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Nokia Android Strategy Raises Questions

Nokia says new Android phones launched at Mobile World Congress are all about emerging markets. Don't be fooled: This move shows how bad things are for Nokia.

Nokia announced not one, but three Android phones this week at Mobile World Congress. The devices may have Android under the hood, but the user interface borrows heavily from Windows Phone's tile-based experience and relies on Microsoft's services. Even though Nokia already has a smartphone platform and a feature phone platform, Nokia says the three phones -- X, X+, and XL -- will help it connect the next billion people. Don't be fooled. Its adoption of Android proves just how bad things are for Nokia.

Nokia threw open its arms and embraced Android in Barcelona by painting everything Android green and by talking apps, developers, and the appeal of connectivity. There was nothing subtle about Nokia's jump into the world's most popular smartphone platform. Some might say "It's about time!" while others are surely saying "Too late!"

Nokia refused to admit that it is forking Android. Instead, it made heavy use of the tree metaphor and claims it is opening a new branch in the Android family tree. (Seriously, it has a gigantic tree in its booth on the show floor.)

Nokia's Android devices do not include Google services, such as Gmail, Play Store, Maps, and the other key apps that define Android devices. In their place are Outlook, the Nokia Store, Here Maps, and Nokia's full suite of home-grown software. Nokia ditched the Android home screen setup and instead ported over the idea behind Live Tiles from Windows Phone. It lets Nokia keep a consistent UI ideal across platforms, theoretically making it easier for people to upgrade from Android devices to Nokia's Lumia devices.

[Learn more about the relationship between Microsoft, Nokia, and Android. Read Nokia X, Android & Microsoft: 6 Facts.]

According to Nokia, Android enables it to target emerging markets, which are the only areas for real growth and volume. It wants the Nokia X brand to serve as the first smartphone for the world's unconnected masses (of which there are still more than 2 billion).

The problem is one of price points, claims Nokia. It currently markets the Asha-branded devices as inexpensive, entry-level phones that fall in the $10 to $100 price range. Nokia's Lumia-branded smartphones start at $130 and go up to $700. It's reasonable to think that these two platforms cover the spectrum of potential consumers. Nokia, however, thinks there's a gap. Though pricing of the Nokia X devices was not revealed, expect them to fall in the $50 to $150 range. Nokia thinks this offers its customers a clear upgrade path from one platform to the next. The company firmly believes its brand and hardware quality will beat the pants off the inexpensive gear made in China that's currently flooding emerging markets.

One problem facing Nokia now is that of apps. Asha is based on Java. According to Nokia's Matt Collins, it has a strong developer community behind Java and the Asha range of devices. Collins said most of its Asha developers already have experience coding for Android, which should make it painless to adopt their apps for both platforms. But what about the existing Android apps? Nokia said it tested the top 100,000 apps in the Google Play Store on its version of Android. Collins said 75% of the top apps worked perfectly with no customization required. The remaining 25% required some tweaking, but Collins suggested developers would only need to spend a few hours adjusting their apps to run on Nokia's version of Android. Mostly, developers will need to swap out Google Services for Microsoft Services. Nokia insists this isn't a big deal.

Nokia will continue to pitch Windows Phone as its premium platform and Lumia as its premium device range. Too bad for Nokia its Windows Phone devices aren't selling all that well. Sure, device shipments in 2013 improved dramatically over 2012, but Nokia is nowhere near the volumes it really needs. That's where Android comes in. It's clear no matter how appealing the hardware is, people aren't yet adopting Windows Phone in droves. Nokia needs to sell millions of devices to survive. In order to do that, it needs Android.

This story makes (some sort of) sense only if Nokia were to remain an independent company. It's not. Microsoft is set to close its acquisition of Nokia's handset business by the end of March. At that point, Microsoft will own the Asha, Android, and Windows Phone lines, and will be responsible for scaring up new phones and developer support. Microsoft has little incentive to beat the Android drum for long.

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Sara Peters, Editor-in-Chief, InformationWeek / Network Computing
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