An artist's mockup of Android on a Lumia device  (Source: Digital Trends)
Will budget Android phone see the light of day?

Phandroid and The Verge are reporting that multiple sources close to Nokia Oyj.'s (HEX:NOK1V) devices team have revealed the Finnish phonemaker was preparing a forked version of Google Inc.'s (GOOG) Linux kernel-based Android operating system.  With Nokia selling its devices unit to Microsoft Corp. (MSFT) and stepping away from the phone business, it's now unclear whether the product will every see the light of day.  But the idea that Nokia had waiting Android devices hiding in plain sight raises a number of interesting questions, and forces a fresh look at the history of Nokia's relationships.

I. Pivotal 2009 Turned Nokia from Android to Microsoft

What is Project Normandy? Is it the long hoped for Nokia Android smartphone?  The answer is "sort of".

Much as the U.S. invasion of Normandy on June 6, 1944 (D-Day) marked a new chapter in a long war filled with twists and turns, the history of Nokia's relationships with Google and Microsoft is deep and complex.

Normandy -- and Android Nokia devices -- might have landed in 2011, given the market direction Nokia was headed around 2008.  But in 2009 something pivotal happened, which would delay that possibility, perhaps indefinitely.  That year, an executive would extend an olive branch to Nokia, a gesture that would eventually transform the Finnish phonemaker from a rival to a close partner two years later.

Stephen Elop was at the time the head of Microsoft's business software unit.  Unlike many at Microsoft, Mr. Elop recognized that smartphones were the next big thing.  While feature phones were still dominating global sales at the time, he envisioned an era in which users did many of their daily PC chores on a smartphone.  So he made a strong push for Office on the smartphone.

Office Launch
Stephen Elop and Microsoft's relationship with Nokia began with Microsoft Office [Image Source: Microsoft]

The only problem was that Microsoft's own smartphone platform, Windows Mobile, was looking increasingly long in the tooth.  Way back in 2005, Microsoft's Windows Mobile had helped to launch the smartphone craze after the company's OEM partners started adding cellular modems to PDAs.  

Smartphone market share 2005 through 2012
U.S. smartphone market share (2005-2012) [Image Source: comScore]

WinMo in 2007 peaked with a U.S. market share of over 40 percent of smartphone sales, and a global market share of around 12 percent.

Smartphone market share
Global smartphone OS shares (2005-2008) [Image Source: Needham & Co. analyst Charles Wolf]

But by 2009, Windows Mobile was in freefall.  At the time Microsoft had just released Windows Mobile 6.5, which while sound in functionality lacked the entertainment-geared app catalog of Apple, Inc.'s (AAPL) iOS-equipped iPhone.  And WinMo 6.5 looked downright Quasimodo-like in terms of its graphical user interface compared to the Android and iOS.

Mr. Elop wasn't a big fan of WinMo, and he urged Microsoft's leadership to commit to a bold redesign.  Between 2008 and 2009 Microsoft got serious about that project, which was dubbed Windows Phone.  But in 2009 with smartphone usage exploding, there was still no Windows Phone product.

Windows Mobile
Windows Mobile was looking somewhat dated in 2009. [Image Source: Geeky Gadgets]

So Mr. Elop decided that Microsoft's mobile Office build needed a new home away from the "burning platform" that was WinMo.  

His team reportedly briefly considered Apple, which Microsoft already had a hot-and-cold relationship with.  But Apple CEO Steve Jobs was lukewarm on the idea, given his own plans for mobile versions of the iWork suite.  And some at Microsoft feared that putting Office on the iPhone would deliver the market to Apple, killing any chances for Windows Phone.  So Mr. Elop looked elsewhere.  And he chose Nokia.

Nokia at the time was the biggest smartphone maker.  It was in the right place, at the right time.  The Finnish company might not have been the biggest name in the American market, but in the middle of the last decade it released a series of devices that came to define the emerging smartphone market.  Unlike Windows Mobile, it didn't treat mobility as an afterthought; it was arguably the first OS truly designed to offer a smartphone experience.

