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There is plenty to say about Nokia’s (NYSE:NOK) decision to phase out Symbian in favor of the-operating-system-formerly-known-as-Windows-Mobile.

Nokia CEO (and Microsoft (NASDAQ:MSFT) veteran) Stephen Elop had already prepared the troops with his “burning platforms” memo, lambasting his new employer for how it failed to respond to the iPhone (NASDAQ:AAPL) and Android (NASDAQ:GOOG) challenge.

Nokia’s problem is that it never got software. It created Symbian so that Microsoft would never take over handset profits the way it did with the PC. It outsourced key software development to Symbian and then continued to peddle its cursor-key S60 platform the in the face of Apple’s groundbreaking GUI phone.

Now it has partnered with Microsoft, a company that certainly is competent at software, but has yet to prove that it can execute on mobile software. Elop has jumped off the burning oil platform into a ship that’s adrift and has a hold filled with water. (Today its stock fell 13% in response to the news.)

Who are the winners and losers?

Winner

  • Microsoft. Even if Windows Phone never goes anywhere, it gets a user base for Bing on the handset.

Losers

  • Nokia. Despited hundreds of millions in side payments from Microsoft, it transitions from the world’s most popular smart phone platform of the past decade (albeit one in sharp decline) to the fifth most popular platform. It adopts Windows Phone 7, which has a 2% share in the U.S. smartphone market, half that of the older Windows Mobile 6.
  • Symbian and MeeGo developers. After following Nokia in its QT-everywhere strategy, they are now officially orphaned.
  • Current Windows handset vendors. Presumably Windows Phone becomes a captive Nokia platform (the only kind it likes) and Samsung (OTC:SSNLF), Motorola (NYSE:MMI) and Sony Ericsson (NASDAQ:ERIC) abandon their limited sales of Windows phones into U.S. enterprises.
  • Research in Motion (RIMM). The distant and long-rumored hope of a Microsoft acquisition as an exit strategy is now gone.

Meanwhile, the Silicon Valley duo, Apple and Google, will continue their march forward to displace all comers — Apple with a plurality of profits and Google eventually achieving a majority of the market share.

The sign of a troubled company is multiple Hail Mary passes in a row. Nokia bought Symbian and made a half-hearted effort to establish an open source project (three years too late). It told developers to abandon Symbian APIs in favor of QT APIs that could enable a transition to MeeGo. And now it declares its future to be a platform that many have already written off.

All this because it doesn’t want to join the commodity free-for-all that is Android? In his memo, Elop told his troops:

Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.

Nokia needs to fix its execution rather than throwing more Hail Mary passes than even Doug Flutie ever completed.

Source: Nokia and Microsoft: Winners and Losers