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How Much Will MeeGo Cost Nokia: Can It Afford Not to Pay?

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Nokia’s (s nok) new strategy to use Microsoft’s software is both plan A and B for the Finnish handset maker, but plan C may stand for “costly.” The company is reportedly paying out bonuses to keep developing its MeeGo platform. Today’s Mobile Business Briefing blog says salary increases and bonuses are going to developers and engineers in the MeeGo area in order to maintain progress on the first MeeGo handset, dubbed the N950. Although Nokia has announced plans to use Windows Phone 7 (s msft) on future smartphones, the company officially committed to delivering at least one MeeGo product this year.

Any payouts or incentives to continue MeeGo development reinforce that not all of Nokia’s eggs are in Microsoft’s basket when it comes to smartphones — or other devices for that matter. MeeGo is an open-source platform that can power handsets, but also tablets or netbooks, and that may be why Nokia isn’t letting go of MeeGo just yet. Microsoft Windows Phone 7 (s msft) is specifically geared toward smartphones, and if Nokia has designs on expanding hardware offerings beyond the handset — something it has done before by offering the Booklet netbook — Microsoft’s new mobile platform won’t help.

I’ve been critical of Nokia strategies in the past, but a small spend to keep MeeGo alive makes sense for a few reasons. Dropping Symbian means the company has no operating system nor ecosystem of its own, and MeeGo, if it’s ever successful, can provide both. It can also allow the company to expand into new mobile markets with one unifying platform for phones, tablets and computers. And even if the reports are true on incentive payouts, the MeeGo division is far smaller than any other area, so it’s unlikely a significant percentage of Nokia’s bankroll will fund the MeeGo initiative. Indeed, Nokia’s own long-term research and development plans shown at its recent Capital Markets Day event illustrate this:

If nothing else, MeeGo allows for a long-term potential option, while in the short run, Nokia reboots itself using Microsoft’s new platform. The key word, of course, is “potential,” as even the the best perceived strategies are simply perception until they’re properly executed. Nokia had a long-standing Symbian strategy that could have worked if only the company had executed it in a timely fashion. Perhaps that’s a lesson learned that Nokia will apply to MeeGo. On the other hand, if MeeGo doesn’t prove its worth within the next year or two, MeeGo could go the way of Symbian: down a painful, end-of-life transition with little to no return on the investment dollars.

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6 Responses to “How Much Will MeeGo Cost Nokia: Can It Afford Not to Pay?”

  1. Oliver

    Sounds like Palm’s plan when they went Windows Mobile for a while while keeping their own eggs in another basket. Anyone remember how that worked out for them?

  2. Stuart

    Many open source developers are waiting for a MeeGo device with Qt baked in so they can really start showing what is possible. A true linux machine in your pocket could allow for enterprise software applications that used to require a computer to be run in your pocket. It could be a much more viable tool than a tablet since telephony is built in.

    • I’m not sure I’d be waiting for a platform if I was a developer, but I know that many programmers were hot for the Qt platform. FWIW, some tablets have telephony built in as well – the Galaxy Tab can do voice calls but the functionality is stripped out by some carriers. ;)

  3. JohnatNokia

    I’d like to share a couple of points. First, performance-based incentives are a standard practice at Nokia. Second, some clarification on the future of MeeGo. There were two fundamental questions relating to the MeeGo’s path: the competitiveness of MeeGo devices and the viability for creating a third ecosystem. We decided to review the mission of MeeGo, and place greater emphasis on longer-term market exploration. While Nokia plans to ship a MeeGo-related open source product later this year, this effort will transition into an ongoing exploration of innovative platform disruptions and next-generation smart devices. The effort is integral to our overall ecosystem strategy, which also includes plans to partner with Microsoft on Windows Phone smartphones, and bringing mobile phone technology to the “next billion” people.

  4. I actually think that some will buy the device! An open platform is a smart decision in the face of the other OSes. Much can be accomplished here that is not possible on say Android.

    I still believe that a browser-based layer could succeed on a number of fronts, and is very likely down the road — Chrome. Throw all of your eggs into an outside platform at your own peril. Basic research needs to go on, because we are so very much at the beginning. Who would have thought that Apple would be so entrenched three years on?

  5. I would rather think that Nokia has agreed with Intel to deliver at least one Meego phone so they don’t have a choise there.
    The phone will be done but nobody will buy any.