Terrific speculative piece from Seeking Alpha (free reg-wall).

To understand where Nokia is coming from with the Nokia X it’s important to keep in mind that developing a new phone platform, even one based on Android, takes time. Product development cycles can run into many months, even for a phone using an OS that the manufacturer is already experienced with, and using hardware based on existing products.

Nokia X features a highly customized user interface, and replaces Google provided services with Microsoft email and search, as well as Nokia Store. Nokia started with the open source version of Android, and developed their own proprietary UI. Given the level of customization, I estimate that it would take at least a year from project start to products on store shelves, and probably more like 18 months. Much of that time is just spent on testing and debugging.

This means that the X project was started sometime in late 2012 or early 2013. Why would Nokia begin the X project? I think the answer is pretty obvious. Microsoft and Nokia had just kicked off the Windows 8 Phone with high expectations in 2012 Q4, and those expectations had not been met, with Nokia selling only 4.4 million Lumia smartphones, less than half of the 9.3 million Asha smartphones that were sold in the quarter, as reported in Nokia’s earnings release.

After suffering through a year of lackluster Windows 7 Phone sales, Nokia’s board would be getting restive. The X project was the fall back position in case Windows 8 Phone didn’t start gaining significant market share. Windows Phone did gain market share in 2013, but Nokia’s Devices and Services division lost money every quarter on an IFRS (International Financial Reporting Standards) basis.

Why all the links to Microsoft services? It may have been meant to placate Microsoft. In its arrangement with Microsoft, Nokia had reserved the right to make other platforms. In late 2012, Nokia was still selling Symbian smartphones as well as the Asha line, based on the Symbian derived Nokia OS. But Nokia was very much dependent on platform support payments from Microsoft, as it acknowledged at the time, with these payments essentially negating the Windows phone royalties due to MS. Even if not specifically constrained by contract to Microsoft, Nokia would want to tread lightly.

Really interesting. Sounds about right.