How the Nokia acquisition could hurt Microsoft's Windows Phone strategy

With Nokia's mobile business now under Microsoft's roof, other OEMs are far less likely to do much with Windows Phone.

The news late Monday that Microsoft had purchased the hardware assets of Nokia and acquired access to other IP for a total of $7.17 billion effectively marked the end of any potential third-party hardware makers entering the Windows Phone business.

This is different from Google’s approach with the Nexus and Motorola products. Those are seen largely as reference platforms, examples of how to build a decent phone. Although I must say the new Motorola phones are earning serious accolades, it’s something I didn't think would happen. Google's purchase of Motorola was seen as a strategic move to get patent protection and not a serious effort at making its own phones.

Some OEMs had flirted with Windows Phone. LG said it would make phones, then it withdrew. Samsung promised the ATIV S, which was the Galaxy S III running WP8, but it never made it to U.S. shores. Other than Nokia, all Microsoft had was HTC, a company in a fight for its life.

With the acquisition of the Lumia line, I can't for the life of me see any third-party OEM entering the market. It will mean any OEM that does will be both competing with Microsoft while paying it royalties at the same time. Why would anyone do that?

Microsoft maintains that nothing will change. "Today’s announcement doesn’t change that — acquiring Nokia’s Devices group will help make the market for all Windows Phones, from Microsoft or our (device maker) partners," Terry Myerson, executive vice president of Operating Systems at Microsoft, wrote in a blog post.

Microsoft explained its thinking in a 30-page document that accompanied the conference call discussing the news. If you read between the lines of that PowerPoint document, what it comes down to is Microsoft is looking to replicate the Apple model of integrating the hardware and software under one roof. I can't say that I blame them, because you can't argue with Apple’s success. Of course, Microsoft tried to copy Apple's tablet, too, and look how that went over.

I suppose I would feel better about this if it wasn't for my own Lumia experience that took place on the same day as this news. I took back another Lumia due to poor battery life. Just 30 minutes of surfing and gaming during a lunch break and I was down 30% of power. That's just not acceptable.

I also wonder where this leaves BlackBerry. Its last gasp has clearly failed, despite the fact that BBOS10 is quite nice and the Z10 is a decent phone, albeit one that runs hot as hell. With BBM coming to other platforms soon, BB is losing any last raison d'etre.

Of course, there's no stopping Microsoft from grabbing that nice pile of IP, which would be a huge boost to the company and would probably come a whole lot cheaper.

The one really encouraging bit of news, somewhat buried in the bigger picture, is that Microsoft gets access to Nokia's HERE technology, which includes the NAVTEQ GPS mapping. I've long felt NAVTEQ was an unsung jewel in Nokia's crown. Combining that with WP, Xbox and Bing will be a huge win for everyone. Quite frankly, that could have the greater impact in the coming months.

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