For Microsoft and Nokia, fewer secrets

While building new phone hardware and software together, Microsoft and Nokia could once be compared to two ships passing in the night.

The companies often touted their deep partnership on smartphones, but it turns out they still kept many secrets from each other. Sometimes those secrets caused one or the other to scramble to change features before a phone launched, and led Microsoft to rethink core aspects of its mobile operating system.

"There are real-world examples of situations where Nokia was building a phone and keeping information about it secret from us," said Joe Belfiore, a corporate vice president at Microsoft who's in charge of the company's Windows Phone project.

"We would make changes in the software, or prioritize things in the software, unaware of the work that they're doing. And then late in the cycle we'd find out and say, 'If we had known that we would have done this other thing differently and it would have turned out better!'" Belfiore told CNET on Friday.

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That scenario, which Belfiore says is expected with any of Microsoft's hardware partners, is less likely to happen once it owns Nokia's phone business, and it will result in "even better" phones at a faster clip, he said.

That promise is at the very core of a deal between the two companies, which was announced earlier this week. Microsoft is spending $7.2 billion to acquire Nokia's devices and services unit, as well as license its mapping services and entire patent portfolio. It's the culmination of a partnership that began in 2011, when Nokia announced plans to use Microsoft's burgeoning mobile software reboot as its primary smartphone OS. Rather than turning to Android like most of its rivals, the company vowed to work only with Windows Phone.

It's arguable whether that bet has paid off. Nokia sells more than 80 percent of Windows Phones on the market, but the operating system itself holds less than 4 percent market share, according to IDC. By buying Nokia, Microsoft not only will make more money from each Windows Phone sold, but it also will be able to better integrate its software with the hardware. How well that will turn out remains to be seen.

Nokia's Lumia 800, the first Windows Phone between the two companies.

(Credit: Nicole Lee/CNET)

Then and now
Microsoft and Nokia's collaboration has changed considerably since its early days. When the two companies came together to work on their first phone -- the Lumia 800 -- Nokia was effectively repurposing a device it had already designed in order to get it on the market as soon as possible, Belfiore said.

"That example was a 'move as quickly as you can' to take an excellent -- in my opinion -- current product and repurpose it for a thing that wasn't quite what it was designed for," Belfiore said. "They did that very quickly, and the product we got was solid, but not nearly as good as the products we're getting now."

One such modern device is Nokia's Lumia 1020, which came out in July. In the case of that product, the two companies worked together closely, according to Belfiore, and Microsoft made changes to its core system software to allow for new hardware features while that device was still taking shape. Microsoft even reworked the way its software manages incoming photos to work with Nokia's 41-megapixel camera, allowing for two images (one large, and one much larger) to be captured and stored at once.

That back and forth is a common occurrence between the two companies. Belfiore says the partnership has also helped the company get a handle on regions it never understood when the first Windows Phones rolled out, including China and other emerging markets.

"In developing countries, end users share files over Bluetooth commonly, and in the US people just don't do that," Belfiore said. "We didn't even have that feature, and we didn't even understand or appreciate the degree to which it was critical."

The same goes for understanding how to lower smartphone hardware costs. Microsoft set certain parameters for the baseline components in Windows Phones, but some of those requirements made phones too expensive for emerging markets. After talking with Nokia, Microsoft went back and adjusted its designs.

Those lessons help other Windows Phone partners too, Belfiore argued. "In the case of features like sharing files over Bluetooth or revving our chassis specs to make low-cost phones work better, everyone benefits immediately."

That's a touchy subject given that Microsoft's acquisition of Nokia's business threatens to change the dynamics of how Microsoft is perceived by other hardware makers. If companies showed hesitation before with the operating system, they're likely now rethinking it altogether. Belfiore, however, brushed off some of those fears.

"Some of our partners have come, and some of them have gone over the years," he said. "It's not likely to change the big picture."