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THOUGHT: Why the Android-based Nokia Normandy aka Nokia Asha X makes a lot of Sense for Nokia and Microsoft
Posted by Arne Hess - on Tuesday, 11.02.14 - 15:03:04 CET under 09 - Thoughts - Viewed 6051x
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In the recent weeks and months, we heard many rumors that Nokia worked on an Android-based smartphone which was code-named "Normandy" and after sources said that this project was nixed after Microsoft announced the take-over of Nokia, The Wall Street Journal said yesterday that the Nokia Asha X, as it is called now, will be definitely unveiled during this month's Mobile World Congress in Barcelona. This rose some concerns if it makes sense for both - Microsoft and Nokia - and I say yes, it makes a lot of sense. If you see the operating system less emotional, it's just a vehicle. In the early smartphone days, Windows Mobile was a vehicle for Microsoft to sell its business proposition to corporate users. And today, the mobile OS is a vehicle to sell apps, and even more important, services to consumers and prosumers.

Microsoft's future can't be to rely on revenues out of its Windows Phone operating system but the future will be to rely on recurring revenues out of apps and services; and a good example is Microsoft's very own Office 365. Office used to be a collection of programs which was sold with a hefty onetime fee. After it was sold, it didn't generate any recurring revenues anymore. Nowadays, Office 365 is a service (Software as a Service) with recurring revenues. Or look at Windows XP, which is still in use. It was years ago that Microsoft made any revenue out of it while it's still maintained.

No, Microsoft has to expand its reach and a good example is - again - Office 365 which is also available on Android and iOS; something which also rose concerns in the Windows Phone community. If you are the Windows Phone business owner, you don't want to see one of your USPs (unique selling point) launched on competitive platforms. However, if you are the Office business owner you have to launch it on competitive platforms since you want to make as much revenue out of it as possible as well as you have to generate a kind of loyalty. And if you are the CEO or stock exchange you don't care if it's launched or not on competitive platforms, as long as you reach your targets. Look at Samsung which is providing components for Apple's iPhone. This causes headaches for the business owner of the Samsung smartphones but it contributes to the overall revenue and value of Samsung.

So how will or can a forked Android version on Nokia Asha phones help Microsoft and Nokia? It's clear that Nokia lost its dominant position in the mobile and smartphone market years ago as well as it lost its position in emerging markets. However, if I've learned something during my 3 months' work in Angola's telecommunication industry, it's the fact that these markets are working different than established markets like Europe or North America; and Nokia is still a recognized and used brand name in these markets.

However, at some point Microsoft decided that Windows Phone has its proposition which is above the entry-level phone, going mid-tier to high-end and it is difficult now to redesign Windows Phone, without giving up its proposition as well as without giving up the business rules like licensing and therefore the income. You can't license the Windows Phone OS for the same fee for low-tier phones as you are doing it for mid-range or high-end phones. However, you can also not strip it down to make it cheaper since it is as it is. This might be possible for a redesigned future version but not today; such a decision would break its own business rule.
This however means, that neither Microsoft nor its license partners nor Nokia has anything available for emerging markets. It doesn't hurt Samsung, HTC or Huawei at all since they can easily use Android instead which means Nokia and Microsoft are the only one left out in the rain. Nokia has no weapon against Android manufacturers and Microsoft has no assurance that its apps and services are used on Android phones. Why should a customer use Bing if Google Search is preinstalled? Why should a customer pay for Office 365 if Google Drive is preinstalled? Why should a customer use Bing/HERE Maps if Google Maps is preinstalled?

On the other hand, if Nokia is now using an Android ASOP fork, it can define which apps and services are preinstalled and which app store is used; but Nokia can also manufacturer cheaper phones under the "Nokia Asha "ASOP" brand" without blasting its own and Microsoft's Windows Phone proposition. You can even go that far and put a kind of Modern UI/Metro design on top of it to make it kind of familiar. It's quite similar to Amazon's Kindle range of Android ASOP devices. Amazon and Google are everything but good friends. Nevertheless, Amazon benefits from Google's ASOP work but makes the money with its own app store and media services. No Amazon Kindle customer will ever come into the situation where he or she is purchasing apps or renting movies from Google Play. No, Amazon is selling the apps, movies and music.

If we keep this scenario in mind and thinking about Microsoft's available Android apps, Microsoft's Xbox Music and Videos services and Nokia's own MixRadio music service, it doesn't matter what the underlying operating system is based on; if it is based on Windows, Linux, Java, or whatever. It could look like a unique Microsoft and Nokia OS, could support apps customers expect and might already know from other platforms and lock the user into the own entertainment services; without paying any license fees to Google or giving up the Windows Phone proposition. The average user will even never understand that he or she is using an "Android" device, but it might be just named "Nokia OS" or "Asha OS".

For sure, such a move is balancing act for both, Microsoft and Nokia, since such a platform shouldn't be better than Windows Phone - Microsoft's high-end platform – and it always needs room for improvement that customers, which might have started once with an Asha X want to upgrade later to Windows Phone. However, at the end of the day, everything is about a wallet garden strategy where Microsoft and Nokia have to catch customers as early as possible, to lock them into its own eco-system. That's nothing different to Google or Amazon which are doing the same.

Therefore makes the expected launch of a Nokia Asha X with Android AOSP a lot of sense for me and I don't think that it's the first and only "Android phone" we will see from Nokia. For me it's the launch of something new and it's out of question that Nokia needs a replacement for its outdated S40 OS, it used so far for the Asha series. Nowadays, you can hardly convince developers to develop something for such an outdated and end-of-life platform without paying for it. However, if you offer an Android platform with a dedicated market, it's easy for developers to also submit apps to this store.

So yes, for me it's clear that the Nokia Asha X and Nokia Android phones make a lot of sense. It makes a lot of sense for me and for Microsoft.

Cheers ~ Arne


 

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Comments
Posted by Symbian User on 11.02.14 - 19:14:59

The first good and by now best analysis of the situation. You hit the nail and there's nothing to add. A must read. Thanks Arne, more of this. I miss your analysis and comments.

Posted by Arne Hess on 11.02.14 - 23:32:08

Thanks for the kind words, appreciated!

Posted by Rafe on 12.02.14 - 11:23:19

It makes sense to me too. I do think there is a challenge in explaining this to analysts and particularly the media who don't seem to be able to be entirely level headed about it. Everyone just sees Android and goes nuts. An interesting mental exercise is the imagine what the reaction would be if Android was replaced with another OS (i.e. Nokia upgrading Series 40). Of course it does raise interesting questions, but I agree absolutely the value is now in the service layer, the rest is almost a given / price of entry.

The advantage to me is partly about apps (dalvik compatibility), but also the ability to work on the back of existing hardware integration works (drivers and cheap silicon). I think the latter may actually be more important that the former.

There is an interesting discussion to be had around why Windows Phone can't go so cheap... then again you could talk about the quality of a lot of low cost Android stuff versus a potential Asha on ASOP and what makes the most sense from a consumer view point (and that consumer view point is nothing like most of the people writing about this topic).

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