Small Cracks In The WinPhone Foundation?

An article on CNET this morning has a summary of an interview with Nokia’s chairman, Risto Siilasmaa, and apparently despite some statements, there is a “Plan B” around smartphones. Of course, he made the usual positive noises about how they are confident in Windows Phone and such. And the existence of a Plan B isn’t entirely surprising. A company that big typically doesn’t bet the farm in one big push. But what is intriguing is that someone as senior in the organization as the chairman of the board would talk about it. But it also isn’t surprising, because of the nature of partnerships and a company’s relationship with its shareholders.

Why Use The Chairman For This?

There is a reason that we are hearing this from Nokia’s chairman, and not their president, Stephen Elop. Elop has to continue to make the Microsoft partnership work for now. He has to deal with Microsoft executives and senior management on a regular basis. If he were to make such a statement, the first thing his colleagues at Microsoft are going to ask is “why did you say that?”. That isn’t to say that the question still won’t come out. But it will be a slightly different conversation. And that allows Elop to say “talk to my boss”, and let that conversation happen at a different level. It means that Siilasmaa will need to talk to Bill Gates, which is a different sort of conversation than would occur between Steve Balmer and Elop.

The chairman doesn’t manage the Microsoft relationship, and their job is to look out of the shareholders first. This is a bone for the shareholders: it says that the chairman and the board are watching the relationship, and that there is a plan to protect their investment. It says that the president doesn’t have unlimited latitude, that there is a leash, and it has a limit. It lets the market know that this situation isn’t permanent, and that there is some plan to salvage things (presumably before it reaches “too late”).

Intriguing Timing

It is an interesting move, and it could be the first tiny fissures in the foundation that forms the Microsoft/Nokia relationship. It also says that the partnership isn’t necessarily as deep is it appeared when it was first announced. If Nokia really does have a plan B, most likely they have people actively working on it to some degree to keep it relevant. It doesn’t mean Nokia has alternative product ready to roll out the door in 30-days. But it presumably means they won’t have to wait 12 months for whatever it is they have in mind.

This isn’t encouraging news for Microsoft, even if it comes to nothing. The fallout from the Surface has manifested itself in a real consequence: HP is not longer going to build an ARM-based tablet. As expected, it doesn’t mean HP is going to walk away from Windows. To expect that would have been naive to say the least. But the fact the HP is going to ignore (for now) what could be the mainstream tablet platform for Windows 8 indicates they aren’t happy with Microsoft’s decision to build their own. This is the risk Microsoft took, but it may come with a reward. But that is still in the future. But to have the Nokia chairman talk openly about the existence of Plan B, and potential willingness to pull back from, or abandon, Windows Phone, on top of the grumblings about Surface, won’t make for happy fun time in Redmond.

So What Is Plan B?

So what could could this “Plan B” actually be for Nokia. There are 3 real possibilities, although one is highly unlikely, and a 4th that may have been made available because of recent news. Consider the options:

  1. They add Android to the Lumia family
  2. They bring MeeGo back to life
  3. They bring Symbian back to life
  4. They do something with RIM (licence, or buy them outright)

There is an outside chance they might be working with Bada from Samsung, but that is highly unlikely. My guess is that they will either go mainstream with Android, or because the idea of using “someone else’s software” has left such a bad taste in their mouth that they go back to something they own and control. So let’s look at the options in a bit more detail.

Moving to Android

This would be the conventional way to go, and while it isn’t exactly earth-shatteringly imaginative, it comes with a host of benefits. First, it means they have devices with a ready-made ecosystem of apps and content. It brings a platform people are familiar with, and it would allow them to focus on the brand again. Yes, it makes Nokia “one of many”, but it means being one of many is a really big and growing market. Do you want 100% of nothing, or 5% of something? That is what it comes down to. Nokia’s brand and recognition has taken a bit of a beating, but it doesn’t look to be permanently damaged at this point. They haven’t sunk as far as RIM when it comes to brand perception, at least from what I can tell.

