> "...I think Microsoft ought to abandon Windows Phone. The war is over, and iOS and Android won."
That's remarkably short-sighted. The first iPhone was released only 6 years ago, Android 5 years ago. You really think that Microsoft - a company with nearly infinite runway, an enormous R&D investment and serious history - is going to down tools after a few years of frustration? Not likely.
The prize is too big and consumers too fickle to just give up.
Exactly. Plus it's a prize Microsoft probably feels it can't afford to lose.
If Android magically evaporated tomorrow Google would be just fine -- the core of their business (ad sales) doesn't fundamentally require that they control the mobile platform, although it certainly makes things easier.
Microsoft, on the other hand, had for decades been the platform company. They've historically tried to grow by pushing out from their desktop beachhead into other territory they think they can control the platform for (i.e. servers, game consoles)
Now suddenly they've found themselves behind in the highest-growth segments of the industry. In fact, just "behind" doesn't do their situation justice: they've had to spend billions just to claw themselves into a distant third place.
I expect that those billions will keep flowing. Microsoft is desperate to win this thing.
> If Android magically evaporated tomorrow Google would be just fine -- the core of their business (ad sales) doesn't fundamentally require that they control the mobile platform
I do not agree. They don't necessarily need to control the mobile platform, but they do need access to the distribution channels.
Witness how Apple replaced Google Maps with their own solution, even before their solution was good enough, as if they couldn't wait to get rid of GMaps. At some point not so long ago, they also threatened to replace Google's search engine with Bing by default. In 2009 Google Voice was also rejected from iTunes because it was "duplicating existing functionality".
Google is basically playing Microsoft's own game from the nineties - controlling the platform makes them a valuable distribution channel, ensuring not only their survival, but also giving them leverage in expanding to new markets.
Google is bigger and much more dangerous today because of Android, which IMHO is vital for them going forward.
But it is arguable if Apple would have done that if Google would not have been their competitor. Before Android they had a nice partnership (with Google CEO Schmidt on Apples board).
>Witness how Apple replaced Google Maps with their own solution, even before their solution was good enough, as if they couldn't wait to get rid of GMaps. At some point not so long ago, they also threatened to replace Google's search engine with Bing by default.
You've got to admit though that, the move was highly political, from both sides, Apple didn't want to provide Google with a bunch of data so Google refused to allow Apple to have turn-by-turn directions (because they happened to be supporting a competing platform), so Apple basically said screw you Google, we'll make our own maps.
the entire history of this comes down to Google launching Android - AT ALL. Before then, strong, positive relationship. Once it happened, Jobs did the "thermonuclear war" thing and the company has been replacing Google components one piece at a time...
> Plus it's a prize Microsoft probably feels it can't afford to lose.
Just like their search engine? They have been flushing cash down the "online services" drain for years, with nary a profit to show, nor any progress in market share. Why should the phone market be any different? They'll keep subsidizing the "WinPhone by Nokia", and flushing cash down this new drain too.
I'm seeing parallels between their attempt to break into the search engine market, and the smartphone market.
Just like their search engine? They have been flushing cash down the "online services" drain for years, with nary a profit to show, nor any progress in market share.
Cash is the one thing Microsoft has. Ability to make tons more cash over the next few years (at least) is another one.
Oh, and their market share in increasing http://www.brafton.com/news/google-bing-gained-search-market... , albeit at Yahoo's expense. Who knows, 3 years from now Microsoft might outbid Google on Firefox or maybe anti-trust will not let Google buy more traffic, being essentially a monopoly and all.
Bottom line: Microsoft is in for the long, long run. So is Apple and so is Google.
It's not about having the resources, it's knowing when you understand you don't have the devices to compete. Then myth that Microsoft has "unlimited runway" is just pure market BS at this point. Microsoft is not invincible based on its former pedigree. We also know that they're likely being funneled money via programs that spy on Americans and are likely helping float products that should have failed (speculation, but the facts are there).
The crux of it is Microsoft is not good at R&D today. Microsoft sells products that people still buy. People don't buy Nokia as much. What was the driver? Surely not to turn them around. We know that's not what they do with an acquisition.
I don't think it's "pure market BS". Microsoft has "total cash, cash equivalents and short-term investments standing at $77.02 billion as of June 30."[1] For a company that's still in the black, that's a pretty long runway.
And I have trouble understanding why the NSA stuff is relevant here. Believe me, I'm as upset as anyone here about it, but I really don't think that Microsoft is propped as a company by some cash that the NSA gave them to build out some relatively trivial monitoring infrastructure.
I think the recent revelations reveal my point re: NSA. A significant amount of that NSA budget is being used to buy into product steering and development. This was rather obvious as details started coming to light. I never said Microsoft was "propped", but that is artificially stimulating a company based on a flawed reality of market and investment (i.e. consumers are not buying a product to increase this margin - and in fact these funds are making the product less viable from the consumer standpoint).
