The Magic Bullet That Microsoft Corporation Would Rather Not Fire

Microsoft (NASDAQ: MSFT  ) is about to become an Android phone designer. By way of soon-to-be-aquired handset specialist Nokia (NYSE: NOK  ) , The Wall Street Journal says that Microsoft will have a low-end Android phone to sell by the time the Nokia deal closes.

Citing its usual anonymous sources, the Journal explains that Nokia had been working on an Android phone before Microsoft stopped by with a $7.4 billion buyout check. Scheduled for unveiling at the Mobile World Congress conference in two weeks, this phone would fill a void in Nokia's product portfolio, where Microsoft's Windows phones just don't play. Google (NASDAQ: GOOGL  ) designed Android to run on lower-end hardware, where Windows Phone refuses to work at all.

This report also jibes with advice from The Guardian's Charles Arthur, who says that Nokia and Microsoft should create their own version of Android in order to explore the untapped low-cost market in high-volume geographies like India and China.

Roadblocks
Now, Google has made it hard for outsiders to fork their personal take on the Android platform. Do that, and you lose access to some of the most important pieces of the Android ecosystem, like the Google Play app store or built-in apps to take advantage of Gmail and other Google-backed services.

Image created from official logos, provided by Nokia and the Open Handset Alliance.

But that hasn't stopped third parties from going this route. BlackBerry (NASDAQ: BBRY  ) built Android compatibility into its BlackBerry 10 software; it's easy for developers to port Android apps over to BlackBerry, and BlackBerry 10 can even run some unmodified Android apps in a compatibility layer.

Then there's Amazon.com (NASDAQ: AMZN  ) , which broke away from the standard Android platform to power its Kindle series of e-readers. Amazon provides its own app store, and the missing Google apps often have their place taken by third-party alternatives or Amazon's own apps.

So sure, Nokia and Microsoft could give it a try. The two companies certainly have the resources to build their own core apps, redirecting Nokia Android users to Microsoft's Bing ecosystem whenever possible.

Worth a try?
Will cost-conscious consumers buy these handsets? Is it worth the effort?

Maybe so. Nokia built a massive brand in emerging markets, back when the world cared about feature phones. This brand awareness, coupled with the proven Android platform in a cost-effective product, could be the silver bullet that Microsoft never could build on its own.

Moreover, Nokia is well known for its high-quality phone cameras, including a contract to offer Carl Zeiss' high-quality lens systems. Other companies put Zeiss lenses in stand-alone cameras, but only Nokia can offer this feature in smartphones. Admittedly, this is more of a mid-market or upscale selling point, but a nice camera never hurt anybody.


Nokia Lumia 900, featuring Carl Zeiss optics. Source: Nokia.

Microsoft's hard-to-swallow payoff
So yeah, if Nokia goes through with this idea and creates its own spin on Android, the brand might actually gain traction in high-growth developing markets. That'll be a bitter pill for Microsoft to swallow, since it would essentially prove that Redmond's mobile platform can't compete on its own merits. But at the very least, Microsoft would get some sustainable revenue out of its $7.4 billion Nokia buyout.

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Read/Post Comments (11) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 13, 2014, at 8:34 PM, djtetsu wrote:

    It makes sense.

    Do what amazon does and have their own store. Developers would have to re-submit, but won't need to re-develop.

    Put everything Microsoft, subscription model versions of Office, Bing, etc.

    Include a way to Remote Desktop into your PC's at phone.

    While you're at it,

    Release a chromebook killer, with a same thing: a linux-based terminal device that Remote Desktops into PC's at home.

  • Report this Comment On February 13, 2014, at 9:12 PM, emilykulish wrote:

    The author made a mistake in thinking that Windows phones require higher-end hardware. In fact, WP works smoothly on low-end hardware, whereas Android chokes on low-end hardware.

    If Microsoft is really as aggressive as Google, it can defeat Google and its allies by selling hardware at absolutely no profit margin. Just like Google offers its software for free, Microsoft can offer phones, tablets, laptops at the hardware cost. Doing so will kill OEM manufacturers, both Android and Windows. But Microsoft will benefit from it eventually...

  • Report this Comment On February 14, 2014, at 1:58 AM, jameskil wrote:

    Chromebook is its own killer ... A Laptop that needs internet connectivity ...

