Nokia, Microsoft Team Up Against RIM

Posted by: Jack Ewing on September 10

Nokia and Microsoft have given rival Research in Motion a backhanded compliment. The Finnish handset giant and the Redmond, Wash. software maker announced an agreement Sept. 10 that will extend a previous agreement and make Microsoft Exchange ActivSync software available on virtually all Nokia smartphones, as well as many mid-range phones.

Anssi Vanjoki, Nokia’s executive vice president for markets, told BusinessWeek that the deal is “absolutely” aimed at RIM and its BlackBerry handsets and software. Though the Canadian company is a relatively small player in the overall handset market, it has defined the corporate mobile e-mail market and is pushing into consumer mobile e-mail.

Now Nokia, whose weakness in business-oriented handsets contrasts with its global dominance in consumer devices, has decided to push back. “RIM has made a whole business out of a commodity product,” Vanjoki maintains. Now, he says, corporations that use Exchange to run their e-mail can easily extend service to handsets without a middleman. “The market has really been waiting for this kind of solution and now they have it.”

What may be most significant about the deal is that it doesn't just apply to new Nokia handsets. Some 43 models that run the S60 mobile operating interface--currently about 80 million handsets--will be able to retrofit at no cost beginning this month. That's double the number of RIM BlackBerries that have ever been sold. Until now, the Exchange client was available only on Nokia's business-oriented Eseries phones.

By allowing free retrofits, which Vanjoki says require only four clicks to install, Nokia is trying to take advantage of its global dominance. The company commands 40% of the world handset market, though it warned Sept. 5 that its market share slipped in the third quarter due to a price war at the low end of the market.

While BlackBerries seem ubiquitous in airport business lounges, the percentage of corporate employees with mobile e-mail actually is still quite small, Vanjoki says. The market is poised to grow quickly as telcos lower the rates they charge for mobile data. "This market is in its infancy," Vanjoki says.