"The crux of it is Microsoft is not good at R&D today."
Where on earth did you hear that?
Both Nokia and Microsoft are known for producing high quality products and investing heavily in R&D. The don't have a technology problem, they've got a branding, positioning and strategic problem.
Great R&D produces innovative and market stimulating products in my book. Microsoft hasn't impressed me, personally, for quite a long time. I realize this is a subjective idea to discuss - but neither Nokia or Microsoft are leaders in the mobile space (trying to create a bit of focus here since Microsoft has many facets). If you're not a leader in a segment you're not developing new and innovative products. Granted I think Apple and Google are coasting a bit right now, this comes back to innovators dilemma - which is what Nokia has grappled with going from a market innovator to irrelevant respectively (to the US market anyway). Just my $0.02, but trying to provide context.
Except you have tabula rasa in console business every few years so you could jump anytime if you have the money. And games as entertainment products rarely have legs longer than a generation - we the PC master race are spoiled with decade long backwards compatibility but in the console world it is rarely so.
And entertainment business (because the console is just a hardware dongle) is different beast.
I would argue that any investment in the Halo series, God of War series, or Mario series is a big draw towards buying the next console the same as the console you currently have. Yeah, you'll have to buy Halo 5 on the Xbox One, but you've already played Halo 1-4. Switching to Killzone halfway through the series won't scratch the same itch.
In theory yes but: (Opinion)
This generation was weak on exclusives even the strong titles were franchised and watered down during the cycle - it was combination of prolonged generation and blockbuster effect with insane production values. After all GoW2 was the swan song of the PS2 and arguably the best game for the platform and for some at all. Xbox 1 also had very strong line up in the last two years (Halo 2, NGB, Burnout, Conker). The last two years have been a desolation in the console exclusive worlds - we have some bright spots like The Last of US but it seems it really is the last of them. So I am almost not interested in next gen at all.
But unlike mobile phones and tablets owning more than one living room console makes sense. You don't have cost of switching just cost of entry (buying PS3 allows me to play Uncharted but does not prevent me from cursing xbox for lack of mouse in a shooter). And you could always bring down the cost of the device to as low as needed if you are willing to take the hit.
Right now in US and western europe the only users MS can get must be poached from Apple and Android. That is much harder task.
Yes, but the effect of ecosystem lock-down is huge compared to 5-6 years ago. It's not about who makes the best phones or phone-OS anymore. People are invested in their respective app ecosystems and all their photos, contacts, documents etc. are in Apple's or Google's cloud.
I'm not saying that Microsoft doesn't have a chance at all but I think the odds are against Windows phones ever reaching a significant market share no matter how much capital and R&D they stack behind it.
I don't agree. Most of the general users I know forget their email password every time they fuck up their phone and just buy all the apps again.
This is the norm. The only thing people give a shit about is their data (and that is usually when it's way to late and they're about to lose it), not the apps.
Who in their right mind would do something like this? Even the most technologically illiterate person I know understands how their Apple ID/Google Account works and that their purchases are tied to it. As for forgetting one's password, this is why just about every login form on the internet has a "Forgot Password" link/button.
I disagree. My wife doesn't use the Apple appstore, at all. If she wants or needs an app (or if I think she does and endeavor to put it on her phone), I have to do it myself. I never remember her Apple ID password, even though I set it. I am certain she doesn't know it, either.
Hi there, as a former phone support/trainer for apple support, people definitely buy things repeatedly!
I had one customer who thought each phone was effectively a burner, and he threw them out when he got a new one.
He also made sure the apple store activated his phone (before all went that way) as he thought it was useless to have a computer with the phone (because why was he buying the phone then?).
This story and many like it popped up again and again until I realized that the majority of users are completely ignorant of even the smallest details of how the device or its internals work, its is mostly a fashion statement.
Surely the Apple Store would set up the new phone with his existing Apple ID, though? Even if they didn't, most people only have one e-mail address (that they know of?) and so will be forced into using the same account again whether they like it or not.
Just like the commenter at the same level, many times the customer would not bring in their previous phone and have little to no idea about what their email address even was.
The apple store will definitely attempt to gather that info, but at some point it is new account and have a great day!
You can create a new email address in the setup wizard. I know of people who set it up there and literally don't understand what they did, and don't attempt to remember it.
Somebody gave one of my students a fairly (< 1yr old) new laptop the other day because they got it loaded up with viruses, (virii?) There is a market segment with more money than brains, it is large.
In Latin, "virus" is a mass noun, like "stuff", "water", or "poison", its original meaning. There is no attested plural. Being of originally Greek origin doesn't help matters.
In English, there's never a reason to use anything other than "viruses".
Actually, virus is a "mass noun" (uncountable) and has no plural. If it ever had a nominative plural it would be vira, and out of anything, viri is its genitive singular.
