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Nokia X – the Trojan Horse

Nokia today introduced their X smartphone series, devices that are based on Google’s Android, or more specifically, the Android Open Source Project (AOSP). AOSP eschews all of Google’s basic services and provides the bare Android OS to the Original Equipment Manufacturers (OEMs) that then must layer a set of services on top of it so that apps can have more than basic functionality.

In order for Nokia to be successful, they need to provide those services that aren’t in AOSP and that is exactly what they’ve done. They’ve replaced all of Google’s services with a set of Microsoft/Nokia ones. These include the Nokia Appstore, Here location services, Outlook, Skype, Bing and Mix Radio. 70% of Android apps should work with little to no modifications and the rest have to be recompiled to use the new Nokia’s/Microsoft’s services. The phones are priced at below a 100 Euros except for the XL. As Stephen Elop, the CEO of Nokia said “Nokia X becomes the feeder system for Lumia”. People will experience Microsoft services and design on the X and when they buy another phone they will look to upgrade to the Lumia line, or so his theory goes. The focus is on using the Nokia X t o monetize the Lumia line later on.

While this is a great theory, giving “people a gateway to Microsoft”, I think it is flawed reasoning and misses the opportunity that Nokia has presented to Microsoft. As their new CEO, Satya Nadella has said, Microsoft is now a devices and services company. The more devices that Nokia sells from the X line, the more that Microsoft’s services are used. Everything from Skype to Bing become part of people’s daily use in arenas where they hadn’t been previously.

Microsoft has been on a tear in recent years building up entire platforms of services that can be provided to any device or OS. Their Azure cloud platform has specific hooks for mobile that will work with both Android and iOS apps, not just Windows Phone Apps. They have expanded that platform so that it not only exists in the cloud but can also exist in a local data center if needed through their Azure in a box program. They have been pushing the ease of building cross platform apps on top of the services that they provide and have had even more success with partners/startups like Xamarin, that allow you to code most of the app using .Net and visual studio. They have built Bing into a search engine service for all. Microsoft is in it for the long haul and wants their services used on all devices, not just Windows Phone. They understand that it is the ecosystem that is important and the ecosystem doesn’t depend on what OS someone uses.

The Nokia X is the gateway for the next billion people to become part of Microsoft’s ecosystem. Once they are using Microsoft’s services and fully part of the ecosystem does it really matter if they upgrade to a Lumia Windows Phone…not really. The goal at that point is keeping them in the ecosystem so that they continue to use Microsoft’s services and money is made from each transaction. Skype calls are made and a few cents ends up in Microsoft’s pocket for each one. They’ve got mobile payments as part of Nokia’s carrier agreements and in many countries mobile phones are used for banking. These are all just more plays into strengthening their ecosystem hold on new users.

The opportunity becomes even more interesting based upon a set of tweets between Ben Bajarin, Ross Rubin and myself. This culminated with Ben’s tweet that Microsoft/Nokia should offer their AOSP fork to other companies as well.

One Comment

  1. Posted March 30, 2014 at 23:09 | Permalink

    Great post ! Good to see you here.
    The Feeder to Microsoft Via Android , well said

    Nokia X looks like brand as their own platform stack while based starting on AOSP v4.1.2, and supports API level 16.
    http://developer.nokia.com/nokia-x/platform-overview

    “Operating system: Nokia X software platform
    Software release: Nokia X software platform 1.0
    Software updates: Firmware Over-the-Air (FOTA)”

    This is to enable their services reflection + feeding own services.

    Also my view is one of the biggest issues with Microsoft market place/Nokia store was the application volume count. Even with best phones the criticism was always on app coverage. Attracting android developers and making them introduced to “parallel services ” as Brian mentioned will be even a feeder for developer community + get app volume issues addressed.

    OS looks like a Metro theme over Android :) , which will land in an usability confusion from a Microsoft to an Android school.

    With such a .apk republishing ecosystem,
    http://developer.nokia.com/nokia-x/publish-your-app
    definitely the appvolumes can be more in Nokia Store credits..

    3 services are reflected; the effort for developers to republish with following capabilities are claimed minimal via Nokia X services SDK

    1.Notification services are reflected from GCM to Nokia Push services
    2.Google Map services are reflected to HERE maps ( Bing is avoided )
    3.Google In-App Billing are reflected to Nokia In-App Payment

    Overall, easy to sell at the price range as users feel they get best of both worlds. Probably later they get hit by the absence of Playstore. But with a Win8/RT strategy in place and moving, this path is also worth a try.. Nokia will be careful to launch this “not as a premium handset” and create fragmentation worry!

    ~AKP

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