Couple of days ago there was some “inside rumors” about Nokia working on an Android phone. This rumor was pretty quickly denied by the Finnish giant.

Full QWERTY and dual screens. Eat that iPhone. Also works as a fishing net weight.

It was a good rumor because it sounded plausible until one starts to seriously think about it. Yes, Nokia is one of the few handset manufacturers who doesn’t have Android plans so it just a matter of time, right? Not exactly. Sure, some might think Android is a better platform than S60 and yes, in my opinion, the current S60 UI and user experience are a crapfest but at least it’s Nokia’s own crapfest. And that’s the important thing.

The reason why other traditional cell phone manufacturers are pushing out Android phones is that it doesn’t really matter what software runs in their phones as long as it sells. And of course Android sells, because carriers finally get to bill for data usage when mobile users discover the web.

Does SonyEricsson, Samsung, HTC have a smartphone that matters? They all pump out smartphones on different platforms and don’t really focus on building an ecosystem across their phones. Their main customers are phone operators, who’ll eventually brand the phones and fill them with their own software and sell them to their customers. This is ture for Nokia too as far as Nokia the mobile phone manufacturer goes. Nokia, however, isn’t just about manufacturing hardware. Take SonyEricsson as a counterexample. As a part of Sony, SonyEricsson is more about extending Sony’s brands (Walkman, Cybershot) and not solely about mobile phones. Same goes for Samsung. Nokia, on the other hand, is a brand on its own and has interests in all aspects of mobile communication.

SonyEricsson is a good example also because it shows what would happen to Nokia if it’d adopt Android. Those who remember time when it was just called Ericsson, the company actually did have pretty nice technologies and phones. Today, that history is pretty much nonexistent in their phones.

Unlike the other phone manufacturers, but like Apple and Google, Nokia has a wide application ecosystem. Nokia is betting a lot on services, even though Ovi Store and other Ovi services haven’t caused similar nerdgasms like Apple’s Apps Store. In fact, one might say that Ovi services are a source of a lot of nerdrage instead. Nokia would also need to port its Nokia Maps and Mail for Exchange support over to Android, just to mention few. Also, why invest in Qt if you’re going Java?

The only way for Nokia to remain relevant in the marketplace is to own the software its phones and services run on. It’s about vertical integration and it’s about mattering in the smartphone market. This vertical integration is why Google and Apple suddenly matter in smartphone business. Vertical integration is why Apple still matters in the computer business.

This is also why no other mobile phone manufacturer has taken Symbian seriously. It would give Nokia, their #1 competitor, immense strategic power. The reason Windows Mobile has zero traction in mobile phones follows the same logic.

As Trip Hawkins, whose Electronic Arts was first to bypass the game resellers and went straight to retailers, has put it, “it’s all about leverage. If you don’t have it, you lose”. With Google’s recent announcement of Chrome OS for netbooks, there are many unhappy netbook manufacturers who decided to build something on Android. On the other hand, by bypassing the need for a real OS and focusing on the Web, netbook manufacturers can try to cut costs – at the expense of becoming dependent on Google.

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Judging from Vincent’s latest post (and the comments!) about why he thinks Android will suck, there are many misunderstandings about global smartphone markets. First of all, they are a small subset of all handset market – just about 10%. There are many who are blinded by their US-centric power-user views. The echo chamber of blogs doesn’t help much, especially because most blogs are also U.S.-based. This smartphone market share graph by Volker Weber is one of the best to illustrate that North America is totally different than other markets. The differences do not limit to smartphones, there are huge differences in mobile usage also.

The other thing to note is that the dominating player right now with more than two thirds of the market is Symbian, which is backed by, among others, the number one mobile manufacturer, Nokia. Both have summarily dismissed iPhone and Android as nothing more than niche (“iPhone is nice, but that’s about it”, “Just another Linux phone”?). They are also both usually missing from all reporting concerning Android and iPhone. Not taking them into account is like talking about PC industry and forgetting about Windows and Dell.

