Maybe Nokia will do a Windows Phone 7 deal, after all

By Mary Jo Foley

Last week, I was bearish on claims, prayers and predictions that Nokia would end up offering some kind of Windows Phone device as part of the company’s line-up. But now, I’m thinking it’s not just possible, but probable.
I was a skeptic for a number of reasons, and not because I am a Windows Phone hater. (In fact, I would be a Windows Phone 7 owner if Verizon would make one available. So far, all we still know is Verizon plans to add at least one WP7 model to its line-up some time this year… maybe after customers stop burning up the lines to buy iPhones.)
Windows Phone 7 is still a version 1 product. Microsoft and the carriers who do offer WP7 devices still have yet to roll out the first update to the platform. WP7s don’t offer much for business users so far. Microsoft has delivered 2 million copies of the OS to carriers since October 2010, which means fewer than 2 million devices have been sold to date. To restate the obvious, Microsoft’s smartphone platform has a long way to go to catch up to Android and iOS.
Microsoft’s decision to “lock down” WP7 handset makers, requiring them to choose among three different chassis specs, also made me leery that Nokia — the No. 1 smartphone provider, with its own OS and developer tools/ecosystem — would agree to abide by Microsoft’s new rules. So even though Microsoft and Nokia had forged a partnership, bringing Silverlight, Office Mobile and Office Communicator to some Symbian phones, I was definitely thinking that Nokia would go with Android over WP7.
What changed my mind? It wasn’t Nokia CEO Stephen Elop’s “Burning Platform” memo — which sounded to me like the kind of memo more than a few Softies have penned in an attempt to motivate the troops and/or signal a sea-change. The rumors were already swirling before the Burning Platform memo leaked that Nokia was ready to add a non-Symbian/non-MeeGo phone platform to its stable of offerings.
Instead, what’s got me thinking I was wrong is a tweet from Google’s Vice President of Engineering Vic Gundrota. Gundrota’s tweet:

February 11 is the date when Elop is expected to unveil publicly Nokia’s new platform directions. I’m thinking the “turkeys” here don’t include the golden goose Google, but more likely refer to Microsoft and Nokia. If your company had just cemented a deal with the established (even though slipping) smartphone leader, would you be talking turkey?
If Nokia still does end up choosing Android, I’d think Gundrota might have some explaining (and apologizing) to do. If Nokia, instead, has decided to go with WP7, I’d be really interested to hear more on any concessions the Softies made to get the deal done. And yes, if it’s WP7 that Nokia chooses over Android, I will be eating crow turkey….
Update: A couple of folks have noted that there’s another possible interpretation of the Gundrota quote. Anssi Vanjoki, Nokia’s former Executive Vice President for Markets, said the exact same thing in 2005 about BenQ buying Siemens’ mobile handset business handset business. Hmmm. Will Google have the last laugh?

Windows Phone developers to get copy-and-paste tools and more Microsoft news from the week

By Mary Jo Foley

It’s that time: Time for the end-of-the-week Microsoft news roundup.
Developers are set to get an updated Windows Phone 7 software development kit (SDK) that will allow them to prep their applications for the first WP7 update (codenamed NoDo). The NoDo update will add copy-and-paste; performance tweaks; improved marketplace search and other minor updates to the Windows Phone OS 7. NoDo — originally known as the “January update” by Microsoft — is now expected in early February. Microsoft officials said in a podcast that developers would get the SDK refresh on February 4. As of nearly 4 pm ET, still no SDK. (A spokesperson said this afternoon that it was “coming soon.”)
Update: 6:40 pm ET: The announcement about the availability of the updated WP7 tools (known as the “January Update”) is out. Microsoft is warning it may take a while for the bits to make it onto the servers.
Will Nokia become a Windows Phone 7 OEM? There’s been a lot of back-and-forth among Wall Street analysts and other mobile watchers this week as to whether Nokia and Microsoft will announce a licensing deal in the coming week or two. Some believe Nokia is going to become a Windows Phone 7 OEM. Others believe Nokia will, instead, become an Android OEM. (Most seem to believe Nokia will not completely drop its Symbian OS platform, regardless of its path.) I’ve said it before and I’ll say it again: I don’t see Nokia going the WP7 route, as they’d be required to adhere to a locked-down Microsoft chassis design — relegating the mobile phone leader to “mere” handset provider. Maybe Microsoft — hoping to boost its market share in a fell swoop (a la Yahoo in the search space) will bend the rules and give Nokia more leeway? If not, color me skeptical of Nokia going the WP7 route.
Windows Azure broadens beta of “Extra Small Instances” from private to public: Microsoft this week broadened the beta program for its entry-level developer-focused offer for Windows Azure, known as “Extra Small Instances.” Any and all interested customers can now use the beta version to prototype new applications on Microsoft’s cloud platform. (Note: This beta, like all Microsoft cloud betas, is paid, not free, and is .05 cents per hour.)
Microsoft adds new aliasing capability to Hotmail. Starting as of February 3, Hotmail users can add up to five aliases per year to their Hotmail account, up to fifteen aliases in total. The goal: To allow users to organize different types of mail inside a single Hotmail account without having to share their primary Hotmail address if they don’t want to.

