This is largely in response to the opponents of the Nokia-Microsoft tie up, as well as the Tomi Ahonem article: http://www.gomonews.com/another-great-article-on-nokia-microsoft-by-tomi-ahonen/
I think it's a good move for Nokia. Nokia should have done it the moment Microsoft started developing Phone 7, instead of waiting till late in the game. They been left in the dust ever since iPhone and Android hit the markets, and their share price is one-fifth of what it was back in 2007, before the iOS and Android storm came.
1. Nokia cuts operating costs. Lots of good developers will leave Nokia for sure. But then again, Nokia will simply fire them if they don't leave, since they just closed down their Symbian division. They won't need much developers, since Microsoft Phone 7 is already fully developed, and in any case, Microsoft can just provide the developers.
2. Related point: the R&D guys don't need to be retrained, since they will be leaving.
3. As for Nokia having built a huge competent force in software and services, it may be huge, but I'm not quite sure if Symbian, Nokia Comes with Music, Ovi Navigation, is really that competent. I think the winner is clear if you compare iTunes v. Nokia Comes with Music... Ovi Navigation v. Google Maps. Used a MeeGo on a N8, and it isn't exactly that good either. It is pretty brutal, but the only way to stop their losses, is to stop wasting time on Symbian, and turn it to open-source (so that the people currently using Symbian or Nokia N8s won't complain too much). Staff developers are always going to feel gutted and stuff, but that's no reason not to jump off a burning platform.
3. Nokia needs a new OS that can reasonably compete with iOS and Android. Given their share price and finances, they simply don't have enough cash to support R&D for an organic OS from ground up, and no bank will lend them the cash either.
This then brings in Microsoft, which is overflowing with cash, and already has a fully developed smartphone OS, Phone 7 (albeit in its first generation). Microsoft will be able to fund the integration of Phone 7 with Nokia's hardware, and continuing development costs of the OS will be borne by Microsoft as well. Nokia basically gains a proper smartphone OS that is way smarter than Symbian, for free.
Teaming up with Google is out of the question since
Android is open-source--integration costs will be borne by Nokia solely.
Additional development costs will be needed on Android to differentiate it from the rest of the Androids.
Google won't provide Nokia with funding or assist them exclusively in developing Android.
Samsung, HTC, SE, etc are all using Android. I don't think the world needs yet another Android phone.
Palm's WebOS is good, but they don't have an army of MIT comp science Phds like Microsoft, and don't have bottomless pockets.
4. From experience and reviews, Phone 7, while in its first generation, is surprising good: http://download.cnet.com/8301-20_4-10475182-10084490.html?tag=contentMain;contentBody
Not sure what premium features current Nokia premium phones have, but they don't seem to be working pretty well. It's better if Nokia simply ditches all the 'premium features' and tries something new.
5. Regarding the carrier relationships, I think that's quite debatable. It's pretty much acknowledged that AT&T is the worst major network to use in US. AT&T never ever liked Apple's revenue sharing deal very much, and Apple basically just betrayed AT&T, since Verizon CDMA iPhones are out in the market now. Their relationship is nothing short of bad: http://www.cultofmac.com/report-apples-relationship-with-att-even-worse-than-we-thought/51709
So basically, the people hate the carrier(AT&T), the carrier and Apple hate each other, but Apple's share price has gone from $55 to $360 since iPhone was released. This is despite the fact that with carrier subsidy, the iPhone is still one of the most expensive phones in US to buy, if not the most expensive.
It is seen in Singapore as well, where iPhones form literally >50% of the phone population, despite the lowest end iPhone 4 starting at $500, with subsidy. Price point & Carrier subsidy doesn't count for much, in a society which is largely middle-classed.
I would say that there is reasonable proof that
profitability {good hardware, good OS, good apps}, and carrier r/s or subsidy is not in the set.
6. Box-movers which is what Nokia is about to become, may make slim profits, but then again, slim profits are better than no profits. And in the long-run, Nokia will probably engage in a revenue-sharing deal with Microsoft, since they will put some of their organic stuff into Phone 7 too.
7. Lastly, it's debatable if Nokia will become slower and more bureaucratic. They will be able to focus more on their low-end, low-price market segment, which iPhone, Android and HTC are steering clear of. And the current CEO was after all Microsoft's division president, so relations with Microsoft should move pretty fast.
