Tech Check

Microsoft and Nokia's New Symbiotic Relationship


If I'm Symbian this morning, I'm sweating.

Microsoft and Nokia now confirm a new alliance that both say has never been attempted in breadth and scope by either side before. The short version of this news is that Microsoft has landed its mobile Office software on Nokia's smart phones, and the two will work together on new enterprise and business software apps.

Microsoft Corporate Headquarters

Microsoft gets access to Nokia's staggering 200 million unit installed base, and Nokia gets a pipeline directly into Microsoft's R&D.

And both sides put aside years of deep, competitive differences to take on a growing number of significant threats in the mobile space from the likes of Google, Research in Motion and Apple.

OK, that's the short version. The underlying themes though are far more interesting. This would have been a bigger deal for Microsoft had it scored Windows Mobile on Nokia's handsets, but you gotta start somewhere and this is an important first step. I spoke with Nokia's executive vice president Kai Oistamo this morning who tells me Nokia is fully committed to the Symbian operating system and it's very much a part of Nokia's long-term strategy.

But when I pressed him about Nokia smart phones running Windows Mobile, he did tell me, "There is a possibility that it expands to other areas, brings new fruits and new possibilities."

And Microsoft's Business Division President Stephen Elop tells me, "Set aside the operating system question, these are two companies that have natural synergies in the competitive environment…Will more things come out of that? Absolutely."

Of course, when I followed up with, "So we'll see Nokia smart phones running Windows Mobile by the Fall, Elop advised, "No, that's not what you heard there, Jim. Thanks." (And laughter.)

For Microsoft, the deal is also a pretty significant departure: "It's big for Microsoft because in the mobile environment, it's the first time we've taken that big step beyond the Windows Mobile environment" and shows that Microsoft is ready to bleed its software across many boundaries to grab market share.

Both companies say this should put Research in Motion on notice that there will be a sizeable competitor for the mobile enterprise. Google is certainly taking notice as well. Android seems to be doing well, and free apps and wider distribution are certainly coming. On that front, this deal today could be critical.

Nokia's been struggling, suffering momentum issues as rival products from Appleand RIM  enjoy the lion's share of media attention, and have seen market share gains at Nokia's expense. Microsoft has been vocal, saying the Windows Mobile platform is actually the industry juggernaut despite gains by RIM and Apple.

Still, I go back to momentum: iPhone and BlackBerry have it, and Microsoft and Nokia are desperately trying to recapture it. This deal this morning is a small step in the right direction. Don't underestimate it. But don't go overboard thinking Microsoft and Nokia have suddenly come up with the magic bullet. This truly is a time-will-tell kinda thing, and for both, time is of the essence.

Separately, with so much attention lavished on Blackberry this, and Apple that, I did ask both these guys for their thoughts on the Palm Pre. They both looked at each other with quizzical faces, laughed, scoffed, and Elop saying, "Palm Pre? Whatever." And again, laughter.

For Symbian, maybe not so much laughter.

Questions?  Comments?