Nokia alliance may spell doom for Windows Mobile

Windows Mobile hasn't done well enough for Microsoft; Office products used to branch out to other devices

The Microsoft-Nokia alliance plan to put Office applications on Nokia smartphones isn't a good sign for the Windows Mobile operating system.

Could this alliance be the beginning of the end for Windows Mobile? Some observers think so, arguing that the agreement is an admission by Microsoft Corp. that Windows Mobile, its operating system for mobile devices, hasn't done well, especially when compared with the Symbian operating system that runs on Nokia Corp.'s handhelds.

Analysts won't state outright that Windows Mobile is dying, but they came close to doing so in comments today.

The alliance announcement is "a tacit admission that Windows Mobile hasn't made the grade and has not gotten the market share they wanted," said Nick Jones, a Gartner Inc. analyst, in an interview. "If Windows Mobile were the leading mobile OS, they wouldn't have needed to do this."

Symbian is the world's leading mobile operating system and runs on nearly half the smartphones globally, while Windows Mobile hasn't advanced beyond fourth place worldwide, despite strong support and years of investment from Microsoft, Jones added.

Jones said he's becoming "more concerned" about the future of Windows Mobile and noted in a blog post today that Windows Mobile 7 could be Microsoft's last update of the product. Windows Mobile 6.5 is due later this year.

"Imagine you are Steve Ballmer and in two years time WinMo was still fourth in smartphone market share. How much longer would you keep throwing money at it?" Jones wrote.

Microsoft strongly defended Windows Mobile today, with Microsoft Business Division President Stephen Elop saying in a teleconference with reporters that the alliance with Nokia doesn't mean Microsoft is conceding that Symbian is the dominant operating system for smartphones. However, Kai Oistamo, Nokia executive vice president for devices, also clearly said that Windows Mobile won't be running on Nokia phones.

And in an interview afterward, Kirt Debique, general manager of Microsoft's business division, said Microsoft remains "deeply committed to Windows Mobile," adding that the alliance was not about operating systems but rather the productivity software that runs on smartphones.

Stephen Drake, an analyst at research firm IDC, said the alliance won't have a negative effect on Windows Mobile. On the contrary, he said, it's a smart move for Microsoft, since the company hasn't been able to license Windows Mobile on Nokia smartphones but will now be able to provide a number of its offerings on another platform without using Windows Mobile.

"It makes sense for Microsoft to port its solutions on other OSs, as it realizes it is a heterogeneous world," Drake said.

While Jones voiced the strongest concern for Windows Mobile among several analysts interviewed, others expressed misgivings as well.

Jack Gold, an analyst at J.Gold Associates LLC, said today's deal has him wondering whether Windows Mobile can survive much longer.

"Microsoft makes so much more revenue on Office and related productivity software than it does on Windows Mobile that the Nokia deal shows Microsoft has decided 'We can't be tied down by Windows Mobile anymore,'" Gold said in an interview. He also predicted Microsoft will exit the mobile operating system market within two years.

Gartner analyst Ken Dulaney noted that Windows Mobile is already "weak right now, whether this [Nokia alliance] got announced or not." While Microsoft seems committed to improving Windows Mobile, "they will never be as dominant [on mobile devices] as they have been on the PC."

And Carolina Milanesi, also a Gartner analyst, said the deal with Nokia won't mean that Microsoft stops improving Windows mobile, but she expressed concern about the long-term fate of the operating system. "To me, the deal shows that there are limitations to where the [Windows Mobile] platform will go in the next year or so, and that the Microsoft [productivity software team] might not want to risk waiting for Windows Mobile 7 to come to the rescue, " she wrote in an e-mail.

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