I don't see how (a) one example of stupidity is representative for the populace at large and (b) how this particular example is relevant at all.
If one person is ignorant in one domain, that doesn't mean that person doesn't excel in another domain. Stupidity is relative.
E.g. my father can't use a computer and thinks his computer is broken whenever he has minor problems with it. On the other hand he has a perfect track record in managing government institutions and the family's business and he's also extremely good at handling money and being a cheap bastard. He never learned to use a computer simply because he can delegate such tasks to his subordinates (or me).
And yet you've placed him in the bucket of people with more money than brains, simply because somebody on this planet sold his computer because it was virused.
Six years ago, most smartphone users were heavily invested in their Windows Mobile or Symbian app ecosystems, or in Blackberry's messaging ecosystem.
That said, to pull off an iPhone- and Android-style upset though, Microsoft would need a correspondingly huge difference in user experience though. The UI on Windows Phone is nifty, but it's not enough of a game changer for most people. It'd really have to be something like successful execution of wearable computing or the convergence described here: http://arstechnica.com/information-technology/2013/08/want-t...
The user experience is significantly worse for some cases, where Microsoft could have grabbed market share (though I don't know if it would have been worth it strategically).
I've posted several times about the awful experience:
I had some very ugly experiences setting up one for my cousin (I stupidly didn't lie and registered her as being from Uruguay and under 18), which made the phone behave like a brick ("sorry, no apps available in your country", "sorry, you have to be over 18 under laws from another country to use most of the features of this phone").
Changing the Live account did not work, I had to reset the phone and create another account for her, lying about her age and country so the phone could work properly (she wanted to use Skype and WhatsApp, not exactly the most demanding use case).
IPhone 3G, iPhone 4, iPhone 4S, Lumia 928. Those are my last four smart phones.
I didn't feel locked in at all to the "app ecosystem". Honestly web and email were paramount and everything else is secondary. At some point in the future I believe native apps will be passe in favor of a complete move to web applications making the underlying platform completely personal preference.
...oh.and at one time I was locked into my Palm Pilot. After that my Blackberry. Tell Apple to look at Palm or RIM if they want to know how long being the popular phone on the market lasts.
Because Windows Phone does web and email better than iPhone.
The primary way it is better is that the screen is so much bigger. This is easy to dismiss, but it makes a ton of UI hacks done for the iPhone needless. For example, the fact that the address bar isn't on the screen all the time is a hack to compensate for the small screen. Then that leads to a need for the hack where you click the top of the screen in the browser to rapidly scroll to the top. Sometimes that's a nice feature, but only if your screen is so small that they can't always display the address bar unless you've scrolled all the way to the top. Sometimes it's the most annoying thing in the world - like when you've scrolled past 7 pages of information reading in the browser and then accidentally click the rapid scroll-up button. There is no rapid scroll-down button to undo that.
My wife has an iPhone 5 and honestly it feels like a tiny little toy when I use it. The screen is ridiculously small.
Now for the other nice things... I can copy music to it without the iTunes bloatware. I plug my phone in, something pops up and then I just copy music to it. With Windows Phone, I have two copies of my music - my computer and my phone. With iPhone I had three copies - what was on my computer, what was on my phone and what the iTunes library. Keeping three things in sync was a massive pain.
The integration to Skydrive is much better than iCloud as well. My Lumia 928 has 32 GB of storage but with SkyDrive I get an additional 125 GB (of which 25 GB was free). I can seamlessly access pictures, video and music right from it as long as I have a signal.
The Nokia maps are the best maps application I ever used. Much better than either Google Maps or Apple Maps. Speaking of signal - the maps application have online and offline capabilities. So if I have no signal whatsoever there is a local copy of map data on my phone so I can still get directions.
I have three young kids and my Windows Phone has a KidZone. I put certain apps in there and then put it into the KidZone mode and my kids are locked into those apps unless they type my password. No more deleting icons accidentally, no more sending emails on my behalf accidentally, no more doing anything I don't want them to do like they did constantly with my iPhone.
This is long enough - the bottom line is that Windows Phone is superior in every way that matters to me to any iPhone I ever owned.
Well, Android has all of this, and then some more. Except maybe for the Nokia Maps. Haven't used it and can't say, but Google Maps on Android is FAR better than the iOS counterpart. So why Windows Phone and not Android?
Android and Windows Phone are both far superior to iPhone at this point. Between those two it comes down to personal preference. Windows Phone seems much more polished to me than Android. But I would be happy with a Galaxy S4. The only non-contender in my mind at this point is the iPhone. It has nothing going for it in comparison to the competition.
I have a Jelly Bean tablet with a 10.1" screen that I use every day and am happy with it.
To which I'd say the screens on WP8 and Android flagships are ridiculously large and poorly calibrated.
I feel as though I'm in the minority: but it pains me to use anything larger than an iPhone 4S. (The iPhone 5 included, sadly.)
