This is beyond all comprehension to me! I don't understand why they could possibly think this was a good idea and the only possible explanation is that Elop is gonna get a fat kickback from Microsoft under the table (probably not in cash, but I think he's now the front-runner for CEO when Ballmer retires!).
Don't get me wrong, I like WP7 (I haven't had much time with it, only handled devices of friends, but I think the UI is very smooth), but adopting it is suicide for Nokia! There's a billion reasons why I think so, but here's a handful:
1. Nokia spends more than any phone manufacturer on R&D. A lot of it is blue skies and will never be marketable, but that's the name of the game in research: you know that one in ever 1000 wacky ideas will be a market-disruptive technology and a killer feature in your next phone. By tying themselves to someone else's OS Nokia's ability to apply their research is crippled, as they depend on someone else building the tech into the software before it can be used! (And it's not just a matter of "they wouldn't do it", it's a matter of them giving up patents, and allowing other WP7 vendors to use it too)
Being a platform-holder means having control of your destiny - being a mere manufacturer means having it dictated by someone else (and that someone else is Microsoft, who, while a capable software company, are currently holding about 6% of the US smartphone market share - and that's WP7 and WinMo COMBINED!)
Elop already said ther R&D spending will be severely cut, so that's a lot of unemployed Finnish PhDs, and a lot of cool technology that will just sit in some vault and rot!
2. Meego is the OS of the future! As phones become more and more like fully-featured computers, they'd need a fully-featured OS to do it, and Meego was the only one around! WP7 is good but it doesn't even let devs use native code, and Android is mostly dependent on Java (most games run in native C, but I understand devs are still limited).
3. Intel! They're VERY serious about making it on mobile, and Meego would've been their main charge! Microsoft is a large and powerful company, but Intel is a steamroller of gargantuan proportions, and Nokia had them in their corner! We all know that the N9 would've been an ARM device, but in the future, to be the only major manufacturer with a meaningful choice between x86 and ARM would've been a massive manufacturing advantage. Currently all Android, WP7 and even iOS phones are tied to ARM's technology curve: they can't introduce resource-costly new features until ARM's silicone is powerful enough to run them. Having a choice between ARM and Intel could give a manufacturer an edge to jump ahead of the curve.
4. Qt: There are more Symbian phones out there than you can shake a stick at. Once Qt took off it would have given app developers a MASSIVE installed base, making it the most attractive ecosystem, and made it MUCH easier for Nokia to gradually shift to Meego as its main OS, since Qt works on both. Brand loyalty is a very powerful thing, and telling all the hundreds of millions of folks who spent a few quid on the Ovi store that their purchases would STILL work when they upgraded from their S40 POS to a s****y new smartphone would be a huge incentive for them to pick Meego rather than Android or iPhone! Which leads me to...
5. APPS! As Elop correctly surmised, value in Android is shifting to Google, because they're the platform-holder, and they sell the most apps. Similarly, while Apple makes good dosh on every single iPhone sold, they make a lot more from commissions through the App Store! That's what being a platform holder is about (well, that and having control of your destiny), and it seems that the Ovi store will be swallowed up by the WP7 store, so Nokia's income will now be only phone sales. And that brings up the next problem:
6. Manufacturing! Nokia can't compete! I'm sorry, they just can't! They design great phones, and put great components in them, but they don't build any of those components, they just put them together! They can't compete with someone like Samsung, who make everything from the screens to the batteries to the silicone themselves. Instead, they're competing with HTC, a tiny company (comparatively) with MUCH lower costs!
7. WP7 - WHY??? There's nothing wrong with it, but Android would've been a more logical choice (even though it still wouldn't have been as good as Meego). They could customise it and make it their own, whereas WP7 is tightly-controlled. And I'm not talking about skinning the UI, but about major functionality changes. For instance, if you want to build a dual-SIM phone (which Nokia sells A LOT of!), you'd need a different dialler than the stock one, and different radio software - with Android you can just build your own and slot it in, with WP7 you're not allowed to! Ballmer said they'd be giving more latitude to Nokia to differentiate themselves from other manufacturers, but I wonder if that will let them do meaningful changes at the kernel level or if it's just useless skins (imagine the irony if Nokia decided to ditch the nice WP7 interface and put their S^3 interface on there...). Also, they said they can't port Qt to WP7 (I can imagine the rage of their developer community!) whereas they could have easily ported it to Android (being also Linux-based). And with Android not being a walled garden they could've kept selling stuff through the Ovi store and made a bit of extra cash that way, as well as easing the transition of their hordes of S40 users to the new platform (see 4.) - so basically, everything I've said above about why Meego is better also applies to Android, to a slightly lesser degree.
If I were a Nokia shareholder I'd be in revolt. It seems I'm not alone, as their stock dropped by over 7% today. I hope they send Elop packing, because what he did wasn't for hte good of the company, it was taking care of his buddy Ballmer, and feathering his own nest for the future.
Also, I seriously hope that Intel team up with some cheap Chinese manufacturer and release a killer x86-based Meego phone that takes the market by storm. I'm sure Otellini is fuming right now, and I can see a breach of contract lawsuit coming Nokia's way (as I'm sure that there were expectations of manufacturer support and online infrastructure through the Ovi store in return for the cash Intel gave them to develop Meego).
If they stick with this strategy, I don't see how Nokia can compete. They'll get bought up by someone within 5 years, and be reduced to nothing just like Ericsson was. I've already moved to Android so I have no personal stake in this, but I was really hoping Meego would succeed, and I'm disappointed that Nokia's board of directors allowed Elop to butcher their company, kill off most of their R&D, and reduce them from a platform holder to a mere second-tier manufacturer.