Nokia saw domination by a single manufacturer as Android risk factor

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In a round table interview at the Lumia 1020 launch in New York, attended by The Guardian, Nokia's CEO, Stephen Elop, after being asked whether he ever regretted choosing Windows Phone over Android, explained that one of the risk factors that the Nokia leadership team associated with opting for Google's mobile platform was the danger that it would come to be dominated by a single manufacturer. Although not mentioned by name, this is an obvious reference to Samsung.

"I'm very happy with the decision we made. What we were worried about a couple of years ago was the very high risk that one hardware manufacturer could come to dominate Android. We had a suspicion of who it might be, because of the resources available, the vertical integration, and we were respectful of the fact that we were quite late in making that decision. Many others were in that space already."

"Now fast forward to today and examine the Android ecosystem, and there's a lot of good devices from many different companies, but one company has essentially now become the dominant player."

Seeing Samsung's domination of the Android space is easy today, but the position was less clear in the back half of 2010 when Nokia was considering its strategic options. The relatively poor position of non-Samsung Android smartphone manufacturers (e.g. HTC, Sony, and LG) today is evidenced in both unit volumes and profits. Those who have found some success, such as Chinese manufacturers, have achieved success through price discounting and customisation strategies (Google AOSP) that would have been alien to Nokia's business model and culture.

A key issue for Nokia would have been scaling up quickly enough to become competitive with the Android incumbents. Choosing Windows Phone did offer its own set of challenges, most obviously around the need to create the ecosystem, but Windows Phone clearly provided a less competitive environment with regards to other manufacturers, who remain Nokia's primary competitors. The Windows Phone option also had the sweetener of platform support payments from Microsoft to ease the financial burden of the transition period and  the prospect for superior long term value creation.

It's clear today that Nokia enjoys a much more equal relationship with Microsoft and a greater stake in the Windows Phone ecosystem, that it would have had if it had opted for Google and Android.

In the interview Elop also touches on how "being different" has helped Nokia in conversations with operators:

"Strategically that's important for us [to be offering an alternative OS] because having a conversation with [chief executive] Ralph de la Vega at AT&T, the first step in the conversation is the recognition that we're not Apple, we're not Samsung/Android - used to be Android/Samsung, it's actually about Samsung now - we're a third alternative."

The idea that Nokia provides a third option for operators is not a new one, but it does appear to be becoming more of a reality now that Nokia's Windows Phone portfolio has matured. For example, Telefónica recently announced it intention to push Windows Phone when it established a strategic partnership with Microsoft, and AT&T has made a significant commitment in terms of both device sales and marketing in order to get a global exclusive on the Nokia Lumia 1020.

Read the full interview at The Guardian.