I'd love to leave the iOS ecosystem, as I agree with your other criticisms. I long for the days where I can use foobar2k to manage my portable media player again -- but there's _no where for me to go._
The iPhone isn't a "little toy" to me, it's the only flagship phone I can use comfortably.
I feel left behind, as if I'm some sort of refugee from the display wars. -- Who will cater to me? Sony seems to be on the right track. At least their giant-Xperia has finally relocated the controls to be a bit more ergonomic.
Microsoft isn't abandoning the mobile war anytime soon. Too many things depend on it: in particular, its burgeoning media business that grew out of XBox Live (which is successful for a lot more than just games these days). Microsoft recognizes that, to preserve the its position in what people once called "the war for the living room," it needs to fight for the territory outside the living room.
Windows Phone may or may not have a shot in hell, and things don't look good in the short term. But finding success somewhere in mobile is a strategic imperative for the company.
Doing that through a hardware acquisition seems strange. And to Ben's point, this is a particularly weird "Why buy the cow?" scenario, given the preexisting partnership that served roughly the same purpose.
We'll see what Microsoft is thinking, but I'm scratching my head. Consumers are fickle, to your point, but en masse, they're also creatures of convenience. Android and/or iOS seem like mighty convenient platforms right now, from a consumer's POV.
There is a slight difference, though, in that as soon as Google went to market with their search engine, it was a hit. Or it seemed like it at least. I don't have the numbers, but I can only imagine that uptake of Google was a lot faster than that of Windows Phone.
Now I understand that search engines are a lot easier to switch to than phones etc. but it still makes for a less compelling comparison.
I don't think it's right to count Windows Phone separately from Microsoft's previous mobile phone offerings. Even if it was a major change from before, it was still part of the lineage.
If you count it that way, Microsoft has been in the mobile phone OS business for well over a decade and they still have essentially no traction. They had traction back when the smartphone market was tiny, but they didn't expand with the market once Apple and Google blew it open.
If Google were still struggling to get traction with their search engine in 2010, I think it would be quite fair to say that Yahoo or whoever had won and maybe they should give it up.
Google was a huge hit since it was hosted on Stanford's servers. It was just so obvious from the beginning that it was easier to use, and produced better results than the incumbents.
We are getting to a point where the power of the device is less of a distinguishing factor. Lots of people are satisfied with the hardware of the previous generation Iphone or lower spec'd Android Phones. If hardware prices continue to drop the feature phone market (which Nokia dominates) could easily turn into a low end smart phone market. The Windows Phone OS could actually be a good choice for this. This is also useful for Microsoft in the business market where there are a surprising number of feature phones (and aging Blackberry's).
I don’t understand that reasoning. Why would a phone maker choose Windows Phone over Android?
– Android is cheaper than Windows Phone (many phone makers pay Microsoft to be able to use patents used in Android, but even then, Android is cheaper than Windows Phone)
– Android has lower system requirements than Windows Phone
– Android has a thriving app market, Windows Phone doesn’t
Windows Phone low-end phones will only be hit if Microsoft convinces network operators to push them. That could happen if network operators were to regain power over the consumer by doing so. For instance, it could mean that on those phones, the app market is managed by the network operator, customers would pay different rates for different kinds of data, and customers could only use a pre-installed web browser that serves the network operator’s ads.
Just for a funny anecdote, an Android user at.my work asked me what virus scanning software I used on my Windows Phone 8. I laughed because I thought he was making fun of Windows Phone. Turned out he was serious - his Galaxy had gotten two different viruses and he was running virus scan on it. I told him that ironically Microsoft's market share wasn't high enough for malware authors to target.
And Android is complicated enough that it doesn't feel secure when it gets bloated. It is easy for someone used to windows to imagine that slowness or crashing are caused by a virus.
The person that asked me the question was a very experienced Android user that legitimately got two viruses on their phone that were causing link hijacking and popup advertisements.
He just assumed that Windows Phone would have the same virus issues as Android.
Somewhat ironically (compared to the Windows desktop situation), the only people I know who have actually gotten virus-like infections on Android are people advanced enough to be running custom rooted 3rd party roms on their devices.
This isn't to say it can't or hasn't happened on phones running factory stock roms, the Samsung /dev/exynos-mem permission bug on its own was one example of a huge attack vector on a limited set of Android phones, I just haven't seen or directly heard of it happening on a stock phone.
Android certainly does not have lower system requirements than Windows Phone. I mean, it could run on lower spec hardware... for some definition of "run". Mine are both last-gen devices, but my Lumia has half the cores and RAM as my Galaxy and runs twice as smoothly.
I hear later versions of Android did get smoother on flagship phones, but I don't know how or if that translates to lower-end devices.
The smoothness thing is actually an architectural choice. On Windows and iOS, the multitasking subsystem will stop the world for a user gesture. On Android it treats a user gesture as one task to handle among many.
