Yesterday’s unveiling of Android-based prototypes at the Mobile World Congress has brought Google’s Android platform back into the spotlight.

BusinessWeek has a story titled “Nokia vs. Google: The Battle Escalates“, which suggests Android will have a large impact in the market. InfoWorld on the other hand reports that analysts doubt Android’s promises will be fully realized. In a CBC News article, Paul Chapple, Nokia Canada’s GM, seems to agree:

“Building phones is really hard. Making announcements is easy. It’s taken a long time for software companies with a great deal of expertise to get this right.”

The Open Handset Alliance is sharing the costs of the Android platform across tens of contributing vendors. Nokia builds similar capabilities using their own R&D budget and their own engineers. It clearly looks like the OHA wins on the cost criteria vs. Nokia’s approach. It could be argued that OHA vendors could innovate faster than Nokia because of their collaborative 3rd party approach.

Will either of these things matter in the market where Nokia owns a 39%+ share of the 1.2 billion device market? I guess it depends on what how much of a mobile device’s user experience is driven by the underlying software (i.e. device OS and runtime) versus the applications that sit on top of the underlying software. I tend to believe that the applications and the usability of these applications drive the majority of the user experience. The applications, their usability and the mobile device form factor are the key purchase drivers. Android doesn’t address any of these three items directly. Sure, Android will allow Samsumg to create a cool mashup with Google Maps and YahooMail. But this application wouldn’t be contributed to the OHA community, so, for example, Motorala would have to invest in building something similar. Nokia would have to do the same, except Nokia would build it on their own OS and runtime platform. Hence, there is minimal competitive differentiation between the applications built by one OHA vendor and any other vendor.

Last, but not least, ISVs could target several handsets by supporting the Android platform. But would any ISV walk away from Nokia’s dominant market share? Methinks the answer is no. At the end of the day, if applications are going to be available for Nokia and Android (and other platforms like Apple’s and RIM’s), is Android really a threat to Nokia?