Last year when Microsoft handed Nokia a very large check to help them promote Windows Phone, we joked about it wondering if Steve Ballmer really expected to see any of that money back. It was the type of moment when you can almost see the writing on the wall (that Nokia was in trouble). Nokia at the time was having financial problems and had even been blocked from transporting some of their gear out of one country they still owed money to. Microsoft saw this as an opportunity to get in with a phone company on the ground and partner with them directly. Nokia was not in any direct legal battles with Apple so there was not any worry that Apple could directly affect imports or sales of the products. Things were looking good.Unfortunately for both Microsoft and Nokia the Windows Phone based Lumia 900 did not make the big entrance that both companies had hoped. This is not to say that it was a bad phone, but that there were too many other smart phones on the market that did not have the same stigma that Microsoft did and still does. After Microsoft’s departure from the very business friendly (and easier to use) Windows Mobile 5 and 6 there was a brief fiasco with Windows Mobile 6.5 that removed many of the features that people liked. It was also hobbled by small fiasco with the Windows Mobile based sidekick phone (where a lot of people lost data due to failures in certain cloud services).
Microsoft next tried and failed to push out two new phones that were widely rumored to be based off of the ZuneHD’s new interface (many actually thought it was going to be a Zune Phone). The Kin was a complete failure so Microsoft stepped back to rethink Windows Mobile. During this time Apple and Google managed to get a nice hold on the market. Even in the business world you find more iOS and Android based phoned and Windows, RIM and Simbian. It is just the way the market has moved.
So by now you are probably wondering what this abbreviated little trip down memory lane has to do with Microsoft giving Nokia a big check. Well it plays into the problem that Microsoft has; they had a few Windows Phones on the market from people like HTC and Samsung, but these were considered secondary to the much more popular Android based phones where they (HTC and Samsung) could exercise their own creativity to pack in features and software to make them more competitive. With Windows Phone, that is not the case, you get the UI you are dealt and there is not a whole lot a phone maker can do to make it different from another phone on the market (except hardware wise).
Microsoft (and Nokia at this point) also has to begin to address the issue of phone hardware specification. In the time that Microsoft was lingering around the outside of the phone world they might have missed that most consumers can tell you if they have a single or dual core and understand that one is “better” than the other. After years of hearing Apple, HTC and Samsung tell people what is inside the phone the consumer is beginning to care about that (whether it makes a real difference or not).
Nokia, on the other hand was looking for someone to help. This made them perfect for a Windows Phone direct partner. Microsoft and Nokia both jumped at the chance. Now, unfortunately Nokia is back in trouble. They have just had to cut 10,000 employees and close down three factories. This is not evidence of a winning company. Microsoft might have put their eggs in the wrong basket. Right now many analysts see Nokia as in danger and it is very likely they will be bought by someone.
This puts one of the pieces of Microsoft’s ecosystem in danger; which means that Microsoft has to find another partner, push more money into Nokia, or buy them. This brings us to the present and also to Monday’s Microsoft event. This is an event that also interestingly enough happens to coincide with a Nokia announcement. Is it possible that the event on Monday will include the planned purchase of Nokia by Microsoft? This would be a reasonable thing to think; after all buying Nokia will give Microsoft quite a bit including a new patent portfolio to use against their rivals Google and Apple. It will allow them to control the hardware for their products directly (not necessarily a good thing) and it could also give them a manufacturing arm to build that tablet they want.
We are certain that Microsoft’s announcement on Monday will include a tablet of some sort that features their hardware design and we would be very surprised to find out that someone other than Nokia is building it for them. For now we know that Microsoft has to do something to bolster Nokia or Windows Phone 8 might not make it far into the market (no matter how good it is). But it would be very interesting to see Microsoft actually announce they were going to buy out Nokia on Monday and throw some of the current predictions and analyses right out the window (no pun intended).
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