Nokia knows this balancing act well, from its days of trying to make Symbian a broad-based platform by attracting its own rivals. And it is caught up in the same dilemma again, because of its close relationship with Microsoft. Talk that the Windows giant would acquire Nokia outright were far-fetched, because it does not need to, given the OEM's wholesale adoption of WP7 and the partners' close collaboration on web services and IPR.
But Microsoft still has to weigh the benefits of tying Nokia in tightly to its agenda against the dangers of alienating other close allies, notably HTC and Samsung. And as though that were not conundrum enough, Microsoft CEO Steve Ballmer has even dropped comments that revived the old rumors that the software firm aimed to create its own-branded gadgets, Google Nexus-style.
Microsoft’s dilemmas about Nokia
Nokia unveiled its first two Lumia WP7 offerings last week and will ship them initially in “friendly‟ markets such as western Europe and India, before the all-important push into north America early next year. To get a foothold in the hostile US soil, it will need active support from Microsoft, whose brand and channels are so much more powerful on its native soil than Nokia's.
Indeed, one reason why Nokia's CEO Stephen Elop, a former Microsoft man, went with WP7 was precisely for the advantages it could bring in a market where the Finnish vendor had never got its head above the parapet. But Microsoft does not want to antagonize HTC – the largest smartphone vendor in the US in Q3 – or Samsung, the country's biggest handset supplier, just when doubts about Google's Android plans and patent position are making them better disposed towards a multi-OS strategy.
Microsoft's recent deal with Samsung for the licensing of patents contained in Android went much further than royalties, and included joint development and marketing efforts which would have caused ripples over in Finland.