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Nokia kills Meltemi, its last chance to compete with Android for the mass-market

July 26, 2012

Around the same time when Nokia announced their partnership with Microsoft to use WP7 as a replacement for their Symbian S60 OS for high-end devices, we got word of a Linux-based operating system called Meltemi, that was supposed to replace Symbian S40.

Symbian S40 is on all of Nokia’s “feature phones” for the mass-market, with a price range between $50 and $200 (unlocked). The operating system is running on 2 billion smartphones today, and it still holds on to about 20% market share in Q1 2012, according to research firm IDC. But that market share is falling rapidly, even in countries where Nokia used to be very strong, with 60%-70% of the market. The reason it’s falling so fast is Android, which is a much more advanced OS, with a much richer app ecosystem.

So Nokia needed Meltemi to counter-attack the Android invasion into their established markets. But Nokia moved too slowly, which, along with the financial troubles, forced the Finns to terminate the Meltemi project and lay off the employees working on it. This leaves the door wide open for Android, which already has 60% of the smartphone market share, to take over Nokia’s S40 market. Cheaper and yet powerful chips like Cortex A7 and faster versions of Android like Android 4.1 should accelerate this trend into 2013.

I’m very skeptical about Windows Phone 8 helping Nokia gain back this market. WP7 was built on Windows Embedded, which is a much more light-weight OS than Windows 8 and Windows Phone 8, and yet it still needed a “special” version for low-end phones. I just can’t see how WP8 would work on $100 phones.

Even if WP8 would be good enough for such cheap hardware, it would be too late. Nokia will first have to focus on making some great “premium hardware” to get people to acknowledge they still exist, and then maybe six months later, they will be able to release lower-end hardware as well. But so far, WP7 sales have been relatively poor, which means that, as Symbian evaporates from the market, Nokia won’t be able to sell enough Windows phones to keep their market share.

So I’m not seeing any way for Nokia to take back the mass-market, with or without Meltemi.