RIM is Dead; Long Live BlackBerry?

BlackBerry 10The company formerly known as RIM, whose claim to fame is the BlackBerry smartphone line, has changed their name to BlackBerry. I, for one, am entirely ecstatic about this, as this will be the last sentence I will ever write explaining that RIM is the company that makes the BlackBerry. Most people had no idea who RIM was, they just assumed the company was called BlackBerry. Apparently, RIM finally got the hint. Oh, and by the way, the company also finally released their long-delayed and somewhat-anticipated new smartphone platform, the BlackBerry 10.

I long ago wrote off RIM, er BlackBerry, as dead. Once they announced they were delaying BB10 until after the 2012 holiday season, I called Time of Death. Truly, last year was their only chance at capitalizing on a new platform, and by missing the holiday season, they effectively lost an entire year. Assuming there even is room for a 3rd place competitor in the mobile device market, BlackBerry will be fighting for table scraps against Microsoft and there really won’t be any winners in that war.

By and large, most pundits agree that BlackBerry’s chances are extremely slim. But if you follow the technology industry at all, or if you are exposed to people in the technology industry, you will read or hear some positive reviews as well as some arguing that BB10 will save BlackBerry. Let me summarize why none of this matters, especially to consumers and small business owners.

While I haven’t had any hands-on with a BB10 device (the devices won’t be released until March or April), many reviews are positive regarding the BB10 user experience. I won’t argue those points. The real question should be is BB10 so much better than its competitors that it will cause a huge defection from people using iPhones or Android-based phones? Almost certainly not. Especially considering that changing phones will mean the loss of purchased apps for that platform, and in the case of the iPhone, a move away from the iTunes ecosystem. BB10, just like Microsoft’s Windows 8 phones, will have a huge challenge fighting the inertia of the installed user base of the iPhone. Evidence shows Android phone users are not as loyal, so they might gain some adopters from that platform, but not likely much of any consequence.

Why should you care if BlackBerry has a large marketshare? The reality is that most developers will not put the effort into writing Apps for a platform without a sufficient user base to profit from. But without quality Apps, a platform will not attract a large user base. It’s a chicken-and-egg problem that BlackBerry just doesn’t have the time or financial resources to overcome. Microsoft maybe, but even that’s to be seen.

One train of thought I’ve seen from technology writers is that the BlackBerry 10 will be a hit among its traditional stronghold of corporate IT departments. They claim that IT departments will be eager to upgrade the BlackBerry devices they currently deploy to their corporate users. This might be true, although there is also a chance that IT departments will be slow to adopt the entirely new BB10 platform, either because they want to take the time to thoroughly test it or because they aren’t convinced of its future. Even assuming that IT departments like the BB10 platform, the reality is that it simply doesn’t matter.

First, corporate smartphone users, who used to make up the vast majority of the market in The Old World of Technology, now make up a fraction in The New World of Technology. Consumers and small business owners now rule the roost, and they have all but forgotten about BlackBerry. Second, because of this consumerization of the technology market, the Bring Your Own Device (BYOD) movement is spreading rapidly across the corporate IT world. In a nutshell, BYOD is the idea that employees are expecting that their workplaces will support the use of their personally-owned technology devices, such as smartphones. By and large, these devices are iPhones – not BlackBerry phones. And by and large the movement is so strong that corporate IT departments have little choice but to comply with their users’ wishes. The era of corporate IT dictating smartphones to their users has passed. The idea that corporate IT will have any significant influence on the smartphone market is wishful thinking.

The bottom line is that if BlackBerry’s only hope is in corporate IT, then they have almost no chance at all. The era of trickle-down technology, where small business and consumers waited to see what technology shook out from big business, is over. Since small business and consumers drive The New World of Technology, BlackBerry has simply become irrelevant. BB10 is BlackBerry’s last gasp before they sink below the surface; don’t get dragged down with them.

