It was breaking news on September 3, 2013. Microsoft buys Nokia, the smartphone division, to be precisely. Now, there are a lot of speculations (why, how) and accusations (Elop is to be destroying Nokia), but is it really so bad?
Especially written for non-techies.
I have tried to avoid all other opinions about this matter before writing this blog. As I usually write opinions in favor of Microsoft, this blog is not meant to defend the company.
On Nokia (some facts, not nearly all):
- Fact: Nokia has reinvented itself continuously from as early as 1865. For a full overview, please visit this site: click.
- Fact: Nokia has a long history of making decent handheld devices (mainly telephones). They were not the first, but they made it available for the consumer on a large scale since the 1011 in 1992. The 3310 model is the best known model of the company.
- Fact: Nokia didn’t step in the smartphone market quick enough.
- Fact: Symbian may be close to Linux (or Android), but it wasn’t appealing.
- Fact: Nokia (NOK) stock dropped in value from 2007 continuously. As a company, it needed a boost.
- Fact: Nokia is the main manufacturer of the Windows Phone handheld devices.
On Microsoft (some facts, not nearly all):
- Fact: Microsoft has been a software manufacturer for multiple manufacturers since the start in 1975.
- Fact: Microsoft has a strong focus on software, since the best known founders are both programmers.
- Fact: Microsoft and Apple have some agreements on the use of patents.
- Fact: Microsoft started to grow as a company since Steve Ballmer was attracted. Not a technical guy, but a business man pur sang.
- Fact: although not always recognized as such, Microsoft is a quite innovative company, often ahead of its time.
- Fact: Microsoft does have a huge share in personal and network computing, not only by selling Microsoft Windows, but also by creating Microsoft Office.
- Fact: Microsoft Office is still the leading standard for document-creating, especially Microsoft Word and Microsoft Excel.
Microsoft has also a history in manufacturing hardware. They have a range of peripheral PC equipment, which is well thought and well designed. They have the Xbox 360 (and later in 2013, the Xbox One) which is successful amongst the gamers as well. They have also some hardware which was not really successful, like the Zune Mediaplayer. But they had never had mobile phones manufactured before.
Microsoft and Mobile Phones
Since 2002, Microsoft launched Windows Pocket PC 2002, a CE powered mobile operating system, which was also fit for mobile phones. This evolved into Windows Mobile. Eventually, in 2011, Microsoft and Nokia started a cooperation, which resulted in Windows Phone 7 (later Windows Phone 7.5 a.k.a. Mango and Windows 7.8), still based on this CE kernel.
In 2012, Windows Phone 8 was launched, together with the high end Nokia Lumia 920, the new flag ship of the Finnish company. The difference with the previous Windows Phone operating system was that this mobile OS is based on the Windows NT kernel, a wholly different architecture and sharing much more components with the Windows 8 OS. With Windows Phone 8, Microsoft started to integrate the mobile phone more and more into its own ecosystem, making it fit for use with either applications and services by using a Microsoft account or business applications and services by making it possible for IT-departments to integrate the high-end device into the business architecture.
Late 2013 or early 2013, Windows Phone 8.1 will be released.
In any way, the Windows Phone interface is something you love or hate. There seems no in-between option.
Why I think it is a good thing
Shareholders, especially Microsoft’s (MSFT on Nasdaq), are not too happy with this. As it is a risk, their opinion is about financials only. A lot of shareholders, mainly the hedge funds, do not have vision on technology for now and in the future; they are focused on making money on a daily basis and investments are not what they are about. Microsoft is a tech company and sometimes, when you cannot beat the market with your own assets, buying a company which completes the envisioned future may be the next best option. Apple does it. Google does it. Microsoft does it. Likely, IBM does it too. It is an investment.
Nokia needed new cash to keep the other divisions going. By selling the smartphone division to their partner, they acquired a lot of cash flow. They keep the patents and they license the brand name. Also, they do not have to fire employees, because the manufacturing division remains and Microsoft sets up a new hub for European customers. Based on the geography, they can use this hub for Russian customers as well.
The Lumia brand is a fixed brand by now, and Nokia has designed it as a proper Nokia handset. Sturdy, with decent materials. And although the Surface is not the success Microsoft aimed for, the hardware shows a proper and well-thought design, with high-end materials. (The critics on the Surface, especially on the RT, are almost never about the design and materials.) They might have set a new standard for tablet PC’s here, at least in hardware quality.
Now Microsoft has planned to acquire a big smartphone company, they do not need to reinvent existing technology. This saves a lot of money on the R&D department, even when they take over the R&D department of Nokia. Nokia has some aggressive marketing strategies, which are sometimes funny as well, meant or not (see this example). Microsoft may learn something from that.
And I think both deserve a new success. It is not about making a good or bad product. If it was, more manufacturers of hardware and software would have a bad time by now. It is about how people see the companies. As long as bashing Microsoft is ‘hot’, consumers will despise the company. Until people get tired of it. Because every company fills a need. Even Microsoft and Nokia.
I am in no way a techie, nor a specialist on these matters. My writing contains my own thoughts, based on the news and rumours.