However, it's not because of such rumors that I'm writing this. I'm doing it because at this point there is further data which reinforces the fact that Nokia would be hard-pressed not to launch Android phones.
As Windows Phone 8 launched, again the hopes were fanned that this would be the time when it would get decent market share. However, now, months later, the data are confirming that such was not the case. The Microsoft OS languishes at 3.1% of the market while Symbian has all but disappeared at 0.5%. Naturally since Nokia can only have part of the Windows Phone share, it's destined to occupy a sliver of the smartphone market and fall off the ranks of the largest smartphone manufacturers (Source: comScore, "comScore Reports January 2013 U.S. Smartphone Subscriber Market Share").
At the same time, even with the strong competition from Apple (NASDAQ:AAPL), Android is still the majority of the U.S. market at 52.3%, and it occupies an even stronger position worldwide.
It is the realization that Windows Phone is going nowhere, together with the fact that Nokia isn't significantly inferior to popular Android manufacturers such as Samsung, HTC or Motorola, which will ultimately drive Nokia to enter the Android market. Were Nokia to take such a move, and instantly it could be expected to easily triple, quadruple, quintuple its overall share of the smartphone market.
Presently, Nokia has around 60% of the Windows Phone market, so around 2% of the overall smartphone market. Just capturing an easy 15% of the Android market would allow it to capture nearly an additional 8% of the entire phone market, thus quintupling its share of the smartphone market from 2% to 10% in one sweep. And better still, Nokia would have a reasonable prospect of achieving even more than 15% of the Android market, while with the Windows Phone OS Nokia is entirely dependent on the OS gaining ground, which is much harder to happen than conquering a large share of an already-accepted OS.
This easy-to-see fact makes Nokia's entrance into the Android market almost a no-brainer, with only 2 exceptions, which I will describe next.
What are the barriers?
There are two different barriers of a wildly different nature:
- The first is that Stephen Elop's entire carrier might be staked on his strategic option towards Windows Phone. It might thus be hard to enter the Android market and keep the same CEO. Also, psychologically it's very hard to a person to change direction once he has stated his option so publicly;
- The second barrier, which we cannot really know for sure, are the terms of Nokia's agreement with Microsoft (NASDAQ:MSFT). There might be penalties. Nokia might have to forgo getting payments. It's impossible to know just what Nokia's options are, what it is allowed to do, how long must it exclusively supply Windows Phones.
Although there are barriers in the form of the present CEO's commitment and possible legal barriers in Nokia's agreement with Microsoft, it's looking increasingly likely that Nokia will launch a line of Android phones.
The strategy of launching such phones is turning into a no-brainer decision able to easily increase Nokia's presence in the smartphone segment by up to five times its present (small) size. Given such chance, it would be hard for Nokia not to take it.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.