Lack of iPhone Was Major Factor in Android Growth

Apple vs AndroidA recently uncovered Apple research study showed that prior to January of 2011, the largest factor for people buying an Android phone instead of an iPhone was that the iPhone was not available on their carrier. This was just prior to Apple releasing an iPhone for Verizon in February of 2011 and then later for Sprint in October of that year. Since last year, the iPhone is now available on the top three carriers in the United States. Not coincidentally, iPhone sales have continued to grow at record paces, and as I wrote previously, carriers who don’t have the iPhone are losing customers to those that do.

The release of the next iPhone model this fall will mark the second upgrade cycle opportunity that customers will have to switch to the iPhone on Verizon and Sprint. This past year I have seen a high number of my clients switch to the iPhone that have Verizon or Sprint. I know many people who say they are waiting for the next iPhone to switch away from their Android or BlackBerry phones this year. Assuming that this small sample size will extrapolate out further, Apple stands to benefit from some pent-up iPhone demand this upgrade cycle. By next year’s iPhone release, customers on Verizon and Sprint will have had at least two full years to complete the usual two-year contracts that most carriers require before upgrading their phones. I expect that we will see the full impact of Apple’s entry into the Verizon and Sprint markets by that time.

Regardless, even if one is inclined to look at the raw marketshare numbers of the various Android-based smartphones on the market, the reality is that pure volume does not drive the success of the smartphone market. Studies have shown that iPhone users are very different than Android users, primarily when it comes to spending money on apps or driving profits for mobile carriers. In addition, Apple makes a lot of money from their iPhone sales, where most of the various Android device makers are not generating great profits, nor does Google derive any real profit from their Android platform. For the sake of the long-term health of a platform, not making any profits doesn’t bode well for continued industry support.

The bottom line is that any perceived marketshare victories for the Android platform in the past were largely due to the simple fact that people who wanted the iPhone on their carrier couldn’t get it. After this upcoming upgrade cycle, we should see further evidence of the ever-growing dominance of the iPhone. There’s little reason to believe that the iPhone is losing its status as the premier smartphone platform, especially when bolstered by the dominance of the other iOS device, the iPad. If you are considering an iPhone or iPad purchase, proceed without hesitation. If you are planning an Android device purchase on the premise that the Android platform is reaching parity with Apple’s iOS devices, please consider very carefully before committing your money.

Stick a Fork in ‘em; RIM and the BlackBerry are Done

BlackBerry DeathThe news has been going from bad to worse over the last year for the Canadian manufacturer of the BlackBerry phones, Research in Motion, also known as RIM. It is no secret that RIM’s sales have suffered ever since the iPhone was originally released back in 2007. Since then, RIM has endured misstep after misstep and is on the verge of extinction. Let’s look at some of the low-lights over the last 12 months:

  • The October 2011 BlackBerry outage was a huge PR nightmare for the already struggling company
  • RIM announced earlier this year that that their upcoming BlackBerry 10 operating system would be delayed until fall 2012.
  • RIM warned it would post a Q1 loss, its first operating loss in 8 years
  • RIM’s stock slipped under $10/share, the lowest the stock has been since 2003, and down from it’s highpoint of $147.55 in 2008
  • RIM’s announced loss for Q1 was significantly higher than expected
  • RIM cut 30% of its workforce in an attempt to preserve its cash reserves

Even with all that, I gave RIM a sliver of hope that if they could survive until the fall of this year, the release of their BlackBerry 10 operating system before this Christmas holiday season might give them some sales that could keep them breathing for another year. But now, a couple of things have happened that I believe are the final nails in the coffin for this once great company.

First, RIM has just announced that the BlackBerry 10 operating system will now be further delayed until early 2013. This means that they will miss this year’s holiday season, effectively putting them another full year behind the iPhone. That by itself is a fatal blow. Start writing the eulogy because RIM is terminal.

