A Marriage of Convenience

We should get one thing clear first, the deal between Microsoft and Nokia was a strategic move on the part of the two companies. Microsoft wasn’t Nokia’s first choice in terms of partners and Microsoft had to be convinced to make the deal.

Yes, there design teams meshed well. Yes, the Lumias are some of the best designed Windows Phone devices out; but this is a strategic marriage. Both are committed to building up Windows Phone, but there will be conflicts due to divergent needs. For Nokia, the deal was about getting in on the ground floor of an ecosystem on which they could move quickly and have an impact. They wanted to make use of their assets, such as Maps and Nokia Music. The platforms they had before lacked the developer interest seen on iOS or Android. When Nokia began to hold talks with Google and Microsoft, they were looking to partner with an existing ecosystem and have an actual say in how it was constructed. I believe this is why the talks with Google fell through; Nokia wanted more than to just be an OEM skinning Android. With Microsoft the need was for a partner who would take Windows Phone seriously. The launch of Windows Phone had created buzz, but the handsets didn’t sell in major numbers. OEMs like Samsung and HTC were shifting more focus to Android because it sold more and they could skin it thus differentiating their devices. Other OEMs like Dell and LG left the platform. And what devices Windows Phone did run on could best be described as hand me downs. So Nokia needed a platform the big app makers could be convinced to write for and Microsoft needed a phone maker that could make devices that made Windows Phone look good, thus a union was forged.

Now here we are a year in and people are screaming Microsoft is trying to kill Nokia and Nokia is trying to take over Windows Phone. To hear people tell it Microsoft screwed Nokia over by doing the Surface and working with (longtime) hardware partner HTC. There is also the lovely urban legend of Stephen Elop being a Microsoft Mole. On the other side, Nokia’s exclusive app deals are hurting the platform and Nokia’s focus on the Lumia brand distracts from Windows Phone. Also the deal really hurt Microsoft’s relationships with other OEMs. A lot of this debate over Microsoft’s and Nokia’s intentions toward each other can be boiled down to people who are fans of Nokia and people who are fans of Microsoft.

Nokia fans are all about Nokia and what’s best for the company; some agree with the move to Windows Phone while others wished they’d went with Android or kept working on MeeGo and whatever else. Some of them also feel that because of the risks Nokia is taking, Espoo has earned the right to build the premier or flagship mobile Windows devices.For some Microsoft fans, the concern is that Nokia is fragmenting the platform with application exclusives and other actions. They have issues with people being more concerned with the health of Nokia and Lumia than of the platform and OS the Lumia runs. Both side have points but they are also not looking at the bigger picture.

Nokia wants to get the bulk of Windows Phone business because of its investment. So it pushes the Lumia brand and bringing in exclusive apps that appear on the Lumia phones before going. But also, they need Windows Phone’s marketplace to grow so they aren’t going to horde apps.Microsoft wants and needs to see other OEMs build handsets running WP. It also needs to ensure that Nokia’s exclusives don’t fork the OS. They aren’t trying to kill Nokia, their focus is on the OS.

I get (sort of) the sentiment some have that Microsoft owes Nokia something; they appear to sacrificing a lot. But those people need to get realistic about a few things. First Nokia’s deal was around Windows Phone; Windows is a different division run by totally different people. Second this is business, the only things owed are what was agreed to in a contract. I was really glad that Stephen Elop stressed the fact that there is a written agreement between Nokia and Microsoft. It reminds everybody that this is a business matter and while we may like to turn this into a damn drama, the people involved treat it with a bit more maturity and sense.

The problem I see is twofold; if something bad happens to Nokia, Elop and Windows Phone will get blamed, regardless on whether its the truth or not. He was the last one in. Secondly focusing solely on Elop and his strategy, even his Burning Platform memo, distracts from all understanding how Nokia got to this point. Its funny how Nokia’s problem is simply Windows Phone and the solution is to go to Android or back to MeeGo. Its as if all the complaining about Symbian and MeeGO and Espoo’s own slow reactions to changes in the Mobile market never happened.

I’m not saying there aren’t inherent issues with the Microsoft deal, but it does seem that people have forgotten how we got here. This is a partnership, one in which both are invested in the growth of Windows Phone. But it also is an alliance that can end and shift. The situation in which the deal was made is not the situation we are in now. Microsoft is shifting its business model to add branded devices and OEMs are slowly coming back, so the story still unfolds.  

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