Preston Gralla

Nokia to release an Android phone in 2014? Don't believe it!

December 12, 2013 11:59 AM EST

Nokia is said to be readying a low-cost Android phone for release next year -- but will it ever see the light of day? Here's why the phone will almost certainly be killed before customers ever see it.

Reports say that Nokia is working on developing a phone based on a heavily customized version of Android. One reason for the move, some people believe, is that Nokia will find itself increasingly unable to compete against low-cost Android phones.

The existence of a a Nokia Android phone project was revealed earlier this year. But the project was launched well before the Microsoft buyout. In fact, there's evidence that the Android project was a not-so-subtle blackmail move by Nokia to get Microsoft to buy out the company. The New York Times reported in September:

"... a functioning Nokia Android phone could have served as a powerful prop in Nokia’s dealings with Microsoft, a tangible reminder that Nokia could move away from Microsoft’s Windows Phone software and use the Android operating system, which powers more than three out of every four smartphones sold globally."

The initial Microsoft deal with Nokia for Windows Phone ran only until the end of 2014. So the existence of an Android project inside Nokia was a clear threat to Microsoft. If Nokia abandoned Windows Phone for Android, it would essentially mean the end of Windows Phone. As of this November, 90% of all Windows Phones in use were Nokias, according to AdDuplex. And a recent report from IDC says that the Windows Phone platform is thoroughly dependent on Nokia. The report says that Windows Phone growth is:

"...a result primarily driven by the support of Nokia. By itself, Nokia accounted for 93.2% of all the Windows Phone-powered smartphones shipped during the quarter, marking a new milestone in the company's short history on the Microsoft platform. Participation from other vendors, meanwhile, still seemed a mixed bag with more vendors participating from a year ago, but volumes still far behind Nokia's own."

All this means that the fear of Nokia moving to Android was clearly a significant factor in Microsoft buying the Nokia handset division.

Would Microsoft really spend $7.4 billion for Nokia, only to have the company sell phones based on the operating system of Google, its fiercest competitor? Certainly not. Microsoft knows that the big growth in smartphones is at the low end of the market. That's where Windows Phone's greatest strength has come from. Why put that at risk by letting Nokia sell low-cost Android phones?

Microsoft will be targeting Windows Phone heavily at the low and medium end of the market. To do that, it's considering giving away Windows Phone for free to manufacturers, to spur them to release low-end devices. The model is based on Google's Android project: Give away the operating system for free, and make money in mobile advertising and services, in Microsoft's case Bing, SkyDrive, and Skype. But that strategy won't work if Microsoft helps Google by selling low-cost Android phones.

For all these reasons, you're unlikely to ever see an Android phone sold by Nokia -- not in 2014 or beyond as well.