I wouldn’t be at all surprised to find out that people from Google have been visiting Nokia facilities, or that Nokia folks have been to the Googleplex. The beauty of Android is that Nokia has access to a lot of help, and you can bet Google would be happy to have them in the Android family. Samsung has gained quite a bit of clout in the Android world, and it wouldn’t surprise me to see Google try to bring in Nokia, and give them a hand, to counterbalance Samsung to some degree. Google wants to be able to continue to exert overall control over Android, and having 2 strong third parties, along with their own hardware group, gives them a better shot at staying at the helm.

Moving to MeeGo

Prior to announcing the Windows Phone partnership, Nokia had announced that they were working with Maemo to use MeeGo as a platform for “mobile computers”. It wasn’t really meant as a Symbian replacement (as per the Nokia blog here), but there is no reason why it couldn’t be moved into the smartphone space. It appears the MeeGo is somewhat better for tablets and other mobile computing devices than Symbian, and given that Symbian is effectively dead, starting something new might be appealing for Nokia. A single operating system for smartphones and tablets would likely be better, because it allows a single general platform for developers to target. It also simplifies support and keeps any future roadmaps for the technology simpler.

Of course, this is basically starting from scratch, and it means resurrecting the system. Work on MeeGo was discontinued in 2011 in favour of another system called Tizen. Bringing it back to life internally isn’t a big deal, conceptually, and it is quite possible they have continued to do things with MeeGo in the lab to keep it alive. If this is Plan B, then it is almost certain that there is a small team working with it. That isn’t the problematic part: the complete lack of a viable and vibrant ecosystem is.

It is clear what is driving smartphones: apps and content. Sure, at some point web-based apps and software will likely supplant on-device/platform-specific apps. But that day is a ways off, and despite what some say, it isn’t HTML5 that will do that, it is whatever comes next. Having a platform that is a solid web-based environment is a good thing, but for the medium-term, apps rule the day. Without them, a new platform doesn’t have much of a chance of survival.

A move to MeeGo or Tizen is a long-shot play, and one that really won’t help turn around Nokia’s fortunes in a useful timeframe. Neither system has any real brand recognition and neither has the kind of ecosystem that Android or iOS have. But it does mean “new” for Nokia, and they may believe that novelty alone might be enough to breath life back into their products.

Bring Back Symbian

Back in 2010, there was a roadmap for Symbian, which included updating the technology to be more in line with Android and iOS. It also included a move to open source for Symbian, which proved to be temporary. This move to “take back” Symbian could be Nokia trying to protect the asset so they can use it again without restrictions or issues, and to prevent the appearance of competing devices. There are some benefits to this idea, but it also has problems.

The beauty of Symbian is that Nokia owns it, they understand it, and they know how to work with it. It wouldn’t surprise me that there are Symbian versions of Lumia handsets in the lab. In all likelihood, Nokia could have a Symbian-based Lumia on the market in less than 6 months, possibly as short as in 3, if they decided to take the plunge. What Nokia can’t afford is another long hiatus while they build “their next platform” as they had when they moved to Windows Phone 7, and Symbian could be shorter path to the destination.

But not all is roses and sunshine with this plan. First, Symbian is basically dead in the market. As with a MeeGo play, Nokia is essentially starting over. And they would be “starting over” with a system they chose to explicitly abandon. That decision may not matter much to most consumers, but to some consumers and enterprise customers, it may give them reason to distrust the platform. They dumped it once, they could abandon it again.

Going beyond trying to rebuild the Symbian brand, there is a bigger problem: it simply doesn’t have the app and content ecosystem of Android or iOS. Yes, there were Symbian app developers, but those will have moved on. Nokia has to convince them to come back, plus convince other app developers to support the platform. Again, their on-again-off-again-on-again history will work against them. Why would app developers want to come back to a platform that Nokia could simply abandon again?

