Today the partnership between Nokia and Microsoft on putting Microsoft Office products on Nokia's smartphones was officially announced and it amounted to an acceptance of the primacy of their competitors in the smartphone market. For Microsoft, its Windows Mobile platform doing a rapid catch up could not bring the desired results on its own. Microsoft had to make use of its new datacenters and cloud infrastructure.
Microsoft's crown jewel is the Office franchise and in my view is far more valuable than the OS itself ( If Office was available on say Linux, people would not mind switching to it ). Microsoft's immediate challenge is to beat back efforts from Google to cut into the office productivity market with its cloud offerings - the Google Apps notwithstanding the fact that Google is nowhere near challenging the Office products. However Microsoft would have been rattled by the slow and steady adoption of Google apps by an ever increasing number of enterprises wanting to reduce costs. This deal coming close on the heels of the search partnership with Yahoo takes the fight straight to Google. This move is a straight hit aimed at Google more than RIM. For Microsoft this will also make a first entry for its products into a open source platform which is what Nokia's phones would be built on be it Symbian or Maemo.
RIM is also losing market by the adoption of iPhone by some enterprises as the smartphone of choice. It has to be seen as to how an innovation leader like RIM would move when faced with such odds. As to Google, it has now seen the moves by Microsoft and Nokia and the company can now plan out its not-much-marketed wireless foray with very known targets. What will hamper the focus Google would want to give its wireless strategy is how far Bing and the new-fangled Yahoo partnership will light a fire under Google for Microsoft.
Nokia on its part was losing market share steadily against RIM and Apple and along with the enterprise segment which was already lost, even the non-enterprise smartphone share was shrinking. Once leading the mobile phone landscape ( and even now with substantial momentum ), Nokia had not done enough to revamp its OS efforts and it shows in the jaded user interface Nokia phones sport model after model. Nokia would expect to buy some time with this deal with Microsoft before it takes a hard look at its OS offerings. Nokia would like to think that having Microsoft Office on its phones is a first major step that would make its OS a favorite with the enterprise customers.
Nokia's stock performance after today's announcement
and how Microsoft fared.