That's certainly true now, and the Android team is on record regretting the decision. It would have been the correct engineering principle for a general purpose computer but obviously fails for a consumer content consumption node.
Currently both the core team and OEMs are striving hard to work around it (reversing it would be impossible as it's baked in).
However, I think as mobile platforms increasingly take on the role of general purpose computers, it will actually end up being a net benefit, and Apple's decision will look as short-sighted as the lack of true multitasking in older Macs.
Now that Microsoft is buying Nokia, they will be making their own phones. I think the idea is that they will operate that division at a loss to undercut their competitors and gain share in the middle or bottom of the market.
Samsung and Apple both need to make money on their phones. Microsoft does not. Both Bing and Xbox were operated at a loss for years; it paid off for Xbox but not (yet?) for Bing.
These Android manufacturers are generally not just shipping vanilla Android and have development costs on top of patents and licensing. They do this because owning the software stack gives power, and they believe it distinguishes them (although usually makes the product worse than stock Android). Microsoft want to own the software stack so shipping Windows on Nokia phones makes sense. It wouldn't make sense for other manufacturers unless they don't mind loosing power over the stack (which Samsung, Huawei, Amazon etc. don't want).
I agree with your points regarding limitations with Windows Phone. Just because an opportunity exists doesn't mean that they will succeed. Although I am unconvinced that the app market is that important. A few key apps are important, but Android app purchases lag heavily behind iPhone, and it is reasonable to suggest that feature phone users will lag even further (especially without a locally integrated payment system in developing markets).
> If hardware prices continue to drop the feature phone market (which Nokia dominates) could easily turn into a low end smart phone market. The Windows Phone OS could actually be a good choice for this.
But at the moment the feature phones and almost-smart phones by Nokia, i.e. the Asha series, are not running the Windows Phone OS, but the S40 OS (which is some kind of Symbian I believe).
For some reason your argument reminds me of DEC and the PC market - given their position in the early 1980s they should have been in a great position to compete, but they were always on the back foot and constantly playing catch up with the actual market leaders (including, of course, Microsoft).
Microsoft seems to avoid competing on even playing fields. It would rather own the platform and dictate terms than try to be the best in a crowded market.
There's one notable area where Microsoft has competed and thrived: Microsoft does quite well on the Mac platform, possibly making more money from each Mac sold than it does from each Windows PC sold. And there are in fact more viable word processor, spreadsheet, and presentation program competitors it needs to worry about on the Mac than there are on Windows (Apple's just for starters).
What's short-sighted is Microsoft not being willing to pursue the strategy it has been successful with on the Mac on other platforms such as Android and iOS, and gambling everything on creating another platform it can strong-arm users and developers on -- something it has only quasi-succeeded in doing once (XBox).
> There's one notable area where Microsoft has competed and thrived: Microsoft does quite well on the Mac platform
I wouldn't call it a level playing field. They've had a lot of time to make inroads into the market by not documenting the office file formats for as long as possible, so people had no choice but to buy their software.
The formats are documented now, but it's very hard for the competition to get people to switch from a product they are already comfortable with.
Good point, but at one point when the dominant WP on DOS was WordPerfect, Word won its position against MacWrite, WriteNow, and several other very solid products.
Agreed. Phones aside, the viability of Chromebooks goes a long way to showing how open the OS market is compared to the desktop market a decade or two ago.
And everyone thought XBox would be a consistent failure whereas the series ending up pioneering a lot of network service stuff and being well considered now.
Xbox didn't struggle for several years trying to achieve just 3% market share. I can guarantee you that if the Xbox only had 3% of the market today, Microsoft would've given up.
Clearly the mobile market is far bigger than the game console market, but fact of the matter is that the Xbox got far more traction early on than Windows Phone has ever gotten.
Though many people think it still hasn't earned back the $20-odd billion investment that's been put into it, which makes it a failure by many definitions.
I don't agree with all the things in this article, but there certainly rings a bell of truth in there somewhere.
A 5.44 billion EURO transaction to acquire a company that is already in a strategic partnership with you and working exclusively with your platform doesn't make sense.
My vote also goes for Nokia being financially in trouble, and M$ have their hand forced by the fear of a collapse in Nokia would gut the distribution channels for all the flagship windows phone models.
Worse, what if word got out and someone else bought them?
...wait, no, that would mean Microsoft would have some special insider knowledge of Nokia's finances that no one else was party to. Surely not.
The article is full of errors and unbacked claims.
> ... adding on a mobile phone business that Microsoft probably should abandon ...
Why should it be abandoned? Just because the author isn't a fan of WP8?
> have argued that Stephen Elop made a massive strategic error by choosing Windows Phone over Android; ... It would have been to Nokia’s benefit to have everyone running Android, including themselves.
