Microsoft Corp. and Nokia Corp. are working together to put a version of Microsoft’s Office productivity applications on Nokia handsets, the companies said today.
In a teleconference, Microsoft Business Division President Stephen Elop and Nokia Executive Vice President for Devices Kai Oistamo unveiled the alliance, which should give Microsoft leverage against Google Inc. and others that are attacking its Office business with free or low-priced, Web-based productivity applications.
Under the terms of the agreement, the two companies will begin working together immediately to design, develop and market productivity applications for mobile professionals, bringing an application called Microsoft Office Mobile to Nokia’s Symbian devices, they said in a press statement.
They will also do the same for other Microsoft communications, collaboration and device-management software.
The applications will be available first on Nokia’s E-series phones, which are optimized for the business market, but eventually will extend to other Nokia handsets. Microsoft and Nokia also will jointly market the applications to business customers and carriers, they said.
The Microsoft-Nokia deal brings two competitors together. Microsoft’s Windows Mobile platform for handsets competes with Symbian, the OS for most Nokia phones.
However, Windows Mobile has never found solid footing in the mobile market, while Nokia’s Symbian is still the market share leader for midrange handsets, said Directions on Microsoft analyst Matt Rosoff.
Putting Office applications on Nokia handsets is a savvy business move for Microsoft, he said, and will also help both companies compete against their mutual rivals Apple Inc. and Research in Motion Ltd. Apple’s iPhone remains primarily a consumer phenomenon, while RIM’s Blackberry OS is popular with business users.
Elop and Oistamo said the partnership is based on Microsoft’s and Nokia’s common goal to make mobile workers more effective as mobile devices become more evolved and powerful.
“This partnership was founded with the customer in mind and understanding that mobile workers of the future will need to get more out of their mobile phones,” Oistamo said.
“This whole relationship is about expanding … from a business-productivity perspective,” Elop said. “We need to take the broad productivity experiences and put them in the hands of as many people as possible.”
The deal does not mean that Microsoft is conceding to Nokia’s Symbian as the dominant OS for smartphones, Elop said. Oistamo said that Nokia has no plans to offer Windows Mobile on its own handsets.
Both said the two companies will remain fierce mobile competitors even as they collaborate to bring Office to more mobile workers. Microsoft already offers Office Mobile on Windows Mobile handsets and plans to put a new version of the application on mobile phones next year.
“We both believe strongly in our respective strategies but we also believe in our new alliance,” Elop said.
The first application to appear on Nokia phones will be Microsoft Office Communicator, the company’s instant messaging and Web presence client for business users, Oistamo said. This will happen sometime next year, he said, with other applications to follow.
Next to its Windows OS business, Microsoft’s Office business is the primary source of the company’s revenue. However, its Office consumer business has been declining, showing that pressure from Google and other less expensive productivity applications is beginning to take its toll at the low end.
To counter this slide, Microsoft also has been working on its own Web-based version of Microsoft Word, Excel, PowerPoint and OneNote called Office Web Apps. That offering will be available on PCs through a browser at the same time it releases the next version of Office 2010 in the first half of next year. Office Web Apps is scheduled to be in a technical preview this month.
The end of Windows Mobile?
The Microsoft-Nokia alliance be the beginning of the end for Windows Mobile?
Some observers think so, arguing that the agreement is an admission by Microsoft Corp. that Windows Mobile, its operating system for mobile devices, hasn’t done well, especially when compared with the Symbian operating system that runs on Nokia Corp.’s handhelds.
Analysts won’t state outright that Windows Mobile is dying, but they came close to doing so in comments today.
The alliance announcement is “a tacit admission that Windows Mobile hasn’t made the grade and has not gotten the market share they wanted,” said Nick Jones, a Gartner Inc. analyst, in an interview. “If Windows Mobile were the leading mobile OS, they wouldn’t have needed to do this.”
Symbian is the world’s leading mobile operating system and runs on nearly half the smartphones globally, while Windows Mobile hasn’t advanced beyond fourth place worldwide, despite strong support and years of investment from Microsoft, Jones added.
Jones said he’s becoming “more concerned” about the future of Windows Mobile and noted in a blog post today that Windows Mobile 7 could be Microsoft’s last update of the product. Windows Mobile 6.5 is due later this year.
“Imagine you are Steve Ballmer and in two years time WinMo was still fourth in smartphone market share. How much longer would you keep throwing money at it?” Jones wrote.
Microsoft strongly defended Windows Mobile today, with Microsoft Business Division President Stephen Elop saying in a teleconference with reporters that the alliance with Nokia doesn’t mean Microsoft is conceding that Symbian is the dominant operating system for smartphones.
However, Kai Oistamo, Nokia executive vice president for devices, also clearly said that Windows Mobile won’t be running on Nokia phones.And in an interview afterward, Kirt Debique, general manager of Microsoft’s business division, said Microsoft remains “deeply committed to Windows Mobile,” adding that the alliance was not about operating systems but rather the productivity software that runs on smartphones.
Stephen Drake, an analyst at research firm IDC, said the alliance won’t have a negative effect on Windows Mobile. On the contrary, he said, it’s a smart move for Microsoft, since the company hasn’t been able to license Windows Mobile on Nokia smartphones but will now be able to provide a number of its offerings on another platform without using Windows Mobile.
“It makes sense for Microsoft to port its solutions on other OSs, as it realizes it is a heterogeneous world,” Drake said.While Jones voiced the strongest concern for Windows Mobile among several analysts interviewed, others expressed misgivings as well.
Jack Gold, an analyst at J.Gold Associates LLC, said today’s deal has him wondering whether Windows Mobile can survive much longer.
“Microsoft makes so much more revenue on Office and related productivity software than it does on Windows Mobile that the Nokia deal shows Microsoft has decided ‘We can’t be tied down by Windows Mobile anymore,'” Gold said in an interview. He also predicted Microsoft will exit the mobile operating system market within two years.
Gartner analyst Ken Dulaney noted that Windows Mobile is already “weak right now, whether this [Nokia alliance] got announced or not.” While Microsoft seems committed to improving Windows Mobile, “they will never be as dominant [on mobile devices] as they have been on the PC.”And Carolina Milanesi, also a Gartner analyst, said the deal with Nokia won’t mean that Microsoft stops improving Windows mobile, but she expressed concern about the long-term fate of the operating system.
“To me, the deal shows that there are limitations to where the [Windows Mobile] platform will go in the next year or so, and that the Microsoft [productivity software team] might not want to risk waiting for Windows Mobile 7 to come to the rescue,” she wrote in an e-mail.