War in the Pocket

Published as part of our sister-site GamesIndustry.biz's widely-read weekly newsletter, the GamesIndustry.biz Editorial, is a weekly dissection of an issue weighing on the minds of the people at the top of the games business. It appears on Eurogamer after it goes out to GI.biz newsletter subscribers.

Nokia's decision to abandon its own smartphone software development in favour of creating new devices for Microsoft's Windows Phone 7 platform was widely trailed by rumour sites, but still managed to come as something of a shock to the mobile world.

Few people outside of Nokia and its loyal developer community were under any illusions about just how seriously the firm was lagging behind newer, more nimble rivals in the upper end of the market, but it was still extraordinary to watch a company which had been utterly dominant in this sector a few years ago effectively admitting defeat and starting again in respect to a huge part of its business.

For observers on the gaming side of the fence, this newfound alignment between Microsoft and Nokia essentially signifies the drawing of a new battle line in the rapidly expanding mobile gaming space. In the red corner, Apple's iOS devices. In the blue corner, Google's Android and the newly revealed PlayStation Suite service from Sony - and in this week's new corner (green, perhaps?) we find Microsoft's Windows Phone 7 and former mobile device champion Nokia.

Why is this significant? The obvious answer is that it's significant because smartphones are rapidly on their path to becoming among the most ubiquitous and popular gaming platforms on the planet. The pace of their evolution vastly outstrips traditional gaming devices, as does the range of their appeal, while their openness delivers nimble, aggressive business models and pricing that the traditional players are struggling to match.

The company that ends up dominating high-end mobile - assuming that any one company or platform does - will become the de facto platform holder for a fairly major chunk of the interactive entertainment business.

On a more short-term basis, though, the Nokia alliance neatly stitches together some questions which have floated over Microsoft's whole position in the mobile market. Up until now, the company has enjoyed little other than a string of failures in mobile - some noble, some rather less so. Despite persistent rumours, it has avoided matching its console rivals by launching an "Xboy" handheld system, instead focusing its efforts on Windows Mobile and, latterly, Zune, neither of which have enjoyed any serious market traction.

The battle between Sony and Nintendo over the handheld space was always one Microsoft could afford to remain aloof from while it focused its resources on establishing a strong foothold in the home console market. But the combined threat of Apple, Google and now Sony in the mobile space - including the rapidly growing mobile gaming aspect - could not be ignored so blithely.

Windows Phone 7 is the company's response, and it's a competent and attractive mobile operating system. A little form-over-function for some tastes, perhaps, but definitely a contender for market share against Android and iOS.

Just one problem - it utterly lacks the kind of device support which would give it a proper chance in the market. While HTC, a manufacturer whose star is definitely in the ascendant, has adopted WP7 on some devices, much of the company's focus remains firmly on Android. Samsung, the other main supporter of WP7, also does Android devices and is something of a bit player in the mobile market anyway.

This is especially important from a gaming perspective, because although it remains a million miles away from the inflated budgets of console game development, mobile development costs have definitely risen in the past couple of years - especially at the upper end of the spectrum.

The nature of the market means that developers are extremely unlikely to target multiple platforms from the outset, choosing instead to release on the dominant platforms before porting to less popular platforms if the demand proves itself. Right now, that means that the bulk of games hit iOS first, and many of them actually stay there, never being ported out to Android.

The growing success of Android will probably change that - but without pulling out the world's biggest money-hat, it was hard to see how Microsoft was going to populate WP7's software line-up with anything rivalling those of its rivals.

Nokia, in this case, isn't quite the world's biggest rabbit - in fact, it's something of a skinny and troubled-looking bunny - but it used to be the world's biggest a few years ago, and that has to count for something.

The company, crucially, has exactly what Microsoft lacks - enormous experience and resources in the field of designing mobile hardware. Adopting an external company's OS is the right thing for the Finnish firm to do, because it's almost beyond question that what has held it back shockingly badly in recent years is the abysmal nature of its user interface - the software, not the hardware, of its phones.

Now Nokia has a solid OS, and Microsoft has a partner with solid device experience. The ideal-world scenario for both companies would be that their combined abilities corner a large enough chunk of the market to attract developers to the platform - levelling the playing field with iOS and Android, and at least allowing them to compete on old-fashioned factors like device attractiveness and functionality, rather than simply being dismissed for having no software worth running.

There are, of course, flies in the ointment. The first is that Nokia's devices won't turn up until 2012, and until then, Windows Phone 7 is going to have to keep trundling along with device support that, bluntly, isn't enough to make it into a serious contender in a market with two such serious rivals.

As such, there is a risk that the arrival of Nokia's devices will not be a triumphant new wave of WP7 support, but rather an attempt to resuscitate a platform that's failing in the market - a much harder job, at least from a perception point of view.

The other rather major problems are, of course, the rivals on the playing field. Neither Apple nor Google, nor Sony, are going to stay still for the next year. Mobile platform development is extremely rapid - with the Xperia Play almost out the door, we can probably expect to see several more PlayStation Suite devices on the market by 2012, while Apple will obviously update the iPhone and its other iOS devices throughout the course of this year.

More importantly, other factors are already changing the playing field that Nokia and Microsoft hope to kick their ball onto in 2012. Where Android still feels like a plucky challenger to iOS at present, within the year it'll be a much more mature platform. Where smartphones rule the mobile space for now, the uptick in sales of tablet devices running smartphone operating systems seems to be an inexorable trend.

Moreover, we're seeing definite shifts in how gaming works on these devices - the rapid development of a "high end" space accommodating more hardcore titles like Infinity Blade and Dead Space (which require technology and tools to be in place), the movement towards freemium or ad-revenue business models (which need to be supported by the underlying platform), even the emergence of platform-defining titles with high public recognition, such as Angry Birds.

It's a tough marketplace and not one which is getting easier - and before now, few would have bet on Nokia doing anything other than sliding to the bottom of the pile. Microsoft, however, has taken on plenty of big challenges in the past, not least of them being Sony's stranglehold on the console market.

The stakes in this game are huge - and before picking sides, game publishers and developers would do well to consider whether having any one clear victor would truly be the best outcome for them or for the market.