Not necessarily true. There's only one manufacturer making money on Android at the moment, Samsung. When Elop got aboard, Nokia was already waaay behind. It's not like he drove them down, he merely tried saving them. Choosing Android might have gone better, but probably not. At least it was better going for WP than sticking to their own, dying systems.
20% of the general public in Poland, Mexico and some Eastern European countries don't agree with that claim. People forget how varied is the smartphone market across regions.
I can't find anything to back that claim up. The only thing I can find that's even close suggests that Nokia had 19% marketshare in Mexico for 2012, but based on other stats that's by far accounted for by Symbian devices:
People want smartphones. WP phones are the cheapest entry level smart phones (such as Nokia 510, 520, 610, 620) they can afford in eastern europe.
You see WP devices 'a lot' (that is: you get to see them once in a while) over there, but these are mostly owned by people who wanted some sort of smartphone. Also a lot of them are quite annoyed that there are no apps.
Except the argument was that the general public aren't fans of Windows phones, to which 20% market share of a few regions was used as a counter argument.
I would tend to think that market share is one indicator of a phone platform's popularity, and while 20% is not bad, it's not an amazing figure either.
I looked around for a chart of the iPhone's market share by year, but couldn't find one. I remember the iPhone having trouble in its first year or two, and most of WP8's credibility comes from the ~2 year old Lumia line.
True. In 2010 the iPhone only had about 4% market share. My only point is that I'm talking about popularity of existing devices. It may well be that Microsoft will turn it around!
The other way to look at it is that iPhone had ~100% share of the "modern smartphone" market (choose your own name for it, but Blackberries and Symbian don't count).
> ...wait, no, that would mean Microsoft would have some special insider knowledge of Nokia's finances that no one else was party to. Surely not.
Not really an issue if the board approved going to Microsoft with the financial information first. Moreover, when negotiating the strategic partnership, Microsoft may have gotten a right of first negotiation, that would legally entitle it to first dibs on the acquisition and certain "insider knowledge" anyway. Ultimately, shareholders might still have to approve the transaction, but there's no insider trading issue with reaching out to potential acquirers on the downlow.
>My vote also goes for Nokia being financially in trouble, and M$ have their hand forced by the fear of a collapse in Nokia would gut the distribution channels for all the flagship windows phone models.
I believe M$ and Nokia made a strategic agreement around 12 months ago that guaranteed that if anyone were to purchase Nokia, it would be Microsoft. The writing has been on the wall since then. I don't know why people are surprised by this move.
Can I add my own conspiracy theory and put forward that MS wanted to buy Nokia years ago when the world was going mobile but couldn't. Then one by one, MS VPs mysteriously left their posts to go work with Nokia. Fast forward to today, MS finally buys the firm they wanted to in the beginning.
That was the consensus amongst Nokia fans after the burning platform speech - that Elop's purpose was to drive down the price of Nokia until it was a cheap acquisition.
The strategy to partner with MS always seems heavily tilted in MS favor. It probably makes a good business study how this can be avoided for anyone in a similar industrial position. It always baffled me that there was no successful shareholder riot because Elops strategy seemed like a self-goal no matter how it would play out.
The notion that Nokia was about to jump-ship or simply go under is certainly plausible. Another possibility is that MS wanted to start using Nokia's resources for their other hardware projects and it was going to be awkward slicing off teams from Nokia and having them start working under a MS department. MS might not be selling as much hardware as Apple, but their XBox line is the current king of consoles. With a new console-war brewing, MS is probably desperate for any edge they can get over Sony. Who knows? Nokia might just have something that can help.
I think Microsoft sees Smartphones as strategic must have for long term.
MS saw that Nokia is the only player in the Windows market and Samsung is never going to be big on MS. They just bought the hardware and are making Windows phones into closed platform like iPhone is.
I don't think that Samsung and others are going to continue making windows phones after MS bought Nokia.
Microsoft wanted an ecosystem of competing handset makers like Android, where they could just make the OS and rake in the money; they have realized they aren't going to get it, and the one handset maker who took the sucker bet was dying fast. So (I predict) they have decided to switch to the XBox model, where the hardware is in-house, subsidized, and used to gain market share.
I love this guy. He almost always "gets it". If Microsoft was forced into buying Nokia's phone business, then if I were a WP phone customer, I'd be even more worried for this division's future, because it means they don't really have a clue what to do with it in the future, if they only bought it so Nokia doesn't go bankrupt (they were running out of money).
It also doesn't help that Microsoft has historically had pretty incompetent management, horrible culture between divisions and inside divisions, and it's now in the process of reorganizing and getting rid of its CEO (which was also sudden, and unplanned).
I'm not sure why so many are predicting WPs death - it's actually doing pretty well outside the US. Here in the UK it's now just under 10%. Pundits are far too US orientated.
