What Choice did Nokia Have?
Let’s face it, Nokia had to do something, and quick. Their Symbian/MeeGo/Maemo approach hasn’t been, and wasn’t likely to start, working with high-end devices. Kudos to Stephen Elop for at least facing this reality — I guess that’s why the Nokia Board brought him in. There certainly wasn’t time available to develop their own high-end mobile OS — the time to begin that action was five years ago. There were really only three choices available to Nokia.
- iOS. This would have been best for both Nokia and Apple, but Apple would never have gone for it. Nokia obviously would have benefited from getting access the most user-friendly mobile OS. But, Apple would have had a legitimate path for avoiding the same second-fiddle role that plagued them in the computer industry in the 1990’s. When I talk with Apple people, I am struck by the unwillingness to to learn from these painful lessons of history. From 1988 to 2000 Apple was being kept on life-support at Microsoft’s pleasure, just so that Microsoft to keep the regulators at bay. OK, that’s a bit of an over-statement, but not wildly so. The point is that there is a natural monopoly here, and Apple is pursuing again pursuing a strategy that cannot make them a market share leader, opening the door for Android to run the table. So, while an Apple-Nokia partnership would have been ideal for both companies, that wasn’t going to be entertained by Apple, so that wasn’t a legitimate option for Nokia.
- Android. The obvious choice. Last quarter, Android represented 53% of US SmartPhone shipments vs 19% for Apple iOS, and 6% for Windows Mobile + Windows Phone (according to NPD), so Android clearly has something that the market likes. Nokia wouldn’t have been able to take full advantage of their Navteq asset, but that’s a sunk cost. Nokia certainly feared the prospect of competing head-to-head with the likes of HTC (usually stated as “avoiding commoditization”), but Nokia has this with Windows Phone too. After all, HTC has been working with Microsoft OS’s for over a decade now.
- Windows Phone. The dark horse. I don’t know what sort of concessions Nokia got out of Microsoft as they played Google and Microsoft off against each other, but this seems like an incredibly short-sighted decision. Who knows, maybe they can pull it off, but the odds seem very long. Microsoft has been struggling in the mobile industry for a long time. What Nokia brings to Microsoft does not seem to address the root cause of Microsoft’s struggles (see post from Feb of last year: Microsoft Doubling Down on Failing Mobile Strategy?). Nokia’s tremendous handset prowess has fallen dramatically in the last couple of years due to the change in the basis of competition caused by iPhone and Android (see, for example, Apps are for Creating iPhone Evangelists). The early results from the market voting with their wallets is that Windows Phone 7 doesn’t address this changed basis of competition. Certainly, Nokia should be able to bring some distribution volume to Windows Phone, but that first phone is many quarters down the road, and by then, Android would seem to be unassailable.
Stephen Elop claims that Nokia and Microsoft creates a viable 3rd horse in the SmartPhone race. Maybe, but why take such a huge gamble, when Android is already the leading horse, and one could argue that Nokia’s ability to make money per handset is at least as good with Android? It seems that Nokia is now on an almost-impossible-to-win path.