Jackals pick flesh off Motorola's still-warm corpse

This has been widely spun as the start of a breakthrough for Microsoft in this most difficult of markets for Windows, but the new partnership has the appearance of two giants that have been suddenly cut off from their accustomed sunshine and are huddling desperately together for warmth.

Motorola has, for the first time in its history, fallen out of the top 10 global chipmakers, has lost its sure footing in handsets and is seeing its domination of the set-top box market threatened. It needs friends, and bringing out a Windows handset may be a small price to pay.

In reverse, Samsung, which had been the only handset major planning a Windows phone, pulled its Microsoft prototypes earlier this year and is now seen growing increasingly close to its arch-rival Nokia. This week the CEOs of the two companies signed a far reaching agreement to collaborate on developing software and boosting the market for the Symbian platform in which both are shareholders (as is Motorola). No partnership could look bleaker for Motorola, except perhaps for Nokia's steps in the direction of Intel.

The Nokia-Samsung rapprochement is likely to make their US rival even cooler about the Symbian cooperative. This year Motorola has defocused on Symbian and its strategy for high end smartphones has looked decidedly confused. Its ground breaking Java based Accompli 009 never shipped, then it seemed to have placed Linux at the center of its roadmap, now it says working with Microsoft is "inevitable".

Compared to the highly focused product and marketing campaigns for smartphones from Sony Ericsson, in particular, and also Nokia and Siemens, Motorola is floundering and rapidly losing the handset high ground. In the US, where Nokia has traditionally been criticized for being slow to introduce advanced models, the Finnish company has now topped up its range aggressively and is going after the CDMA sector with a new fervour, wrongfooting Motorola still further.

So why is working with Microsoft inevitable? Symbian may not yet be the powerhouse in the US that it is in Europe but when did Windows Mobile, with its handful of minor licensees, become an alternative to be taken seriously by a handset maker on the scale of Motorola? Samsung has already changed its mind about its original strategy of developing smartphones for all platforms, the Scandinavians have no incentive to support Microsoft – why is Motorola bucking the trend?

The answer has to lie in the US company's inherent weakness. It is being backed into a corner in the cellphone market. While Nokia and Samsung can be friendly rivals, no such cooperation is possible between the market leader and its US arch-enemy as Nokia seriously threatens Motorola for the first time on all its strongest fronts: CDMA, the US market, China. These shifting alliances will make Motorola the weakest partner in Symbian and take away the reason to heavily promote a platform whose success will primarily benefit Nokia. Motorola showed its weakness compared to Nokia when it agreed to make unbranded phones for major operators such as Vodafone, something Nokia has refused to do as it tries to enhance the power of its own brand.

Microsoft gains the upper hand

Microsoft, on the other hand, could be a real ally. It too needs help, and is failing badly in the smartphone sector, where it badly needs a strong position if it is to retain its domination of client end computing into the future. It has nothing to offer Nokia, which also wants control of Microsoft's birthright, the enterprise front end, so it could do a lot worse than getting Windows Mobile on to the smartphones of the world's second largest phonemaker, even if this company is losing its way somewhat. This is why we believe that Motorola is not just doing what Samsung had initially planned - planning to provide a Windows phone as just one small string to a multi-platform bow. We expect to see Windows Mobile becoming a central part of its roadmap, under intense pressure from its new friend – a friend that threatens to become a ringmaster.

Motorola's support could be a major boost to Microsoft, though without Java the Windows smartphone platform still has serious handicaps in building the applications base that will appeal to the mass market. In the enterprise however, especially in the US, a Motorola-Microsoft-Visual Studio combination could make a real impact in 2004. But for all the benefits to Windows, the balance of power in this alliance is firmly on Microsoft's side. The deal is putting Motorola firmly into Microsoft's hands. It is fully aware of Microsoft's expertise in signing up major hardware allies and then robbing them of their power within the relationship. To put itself into such a position in handsets, Motorola must be feeling very vulnerable.

It is not all about handsets of course. The other core Motorola territory in which Microsoft has ambitious designs is set-top boxes. Here too, the chipmaker is under threat, as NatSemi moves into the market. Microsoft has recently unleashed an aggressive onslaught designed to gain control of the cable TV sector, centered on two prongs – digital rights management software and TiVo-style interactive channel menu/navigation. Although Microsoft is working with NatSemi on reference platforms for digital TV systems, the initial trials of its navigation system are running on Motorola hardware. Again, we see a market Motorola is desperate to protect and where Microsoft's support is suddenly critical.

With Motorola falling out of the top 10 list of chipmakers for the first time ever, we can see that it needs to ensure Microsoft's goodwill across the spectrum of its businesses to fend off its rivals in its home markets. Microsoft has done what it is really good at – hung around until it gets a major but wounded player to give in to its courting, then poise itself to take the helm. Perhaps it's not so ridiculous to suggest that Microsoft should just buy up Motorola and go after Nokia in earnest.

Just as Motorola is likely to lose enthusiasm for Symbian, the Nokia deal indicates that Samsung will put it firmly in the center of its plan as it works more closely with its ally-cum-rival. It is the newest member of the Symbian coalition, but has the power to be the most influential after Nokia, and its commitment now seems wholehearted.

These two jackals may be at each other's throats out on the high street, but they clearly think that the Motorola corpse will be big enough for both of them to pick upon as they move themselves to the head of the Symbian pack
 

This article was originally published in Wireless Watch and was republished with the permission of Rethink Research Associates.