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What the Web Is Saying: Nokia Partners With Microsoft

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It’s not exactly a surprise, but now that it’s official, the Nokia-Microsoft partnership is still stunning in many ways. It shows how desperate Nokia (s nok) is, and how willing they are to cede control to Microsoft (s msft) in a bid to stay alive. It’s also a recognition that in just a couple of years, the smartphone market has become a two-horse race, leaving former powerhouses Microsoft and Nokia on the outside looking in.

There are huge implications and tons of questions, from execution to integration and how Nokia will fare as it weathers two years of transition betting the farm on a single, emerging OS. Here’s a sampling of what the web is saying about the deal, its implications, potential pitfalls and the reasoning behind it. On the whole, observers don’t seem to see much good coming from the partnership.

In an e-mail note, analyst David McQueen, principal analyst at Informa Telecoms & Media called the partnership a “make or break” strategy that will give Microsoft scale and inject more competition into the market, which carriers will welcome. But he questioned the wisdom of the move for Nokia:

This may not be the best move for Nokia and it is questionable how “open” Microsoft will be to work with. Even if Nokia fear Google’s (s goog) dominance, an open platform like Android would allow much more possibilities to Nokia. Also, two losers don’t make a winner, particularly given their scale and cultural differences. It’s hard enough for massive companies to innovate on their own much less with another massive partner with a completely different culture. Whether Steve Ballmer and Elop can be the white knights that the operators are looking for will depend largely on the ability for Nokia and Microsoft to execute their partnership effectively.

Others raised similar concerns, including analyst Bob Egan who tweeted that much comes down to execution, which hasn’t been a strong suit for Nokia:

Execution has been Nokia’s shortfall yet now it seems they are taking on even more execution complexity. Was hoping for simpler more focused.

The Armed and Dangerous blog said the moves by Nokia will fragment the company into confusing factions that won’t be able to execute on their different goals:

The reorg may dissipate Nokia’s people and energies into so many officially-sanctioned missions that it can’t execute on any of them – in fact I think that’s the outcome to bet on. It’s the company that’s burning now, not the platform; I would no longer bet on Nokia surviving another 24 months.

Nokia CEO Stephen Elop, however, answered critics on Twitter with a quote, effectively responding to a statement by Google VP of Engineering Vic Gundotra earlier that Microsoft and Nokia were two turkeys that didn’t make an eagle:

Or this: Two bicycle makers, from Dayton Ohio, one day decided to fly.

Rene Schuster, CEO of Telefonica SA’s O2 mobile business in Germany, told the Wall Street Journal (s nws) that Nokia and Microsoft bought themselves some time and had a “pretty good shot at trying to get it right”:

Strategically it makes sense, I think actually both parties win. Nokia still is a powerhouse. I know people have been talking doom and gloom and all that, but they have significant market share and they still have a huge customer fan base. From a Microsoft point of view, Microsoft will actually benefit with the positioning and the Nokia fan base. Nokia gets an operating system that we all agree in the industry is really, really good, and if there’s any criticism that we have, [it] is ‘what took them so long?’

Tech blogger Robert Scoble added that the deal, while not popular with Nokia fans, will prove to be a good one in the end for Nokia, helping it attract the attention of developers.

Nokia just doesn’t have the right people to play in this new world. They needed to join the engineering teams at Nokia who know how to build great hardware with someone else who knows how to build services. That someone else is Microsoft. No one else was as strong a fit and if you think Google is it, well, sorry, no. That would be even worse for Nokia because Nokia needs to have something different than HTC has (Nokia can’t compete with China’s brightest minds).

But Tomi T. Ahonen, a former Nokia executive and book author expressed shock at the partnership, especially because he dismissed Elop’s recent memo about the state of Nokia as a possible fake. He said today this was the beginning of the end for Nokia, something the company will regret long into the future. He said the eventual abandonment of MeeGo and Symbian means much of the work and research that went into those platforms is for naught. And Ahonen said it will ultimately slow down Nokia, not speed it up:

So, all Nokia R&D and product development guys need to be retrained for Microsoft abilities, tools and methods. This is not learning new, this is unlearning the past, and re-learning the same but by the vocabulary, methodology etc of another company. That is a huge internal training effort, huge, for what? Will definitely be costly, and there will be very many times a Nokia contact, internal or external, will now see as the automated reply ‘I am not available now, I am in training’ haha.. Yeah, Nokia is moving to internet speed exactly how? This means the whole organization is mummified for at least what, 18 months? All processes will now be made slower and in the end, will they be any faster when they have to often consult with their Microsoft partners on issues (rather than internal Nokia colleagues). Yeah.. Look up Sony and Ericsson, how long it took for those two partners to understand each other. Or check Alcatel and Lucent. And this can very well end  belly-up, see Daimler and Chrysler. It will not make Nokia a more responsive and modern company. At least not for the next 18 months, maybe longer. And the end result won’t be something faster it was today. Not with this partnership.

The partnership brokered by Elop, a former Microsoft executive, led some to question if the ultimate end game is a total buyout of Nokia by Microsoft, something Chris Selland raised in a tweet:

If Elop was brought in to sell phones it’s the wrong move. If Elop was brought in to sell the company, it’s the right one.

Nokia’s embrace of Microsoft will have a huge impact on longtime Nokia developers, who have been migrating to QT, the software framework Nokia pitched as a bridge between MeeGo and Symbian. Now with both those platforms heading for the door, many developers feel burned. On Forum.Nokia, developers sounded off on the plans, with many dismayed at the news:

Wow what can I say, Nokia just flat out killed any enthusiasm I had to develop on Nokia platforms, I never have and never will use a Windows platform. You have just killed QT, even worse killed the most promising OS out there in MeeGo. Elop is the worst thing that has ever happened to Nokia.

