Today, we learned that Microsoft Corp. is acquiring Nokia Corp.’s mobile phone and services business in a deal valued at $7.2 billion. This news seemed to be a real surprise to many who have viewed Microsoft’s mobile efforts (i.e. Windows Phone) as weak at best. This news follows Google’s move in 2011 to acquire Motorola’s mobile hardware business. What’s this all about? Well at least in part, it shows that Steve Jobs was right all along…
See why – somewhere – Steve Jobs is smiling right now…
Let’s face it…the tech industry has some really, really smart people. Bill Gates is smart. Sergey Brin and Larry Page are smart. And Steve Jobs was smart. Of course, being smart does not necessarily guarantee business success – but it helps.
But – as the old Sesame Street game goes – one of these things is not like the others…and the one that is different is Steve Jobs. It was Jobs who took Apple from the brink of extinction to the most valuable company in the world (at least for a while). Apple went on to create amazingly strong consumer businesses from personal music players to smartphones – and their smartphone success hasn’t been matched by any other single brand – notwithstanding Android’s multiple manufacturer support driving that operating system’s overall market success.
Only Jobs understood…
It was only Steve Jobs who understood that the key to “insanely great” products was the ability to control the entire eco-system – hardware and software. Both Gates at Microsoft and Brin & Page at Google suffered from the illusion that the only thing that matters is software.
Apple’s tightly integrated hardware and software – based on an overriding concept of “simple is better” (“Simplicity is the ultimate sophistication,” was reported to be a Jobs mantra) – has given Apple an unmatched advantage is creating or recreating whole new businesses. However, during Apple’s formative years, Jobs took a lot of criticisms from his software and hardware brethren – each of whom deemed innovation to be the sole dominion of their respective industries.
Not a fan-boy…
Now don’t get me wrong, I am NOT an Jobs’ fan-boy. There are many aspects to things Jobs has done with which I strongly disagree. But I have been saying for years that the genius of Apple was their ability to manage to get two entirely different disciplines of engineering (software & hardware) to actually work together to create something cool-looking, unique, and easier to use – intuitive.
Google did simplify search engines, but stopped at software innovations – in the past. Of course, this is changing now with their acquisition of Motorola Mobility Holdings, Inc., and the research and development of Google Glass and the self-driving car platforms.
Innovation winding down…
Microsoft innovated new ways to sell more software, including branching into office “suite” applications software, server software, mobile software and online services. But, other than some computer accessories such as keyboards, mouses, etc., the company never had a major hardware hit until their Xbox gaming system.
Many experts feel the innovation of the Windows operating system has wound down over the years, jeopardizing the foundation of Microsoft’s business. Over the last few years, Microsoft watched the explosive growth of mobile phones, especially smartphones (largely thanks to Apple). But Microsoft has struggled in this business with their various mobile operating systems losing market share as iOS and Android grew in popularity.
Stepping up efforts?…Or stepping into quicksand?…
Obviously, the acquisition of Nokia is an attempt to step up Microsoft’s efforts in the mobile market. It may be too late. Once the leader in the mobile phone business, Nokia has struggled to turn around their flagging fortunes. And while Nokia’s Lumia phones have shown some promise in parts of the world outside of the U.S. – Nokia itself if far from emerging from the also-ran fog that is also consuming BlackBerry.
In the nine months through the second quarter of 2013, Nokia generated a substantial €4.1 billion operating loss (about $5.4 billion). Based on these results, an analyst at IDC said of Nokia, “Nokia continues to show no signs of recovery in the US market. High investments, high expectations, low results.”
A defensive move?…
The acquisition of Nokia may have been a defensive move by Microsoft. For all its problems, Nokia is Microsoft’s largest Windows Phone partner.
Clearly, both Google and Microsoft have now come to recognize the need for Apple’s more holistic approach for success in the mobile market. It remains to be seen, however, if Microsoft has the plan to really move Nokia up the steep mountain trail to success in the mobile phone business. Or whether the effort will result in them simply stepping into a quicksand that will suck both companies down.
One thing is certain, no other company has “cracked the code” of harmonious and elegant integration of hardware and software. In this, Apple still holds a significant edge.
No doubt…somewhere…Steve Jobs is smiling.
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