What are Nokia and Microsoft to Do? Lots of Ideas in the Media
Yesterday, analyst Adnaan Ahmad published an Open Letter to Nokia and Microsoft CEOs
proposing a strategy for how each will save their companies. This seems a bit over dramatic to me, as I don't see either Nokia or Microsoft on the verge of obsolescence any time soon. They do share a common situation with their PDAPhone story (along with HP/Palm) in that they were once at the top of the market and cruising, and today they are fighting for survival in this space. Adnaan is proposing that the two join forces... Windows Phone 7 exclusively on Nokia hardware, referencing the early days where IBM and Microsoft has a monopoly on the PC. Thats a rather odd analogy since IBM no longer even makes PCs... not sure that would have been my example for two CEOs that surely know this.
Today, a different approach was proposed for Nokia by Eric Zeman of Information Week. He made the case for why Nokia should go it alone... or at least kind of alone given that their next generation PDAPhone OS, MeeGo, is a partnership with Intel. But then, I doubt Intel will ever be producing handsets. MeeGo is an open source Linux project aimed at delivering a next generation OS to PDAPhones, Netbooks, Tablets, etc.. Sounds pretty similar to the goals of Google's Android, and of all the proprietary platforms as well. But the scary thing about MeeGo is that there are many other "Linux projects" that aimed at taking the popular open source server OS and making it a force to be reckoned with on desktops. Is Microsoft worried about that? While Linux commands a 67.3% share of the server market, it has only mustered a 1.5% share of the desktop/laptop market after many years of trying. So that is not very comforting for those putting their hopes in Linux to win the day in PDAPhones.
The bottom line here is that Nokia and Microsoft, as well as HP/Palm, are now fighting for who will be in 4th place in a highly competitive and rapidly growing market, with very high stakes. Apple, Google, and RIM are effectively in a three way tie for the top spot right now and Android is coming on like a freight train mowing down everything in its path. Apple still has plenty of momentum and is dominating the tablet space at present. RIM has their leadership in the enterprise. Nokia, Microsoft, and HP are not companies that consider it a "win" to get 4th place in a race. Senior VPs in companies this large lose their jobs over being in second place, let alone 4th, and its no foregone conclusion that they can even achieve that.
So these two analysts approach the problem with two different theories of success. If Nokia knew that they could have exclusive rights to Windows Phone 7, then its conceivable that they may consider this proposal, but that is never going to happen. As I stated earlier, they dominated the desktop space by shedding their exclusive partner and running on anything and everything. Microsoft has a good product, but they have to win over the developers. The winner of this race is the guy with the best stack of applications. How many platforms do developers want to deal with? History has shown that in most cases that number is about three. Microsoft does have a following though that will certainly want to get into the early lead on that platform, so they will come along. So that means to me that there will never be a Nokia / Microsoft exclusive because Microsoft will never do it.
So I find myself siding with Eric on this one. Nokia needs to approach this like Apple did with the iPhone. They sat back and studied the market from the outside and came up with what was a game changing device. A device. Uno. One. They didn't deliver the most bleeding edge technology, and they didn't even pick the most highly regarded carrier to partner with. But they built a whole ecosystem that changed forever the way everyone looks at PDAPhones / Smartphones. They turned the industry on its head and now we have all the competitors scrambling to copy the house that Steve built. If Nokia is really going to recapture their PDAPhone market leadership, they need to deliver a device with MeeGo that does everything right, with an ecosystem to support it, and a stable of developers that are going to take it to a place that competes with the Apple in a very short time. If they can't pull that off, then they are going to start a slow spiral downward. Apple pulled it off, but this is a very different market now.
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