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Hodgson Blog

Microkia / Nokiasoft

Feb 16, 2011 by Steve Mallory

Finnish cell phone / paper products manufacturer Nokia has come upon hard times. Once known as the maker of every American teenager’s first and second cell phones (circa 2000), Nokia revolutionized the market by being the first telecommunications company to target young audiences. They were also directly responsible for the sudden, short-lived boom in sales of tasteless faceplates, sold through sketchy websites, eBay merchants and mall kiosks everywhere.

But as with The Beatles, DDT, and Arrested Development, all good things must come to an end—for Nokia, this terminus came in the form of a shiny slab of sweet desire known as the iPhone. Involved in healthy competition with the likes of Microsoft’s Windows Mobile devices and Research In Motion’s Crackberry, Nokia was busy leading a group of manufacturers in developing and supporting a smartphone OS called Symbian, which, despite being the most popular smartphone OS of its time, was distinctly lacking in awesome, colorful, touchable fun.

Unfortunately for Nokia, precisely that kind of fun was handed down from the end of a black turtleneck sleeve to the salivating masses, who immediately stopped paying attention to Symbian, their children and the road in front of them, while instead focusing on Fruit Ninja and writing songs about their totally cool phones (note: if you pay close attention, you’ll see that the old phone he chucks in the water is, in fact, a Nokia).

So four iPhones and 300 Androids later, Nokia was hurting. Their much-hyped N8, though admittedly a fine piece of hardware, was still running Symbian and therefore didn’t even have Angry Birds! How was anyone supposed to use this thing to avoid the dreadful monotony of his / her life? Needless to say, the phone that was supposed to save Nokia sold poorly, though at least it did finally get Angry Birds (that’s not saying much, considering the smash-hit app has also been ported to a cardboard and plastic-based OS).

Thus, Nokia’s board of directors replaced their old, worn-out CEO with a fresh one named Stephen Elop. Elop had just jumped ship from Microsoft, but upon arrival to his new vessel, he expressed doubts about its seaworthiness in a metaphor-rich memo. A few days after issuing that memo, he allegedly barred himself in his old office at Microsoft, holding an intern hostage and demanding that they not “make [him] go back there.” When pressed for details about the incident, Elop responded by calling a press conference and announcing a new partnership between Nokia and Microsoft.

Yes, it seems the days of Symbian have mercifully come to an end. In a strategy that has been called into question by investors, tech pundits, and Nokia employees, Nokia is ditching its old poorly-selling OS in favor of a new poorly-selling OS. Tweeting via his Nexus S while sitting atop a mountain of hundred dollar bills, Google exec Vic Gundotra offered a terse metaphor as his assessment of the Microsoft–Nokia partnership: “Two turkeys do not make an eagle.”

So what can we, the consumers, conclude from this tale? Either Nokia is still relevant, or double turkeys roasted on a burning oil platform make toast. It would appear that the jury’s still out, but in my opinion, it was a good move; Microsoft has a lot of money. This isn’t really about whether Nokia can make a killer Windows phone; it’s actually about whether Microsoft can cram their OS down the throats of enough—oh, right, they’re really, really good at that sort of thing.

Consider the Xbox for a moment. At a time when the video game market seemed closed to newcomers, Microsoft came along and forced its way in. Sure, they initially had billions of dollars in losses, but Microsoft knows that when you pour money into a large hole, it eventually fills up. A couple of years later, Microsoft released the Xbox 360, which surpassed PS3 sales by a significant margin.

I think this will also be the case with Windows Phone 7. It’s an operating system backed by Microsoft, and from what people say, it’s a pretty good one, too. On top of that, many service providers and phone manufacturers are eager to get a third smartphone player in the rink to balance out competition. It might be a slow process, but it will happen. Since Nokia is now Microsoft’s premier WP7 manufacturer, it’ll be around to reap the benefits of this relationship.

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