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

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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