NOKIA…FALL OF A GIANT..Microsoft buys Nokia for 7.18 Billion

Microsoft acquisition of Nokia phone and device business brings to a close a remarkable period of high tech leadership. If you looked across the mobile landscape a decade ago you saw Nokia, Ericsson and DoCoMo of Japan, not Android, Apple and Samsung. Since 2007 Nokia has been hacked mercilessly by a tide of competition that it should have been well able to withstand, after-all it was the grand dad of the market. Even more amusing is the fact that Apple and Google has no prior expertise in the telecom market and Samsung was fiddling around with the extremely competitive consumer electronics landscape trying to find a footing for itself. The big daddies of the market were Nokia, Motorola and Ericsson. None of them exist any more in the handset market. They shut shop or meekly allowed to be taken over.

There was a time when I vouched that there was no phone that was better than Nokia. Even in my wildest dreams I could not have imagined Nokia being bought by Microsoft at a paltry 7.2 billion dollars. In comparison,* Xiaomi… a Chinese handset manufacturer, (6^th in china based on sales revenue) is valued at 10 billion dollars. It is 3 years old and pre- IPO . Similarly Motorola was sold to Google for 12 billion couple of years back.
(*Source http://tinyurl.com/nvug4np)

But this is Nokia, the largest mobile phone manufacturer and that brand  that believed in connecting people,somewhere down the line the connection dropped and the call got disconnected.

What went wrong for Nokia?

While there will case studies harassing students at business schools trying to answer the above question, I think I can summaries it in three key heading.

Missing the Big Picture: The telecommunication landscape was changing. It was not the voice that was connecting people it was Data. Facebook, Twitter, Whatsapp, Skype…. the list goes on. Nokia missed the picture and was trying to provide devices that offered superior audio quality.In the era of downloaded music and pirated cam prints, quality was never the highest priority. (Remember Apple antenna) It was being connected by data that was important. Apple recognized that and created a whole new business vertical to tap into that demand. Rest is history

Ecosystems: In the new mobile landscape software ecosystem is the game changer. Apple recognized it and invested in technology and infrastructure to help terraform the new emerging landscape. It understood the disadvantage of being on the wrong side of the application space, it has faced it in its PC business. Apple replicated a model in mobile space what Windows did to it in the PC market. Develop the ecosystem and leverage both software and hardware side of the market.

Mobile ecosystem is a delicate balance between technology and  application space. When it comes down to offering users highly accessible and relevant content, IOS and Android wins hands down against Symbian. With Android and IOS, the critical availability of core applications that fulfill user needs is such that people will equate their phone usage with the operating system and what it gives, ignoring the subtle differences in the physical media and the software layer above it. Nokia found itself on the wrong side, unaware.

Nokia made a mistake to stick with its own unique operating system for its brand of devices, which might have become the limiting factor for its growth. It was unable to leverage the huge potential it had with when more than 80% of the phones in the market were on its platform.

Innovation Paralysis: For a company that had pioneered GSM technology, developed Symbian and all those early innovations the company seem to be in a state of paralysis from the time IPhone was launched and android followed. With the released of IOS Symbian got outdated from day one. Even for someone with no tech background like me, Symbian looked drab, i was disenchanted with Nokia the moment I saw an IPhone.

I thought Nokia will bounce back with an even better OS but that never happened. They stuck on to Symbian. After the agony of dwindling sales and profits Nokia finally decided to dump the Symbian OS and create a new smartphone OS that would be distributed as an open-source. It was called  Maemo and ran on the Linux platform. It was a disaster.

Then Nokia wanted something entirely new, something hot and decided to stick with Intel’s Linux-based operating system – Moblin. Unfortunately, things didn’t go as planned, Mobiln was later merged with MeeGo which caused further delays and Ironically it go went gone with one device. In the meantime Samsung adopted Android and there were more than a billion app downloads from the iTunes store.

While IPhone changed the landscape with IPhone it was disappointing that Nokia in the last 10 years was unable to deliver not even a single revolutionary or game-changing feature. Finally it dumped its OS plan and decided to go with Microsoft as their primary OS, that marked the end of innovation in software thereby and a tech suicide for the company. It would have been better had it just adopted Android and continued to compete with Samsung with their innovations in hardware space

Endgame to all the above : Nokia handset division got bought over by Microsoft…

Buy what did Microsoft Buy?

THE DEAL