Avi Greengart, an analyst with Current Analysis, pointed out in a tweet that the deal with Microsoft still doesn’t address the exploding market for cheap smartphones:

So that’s the strategy at the high end. How does Nokia fend off competition in emerging markets?

ZDnet’s Mary Jo Foley, who covers Microsoft, wondered what Windows Phone 7 manufacturers such as Samsung and LG will do now that Nokia is partnering with Microsoft:

Nokia didn’t become just another Microsoft handset partner via today’s agreement, like HTC, LG, Samsung and Dell. According to the announcement, Nokia would is going to have direct input on the future of Windows Phone, influencing key areas like maps, imaging and the marketplace…So if you’re HTC or Samsung, do you keep your eggs in the Windows Phone basket or put more in the Android one?

Despite Nokia’s belief that it faced commoditization going with Android, others still wondered why Nokia wasn’t open to multiple platforms if it wasn’t sticking to its own. Analyst Ray Wang conveyed the following in two separate tweets:

Nokia should have bet on multiple platforms if they weren’t going to have their own […] If you don’t have your own platform, you are relegated to being a “slave” to someone else. That’s just how it is.

Analyst Michael Gartenberg added a number of interesting quotes, questioning the logic behind the deal, which seemed to be motivated by fears of Apple (s aapl) and Google. Gartenberg tweeted:

The enemy of my enemy is my friend is usually not a good basis to form a partnership. Marry someone because you love them not because you share a common foe.

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14 Responses to “What the Web Is Saying: Nokia Partners With Microsoft”

  1. as much as i love to hate MS, i kinda feel sorry for them today.
    they stand no chance against google, which we all love to love, but their corporate behavior is just as MS in the old days (on the users side).


  2. Nokia are desperate, as the number one phone and smartphone company? If you say so.

    The smartphone market *is* a two horse race, I agree. That two horse race is Android and Symbian. That’s a fact. That’s the latest market share figures. I know people love to ignore or poke fun at Nokia and pretend otherwise, but that doesn’t change the actual market figures.

    I don’t see this is necessarily a good move for Nokia – but on the contrary, it’s the current success of Nokia and Symbian that makes me think this is precisely a risky move. (And let’s face it, if Nokia really were the minor company that you and others make them out to be, why would anyone care about this announcement if the first place? You can’t have it both ways.)

    OTOH, it is a very good move for Microsoft. Even if Nokia’s smartphone share takes a dive with WP, it’s not inconceivable that they still remain ahead of the Iphones. What do you think the headlines will be? “Nokia fall behind Apple”? (Unlikely, since the media love to ignore Nokia.) Or, “Microsoft now outsell the Iphone”?

  3. I think the Nokia customers, developers and shareholders are actually seeing what is happening. Lunacy.

    See Nokia Conversations blog for actual reactions:

    Only good thing that I can see coming out of this debacle is that the smart Nokia folks will leave the company and maybe help start doing some other cool stuff in Finland.
    We have been too dependent on Nokia lately, well now it is changing.

    Goodbye and thanks for the fish!

  4. Rene Schuster. …because Windows Phone 7 is a really, really good operating system. No multitasking, no cut and paste, no universal search, youtube, flicker, pandora, hot spot, tethering, flash, silverlight, file sharing, damn where do I stop. And months away from having these things fixed. How would you describe iOS and WebOs? The only break Microsoft has caught with the whole WP7 mess, is that so few WP7 phones have actually been sold the bad news has had a chance to leak out.

  5. This deal will turn Nokia into the Motorola of 2003. The board of Nokia admitted they have no clue when they hired Elop, who would not surprisingly turn to his old employer, Microsoft.

    I’m no fan of Symbian, but unless Microsoft is giving them WP7 for free, they just made their phones more expensive and only slightly easier to use.

  6. Lucian Armasu

    I think everyone is not seeing this for what it really is. It’s not a “partnership” with Microsoft. It’s a take-over by Microsoft for a much smaller price (rumored a few hundred millions).

    What better way to take over a company as big as Nokia than to replace its top leadership with “former” Microsoft employees. I’m not just talking about Elop here. They are already hiring other former MS employees in top Nokia positions. But believe me, Nokia is not only run by former MS employees now, but by Ballmer himself. Has anyone noticed Elop’s body language around Ballmer? He gave signs of submission.

    Together with giving Microsoft not only the opportunity to put Bing on all Nokia’s phones (huge win for MS), but also free access to 8 billion worth of maps service, it’s pretty clear to me that now Nokia will be run from Redmond. They won’t even have to buy it later when the share price falls, like others suggest it will happen. Microsoft already owns Nokia.

    • Smartphones are outselling PC, that’s why both HP and MS are trying to be an Apple. HP even said WebOS for PC, ditching Windows. MS is actually in bigger trouble than Nokia. As good as move it is for Microsoft, it also means there’s no point for HTC, Samsung etc to make high end WP7 phones, because Microsoft is a competitor now with their takeover of Nokia.

      • It’ll be better if you come with seasoned facts. “Microsoft in bigger troubles with $20billion profit?”. They have the wad to rewrite their future and they are doing just that. I use WP7 phone and I’ll confess it’s awesome. I think it’s better we put down this NOKIA-MSFT bashing and open our arms to real products.

    • TechMinds

      You do realise that no decision of this scale could be made without the support of Nokia’s Board of Directors right? While the anecdotal evidence may seem like Elop is some kind of trojan horse the fact remains that Nokia’s current Symbian/MeeGo strategy wasn’t working. They needed to take drastic action on the software side of things and their only real options were Android or Windows Phone.