Not only that, but with today's homogeneity in hardware, the phone market takes some time to shift. I held onto my Android phone for my two year contract and replaced it with a Lumia 920. My wife's Nexus contract is expiring in a few months and she is considering a Lumia as well. That transaction will occur about a year after my last upgrade.
These things don't happen instantly now that so many devices are alike.
By comparison, when we adopted the first iPhone, it was a dramatic departure from previous cell phones and we had to have it immediately. Since then, we've just waited for our contract terms to expire.
Though I would interrupt my contract immediately if someone would deliver on personal application omnipresence, making a cell phone that is just a small touch-enabled view on my network and my applications.
> I'm not sure why so many are predicting WPs death - it's actually doing pretty well outside the US. Here in the UK it's now just under 10%. Pundits are far too US orientated.
Trouble is, the US is a large and profitable smartphone market. And it's locked up by the on-contract subsidy model.
There is a strong relationship between iPhone market share and subsidy amount. Countries with no subsidies have very few iPhones. Countries with some subsidies have some iPhones. The United States has high subsidies and thus a lot of iPhones.
To some extent, Apple has a protected home market. Regardless of how its market share declines overseas, Apple will still rake in enormous profits through the cellphone subsidy in the US.
This is something that Nokia/Windows Phone doesn't have, with its puny 3.5% US market share. They're doing OK in the markets where people look at the price of the phone, and not doing well in the one market where people are happy to have their pockets picked.
That's not a recipe for making large profits in the phone business. And that's why the US market matters. Profits are disproportionately large compared to revenues.
Yup it's totally possible that WP will never crack the US, but as the non-US smartphone market is growing rapidly, I don't think success in the US is the be all and end all.
I've never seen one in SE or East Asia, not one, in Hong Kong, Singapore, KL, Bangkok or even little Phnom Penh, and you would think MS would see WP's best chance was to attract buyers who hadn't bought a smart phone before. What are they buying? Samsung mostly (and not just Galaxy, they make a lot of android phones at a cheap pricepoint), with 20-25% buying iPhones.
I would dispute that WP is "doing well" anywhere except a handful of countries where Nokia previously dominated distribution.
Microsoft now owns all of Nokia's handset business, which is still 90%+ non-WP. As the S30, S40, and Asha base under WP evaporates, WP will have nothing to piggyback on in these markets.
well that's because US has the market dimension of the full EU and more.
This is why also if in EU wp is aroundd 10%, worlwide it is still on 3%. Us-Africa(that is still for more than 60% on dumbphones)-Cina-Japan do not like it for various reasons
On HN, you could give people the benefit of doubt and assume that market-share growth wouldn't be brought up unless the numbers were large enough. I would refrain from quoting that figure if it went from say 10,000 units to 20,000.
Last quarter, iPhone sales were 31 million devices and WP8 sales were 7.4 million devices. If WP8 is selling one device for every 4 iPhones, that is indeed a decent result relative to where they started off from.
It isn't clear to me why the author is angry here but it comes across that way :-)
His thesis though, that something forced this move, is pretty credible. And the choices being (in order of likelyhood)
1) Nokia filing for bankruptcy - this one clocks up as being most likely for me
2) Someone else was going to buy them - I wondered about this with Apple's Maps fiasco, they had much better maps than Apple did, although I don't think Nokia would go for a breakup with partial acquisition.
3) Nokia switching to Android - this one I hear from people who wish it were true, but haven't seen much from Nokia on it.
Nokia has clearly been hurting for a while. Small flashes of excellence in an otherwise confused consumer experience. They also showed that you could build a competitive experience with Microsoft's phone product but it hasn't been helped by Microsoft's inability to get the developer traction it wanted.
Time will tell if it was able to change the path of Nokia and Microsoft for the better.
> 2) Someone else was going to buy them - I wondered about this with Apple's Maps fiasco, they had much better maps than Apple did, although I don't think Nokia would go for a breakup with partial acquisition.
Am I reading the news wrong or is this a partial acquisition? It actually looks like Microsoft just made it easier for Apple to buy the part of Nokia it would want (maps).
I don't have inside information here, but from what I know about such things, breaking it up decreases the overall value sometimes. Sort of a "leave the desirable asset attached to the junk to ensure it all sells." In the press release Microsoft did they explicitly call out getting the Maps unit as part of the deal.
It would also have been a disaster for Microsoft if Google had bought them, not that I think they were thinking about it.
The NeXT deal made perfect sense. Copland, Apple's internal effort at making a next-generation OS, had failed, and they needed to acquire a pre-baked operating system. Speculation at the time had them acquiring BeOS, but they went with NeXT instead, and the rest is history.
The deal does makes sense - MS has oodles of cash and several cash cows but no stars for the future. Other two players, Apple and Google has already brought production in house - MS has a fighting chance with this acquisition - though the larger issue of MS bureaucracy can rock this boat as well
Elop must have the record in destroying a company. In 5 years a company went from being market leader with something like 90% of the smartphone market to almost bankrupt. I do not think something like this have ever happened this fast.
