Commentary

Yahoo, Nokia No Mobile Dream Team

Yahoo/Nokia

Following a vaguely worded invite to a press conference sent out by Yahoo Thursday, word leaked out via Kara Swisher's BoomTown blog that the company is planning to announce a broad partnership with Nokia.

The alliance is expected to entail Yahoo building email, search and other applications and services into a variety of Nokia devices. The deal, code-named "Project Nike," had reportedly been fast-tracked after the two giants had kicked the idea around for several years without result.

It also follows on the heels of Yahoo renewing its pact with Samsung to provide a range of mobile services across the manufacturer's handsets and bada operating system. Yahoo has long touted its long list of partnerships with mobile operators, so adding the biggest handset maker of all in Nokia isn't a surprising step.

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But how big a payoff will this prove for Yahoo? Nokia has become the industry's lumbering legacy player, watching as other companies -- including Apple, Google and BlackBerry -- rapidly gain share in the fast-growing smartphone segment. Smartphone sales increased nearly 50% in the first quarter compared to 17% for mobile phones overall, according to data released this week by Gartner.

While Nokia remains the world's top handset seller, it lost 1.2% market share year-over-year, with the company doing all right with mid-tier phones but lacking "a high-volume driver in the high-end," according to Gartner. That means Nokia hasn't had a hot smartphone to compete with the iPhone or Android-based phones from manufacturers like HTC.

What's more, the Symbian operating system on which most Nokia phones runs continues to lose share, slipping to 44.3% in the first quarter from 48.8% a year ago. Android, by comparison, has gone from 1.6% to a 9.6% share, and iPhone from 10.5% to 15.4%.

And while Apple and Google have built ecosystems around their respective platforms with application storefronts and tailored devices, Nokia hasn't offered much of a threat with its Ovi Store. What's more, Nokia still doesn't have a presence in the U.S. market with either feature phones or smartphones.

Obviously, Nokia is hoping Yahoo can help it make its handsets more attractive and become a more serious contender in the smartphone market by packaging devices with popular Yahoo apps. From Yahoo's perspective, hooking up with a manufacturer that's an also-ran in the smartphone race won't help it gain ground in the segment where users are most actively accessing the Web and mobile apps.

At the same time, Yahoo doesn't have its own mobile operating system or app ecosystem to bolster Nokia's core technology. So how much the two old-line Web and mobile companies can benefit each other by teaming up is questionable. Buying Palm might have been a better move for Nokia, in order to acquire the company's well-regarded webOS and shift away from Symbian. But more details of the Nokia/Yahoo deal should be provided on Monday.

1 comment about "Yahoo, Nokia No Mobile Dream Team ".
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  1. Matthew Snyder from ADObjects Inc, May 21, 2010 at 7:16 p.m.

    Mark, couple facts see my blog www.adostrategies.com as well.

    1) Even thought the percentage of 48.8% dropped to 44%, based on my extrapolation of the data, the amount of devices shipped as Symbian in the smartphone area was on par and actually at a higher growth rate then iPhone and Android. So as the market moves from 21% to 50% SmartPhone over the next 18months, holding on to close to 50% of the market is quite tough, but maintaining 40% like Nokia has been known to do is quite possible. They are shipping an additional 33,000 new devices a day and a strong machine for delivering the smartphone needs to the masses in those numbers. They have a very strong customer support function and a long history of working with Carriers to create a great cost-effection end-user relationship post sales.

    2) Everybody seems to bash Yahoo. Do not know why, yes the email product has dropped slightly in volume, but they are still far above the others as a leader in this space. Take services like Flickr and others are still leading edge. As Nokia has been about "Connecting People" and a communications company with Yahoo's strong position in Email, it might just be a better alternative then the lack of user focus with "privacy" we have we from some of the other companies out there and email.

    3) Symbian may not get all the buzz like Android and iPhone here in North America, but it is an incredible OS if you look at on the technical base/ drivers that have been built in an work quite smoothly. There has been a problem with the user interface design and some of the resource allocations, but as a whole and now with QT development environment coming to market, it just might surprise many of you as the right OS for this massive middletransition to low side of the market like we are starting to see for smart phones. Nokia is the best to push out several Millions of devices per day to really help keep the transition to the Smart ohone Market moving forward, so we all carry a "Multimedia computer in hand".
    For the Higher-End, Meego and Maemo jury is still out. One killer product UI from this platform at the right positioning and full turn-key solution set could really give all market players a solution of balance for Carriers and media.

    As Nokia has been a mobile only focused company, there has been challenges with the convergence to Online like we have seen from the Online players entering mobile, but now we are approaching round 2 of this fight. We might see something fairly interesting coming from Nokia and Yahoo that could be the right balance to the mobile marketplace.

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