If that wasn’t enough, it has been confirmed that carriers are negotiating to lower the fees they pay RIM for the BlackBerry service. These fees are charged to the carriers by RIM for every subscriber that uses a BlackBerry and accounts for one-third of RIM’s revenue. RIM can ill-afford to lose any revenue right now, but it is likely that the carriers have leverage against the struggling company. Consider that there are no such fees charged by Apple for their iPhones or Google for any Android-based phones or Microsoft for any Windows-based phones. The reality is that due to the legacy nature of the BlackBerry service, RIM must support infrastructure costs that Apple or Google or Microsoft do not. When BlackBerry was king of the Old World of Smartphones, carriers just had to deal with those fees. Now with RIM on the ropes, carriers probably know they can get lower fees. So if RIM loses even more revenue it will only accelerate the end.

The question is what does “the end” mean for the BlackBerry? RIM is rumored to be courting companies to buy them out. The question is who would want to buy them? What company could do anything better with the BlackBerry brand? It may be very possible that no company is truly interested. If this is the case, the end may come suddenly and abruptly for the BlackBerry, possibly leaving their users without e-mail service if some company or companies (perhaps the carriers) do not pick up the management of the BlackBerry service infrastructure. However, even if some company does buy out RIM, will the BlackBerry brand fare any better than the Palm brand did when HP bought them out? HP couldn’t gain any marketshare with their WebOS-based devices and completely killed the line last year. The tale of Palm’s WebOS and its fate with HP seem to be have many parallels with BlackBerry’s situation to this point. Companies may be heeding HP’s costly lesson which would explain why there is little interest in purchasing RIM. Any way you look at it, It seems certain that the days of the BlackBerry are numbered. If you currently depend on the BlackBerry, it would be wise to start planning a migration to another platform as soon as possible.

iPhone on Sprint: For Real This Time?

The Wall Street Journal is reporting that Apple will release an iPhone for Sprint in October. It’s been rumored before, but this article is pretty firm on its assertion. If this ends up being true, then the WSJ has just gotten a huge scoop. Otherwise, they’ll be eating a lot of crow soon. Stay tuned …

HP: “The Tablet Effect is Real”

In the second shocking technology announcement of the week (after the Google announcement that they are going to buy Motorola Mobility), HP revealed that they are killing the TouchPad product after only 6 weeks, as well as their WebOS-based phone line. Additionally, HP stated they are considering leaving the PC business, possibly spinning-off the division that made the mobile devices and makes their PCs.

Let’s get clear just how important these announcements are.

1) The biggest PC company in the world threw in the towel after just 6 weeks in the “tablet” market. Why did I put the word tablet in quotes? More on that in a bit.

2) The biggest PC company in the world wants to get out of the PC business. The same business that brings in one-third of its revenue.

For a company to throw in the towel after 6 weeks is almost unprecedented (only Microsoft has done this with their Kin phones of last year). Sales of the Touchpad must have been utterly abysmal. This just shows how much of a lock on the market Apple has with their iPad. This is why I put the world “tablet” in quotes. As I’ve said before, along with a growing number of others, there really is no such thing as a tablet market. There is only an iPad market. People do not seem to want anything except the iPad. Most people probably aren’t even aware that the other tablets compete with the iPad. I wouldn’t be surprised if they think that the iPad is the only product of its kind – which in many respects, it is. Just look at the recent report that 97% of all web traffic by tablets is from the iPad.

This utter domination of the tablet market by Apple’s iPad explains why HP bailed out on their TouchPad so quickly. But it doesn’t explain why HP wants to get out of the PC business. Or does it?

Just look to one comment by HP’s CEO, who said “the tablet effect is real.” What he is referring to is the thought that tablet (i.e. iPad) sales are eating into PC sales. Up until now, the “tablet effect” has been sort of a hush-hush topic among the PC makers. Sure, PC sales were shrinking for the first time in history, but other factors such as the economy were surely to blame. Certainly the iPad could not be a significant factor, right? Well, now the cat’s out of the bag – big time. There’s no denying it anymore. The iPad is not only dominating the tablet market, but it is eating away at the PC market as well. HP sees the writing on the wall. The PC market has become stagnated with price being the only real differentiator. Competition is fierce and profits are slim. The PC Era is ending, the market is moving towards mobile devices, and the rats are leaving the sinking ship. Well … except for one company.

