Albeit expected, very big news regarding Nokia. It has just announced that it will partner with Microsoft in the smart phone business – Windows Phone will serve as Nokia’s primary smartphone platform. Additionally, Nokia has announced that it has looked at designing a new approach to “capture volume and value growth” to connect the next billion to the internet. For startups, there are good news as well, Nokia will begin (if not continue) focused investments in new technologies in key areas. Lastly, they will shuffle some of their leadership team and organisational structure to better focus on speed, results and accountability.

Stephen Elop and Steve Ballmer blogged about the changes this will bring in the Nokia Conversations blog. Below are the key points:

• Nokia will adopt Windows Phone as its primary smartphone strategy, innovating on top of the platform in areas such as imaging, where Nokia is a market leader.

• Nokia will help drive and define the future of Windows Phone. Nokia will contribute its expertise on hardware design, language support, and help bring Windows Phone to a larger range of price points, market segments and geographies.

• Nokia and Microsoft will closely collaborate on development, joint marketing initiatives and a shared development roadmap to align on the future evolution of mobile products.

• Bing will power Nokia’s search services across Nokia devices and services, giving customers access to Bing’s next generation search capabilities. Microsoft adCenter will provide search advertising services on Nokia’s line of devices and services.

• Nokia Maps will be a core part of Microsoft’s mapping services. For example, Maps would be integrated with Microsoft’s Bing search engine and adCenter advertising platform to form a unique local search and advertising experience.

• Nokia’s extensive operator billing agreements will make it easier for consumers to purchase Nokia Windows Phone services in countries where credit-card use is low.

• Microsoft development tools will be used to create applications to run on Nokia Windows Phones, allowing developers to easily leverage the ecosystem’s global reach.

• Microsoft will continue to invest in the development of Windows Phone and cloud services so customers can do more with their phone, across their work and personal lives.

• Nokia’s content and application store will be integrated with Microsoft Marketplace for a more compelling consumer experience.

What this essentially means for Nokia is that it will ditch it’s MeeGo and Qt from its core strategy. They have been expected to serve as their new high end platform offering on smart phones. The press release states the following:

With Nokia’s planned move to Windows Phone as its primary smartphone platform, Symbian becomes a franchise platform, leveraging previous investments to harvest additional value. This strategy recognizes the opportunity to retain and transition the installed base of 200 million Symbian owners. Nokia expects to sell approximately 150 million more Symbian devices in the years to come.

Under the new strategy, MeeGo becomes an open-source, mobile operating system project. MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences. Nokia still plans to ship a MeeGo-related product later this year.

So if this is understood correctly – MeeGo will stay as an experimental platform, but no real business expectations are laid out for it. As for Symbian, Nokia still has such a large userbase that there’s no business sense to just drop it. Thus this seems like a plan to transition the platform over the years to come.

Update 8:25 GMT:
An interesting change regarding the organizational structure reveals that there will be two main device units; mobile phones and smart devices. Mobile phones will most likely pursue Nokia’s core symbian strategy as its the unit responsible for taking the “next billion” online with mobile phones.

Smart devices unit will have under its wings the following sub-groups; symbian smartphones, MeeGo computers and Strategic Business Operations. The smart devices unit will also be responsible “for creating a winning Windows Phone portfolio“.

This might seem a bit contradicting currently, and it is – we’ll try and report on this in the coming week and reach out to Nokia for comments.

Update 8:40 GMT:
The intitial reactions are beginning to surface regarding this monster of news. Tomi Ahonen, the much cited Nokia supporter and former executive just tweeted: “Awesome win for Microsoft, after 10 years wanting to get into phones. Disasterous decision by Nokia”.

Former Nokia employees are also tweeting their reactions. One who currently works for Thinglink just tweeted: “Nokia can’t ship Windows phones for many months anyway, Meego has no future and Symbian will continue to suck => Zero developer interest.”

In general, the overall reaction seems to be very very mixed. Nokia employees are naturally happy about the partnership, but former and external people are seriously questioning the move.

A letter regarding the developer ecosystem has just surfaced on Forum Nokia. It explains what in a little more concrete terms what the partnership means for developers. Below are some key points from the letter to developers by Purnima Kochikar, the head of Forum Nokia and the Developer community:

Nokia and Microsoft together
The Nokia-Microsoft ecosystem would aim to deliver differentiated and innovative products and have unrivalled scale, product breadth, geographical reach, and brand identity. With Windows Phone as our primary smartphone platform, we would help drive the future of the platform by leveraging our expertise in hardware optimization, software customization, language support and scale.

Microsoft would make available the existing free Windows Phone Developer Tools; Visual Studio 2010, Expression, Silverlight and the XNA Framework to developers. Together, we will provide guidance for developers wishing to port their applications to Windows Phone.

Nokia and Microsoft would also combine services assets to drive innovation. Nokia’s Ovi Maps, for example, would be at the heart of key Microsoft assets like Bing and AdCenter, and Nokia’s application and content store would be integrated with Microsoft Marketplace for Nokia Windows Phones, to deliver a great single commerce experience for developers and consumers alike.

The Qt ecosystem
Qt will continue to be the development framework for Symbian and Nokia will use Symbian for further devices; continuing to develop strategic applications in Qt for Symbian platform and encouraging application developers to do the same. With 200 million users worldwide and Nokia planning to sell around 150 million more Symbian devices, Symbian still offers unparalleled geographical scale for developers.

Extending the scope of Qt further will be our first MeeGo-related open source device, which we plan to ship later this year. Though our plans for MeeGo have been adapted in light of our planned partnership with Microsoft, that device will be compatible with applications developed within the Qt framework and so give Qt developers a further device to target.

Nokia Mobile Phones
Nokia Mobile Phones will drive Nokia’s ”web for the next billion” strategy, leveraging Nokia’s innovation and strength in growth markets to connect the next billion people and bring them affordable access to the Internet and applications. This represents a further opportunity for developers. Nokia will leverage our proxy browser technology on mobile phones, as well as continuing to enhance Java support and SDKs, with developers and publishers able to deliver their applications to consumers through the Nokia store.

Update 9:15 GMT:
Despite the initial reaction, it seems that the decision by Elop on Nokia is beginning to gain support in some circles. Mobile Industry Review for example has outlined that this is perhaps the best option for Nokia out of all available.

The early analysis from Mobile Industry Review is that Nokia needed to deal with the large competitors out there; Google, Microsoft’s WP7 and Apple. By partnering with Microsoft, they’re taking one player out from the opposition to create something new.

Personally, being the optimist I am (and full disclosure; we work with both Nokia and Microsoft in a business relationship), I believe this will be something great for both of the companies. Sure it seems like Microsoft just got into the mobile game in a big way.

However, Nokia has been quite deep with its platform strategy and while partnering with Microsoft is a big move – it’s certainly a big move forward. Microsoft has had some very good feedback regarding its WP7 and Nokia is renown for its hardware knowledge. If they are able to bring these two together in a good way – it’s going to be a big win.

Furthermore, not that much will change in the near future. Nokia will continue to develop Symbian phones during this year, some 150 million of them. That should be of interest to developers (which in my opinion are the key stake holders here). The bigger question in the end is – how will Nokia and Microsoft transition the hundreds of millions of Symbian users into the new platform over time so that people won’t change to other handset providers?

We’ll be covering this topic in the coming week hopefully with commentary from both Nokia and Microsoft.

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