Microsoft needs to jump start Windows Phone 7; Here are five suggestions

By Larry Dignan
Microsoft has reportedly sold 2 million Windows Phone 7 licenses, but the actual sell-through—consumers who actually purchase these smartphones—remains a mystery. Now NPD Group puts Windows Phone 7 market share at 2 percent of the smartphone market in the fourth quarter.
Clearly, Windows Phone 7 didn’t light up sales dramatically. AT&T gave Windows Phone 7 a passing mention on its earnings conference call, but highlighted Research in Motion sales as strong. NPD reports that Windows Phone 7 devices debuted with 2 percent market share tied with Palm’s WebOS. Microsoft’s Windows Mobile market share fell 3 points to 4 percent. If you assume that Windows Phone 7 eclipses Windows Mobile, Microsoft will wind up with about 6 percent smartphone share in the next few quarters.
There are a few caveats with the Windows Phone 7 data that keep me—not to mention Microsoft honchos in Redmond—from hitting the panic button. First, the mobile OS landed in the middle of the fourth quarter. NPD’s Ross Rubin noted that Windows Phone 7 landed in the middle of an Apple iOS-Android war. Simply put, Microsoft needs to build on its launch, add features and get partners to develop better hardware designs.
Microsoft officials have said Windows Phone 7 is a marathon not a sprint. But no matter how much Microsoft spins it, the company couldn’t garner more share despite buy-one-get-one promotions at AT&T and T-Mobile. Microsoft needs some dramatic moves if it’s going to stand out in a smartphone dominated by Android (53 percent of the smartphone market) and Apple and RIM (19 percent share each per NPD). NPD’s bottom line: “Windows Phone 7 also entered the market with lower share than either Android or webOS at their debuts.”
Nevertheless, ZDNet is beginning to wonder if Microsoft will be able to goose Windows Phone 7 adoption. Ed Bott asks whether Windows Phone 7 will get its grand opening and Matthew Miller wonders whether the OS will garner much usage.
So what can Microsoft do to give Windows Phone 7 more juice? Here are five suggestions:
Call Nokia and buy some market share. Nokia CEO Stephen Elop hinted last week that the phone maker is going to look into other operating systems. Most observers took those hints to mean that Nokia will go with Android devices in the U.S. The odds are good that Nokia will look at Android. Microsoft has to get into the mix at Nokia. In fact, Microsoft should pay heavily to get Nokia to use its operating system overseas. Nokia needs diversification and Microsoft needs distribution. Microsoft will have to pay to play.
Get better hardware. Let’s face it—Microsoft partners aren’t inspiring a lot of gadget lust with the Windows Phone 7 hardware designs. The software giant needs to dangle more carrots to get cutting edge designs. Windows Phone 7 is a fine operating system, but hardware is a big part of the smartphone buying decision.
Launch a Windows Phone 7 tablet already. Microsoft has built an app ecosystem fairly quickly and many of those Xbox games would look good on a larger screen. Add it up and Windows Phone 7 has the interface, Office hooks and characteristics to work well on a tablet. Instead, Microsoft keeps pitching Windows 7 tablets.

Give Windows Phone 7 away. It’s hard to compete with Android, which is free. Microsoft should just give Windows Phone 7 to carriers to level the playing field. If Microsoft really wants to be bold it should open source Windows Phone 7. Hell may freeze over if Windows Phone 7 went open source, but it’s hard to think of a bolder move for Microsoft.
Focus on feature phones. How many smartphone operating systems do we need? Microsoft could grab more share by focusing on feature phones—the largest part of the phone market. This focus on feature phones could also be ramped in emerging markets such as India, Brazil and China.
Will Windows Phone 7 conquer the smartphone world? Probably not. But with a few breaks Microsoft could get some respectable share, say 10 percent or so.