The New Math: When 5 + 4 = 1 (Nokia and Microsoft Get Together)

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?)

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Microsoft: Putting the Inmates in Charge of the Asylum

I received a Tweet the other day from a former client, the always-insightful John Taschek, VP of Strategy at Salesforce.com, asking for my take on this news story about a rumor that Microsoft CEO Steve Ballmer is going to make significant management changes, elevating people with engineering backgrounds at the expense of those with marketing backgrounds.  There are so many ways this is just troubling when it comes to what ails Microsoft.  Let me outline just a few of them:

  • Putting engineers in charge of anything is generally a bad idea.
  • If bad marketing is Microsoft’s problem (and it’s one of them), putting engineers in charge of things does not solve that problem.
  • Microsoft’s biggest challenges are generally neither related to bad marketing nor stifled engineering.  They’re related to bigness and the innovator’s dilemma, as expressed by Clayton Christiansen.  (I find it personally exciting that this is discussed in the Wikipedia article on “disruptive technology.”  While I wasn’t using the term in 1995 when it was first ascribed by Christiansen, it has been my career since 1979 so I guess I owe a debt of gratitude to him for giving definition to my life.)

Those of you who like typical blog posts can stop now.  Those of you who know me, however, realize that these call for further discussion.

So why is putting engineers in charge a bad idea?  The best way I can explain it is through an old joke.

Talking frog

A man was crossing a road one day when a frog called out to him and said: “If you kiss me, I’ll turn into a beautiful princess.”  He bent over, picked up the frog and put it in his pocket. The frog spoke up again and said: “If you kiss me and turn me back into a beautiful princess, I will stay with you for one week.”  The man took the frog out of his pocket, smiled at it and returned it to the pocket. The frog then cried out: “If you kiss me and turn me back into a princess, I’ll stay with you and do ANYTHING you want.” Again the man took the frog out, smiled at it and put it back into his pocket.
Finally, the frog asked: “What is the matter ? I’ve told you I’m a beautiful princess, that I’ll stay with you for a week and do anything you want. Why won’t you kiss me ?”  The man said, “Look I’m a software engineer. I don’t have time for a girlfriend, but a talking frog is cool.”

Engineers are brilliant at what they do.  Understanding what users want is not one of the things that they’re brilliant at.  I’m often asked why, in a coming up on 32 year technology career, I’ve never lived in the Bay Area.  Oh, I’ve visited there a lot, almost certainly over 100 times in that time span.  The way I always explain it?  Silicon Valley’s hometown newspaper, the San Jose Mercury News, I say, has technology on the front page of the paper five out of seven days.  My hometown newspaper, the New York Times has technology on the front page of the paper five times a year, twice after an Apple product introduction and three other times…when something goes catastrophically wrong.  Engineers are great at figuring out what’s possible.  Marketers, at least good ones, are supposed to be great at figuring out what users want.  The intersection of the two is where magic is made.

Steve Jobs is not an engineer.  Steve Wozniak was Jobs’s original technological guru.  Jobs has a remarkable understanding of what consumers want, usually before they know they want it themselves.  Steve Ballmer is a marketing guy from way back.  Putting the engineers in charge is perhaps the most damning thing he could ever do.  I have known SteveB since 1987 and have been a staunch defender of his for a long time, even when it wasn’t popular, both early in his reign and lately.  If this is his strategy for returning Microsoft to its former glory, well…Steve, you just lost me.

So, what is Microsoft’s bigger issue and how do you solve it?  Microsoft does not lack for technical excellence nor innovative ideas.  The Kinect is a great example of what Microsoft can do and the business rewards it can result in.  It’s also instructive in how Microsoft works.  Microsoft has been doing research about alternative input approaches for decades.  Yet all we had in the market was the keyboard and mouse.  Oh yeah, Microsoft did tablets too.  We see where they took that.  But I digress.  How is it that the Kinect came to market?  You can bet that if Nintendo hadn’t invented the Wii, the Kinect might not have seen the light of day for another decade.  Microsoft was threatened.  Someone else had asserted market leadership and, with it, sales success.  Only then was Microsoft able to identify technologies it had that could return the Xbox to sales competitiveness.

This has been Microsoft’s response for way too long.  When threatened, they innovate…or at least get competitive.  The browser is another great example of that.  Threatened by Netscape, they came up with the competitive Internet Explorer (and used anti-competitive measures to bring it to prominence).  Almost every subsequent browser innovation from Microsoft has been spurred by, or copied from, alternative browsers.

I am aware of way too many Microsoft products and technologies that were quashed or watered down, not because of marketing, not because of engineering, but because of internal politics.  This is not a recent phenomenon but has been a Microsoft “sickness” for over a decade.

Witness Microsoft’s response to the cloud.  They have been reasonably aggressive when it comes to server-side cloud initiatives with Azure.  That’s because Microsoft’s upside is larger than its risk.  Yes, self-impact is a concern but if they can further damage Oracle/Sun, IBM or Salesforce, well, then Microsoft’s upside potential is great and the strategic beachhead is important.  Whither, however, Office for the cloud?  Oh, yes, they’re getting around to it.  They’re hardly, however, aggressive about it.  Why?  Because Office is one of the great cash cows in the history of technology and they’re in no rush to gore that cow while no one else is really threatening them.

What do you think we’d have now if Steve Jobs were in charge of Microsoft and Office?  Do I really even have to answer that question?

No, Microsoft’s problem isn’t that the marketers were in charge and now the engineers will come in on their white steeds to save the day.  Engineering and marketing have to work in concert, driven by a compelling vision that unifies the two, often warring, groups, espoused by a leader with the strength of character to make these groups work together when their individual priorities and incentives are not necessarily aligned.  Apple does that beautifully.  Google does that occasionally well.  Throwing a bone to John, who motivated this post in the first place:  Salesforce does that pretty well too.  Microsoft?  Not so well.

There was a time when Microsoft faced a challenge from the Internet.  Almost 16 years ago now, Bill Gates issued a famous memo, a call to arms.  That is what Microsoft needs now.  A definition of what it is and, more importantly, what it needs to be.  Again, if this were Apple, Bill Gates would make a triumphant return, leading the company back to its former glory.  But Bill has other priorities on his mind and the world is a better place for that.  Is Steve Ballmer the man for that task?  I honestly don’t know.  And that’s perhaps the most damning statement of all about Microsoft.  I don’t know.