During its Q4 CY2010 earnings call Nokia hinted at the possibility of third party operating systems such as Google’s Android or Microsoft’s Windows Phone 7 on its smartphones to compete effectively in the North American market. Nokia is expected to announce its long-term strategy on February 11 in London.

We believe that Qualcomm could be a major beneficiary from any such move from Nokia as Qualcomm is the only company that currently has a broad enough portfolio of processors to address these two ecosystems. We estimate that Qualcomm had close to 60 percent share in the Android ecosystem and 100 percent share in the Windows Phone 7 ecosystem in 2010. Nokia was already on track to use Qualcomm’s MSM7K and 8K series chips in 2011 as the two companies settled their legal disputes in 2008. Nokia is expected to announce Qualcomm-based Symbian and MeeGo smartphones in 2011.

Our opinion is that Nokia has the best-in-class chipset suppliers and any change in its software strategy should be well supported by its suppliers. Nokia's software strategy changes are somewhat still speculative but we can see strong justification.

Sravan Kundojjala