James Brehm's Blog

Nokia and Microsoft: Marriage Made in Heaven or Two Companies Stuck in Apple and Android hell?

11 Feb 2011 | by James Brehm
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Earlier this week, Nokia CEO Stephen Elop sent a scathing memo to employees. The jest of the email: “fix it or else!”

 “The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things” states Mr. Elop in the memo. “Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyze or join an ecosystem.”*


That was Monday...


And today, another huge announcement. Big changes are in store for Nokia and a change in direction is in store for Microsoft. After struggling mightily for the past few years against the onslaught of innovative smart devices from Research in Motion, Apple, and Android, Nokia has abandoned its “Symbian for Everyone” mantra in favor of a tie up with computing industry behemoth Microsoft.

Microsoft has also had its fair share of problems in the mobile space. While promising to bring its industry leading PC operating system to mobile phones everywhere, Microsoft has stumbled through several failed attempts to gain user acceptance and with its latest release of Windows Phone 7 may be at the end of its rope with many Microsoft hardware partners.

What does this partnership mean? While Nokia has struggled, losing market share over the past four years, they are still the largest manufacturer of mobile phones in the world. And while Microsoft has yet to recreate its “desktop dominance” for the mobile world, the pairing of the two industry giants must be seen as a major development.

After taking the helm of Nokia last year, Stephen Elop has an unenviable position – to keep the company in the number one spot of mobile sales, increase shareholder value, improve mindshare among consumers, strengthen the weakening industry partnerships while growing and expanding relationships with the ever-important US tier-1 service providers. Phew, that is a lot of work.

So what did he do first? Nothing. Like any good brand new manager, he stepped back, took a deep breath and examined just what works for Nokia and what doesn’t. Next, he evaluated his management team with a particular focus on just who would be able to carry out his marching orders. Next, he looked at existing partnerships and other areas to strengthen partnerships. Finally, he made some hard choices, floated an internal “flaming” memo and began to make surgical cuts to certain areas of Nokia.

Many pundants have called Windows 7 the “make or break” mobile OS for the company, saying that if Microsoft doesn’t have significant success this time around, it will be “all but done” in the mobile industry. Well, the relationship with Nokia could well just mean that this cat got another 9 lives. A tie up between the two largest organizations in their respective fields means investment will be made, mistakes will happen, accomplishments will be measured in inches and not miles, and success is viewed by both organizations as inevitable.

"Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward," said Elop, as he announced the company's new direction earlier today.

"Today, we are accelerating that change through a new path, aimed at regaining our smartphone leadership."

Nokia will continue to make phones running Symbian, focusing these devices at emerging regions and the lower end of the market, thus continuing to reap rewards of previous investments in the platform.

MeeGo, the joint software development between Intel and Nokia will continue; however MeeGo leader Alberto Torres is leaving the company. That means that MeeGo release en masse will not be happening anytime soon. Because MeeGo was the pairing of Nokia’s Maemo platform with Intel, MeeGo was expected to be widely available by now. MeeGo now looks to be Nokia’s next-generation operating system; or perhaps Nokia, Microsoft, and Intel will work together to create the next Wintel platform.

What’s next for Nokia? Let’s see how they address analyst concerns at Mobile World Congress, the mobile industry’s most important trade show next week in Barcelona. And after MWC, let’s take some time to let the shock wear off in Espoo. It’s a very important time for Nokia and Microsoft and the next 90 days could well tell the tale of a marriage made in heaven or two companies in Apple and Android hell.


*source of memo: engadget