Credit Herald

Microsoft’s high-profile deal with handset maker Nokia could help keep aggressive software rivals at bay, but at the same time spell the end for its ailing Windows Mobile operating system.

Last week Microsoft and Nokia unveiled an alliance taking Microsoft’s Office applications — including Word, Excel and PowerPoint — to a range of Nokia cell phones from next year. The pact could counter moves by phone makers to use Google’s free Android operating system, and keep Microsoft relevant in the mobile market despite a poor showing from Windows Mobile.

“It’s possible that Microsoft has accepted it is not going to succeed in the mobile OS race, particularly now that HTC and Samsung seem to be sneaking into the Android party,” said Tero Kuittinen, analyst at MKM Partners.

“It may be better to help Nokia throw meatballs into Google’s punch bowl — Nokia still has a chance of spoiling the Android feast,” Kuittinen said.

Android has got a lot of traction in the cell phone industry, with many vendors planning to introduce phones using it, but so far only a few Android phones have reached consumers.

“Microsoft appears to be gambling that the benefit of gaining Nokia’s scale with Office will offset the possible cost of losing sales among its existing Windows Mobile licensees,” said Neil Mawston from Strategy Analytics.

Radical steps were needed, not just to battle Android but also Nokia’s own Symbian system, which it has opened to other handset makers for free use — leaving Microsoft the only operating system maker charging license fees from handset makers online payday loan.

But though Microsoft says its is committed to Windows Mobile, the Nokia deal is being read by many as a signal the company wants to limit its involvement. The arrangement also jeopardizes sales of smaller handset makers like HTC who have focused on Windows phones.

STRUGGLES

Microsoft has tried to conquer the mobile operating system market for years, but despite heavy investments its success has been limited - and that was before the onset of the recession, which will trigger an overall market contraction this year.

The world’s largest software company has not been able to challenge Symbian, the top mobile operating system, and Windows Mobile’s market share has at best topped 10 percent compared with Symbian’s market share of around 50 percent.

In the last two years the success of RIM’s Blackberry

and Apple’s iPhone has pushed it to No 4 in the market, and Android has started to make headway.

“The Nokia deal could marginalize Windows as a mobile operating system even further,” said Kuittinen.

All manufacturers in total sold just 3.8 million Windows phones in April-June quarter, according to research firm Gartner, giving Windows a 9 percent market share among smartphones. 

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