Microsoft and Nokia announced on Friday plans for a broad strategic partnership in which they will create a new global ecosystem built around the Windows Phone smart phone platform.
"Today, developers, operators, and consumers want compelling mobile products, which include not only the device but the software, services, applications, and customer support that make a great experience," said Nokia President and CEO Stephen Elop. "Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivalled global reach and scale. It's now a three-horse race."
Under the terms of the partnership:
- Nokia will adopt Windows Phone as its primary smartphone.
- Nokia will "innovate on top of" Windows Phone, in areas in which it has key strengths, including imaging.
- Nokia will collaborate with Microsoft on the future of Windows Phone.
- Nokia will use Bing as its search service and Microsoft adCenter as its advertisement delivery mechanism across its various devices.
- Microsoft will integrate Nokia Maps into its mapping and location services.
- Microsoft will integrate Nokia's content and application store into Microsoft Marketplace. (Windows Phone currently uses a tailored version of this called Windows Phone Marketplace.)
While some have questioned this long-rumored strategy, Elop says that the two companies have the resources and drive to succeed together. "There are other mobile ecosystems," he said. "We will disrupt them. There will be challenges. We will overcome them. Success requires speed. We will be swift."
Perhaps. But there are lots of questions out there, and uneasiness over this strategy. At a press conference announcing the move, Elop said that 2011 and 2012 would be "transition years," and Nokia shares immediately tumbled 10 percent. Microsoft's current Windows Phone partners, like HTC, LG, and Samsung already have Android-based devices in the market and could choose to abandon Windows Phone out of fears that Nokia is getting special treatment. And while Nokia is still popular internationally, it has almost no presence in the United States at all, and it's unclear how the company can help Microsoft in the software giant's key market.