This pioneering role is reflected in Nokia's fearsome patent portfolio, which is widely regarded as the strongest in the smartphone industry.  Even Apple, after being sued by Nokia, eventually acknowledged that it had "borrowed" some of the defining features of a smartphone from Nokia, agreeing to licensing payments on it iPhone product in 2011.

Thus it wasn't surprising that Microsoft and Nokia -- veterans of the software and smartphone industries, respectively -- would decide to partner up.  What was more suprising is that the pair stuck to that plan as the fire spread to Nokia's platform.

II. Symbian -- Nokia's "Burning Platform"

In 2009 Nokia was starting to slow.  After being on top of the "smartphone" market since 1996, Nokia's smartphone operating system of choice, Symbian, began to fall, starting with the release of the Apple iPhone in 2007.

Smartphone market share -- Nokia slowdown
Smartphone market share (2007-2012) [Image Source: Gartner Inc. (IT)]

In 2007 Symbian had roughly 65 percent of the market; in 2008 its share dropped to under 45 percent.  Much like Windows Mobile, Symbian's sales were hit first by Apple and Blackberry, then later damaged even more by the emergence of Android as a dominant competitor in 2010.

smartphone market share
IDC estimates, smartphone operating system market share (2007-2011)
[Image Source: Wikimedia Commons]

From whence did the fall come?  Symbian wasn't nearly as clunky and unattractive as Windows Mobile.  But in 2007 and 2008 Nokia's Symbian devices began receiving weaker reviews.  Meanwhile a far greater problem lurked below the surface.  Mobile developers were finding Symbian C++ much harder to learn and develop for that Google's Java-based SDK or Apple's Objective-C based SDK.

This is a key, oft overlooked element of Symbian's fall.  You see, to Symbian's fans the operating system didn't look or feel grossly inferior to iOS or Android, and that was largely true in terms of the core OS.  But what casual users for the most part were unaware of was the struggle it was to develop for Symbian.
Nokia N8
By 2010 Nokia's faith in Symbian was weakening, as was its global market share.

Also, by 2009 Symbian had been largely abandoned by other OEMs besides Nokia.  Samsung Electronics Comp., Ltd. (KSC:005930), Motorola Mobility (now a Google unit), and Sony Corp.'s (TYO:6758) phone business (then Sony Ericsson, a unit co-owned by Sweden's Ericsson AB (STO:ERIC.AERIC.B)) all made the switch from Symbian to Android between 2007 and 2009.

However, when Mr. Elop pushed Microsoft to partner with Nokia in 2009, the Finnish phonemaker was still the world's top smartphone and feature phone seller with sales far greater than Windows Mobile.

Was Mr. Elop's decision to place Microsoft's software to transplant Microsoft's software from its current "burning platform" onto a far bigger "burning platform", a mere coincidence or a prelude to trying to lure the veteran phonemaker away from its struggling Symbian?

III. Moving to Windows Phone

We may never know, but by 2010, Symbian's woes had taken a turn for the worse.

In April 2010 Nokia announced a facelift for Symbian -- Symbian^3 (S^3) and a new Qt based app platform -- which offered a much quicker path for new developers, albeit at the cost of a little less power under the hood.  Nokia even was talking about an even more ambitious makeover, Symbian^4 (later retitled S^3 "Belle") in early 2010.

But Nokia's board was impatient with these efforts.  Under pressure, Nokia executives in June 2010 made the decision to pull the plug on Symbian from its high-profile N-Series phones.

Nokia Meego
Nokia made the decision to move away from Symbian before Stephen Elop even arrived -- it announced in mid-2010 that its premium smartphones would no longer run a Linux variant, instead.

At the time one might expect Nokia to consider Android the leading candidate to displace Symbian -- given that's the choice Symbian's other former backers had made.  Instead, Nokia first turned to Meego, an alternative platform that combined the company's experimental "Maemo" Linux-kernel mobile OS with Intel Corp.'s (INTC) Moblin.

More changes quickly came.

