Nokia and Microsoft Team Up for Wide-Reaching Enterprise Mobility Initiatives

| Aug 14, 2009 | Enterprise Mobility - U.S. | Competitive Intelligence Report

| Analysts: Kitty Weldon, Brian Riggs, Avi Greengart, Brad Shimmin, Rolf Schonhowd

Current Perspective: Slightly Positive
Vendor Importance: High
Market Impact: Moderate

Event Summary

August 12, 2009 - Microsoft and Nokia announce a global alliance to bring the software maker's office products to Nokia smartphones. The deal will see Microsoft Office Mobile and Microsoft business communications, collaboration and device management software for use on Nokia's Symbian devices, initially on the Nokia Eseries. Next year, Nokia intends to start shipping Microsoft Office Communicator Mobile on its smartphones, followed by other Office applications and related software and services.

Analytical Summary

• Current Perspective: Sightly positive on Microsoft and Nokia’s global alliance as each partner stands to gain a larger share of the potentially lucrative enterprise mobility market. While the initial joint product, Office Communicator Mobile on Nokia business handsets, is the tip of the iceberg, follow-on initiatives in collaboration software, Mobile Office, UC/FMC and user interface development are more intriguing. Of course, success will depend on the strength of execution. High level alliances of this sort do not have the best track record and Nokia has struggled to provide a good mobile email experience with its existing Exchange ActiveSync license. Distribution could prove to be a challenge as well. In the U.S., RIM sells multiple BlackBerries at each national carrier, while Nokia only has a single Eseries device at AT&T.

• Vendor Importance: High to both Microsoft and Nokia as each faces obstacles in the mobile enterprise space in spite of their overall market clout. Nokia needed to fill the hole left by the disbanding of its Intellisync business software and services group, and Microsoft faces increasing competition in the mobile OS space from the likes of not only RIM, but also Apple and Google/Android, while Windows Mobile growth has been steady, but not stellar.

• Market Impact - Enterprise Mobility - U.S.: Moderate on the enterprise mobility segment; while this announcement has far-reaching implications, it is not enough to guarantee Nokia a significant place at the table for U.S. enterprise business and while Microsoft will have its finger in more pies, the Nokia deal does nothing to improve Windows Mobile’s quest for market share. Additionally, it won’t have any immediate impact in 2009 and doesn’t fundamentally fix Nokia’s problems outside of the enterprise market.

• Market Impact - Enterprise Mobility - Europe: Moderate to high on the European enterprise mobility market, because both Nokia and Microsoft have solid market positions in Europe. However, while this announcement has far-reaching implications on a global scale, Nokia will struggle much more to get a place at the table for US enterprise business and while Microsoft will have its finger in more pies, the Nokia deal does nothing to improve Windows Mobile’s quest for market share. Additionally, it doesn’t have any immediate impact in 2009 and doesn’t fundamentally fix Nokia’s problems outside of the enterprise market. However, the combined product portfolio means that competitors will have to redefine their competitive positioning against Microsoft and Nokia’s global alliance solutions over time.

• Market Impact - Enterprise Communications: Moderate on the enterprise communications market because native integration, rather than running Office Communicator Mobile as a Java app on Symbian devices as it available today, will provide a potentially more feature-rich implementation of the client on Nokia handsets. And the fact Microsoft productivity and collaboration applications will run on select Symbian devices will challenge UC solution rivals unable to extend as wide a set of mobile apps to their enterprise customers.

• Market Impact - Collaboration and Conferencing: Moderate on the collaboration software and services market initially, given the slow burn nature of this alliance, which will not deliver marketable product until an as-yet-undisclosed date in 2010. With Google's Android OS coming online this fall and RIM's BlackBerry already holding a dominant position within the enterprise, this delay will give collaboration software rivals (most notably IBM, Oracle/Sun, Cisco, and Google) time and opportunity to pitch a user experience devoid of Microsoft software.

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Enterprise Mobility - U.S. | More information
| Client access - Full report in Enterprise Mobility - Europe | More information
| Client access - Full report in Enterprise Communications | More information
| Client access - Full report in Collaboration and Conferencing | More information

Recommended Competitor Actions - Enterprise Mobility - U.S.

• Nokia’s rivals should point out that the new alliance is non-exclusive and it is very likely that Microsoft will partner with other companies.

• Microsoft’s Windows Mobile licensees should demand that Microsoft publicly promise that all of the Nokia-alliance functionality will arrive on Windows Mobile before it shows up on Symbian. If Microsoft is not willing to make that promise it would be a clear indication that Microsoft is not committed to its OS and licensees should shift their resources to alternatives accordingly.

• RIM needs to tweak its own handset lineup. While it can tout its superior on-device email experience over both Nokia’s and Microsoft’s Exchange implementations, RIM needs to rethink its UI and make it friendlier for consumers and better tailored to touchscreens. Beyond its products, RIM might also consider a partnering strategy with a corporate software giant to offset the effects of the Nokia/Microsoft deal.

• RIM has hardware changes it needs to make to stay ahead of Nokia. It should add touchscreens to its QWERTY phones, WiFi to its CDMA models and create more GSM BlackBerries with both WiFi and GPS (only the Bold offers both). RIM also needs to add HSDPA to all its BlackBerries (again, not just on the Bold) for AT&T (850/1,900) and T-Mobile’s (1,700) network.

• Apple has added encryption to the iPhone, but business users need the ability to edit and create Office documents on the go, a user-accessible file structure on phone to store them, and the ability to attach documents stored there to email messages. Apple also needs to provide details and a roadmap for how the iPhone’s enterprise features will evolve. Apple likes to keep its future plans secret, but IT managers value consistency and communication.

• Google can’t possibly be serious about the enterprise when its OS doesn’t even natively support Exchange, the most widely used corporate email system. Leaving this to carriers and third parties also means a fragmented approach to integration of contacts and calendars. HTC is doing a terrific job of this with the Hero, a poor job with the myTouch, and no job with the G1. We shudder to think how the situation will change once Samsung, Motorola, and others start offering variants as well.

Recommended End User / Customer Actions - Enterprise Mobility - U.S.

• Existing Nokia and Microsoft accounts should take a look at the new alliance and press both parties to be more forthcoming with the product development roadmaps for their existing solutions and some indication about future functionality.

• Enterprise customers should inquire about the device management solutions that will be offered on Nokia devices running Microsoft software. Does Microsoft MDM Server provide policy management, configuration management and security for Nokia devices? What will be required for Systems Center integration?

CLIENTS ONLY

Current Perspective

Competitive Positives and Concerns

Recommended Vendor Actions

| Client access - Full report in Enterprise Mobility - U.S. | More information
| Client access - Full report in Enterprise Mobility - Europe | More information
| Client access - Full report in Enterprise Communications | More information
| Client access - Full report in Collaboration and Conferencing | More information

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