This is a difficult one. Where should I begin? So, Microsoft is buying Nokia’s phone business. What do I think? Can’t really say that this one comes as a shocker. Naturally I hoped that it would not come to this but considering the recent developments, or rather the lack of them, it’s not surprising.

When Nokia announced in 2011 that it would start using Microsoft’s Windows Phone I wrote a post about it and in many ways agreed with their decision. It’s easy now to say that it was the wrong decision to make, but back then it seemed justified and logical. Windows Phone is a great OS and easily differentiated from iOS and Android. Samsung was already back then too dominant inside the Android ecosystem and Google was being difficult mainly due to Nokia Maps. On the other hand Microsoft was desperately looking for a partner, was willing to invest resources in the partnership and was eager to use Nokia Maps. Microsoft also offered Nokia an easy way to differentiate itself from the competitors. Having a CEO with good connections to Microsoft must also have been beneficial to Nokia. Therefore it’s easy to see why Nokia made the decision it made back in 2011. And naturally they were wrong.

The thing is that Microsoft is a really sucky partner. By choosing Windows Phone as the only platform Nokia took a huge risk. It was clear already back in 2011 that if Nokia’s bet on Windows Phone would fail Microsoft would need to go it alone, which in essence would mean acquiring Nokia. Microsoft cannot let Windows Phone fail as the future of the company relies on succeeding in the mobile space. So far Microsoft’s mobile strategy has been disastrous. It seems that there is something fundamentally wrong in the way Microsoft sees the mobile space. They have tried countless times, but have never been able to penetrate the market. In my opinion Microsoft just doesn’t get what the market is about. Mobile devices are just completely different than PC’s. First and foremost mobile devices are very personal. Nokia knows this and has been really good in designing devices that give the impression of something humane. And the Nokia brand strongly supports this impression, whereas Microsoft and Windows brands do not. Especially the Windows brand has such a bad vibe to it that I would suggest Microsoft to ditch it regardless how valuable it might be.

Some analysts seem to think that by acquiring Nokia Microsoft now has hugely better change of succeeding. I don’t really see how this would be the case. Nokia has done an amazing job in the past two years and more-or-less single-handedly build the ecosystem from scratch. I’m sure Microsoft has also tried to do it’s best. Their best just hasn’t been good enough – not even close. This takes us to the whole “Elop as a Trojan Horse” thingy. At this point it’s difficult to say for sure what is true and what’s not. However, I don’t really see how Elop could have been a Trojan Horse. Like someone wrote on Twitter: “The ‘Elop was a MSFT Trojan Horse’ argument implies Microsoft wanted Windows Phones to fail in the market for 2 years. Just too silly.” I agree, makes no sense. This would also mean that the 2011 Nokia Board of Directors were a punch of incompetent clowns, which I’m pretty sure they were not. I think that the real truth is actually something much starker. My supposition also relies on the assumption that in 2011 the situation was already much more severe than what we were let to believe. I think Nokia realized that MeeGo was just too late and that the company did not have the necessary resources to fight the competition alone. Joining Android was likely considered much riskier than Windows Phone. Samsung was already at that point too dominant and Google was their competitor in maps. On the other hand Microsoft was willing to support Nokia directly with billions of dollars.

I’m certain that the Nokia board knew exactly what it was doing when it brought Elop to run the show. Plan A:  keep the company afloat and with the help of Microsoft succeed with Windows Phone or if A fails, secure share holders interests and minimize loses. I would argue that selling the devices unit was already considered as an option well before Elop became the CEO. I would go as far as saying that that was exactly why Elop was appointment as the CEO. Nokia’s future has been in the hands of Microsoft ever since they chose to partner up with Microsoft – and Nokia board has been fully aware of this. I’m sure that Elop coming from Microsoft was also no coincidence. Emotions aside, I have to hand it to Nokia. Very gutsy decision to call it a day and cash in when still possible. Might just have been one of the best decisions they’ve made in a while. Nokia found a way out from a very difficult situation, got back its independence and for a change has a future that actually looks somewhat bright. What all this means for Microsoft and Windows Phone remains to be seen.


  1. Chris Avatar

    “The ‘Elop was a MSFT Trojan Horse’ argument implies Microsoft wanted Windows Phones to fail in the market for 2 years. Just too silly.” Quote belongs to Benedict Evans!

    I really liked the idea put forth in this post. Its a perfect middle ground between the Trojan theory and the theory that suggests that Elop and the board were a bunch of incompetent fools. I imagine this explanation will prove quite popular in the future. Thanks for an interesting read.

  2. happosai Avatar

    “On the other hand Microsoft was willing to support Nokia directly with billions of dollars.”

    This implies that Nokia NEEDED cash in 2011. It did not yet, the cashflow was still nice. The real failure of the board and Elop was believing they need to make a strategic one-horse decision. There is absolutely no reason why Nokia couldn’t have gone both windows and android. The added extra cost for supporting two platforms would have been minimal had they used same Qualcomm chips on both.

    1. Chris Avatar

      I’m pretty sure Microsoft insisted that to get their support Nokia was allowed to make only WP and Asha handsets.

      1. Ville Aho Avatar
        Ville Aho

        And not just Android but to ditch Symbian and MeeGo and to terminate Meltemi. Android+WP was never a real option.

    2. Ville Aho Avatar
      Ville Aho

      The board must have seen that they could not get out of the hole they were in without outside money.

  3. Tero Lahtinen Avatar
    Tero Lahtinen

    “Microsoft cannot let Windows Phone fail as the future of the company relies on succeeding in the mobile space. ”

    This is quite a bold claim, especially considering that some MS owners are suggesting that the corporation should exit consumer business altogether and focus on B2B. Also Windows Phone is not in key strategic areas for 2014, as announced by MS.

    Do you have anything to support this?

    1. Ville Aho Avatar
      Ville Aho

      What you’re suggesting seems even bolder. 😉

      This is just my interpreration. To me Microsoft intends to be more like Apple and less like IBM. They want to own the living room and be in your pocket. Windows 8 is Microsoft’s mobile strategy. I see Windows RT and Windows Phone merging by 2015.

Leave a Reply

Your email address will not be published. Required fields are marked *