With acquisition by Microsoft imminent, Nokia is well-placed to inherit the tragedy of the Redmond-based software giant: its devices strategy and services strategy are fundamentally opposed to each other. Needless to say, there is pain ahead for Nokia.
Watching the events of Nokia World, the Finnish handset maker’s flagship event, left me with a sense of uneasiness—a feeling that similarly struck me during the unveiling of Microsoft’s Surface tablet. The speakers who were trotted out at Nokia World, led by 'papa bear' Stephen Elop, and the overall proceedings in general seemed rushed in some places, and in others it was as if the company was just going through the motions.
Just as Microsoft CEO Steve Ballmer offered nothing resembling a coherent answer as to why the company decided to dabble in hardware, the executives and support staff at Nokia World walked on eggshells, refusing to prod the elephant (read: impending acquisition by Microsoft) in the room. There was no story, no context and no bigger picture.
When I asked seven mid-level Nokia executives separately how they felt regarding Microsoft’s upcoming purchase of the company, they replied, as if almost on script, with only one word: "Optimistic".
The simplest answer to this stifling atmosphere is that, legally speaking, Nokia must continue with its affairs as planned until the acquisition process is over. Whatever it has cooking in the product line must come out, as required by US anti-trust law. Therefore, the world was treated to a glimpse of ‘what could been’—an alternate timeline of devices and services that Nokia had planned, a line-up that now may or may not change depending on what Microsoft has in store for Nokia.
The upcoming acquisition can only be seen as a classic tragedy in this context, because the new Nokia line-up presented at Abu Dhabi finally made some headway in attacking the company’s fundamental hurdle: the lack of a cohesive software strategy.
Nokia is, and always has been, primarily a hardware company. This not only shows in how their internal teams are organized, with software teams running behind their hardware counterparts, but also in the company’s brand image and market feel. It does not matter whether it is Nokia’s oldest phones—which are fondly remembered for their durable, brick-like hardware quality—or the Lumia line, where the camera and imaging attributes are the main marketing talk points. Nokia is hardware.
Under the hot sun of Abu Dhabi, however, the de facto language was software. Take a look at Nokia’s latest flagship, the Lumia 1520. The camera capability has actually been scaled back in favour of greater software adjustments. The talking points of the 1520 are not an insane-megapixel count camera but rather Lumia Black, Storyteller, Beamer and so on: all which point to the fact that Nokia is paying close attention to Windows Phone customization software.
Above all, it shows that the company has taken the first baby step towards emulating Apple’s integration of hardware and software; even the Lumia 2520 tablet looks interesting with its keyboard cover with a built-in battery extender.
Where is the tragedy, then? While Nokia essentially has acquired Microsoft in terms of vision as the Redmond-based software giant has decided to go through the ‘devices and services route’, it takes nothing away from the fact that Microsoft’s devices strategy and services strategy are fundamentally opposed to each other.
Microsoft has put all its chips in, banking on a strategy that veers towards implosion. For its Office suite and division to succeed, the company must let it proliferate onto other platforms, the way Google does with its services. On the other hand, if Microsoft wishes its devices division to succeed, it must use its software as an exclusive differentiator, the way Apple does.
It is in this tragic bear-trap that Nokia now finds itself. And this is not counting whether Windows Phone software can even succeed in an Android/iOS world. There will be much pain ahead, no matter which part of Microsoft wins.