Microsoft & Nokia - now what?
Obviously the market didn’t care much for the newly-announced $MSFT / $NOK partnership. In the near-term, it’s both a cash drain and a confirmation that Microsoft’s mobile efforts are failing, and of course for Nokia it’s an obvious surrender flag for its now-effectively-dead software aspirations.
But longer-term, I’m not quite as negative - there are some interesting possibilities. This could very possibly be the beginning of the devolution of Microsoft that I and others have been predicting for some time. Microsoft now effectively controls all of the assets necessary to build out - and maybe spin off - a ‘Microsoft Mobile’ division that would include a set of well-integrated hardware & software assets.
Of course, there’s no guarantee such a venture will succeed, but I wouldn’t write them off either. Windows Phone 7 (Microsoft’s latest phone OS) is acknowledged as being a very good Facebook & ‘social’ phone - and Nokia is very good at building innovative hardware. Imagine a series of innovative, consumer-focused ‘Facebook phones’ and another series of business-focused ‘Outlook/Exchange phones’.
Neither Apple nor Android should be quaking in their boots (although $RIMM may be another story) but I do believe that there’s a window of opportunity here for this new venture. Both Microsoft & Nokia had to swallow considerable pride to make this deal (I would have loved to have been a fly on the wall in their internal PR meetings prior to the announcement) - but better that than to delude themselves with rosier-sounding but less-realistic alternatives.
Microsoft’s partners, notably HP and Dell, are running away as quickly as possible. Windows Phone 7 shows promise, but I believe Microsoft understands the same thing Nokia did, from the other side: it has software, but no hardware. In Nokia, Microsoft now has an established, experienced, recognized OEM with one of its own men at the helm.
So in the span of one year, we have Microsoft failing to acquire Nokia, “losing” a top executive, and now having one of the most recognizable mobile hardware vendors in the world under its thumb. There’s no question in my mind that the next generation of flagship Windows Phones will come from Nokia, and for that, Microsoft will have unprecedented influence over the hardware that runs its software. We like to think of Steve Ballmer throwing chairs when his executives leave. I think this time he told Elop, “Fine. Go get me some hardware I can own.” Elop did.
I have absolutely no qualms about calling this new regime at Nokia a puppet government. This is far and away the most brilliant move of Ballmer’s tenure. Whether it pays off is another question entirely.
