Nokia and Microsoft choose wrong strategy

Nokia and Microsoft choose wrong strategy


Marek Pawlowski's BBC interview on the partnership between Nokia and Microsoft

This article builds on Marek Pawlowski’s earlier interview for BBC television (lead story on BBC World Business Report – those with iPlayer access can see it here).

The partnership between Nokia and Microsoft fails to deliver the multi-platform user experience strategy vital to future success.

  1. Reduces the speed at which knowledge of customer behaviour is translated into new user experiences.
  2. Prioritises Microsoft’s legacy applications architecture at a time when customers are switching to new, cloud-based services and expecting multi-platform access to their data.
  3. Creates a 2 year ‘transition’ period during which customers and developers switch to other platforms and competitors increase market share.
  4. Destroys value for Nokia shareholders by reducing control of the multi-platform service architecture essential to future profitability.

There is a customer expectation against which this partnership should be measured:

By the end of 2013, the majority of customers will want an integrated range of wireless products in their lives, using natural interfaces such as touch, voice and gestures to communicate, access media content and use third party services. The expectation will be of pervasive access to data across multiple digital touch points.

The partnership between Nokia and Microsoft will not succeed in meeting those expectations. Their own execution will be less effective and several competitors already have better strategies:

  1. Apple already has an architecture (AirPlay) for customers to access their media content across PCs, TVs and mobile devices. The architecture will soon be extended to enable Apple’s developer community to build those same features into third party services.
  2. Google’s entire strategy is built around access to a personal cloud. It already leads in providing access to services such as search, communications, maps and third party applications from almost any device with a web browser. It has a better business model in place to generate high margin revenue from these services.
  3. HP’s WebOS platform is better designed than Windows Phone for building new services across a range of devices. The WebOS architecture makes extensive use of existing web technologies, making development more accessible to a wider range of service providers.
  4. RIM has the best back-end architecture for managing the inconsistencies of wireless networks to deliver the illusion of an always connected experience for users. Two recent acquisitions – QNX for their operating system and TAT for their interface expertise – give competitive advantage in delivering multi-platform services across numerous digital touchpoints.
  5. Samsung, LG, Toshiba and Sony are better placed to build a wider range of digital touchpoints, from TVs to home appliances, and integrate those more effectively with mobile devices.
  6. HTC has a lower cost base, a headstart in developing for Windows Phone and delivers new products faster.

We would love to hear your views on the strategy announcement. What does it mean for Nokia, Microsoft, their competitors and – crucially – the customers? Please post a comment to the blog below.

MEX foresaw the importance of multi-platform experience architectures some years ago in our 2009 Manifesto. In addition to our ongoing research publications, we hosted a series of international MEX events to create new ideas for the multi-platform future of mobile user experience. The next MEX event is in London on 4th – 5th May 2011.

Viewers with BBC iPlayer can watch Marek Pawlowski’s BBC interview on Nokia’s strategy, where it is the top story on BBC World Business Report. The iPlayer link will be available until 18th February 2011 and the interview will also show internationally on broadcast TV and on various BBC channels throughout 11th February 2011.


7 Comments

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  1. 3
    Graeme Bradbury

    Of the problems identified point 2. seems confused. Phone 7 is not yet 6 months old so hardly legacy. Plus it strongly enables cloud access.

  2. 4
    Marek Pawlowski

    Thanks for your comment Graeme. To clarify on point 2:

    “Prioritises Microsoft’s legacy applications architecture at a time when customers are switching to new, cloud-based services and expecting multi-platform access to their data.”

    The majority of Microsoft’s revenue comes from selling operating systems and applications for various verticals: PCs, mobile phones and games consoles. When you strip away the spin, its interest in this agreement with Nokia is to increase revenues from those assets.

    The architecture of Microsoft operating systems and applications carries a heavy legacy dating back to desktop PC-era thinking. It is unsuited to the challenge of delivering the kind of multi-platform user experiences customers will be expecting in the future. As such, Microsoft’s legacy interests will have a negative impact.

  3. 5
    Yuri

    I think that you are completely right – Nokia just committed suicide. With one announcement they alienated their development community, committed themselves fully to a laggard mobile OS thus sacrificing their existing platform, which would have given them far greater speed and flexibility.

    Even if tomorrow they announce that they will support Qt on Windows Phone, I think it will be too late to recover the trust they just destroyed.

    Sad day for mobile technology

  4. 6
    Albert

    The fact that there are competitors with better strategies shouldn’t be a reason for giving up, what MSFT and Nokia should do, quit?
    Your four points doesn’t hold much water either.
    1. Reduces the speed at which knowledge of customer behaviour is translated into new user experiences.
    Windows Phone like Android it’s a OS build by one company and phone manufacturers are working together to integrate them into their phones, I don’t see any speed difference here, the winner here is Apple that has full control of both, the down side, there is only one option, if you don’t like that option you are out of luck.
    2. Prioritises Microsoft’s legacy applications architecture at a time when customers are switching to new, cloud-based services and expecting multi-platform access to their data.
    Windows Phone 7 is a phone in the cloud (all content is duplicated there), nobody is investing more on cloud services that Microsoft, almost all the major MSFT franchises have a cloud version or will have soon and customers may expect multiplatform access to their data but unless we switch to some sort of communism-platform I don’t see that coming soon
    3. Creates a 2 year ‘transition’ period during which customers and developers switch to other platforms and competitors increase market share.
    There is thousands of developers already creating for WP7, there is definitively no transition for them, on the contrary, they just won a big chunk of market share in one day.
    4. Destroys value for Nokia shareholders by reducing control of the multi-platform service architecture essential to future profitability.
    That’s probably true but Motorola already did that and seems is working well, it’s life or death out there, rather have your stock plunging and hope for better times, than selling it for a penny.

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