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The Immediate Aftermath - when software bought hardware

15 February 2011 , Written by Dhruv Tanwar
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Nokia running Windows? Or is it that the Windows maker running Nokia?

If you believe all that you read in the news, you could be forgiven for believing that this deal is about more than Nokia's hardware running Microsoft's software. It would seem more like Microsoft management is now moving into Nokia's house, and starting to run it. That, even as Nokia CEO Elop made it clear in an interview with Bloomberg that Nokia has no plans to merge with Microsoft.

ConceptNokiaWindowsPhones1Blown away by the winds of extreme change at Nokia is Mark Louison, president of Nokia Inc., deciding to pursue opportunities outside the company. In his place, comes Microsoft's man Chris Weber, a 16-year veteran of the software giant. Also on his way out is MeeGo EVP Alberto Torres. Reports also picked up on Elop's statement that the move to run Windows on Nokia would result in substantial layoffs, even in Finland, in addition to the voluntary churn already visible.

Other reports said Nokia should have considered at greater length the history of Windows Mobile OS bombing on each and every hardware platform that Microsoft partnered with since the turn of the century. Previous attempts by Microsoft to shore up market share for the mobile operating system though deals with Ericsson, Sendo, Motorola, Palm and LG have been met with little success. Moreover, reports said, the game has shifted to feature-rich platforms such as Android, iPhone, even Blackberry, which allow users style and functionality irrespective of the hardware they run on through their ecosystem, developer community, and app stores, which is an area where Windows Phone 7 does not match up to the competition. A report specifically outlined the shortfalls in Nokia's market strategy, which it believed to be the cause for its shrinking market share, rather than troubles with its Symbian OS. In taking the plunge from the “burning platform” that Elop said Nokia was on, he has outlined that Nokia would get billions of dollars from Microsoft in support to help develop and market smart phones on its operating system, even though Nokia would pay royalty to the software giant to license the software. Additionally, he foresees reductions in operating expenses, partly from the layoffs, as internal OS development comes to a sure, gradual end.

A report by Reuters said the wireless industry was positive on the deal as it was “good for competition and innovation,” even though investor confidence was clearly missing with Nokia's stock plummeting around 20% to levels unseen since 1998. The report spoke of other OEMs such as Samsung and HTC supporting the move, even though there reports about how these OEMs perceived the competitive landscape once Windows Phone 7 arrives on Nokia were conspicuous by their relative absence. It would seem at this point that because these OEMs sell most of their products running Google's Android, they are fairly secure in their view that the alliance does not represent a credible threat to the larger chunk of their respective market shares, which is in line with investor reactions. What is clear, is that the better part of the world, at least at this point, believes Microsoft is the cat who licked the cream while Nokia probably got a bit of a raw deal.
 

LISTS AND RESEARCH

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