- Nokia will tie up with Microsoft to use Windows mobile platform as the new primary Nokia smartphone platform
- They will continue to use symbian and expect to sell 100 million more units.
- Meego, the vaunted new platform is expected to become open source mobile OS project.
In the hindsight, the decision looks consistent. There are couple of points that I missed to reckon earlier. Tie-up with Google was not going to be win-win for Nokia. Android has proved to be disruptive and Google wants to bring down the Total Cost of Ownership for Smartphones by giving Android free. They are not expecting revenue from selling their OS, they are creating future revenue channel of mobile advertising. They have lot to gain from the tie-up while Nokia has lot to lose. On the other hand windows is not an open source OS, Microsoft wants to earn money from selling their OS and Nokia's revenue source is entirely from selling smartphone. In other words Nokia and Windows are from old business school: earning revenue by selling product. in the scenario of Google's disruptive strategy, both, Nokia and Microsoft have lot to gain by working together. Contrast this with HTC and Motorola approach: they are selling both Android-based and Windows-based smartphones.
Question is this: smartphone volume market is growing and is already quite large in all emerging markets. This market is more price-conscious and more socially active. Can Nokia address that market without joining Android bandwagon?
Well, this time I am going to wait and watch!
Update from 2012
It's more than a year since the Nokia took that strategic turn to move to Windows. People as expected, have started to evaluate what that decision gave to Nokia. I have few very interesting articles from an ex-Nokia executive to add here:http://communities-dominate.blogs.com/brands/2012/03/the-ceo-insane-how-to-rescue-nokia.html
http://communities-dominate.blogs.com/brands/2012/03/brutal-truth-about-lumia-cannot-sustain-even-1-to-1-replacement-of-symbian-windows-phone-strategy-do.html
Fact is Samsung Galaxy [android] has won the market hugely and Nokia Lumia does not figure in the 'to-have' list of average smartphone buyers, neither the Nokia stores are particularly interested to demo it for you even today. So, I guess people decided already but as I said, let's not judge. Let us wait and watch how Nokia CEO manoeuvres from here. Will he finally abandon Microsoft OS? Will he promote both Meego and Microsoft OS? Or will he pull the magic from his sleaves to make Lumia a winner? If one follows his rant about Nokia Sales, it does not look like he has abandoned Microsoft OS as yet.
4 comments:
This isn't a "tie up" but a Trojan Horse operation by MS - http://www.appleoutsider.com/2011/02/11/nokia/ .
And there is mutiny now. Shareholder activism just began: http://nokiaplanb.com/ . Lets see how it turns out. Whether plan b succeeds or not, Nokia has a better chance of succeeding by hunkering down and trying to innovate again using a small team to build a classy product 2-3 yrs down the line than jump on WP7 and become a MS roadkill... Another worthwhile analysis: http://esr.ibiblio.org/?p=2931
What is not clear to me is if Nokia Finland Board is changing. The post indicated that some ex-MS is coming as chairman of the board of Nokia's US unit. Given that Finland Govt's stake in Nokia is sizeable, it is not that easy for any US company to stake absolute claim in Nokia. Although it is quite evident that there will be LOT of backstage influence of Microsoft on Nokia's product roadmap now.
But given the situation Nokia smartphone had got themselves in, was there any better option? Platform strategy is always a very tricky one, since it takes a few years before the result shapes out. Reinventing the wheel also is a very unpalatable proposition to the investors. Most companies once it crossed few billions, took the path of picking up a proven incumbent platform from the market rather than developing a new platform in-house. Apple remained exception all along, so is their CEO.
Many would like to believe that Nokia would be another gobbled up company in what turns out to be a MS-Google race for Mobile OS supremacy but the fact is future is anything but simplistic.
The plan b thing was a hoax in case you didn't notice: http://www.engadget.com/2011/02/16/nokia-plan-b-was-just-a-hoax-all-along/ . Anyway, all this wouldn't have happened without the blessings of the board anyway.
Wrt your comment "picking up a proven incumbent platform from the market," who are you referring to? MS doesn't have a proven platform while Nokia has a proven hardware/brand. Similar to how google bought Android Inc in 2005, Nokia could have bought something that worked but they didn't. But they still could have... After all, smartphone market has always been up for grabs every 3-4 yrs if someone comes up with a disruptive product.
All in all, a major win for MS and a complete lose for Nokia...And the market reflects it
Take a look at the recent Gartner report on mobile devices here: http://www.gartner.com/it/page.jsp?id=1543014. Of many interesting observations you cane make from this report, you also observe that Microsoft's share in the mobile OS is the 3rd highest if you skip Symbian. Between 2009 and 2010, Microsoft lost its share a bit but primary reason for that is the 'other' OEM category which is primarily unnamed mobile OEMs from China and far east countries, who have doubled their share between 2009 to 2010. These guys are taking Android path all and sundry simply because because it is free. Long story short: Microsoft has established itself as serious player in mobile OS segment albeit it has no leadership position. With Nokia, I agree that MS will gain more but it also is dependent on how Nokia plays the game, how Nokia uses its leverage its leadership in the handset market.
It appears that many of the steps/moves are in response to projected growth of smartphone sell in US. http://newsinfo.inquirer.net/breakingnews/infotech/view/20110218-320868/Smartphone-top-US-electronics-buy-in-2011survey, says in 2011, smartphone would be the most bought electronic gadget in US.
Even otherwise, it appears that soon smartphone by itself will be considered a separate segment, decoupled from GSM/CDMA/3G and soon 4G handset market. People's expectation and usage of these device are going to drive this transformation where iPad-like device and smartphone will merge to create one single smart-mobile-device segment.
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