Waiting for the New Nokia

Now that the dust settled and everyone forgot about Nokia’s decision to partner with Microsoft, I can write quietly about why I think this is a good deal for both Nokia and Microsoft.

If you have a look around in the news world you will see that all the rage is about Apple versus Google, iPhone against Android iPad fighting the Honeycomb wave. Microsoft and Nokia are off the radar, as if they don’t exist. December 2010 saw Google activating 300,000 phones per day. This is a nightmare for Microsoft and Nokia is not doing much better on the much publicised “burning platform”.

But maybe in the long run, the evolution will not follow this trend in a linear fashion. We are wired to extrapolate past and present events and “predict” the future based on educated expectations. The expectation is that Android will keep growing at this pace and dominate the market copiously. I challenge this expectation.

The fact that so many manufacturers are crowding the Android space is because the mobile computing is really hot and growing fast. Google is the cheapest way for these manufacturers to have a piece of action with zero investment in the operating system. Consumers cannot get enough of it. Apple opened the floodgates with the launch of the iPhone. In one stroke Steve Jobs changed the telecomm space and moved the centre of gravity from network services providers to computing ecosystem makers.

If you browse the media chatter about mobile phones, the talk is still focused on handsets. The reviews analyse new models based on a few hardware design considerations; the operating system is never a differentiator within the Android camp. This is where things are going to be interesting in the next couple of years. A true complete design is not solely about the handset, but about integration in an ecosystem that is useful, practical, innovative, secure and aesthetically pleasing in the same time. 

When it comes to the ecosystem, Apple has an edge against Google. One example is that all models in the Android space are compared with either iPhone or iPad. This is free advertising for Apple all the way. For individual manufacturers of handsets in the Android space the innovation process is limited to hardware details and there isn’t much room for playing outside the boundaries set by Google. Each one of them wants to gain market share not only against Apple but against the other Android players. For now the market accommodates all participants and it rewards them handsomely. But the day of reckoning is coming fast because the market has a limited size. Someone will loose badly.

This is why I believe Nokia made a good decision, provided Microsoft will do its part. Microsoft and Nokia can combine their research capabilities and resources to create an ecosystem rivalling Apple’s in a way that Google and the Android manufacturers cannot accomplish because there is too much inconsistency and strategic conflict among all the participants. In the long run Samsung, HTC and Motorola will compete among themselves at hardware level with little scope for value add.

Microsoft and Nokia have a chance to do something different and start a really interesting race with Apple.  Nokia has outstanding customer service and it can exploit this partnership best by focusing on innovating this product category in a way the Android partners cannot dream of. Because of the critical strategic overlap between Microsoft and Nokia, it is possible that Nokia will be able to influence the direction of future design. One space in which these two partners can innovate is in shopping experience, such as for instance purchasing using the mobile phone and instant access to product information (Microsoft is a leader in the advanced product tagging). The Windows ecosystem can be developed to create a better market place experience. That is IF Microsoft will be able to support the partnership in a more creative way. Until now it hasn’t shown much and sometimes their effort in this space reminds me of the days when IBM was trying desperately to revive OS/2 when they failed because they could not get rid of the habit of behaving like a massive rigid corporation and compete with a much nimbler Microsoft.

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