Microsoft Buys Nokia

By Christopher Zoukis

It’s no secret that Google is intent on world domination.  Apple maintains the same aspiration.  Other than their similar ambition, Google and Apple have little else in common.  The two companies approach the marketplace differently.  And their corporate cultures sit at opposite ends of the spectrum.  Yet Apple and Google are focused on the same goal:  technological hegemony.   Image courtesy www.latimes.com -

In their battle for total world domination, neither Apple nor Google pulls any punches.  There’s nothing subtle about the conflict.  It’s like watching Monster Zero clash with Godzilla. 

Recently, Apple announced that it would allow Verizon access to the iPhone, which had been the exclusive property of AT&T.  It’s safe to say that the thinking behind the move was market share and profit.  So in that sense, the move was understandable, especially since Android-based smart phones are outselling iPhones by leaps and bounds.  In another sense, the move might have been a mistake, because by allowing Verizon’s customers the iPhone option, Apple may have diminished the iPhone’s exclusivity, which makes it hard to justify the smart phone’s price tag.

Historically, Apple has had a tendency to price its products right out of the market.  Witness Apple’s computers, which are not even an alternative for the average consumer.  If I can purchase a Dell laptop for half the price of an Apple laptop, it’s a no-brainer.  I’m going with the Dell.  And pretty soon, Apple will have the same problem with its iPad, because Samsung is ready to rock n’ roll. 

But things are about to get even more interesting.  Microsoft has elected to become a device company.  The first step in their strategy is to buy Nokia.

Microsoft has been stuck in a rut for a long time.  The company is big and wealthy, but has failed in the area of product innovation.  The same is true of Nokia.  However, Nokia’s predicament is distinct from being stuck in a rut.  Nokia has been sliding down the slippery slope towards obsolescence for quite some time.  Hooking up with Microsoft is Nokia’s way of trying to stop its tumble from the ledge of ‘seen better days’ into the crater of ‘out of date.’

Nokia’s CEO is Stephen Elop, a former Microsoft executive.  Nokia has been steadily losing market share to its competitors.  Hired a few years ago, Elop’s job is to perform a miracle, something akin to Jesus calling forth Lazarus from the tomb.  According to Elop, “Nokia is at a critical juncture, where significant change is necessary and inevitable in our journey forward.”  The company is focused on “regaining our smart phone leadership, reinforcing our mobile device platform and realizing our investments in the future.”  Translation:  they are trying to stay out of bankruptcy.  Image courtesy www.latimes.com -

The problem for both Nokia and Apple is that Google’s Android took over the number one spot as the world’s most popular smartphone software.  And most experts predict that Android’s market share will continue to increase.  If the tag team of Nokia/Microsoft hopes to take a bite out of Android’s expanding piece of the pie, they will have to develop devices that do more than merely pique the curiosity of consumers.  That means the devices must exude emotional appeal, which, put simply, means they need to be sexy and cool.  Whether or not Nokia and Microsoft are capable of doing sexy and cool is the billion dollar question, as neither company has been sexy or cool in a long, long time.  Unlike Google, which goes out of its way to cultivate and encourage its cool factor, the corporate cultures of Nokia and Microsoft are definitely ‘white shoe,’ which means most of their employees are sensible and boring bean-counters in Brooks Brothers suits.  Google’s employees wear shorts and ride skateboards, i.e. they know what cool is because they are cool. 

Steven Ballmer, who is Microsoft’s CEO, said that hooking up with Nokia would provide “more innovation, greater global reach and scale.  We need to, and we will, collaborate closely on development so we can really align and drive the future revolution of the mobile phone.”  Translation:  we’re hoping people will think we’re cool because we hang-out with Scandinavian chicks. 

Right now, of the two (MS and Nokia), Nokia is way-cooler than Microsoft, which probably explains why Microsoft wants to hang-out with Nokia.  Microsoft has more to gain from the relationship, because Nokia brings a lot more to the table.  For one thing, Nokia knows how to develop a platform for mobile phones.  They did it quite successfully – for a while, anyway – with their Symbian operating system.  And up until the announced partnership with Microsoft, Nokia was developing a new platform called Meego. 

Granted, Microsoft isn’t entering the partnership empty-handed.  Microsoft has Windows Phone 7, which it rolled out last year.  But face it.  Windows Phone 7 is not even in the same league as Apple or Google’s Android.  How many phones actually use Windows Phone 7?  Not very many, that’s for sure.  And the number of apps available for Windows Phone 7 can be summed up in one word – negligible.  In other words, Microsoft is lagging far behind.  Nokia is going to have to take up a lot of slack, if the partnership hopes to be a winner.

Neil Mawston, who is an analyst – which is biz-speak for soothsayer – at Strategy Analytics, stated that Microsoft made a shrewd move by hooking up with the world’s leading vendor of mobile hardware.  “In terms of expanding their distribution reach, this is a huge win for Microsoft.” 

Microsoft became a high-tech celebrity on the strength of Windows.  Microsoft does operating systems for computers.  So why on earth does the company want to jump into smartphones and tablets?  The answer to that question has two parts.  The first part is because there’s a lot of money at stake.  Smartphones and tablets are the wave of the future.  And the wave hasn’t even begun to crest.  Microsoft sees everyone else riding the wave, and they want in, because the wave they were riding – the computer wave – hit the beach a long time ago.  In other words, the demand for Windows is not going to grow much, which leads to the second part of the answer.  Microsoft, if it doesn’t do something, is going to be left behind.  Microsoft knows that, and doesn’t like it.  Microsoft looks in the mirror and sees itself growing old, marginalized, falling by the wayside.  In effect, Microsoft is scared by the vision of its own waning significance.

So it’s going to be very interesting, even fun, to stand on the sidelines and see if Microsoft, with the help of Nokia, can reinvent itself.  Apple and Google are going like gangbusters.  Of course, as the old adage says, the bigger they are, the harder they fall.  If Apple and Google don’t position themselves correctly, or fail to grow like teenagers on steroids, things could change in a New York minute.