The rumored partnership of Nokia and Microsoft has come to pass, as Nokia announced today that it is going to embrace Windows Phone as their primary smartphone platform. I’m not going to go into a deep analysis of the keys to success. That will be well covered in the news today. The big one obviously is how many platforms will developers support? iPhone, of course. Android is on the cusp of becoming 1a to Apple’s 1. A must-do platform. In certain markets (e.g., enterprise), Blackberry is 1b or at least a strong contender. HP made its WebOS move earlier in the week, with some interesting value propositions, linking computers, tablets, phones and peripherals. What would make Windows Phone compelling for developers?
Nokia has had its own set of challenges. While they long said they were the world’s largest Smartphone company, they were kidding no one. Once the iPhone came out, they were yesterday’s news. Once Android gained momentum, they were in full denial mode. They missed key trends (like Americans were buying clamshell phones) and took years to rectify the shortcoming, never to regain market position.
So now Nokia and Microsoft are partnering. Not surprising, considering where Nokia’s new CEO, Stephen Elop came from. (Microsoft, if you don’t already know.) It didn’t take him long on the job to conclude that Nokia’s own efforts were failing and ultimately failed. Nor did it take him long to conclude that his best strategic bet was Microsoft. Given his background and their mutual desperation, it didn’t take long to conclude this deal. In some ways, it’s almost stunning in its rapidity.
I just want to ask one simple question: when have two waning market players ever combined together to create one market-winning entrant? I was sitting in a session yesterday at New York’s Social Media Week next to IBM AR star Mauricio Godoy and I asked him to come up with any examples of where this had worked. Interestingly, he came up with a couple of situations. Involving musical artists/groups. I’m not sure they were entirely compelling but at least they had merit worth discussing. But neither he nor I, nor anyone else I’ve asked this question to, could come up with a compelling instance where two fading businesses combined to reassert market leadership or even competitiveness.
Combining my problems with your problems sometimes solves both our problems. More often, however, it increases complexity and amplifies both of our problems. Friend and fellow analyst Bob Egan Tweeted this morning “Execution has been Nokia’s shortfall yet now it seems they are taking on even more execution complexity. Was hoping for simpler more focused.”
Often in business conversations, you hear people say that they’re looking for situations where 1+1 is greater than 2. Here we have a situation where 5+4 is supposed to produce 1 or 2. Now I admit that I’m just old enough that I missed the “new math” in high school. (My sister, two years younger, learned it.) But I don’t see the math working. And in a market so dynamic and fast-moving, combining these two entities, neither of them known for their speed, may just hasten their mutual demise. (I would, however, love to hear of successful business combinations in this vein in the comments. Anyone?)