The only “PC” company that is growing sales, revenue, and profit is … you guessed it … Apple. The Macintosh personal computer, seemingly long forgotten until recently, is seeing tremendous growth while the rest of the PC industry is shrinking. So not only is Apple poised to dominate the “tablet” market, the Macintosh may be the “PC of choice” of the “Post-PC Era”.

Imagine a world where Apple completely dominates the “personal device” market – tablets, smartphones, iPods, laptops, and desktops. Does it seem like fantasy? Perhaps 10 years ago, even 5. But ever since the iPhone was introduced 4 years ago and the iPad just a year and-a-half ago, nothing seems out of reach for Apple. And perhaps companies like HP are waking up to that realization now.

Hello, Moto?

In a move that was as surprising as it is rife with possibilities, Google announced today they will purchase Motorola’s Mobility division for a staggering $12.5 billion. It is clear that this move is a game-changer for the smartphone industry. But the real question is who’s game does it change?

Is this move simply a patent portfolio purchase? Perhaps Google is trying to shore itself up against future litigation like the lawsuits their hardware partners are encountering now. But it isn’t evident that Motorola Mobility had any patents worth gobbling up. If so, likely the other players who have been purchasing patent portfolios would have been bidding. And from early reports, it appears that Google will keep Motorola Mobility running as a wholly owned and independent subsidiary. So it doesn’t appear to just be a patent grab – especially considering what Google paid. $12.5 billion is about one-third of their cash reserves.

So if Google is interested in making both the hardware and software (a la the Apple iPhone and iPad), where does this leave Google’s current Android partners? Does Google actually intend to allow other companies to continue to make Android-based phones and tablets while competing against them with their own devices? Does Google think that their partners are excited about this?

If it is true that Google wants to move to an Apple-style production model, it only reinforces the idea that Apple’s top-to-bottom control model is the only viable blueprint for the New World of smartphones. The Old World of smartphones was characterized by one company creating the software, other companies creating the hardware, and the carriers enforcing their whims on both. I’ve written many times how Google was following the footsteps of the Old World smartphone market with potentially disastrous results. Perhaps they’ve figured this out now?

Then the question becomes can Google compete against Apple in the game Apple invented? Apple has been in the hardware manufacturing business for over 35 years, has a minimum 4 year head-start on smartphone manufacturing, and has ample experience with all the business infrastructure required to run a company that makes physical products for their customers (support staff, fabrication contacts, supply chains, etc.). Google has never competed in this market before, and when they tip-toed into it with their Nexus One phone, most agree it was a disaster across the board for Google. Has Google learned from their mistakes or are they hoping that Motorola’s experience will fill in the gaps? Either way, it seems like a long shot for Google to take Apple head-on. But, after a couple of years of doing things the Old World way, perhaps Google has come to the realization it is their only viable strategy?

If so, can Google rollout this new model quickly enough to avoid a potential disaster? If Google chooses this new path, it goes against almost everything Google has said to this point regarding their strategy for the smartphone market. Not only could this destroy some of their credibility in the industry, but it could also devastate their relationships with their current hardware partners. What would happen if their partners suddenly stopped making new phones (say after the holidays this year)? Could Google’s Android platform survive such a blow? Could Google have a full-blown operation running to counter this potential so soon?

The bottom line is that this move won’t have any effect on the market until at least the beginning of next year. However, it is not too early for those considering device purchases to ponder the ramifications that this move will have. Primarily, if Google’s move destroys their relationships with their current hardware partners, what will happen to their options for support and upgradability over the next couple of years? If one buys an Android-based Samsung phone today, for example, and expects to keep it for 2 years, will they be orphaned in 6 – 9 months?

