Nok-nok-nokiaing on heaven’s door

Oh, oh, oh-oh-oh

Nokia and Microsoft have announced an alliance whereby Nokia will use Microsoft Windows on its new models of smartphones, beginning in 2013.

Will that save Nokia?

At Vox Sapiens we think not. Here’s why.

Firstly, Nokia needs to be saved from a death spiral. Its share of the smartphone market is falling like a stone, turning into a self-fulfilling prophecy – as the share shrinks, potential customers get turned off resulting in even more shrinkage.

But why is it shrinking? Can’t something be done to arrest the decline?

Well, perhaps. But it’s a slim chance.

Secondly, it doesn’t have the right product range and marketing message.

Thing is, these days, the functionality associated with most consumer operating systems is more than required. In consultantspeak, operating system capabilities have become hygiene factors – things that are expected by consumers without which you can’t even join the race It’s not like a few years ago when new features sold a product.

It’s the design, stupid

Instead, sexy and sleek designs sell phones.

The current beneficiaries are Apple and Samsung – the latter both in its own right and as the major supplier to Apple.

Apple is successful because consumers love its designs – not just the iPhone but its entire range. And not just the range, but the complementary designs that make each item in the range look good next to any other item.

Infrastructure

Thirdly, Apple is also successful because it really understands infrastructure and how it underpins how Apple delivers products and services to the consumer, and how the consumer acquires and enjoys those products and services. For people who own an iMac and an iPod, an iPhone is a logical choice – because all the products talk to each other and all their podcasts and movies can be shared across all the devices. Choose anything other than an iPhone and the benefit of the infrastructure is lost.

Nokia does not have that infrastructure. Microsoft does not have that infrastructure from a phone viewpoint – although arguably it should be easier for Microsoft than any other company to develop such an infrastructure given its dominance of the desktop.

Perception and Reality

Fourthly, in business, perception is everything. And the message advanced by Elop contributed to the perception that Nokia had failed. His “burning platform” memo is perhaps the worst piece of corporate communications ever. It both demotivated employees and confused customers. Nokia’s competitors could not have done a better job with a portfolio of underhand tricks.

What’s the opposing view?

Well there is some logic in the deal.

What is Microsoft’s problem? … Hardware and apps

The WP7 partners are just me-too, they’re not innovating to beat Android, and their designs don’t have the appeal of the iPhone or the Droid. The knock-on effect is that WP7 is becoming less attractive to developers and so the apps library is suffering.

And where’s Microsoft’s response to the iPad? It needs a response. Maybe Nokia can help.

What is Nokia’s problem? … Software

Nokia is a generation behind in its software. They didn’t move quickly enough as the market shifted from being led by hardware innovation to being led by software innovation.

What is Microsoft’s forte? … Software

The .Net framework is widely used. Microsoft just needs to persuade apps developers with this skill to develop for WP7. And the techies themselves tend to agree that Microsoft still outperforms Apple in the development and debugging environment, even if Apple wins hands-down in terms of the final product.

Microsoft also knows how to work with a large, dispersed developer network.

Additionally, Microsoft has the deep pockets that might be needed to get through the challenging times.

What is Nokia’s forte? … Operations and distribution

Nokia knows how to run a supply chain and distribution network. You can’t ship 100 million phones a year without this skill.

Nokia also has a valuable brand in the mobile phone market, even if the brand is a bit cobwebby. The combination of Nokia and Microsoft should enable the Nokia brand to be buffed up again.

Does the market never change?

Remember RIM’s dominance? Remember how Apple used to be nowhere? So why assume that just because Nokia has slipped it cannot climb back?

 

And another thing, Elop hasn’t given the N9 and N950 a chance. He’s inflicted the Osborne effect by dropping Symbian and totally committing Nokia to Windows Phone, but with a two-year transition – that’s an eternity in this market. Nokia’s fate (in this market – it has other problems elsewhere – with NSN, for example) is determined almost 100% by this. Thirty years ago nobody got fired for buying IBM. Now Elop is hoping that nobody gets fired for betting on Microsoft. At Vox Sapiens we think it’s the wrong bet, but it will be interesting to see what happens.

7 comments

  1. TheVoice says:

    WP8 support to expire July next year, WP7.8 support to expire September next year: http://mashable.com/2013/03/18/microsoft-end-support-windows-phone-8/

  2. TheVoice says:

    The criticism continues. Here is an interesting commentary on the 12 months since the memo and announcement: http://communities-dominate.blogs.com/brands/2012/06/the-final-reckoning-of-burning-platforms-memo-damaged-nokia-by-wiping-out-13b-in-revenues-and-destro.html

    Particularly interesting is the section beginning “THE SNATCHING DEFEAT FROM THE JAWS OF VICTORY GRAPH” (the first time the phrase occurs, it occurs again a few paragraphs later after which the graph appears) which includes the following:

    So, many in the conventional wisdom think that the iPhone killed Nokia’s smartphones. They don’t know the facts. Yes, the iPhone did kill off many rival smartphone makers like Palm and even smartphone platforms like Windows Mobile. But every year of iPhone’s existence – Nokia grew smartphone sales. Here is the scary part – every year (obviously up to year 2010) Nokia added more smartphone new sales – new customers to Nokia, using Nokia branded smartphones – than Apple did add to new users to the iPhone. Yes. That is the facts, m’am. You think the iPhone was the standard of excellence in smartphones? Yet Nokia added more new Nokia smartphone customers every year than the iPhone managed! In 2007, in 2008, in 2009 and yes, in 2010. In 2010 Nokia sold over 100 million smartphones, Apple only sold 48 million iPhones – very literally, Nokia was more than twice the size of its nearest rival !!!

  3. 77sd says:

    Palm first, Nokia second.
    Microsoft can’t rescue Nokia.
    But it can use it for its own purposes.

    In this breakfast Nokia is the pig but Microsoft is just the chicken.

    • TheVoice says:

      Sadly it’s actually Palm about fifth.

      In 1990 Microsoft tried to work with Nokia’s neighbour Ericsson and that ended in tears.

      To my knowledge, Microsoft has also tried to work with LG, Motorola and Sendo. Perhaps there are others?

      So where I say “What is Microsoft’s problem? … Hardware and apps” maybe that should be “What is Microsoft’s problem? … Hardware, hardware vendors and apps”

  4. Fred says:

    Best example of I’ve seen of kicking something when it’s down. Way to go Elop !!

  5. Jay says:

    If only he had a decent smartphone, Stephen Elop wouldn’t waste so much time texting.

Post a comment

*

Copyright © Vox Sapiens
Intelligent Commentary on Society and Business

Built on Notes Blog Core
Powered by WordPress