Image credit: REUTERS/Brendan McDermid)
When Microsoft, Nokia, and Steve Ballmer, and Steve Elop, and the new mobile at Microsoft happened two days ago, my first reaction was a paused ‘ok, why though?’ curiosity. I just didn’t see the deal that will change everything some did. But when a company bets $7+ billion on a future, and another goes into invisible mode to not fight anymore – if we consider fighting with and licensing patents to hardly be fighting that is – there’s gotta be something in there I can’t see. ?
Maybe. But the more cynical me that insists on being fashionable and just dismissing as one of the mistakes that Microsoft, Steve and Steve have made in recent years.
But does Microsoft have a fighting chance now. It’s hard to see. The one thing that’s glaringly everywhere about this deal is how the app ecosystem factor hasn’t been resolved. Mobile devices thrive in an ecosystem of apps and those with many many many apps, have the better offer. Nokia, Microsoft, and everyone else who’s not Apple and Google, are simply in the dust as far as apps are concerned. They are like owning a fancy TV that just sits there without a TV subscription. What good is all the physical awesomeness without content?
So maybe, patents. For Nokia at least. But again, this is not a fight. It’s essentially them conceding defeat and attempting to live of yesteryear’s glory by going after those that have remained relevant to consumers. Google by the way, now has its own flagship Motorola device, so a plan to threaten the platform with lawsuits and costly licensing is just not as powerful as it used to be when Google was forced to buy Motorola.
Will something new even come out of this? Maybe rebranding the phones completely? But Microsoft is in leadership transition right now and the muted names don’t exactly inspire radical exciting new paths. Stephen Elop is in fact said to have played the majority of what Nokia finds itself in platform wise, and the new deal a sign he’d like to keep digging.
Something to remember though is that as brands in emerging markets, Microsoft and Nokia are still very powerful. Nokia’s feature phones, especially those that are WhatsApp able, are quite popular here. But how will Microsoft remain relevant to users upgrading from feature phones. Feature phones still rule in the emerging and developing markets like Africa and will do so for at least another couple of Microsoft years. There, maybe, lies the opportunity.
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9 comments
It’s definitely not patents: what’s left of Nokia is keeping those (Microsoft is simply getting a license to them).
The most sensible speculation I’ve come across is that this is a defensive deal. Nokia is responsible for 80% of WinPhone sales. Things weren’t going too well for Nokia, so it’s likely that they were considering going the Android root OR would soon file for bankruptcy; either occurance would kill Windows Phone. Microsoft’s hand was forced.
With plenty of patents and no handset business to protect (from so-called ‘defensive patents’),Nokia is poised to become the biggest Patent-Troll of all time, courtesy of Microsoft.
And M$ is the biggest patent troll to roam the planet…
Its not patents or any of the stuff people are looking at. Microsoft is a a comeback kid and most people forget that. Lets just look it it this way. First there was CP/M – Digital Research, there was GUI – SmallTalk, there was GUI/Mouse on PCs – Apple, there was WordPerct – ??, there was Lotus 123 – ??, there was internet – ??, and now there is apps/android/whatever – others. Microsoft started late in these and clawed its way into dominance (except apps/android because surely the jury is still out ther). Coming from behind is the DNA of Microsoft and that is something to bet on. Remember how the Oracle guy, Ellison I think, tried to get a coalition of the anti Microsoft around what he termed a network computer (something that says you don’t need windows) and where is he now. Unless all the fighting spirit was rooted around Bill, otherwise Android has a real fight in its hands. Me I am going with Microsoft. I understand their strategy and at the beginning of 2013 I used the Nokia/Microsoft alliance to drive my entry strategy into my next project and I am elated that I now see my ducks just lining themselves in a row!
the deal between microsoft and nokia makes a lot of sense. For one is a great buy from a Microsoft perspective, they bought Nokia at $7.2 billion now Nokia is certainly in a better state than Motorolla which google bought for $12.5 billion now thats nearly twice as much. Microsoft is paying 50% of Nokia’s market value ($14.48B as of last Friday) for half of its business.
One of the main reasons why Nokia failed was because they did not have a strong app ecosystem, now what better way to fix this than to partner or in this case be bought outright by a company that has a very stable mobile OS.
All that needs to be done is to closely integrate microsoft products into the Nokia phone and they have the enterprise market. To get the general masses to come on the Microsoft bandwagon they just need to have more focused energy on creating the mobile ecosystem as they did with the desktop ecosystem. This is already happening with the recent reorganisations and stuff.
In the tech world change happens fast, only a few years ago Nokia was the dominant phone maker. So its not beyond possibility that Microsoft can certainly gain traction in the smartphone sector.
It really gives consumers a lot of choice from Google/Android, Apple/iOs and Microsoft/Nokia and who knows pretty soon Samsung/Ubuntu Os or Firefox Os.
So I am really at a loss when you say you dont understand the need or necessity of such a move by Microsoft, it was inevitable.
With the lowering margins in the mobile communications sector and the movement to earning more money from data as opposed to voice & sms (mobile) of yesteryear’s pretty soon you will be having technology companies that own a mobile phone operator, financial institution, phone manufacture & OS (that works on mobile & desktop).
Look at Econet they are a hybrid of such already having a phone license & a bank whilst pushing mobile financial services. We also have hybrid companies in the form of Google, Apple & now Microsoft who own a whole technology value chain. Microsoft is also into gaming mind you. There will be consolidation in the technology sector with companies owning the hardware, software & commerce in their platform pretty soon.
Gaming is the entry to the individual/people market. That is a good point there.
Well said Greg – Its a win-win for Nokia and Microsoft. The opportunity for success for this marriage is to make life easy for the millions on the Windows/Office platform – this can easily be achieved by having seamless integration and synchronisation between the laptops, tabs and the smartphones. I’m currently hooked on Samsung but I’d definitely consider going back to Nokia (yes I was once on the Nokia bandwagon) if I have one OS on all my critical devices. Business strategy authors have told us countless times that the winner is the one who makes it easy for customers to do whatever they need to do in order to do what they want to do. The only nagging worry I have is viruses – but with auto backups etc I can sleep easy knowing that if I lose my smartphone database I wont have to commit suicide or miss a critical business appt. What does it take for Microsoft to attract app developers to create versions for their OS..? They have a solid enterprise ecosystem in terms of size and this should be adequate incentive – the only thing is to figure out useful apps for business people and there’s plenty of talent around. My prayer is that there be no one too dominant player in all corners because once a monolith emerges, it becomes fat, lazy, happy and develops marketing myopia…
I say they are going for the big one with this move. Taking on Apple. The one advantage the iPhone consistently holds over ANY Android device is fitness for purpose because the hardware gets bespoke software (I really find Samsung’s Android tweaks annoying and ill thought out). Solution, get your own phone and show them how Windows phone is supposed to work. Is this the answer? Highly unlikely, MS needs to work with developers much better to succeed in an app environment.
And time is ticking. I initially backed the idea of Windows phone because I like the idea of having the same (or reasonably similar) OS on all my devices. They need to get it right while people are still using Windows (Windows 8 did not help).
I had been anticipating this deal since Elop left Microsoft for Nokia. One might say, he went there to pave the way for this to happen. Nokia makes great phones. Microsoft makes great software. Nokia needs the money, Microsoft needs the phone making talent. This is the deal of dreams.