A trusted source in the telecommunications industry tells me that Microsoft has been planning the acquisition of Nokia for over two years. According to my informant Redmond is waiting for the Finnish mobile phone provider to shed more of its market cap – currently sitting at around $22 billion – before tying things up.

I don’t believe it.

Firstly, Microsoft already has everything it needs from Nokia following the signing of an agreement between the two companies that opens various avenues of opportunity aside from Nokia licensing the Windows Phone operating system – which is the most significant part of the deal for Microsoft.

Secondly, Microsoft doesn’t do hardware unless it has to and can clearly differentiate – such as in the case of the Xbox and Kinect. It’s a software licensing company. You don’t make healthy margins from hardware unless your surname is Jobs. For everyone else it’s a tough volume game that I’m pretty sure Microsoft has no intention of playing.

But while we consider the marriage of these two technology giants, we were recently provided with a glimpse of what Nokia could’ve been sans Microsoft.

Windows Phone has been a failure to date. Its predecessor, Windows Mobile, had a pitiful market share in the smartphone arena, ending up with 5% last year according to Canalys. Since launching Windows Phone 7 Microsoft’s market share has actually deteriorated, falling to 3% in the first quarter of 2011.

Look at leading manufacturers’ operating system approaches and there is no question as to why Microsoft has fallen behind. Samsung and HTC are fully committed to Google’s Android operating system and their releases of Windows Phone devices have been little more than experimental. Microsoft is yet to win over handset vendors and it remains to be seen whether they ever will.

A source at one of the world’s largest handset manufacturers recently confirmed what I had suspected: nobody wanted the Windows Phone 7 device that their company launched in SA. Stock was returned by operators who could not dispose of it, while the company’s Android devices sold like hotcakes. The market has spoken.

Nokia will be the first manufacturer to go big on Windows Phone, but it remains to be seen if it can turn the tide for Microsoft.

And while Nokia prepares to enter the market with Microsoft onboard, the fruits of previous engagements are about to launch.

The Nokia N9 was announced in recent weeks running the MeeGo operating system that Nokia created in partnership with Intel. This was part of the strategy that the old Nokia regime put in place to regain relevance in the smartphone market. And it might have worked if their shareholders had given it a chance before displacing the CEO and alienating other key executives in the company like Anssi Vanjoki.

The N9 looks spectacular, although I haven’t had a chance to play with it yet. MeeGo seems to address all of the crippling issues that users had with the Symbian operating system. It also utilises the powerful services Nokia has built via its Ovi brands, such as Maps and Music Store. These services used to be differentiators for the company, but are now being tied into Windows Phone to the benefit of other manufacturers too.

Earlier this year I met with the new Nokia CEO, Stephen Elop, who explained that if Nokia was to be successful as a Windows Phone manufacturer it first had to work to improve and grow the Microsoft ecosystem. This makes perfect sense and I have faith in Elop’s strategy and ability to execute, even if I am skeptical of Microsoft’s mobile prospects.

But the N9 and MeeGo could’ve been the renaissance Nokia needed. The once fiercely contrarian Finnish company may well have clawed its way back to the top of the market without Microsoft.

Of course, now we’ll never know.

The N9 will soon have to compete with similar devices running Windows Phone, from the same manufacturer. Any success it does have will be weighed down by Nokia’s commitment to Microsoft. Marketing resources, etc. must be split. You won’t hear Intel’s take on this out in the open, but you can bet they’re fuming. The Nokia that Intel originally partnered with is no more, its attentions split and its strategy transformed – not necessarily a bad thing, depending on your perspective.

So while we wait to see whether or not Microsoft and Nokia can redefine themselves in a market obsessed with Apple and Google, let’s take a moment to consider what could’ve been.

Check out the promo video for the N9 below. I can’t wait to get my hands on it.

The Desire is comparable to the Nexus One, which is manufactured by HTC and sold by Google. There are still no plans to launch the Nexus One in SA, but the Desire is a practically identical phone with the same 3.7″ AMOLED capacitive touchscreen, 5 megapixel camera and, most importantly, Android 2.1 operating system that you’ll find on the Nexus One.

The only real difference between the two is that the Nexus One is a quad-band device that supports WCDMA and associated American network frequencies, while the Desire is a dual-band GSM (with HSDPA) handset. The Desire also beats the Nexus One for battery life, apparently.

The Legend is a smaller smartphone with a slower processor (600MHz compared to 1GHz on the Desire). It also runs Android 2.1 and HTC’s Sense user interface.

It is uncertain at this stage what the new HTC devices will cost in South Africa or which networks will carry them – but since Vodafone carries both the Desire and Legend in the UK I think it’s safe to say that Vodacom will have both available on contract.

HTC faces legal charges from rival Apple who has accused the former of patent-infringement. Analysts have predicted that HTC will have to place new products on the back-burner until the dispute is settled. The Desire and Legend are firm competitors for Apple’s iPhone, which continues to dominate the touchscreen smartphone market.

According to Leaf the phone will only be available to contract customers on the Vodacom network and via Altech Autopage Cellular, but it can be purchased at retail for an estimated price of R6700.

The Hero has all of the features one would expect from a modern smartphone including a 5 megapixel camera, 7 customisable home-screens, a 3.5mm audio jack, WiFi, Bluetooth and 3G HSPA.

The Android market is hotting up and it is expected that there will be over 20 devices running the operating system available before Christmas 09. The Hero is the most fully-featured Android phone to date.

• Large touchscreen with haptic feedback.
• Full QWERTY keypad.
• Keypad that either slides or swivels for easy typing/texting.

Other features listed by HTC include HSDPA connectivity and a built in compass for use with Google Streetview. The device also has a 3.1 megapixel camera and was submitted for FCC testing in the USA for WiFi and Bluetooth. It does not appear to have a GPS chip however – but the compass approach combined with Google Maps is intriguing. Unfortunately Google Maps coverage of South African roads is currently very poor and this will initially limit the device’s use for navigation in the country.

The launch of the dream G1, which has been designed as a direct competitor to the Apple iPhone, has analysts buzzing around the mobile space.

“The G1 is the first device coming to market supporting Google’s operating system Android. Although this will give us a taste of what the platform will be able to do, we are expecting some limitations given this is the first device,” said Roberta Cozza, principal research analyst at Gartner. “There will be more to come in 2009 when manufacturers such as Samsung and LG will deliver their devices. Android has the potential to become the de facto operating system for Linux and we expect sales to reach around 10 percent of the smartphone market in 2011.”

Stafford Masie, country manager for Google South Africa, says that Google’s intention is to drive smartphone adoption.

“What we’re trying to do with Android is bring iPhone-type functionality to the masses at prices they can afford,” he says, speaking on a recent episode of the ZA Tech Show podcast.

Android is an open source operating system for mobile devices and is based on Linux. It is developed by Google and the Open Handset Alliance – a consortium of 34 hardware, software, and telecommunications companies working to advance open standards for mobile devices.

The smartphone arena has been screaming for openness in a market where walled platforms, such as the iPhone, rule the roost. It will be interesting to see where Android goes over the coming months, given the ease with which third party developers are able to provide applications for the platform. The HTC Dream G1 is the first of a series of Android devices from a number of vendors that are slated for launch over the coming months and reaffirms Google’s commitment and drive to mobile.

Look out for my article in the October issue of Net.Work where I explore the mobile space, and smartphones in particular.