Why Microsoft? Why Windows Phone?

By the numbers, Nokia is still a major player in the mobile industry today, with 1.3 billion users worldwide owning Nokia devices, and its Symbian mobile operating system is the largest in terms of usage. But the company foresaw challenges if it were to continue on its current course of supporting Symbian and launching a new smartphone OS, MeeGo, developed in partnership with Intel.

Symbian had begun to face engineering challenges, said Elop. "The code got fragile. It took longer to stabilize after making changes." And with MeeGo, Nokia realized it just couldn't get a portfolio of phones out there fast enough to face its competitive threats.

Before choosing to partner with Microsoft, Nokia spent time meeting with both it and Google to learn about their respective offerings. While Google was clearly on a winning trajectory, Nokia's concern was that it could not differentiate its products enough from the Android devices already on the market. But there was a psychological reason behind its choice to forgo Android, too. Elop explained Nokia's company culture was one that had a history of making changes, shifting direction and leading again. Android didn't fit with that spirit. "It felt a little like giving in," he said.

With Microsoft, it was simply a better fit. There was more symmetry between the two companies' assets. "They had much of what we needed, and we had much of what they needed," said Elop. And Nokia has the belief that it will differentiate itself there, and stand out among both the current and planned Windows Phone devices arriving on the market.

Nokia's 5 Basic Principles

To achieve its vision, Elop described Nokia's 5 basic principles in building its new ecosystem going forward.

1. Delight Customers: Nokia will deliver iconic devices at massive volumes. It's known for phones like the popular N8, which has some of the best optics on the market today. It will deliver great hardware, at scale, said Elop.
2. Complete the Ecosystem: Working with Microsoft, Nokia will deliver more than just great hardware and software, it will contribute to the whole ecosystem by offering mapping, navigation, location-based services, operator billing, languages, customization, hardware capabilities, and more. Meanwhile, Microsoft will complete the ecosystem with its products like Zune, Xbox, Bing, AdCenter and others. Scaling the software design and handling chipset support will also be involved.
3. Work with Operators: Elop again referred to Nokia as the most operator-friendly mobile operating system, a key strategic maneuver which will encourage the operators to support the company and its devices. Nokia says that it has tools,  options, marketing efforts and revenue programs that will appeal to operators. It also has 132 operator billing relationships in the 190 countries where it has a presence.
4. Broaden the Ecosystem: Nokia plans to take the ecosystem beyond mobile. Says Elop, "we are just at the beginning of the mobile revolution." It will also be about connected devices, like tablets, TVs, gaming platforms, automobiles and all the other places "where people expect to have digitally connected experiences." But there's no new Nokia tablet arriving anytime soon, apparently. Without referring to any of Nokia's competitors by name, Elop essentially said that many of the iPad alternatives were not gaining momentum and attracting customers. When it comes to tablets, "I don't want to be number 202," he said. "If we can't differentiate from the pack, we won't be successful." However, Elop did make note of the recent reveal of Windows 8, which leads us to wonder if Nokia might be a hardware partner for Microsoft's next-gen, touch-enabled version of Windows in the future.
5. Build the Developer Community: Finally, Elop said that it's critical that the developer community embrace the Nokia ecosystem, if it is ever to gain "escape velocity." To attract this crowd, it's offering free registration, Microsoft's free developer tools, a single developer portal and publishing location and analytics tools. Nokia can also provide the above-mentioned access to operator billing, which can help developers maximize their revenue streams. Operator billing is 3 and half times more successful than other methods, said Elop, at gaining downloads.

It was clear during Elop's keynote address that the sum of these initiatives presents a very different vision than what Google and Apple are offering today. Elop described Apple as having such a closed ecosystem that it practically forced Android into existence. "Apple created a vacuum, which Google filled with Android." But Elop had questions about Google's "open" approach with its mobile OS. "It remains to be seen how open, and for how long," Elop concluded.

Image credit, concept devices: Engadget