Nokia admits risk of Microsoft building a Windows Phone 8-powered Surface Phone

Microsoft Surface Phone conceptIn one of its regular updates to the U.S. Securities and Exchange Commission, Nokia has revised its risk assessment section to include a few comments on the harm a Microsoft-produced Windows Phone device would do to its business. While no such device officially exists, rumors Microsoft is in the process of developing a possible Surface Phone have been around for some time; and they clearly carry enough weight for Nokia to consider the impact such a phone would have on its partnership with them.

As with all risk assessment sections, it covers almost every possible outcome and is laden with doom and gloom, proven by the opening statement (highlighted in bold and italics) which says, “We may not be able to make Nokia products with Windows Phone a competitive choice for consumers unless the Windows Phone ecosystem becomes a competitive and profitable global ecosystem that achieves sufficient scale, value and attractiveness to relevant market participants.” We’d say that’s fair, Nokia.

Glossing over the next ten pages brings us to Nokia’s thoughts on Microsoft, and how it directly affects the Finnish firm’s fate. In amongst all the talk of monstrous licensing fees, recruitment problems and other issues, Nokia notes Microsoft could make strategic decision which may be, “Detrimental,” to the company, such as, “In addition to the Surface tablet, Microsoft may broaden its strategy to sell other mobile devices under its own brand, including smartphones.” It’s later added the relationship would take a sour turn if, “Microsoft chooses to develop its own mobile devices, including smartphones, or if Microsoft otherwise develops interests that are contrary to ours.”

Changing allegiances in the future

It looks like Nokia has been paying attention to the problems surrounding the Surface RT tablet, which has seen the operating system all but abandoned by other manufacturers, who were unwilling to go up against Microsoft following its launch. Poor sales performance from those who didn’t shun Windows RT have made this appear to be a sound decision. If a Surface Phone is released and has the knock-on effect of killing the market for everyone else, Nokia isn’t in the position where it can fall back on another OS.

Of course, Nokia knew that part when it joined forces with Microsoft in 2011, but one must wonder if the chances of Microsoft supporting its mobile operating systems with hardware of its own was considered at the time. Nokia’s wording probably shouldn’t be taken as concrete proof of the Surface Phone’s existence either, as it’s feasible Nokia is just covering all eventualities, however it could also know something we don’t.

In January, Nokia CEO Stephen Elop said the company is always asking, “What’s next?” suggesting that although the company’s is currently tied to Microsoft, that may not always be the case.