Our Interview with the Nokia CEO Who Just Announced the Microsoft-Owned Company's First Android Phones
BARCELONA — Nokia has shaken things up at this year’s Mobile World Congress. After years of making smartphones running Microsoft’s flagging Windows Phone operating system, the company revealed its first smartphones that run Google’s Android operating system.
The phones — the Nokia X, Nokia X+ and Nokia XL — together represent the biggest stunners thus far at the largest event for mobile technology in the world. The announcement was surprising not just because Nokia pledged support to Microsoft and Windows Phone in a highly publicized event in 2011, but also because Nokia was recently acquired by Microsoft for more than $7 billion.
As we noted previously, the Nokia X phones mean that Nokia is making devices running software created by its owner’s rival.
To discuss the eye-opening move, we sat down with Nokia’s CEO Stephen Elop to pick his brain. He explained that using Android does not affect Nokia’s allegiance to its parent, but rather that it represented the best opportunity to sell more smartphones for less money.
“Windows Phone continues to be our primary smartphone platform within Nokia and the larger context of Microsoft,” Elop told Yahoo Tech. “But there is this opportunity at price points below where we reach with [the company’s premium line] Lumia. There’s a fast-growing segment of people who are entering into the market and purchasing their very first smartphones.”
That segment is one that’s currently exploding outside the U.S., in what the industry calls “developing countries.” In these parts of the world, cellular infrastructure is improving and smartphones are becoming primary computing devices for plenty of people, replacing desktops and laptops outright.
It’s an area that Nokia once completely dominated. In recent years, however, Nokia has primarily focused on competing with the iPhone and Samsung’s Galaxy line, with premium Lumia smartphones. Meanwhile, the explosion of low-cost Android-based smartphones has eroded the company’s market share in those areas.
Developing nations have “smartphone market growth of four times that of the overall industry,” Elop added. “That’s very much worth pursuing, particularly given Nokia’s heritage in emerging markets. It’s a great opportunity for us, and we think we’ve done it in a way that is coherent across the different product lines.”
Nokia has created an Android experience that feels an awful lot like Windows Phone. In fact, the company has built on top of Google’s operating system, removing apps like Gmail and Google Maps and replacing them with Outlook and Bing Maps, and tying cloud services to Microsoft’s OneDrive offering, instead of Google Drive.
More obviously, Nokia’s X line also features a design that matches Windows Phone’s tile aesthetic. Looking at the phone and its large animated tiles, you would assume it is a Windows Phone. All of this means the opportunity to give first-time smartphone owners a foot into the door of the Lumia/Windows Phone experience.
“If you think about the Nokia X,” Elop said, “you’re seeing a device that carries the Nokia brand, which, in those emerging markets, is a very powerful brand. You’re seeing unique Nokia experiences, a new user interface, as well as Microsoft service. So you put all those pieces together, and still, even at the budget level, we’re doing something that’s differentiated.”
Elop is hoping that a Windows Phone–flavored Android smartphone will attract an audience. But for the United States, don’t expect the X line to gain much of a foothold.
“The U.S. has an interesting pricing dynamic,” Elop said. “For any phone at lower prices, it’s actually hard to differentiate, because of the way the carriers subsidize the prices. When you see something like the Lumia 520, no consumer in the United States pays initially the full retail price. … So the United States creates an environment where there’s less of an opportunity for lower-price devices.”
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