Windows Mobile: the cat does have nine lives!

With the recent Nokia deal, Windows Mobile is back! While Nokia seems irrelevant in the US, Symbian still has 37.6 % market share globally (amongst smart phones), and more importantly, Nokia has 40+ % of the global cellphone market (of devices sold by the top 10 cellphone makers). So, while Nokia will continue to loose share in 2011/2012, it will remain the largest cellphone maker (in volume terms) for a while.

I think that Windows Mobile has a credible shot at 30 % + market share of all cellphones by 2015 up from 4.2 % of all smartphones today.

  • By 2015, all phones will be smart phones, and just with Nokia alone, Windows Mobile could have 30% + market share. In addition Samsung, HTC, LG and other Asian manufacturers will all hedge their bets and sell a mix of Windows Mobile and Android.
  • Nokia and Microsoft both have a very strong retail and corporate distribution channel in Asia and Europe. Together, they have also strong relationships with both carriers and large enterprises, which both Google and Apple lack.
  • MSFT has a very strong developer ecosystem in Asia and Europe and amongst enterprise developers in the US. In India, which has the 2nd largest number of developers after the US, .NET has more developers than the open source stack. Not a surprise when you consider that Indian developers cut their teeth at the IT out-sourcers which use .NET extensively.

The Windows-Nokia alliance could be the new WINTEL, and in time may be remembered as pivotal as Yahoo’s decision to out-source search to Bing or even IBM’s decision to out-source the PC OS to Microsoft. In particular, this is bad news for RIM’s platform and HP’s Web OS (formerly Palm), both of which I suspect will be history by 2015. Google will continue to be the market leader with 50% + of the market and Apple will end up with 15 % in volume terms and highly profitable.

Off course all this assumes that MSFT and Nokia can execute together, which is a big IF! What do you think? Does Windows Mobile have nine lives?

About Ashu

General Partner with Foundation Capital. Areas of interest range from digital media, mobile and internet infrastructure to all things related to India. Currently on the board of TreeHouse, Aspire, Conviva, Agni and TubeMogul.
This entry was posted in India, Mobile. Bookmark the permalink.

15 Responses to Windows Mobile: the cat does have nine lives!

  1. There is really no point in speculating about this.

    You speak of Symbian holding a 37.6% marketshare. This is relevant to the MSFT-NOKIA deal discussion only IF the devices running Symbian^3 can be upgraded to WP7. Even in markets where Nokia is wildly popular, other players have learnt and are stepping up their game. If Nokia and MSFT do not do something big (like releasing a version of WP7 for S^3 devices currently on the market), very soon, they are headed nowhere.

    Note that this possibility is being pondered over by Nokia, as it became evident at the Q&A session yesterday. They are analysing the possibility of bringing WP7 to existing s^3 devices, but they would have to look at the chipsets, etc.

    Personally, I see potential, yes. There is potential for it to be an epic success or an epic fail too. Here’s wishing them the best….

  2. Koyce says:

    yes I see a big potential. it’s windows phone not windows mobile, windows phone is new and was launched 4 months ago while windows mobile was the old operating system.

  3. Amit Prasad says:

    When you look at the apps market, Blackberry, iphone and Symbian are not very friendly from a developer angle, too many restrictions and porting your app on those, then placing it on their market places is a cumbersome process too. Android and Windows are the only ones which are easy to build apps on and propagate, so if Windows is assured of a good market share through Nokia, I see a lot of consumers and B2B guys waiting in line to use apps on the Windows OS, it does have 9 lives!

  4. Mohit Mahendra says:

    I think this stack will hold its own in time to come. It has many things going – better s/w & h/w optimization now possible + large MS developer ecosystem + better dev platform + enterprise credentials + MS cloud services + incumbent handset brand mkt share + financial resources. It can bring together the strengths of Apple (design & user experience optimization) & Android (wide handset choice). I would say time to buy a little NOK and put it away for a few years.

