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.
