Opinion: Microsoft's might rules out knockout blow for Nokia

Finnish firm too important to flounder

Opinion: Microsoft's might rules out knockout blow for Nokia
At times of economic difficulty, everybody tends to rush towards the extremes.

Companies are no longer afforded the right of 'doing okay' or delivering 'good, if unspectacular' results - they're either the best thing ever, or on the brink of folding.

Case in point: as Facebook edged towards its IPO, analysts talked up the company's fortunes no end. The social network's debut on the stock exchange was to be a vast, shining light at a time when success stories seem to be few and far between.

Little over 24 hours after Zuckerberg's big splash, however, and analysts had changed their mind. In fact, they'd done a complete 180, describing the move as – according to the episode of CBS News I stumbled across in the middle of the night yesterday – the "worst major IPO in US history."

Willful blindness

The willingness of commentators to see things as either black or white is hardly surprising.

When times are hard, those looking to invest are often more prudent than usual, making analysts who manage to see the light and spot a sure thing worth their weight in shares.

Being able to do that during a period when almost every company under the sun seems to be suffering some difficulty or other means taking a risk, however. As such, there were plenty of commentators who branded Zynga's move for OMGPOP as a moment of inspiration, and others who had written it off as a disaster within hours of it being announced.

Likewise, those in the US have long written off Nokia since Apple's iPhone first began to make waves. So disparaging have many prominent analysts and commentators on the other side of the pond that many watching on had been drawn into the illusion that the Finnish firm had fallen off a cliff as a result.

In fact, only during the last quarter did Nokia finally concede its position as the world's largest mobile manufacturer to Samsung.

Scores of US analysts have always been willing to turn a blind eye to the firm's traditional strength in Europe and its hand in developing markets – a lack of presence in North America meant Nokia was effectively dead and buried.

A closing window?

Such an attitude reached a head last week when a clutch of analysts suggested that, should Nokia continue burning through its cash at the rate it has in recent years, the company could go bust before it's even had a chance to see if its Windows Phone gamble ever pays off.

It's an interesting assessment, not only because it involves quite a leap in logic – Nokia's initial spend to make the jump to Windows Phone from early 2011 onwards unlikely to be replicated in the coming years – but also because it ignores one major tool in Nokia's arsenal: Microsoft.

The likelihood of Nokia going under is remote, if only because CEO Stephen Elop's decision to back Windows Phone over Android granted the manufacturer a safety net.

So important is Nokia to Microsoft's vision for its smartphone OS – the firm already the largest player in the Windows Phone ecosystem according to most indicators – that the idea of the Redmond giant sitting by and watching its new best buddy go under is utterly fanciful.

What makes such an oversight bizarre is, ever since the strategic partnership was unveiled, commentators have been eager to predict a full on buyout of Nokia by Microsoft, all to no avail.

Cutting out the noise

At the one time when such an acquisition would realistically be on the cards – the prospect of Nokia disappearing from the face of the earth – suddenly the move once deemed as inevitable by many is suddenly not even a possibility.

Admittedly, Nokia would like to be doing a whole lot better than it is now. Scan through the firm's financial reports, and you'll spot statements aplenty pointing to the difficulties it's encountering re-penetrating a market it recently dominated.

Interesting, Nokia is also one of the few manufacturers that understands the strength of Apple's combined smartphone-tablet approach, noting in its most recent report that the cross-device span of iOS across both iPhone and iPad keeps consumers locked in, and makes both products immediately more attractive to Apple's customers.

That's a wall Nokia will look to break down with the launch of Windows 8 tablets later this year.

But, the real reason those with a vested interest in Nokia can afford to be cheerful despite Lumia's apparent slow start is the security Microsoft provides.

So here's my particularly polarised, extreme take on things, just to add to the mix: Nokia would have been lost on Android – just one of many big players in a crowded market, and liable to run into real trouble as a result. 

On Windows Phone, however, it is an essential partner, and one Microsoft is never likely to let stumble and fall.

With a fine eye for detail, Keith Andrew is fuelled by strong coffee, Kylie Minogue and the shapely curve of a san serif font.


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