Nokia and Microsoft deal shakes up industry

Guardian Unlimited | The Guardian | Richard Wray: Nokia and Microsoft deal shakes up industry

There are very basic business reasons why these two goliaths of the European and American markets have come together.

Microsoft has for years been desperate to get into the fast-growing mobile phone market, while Nokia, the world's largest maker of mobile phones, has been fiercely defending its patch.

The Finnish giant has flatly refused to produce phones using Microsoft's operating system, instead sticking with Symbian, the London-based software developer in which it is the largest shareholder.

But for its part Nokia has become desperate to gain a larger position in the business market, in which Microsoft's Windows is dominant. The success of the rival Blackberry handheld email device - which companies can integrate into existing corporate email systems - has certainly played a part in persuading Nokia that in order to get into bed with business it must seduce Microsoft.

Some delegates in Cannes believe that allowing Nokia phones to synch seamlessly with Microsoft's email products is a quid pro quo for allowing Microsoft's music technology to work with the latest Nokia handsets. Under the deal Nokia has licensed Microsoft technology that allows direct synchronisation between Microsoft's top-selling corporate server operating system and future Nokia devices.

But it is the music deal that has people talking in Cannes.

"It is great for the industry," said Duncan Ledwith, the European general manager for the mobile music firm Melodeo. "We have the two most significant technology players in the mobile space coming to the market and saying what we have always thought: that music on a mobile is the way forward."

Nokia has agreed to work with Microsoft's Windows Media Player technology so digital music can be easily played on both PCs and Nokia phones - moving tracks between devices.

"We are enabling Windows Media Audio files to be played on the Nokia music player," explained a Nokia spokesman. That means a big stack of CDs can be easily downloaded on to a PC and into a phone. Meanwhile, Microsoft will support open standards digital rights management technology. "So if you purchase a song from one of the operators' music stores, you can listen to the music on your PC," he said.

"With this collaboration we can really offer ease of use to the consumer so they do not need to worry about different standards," he added. The first phones to play Windows media files will appear this year and some will be able to store hundreds of songs.

For mobile phone firms, which had hoped that digital music would be a major money-spinner, it is a further sign that the device people want is a digital music player they can put their existing CD collection or tracks bought over the web on to that just happens to be able to make phone calls, rather than a handset that can download music from a mobile phone network.

In this context, the Nokia and Microsoft tie-up may kill off the mobile operators' current approach to music.