The Nokia MS deal

The more I think about the Nokia- Microsoft deal the more it smells of a maneuver by MS to implant their guy into Nokia who then turns the company over to MS.  The agreement seems highly profitable for MS but highly risky for Nokia.  Olap has a lot of MS stock and apparently no stock in Nokia, so one wonders where his loyalties lie and if he is more interested in serving the interests of MS or Nokia.  In this agreement MS is getting the world´s largest phone maker to exclusively sell its Windows OS.  There is a large potential upside and almost no downside for MS.  If it does not work out and Nokia crashes and burns then, they can find another hardware manufacturer to work with.  No skin of their back, and they will have managed to eliminate Symbian and Meego as competing operating systems.  Slam dunk for MS.

For Nokia however, despite the potential to do well with Windows, there is also a lot of risk in this agreement.  Yes maybe Nokia will form a beautiful relationship with MS and their business will flourish once again on the back of Windows Mobile.  Or, maybe they will run into a lot of problems.  I foresee difficulties in sales this year because, who will be motivated to buy a Nokia smartphone with Symbian which has no future?  And yes Nokia will gain new customers with their MS alliance, but they will also alienate a lot of existing customers who will find their beloved Nokia turned into a vassal of the hated monopolistic American closed source MS, and they will buy Andriod phones instead.  Olap´s comments about Nokia´s business burning up is also not reassuring.  Another problem is that Nokia is burning all of its bridges and giving up its independence by betting everything on Windows Mobile, which so far has failed to make much market penetration.  What if Windows Mobile does not prosper with Nokia?  What is the fall back plan?  It sounds like Nokia is giving up most of its intellectual property in software and turning itself into a subdivision of MS concentrating on hardware.  I believe that hardware is a commodity and the Asians are very agressive now so the future of Nokia in that areas may not be bright.

I think that it would have been better first to concentrate on how Nokia´s management lost its edge and how Nokia became a complacent slow unfocused company with difficulty executing.  A lot of leaders believe that companies need to completely change their business model, when often the solution is simply for the company to go back to doing whatever it was that it did in the first place to be successful.  Nokia was once innovative, nimble and slick.  It needs to get that back.  If it could get its act together, it would not need MS.  Or Nokia could still make Windows phones, but not exclusively.  They should not turn over their intellectual capital in software to MS.  That way they could get the potential of using Windows without having to mortgage themselves to MS and betting everything on Windows Mobile.

The whole deal seems odd because Olap agreed to something that will highly benefit MS, but is very very risky for Nokia and risks ending the company as we know it.  Can´t wait for my new Microkia/Mokia? phone.


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