  • Report this Comment On February 14, 2014, at 3:43 AM, othelzer wrote:

    The google development team are srewed

    and crafty to open source the os to

    deflate the competitors, then when all

    perfectly good phone Os competitors

    are marginalized like RIMM and Microsoft

    then go apple and divert market share

    into slavery

    while it is profitable (oh so profitable)

    it is a openly dishonest company

    even though apple dose this and more

    Apple is a honest overpriced closed competitor

    and in My opinion deserves every red cent

    it can wring

    google aquired market share (like microsoft did

    back in the day) by telling everyone they

    are hip open minded and have open arms

    for everyone, hey use our android OS

    based upon linux .

    google's motto of do no harm, is a vacant lie

    that Al gore prolly taught Larry Page and Sergey Brin

  • Report this Comment On February 14, 2014, at 8:11 AM, TMFZahrim wrote:

    @emilykulish, I'm sorry but I stand by my hardware statements.

    Windows Phone 8 requires a dual-core Snapdragon S4 or better, while the latest Android version (KitKat) runs on the Nexus S, released in 2010 with a single-core, earlier-generation Exynos 3 chip. 512MB memory is enough for both platforms. Microsoft has never been known for its low hardware requirements...

    Anders

  • Report this Comment On February 14, 2014, at 8:33 AM, JD80 wrote:

    "Google designed Android to run on lower-end hardware, where Windows Phone refuses to work at all."

    So what is the Nokia Lumia 525? That phone was specifically designed for the low end market.

  • Report this Comment On February 14, 2014, at 9:18 AM, auggybendoggy wrote:

    JD80, I was wondering the same thing.

  • Report this Comment On February 14, 2014, at 10:18 AM, marv08 wrote:

    The plan might be:

    1. Make low end Android fork running devices

    2. Price them to kill Nokia's Asha/S40 devices

    3. Reduce the 30k Nokia workforce dramatically

    4. By the time that has played out, even mid-level hardware will be cheap enough to support WP

    Risks:

    1. Even less reasons to develop WP apps

    2. Android devices might outsell low end Lumias, reducing WPs market share

    Interesting decision indeed...

  • Report this Comment On February 14, 2014, at 12:23 PM, EddieLomax wrote:

    Its not true that windows 8 needs higher end hardware than android. It runs on 512mb fine, what is true though is that it was only written to support a dual core processor since Microsofts strategy is to support one processor at a time.

    Since it runs far better on low end hardware than android then they could easily develop it for a single core phone.

    The other minimum requirements would be a problem for W8 though, going below 800x480 screen resolution is a no go and supporting lower resolutions would fragment the windows phone ecosystem.

    So I guess that is their main motivation, it is still likely a short term project though as technology costs decrease the low end W8 handsets will compete in this area, at which point - like Asha the range will be obsolete. (e.g. even feature phones now for example have colour LCDs, I expect in future W8's minimum hardware requirements will be extreme low end).

  • Report this Comment On February 14, 2014, at 1:45 PM, MFoolCommenter wrote:

    Microsoft is finding that selling products on their merits to consumers, in the presence of competition, is a whole lot harder than selling to "friendly" corporate IT purchasing managers who feel compelled buy anything that is suggested by a MS account exec.

    Retail consumers are not captive consumers like many corporate purchasing managers are.

  • Report this Comment On February 14, 2014, at 2:08 PM, NoWindows8LockIn wrote:

    If Microsoft (Ballmer) were not so hell-bent on creating vendor-lock-in, a strategy that Wall-Street types like to call euphemistically "customer stickiness", they might have gained some traction with Windows Phone 8.

    As it stands, Microsoft, in a matter of only 2-3 years, tried to take, metaphorically speaking, a country that was accustomed to one-person-one-vote democracy, freedom-of-speech, freedom-of-press, right-to-bear-arm, etc. etc...and turn it into North Korea. They were hoping that no one would notice, or if anyone noticed, that the momentum in the conversion would be so great that customers would be helpless to resist.

    We noticed. We resisted.

    We are looking elsewhere for our computing needs.

    Just keep one thing in mind, Microsoft, when this all plays out. You did this. You have no one to blame but yourself.

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