  5. Ashu says:

    I am not sure if I would buy Nokia right now, but I do think that it could be a MOTO like story. All depends on how good a job Stefan Elop does in terms of execution. Sanjay Jha at MOTO rocks!

  6. Peeyush Rai says:

    Hi Ashu,

    While I agree that theoretically this looks like a great opportunity for both MSFT and Nokia to establish themselves in the smartphone market, the reality is (IMO) the core value brought about by either of the companies into the mobile market (let alone the smartphone market) is quite week at the core. WinMo has failed to gain any traction since its launch – and that is not due to the lack of hardware platforms available. They came 2 years late to the market with an product and ecosystem that is inferior to both iOS and Android . Nokia has failed to create smartphone hardware that is close to the ones created by Apple, HTC, Samsung, Moto, LG etc. Even in the mid to low segment “feature phones”, Nokia is getting slammed in developing markets. Also as someone mentioned earlier in comments, Nokia really needs to start fresh as far as hardware goes. This requires significant adjustment of execution and culture within the company which is very difficult.

    IMO at best there is a glimmer of hope for Nokia. Even if WinMo survives, it will be the 3rd or 4th option (behind iOS, Android and even RIM) for developers. They would have had a much better chance with Android, but with an Ex MSFT CEO, that was too much to ask for 🙂

  7. Surya says:

    Hi Ashu,

    I’m not sure if MSFT can make it big because of the simple fact.. it’s still copying instead of innovating. For example in case of Kinect they were the game changers.. instead of copying Wii or PSP3 they just blew away everyone.. but in case of mobiles they still are setting up things like app store, no flash support, live tiles (something like widgets) etc… they just need to change the paradigm here and need to innovate.

    Even though I use iPhone 4.. i feel Android is better than this if only they had decent looking icons and better hardware

  8. Vin Bhat says:

    Great post Ashu. I agree that this is a landmark announcement and gives us the 3 players that are going to control the global smartphone software market: Android, iOS and Windows (7 and beyond). Every other player will be acquired, left with market share scraps, pivot to new applications or shut down.

    The key strengths at Nokia are hardware, retail distribution, and carrier relationships, and the key strengths at Microsoft are software/OS, developer relations, search, and ad sales

    The fit is hand in glove and the critical success factors lie in the ability for two huge companies to move fast and execute. I think it will come down to how 1) how tightly the OS and hardware are integrated, 2) the consumer experience around the applications, 3) the billing integration for transactions/subscription for digital and real world products, and 4) how quickly this all rollouts from the C-Suite to the retail shelves.

    Given Nokia’s market penetration today, I think the opportunity is more outside of North America. Not many people have a Nokia phone in the US, but it is still the dominant player (despite recent market share losses) in most other parts of the world. This move plugs the hole in the dyke and will make them competitive again, and they also just prevented a huge writedown related to the acquisition of Navteq. Nokia’s existing carrier relationships around the world definitely should accelerate achieving success, as carrier involvement will be critical for billing and promoting greater connected consumer use cases for their mobile devices. If the two partners get this right, we’ll also see firsthand a transformation on how people use their phones for making nearly any kind of purchase in the emerging markets. It will be a proxy for cash.

    Another key area where Microsoft wins is piracy, especially in the emerging markets where they are historically hit the hardest. By purchasing a phone with software installed, Microsoft firmly secures licensing revenue in markets where piracy is rampant. More people have phones than computers in emerging markets, so this is the right track to win back lost revenue. I’d be really curious to know how much of license fee Microsoft gets for each unit sold. I also am curious to know how this impact Microsoft’s relationships with other OEMs like Samsung that are using Windows (if at all)?

    From our company’s perspective, I can say that developers are definitely enthused. While desktop Windows had its fragmentation issues over the last 25+ years, a new rollout of Windows 7 on mobile and subsequent versions can be designed in lock-step with hardware and also keep in mind that importance of compelling applications. If/once this partnership is executed, it will give developers another world stage to showcase their products and services, deliver value to consumers at scale, and generate substantial revenue in the process.

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