October 18, 2012 3:00 pm
Nokia’s CEO said during a call following the company’s disappointing Q3 earnings that a potential Microsoft-made Surface phone would be a “stimulant to the ecosystem.” Referring to Windows 8 and Windows Phone 8, Stephen Elop said that he welcomes Samsung, HTC and even Microsoft to create smartphones: “[They're welcome to] have devices in the market and to be making whatever investments that helps spur the ecosystem on.”
Rumours of a Surface Phone have arisen lately as Nokia, HTC, Samsung and even Huawei gear up to release their first Windows Phone 8 devices. But Nokia has the most to lose out of all the company’s investing in Microsoft’s overhauled phone platform; all the other OEMs on the list make the majority of their profits from Android, though HTC is certainly feeling the pinch from Samsung in its latest quarterly earnings.
Nokia is also in a very uncomfortable position right now. It needs to continue to woo Microsoft and prove that its Lumia devices are the best Windows Phones bang for your buck. HTC and Samsung have both announced stunning devices, but don’t have the same history of software support as the Finnish giant. That is what Nokia is banking on, and even Microsoft couldn’t touch that advantageous position. Nokia’s Drive, Transit, Maps, City Lens, Camera Extras and exclusive app deals make it by far the most attractive OEM from an ecosystem perspective, but Microsoft, if they really wanted to, could undermine everything Nokia has worked so hard to produce. It’s unlikely to happen — they both need each other — but Nokia needs Microsoft more than the other way around.
Even if Microsoft does release a Surface phone, it doesn’t have the carrier relationships, nor the distribution know-how, of a Nokia. Microsoft would have to start from scratch, emerging yet again as a smartphone underdog in its own game. While the Surface fits in with its new ethos as a “devices & services” company, they control the ecosystem and the distribution of each tablet sold. They wouldn’t be able to maintain the same control over their phones, as consumers, especially in North America, are unaccustomed to buying phones unlocked and at full price straight from the manufacturers. Apple tried this and failed; Google has seen limited success selling its Nexus devices from the Play Store; and Samsung’s success is largely attributable to hammering every carrier in every market with honey deals.
I also believe that if a Surface phone was imminent, Elop wouldn’t be so flippant about it. It’s more than likely Microsoft is using a few homegrown devices for software testing. Building a smartphone, and making it a success, is incredibly difficult; Elop may be having a chuckle to himself about Microsoft’s potential success in the smartphone market. In fact, it may be the only thing that makes him laugh all day.
Via: The Verge