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Greg’s Bite: The Nokia/Microsoft implosion — or merger? 

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By Greg Mills

For those constantly reading my blog, the Nokia transition to the Windows 7 OS, which I predicted would be a disaster for Nokia, seems to be gathering steam.  

Since Nokia announced they were discontinuing the bulk of the existing lines of Nokia smartphones and dumping the lackluster two mobile operating systems they had been using, the market has shunned both their products and the stock of the giant Norwegian company.  

Who wants a soon-to-be-discontinued smartphone? Anybody want to buy a nearly new Kin phone that won’t even run WIndows Mobile 7? They do make good paper weights and conversation pieces if you buy them right (I’m thinking under a dollar).

Elop, the former Microsoft executive, publicly threw in the towel on MeeGo OS and Symbian OS, the two proprietary Nokia brand operating systems. They were so far behind both Apple’s iOS and the Android operating systems, he knew it was throwing good money after bad to continue to develop their own software.  

Apple and Android had been taking giant bites out of the Nokia market share constantly each quarter. The once indisputable leader of the cell phone industry was so flummoxed by Apple and Android that CEO Elop announced, in emotional desperation, that continuing as they were doing was like staying on a burning oil platform that was on fire. The alternative was to jump into the roaring sea full of sharks. He chose suicide by jumping into the sea, and a copycat fish named Ballmer saw a chance to capitalize on the distress of Nokia.

Microsoft had awakened from a long innovation coma to finally figure out the smartphone and tablet revolution was real, and that they had missed out on it. The late-to-the-party Windows Mobile OS 7 was hastily launched, and Microsoft prevailed upon a number of cell phone handset makers to launch Windows 7 capable smartphones. One wonders how much it took to bribe them to do that.  This is a business move they now regret. Windows 7 phones are more apt to fall off the shelf than to fly off the shelf.  

Desperate to catch up with Apple, which is the basic business plan at Microsoft, Ballmer knew he could advance his new mobile OS if he could just get Elop to transition from their old software to his new mobile platform. Nokia was still throwing a ton of dumb phones out the door up until that point.

Always the great savvy deal maker, Ballmer moved upon the situation and sold Elop on the concept of going with his new mobile OS instead of Android, which would have make more sense. Taking advantage of Nokia’s great desperation, Ballmer gave Nokia one billion dollars to seal the deal. Nokia then loudly announced they were going to the Microsoft camp for their mobile OS. That should not have been announced publicly.

The stock market reacted by brutally punishing both companies, dramatically selling off stock, driving the market share of Nokia down 41% since the giddy announcement.  Nokia has been in an almost revolt mood internally ever since, many employees distrusting Microsoft and hating the thought of becoming just another handset company. Nokia stock took a full 20% drop in the last week.  

It is bad enough to see your company stock continue to decline, but publicly announcing you are giving up a several billion dollar software project that had been in the works for years to partner with Microsoft and take on an unproven new mobile OS is a very risky thing to do.

The market cap of Nokia has tumbled from a high of US$150 billion to current levels of just $25 billion. This makes Nokia an obvious candidate for a takeover by someone with a bunch of cash in the bank. Even if the smartphone market running Windows Mobile 7 never works out for Nokia, there is still a market for dumb phones around the world. A cell phone that is just a phone will likely still be in demand for some time to come.

For Ballmer, the guiding light in his business plan is to do whatever Apple does.  Since Apple builds smartphones, Ballmer wants to build smartphones. The talk of Microsoft buying Nokia may have some substance after all. First, you bribe them to partner with you, and your reputation is so bad the partnership announcement alone drives their stock price down enough you can buy them out. Ballmer may be smarter than I give him credit for.

Reports from Norway indicate that Elop had made an interesting decision recently to provide free smartphones for his executive and R&D department employees. If you think he provided Windows Mobile 7 smartphones you would be wrong.  Logically, the Nokia staff ought to learn the Windows Mobile 7 OS since they are now building Windows phones. Elop gave them all an iPhone 4! What does that say?  

That’s Greg’s Bite for today.

(Greg Mills is currently a graphic and Faux Wall Artist in Kansas City. Formerly a new product R&D man for the paint sundry market, he holds 11 US patents. Greg is an Extra Class Ham Radio Operator, AB6SF, iOS developer and web site designer. He’s also working on a solar energy startup using a patent pending process for turning waste dual pane glass window units into thermal solar panels used to heat water see: www.CottageIndustrySolar.com Married, with one daughter, Greg writes for intellectual property web sites and on Mac/Tech related issues. See Greg’s art web site at http://www.gregmills.info He can be emailed at gregmills@mac.com )

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