I must disagree. In 2010 Nokia was 70% of Brazil smartphone market and their share was still rising, very fast. Symbian phones were known to.be solid, fast, and had apps and games ( even a port of counter strike! )
As soon Elop announced Symbian death, the whole thing tanked, and I cannot help but feel that Elop is stupid.
This would seem to imply that Brazilian consumers read the burning platform memo.
I highly doubt that. I have a huge problem with people flat out claiming that Symbian was an acceptably competitive phone offering in 2010. That's a bald faced lie in my opinion.
Symbian phones were much cheaper than a iPhone, and Android had not yet really arrived in force.
Nokia was known here for making sturdy, durable phones that you could use for a long time. If they paired that with also having a solid app ecosystem for the most popular brazillian uses (like, Facebook, Mail and Youtube) they could have easily won the smartphone wars here.
Instead they dumped Symbian and went for Windows Phone, allowing Android to get their former place in the market.
Mind you, most Android phones here are now no-name chinese ones, Nokia left the cheap but solid phone market, and cheap (but not-solid) phones took over the vacuum.
Yeah the completely market revolutionizing iPhone taking all of the high end market and Android taking all the low to high end market had nothing to do with Nokia's downfall.
And the announcement that they were abandoning Symbian when all of the phones they were selling were Symbian didn't have anything to do with that?
You don't announce that you're abandoning your current platform when you haven't developed your replacement platform yet unless you're a moron or intentionally sabotaging your company.
There's an argument that Nokia wouldn't have been stable now if Elop never took the job. It would have failed in Finland instead of now potentially failing in Redmond.
To be honest, I doubt it was how Microsoft planned it turning out. It certainly wasn't Plan A.
Microsoft had already made a significant cash injection into Nokia. Plan A would have been for the Lumia handsets to be a massive success, and for Windows Phone to gain significant traction.
Although you could argue there has been some progress towards this, it hasn't been fast enough for either Microsoft or Nokia. Nokia's current strategy with Windows Phone simply isn't working. They're at a point where they either a) change the business plan, or b) find another source of cash to pay the bills.
Since 'changing the business plan' in this case would have been hugely detrimental to Microsoft the acquisition was inevitable, but far from ideal for both parties.
I wouldn't limit it to the really big acquisitions. If the market says jump, the desperate company does it ASAP and invariably bumps their head on a sharp pointy object.
Microsoft is probably aiming to become a patent troll in the long run due to their lack of innovation. They already have many patents they can extort future innovators with, so picking up Nokia's (reported to be worth $6b) makes sense.
They didn't buy Nokia's patents. They bought Devices & Services business unit (the one making the phones) and a 10-year (non-exclusive) licence to Nokia's patents, which obviously are needed to make the phones. Does not sound like a patent troll move on part of Microsoft.
People are giving advises all over the web, as if, getting to a point where you have $7B to spend is not a result of a series of wise decisions and solid strategy.
I am not a Microsoft fan to say the least, but boy, we understand that this is all your personal opinion, etc.
However, have you ever touched or got near by a pile of a billion dollars, that you allow yourself to make such strong opinion about? Did you ever have 1% of that money, or .1% of that money?
Everyone has the right to have an opinion, but please, assume "they" know facts and figures you don't.
This guarantees that Nokia phones will continue to run Windows and that Microsoft can stay in the fight. This could be a life and death fight for Microsoft as both Google's and Apple's ecosystems are extending to phones, tablets, set-top boxes and beyond. They haven't built a bad Phone OS, but they need more time and a full-court press to fight for some market share. This deal gives them that opportunity.
The deal totally makes sense from my perspective. I wouldn't be surprised if they try really hard to buy BlackBerry for cheap as well when they falter low enough to be worth it for them.
Speaking through my hat here, having read nothing about the deal. But is this the hiring of the new CEO? Sort of like Apple buying NeXT to bring back Jobs?
Nokia's most recent quarterly had them sitting on $4 billion EUR of cash ($5.2 billion), with barely any burn. I don't think the company was poised to go bankrupt anytime soon.
Either Microsoft is completing a long planned purchase, or Nokia threatened to dabble in Android. Other than that the purchase is irrational.
In August, they spent about €2.2 billion buying out Siemens' stake in Nokia Siemens Networks. This could very well have caused some short-term cash flow issues. Which also explains Microsoft's offer to finance Nokia at extremely low interest bonds.
Long-term, NSN is generating positive cash flow and ought to be able to pay for itself.
That's remarkably short-sighted. The first iPhone was released only 6 years ago, Android 5 years ago. You really think that Microsoft - a company with nearly infinite runway, an enormous R&D investment and serious history - is going to down tools after a few years of frustration? Not likely.
The prize is too big and consumers too fickle to just give up.