It’s always a good reminder that Nokia is also the world’s largest MP3 player and digital camera manufacturer. They also have more than half of the smartphone market. From a U.S. perspective this might not be so visible, because in the U.S. market the best selling smartphones are Blackberry Pearl, Motorola Q and Apple iPhone. If these are your idea of smartphones, do yourself a favour and familiarise yourself with Nokia’s Nseries (for consumers) and Eseries (for enterprise).

In the Open Handset Alliance’s FAQ, the alliance says that the benefits of an open platform for operators and manufacturers are lower costs and flexibility to offer services. For consumers, they promise cheaper prices, but given that most phones are given free by the operator or that it doesn’t actually make any business-sense to do give phones on a discount without a reason, this is probably a joke. Also, do not read too much into the “partnerships” in OHA, as many of those companies are also involved with Symbian and many other mobile initiatives.

The business model of your average mobile carrier is to make money out of you by offering you value-added services. The problem in the marketplace is that most people are just fine with voice and SMS. In the EU, many people feel that mobile data is still too expensive to the extent that the EU will probably mandate some price limits. Seriously, this is an industry that thought WAP and walled gardens were the future. Open competition is an anathema for them.

What the carriers with their monopoly mindset didn’t see coming was that internet is everywhere for far more competitive price and experience than what they can deliver. A surprise hit in Finland is a USB-device with 3G connection with gives you mobile broadband to your laptop with fixed monthly price. Why not just use your mobile’s Bluetooth instead is something a more technically oriented guy would think. But that’s why this guy can’t understand either why Google sees more search activity from an iPhone than from other handsets.

Many ISPs have started to adopt the mobile operators’ tactics now that the basic service is so low-margin. Of course, they can’t go as far as they’d love – you can’t imagine your ISP mandating what kind of computer you can use to connect to the net. In part, this is what the net neutrality discussion is about.

Google reported some time ago, that iPhone is by far the most used mobile user-agent. You can take this as a success story to Apple (and AT&T), but you could also see the sorry state of internet on mobile. A device with a tiny market share dominates internet usage? This is of course good news for iPhone carriers, who would love to have more customers like that. The question is, is the reason that using the web is so easy on an iPhone or because the iPhone owners behave differently? A little bit of both is always the easy way out, but whatever, the bottom line is that it brings more internet traffic revenue to mobile carriers. One point of warning, though, one reason for iPhone’s search dominance to keep in mind is only hinted in the article – the default search engine for many mobiles isn’t Google, but Yahoo! or even an operator’s own.

Then there’s the talk about the open platform of Android. One problem when talking about iPhone SDK and Android is that, right now, neither are “real” in the sense that so far all we have seen is hype. As a Symbian boss said, “We take [Android] seriously but we are the ones with real phones, real phone platforms and a wealth of volume built up over years”. In 2007, 141 different models and 77,3 million Symbian phones were sold. The fight between Android and iPhone SDK is pointless if you don’t include Symbian in it. It is open (to an extent), it’s free, there’s no AppStore (which is good and bad), there’s digital signatures (which is good and bad). And there are almost 9,000 third-party applications.

Want IM and VoIP on your smartphone today? Here’s a Gizmo client for Symbian S60 -platforms by Nokia (See the site for other cool apps if you happen to have a compatible phone). Do not forget the power mobile operators have over their networks, even that app can’t use VoIP on 3G, just on WLAN. Apple and Google are not mobile companies and that’s why they try to change the rules more to the their liking. This is a good thing, but history has proved these efforts have so far been very futile.

This Wired article on Motorola ROKR couple years back is a good reminder of some laws of the mobile market. Of course, the article didn’t age that well (which seems to be quite common at Wired), but the middle part with Nokia’s Vanjoki is worth a second read, especially now that Nokia is busy with Ovi.

PS. I’m a low-profit customer for my mobile operator, I have a simple SonyEricsson K610i with Opera Mini that I use web with like three times a year. I tried to use mobile internet while “outside the grid” (e.g. WLAN or DSL), but because I happened to be outside a major city (and 3G connectivity), the experience sucked a lot. We wanted to see a YouTube movie but were unable to. And this was 2008.

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