Nokia and Android? Don't Listen to the Rumors

Market rumors are something with which Fools are familiar, driving short-term stock price movements up or down, depending on the "news." No company is immune, of course. A leaked picture of a new smartphone here or a CEO alluding to a possible sale or strategic alliance there, and before you know it, investors react. Technology seems to be affected by rumors more than most industries. That'll happen when new products and services are introduced almost daily.

For fans of Nokia (NYSE: NOK  ) , the recent news of CEO Stephen Elop stating that he's open to a change in operating systems from Microsoft's (Nasdaq: MSFT  ) Windows 8 -- the OS to which Elop's essentially hitched Nokia's wagon -- to Google's (Nasdaq: GOOG  ) Android was a shock, to say the least. Now? Just when things seem to be going so well?

Can't we all just speak English?
Nokia is based in Finland, and Elop is a Canadian citizen. What does that have to with anything, you ask? Turns out, the rumor mill regarding Nokia being open to a Google OS smartphone alternative began in a recent interview Elop had with a Spanish reporter for the El Pais paper. A Finnish company, a Canadian CEO, answering questions in Spain. You can already see where this is going.

When asked by El Pais whether Nokia would make a smartphone running Google's Android, Elop responded, "Today we are engaged and satisfied with Microsoft, but anything is possible," ostensibly leaving the door open for a shift. Or, at least that was how Elop's response was interpreted. Nokia clarified the misconception almost immediately saying , among other things, "We're looking further into the future, but in terms of what we're bringing to market, and what we're immediately focused on, we're focused on Windows Phone."

Unfortunately, Elop's misunderstood quote came on the heels of prior speculation of Nokia's shift to Android based on a job posting a couple of weeks ago. So, rumormongers were already primed for a Nokia/Google tryst, and with Elop's Spanish quote getting lost in translation, the pump was primed.

Why the rumor really made no sense
Naturally Nokia isn't tied to Windows 8 forever, nor should it be; systems and markets change too quickly to suggest otherwise. But Nokia's Lumia smartphone introduction efforts, running Windows 8, are beginning to pick up steam, making it even less likely Elop would choose now to suggest such a dramatic change in direction.

The deal with China Mobile (NYSE: CHL  ) and its 700 million users -- and, better still, its agreement to subsidize the cost of the Chinese-specific Lumia 920T smartphone -- is a huge win and could prove to be a game changer for Nokia.

Its recent agreement to settle the patent litigation with Research In Motion demonstrated the value of Nokia's impressive patent portfolio, estimated at $6 billion and generating over $650 million in revenue annually. Introduction of the Lumia 620 will boost Nokia's share in the profitable, but often neglected, low-end smartphone marketplace.

No, Nokia isn't in the market for the Android OS, nor should it be. Elop's move to fall in with Microsoft, full steam ahead, is working out just fine. Google will just have to wait. 

 
 
 

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  • Report this Comment On January 08, 2013, at 8:06 PM, aileenie84 wrote:

    I'm not sure why this is a surprise. A few months ago, Nokia has put in linkedin a position that specializes in the Android platform...which sparked major speculation.

    Though I agree that Nokia and Windows 8 is doing well together, I think it makes absolute sense to also partner with other companies...given the two companies are not exclusive. By adopting other platforms (perhaps Android), Nokia can capture even more market share.

    Microsoft also has a history of not playing fair during their time of dominance. If Windows do take off, then Nokia will need other partners in order to maintain their bargaining power...instead putting all their eggs into the Microsoft basket.

  • Report this Comment On January 08, 2013, at 9:26 PM, techy46 wrote:

    It wasn't the comment that actually mattered it was the lack of enthusiasm for Windows that the response implied. Elop could of said hell no we're doing great with Windows and you'll know more in a few months. The response he gave sounded like they are not meeting their own expectations and thus left everyone wondering how lousy earnings will really be on 1/24/2013.

  • Report this Comment On January 09, 2013, at 2:27 AM, jhf678 wrote:

    Windows 8 is spreading to other phone makers like Android did. There is no reason for Nokia to switch to Android.

  • Report this Comment On January 09, 2013, at 9:45 AM, PeterC89 wrote:

    jhf678 - Could you provide some numbers pls?

  • Report this Comment On January 09, 2013, at 9:52 AM, PeterC89 wrote:

    @aileenie84 - I concur. Nokia is no Samsung, at least not at this moment in time. Samsung doesn't need dual OS. They are the king of Android. Nokia is trying to make come back and banking on MSFT's OS. Nokia has been making the most noise this quarter due to their new Lumia lines, not MSFT's OS. If Nokia is serious of making a return, they need Android. One strategy would be exploring new option such as Droid? I also agree that you can't trust MSFT at all. These bastards are shady.

  • Report this Comment On January 09, 2013, at 8:36 PM, chilero wrote:

    Samsung is the only hardware company making money in Android. Google can't even do it with Motorola. Nokia was right to stay away. Android is not the path to riches. Windows Phone was their best option, and still is.

    If WP8 gets traction here in 2013 and reaches high single digits or even 10% market share from the current 3% then Nokia is golden.

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