Nokia Is Mad at Microsoft

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Nokia and Microsoft have grown so close in recent years that Microkia is now a commonly accepted portmanteau, much like Wintel was during the PC's heyday. Well, the Finnish smartphone maker may not be too pleased with its software partner. In fact, Nokia is downright mad that Microsoft continues to drag its feet with upgrading Windows Phone, which Nokia's smartphone business relies entirely on now.

Windows Phone has successfully overtaken BlackBerry as the distant No. 3 smartphone platform in the world. Kantar Worldpanel Comtech's latest estimates peg Windows Phone at 4% domestic market share, well above BlackBerry's 1.1%. However, Windows Phone isn't as financially important to Microsoft as its other products. The software giant makes more on Google Android-related royalty payments than Windows Phone licensing fees.

In an interview with International Business Times, it's difficult for Nokia exec Bryan Biniak to hide his frustration with Microsoft. Biniak tries not to sound too critical of Microsoft specifically, but it's not hard to read between the lines regarding Nokia's partnership with Microsoft: "Waiting until the end of your fiscal year when you need to close your targets, doesn't do us any good when I have phones to sell today."

Windows Phone 8 was unveiled more than a year ago, which included some important changes under the hood such as sharing many core technologies with Windows 8 for streamlined development. Microsoft has issued incremental updates since then, and Microsoft did not detail Windows Phone 8.1 at its Build developer conference in June.

Much like Windows 8.1, Windows Phone is expected to get a "Blue" update that will include a number of interface tweaks and the addition of a notification center, among other additions. However, Windows Phone 8.1 is reportedly delayed until 2014 so Microsoft can squash bugs.

For Nokia, whose investors are growing impatient, that's an awfully long time to wait for another major software upgrade. Nokia's Lumia lineup is gaining momentum, albeit at a slower pace than analysts expected, and an extended upgrade time frame will just further test their patience.

Biniak has been trying to get Microsoft to change its ways with its pace of mobile development, since apps and operating system are just as important as tech specs in today's market. As further evidence that today's market for computing devices favors integrated players, Biniak concludes, "As a company we don't want to rely on somebody else and sit and wait for them to get it right."

The tech giants are at war. Some contenders use an integrated strategy, while others embrace segmented value chains that favor open ecosystems. Only time will tell who emerges victorious. Microsoft is now straddling the line between integrated and segmented as it transitions to a new age of mobile computing, but it's facing an uphill battle. Keep reading by clicking here.


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Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Google. It owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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