By now, most people are aware of the Keystone Kops routine played out during Nokia's (NYS: NOK) launch last week of its flagship smartphone, the LTE-capable Lumia 900, on the AT&T (NYS: T) wireless network:

  • Poor planning: Scheduling the Lumia 900 coming-out party on Easter Sunday -- Easter Sunday!!!! -- guaranteed a smaller-than-optimal turnout.
  • Poor product testing : After accusing other smartphone makers of foisting unproven handsets onto unwitting customers, a "software glitch" rendered Nokia's Internet-capable phone incapable of connecting with the Internet. Not only was this embarrassing; it was also expensive. Nokia offered the phones for free to anyone buying one before April 22 -- even if the phone was problem-free.
  • Poor financial news : Nokia released an earnings warning three days after the Lumia's debut that the company's first-quarter outlook looked grim. Its bread-and-butter feature-phone business in India, the Middle East, Africa, and China was being encroached upon by cheaper smartphones running Android.

Woulda, shoulda, coulda ...
Could Nokia have avoided all those troubles by choosing a different OS to go with, after the company found its homegrown Symbian platform to be wanting as a smartphone operating system? Rather than Google's (NAS: GOOG) established and popular Android OS, Nokia chose Microsoft's (Nasdaq: MSFT) thinly used Windows Phone mobile OS as its smartphone platform.

Should it have gone with Android? After all, smartphones made by Samsung, LG, Huawei, and Motorola that run the Android OS together have grabbed more than half of the world's smartphone OS market share by the end of 2011, according to market research firm Gartner. Apple's (NAS: AAPL) iOS, running iPhones, was in second place with 23.8%. Windows Phone was in sixth place. Worse yet, rumors abound that the Cuprtino powerhouse will launch another iteration of its iPhone at some point in the second half of the year.


So why Windows Phone?
As for why Nokia chose to go with the mobile OS that it did, we have to go back to February 2011 and listen in on a joint Nokia-Microsoft press conference, where Nokia CEO Stephen Elop announced the companies' cooperative venture to the world.

Why Windows Phone? "It gives us the opportunity to lead," Elop said. "It gives us a faster path to the United States marketplace."

Elop then said that Nokia assessed three options: MeeGo (a Linux-based open-source OS, now unsupported) along with its own Symbian OS, Android, and Microsoft.

"We absolutely spent time with our colleagues at Google," he said. Even though Elop admitted that Android is "moving very quickly" and "gaining share," he was concerned that the Nokia handsets would become just another Android-running phone. "Our fundamental belief is we would have difficulty differentiating," he said. "The commoditization risk was very high."

Earlier, though, in an interview with All Things D's Ina Fried, Elop admitted that Android was ahead of Windows Phone: "Android is growing very nicely; it has significant market share." He also said that "Nokia could bring to the Android ecosystem [a] very large number and would signal a very substantial shift in the dynamics of the mobile operating system market."

As for the Microsoft product: "Windows Phone is in its early formative states in terms of customer traction and so forth."

The line at the bottom
So it appears that the choice of Nokia's smartphone operating system may have been made not because of any technical advantage -- or even market-share advantage -- that the Windows Phone OS may have had over Android, but because the Finnish phone maker was just afraid of having its product become another undifferentiated Android-running mobile device in a vast sea of the same.

But Elop made those remarks more than a year ago, and the dynamics of the mobile marketplace have gone through some changes. Apple has been able to charge mobile carriers so heavily for its very popular iPhone that subsidies the carriers have to pay on the iPhone to lure customers into long-term contracts cut deeply into their profit margins.

So putting Nokia's recent marketing missteps aside, having a viable third mobile ecosystem around to put competitive pressure on Apple and the Android phone makers to keep their costs down could be incentive enough for the carriers to help Nokia get through its recent woes -- maybe even long enough so that people will stop asking the obvious question.

