The day Nokia decided that it will go with Windows Phone as their next smartphone OS, instead of the much speculated Android. Perhaps, this was the precursor of things to come. At 6 A.M., Helsinki time, on Sept. 3, 2013, Microsoft announced buying of Nokia’s phone business for $7.2 billion. So why did Microsoft hurry to buy Nokia? Was it afraid of Nokia’s flirting with Android? Were there actually tests on Nokia running on Android?

There was wide speculation that Nokia was atleast looking at developing an Android phone to either altogether replace or work along with its Microsoft Windows line. There was a huge possibility that sometime after late 2014, Nokia would have shifted to Google’s Android.

But isn’t this what everyone else does? Looks at what everyone else is doing and plays with it?

Or was it Plan B which companies often have in case they need to change course on strategy or want to help negotiate better terms with vendors. An important thing to notice is: re-engineering Nokia’s hardware to run Android wasn’t next to impossible.

A team within Nokia had Android up and running on the company’s Lumia handsets well before Microsoft and Nokia began negotiating Microsoft’s $7.2 billion acquisition of Nokia’s mobile phone and services business. Nokia had produced a Foxconn Batch android phone prototype, in July, Nokia R & D center in Beijing, test code-named “Mountain View” entry-level Android phone.

If Nokia was seriously considering dropping Windows, then this for sure pushed Microsoft into the act. Of the Windows Phone OS platform, Nokia contributed a handsome 80% sale. A potential switch to Android by Nokia would have had massive consequences for Microsoft. Nokia’s success on Android would have meant waking up from the dream of Windows being a serious mobile OS platform.

One particular project in testing was codenamed “AOL” according to insiders — “Asha on Linux,” a reference to Nokia’s low-end line of devices that don’t run Windows Phone. Nokia’s experimentation with Android was not limited to the bottom of the line: the company was also testing Google’s platform on its mainstream Lumia range to hedge against the possible failure of Windows Phone.

Reports say Nokia was frustrated with the lacks of apps on Windows. It has a great catalog of apps but still a few essential ones are missing. In the past year, Nokia has released some of the most innovative smartphones available on the market, but with some vital apps missing, consumers were holding off from buying.

Its latest device, the Lumia 1020, features perhaps the best camera of any smartphone, but Instagram, the most popular mobile photo social network, isn’t available on Windows Phone.

A functioning Nokia Android phone could help Nokia muster enough courage to face Microsoft in all its dealings, even as a threat to permanently move over to the platform which powers more than 3 out of the 4 smartphones sold globally.

Between the lines

When the 2011 deal was signed for Nokia to run Windows Phone OS, Nokia had an option to exit that partnership at the end of 2014. But with this masterstroke of buying Nokia’s handset division, Microsoft has started the consolidation phase in the handset-OS ecosystem.

For the Indian consumer, the war is between Nokia and Samsung. Local manufacturers are happy that the Nokia-Android deal is not happening. Else they would have been shoved away from the second position, behind market leader Samsung. If players like Micromax and Karbonn have raced ahead, it is only due to Android (See Indian Smartphone Vendor market share below).

Top-5-Smarphone-Vendors-market-share

India matters:

By 2017, India would replace US to become the second largest smartphone market after China. Vendors shipped 9.3 million smartphone units in Q2 of 2013 compared to 3.5 million units in the same period of 2012. While Micromax and other local players have either maintained or increased their share, Nokia has been seeing a steady decline – from 23% in the second quarter of 2011 to 15% two years later.

Android on Nokia was possible, but no longer now. With Nokia’s hardware becoming top-notch, Windows apps are the weakest link in this bonding. India is a huge market yet to be captured, where we love Windows on computers and laptops but Android on cellphones. Will Microsoft pull its act together and revamp its apps or will an opportunity be lost forever?

  1. Yusuf Turab says

    Almost every journalist seems to miss the bigger game at play. We see this all the time in political reporting now its happening in business as well. The real story is quite likely to be something totally different. Read this account of how Microsoft got Nokia for pennies.

    http://anisgandhi.wordpress.com/2013/09/03/nokia-ceo-was-a-trojan-horse/

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