Diggin' technology every day

June 14, 2012

Nokia’s dark future

Filed under: Random Thought — Tags: — Nate @ 8:00 am

Nokia made some headlines today, chopping a bunch of jobs, closing factories and stuff. With sales crashing and market share continuing to slip, their reliance on Windows Phone has been a bet that has gone bad, at least so far.

What I find more interesting though is what Microsoft has gotten Nokia to inflict upon itself. It’s basically investing much of it’s remaining resources to turn into a Microsoft shop. Meanwhile their revenues decline, and their market valuation plunges. There was apparently talks last year about Microsoft buying Nokia outright, but they fell through. For good reason, I mean all Microsoft has to do is wait, Nokia is doing their bidding already, and making the valuation of the company even less as time goes on. From a brand name standpoint Nokia doesn’t exist in the smart phone world (really), so there really isn’t much to lose (other than the really good employees that may be jumping ship in the meantime – though I’m sure Nokia keeps MS aware of who is leaving so MS can contact them in the event they want to try to hire them back).

At some point barring a miracle, Nokia will get acquired. By so heavily investing itself in Microsoft technologies now, and until that acquisition happens they are naturally preparing themselves for assimilation – and at the same time making themselves less attractive to most other buyers because they are so committed to the Microsoft platform. Other buyers may come in and say we want to buy the patents or this piece or that piece. But then Microsoft can come in and offer a much higher price because all of the other parts of the company have much more value to them.

Not that I think going the Microsoft way was a mistake. All too often I see people say all Nokia had to do is embrace Android and they’d be fine. I don’t agree at all here. Look at the Android market place, there are a very few select standouts, Samsung (Apple and Samsung receive 90%+ of the mobile phone profits) being the main one these days (though I believe as recently as perhaps one year ago it was HTC though they have fallen from grace as well). There’s not enough to differentiate in the Android world, there are tons of handset makers, most of them are absolute crap(very cheap components, breaks easily, names you’ve never heard of), the tablets aren’t much better.

So the point here is just being another me too supplier of Android wasn’t going to cut it. To support an organization that large they needed something more extraordinary. Of course that is really hard to come up with, so they went to Microsoft. It’s too bad that Nokia, like RIM and even Palm(despite me being a WebOS fan and user, the WebOS products were the only Palm-branded products I have ever owned) floundered so long before they came up with a real strategy.

HP obviously realized this as well given the HP Touchpad was originally supposed to run Android – before the Palm acquisition. Which would explain the random Touchpad showing up (from RMA) in customer’s hands running Android.

Palm’s time of course prematurely ran out last year (HP’s original plan had a three year runway for Palm), Nokia and RIM still have a decent amount of cash on hand and it remains to be seen if they have enough time to execute on their plans. I suspect they won’t, with Nokia ending up at Microsoft, and RIM I don’t know. I think it would make another good MS fit primarily for the enterprise subscribers, though by the time the valuation is good enough (keeping in mind MS will acquire Nokia) there may not be enough of them left. Unless RIM breaks apart, sells the enterprise biz to someone like MS, and maintains a smaller global organization supporting users where they still have a lot of growth which seems to be in emerging markets.

Of course Nokia is not the only one making Windows Phone handsets, but at least that market is still so new (at least with the latest platform) that there was a better opportunity for them to stand out amongst the other players.

Speaking of the downfall of Nokia and RIM, there was a fascinating blog post a while back about the decline of Apple since the founder is gone now. It generated a ton of buzz, I think the person makes a lot of very good and valid points.

Now that I’ve written that maybe my mind can move on to something else.


  1. Looks like someone is cribbing your work:

    Comment by Gabriel Chapman (@Bacon_Is_King) — June 16, 2012 @ 2:25 pm

  2. That could be! But even if so it’s not a big deal, not like I profit off of any of this stuff anyways 🙂 thanks for pointing it out.

    Comment by Nate — June 24, 2012 @ 9:43 am

  3. […] sacrificing themselves slowly on the sword of Microsoft, and the investors were getting upset. I fully believe(d) that they would be acquired by Microsoft but not until the viability of Nokia was called into […]

    Pingback by Microsoft buys Nokia division – was Nokia about to jump ship? « — September 3, 2013 @ 6:40 pm

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