What do you do when your product portfolio is no longer up to par? When your markets are slowly migrating in another direction than you are? When your customers no longer identify with your brand? When the very existence of your company is at stake? You follow; your markets, your customers, and their money.
Not Nokia. Last Friday, that company entered into a “strategic alliance” with colleague-loser Microsoft. By migrating to the Windows Phone 7 platform, Nokia states it can differentiate its proposition from the iPhone and Android platforms. Of course, there is a huge difference between differentiation within a market and differentiation from a market. And with this move, Nokia appears to be doing the latter.
When your mobile devices are perceived as solid instead of sexy (Apple), you better make sure you associate with the right platform (ecosystem, as it is called these days). Although iPhone users currently have the largest choice in applications, Google’s Android is quickly catching up. Looking at current trends in mobile application development, the open Android platform might soon overtake the proprietary Apple platform. Instead, Nokia migrates to a platform that has a market share of only three percent.
Kiss of Death
Today, after being severely punished by its stockholders, Nokia “clarified” its strategy by stating that the deal with Microsoft brings huge financial benefits (“billions”) as well. It reminds us of other companies in trouble, entering into strategic alliances with Microsoft. Often full-blown migrations to a Microsoft platform were “compensated” with hundreds of millions of dollars. Some companies never recovered, languishing for years: Unisys and Novell. Others were killed off not long after: Borland, SCO, Corel, and Sun. To name a few. Interesting to see in which category Nokia will eventually fall. Bets are on!