The more time goes by, the better Elops bet on windows phone looks to me. Now that Google owns a device maker, developing for android is less attractive as you'll always be dealing, in part, with Googles hardware divisions priorities. On the other hand, Nokia is, more-or-less, Microsoft's hardware division. Other people make windows phones, but Nokia is the biggest player and their best bet. That's a pretty good place to be in if you're not going to make your own OS.
Of course, maybe windows phone will be a total failure, but given the alternative is being a "me too" Android developer I think it's a reasonable strategy.
Are you saying that now that we have over 2 years of empirical evidence that WP is causing a decrease in market share and revenue for both MSFT and Nokia. It looks better after that than before when WP's future was uncertain?
You people seem to forget that WP is not a brand new player that no one knows what's gonna happen to it anymore. It's been over 2 years. The evidence is in. It's no longer a question of whether "will it be a failure". It already was a failure.
Google has shown nothing that indicates they will favor Motorola over anyone else. Furthermore, the point of open source is that you can always fork the software if you do not like the way the main branch is going. Forking Android would not be easy but it is a possibility and it forces Google to play nice.
I do not know what is the big problem with being a "me too Android developer". If you are going to use someone else's OS, might as well use one that is wildly successful already. So no it is a terrible decision and it continues to be a terrible decision as Windows phone market share languishes.
First up outside of Samsung and HTC none of the other Android vendors were as of Q1 2012 operating at a profit. Everybody else is bleeding red ink. I would expect that several of the second tier Android vendors to throw in the towel over the next few years as their losses become unsustainable.
Secondly margins in the Android world are going to get much tighter. Google has essentially slit other the Android tablet makers throats by selling the Nexus 7 at cost. Effectively this gives the vendors the choice of competing with the Nexus 7 and Kindle (both of which are sold with little or no margin in hope to recoup via the app and content ecosystem) in the 7" space or the take on the iPad in the 10" space. Essentially the way the market is heading unless you control the whole stack, your margins will be impossible to sustain against those that do.
While Google has not yet favored Motorola, I'm sure Samsung is watching very closely especially after the release of the Nexus 7. I would not be at all surprised if Samsung forks Android to become a full stack vendor. I believe that they have the Cyanogen developers on staff already so it wouldn't be a huge hardship for them to do that providing they could get a content ecosystem off the ground.
I do not know if you have noticed but Nokia is also bleeding red ink. This whole idea of the Android market being too competitive is wrong, because it mistakenly segregates the Android market from the WP one.
There is no such separation. At least not on the WP side. In the real world, in almost every wireless store in America there is a stand with a bunch of phones where Android phones sit next to Windows Phones, Blackberry's and sometimes iPhones. A shopper comes in and looks at them all and decides which one he wants. So Android are in the same market as the Windows Phone and the iPhone.
Yes there is high competition in Android. Which means that there is high competition in smart phones period. Nokia are feeling and will feel the competition and the pressure for low margins regardless of whether they make Windows Phones or Android phones.
I stand corrected on ZTE. The chart I was referring to did not have them on there.
However looking them up we have profits of 151 million yuan on sales of 18.6 billion yuan which is barely breaking even so I would hardly describe them as doing well.
Still that puts them ahead of LG, Motorola and Sony Ericsson.
> Effectively this gives the vendors the choice of competing with the Nexus 7 and Kindle (both of which are sold with little or no margin in hope to recoup via the app and content ecosystem) in the 7" space or the take on the iPad in the 10" space.
Also, there's rumors of an iPad mini coming out this year - there's a WSJ article about it in the last day or to, and I saw Gruber giving some credence to it. If that actually happened, there'd be basically no room in that market for any other players to make money.
I'm not sure your first and second points really make sense together - if second tier vendors throw in the towel wouldn't that reduce the pressure on margins?
The pressure on margins for those that remain will come from those that control the full stack versus those that don't. A full stack developer can sell the device at near cost then recoup on app and content sales. The Nexus 7 and Kindle Fire are two examples of Android devices that follow this model.
I'm not sure what the margins are on the current Nexus phones are but if the next phone is of similar quality and has similar margins to the Nexus 7 then its going to put Samsung and HTC in a very uncomfortable position, especially if Google uses Motorola to build it. HTC is especially vulnerable as their operating profit last quarter was low.
Similarly if Amazon decides to do a Kindle Phone similar to the Fire that's going to put Samsung and HTC in another difficult position unless Google is going to start sharing more of the app and content 30% with the remaining phone vendors than they do today.
The key point is that the market has moved from devices and platforms to ecosystems. Unless you can derive revenue from all parts of the ecosystem then its going to be very difficult for companies that can't do that to compete with others that can.
If Windows Phone ever get a good market share, you can be sure that Samsung (and others) will take notice, turning Nokia in a me too. The only company that has to gain from this situation (Windows Phone getting bigger) is Microsoft, not Nokia.
The problem with your reasoning is that Microsoft is also going hardware. And not by buying Nokia... Look at surface, it's only the start. So your main argument that it's not good to rely on the product of a competitor... is weak.
And it's not at all a reasonable strategy. A reasonable strategy is when you minimize the worst possible outcome of the strategy. This is maximizing it... while at the same time maximizing the best possible outcome. There is no way this is reasonable. It's a bet. A risky bet strategy. Might work... but computer history will remember it as a bold risk.
They are only serious about it if they push it to their channel and compete directly with the OEMs. They don't have enough stores to go it alone. If you read between the lines of the recent article in Vanity Fair, it seems Ballmer will not take it seriously and wants it to die by not being successful enough, because they never gave it a chance.
Of course, maybe windows phone will be a total failure, but given the alternative is being a "me too" Android developer I think it's a reasonable strategy.