Nokia Tries to Revive Its Fortunes With MeeGo OS

by: Trefis

Nokia (NYSE:NOK), which competes with Apple (NASDAQ:AAPL), Research in Motion (RIMM), Google (NASDAQ:GOOG) and Microsoft (NASDAQ:MSFT) in the smartphone market, introduced the operating system called MeeGo a few months back in partnership with Intel (NASDAQ:INTC).

MeeGo Is a Multi-Device Operating System

MeeGo is a operating system that can be run on devices like smartphones, tablets, PCs, netbooks, in-vehicle infotainment devices and TVs. Other operating systems like Windows mobile, Apple’s OS and RIM’s OS are either limited to a few devices or to one type of device only. MeeGo’s flexibility to operate on multiple devices is similar to Google’s Android operating system, which is currently available on smartphones and is expected to be available on tablets, smart TVs and digital set-top boxes.

Nokia Can Revive Share With MeeGo

Nokia is looking to boost the competitiveness of its smartphones as well as widen its presence in other devices through the MeeGo OS. Nokia’s market share within the global mobile phone market has been on the decline. New smartphones that can compete with the functionality and features offered by the iPhone, RIM’s BlackBerry and Android-based phones are essential for Nokia’s future.

Even if Nokia were simply able to halt the decline its market share and instead maintain share, we estimate that there could be an upside of 10% to the $23 Trefis price estimate for Nokia’s stock.

MeeGo Appeals to Device Makers and App Developers

The success of MeeGo is not only dependent on its appeal to customers of Nokia smartphones, but also to third-party device makers that Nokia will rely on to widen the reach of MeeGo as well as app developers that will develop new apps for the MeeGo platform.

1. MeeGo OS Can Save Cost for Device Makers

In the last few years, many new types of computing devices have emerged in addition to the traditional PC. Dell (NASDAQ:DELL), Sony (NYSE:SNE), HP (NYSE:HPQ) and other PC makers are building a much larger variety of “smart” devices like smartphones, tablets, netbooks, smart TVs, infotainment systems and more, in order to compete in today’s rapidly changing mobile technology environment.

Until now, these companies have incurred costs (especially R&D costs) to make their device hardware compatible with different operating systems or created proprietary systems for their devices. Since MeeGo OS is expected to be compatible with many types of devices, it will help device makers focus their efforts in making their device hardware compatible with a single OS. This will help device makers save costs as they introduce new devices at a rapid pace, which was not possible earlier as popular operating systems like Android and Windows Mobile were limited to a few devices only.

2. Apps Developers Can Reach a Wide Range of Devices

Apple’s devices (iPhone, iPad) as well as those of RIM (BlackBerry) are closed systems, meaning that applications developed for those platforms are often not easy to be port to other devices. This can be one of the limiting factors for the monetization opportunity for a developer.

Since MeeGo OS will be present on multiple devices, it will give developers an opportunity to create apps once and distribute across different devices, providing multiple monetization opportunity. However, this transition will be justified only if MeeGo becomes successful and the total number of devices using MeeGo can match the number of Apple or RIM devices in use.

Disclosure: No positions