Already, Apple iOS devices have an overall ease-of-use and reliability advantage over the various Android-based devices. Now a cloud of uncertainty exists over the future of the current line-up of Android devices. At least until it is clear what Google’s plans are with this purchase and what effect it will have on their current hardware partners, I must recommend extreme prudence to those considering a purchase of an Android device.

Introducing the RIM Bleak-berry

To those that follow the industry, it’s no secret that the company that makes the Blackberry, RIM, is in trouble. From a sales perspective, they still sell a lot of devices, but from a consumer perspective, they are nearly forgotten outside of the “old” smartphone market (i.e. corporations and tech-savvy people that have had Blackberries for a long time). Industry experts have been warning that RIM has fallen way behind to Apple’s iOS (iPhone and iPad) and Google’s Android platforms for some time now. But it doesn’t take an expert to see that the operating system of the Blackberry is still rooted in it’s original design that was created in the late 90′s. It was great back then, but certainly seems dated today.

An open letter to RIM’s executive management from an anonymous RIM senior manager was recently published on the Internet. The letter portrays a company internally dysfunctional and lost on what it needs to do to successfully compete. This is the major takeaway for anyone who has any interest in the Blackberry platform.

However, while the letter is focused on RIM’s issues, it brings up many topics about the smartphone industry that I have talked about before, both in this blog and to my clients directly. It is those points that I’d like to emphasize, taking quotes from the letter.

We often make product decisions based on strategic alignment, partner requests or even legal advice — the end user doesn’t care. We simply have to admit that Apple is nailing this and it is one of the reasons they have people lining up overnight at stores around the world, and products sold out for months. These people aren’t hypnotized zombies, they simply love beautifully designed products that are user centric and work how they are supposed to work.

I’ve made reference many times to how most smartphone vendors market their products as if they are “made by geeks for geeks”. They talk about specs, speed, capacity, and how “kick-ass” they are. Yet the reality is that most other smartphones simply don’t work as well as the iPhone. What this letter points out, and I can substantiate, is regardless of all the marketing done, if a product simply doesn’t work how it is supposed to (and the common expectation is that it will work as well as the iPhone), then the end-users will not like it. For all the “cool” technology behind a product, users just want something that works and works well. The iPhone should have made this abundantly clear to all tech companies. Obviously, it hasn’t sunk in yet for most.

Until companies embrace user-focused product development AND then figure out how to successfully implement it, they won’t touch Apple. And therein lies the rub. Companies must first embrace this thinking, which is extraordinarily difficult for most tech companies to come to grips with. It won’t happen overnight. There’s a lot of corporate culture to change and that takes time. And then once that long process is over, the company actually has to figure out how to make great, user-friendly products. That of course takes vision and talent, but it also takes experience. That is experience Apple has learned over 35 years. RIM, and most tech companies, have very little of it.

There is no polite way to say this, but it’s true — BlackBerry smartphone apps suck. Even PlayBook, with all its glorious power, looks like a Fisher Price toy with its Adobe AIR/Flash apps.

The original iPhone was successful. It made people stand up and take notice. Looking back, however, it really didn’t make that much of a dent in the smartphone market. It was the next year that Apple changed the world by introducing the App Store. Since that time, the tremendous success of the App Store has catapulted iOS devices into every aspect of society. Overnight it was no longer enough to make a nice smartphone. That smartphone had to run apps – and lots of them. It took a year or two for competitors to even get into the game. Now it seems that Apple’s experience working with third-party developers as well as the polished and mature software development environment provided for the iOS (both honed for years on the Macintosh platform) have put Apple into a position where the quality of their Apps is head-and-shoulders above everyone else. No other tech company (besides Microsoft) has the wealth of experience working with developers and development tools, so it would seem that this puts RIM at a distinct disadvantage.

25 million iPad users don’t care that it doesn’t have Flash or true multitasking, so why make that a focus in our campaigns? I’ll answer that for you: it’s because that’s all that differentiates our products and its lazy marketing … My mother wants an iPad and iPhone because it is simple and appeals to her. Powerful multitasking doesn’t.