Something With RIM

This one is intriguing, and there are some possible combinations that could look viable because of RIM’s dire situation. There could be two possibilities. The first is that Nokia licences Blackberry 10 as well as licences access to the RIM network. This would give Nokia a new and modern mobile operating system that is suitable for phones and tablets. It is a fresh start. RIM may also be desperate enough to make a really killer deal with Nokia to make it happen, with Nokia having protection against RIM’s demise as part of the deal.

More “protection” could be gained if Nokia simply made an offer to buy RIM, although that could be a challenge for Nokia. Their stock isn’t all that useful to buy other companies. Shareholders may be disinterested in swapping their crappy RIM shares for crappy Nokia shares. Short-term, it doesn’t look like a good play. An all-cash deal would be hard for Nokia, but it could be offset by the cash horde that RIM is still sitting on. Taking on short-term debt to buy RIM has its own difficulties: Nokia’s debt rating is currently junk according to Fitch ratings. Trying to borrow more will be hard, and Nokia isn’t sitting on a big pile of money right now. Buying RIM is likely out of the question for Nokia.

Any sort of deal (licence or buy) has its own problems. First, as with Symbian and MeeGo, Blackberry 10 has a dearth of apps in their catalogue, and it isn’t likely to grow anytime soon. The lack of an ecosystem, and essentially no meaningful developer interest, isn’t going to help.

Further, BB10 could be delayed again. When BBX was announced in October 2011, the rumoured date was early-2012 (ish). Then the name changed to Blackberry 10 because of a trademark issue (not a big deal, but if RIM didn’t have the sense to see if the name was protected or not, what else did they miss?). In December 2011, a real date (sort of) was announced: late-2012. That was the party line unti their most recent quarterly results, which now indicates a Q1 2013 release for the first devices. It certainly wouldn’t come as a surprise if that date gets moved again.

If Nokia’s Plan B is to hitch their fortune to an unproven platform from a struggling company, then that would be scary indeed. At least with Windows Phone, they are on a platform that has a stable but tiny portion of the smartphone market, and Microsoft isn’t going away anytime soon. Blackberry’s trajectory looks a lot like Symbian’s did over the past year or so.

So Which Is It?

The two most likely would appear to be either go with Android or to try to bring back Symbian. It depends entirely on how badly things are actually going inside Nokia, and how unhappy they are with using someone else’s platform. There is a corporate culture angle that will come to bear on this.

Going with Android isn’t without its risks, but it is a conservative approach. It brings a lot of benefits, particularly the ecosystem and a substantial potential customer base. But it also means betting, once again, on a platform they don’t own or control. It also means joining the Android Treadmill of frequent updates, frequent releases and a fair amount of change. Being able to keep up with that will take some effort. This isn’t an “upgrade every couple of years” type of system.

However, Nokia could be tempted to go with “what worked before”, on the assumption that all Symbian really needed was for Nokia to “try harder”. It can be tempting to rush back to the familiar. The problem with this approach is that the world has moved on. Symbian is effectively dead, and it would take a miracle to bring it back to some semblance of life. While Symbian has been out of action, iOS and Android have continued to advance the state of the art, and as Microsoft has discovered, keeping up is hard. When you look at Windows Phone, it is easily 1-2 years behind where iOS and Android are now in many ways. Advanced mapping and location, strong support for augmented reality, improvements in graphics and multimedia tools and voice control options are still absent on Windows Phone. Windows Phone 8 really only focuses on enterprise integration, and that may help it some. But enterprise customers have been adopting iOS devices in the millions with what it offers today. Despite some challenges in integration, companies are making it work, and now that they know how, they aren’t likely to walk away just because WinPhone 8 is easier.

Of course, this is all speculation, and Nokia could have some other surprise waiting in the wings. The real questions are: will they pull the cord? And when would they do it?

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