A month later Nokia announced it would be booting Olli-Pekka Kallasvuo, who had served as CEO at Nokia since 2006.  In September it selected Stephen Elop as his replacement.  A number of executives quit in the next couple months and the Symbian Foundation's director Lee Williams resigned.  In Oct. 2010 Nokia's CTO stated, "We will no longer be talking about Symbian^3 or Symbian^4 at all."

But thanks to his deep relationship with Nokia, Stephen Elop convinced his new employer to embrace Windows Phone instead.  [Image Source: Reuters]

In Q4 2010 Android passed Symbian (and Nokia) in global smartphone sales for the first time.  In Feb. 2011 Mr. Elop gave his famous "burning platform" speech, in which he heavily criticized Symbian.  Two days later, backed by the board, he announced that Nokia was going to adopt Microsoft's Windows Phone (instead of Meego or Android) and would complete the phase out of Symbian that had been set into motion shortly before his arrival.  (Windows Phone 7 had quietly launched in Nov. 2010.)

III. Nokia Plots Secret Normandy Device

Microsoft paid Nokia over $1B USD to stay away from Android.  But the move did little to stop Nokia's fall -- in fact it may have accelerated it.  Nokia learned the hard way you don't announce you're phasing out a platform without having its replacement ready.  With a limited stock of Windows Phones hitting the market in 2011, sales plunged.

Smartphone global market share 2009 through 2013
A switch to Windows Phone didn't exactly help Nokia. [Image Source: BI Intelligence]

Still Nokia and Mr. Elop stuck to their guns.  Throughout 2011 and 2012, Nokia talked a whole lot of trash about Android.  One Nokia executive suggested that OEMs using Android were like children peeing themselves to stay warm in the snow, a bizarre analogy that stuck in the minds of many.

Given that rhetoric, a switch to Android seemed extremely improbable despite Nokia's struggles.  And yet in late 2012 the rumor spread that Nokia was eyeing an Android escape route, particularly after a Nokia executive suggested the company was formulating a "contingency plan" if Windows Phone failed.  Could Microsoft's "Trojan horse" CEO possibly be planning such a move?

Indeed, after publicly admonishing Android for so long, new reports indicated that Nokia began a secret affair with the Google-backed Linux OS in early-to-mid 2012.  The media took note that Nokia was hiring engineers with Android experience, but ultimately these reports were downplayed after Nokia executives claimed that it was simply looking to improve support on Android for its cross-platform HERE mapping service.

Now those hirings are seen in a new light, as reports reveal that Nokia was working on an Android phone.  According to sources Nokia was eyeing Android as a potential partner for Windows Phone.  Android would occupy the low end, replacing S40.

It's unclear whether "Meltimi" -- a rumored Linux-kernel based replacement for S40 -- was actually the Android build in question.  What is clear is that this was no garden variety Android phone.  Nokia was planning to cultivate its own branch on the Android tree, similar to Inc.'s (AMZN) Fire OS.

Nokia hoped to revitalize its mid-range lineup with a quasi-secret new Linux OS. 

[Image Source: Symbian Tweet]

The secret Android device was dubbed "Normandy" and was pictured in a leak by @EVLeaks on Twitter, shortly before it was announced that Nokia's devices unit was being acquired by Microsoft for $7.2B USD.  The device may have been hinted at, as well, by Nokia's recent admission that it "kept secrets" from Microsoft.

Now the burning question is whether Microsoft will abandon the device -- and other potential low-end Nokia Android devices.  On the one hand Microsoft seems to have no clear alternative on the low end, where Windows Phone has yet to reach.  On the other hand it would be rather bizarre to see a Microsoft-branded Android ("Nokia" devices will be rebranded to "Microsoft" after the acquisition is complete).

Thus the saga of Nokia's secret affair with Android may be complete, or it may be poised to enter a new, more public chapter.  Either way, this intriguing tale illustrates that Mr. Elop might not have been quite as much of a "Trojan horse" as some depict him to be.  Sure Microsoft paid him handsomely after he delivered Nokia to his former (and new) employer, but he also appeared to entertain the idea of Android adoption, even if that product may never reach the market.

Sources: The Verge, Phandroid, EV Leaks

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