Microsoft’s decision to purchase Nokia’s devices business has been described by some as a bold move and has been seen by others as inevitable. But will this combination work asks Kushan Mitra.
Call it a tale of two interviews. In 2004, Microsoft India was inaugurating their India Development Centre campus in Hyderabad and Chief Executive Officer Steve Ballmer was cutting the ribbon, he had agreed to give my former publication an interview and I had specifically requested if I could interview Ballmer.
I do not remember much of the interview, but I distinctly remember one question I asked Ballmer about Google when we spoke about Microsoft’s search plan. Dismissive would be an understatement to describe his response, “Things come and things go. Yahoo was cool, now Google is cool.”
Ballmer genuinely believed that Google was a flash in the pan. This interview was being conducted in a boardroom with several Indian and global executives sitting all around. Each and every one of them nodded their heads in agreement with Ballmer.
A decade on, Google has somehow managed to remain cool , Yahoo is cool again thanks in part to their cool Chief Executive Marissa Mayer. Frankly, if it was not for Microsoft’s gaming division and the Xbox, which is cool, the software giant is predictable, it is not a cool company for consumers or investors.
The second interview was one from 2007, when I interviewed the then Chief Executive of Nokia, Oli Pekka Kallasvuo, or OPK as folks in Nokia referred to him. Nokia had recently introduced the N95, possibly the peak device of their smartphone operating system Symbian S60 but it was going to compete against the Apple iPhone. The interview was taking place in the interim period between the unveiling of the iPhone and its sales launch.
OPK genuinely believed that an upstart, and in 2007 Apple was an upstart company in the mobile phone space could manage the complexities of a touchscreen device. After all, Nokia had tried and failed with touchscreen phones at that time. They had a device called the 6708 in 2005-06, a regular resistance touchscreen device, which albeit bulky was not a bad device to use, but an iPhone it was not. OPK spoke how users would prefer regular devices and how Nokia would remain dominant in the market and would even conquer the United States market, after all, they were showcasing ‘Ovi’, Nokia’s showcase for applications and of course the ‘N-gage’ gaming platform.
To be fair, Nokia did have very good ideas, but as someone who observed the company very closely in the latter part of the last decade, it also had a frightening bureaucracy. If anything, Nokia’s failure to capitalise on their first-mover advantage in the smart-phone and app-store spaces is almost completely attributable to the ‘death by committee’ syndrome and (at least then) an undying arrogance at the top echelons towards an American company.
Some describe this as corporate bravado, in both the aforementioned cases. At least Microsoft kept iterating their search product burning through multiple brand-names, Nokia started and stopped far too many projects and took far too much time to launch products. And despite good marketing and PR in key markets like India, they were not even a fraction of Apple’s gigantic hype machine. In fact, as the internet broke down media boundaries, particularly in the technology space and American tech blogs such as Gizmodo and Engadget began to dominate global audiences, Nokia’s failure to crack the US market through the 1990’s and early 2000’s came back to hit them hard again because tech writers had little or no affinity towards Nokia.
Nokia seemed so confused trying to keep up with Apple than they never noticed the Samsung steamroller coming from behind them.
Microsoft also has been at beat half-hearted towards mobile, the company kept Windows Mobile 6.5 alive well past its sell-by date as a sort of Frankenstein monster. WindowsPhone and Windows 8 are massive improvements no doubt as are the brilliant lumia devices by Nokia that run them.
But it is apparent that Microsoft is betting big on Nokia’s Asha range of ‘feature-phones’, although they are far more capable than smartphones from a decade ago and while Nokia has lost some of this market to up and coming Indian-branded resellers of Chinese devices, it is still strong player. Hundreds of millions of Indians still do not have a mobile phone and several hundreds more have a mobile phone but not one that utilizes data networks. Armed with Microsoft’s cash, and keeping Nokia’s brand (at least for now) the possibilities that this combination will do well, at least in emerging markets is still very good. Although, I would keep an eye out for Chinese manufacturer Xiaomi.
Personally, I doubt that Microsoft will be able to break the Apple-Google duopoly at the top end of the mobile market anytime soon, but it has been six years since the last revolutionary device was launched in the mobile device market and much like Apple moved from being an upstart to a dominant mobile player in two years, and is now making serious inroads in the Indian market, I have learnt not to discount anybody.
The past five-six years have been chastening for both Nokia and Microsoft, the arrogance and bravado should have gone by now. If the bureaucracy has been dealt with too, we might see some exciting things from this Finnish-American company.