Monday, 20 January 2014

Nokia vs Nokia

(Apologies that this article isn't strictly speaking directly Jolla-related, but due to their very close shared history Jolla's chances of becoming global may well be intertwined with Nokia's return to smartphone manufacturing. This is intended to be a commentary on the possibilities surrounding that scenario.)

Nokia's shareholders recently approved the sale of their phone-making unit to Microsoft, but the rest of the company (including the Nokia brand itself) was not part of this deal, so Nokia Lumia devices will become Microsoft Lumia devices once the sale process is completed.

However, as noted in a previous article on this site, the terms of the deal have two extra bits of small print: Nokia cannot use their own brand on smartphones until 2016, and Microsoft has permission to use the Nokia brand on feature (non-smart) phones until 2024. This brings up an interesting possible scenario for the period 2016 to 2024: two competing sets of incompatible Nokia-branded phones made by two totally separate companies on sale simultaneously. Quite how consumers would react to this would be interesting to say the least.

Here's how it would work:

In the blue corner: Nokia Nokia smartphones

These phones would be made by Nokia, the Finnish company which owns the Nokia brand and currently consists of NSN Networks, HERE Maps and a patent management division. There is nothing to stop it getting back into making phones and smartphones (quite possibly by buying Jolla, which is why this article is on this site), and from 2016 onwards there would be nothing to stop them making smartphones again using the Nokia brand.

They would also no longer be bound by any commitment to the Windows Phone platform, and considering the disaster that it brought upon the company it seems likely they would avoid it like the plague. Their options for non-Windows devices are explored in the article mentioned above.

In the red corner: Microsoft Nokia feature phones

These phones would be made by Microsoft, the American company which owns the Lumia and Asha brands and currently consists of both the current Microsoft company and the former phone-making division of Nokia. They would not be allowed to use the Nokia name on their smartphones because they do not own the brand, but thanks to their licence from 2014 - 2024 they would be allowed to have the Nokia brand on their non-smart phones.

It was assumed by most that this would mean Microsoft producing cheap Asha devices which run Nokia's old Series 40 proprietary platform, but the recent leaks about devices codenamed "Normandy" coupled with those same leaks' Windows-esque stylings bring up another and very bizarre possibility: Microsoft could be releasing Nokia-branded phones based on some kind of crippled Android fork dressed up to look like Windows (they would have to be crippled in order to comply with the legal terms of their licence to use the Nokia brand). If this is the case, presumably MS see this as cheaper than maintaining the Asha Series 40 OS, but it still seems an odd and embarassing move by Microsoft, effectively conceding that Android is a better platform for low-end devices. It also runs the risk that people upgrading from those devices would just go to a higher end Android phone instead of Windows.

So, what happens next?

Although a "Nokia vs Nokia" confrontation would be an interesting one, it's almost impossible to know if it will happen and what would happen if it did, because the mobile landscape is likely to change radically both leading up to 2014 and beyond.

Part of the outcome would depend on how relevant the non-smart feature phone market is by 2016. Smartphones are occupying an ever-increasing share of the market even in developing countries, and it could be that the market for feature phones will simply disappear by then. However, why did Microsoft buy a 10 year feature phone licence if they felt it had no value? Was this just a mistake by Microsoft, or do they think feature phones will continue to be a going concern for the next ten years, or do they have some devious plan to actually somehow sell Nokia-branded smartphones without technically breaching the licence terms? Or was Nokia just trying to sweeten the deal while avoiding selling the more lucrative smartphone brand rights?

There are also many reasons to think that other events would intervene before 2016, preventing such a head-to-head from ever taking place.

Windows Phone's future is still in the balance with a global market share of about 3% after several years and literally billions spent on marketing and development. Perhaps the most salient question is what will happen to the Lumia range (which now accounts for almost all WP sales) after it no longer carries the Nokia name, something that will happen from 2014 onwards. If significant numbers of people abandon Lumia, then the entire future of Microsoft's presence in the mobile market would be called into doubt before 2016, and the head to head would never happen.

As for Nokia's near future, on one level they seem to have given up on phones by selling their phone-making division. But if that's really the case, why did they hang on to what is essentially a consumer-oriented phone brand? Neither HERE Maps nor NSN nor the patent division have any need for the Nokia brand so why did Nokia keep it? They must intend to do something with it, and the thing that would make the most sense for such a brand would be smartphones of some kind.

Maybe the weirdest plausible scenario would be this: Windows-based Lumia sales decline due to the removal of Nokia branding, but Android-based Asha sales increase due to it being the first Nokia-branded Android phone. That might lead Microsoft to abandon its own OS in favour of adopting a competitor's, which was exactly the fate they forced upon Nokia just a few years ago.

What about Jolla?

Although Jolla is a new company making a new product, in many people's eyes they are the true heir to Nokia, continuing the work that Nokia abandoned when it drank the Windows kool-aid.

Now Nokia has apparently purged Windows from its system by selling the phones unit, it's very tempting for fans of the old Nokia to believe they could decide to get back into smartphones by investing in or even buying Jolla: it would arguably see the old company restored to the path it was supposed to take in the first place, while also promoting a platform that deserves a proper second chance.

Maybe that's just wishful thinking, maybe it's not realistic, maybe Nokia has changed so much internally that it's not even a desirable scenario any more. However, we can always hope, and perhaps the next couple of years will see some very interesting things happen.