The mobile revolution makes for a fast-moving target for investors. To help you find a key player in this revolution, The Motley Fool has released a free report called "The Next Trillion-Dollar Revolution." It details a "hidden" component play inside mobile phones that also is a market leader in the exploding Chinese market that Intel praised for leading it to success last quarter. Hundreds of thousands have requested access to previous reports, but you can be among the first to access this just-released report -- and it's free.

At the time this article was published Fool contributor Dan Radovsky owns shares of AT&T and Nokia. The Motley Fool owns shares of Microsoft, Intel, Google, and Apple. Motley Fool newsletter services have recommended buying shares of Apple, Nokia, Google, Intel, and Microsoft and creating bull call spread positions in Apple and Microsoft. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Basics Of The Stock Market

Stock Market 101 - everything you need to know but were afraid to ask!

View Course »

Investing in Startups

The lucrative and risky world of startups.

View Course »

Add a Comment

*0 / 3000 Character Maximum

7 Comments

Filter by:
Carlos

I don't know what is the problem with the "differentiation" thing that Nokia is talking about. Right now the only different thing they got going with Windows is the they are going down while everybody else is going up with Android. I don't thing that running the same OS as the other will make you the same. Still there are other field where you can be different to the others, like bringing updates faster, making competitive and reliable phones, etc. In the computer world, HP, Dell, Lenovo, etc, were using the same OS and platform (Intel/AMD) and still they were different from one to another.

April 18 2012 at 11:53 AM Report abuse rate up rate down Reply
Carlos

I don't know what is the problem with the "differentiation" thing that Nokia is talking about. Right now the only different thing they got going with Windows is the they are going down while everybody else is going up with Android. I don't thing that running the same OS as the other will make you the same. Still there are other field where you can be different to the others, like bringing updates faster, making competitive and reliable phones, etc. In the computer world, HP, Dell, Lenovo, etc, were using the same OS and platform (Intel/AMD) and still they were different from one to another.

April 18 2012 at 11:51 AM Report abuse rate up rate down Reply
100avenue

NOKIA is in a death spiral as is RIM. The CEO's of these companies lack the 'right stuff' that makes great CEO's great. These two individuals follower's not leaders. They are weak and lack vision. The good news is that it not too late to replace them. They must act now.

April 18 2012 at 9:28 AM Report abuse rate up rate down Reply
Atlant

No, Nokia should have gone "all-in" with their own Maemo/MeeGo (their own in-house Linux system). That would have still allowed them to easily maintain product differentiation from the Android crowd while still switching to a development environment much more familiar to millions around the globe.

They could have milked their obsolete Symbian smartphones for a few more quarters while they made the switch to MeeGo, but instead, they hired the Manchurian Candidate from Microsoft who almost-immediately decided to burn down the entire corporation with a flaming memo and, surprise!, switched Nokia towards depending upon a Microsoft product. I guess he'd never heard of Adam Osborne?

April 18 2012 at 7:36 AM Report abuse rate up rate down Reply
Victor

It's a fallacy. Anyone can buy a WiMo patent and start selling the device. The problem with WiMo is its owner, Microsoft. Sure, they're moving fast, but not faster than iOS or Android.

April 18 2012 at 6:37 AM Report abuse rate up rate down Reply
Mark Gibbs

I think Nokia made the right decesion and its going to take time .. look at how long it took google to take off with android.. and yes nokia android would be another android phone..
sales are not that bad I beleave by the end of the year nokia would have sold 25 to 35 mill windows phones and from there it will than start taking off with win 8 out

April 17 2012 at 8:47 PM Report abuse rate up rate down Reply
1 reply to Mark Gibbs's comment
Get real

You must have hit your head. Windows phone is not going anywhere apparently until they can figure out how to squeeze past #6 in the market and it's not going to happen. If Nokia wants to sell phones, they need to switch their OS to android as did everyone else that wanted to make a real splash in the cell phone business ie.... HTC, Motorola, hell even LG. Get it together Nokia or else you will continue to be on the outside looking in.

April 18 2012 at 12:14 AM Report abuse rate up rate down Reply