Opinion: Mobile industry sweats on Nokia choice

Speculation over whether Nokia will release an Android or Windows Phone 7 handset boosted the value of shares in the Finnish cellphone manufacturer this week, but the content of a Friday announcement by CEO Stephen Elop is likely to have a far more profound impact on the mobile industry.

Stephen Elop, Nokia CEO.

Elop [pictured], a former Microsoft executive, has been brought in to turn around Nokia’s flagging profits, which have been eroding at rates of up to 20 percent a quarter.

During the company’s recent earnings call, Elop hinted that Nokia is likely to embrace some of the mobile operating ecosystems that have built scale in the United States and Australia.

Elop said the company was prepared to embrace “multiple ecosystems” and not just its own proprietary mobile operating system. He said the company wanted to “re-open markets such as the U.S.” and that it must “build, catalyse or join a competitive ecosystem.”

In the United States, the Google-backed Android operating system and Apple’s iOS reign supreme – boasting app stores bursting at the seams with third party applications that can extend the platforms in every direction.

Nokia, by contrast, enjoys significant patent holdings and a very large share of the market for lower priced mobile devices – especially in emerging economies such as China and India - although these are increasingly coming under threat.

In Australia, Nokia has even offered to pay the developers of well-known apps for iPhone and Android a set fee to convince them to port the program to Nokia’s platform. How long can the Finnish company sustain such a strategy?

Elop’s comments have led many pundits to speculate as to whether he might be considering launching a device based on Windows Phone 7, the mobile operating system developed by his former employer, or the open source alternative, Android.

Either of these choices would have a profound impact on the market – but the latter one especially. A Nokia powered by Windows 7 might give the Finnish vendor a leg-up against RIM’s BlackBerry in the corporate market, and potentially introduce Microsoft to new business in developing markets, but I’ll eat my hat if it makes big inroads in mature markets like the United States or Australia.

Releasing an Android phone, however, could be a game changer – especially if the device was released across the globe. Nokia’s user interface smarts, with access to the Android app store, would be a very compelling proposition.

If Nokia took a very serious look at Android, I would wager that the weight of mobile app development would narrow down to just two platforms and leave the likes of HP, Microsoft and to a lesser degree RIM in a very tough place.

What do you think? Would you prefer Nokia kept its own OS or embraced those of its competitors?