Nokia's U.S. Survival Strategy Reveals Its Weaknesses

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Two years after Nokia (NYSE: NOK  ) officially pooh-poohed the idea of a Windows phone, new CEO Stephen Elop may be considering exactly that here in the U.S.

Reports in The New York Times and elsewhere say Elop will unveil the new handset at an investor conference next Friday in London. Based on Windows Phone 7, the device would mark an unlikely shift away from the Symbian operating system that's led the global market for years.

In the U.S., Symbian has become less of a factor with the rise of Apple's (Nasdaq: AAPL  ) iOS and Google's (Nasdaq: GOOG  ) Android. And don't forget Research In Motion's (Nasdaq: RIMM  ) BlackBerry, which appeals to corporate buyers who might otherwise choose Nokia.

Why not partner with any of these three? To be fair, we don't yet know if there's a partnership of any kind. But if one is forthcoming, I can see the logic in locking hands with Mr. Softy. Nokia and Microsoft (Nasdaq: MSFT  ) are already partners.

The two companies paired up in 2009 to offer a mobile edition of the Office productivity suite to users of Symbian smartphones. Elop was president of Microsoft's Business Division at the time. He knows the investments both companies have made to understand each other's hardware and software.

Even so, Nokia also may not have much of a choice when it comes to smartphone platform suppliers. Neither iOS nor BlackBerry is an open platform, which leaves just Windows Phone 7 and Android.

Android has plenty of advantages. Not only is the OS growing fast, but it's also becoming more functional with the forthcoming release of the "Honeycomb" edition of the software. Trouble is, in adopting it, Nokia would be jumping into a big pool that already includes rivals Motorola Mobility (NYSE: MMI  ) , Samsung, and HTC.

Windows Phone 7 looks to be about as functional yet it isn't as popular. Rather, it's a good-looking OS that has yet to find a dream date for the mobile ball. Don't be surprised if Elop wants Nokia to become that partner.

Now's your turn to weigh in. Should Nokia adopt Windows Phone 7 here in the U.S.? Please let us know what you think using the comments box below. You can also rate Nokia in Motley Fool CAPS.

Interested in more info on the stocks mentioned in this story? Add Apple, Google, Motorola Mobility, Nokia or Research In Motion to your watchlist.

Google and Microsoft are Motley Fool Inside Value picks. Google is also a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended subscribers purchase a diagonal call position in Microsoft.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Google, Microsoft, and Apple, in which it also owns puts. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy will survive.

Read/Post Comments (7) | Recommend This Article (7)

Comments from our Foolish Readers

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  • Report this Comment On February 04, 2011, at 9:48 PM, marv08 wrote:

    The problem with this idea is, that the only potential beneficiary is MS. Nokia sells more than 100 million phones per quarter, and makes less money from them as Apple does from 15-16 million iPhones. And that is using an OS that they own.

    Now they shall pay licensing fees to MS, plus the R&D cost required to bring their hardware in line with MS's licensing requirements for WP7. To achieve what? Feature an OS that is still outsold by its own antiquated predecessor (WM 6.x) and not even attractive enough to make the 10 existing models financially viable? Sounds like a plan.

    Is Elop a trojan horse, or Nokia's CEO (MS's new credo: don't innovate, infiltrate)? Nokia has a great OS, just the user interface and the apps are junk. And they should replace this with an OS that also has no apps, and an OS that can display a maximum of 6-8 icons on the homescreen while being advertised as "the phone you won't want to look at"? Any CEO acting in the best interest of Nokia would fix Symbian, instead of sending money for nothing to Redmond.

  • Report this Comment On February 05, 2011, at 2:29 AM, foolanyman wrote:

    The article is otherwise quite reasonable, but I didn't see any comment about MeeGo.

    We haven't yet seen a version that has been good enough for Nokia to take it into use, but it should be around the corner. I wouldn't forget that combination, S40 in Nokia's low end phones, Symbian in the middle segment and MeeGo for the real high end mobiles and possible other gadgets.

    Let's see...

  • Report this Comment On February 05, 2011, at 4:37 AM, Henry3Dogg wrote:

    "Neither iOS nor BlackBerry is an open platform, which leaves just Windows Phone 7 and Android."

    Windows Phone 7 is not an open platform, it's a commercially available closed platform.

    This is not a criticism of Windows Phone 7, there is no reason for it to be open, but considering the hype currently associated with open, let's get it right.

  • Report this Comment On February 05, 2011, at 5:40 AM, john1ash wrote:

    "Nokia's U.S. Survival Strategy Reveals Its Weaknesses"

    Excuse Me?

    Where has this strategy been announced?

    All I've seen is speculations while waiting for Feb 11th. Including this article.

  • Report this Comment On February 05, 2011, at 11:12 AM, techy46 wrote:

    Nokia should do for the smart phone market what IBM did for th PC market. Nokia should announce that N9 will be an open hardware platform based on Intel Atom (Medfield, Oak Trail) availablle with all compaitible OS's; Android, Meego and WP7. Nokia should say that Symbian is going to be available on low end dumb phones. They should also announce a T9 tablet with the same compatibilities. This would reduce the fud over OS's and boast Nokia's R&D while leveraging Intel and Microsoft relationships. They could add Android to mix if strategy proves economical and viable.

  • Report this Comment On February 07, 2011, at 12:52 PM, melegross wrote:

    What a terrible idea, if true, which is something we don't know.

    WP7, so far, is proving to be an unpopular OS. Mate that to an increasingly clueless manufacturer such as Nokia, and what do you get?

    they've got to get MeeGo working well enough to be interesting, and mate that with really good hardware.

    The article doesn't mention that most of the Android players are also manufacturing WP7 phones, so the fact that Nokia would be competing with them if they used Android isn't an issue. Even if they stick with MeeGo for Smartphones, and drop Symbian to featurephones, where it belongs, they will still be competing with all those companies. I don't get the logic in the article.

    But then, these guys writing these articles don't understand these businesses. They just pretend they do.

  • Report this Comment On February 08, 2011, at 4:17 AM, kariku wrote:

    Still short NOK (although I lost some $)

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