Nokia and Microsoft – What they gain from this

This is an answer to “The irrational belief in the power of money – A Nokia and Microsoft story” that’s related to my post earlier today. It gotten a bit longer, so I posted it here.

I don’t think being “anti-capitalistic” about this matter helps, as this announcement is not about throwing lesser money around, but throwing it in a better direction than before.

So, Nokia is f*cked. Since two years, smartphone hell breaks loose and people buy smartphones and tablets like zombies grieving for brains. Everyone wants a part of the big pie. But since about one year, Android is available on devices, and Nokia realizes that not only smartphones win market share, but that noone buys dumbphones / featurephones anymore. They tried making a smartphone OS themselves, and they failed badly. As said, they could only go for Android or WinPhone7 at this point, while WP7 is unattactive because of the fees Microsoft wants for their platform. It correct that they needed to stand out, to not be “just-another-HTC”.

Microsoft for the rescue! For Microsoft, this is the best way to get their operating system (which really seems to be pretty good!) onto devices, as most devices run with the cheaper Android and Microsofts main problem with WinOS7 is that users just have not seen it in action anywhere. I saw it on a developer’s device at work, and it looked pretty impressive. But Microsoft cannot sell their own device, as they just have never produced phones and don’t have the retail backend that Apple has. So for Microsoft it’s a no-brainer, as they need to have a critical mass of phones out there. Meanwhile I guess that the “strategic partner thing” means that the fees for Nokia will be a lot smaller than for everyone else. (Just FYI: Microsoft takes these fees because they want to guarantee that devices using WP7 will be uptodate and get the fitting drivers ASAP, using their own engineers for that. Besides making money.)

And what would be the alternative solution for Nokia? Close all their factories, give their money to the stockholders and leave, saying that it has been a nice dominance of the world market but now they’re tired and want to go back to making tires? (Yes, they made tires.) Certainly not. After all they still have a really big name that will make customers buy their phones again – no matter what the software is called today (consumers only think of the device brand, not about the OS brand). When the customer sees that the Nokia phone has nicer graphics than the iPhone and the HTC phone, he’ll buy the Nokia phone.

That said, I can only applause both corporations. They have made a good move. They just need to make sure it’s not the last good move, as shipping will count and not big agreements. They need to work hard and fast to generate some serious competition, else at least Nokia is doomed.

P. S.: Another point about Microsoft: they have a lot of elite programmers on their team, and its the old windows core that slows them down. I believe that the developement of WinPhone7 will be going much faster than their development in the PC OS.

photo credit: Arty Smokes (deaf mute)