Earlier I mentioned how most smartphone companies market their products as if they were “made by geeks for geeks”. Compare this to Apple’s marketing where they highlight the simplicity and ease-of-use of their products. In many cases, Apple’s marketing is inconsequential as the real secret to their growth is word-of-mouth. Apple owners tend to become evangelistic about their devices, proudly showing them off to their friends and family who quickly purchase their own Apple products and continue to spread the word. Again, most tech companies simply don’t understand that “old world” marketing only appeals to tech-savvy people. When the smartphone market was small and made up of mostly geeks, that worked well. Now that Apple has kicked open the doors of the smartphone market to the mainstream, that type of marketing is no longer effective. But again, it will take a complete corporate culture change for a company to embrace this type of thinking, then they must create the products that are user-focused, AND then they must understand how to market it. Again, none of this will happen overnight.

The bottom line is this letter highlights the trouble with RIM, but it basically shows the fundamental weaknesses of most tech companies which Apple is currently exploiting. The secret to Apple’s success is that they are the ONLY company in the market with so much experience in user-focused computing. That experience has been gained over 35 years, starting in the dawn of the personal computer market. No other company can touch that level of expertise and it is showing now. Only the companies that are strong enough to stick around, gain the necessary experience, and change their corporate culture will have any chance of competing with Apple. Unfortunately for RIM, time is a luxury it does not seem they have. Unless RIM can pull off a miracle, dramatically change their company, and introduce products that can feasibly compete in the new world of technology, it seems their days are numbered.

Microsoft Zune, R.I.P.

It has been reported that Microsoft is killing their ill-fated Zune player, allowing the company to focus on other devices. For those of you that didn’t know about the Zune (I’m not surprised), it was Microsoft’s attempt at an iPod. First released in 2006, it never was as easy to use or had the integration with a service like iTunes that made the iPod such a success. It could also be argued that younger demographics see Microsoft as a brand their parents used, not a brand they identify with.

The Zune is just another in a long line of digital media players from a variety of well-known and not-so-well-known companies to fall by the wayside in the last 10 years since the iPod was introduced. The question to ask is if Microsoft couldn’t crack the iPod market, can anybody? And the follow up question is what about the iPhone and iPad markets?

For what it’s worth, the fact that Microsoft couldn’t make inroads against the iPod may be as much of an indictment against Microsoft as it is an indication of Apple’s strength in the market. But the demise of the iPod has been predicted nearly every year by so-called experts in the field and it has yet to happen. So the failure of the Zune isn’t just due to any incompetence on Microsoft’s part, especially when companies like Sony with their Walkman brand had no better results.

Let this be a wake-up call to anyone who is sitting on the sidelines, hedging their bets on the iPhone and iPad. If this story teaches us anything it is that Apple certainly is not a flash in the pan. Those who are waiting (hoping?) for the market to catch up with Apple are letting their competitors who are already leveraging these technologies gain the upper hand.

Did Nokia Pull an Osborne?

One of the great folklores of the technology industry is the story of the Osborne Computer Corporation and their demise due to an ill-timed product announcement. According to the tale (of which the details may or may not be accurate), Osborne pre-announced an upcoming new computer in an effort to stave off competition. But instead of wooing customers from their competitors, this announcement led to the sudden cancellation of orders for their current computer model. They could not ship their new model for several months, inventory piled up even with drastic price cuts, and in the mean time, the lack of cash flow killed the company and they filed bankruptcy. Regardless if it is completely accurate, the story is so well-known that the term “Osborning” or “pulling an Osborne” is understood to mean when a company’s announcement of a future product kills the sales of its current products.

I bring up this bit of tech lore because perhaps Nokia has Osborned its current line of Symbian smartphones, or at least it seems they are very afraid they have. By publicly aligning themselves with Microsoft’s Windows Phone 7 operating system, many questions arose over the future of the Symbian line of phones. Nokia didn’t do themselves any favors by not clearly defining their intention for Symbian. They only gave a very confusing statement by calling Symbian their “franchise platform”, virtually ensuring that anyone who has any vested interest in the platform was left in limbo. I myself questioned how Nokia would be able to successfully split focus among Symbian and Windows Phone 7.

