Rescued or Buried At Sea? – Nokia and Microsoft’s Mobile Partnership

February 11, 2011 | 
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So at last we know. Nokia’s big chance for recapturing its leadership role in the mobile phone world, is… licensing an OS for their hardware? From Microsoft? Haven’t we seen this movie before?

Rescued At Sea

Much praise was heaped on Nokia CEO Stephen Elop for his “Burning Platform” press release/leaked memo. People called it courageous and honest. The tone of the letter was clearly influenced by Brad Garlinghouse’s “Peanut Butter Manefesto.” And that kind of speaking-truth-to-power thing always plays well in the press (even if it’s coming from the CEO).

But the big difference between the two memos is the call to action. Brad talks about divesting the distractions and focusing on what made Yahoo! great. Stephen’s memo is a call to… to what? Jump into the North Sea and get rescued?

Nokia, for all its troubles, was not a company that woke up on a burning platform. It was a company hobbled by committee and consensus. Nokia employees weren’t woken up by the memo to find their platform burning. They couldn’t help but notice strategic partnership after content marketplace fail to catch on. Nokia was on an island and the water was rising all around it. They were scrambling to find a way off. Nokia employees needed dead wood cleared, goals set, and risks encouraged so they could build a boat and sail someplace better. Instead, their new CEO called on them to follow him back to the mothership.

So who’s the winner here?

Bing wins big in this deal. Deploying a new mobile search partner is easy, and quick wins are usually the only ones that generate value when behemoth companies try to partner. On the mobile search side, Google will now feel a little more competition internationally. But overall, Google wins as other handset manufacturers see even more reason to adopt Android. Apple continues not to care.

Meanwhile, Nokia gets what?

They might be making some cash on this deal, but the bulk of any spending from Microsoft will be in-kind or co-marketing. So it’s mostly on Nokia to get the new OS working on a bunch of phones, get developers to build to it (who handles developer support for this ecosystem?), sell carriers on the phones, then sell consumers on them, all while making money and still (inexplicably) launching Symbian and even MeeGo devices.

Finally, in an effort to become a completely commoditized hardware vendor, instead of all the various content marketplaces that Nokia has built, they are going to use Microsoft’s. But for billing they can leverage Nokia’s relationships with carriers? Not a great track record there. Nokia has survived for hundreds of years, and I don’t believe that this is the beginning of the end of the company. It might, however, be the beginning of the end of their phone business. They are trapped in the middle market, not great at either the high or the low end, and getting pressure from both sides.

They tried to acquire their way out of it, and failed. Now they have described themselves as someone who needs rescuing, and they are relying on Microsoft to pull them out of the ocean. We’ve seen this movie before.

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