New HTC smartphones good news for Windows Phone, Nokia says

Nokia might not be the favoured vendor du jour of a Windows Phone 8 smartphone, but the Finnish cell-phone maker nonetheless issued a diplomatically worded statement in response to Microsoft CEO Steve Ballmer's praise for HTC's 8X and 8S devices announced earlier this week.

"This HTC announcement is more good news for the Windows Phone ecosystem," said Nokia spokeswoman Mona Kokkonen. She proceeded quickly to talk up Nokia's Lumia line of smartphones, which includes the latest Lumia 920 running Windows Phone 8.

"Nokia is driving an industry-leading smartphone franchise - that we call Lumia - exclusively around Windows Phone," Kokkonen said. "With Lumia, we are creating truly differentiated experiences like PureView imaging, location and navigation, wireless charging and Nokia Music."

Ballmer had been effusive in praising the Lumia 820 and 920 as well as Nokia when he appeared onstage with Nokia CEO Stephen Elop for the launch of the new smartphones on September 5.

Lumia 820 and 920

But Ballmer might have been a tad more effusive in praising HTC and the new Windows Phone 8X HTC and Windows Phone 8S HTC smartphones when he appeared with HTC CEO Peter Chou for the products' launch.

If anything, Samsung might feel left out since Ballmer didn't appear onstage in Germany at the August launch of the new ATIV S 4.8-inch smartphone running Windows Phone 8.

At the Lumia 820 and 920 launch, Ballmer said it was an "important milestone" in Microsoft's 18-month partnership with Nokia. "Windows Phone is unlike any other on the market. You really see it in the Lumia 820 and 920."

Then Ballmer seemed to reach a little further, calling the 8X "truly a Windows Phone hero product. HTC built this hardware from the ground up to showcase the software."

Windows Phone boost

Analysts also said Microsoft must have been pleased that HTC was willing to include "Windows Phone 8" as the first part of the name for the new HTC phones.

Gartner analyst Michael Gartenberg said Ballmer chose his words carefully to avoid suggesting that HTC or Nokia was his "favoured child" in Windows Phone 8 development.

It probably doesn't matter whether Microsoft prefers to favour Nokia or HTC, as long as Windows Phone 8 gets a boost, several analysts said.

However, Nokia might appreciate the Ballmer endorsements more than HTC, given its dismal second-quarter earnings report. In July, Nokia reported a 39% drop in the number of smartphones sold in the second quarter, to 10.2 million.

Microsoft committed to Nokia

While it may appear that Nokia is less favoured than HTC, analyst Jack Gold of J. Gold Associates said he didn't think Microsoft was "any less committed to Nokia."

Gold said Ballmer was being "opportunistic" in his praise of HTC. "Don't forget, Ballmer is a salesman first and foremost, and of course he's going to play up a new device release, just as he did when Nokia announced last month," Gold said.

"Nokia has not hit all the sales projections that Nokia would have liked," Gold said. "But Microsoft understands it is investing in the market, so you have to have a portfolio of products approach. That means you have to push as many Windows Phone devices as you can from multiple vendors."

With less than a 5% share of the global smartphone market, Windows Phone needs to take advantage of multiple vendor smartphones to gain share, and the vendors know upfront that is what needs to happen, analysts said.

Windows Phone 8 ecosystem

Carolina Milanesi, an analyst at Gartner, said it is logical for Ballmer to praise HTC since they have been partners for 15 years and HTC was one of the first vendors to launch the original version of Windows Phone.

With HTC, Windows Phone 8 offers new opportunity, since things haven't gone well with HTC and the Android ecosystem, she added. Meanwhile, "Nokia is putting Nokia and Lumia ahead of Microsoft because they care about creating stickiness to their own brand and ecosystem within the Windows Phone 8 ecosystem," Milanesi said.

Nokia may see the need to push its own brand in part to dispel rumors over the past 19 months that Microsoft would buy Nokia, analysts said. Ironically, several bloggers said that Microsoft's strong endorsement for HTC could be an indication that Microsoft wants to buy HTC.

The companies would not comment on such speculation. Gold said he couldn't envision Microsoft buying any phone manufacturer. "After the Danger acquisition and the Kin disaster, I think Microsoft understands they shouldn't be in phone manufacturing," he said.