Now a Microsoft executive is publicly urging Symbian developers not to abandon that platform. This is highly unusual that an executive of a company tries to bolster a platform with which they virtually compete. Of course, now that Microsoft and Nokia have partnered it is somewhat understandable, but it is still very strange that Microsoft would make this announcement instead of Nokia. It appears to me Nokia fears that the Symbian development community doesn’t believe what Nokia is saying so they figured they might believe Microsoft.

Yet, even Microsoft’s statement is confusing as in virtually the same breath they encourage Symbian developers to stick with it, they also encourage them to get familiar with Windows Phone 7. The entire situation reminds me greatly of politicians spinning damage control. The common perception is that Nokia is abandoning Symbian and so developers are hesitant to continue to support that platform, and I’m sure certain large corporate buyers are questioning the platform as well. Nokia is trying to manage the situation so that they don’t get Osborned, because if the bottom falls out of the Symbian market before they get rolling with Windows Phone 7, it could greatly hurt Nokia’s chances to remain a significant player in the smartphone market – which ironically is exactly what they are trying to achieve by partnering with Microsoft. As I mentioned in my previous article, this is the risk they felt they had to take, but perhaps they didn’t anticipate the Osborne Effect.

Which just goes to show that those who don’t study their tech history are doomed to repeat it!

Nokia CEO: Our Platform is Burning

A few days ago, Nokia CEO Stephen Elop sent a memo to his company admitting what was clear to most in the industry: Nokia has fallen way behind in the smartphone market. He used an analogy of a man standing on a burning oil platform in the North Atlantic. The man could either stand on the platform and die for certain, or he could jump into the frigid waters and risk freezing to death. While the man would never have jumped into the water under any other circumstances, it was his only chance at survival. So he leaped. He relates this story to Nokia. The current situation dictates they must make a drastic decision or face certain doom.

Today, Nokia and Microsoft announced a strategic alliance where Windows Phone 7 will become the primary smartphone platform for Nokia. Also significant, at least within the organizational structure of Nokia, is that they will split their mobile business into two units: Smart Devices and Mobile Phones.

My first thought was that this alliance would be beneficial for both companies. Nokia gets a modern smartphone platform and Microsoft gets the support of the largest cellphone manufacturer in world. However, on further inspection, this isn’t necessarily a slam dunk.

It is interesting that Nokia has chosen to split their operations between “smart” devices and “non-smart”. It speaks to their view that the two markets are so distinct that they should completely separate the two. Is this the right decision? Time will tell, but can a company sustain two separate focuses like this? It may be that they must to have any chance of success. If one fails, the other may survive.

Also interesting is that Nokia will retain their previous flagship platform, the Symbian OS. They are now calling it their “franchise platform”. This very vague description makes it difficult to understand what Nokia’s intention is. Yet, it is clear to me that they are still following the same path that the “old guard” of the smartphone industry have followed: place their bets across various different platforms and various different form factors and carriers. Nokia’s CEO acknowledges that Apple changed the game, in fact using that very phrase. Yet he apparently fails to grasp how they did it: by focusing. Apple didn’t create multiple form factors and didn’t attempt to spread their phone around every carrier they could. And they definitely didn’t create multiple operating systems.

And I don’t know about you, but comparing your new business partner to jumping in the the North Atlantic doesn’t exactly make it sound like a trusting relationship. But then when you’re getting into bed with Microsoft, I guess it doesn’t hurt to sleep with one eye open.

So looking at the deal, while it could be a powerhouse arrangement, I don’t believe either company has the marketing prowess to make it highly successful. This is primarily because both companies don’t have the necessary focus. Microsoft is still courting other phone vendors, and Nokia has other platforms they are still clinging to. So unless both companies are willing to completely commit to each other, like any marriage, it just isn’t going to end up well.