Nokia’s Elop Proclaims 3-Way Mobile Race

Nokia created a lot of confusion last week when it announced it had entered into a deep partnership with Microsoft and would begin building and selling phones based on Microsoft’s Windows Phone 7.

What to do when the press is going wild with speculation and confusion around Symbian, Meego and now a new platform? Easy. Just do it over. Here in Barcelona at the Mobile World Congress, Nokia held a press briefing to clarify why Nokia would partner with Microsoft. After the leak of a scathing internal memo from Elop’s desk, and last Friday’s announcement, the press was all ears.

According to now Nokia CEO (a former Microsoft exec) Stephen Elop, he "was not a Trojan horse" intended to force Microsoft technology into Nokia devices. And there are no immediate plans to kill Symbian. Elop said development of the Meego and new Symbian phones will continue, though Nokia intends to eventually transition all users and developers to the Windows Phone platform. The big question, then, is whether developers will bother at all with Meego and Symbian, and consolidate work on Windows Phone 7. While Nokia continues to be a dominant player globally, its market share has declined dramatically — 6 or 7 percent, depending on whether you're looking at IDC or Gartner estimates.

Nokia's decision to side with Microsoft, he said, "will create a three horse race: Google/Android, Apple and, now, Nokia and Microsoft." He’d had similar discussions with Google, and boasted that a Google/Nokia partnership would have created an effective duopoly: Nokia/Android vs. Apple. Elop said three major players is a more preferable way to create a universal ecosystem of competition – and certainly Microsoft preferred it, he added.

It was hard to tell whether Elop was asking for the industry's gratitude; still, it does create an interesting cornerstone OEM for Microsoft. On the other hand, this is clearly an agreement between two companies whose mobile futures are in serious jeopardy, and who have each taken a mulligan or two. Worse, Elop dismissed Blackberry as a contender: The players are Apple and Google, he said, and now Nokia/Microsoft. (Shhh. Don’t tell Research In Motion.)

He also dismissed the notion of Microsoft purchasing Nokia. The two are in a deep development agreement and Elop said he is still regularly meeting with Intel to care and feed (and salvage?) that relationship.

Microsoft paid dearly for a ticket to ride, he said, alluding to billions that Microsoft paid Nokia "in real money" for the chance to be a major player. Nokia, he said, was the swing vote necessary to create the three horse race. Looks like Elop got there just in the nick of time.

Nokia showed no hardware at the event – choosing only to flash prototype mock-ups – but the company did reveal it intended to have a Nokia/Windows Phone device on the market by year's end, as well as a Meego device.

Nokia, for what it's worth, will add its content to the Windows Phone marketplace and try to improve relations with its developers during this transitional time. The real goal Elop's focusing on, though, is "beating Android" and Nokia plans to leverage Microsoft software to do it. That’s job one, he said.

As the week progresses, we’ll see if Microsoft chief Steve Ballmer mentions Nokia prominently. And we’ll talk to Intel to get its reaction. Elop made a point (perhaps a dozen times) that he continues to talk to Intel chief Paul Otellini, and that the company's partnership with Intel is as vital as it ever was. If we can find any Meego or Symbian developers, we’ll get some of their reactions also. Can Nokia really attract developers and compete with its own phones while getting in bed with Microsoft? This could be this grand dame’s biggest challenge yet.

(Read my colleague Eric Zeman's analysis of the Nokia/Microsoft strategy here.)

For InformationWeek, Techweb and the new BYTE.com and reporting from Barcelona, I’m Gina Smith.