The Irony

So Microsoft bought NOKIA phones division. Many people are scratching their heads, why? Well, there’s isn’t a single reason for this to happened, let’s try to greatly summarize how this became to be. Its a long post, so take you cup of coffee with you 🙂

@parislemon The Matrix will always have a Nokia 8110. “Fate, it seems, is not without a sense of irony.”

— Stewart Steel (@steelso) September 3, 2013

During the 90’s Microsoft became the most profitable software company on the planet, and one of the most successful companies in human history. The same can be said for NOKIA on the telecom side, during that same period.

On late 90’s early 2000s, Microsoft dominance seemed unstoppable and they put their objective on this nascent smartphone market (yes, there were smartphone before the iPhone), which NOKIA was dominant as like everything telco related. Remember, Microsoft (at that time) mainly made the software, so the idea behind Windows CE (their mobile operating proposal), was to seduce phone manufacturer to use Windows CE on their phones. As a reaction to this world domination plan, NOKIA decided to put its weight behind a joint venture called Symbian. This venture included Psion (original Symbian), Motorola, Ericsson and NOKIA, with exactly the same objective as their counterpart: to seduce phone manufacturer to use Symbian on their phones.

The joint venture was incredibly successful on keeping Microsoft on even getting the dominance that it had on the desktop world. Windows CE became common place, but not as big as Symbian. Within Symbian, NOKIA called the shots, because it remained the biggest and more powerful phone manufacturer of the venture.

Windows CE and Symbian were moving at telco speed, meaning: slow. Until the iPhone came, which accelerated the telco rate of change, on which neither Microsoft, NOKIA nor Symbian were prepared to do. Many of the iPhone “innovations” were already offered by NOKIA, however, since NOKIA’s customer were operators, many of these innovations were rejected by the operators, leaving NOKIA’s advancements as prototypes. On the contrary, the operators didn’t control any of the features of the iPhones, that made a big difference on how the history evolved. As it happened with BlackBerry, middle 2000’s were the best times for NOKIA and Microsoft so they couldn’t see the Tsunami of change coming.

NOKIA Transformation

In all this debacle, NOKIA has been accused on not being able to transformed, and it’s true. The thing is, we westerners were expecting NOKIA to “transform” and adapt within the phone business, were as these Finnish people, when they change, they CHANGE! And so, when NOKIA changes it’s not to do the same, its to do a completely different thing. Most don’t know or remember, but NOKIA has lived these crises before, and has get out of it better than before. The last one of these crises was on their late 80’s early 90’s when one of their biggest customer simply didn’t have more money. That customer was the USSR, hence they scrambled to focus their efforts on telecommunication equipment. Most of us on this side of the planet, didn’t “lived” that change, but it has already happened.

Maybe because the company is used to these transitions is the reason they took the fallout so “calmly”, and maybe this is the reason why Stephen Elop was brought in, not to save the phone business, maybe it was to find a soft landing of they getting out of it. After all, it was weird they (NOKIA board) chose a Canadian, former Microsoft executive (remember they were competing against each other) to command the sinking ship. Specially when this new commander already has in its resume, being CEO of Macromedia when it was sold to Adobe, and even more so, when his family continued living in Redmond (Microsoft headquarters) while he was working in Finland and the rest of the world. On top of all, his boss at the time (Steve Ballmer, the one who recruit and convince him to work in Microsoft), didn’t show any resistance for him going there (at least externally), even when only having two years at the job he was hired at Microsoft.

Even more weird was the board neutral reaction to Elop’s memo of the “burning platform”. With this memo, Elop’s took the Osborne effect to a whole new level. To those not familiar with the Osborne effect, quickly, is when an executive of a company announces a new product before it is even possibly to sell it, customers hold their buys for this new product. During the interim the company suffers, because their sales drop to almost zero. This is what happened with NOKIA after that memo, loyal customer (like myself) jump ship mainly towards Android, plummeting NOKIA sales. NOKIA’s answer to this situation would come out more than a year after the memo. How come the board allowed this to happened? Why did he do it? Was it intentional?

It was always speculated that Elop’s was a trojan horse, even if that was the case, it’s tough to see how NOKIA board was so naive, unless that was the intention all this time.

“Two Losers”

Another way of saying it: two wrongs don’t make a right …Microsoft’s purchase of Nokia. Two dinosaurs becoming one. 🙂

— Vivek Wadhwa (@wadhwa) September 3, 2013

Times change, in the last decade Microsoft have become a hardware manufacturer with the XBOX and the Surface tablets. Possibly in their long term objectives are that if they want to become relevant on the phone space, the have to becomes also a manufacturer, thus Microsoft buying NOKIA’s phone division.

Now everybody’s is beating this dead horse as a nonsense. Sure! But I also remember in history when two losers joined forces: One company which regardless of their wonderfully technical products, couldn’t reach commercial success, this company was called NeXT. The other company was bleeding money to death, was close of bankruptcy, and was in disparate position to gain new technical wonders, this company was called Apple Computer. At the time, the comments were more or less the same, and we all know what happened with that duo.

The difference today is that neither NOKIA nor Microsoft (specially not Microsoft) are in the position that NeXT and Apple were at that time. Apple was within weeks of closing shop, where as Microsoft still has the milk cows of Office and Windows healthy. Granted, they’re not going to be healthy for long, nevertheless they remain one.

Some years ago Google Docs was on the breach to becoming the next office suite standard, Microsoft adapted and with Office 365 stopped that grow. Then Amazon became big in cloud, just to quickly find Azure as a serious contender. Even Apple uses Azure!

So its too early to tell if this new friendship will work at all, for Microsoft is their natural evolution, for NOKIA, they used to make military boots, maybe they’ll become really big on wearable devices 🙂