Jeff Kagan: Microsoft and Nokia Flop, What’s Next?

Jeff Kagan |

Did you ever find yourself along a busy street and see someone stepping into traffic trying to cross? Your first instinct it to yell, "STOP!" Well, that’s how I felt when Microsoft Corporation (MSFT) decided to acquire Nokia Corporation (NOK) a few years ago. Sure, they needed to shake things up. In fact, they still do...but not like that.

I’ve been a wireless analyst for decades and have watched the industry go through changes. We have seen both networks and handset makers explode with growth over time. With that said not every company is a winner. There are plenty of companies who struggle.

It’s not that I am a gifted palm reader. Everyone who had followed the wireless industry for any reasonable length of time saw the writing on the wall. Nokia and BlackBerry Ltd (BBRY) once lead, but now they struggle to follow as Apple Inc. (AAPL) iPhone and Google Inc. (GOOG) Android transformed the handset space.

So the weakened Microsoft thought that by acquiring the weakened Nokia they could somehow become an industry powerhouse? Excuse me, but what planet does that logic come from?

Microsoft obviously thought they could wave their magic wand over Nokia and transform the wireless handset space to their favor. Well, just as I said many times when it was happening - fat chance. While I hope for the best with Microsoft and Nokia, the ending of this movie was so foreseeable.

Apple iPhone and Google Android transformed the wireless handset business roughly seven years ago. Microsoft has been trying to succeed in the wireless space for more than a decade now.

With all that change going on, Microsoft simply has not succeeded in wireless. When will they learn the truth…they are not a wireless genius. However, this does not have to be the end of the story.

Future Microsoft Success from Windows 10

The best chance for Microsoft to ignite excitement and sales once again could be Microsoft 10. I’ve been hearing good things about this operating system. Windows 10 may be the first OS from Microsoft that will simply continue to update itself. If thats true, that would solve one of the biggest problems users have with Microsoft…updates.

That means there is no need for buying and installing and getting used to new operating systems every few years. That would be a welcome change for individuals, companies and governments who dread upgrading to the next version of Windows.

Would you believe it if I told you there are still plenty of companies and governments still using Windows XP. That’s right. That’s the hell that Microsoft has put users through for generations cutting against the grain.

As for wireless, I think Microsoft may be better off forgetting about owning a slice of the wireless handset pie. I believe Windows 10 will also integrate wireless because that’s what users want. However Microsoft can be a player and get more market share with an app, which will work on any smartphone, rather than their own handset.

Microsoft Success Path

So Microsoft could be successful with Windows 10 and a wireless app. That is the direction they should be focusing on. That way, users can choose their favorite computer, tablet and smartphone and tie it all together with Windows 10 and apps. That way they can create content on any device and save it to the cloud. Problem solved.

Of course, as I say this, I understand Microsoft seems to be moving in the direction of selling their own hardware. So we’ll just have to see what the company does as they do it going forward.

Nokia is Coming Back

With all this chaos we aren’t paying much attention yet to the Nokia re-entry into the wireless marketplace. However Nokia is coming back. After the Microsoft acquisition we thought Nokia would fade into the sunset. However they aren’t ready to give up the ship. They are moving back into the tablet business and next step will be the smartphone business.

Will Nokia be successful? It depends. Do they have a great handset that will attract lots of good attention from users and app makers? Do they have a deep understanding of the power of marketing, advertising and public relations? These are just some of the areas they flopped at after Apple and Google jumped in and transformed the space.

Good Luck to Microsoft and Nokia

So at this point all I have to say is good luck and success to both Microsoft and Nokia. We thought these two companies were joining, and in fact they did, but the belly flop could be heard around the world.

This is a second chance for both companies. For the sake of their workers, investors, partners and customers I hope they are both successful with Microsoft Windows 10 and Nokia N1 tablet and coming smartphone.

Perhaps with this increased level of competition, both Microsoft and Nokia will actually care about the end users. We can only hope.

Equities.com columnist Jeff Kagan is a Wireless Analyst, Telecom Analyst, Industry Analyst and consultant. He shares thoughts on the changing industry, which he's been following for 25 years. He follows what's hot, what's not, why and what's coming next. Email him at jeff@jeffKAGAN.com

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 111.80 0.77 0.69 8,330,942
NOK Nokia Corporation Sponsored American Depositary Sh 4.58 -0.12 -2.55 9,843,601
GOOG Alphabet Inc. 774.93 3.74 0.48 431,358
BBRY BlackBerry Limited 7.74 0.11 1.44 859,923
MSFT Microsoft Corporation 61.37 0.00 0.00 5,871,782

Comments

Emerging Growth

PixarBio Corp

PixarBio Corp is a specialty pharmaceutical/biotechnology company focused on pre-clinical and commercial development of novel neurological drug delivery systems for post-operative pain.

Private Markets

Spotify

Spotify is a online music service offering providing digital content from a range of record labels and artists. Users can browse through the interface by artist, album, genre, playlist, record…

Cloudera

Cloudera offers enterprises a new data platform built on the Apache Hadoop open-source software package. Hadoop is a data-management platform that can consolidate data in a single repository for comprehensive…