Windows Phone To Boost Nokia, Microsoft, As Samsung's Defeat Raises Android Concerns

By Alexandra Burlacu | Aug 27, 2012 12:23 PM EDT

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Nokia and Microsoft are looking to increase U.S. sales of smartphones by joining forces to produce Nokia Windows Phones. The team may finally get a much-needed boost in the wake of the Samsung - Apple legal battle. As Samsung Electronics products face a possible U.S. ban, handset makers may have to consider alternatives to Google's Android software.

A federal jury awarded Apple more than $1 billion on Friday, Aug. 24, ruling that Samsung has infringed on six out the seven patents for mobile devices Apple included in the suit. U.S. District Judge Lucy Koh is due to decide next month whether to grant Apple's request to ban U.S. sales of some devices from Samsung, the dominant Android smartphone maker.

News of a potential sales ban on Samsung products comes at a great time for Nokia, as the Finnish mobile maker is preparing to launch its new lineup of Lumia devices running on Microsoft's Windows Phone 8 platform. Nokia is working on expanding the Windows Phone ecosystem, and a ban on the competition would leave more room for such plans.

According to Gartner Inc.'s Carolina Milanesi, some Android device makers may turn to platforms such as Microsoft's Windows 8 as an alternative in order to avoid similar legal battles.

"I am sure that vendors in the Android ecosystem are wondering how long it will be before they become Apple's target," Milanesi told Bloomberg. "This might sway some vendors to look at Windows 8 as an alternative, and for the ones like HTC Corp. and even Samsung, who have already announced plans to bring to market a WP8 device, how much stronger their investment should be."

The ruling marks a crucial victory for Apple, and it will allow the company to defend its intellectual property even more vigorously from now on, noted Bloomberg Industries analyst John Butler.

In the wake of the jury verdict, Nokia, Apple and Microsoft climbed on the stock market, while Samsung faced its biggest decline in more than a year.

BlackBerry maker Research in Motion (RIM) could also benefit from the fact that it offers a different platform in this rocky period for Android, but the company has delayed its BlackBerry 10 phones several times already and the first devices with the new software will not arrive until 2013.

According to Horace Dediu, a former Nokia analyst who now runs Helsinki-based mobile-phone industry research firm Asymco, Microsoft stands to gain the most, as it has already prevailed in patent disputes with Google's Motorola Mobility.

"Microsoft can go in to all these accounts and say, 'Let us remind you again of the cost of Android,'" said Dediu, as cited by Bloomberg. "What Microsoft has always had trouble with is getting these vendors to switch."

While Microsoft has only three phone models, Samsung sells dozens of Android phones. Microsoft could even tout that it offers legal protection that Google could not provide as it gave away Android for free to vendors, Dediu further explained.

"With Windows phones, you're protected against IP lawsuits because, it anybody sues, they are going to talk with Microsoft," he added. "Microsoft can do that because they actually do have their IP pretty well sorted out."

Nokia ditched its Symbian platform last year, after it had failed to keep up with Apple's iPhone and Android devices, and partnered with Microsoft. According to research firm Gartner, Nokia's global mobile-phone market share dropped to 20 percent from 23 percent the previous year. Meanwhile, Android's share among platforms climbed 21 percentage points to 64 percent, leaving Apple's iOS with 19 percent.

Nokia sold 600,000 handsets in North America last quarter, while Apple sold 5.9 million iPhones, according to Strategy Analytics. Microsoft's platform did, however, gain some more traction, reaching 2.7 percent of global sales compared with 1.6 percent a year earlier, Gartner reported.