Feeds

Nokia's 15-year tango to avoid Microsoft

For want of a smart(er) phone, €50bn was lost

Internet Security Threat Report 2014

Everyone agrees to lose

The relationship between Nokia and Microsoft then mellowed, partly because by 2004 both parties realised they'd failed. Nokia had failed to establish a thriving smartphone mass market: the phones that were 'smart' weren't creating other markets, for content or commerce. Microsoft hadn't won a major first-tier OEM, but realised it could make a tidy but not massive business putting Windows CE in gadgets. HTC and others were happy to help; Microsoft didn't need to fight Nokia and the phone industry at every turn.

In 2005, Nokia and Microsoft signed a collaboration agreement covering a wide range of enterprise and consumer electronics technologies. Microsoft wanted its content DRM in other devices, and it wanted to firm up its its Exchange server against the encroachment of Blackberry. (RIM threatened to take email into the cloud, away from the corporate Exchange servers. In the end, that never happened.)

The years from 2004 to 2007 saw everybody – Nokia and Microsoft included – dumb down their designs in an attempt to catch the elusive mass market. The smartphone became more phone than smart. Yet the underlying economies wasn't changing. This allowed a new market entrant who could take risks, and produce a phone just "good enough" to be a phone, but offered something completely different, a new value proposition. That's just what Apple did.

Once Apple created the smartphone mass market, Nokia and Microsoft quickly found themselves in the "other" category. Nokia clung to the belief that because it was selling more smartphones than anyone else (by the analysts' definition), the company didn't have to do anything too drastic to change. But this was a category error of historical proportions.

For Nokia's smartphones weren't being used as smartphones, and they weren't an "ecosystem". Developer interest was almost zero. Content companies, games developers, retailers were all ignoring Symbian despite its apparent, illusory leading market share. The Ovi store was late, awful and empty. Yet still Nokia executives kidded themselves that the company would prevail through scale and brand. Nokia had forgotten the personal factor that underpinned their decisions in the mid-1990s. They'd become seduced by the awesome scale of the logistical machinery – buying, manufacturing, distributing – that they'd created.

I can't help thinking that Nokia's fate was sealed by a kind of "for want of a nail" decision. Perhaps if Nokia had realised what it needed to do during 2007 and 2008, it could have launched a just-good-enough smartphone in 2009. Instead, in 2009, Nokia gave us the N97 and the Ovi Store. 2010 rolled round and even Microsoft had woken up from its slumbers to present people with a modern smartphone. Perhaps if Nokia had acquired Palm's WebOS, it could have avoided the fate of becoming a Windows. It would have had to swallow a lot of pride, but not as much as it has had to swallow today – leaving behind around €50bn of investment to burn on the oil rig.

Elop's proposition is that Nokia will claw back some of the margin it will lose in the services layer. This was met with some skepticism, bordering on derision, in the analyst briefings today. I wrote earlier today (here and here) that Nokia is really now two things: a brand, and a distribution operation. That's not all: it's also an IP portfolio. There must be an even money chance that in the next five years the company will be acquired for its patents, for a fraction of its former value.®

Bootnote

For fans of surreal coincidences: A few years ago I sat opposite HP's recently appointed CTO, the splendid Shane Robison, wondering why HP didn't join the rest of the phone industry in creating smart mobile devices. I'd got it wrong, he told me. To make a phone, all HP needed was Microsoft Windows CE. This week HP announced a range of devices including new phones based on its own proprietary WebOS, while Nokia committed its future to Windows.

Business security measures using SSL

More from The Register

next story
Brit telcos warn Scots that voting Yes could lead to HEFTY bills
BT and Co: Independence vote likely to mean 'increased costs'
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
New 'Cosmos' browser surfs the net by TXT alone
No data plan? No WiFi? No worries ... except sluggish download speed
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Blockbuster book lays out the first 20 years of the Smartphone Wars
Symbian's David Wood bares all. Not for the faint hearted
Bonking with Apple has POUNDED mobe operators' wallets
... into submission. Weve squeals, ditches payment plans
This flashlight app requires: Your contacts list, identity, access to your camera...
Who us, dodgy? Vast majority of mobile apps fail privacy test
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Storage capacity and performance optimization at Mizuno USA
Mizuno USA turn to Tegile storage technology to solve both their SAN and backup issues.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security and trust: The backbone of doing business over the internet
Explores the current state of website security and the contributions Symantec is making to help organizations protect critical data and build trust with customers.