Wednesday, July 4, 2012

Nokia: Microsoft's Private Label Provider

It seemed intuitively clear to us that Microsoft couldn't let Nokia go down the drain, and we wrote about it recently.  The website Seeking Alpha had an article which came to the same conclusion by looking at the industry dynamics among Microsoft partners, including Samsung, HTC, Nokia, HP and Dell. It's good reasoning.  Here's an excerpt from the blog:

"With Nokia and Surface, Microsoft achieves two important goals. First, there will be enough hardware support for Windows 8 in the categories that are the most important for Microsoft's expansion from PC to mobile devices. Second, these two products set the standard for Windows 8 based mobile devices. In order to stay competitive in the market, Samsung and HTC can no longer support Windows 8 half-heartedly, as they did with Windows Phone 7. Their Windows 8 smartphones will have to be good enough to compete with Nokia's. As pure play hardware companies, there is very little incentive for them to give up on Windows 8, but Nokia will ensure their full support. The similar goes with HP, Dell, and Microsoft's own Surface. It will be too dangerous for HP and Dell to stay out of the tablet market. Now they have to provide something capable of competing with at least Surface, and to some extent, Apple's (AAPL) new iPad and Google's (GOOG) Nexus 7.

In this sense, Nokia is Microsoft most important partner in its mobile strategy. Microsoft will not allow Nokia to fail, not within the first year of Windows 8's introduction anyway. It will not 'write off' Nokia." (Seeking Alpha)

There are some interesting articles in Vanity Fair from staff writers and an interview with Paul Allen.  The bottom line is that they lay the blame for the long-term malaise at Microsoft at the feet of Bill Gates for his insistence, according to the story, on choosing Steve Ballmer to run the business many years ago.  Overall it paints a very ugly picture of a Microsoft internal culture too weighed down by its Office/Windows franchise to the detriment of initiatives which would acknowledge and hasten the demise of the franchise.  No wonder the stock was a value trap in the past!

Can it still right itself?  The Windows 8 launch will truly be a big deal. 

Happy July 4th!

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