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In a note to investors Friday, analyst Mike Abramsky of RBC Capital Markets said that the new partnership between Nokia and Microsoft may "inadvertently help" its competitors, namely Apple and Google Android, and possibly BlackBerry maker Research in Motion.
Nokia Chief Executive Stephen Elop, who formerly served as Microsoft's Business Division head, and Microsoft CEO Steve Ballmer issued a joint open letter Friday announcing the strategic alliance.
"Today, developers, operators and consumers want compelling mobile products, which include not only the device, but the software, services, applications and customer support that make a great experience," Elop said at a joint news conference in London. "Nokia and Microsoft will combine our strengths to deliver an ecosystem with unrivaled global reach and scale. It's now a three-horse race."
The announcement came just days after Elop had issued a surprisingly candid internal memo comparing Nokia's situation to "standing on a burning platform." Elop compared competition from Apple to an "intense heat," admitting that the iPhone maker had "disrupted the market by redefining the smartphone."
According to Abramsky, the deal between Nokia and Microsoft "could produce a stronger combined platform" on paper, but may instead result in gains for rival smartphone platforms.
The analyst notes that if successful, Microsoft could see its share of the global smartphone market rise from less than 5 percent to 30-35 percent. On the other hand, "the partnership may accelerate competitor share gains to Android, Apple and RIM," Abramsky said.
Apple, Android and RIM could present "possible disruptions to Nokia and Microsoft while making it work," though Microsoft has promised priority and customization to Nokia. Also, "possible carrier and Enterprise caution on adopting Nokia/Microsoft pending roadmap/product visibility" could affect early sales of Nokia's forthcoming Windows Phone 7 handsets.
Abramsky also speculated that existing Microsoft OEMs may further favor Android because of the increased competition. Finally, "developer hesitation, pending visibility to traction for the platform" could result in a boost for Apple and its rivals.
The analyst concluded by noting that the Nokia/Microsoft partnership could cause "ripple effects" to the smartphone industry and along the supply chain, "including setting up bigger battles between Nokia/Microsoft and Android/Apple/RIM for platform dominance at carriers, emerging markets, content and developers."