Opinion: Nokia buyout paints Stephen Elop as a smartphone superhero

Next stop Redmond?

Opinion: Nokia buyout paints Stephen Elop as a smartphone superhero
Microsoft received some rather positive news at the start of this week.

According to stats published by Kantar Worldpanel, Windows Phone has achieved its highest ever share of the smartphone pie in key European markets.

"Android and Apple take the lion’s share of the headlines and continue to dominate smartphone sales, so it’s easy to forget that there is a third operating system emerging as a real adversary," detailed the firm's strategic insight director Dominic Sunnebo .

"Windows Phone, driven largely by lower priced Nokia smartphones such as the Lumia 520, now represents around one in 10 smartphone sales in Britain, France, Germany and Mexico.

"For the first time the platform has claimed the number two spot in a major world market, taking 11.6 percent of sales in Mexico."

One day later, Microsoft's proposed buyout of Nokia – the very firm credited with spurring this steady surge in sales – was announced to the world.


Naturally, there's no direct link between the two events.

The Nokia deal will have been on the cards for some time (the mobile giant's Facebook account quickly began a #NextChapter campaign across social media after the news was announced), but the timing of the announcement undoubtedly suggests one thing.

Despite all the confident talk at the time of the two firms' 'strategic partnership' back in 2011, Microsoft wasn't at all sure Nokia could have a positive impact on the Windows Phone ecosystem.

The partnership with Nokia was big news and came at a time when speculation suggested a formal acquisition of the Finnish firm was highly likely, if not inevitable.

However, by going no further than aligning itself with Nokia, Microsoft was able to bring a big name to Windows Phone without committing itself to the company's future.

The last two years, then, have been something of an experiment. Microsoft has been able watch Elop slowly – and, at times, painfully – steer Nokia in a new direction without getting its hands dirty.

The upturn has been slower than many expected, but the last few months in particular have seen Windows Phone gain steady ground and edge ahead of BlackBerry.

More importantly, some stats suggest that as many as eight out of every 10 Windows Phones sold is a Nokia. While Samsung has shown almost complete disinterest in its Windows Phone range and HTC continues to struggle to gain ground, Nokia has made Windows Phone its own.

Different by design

Indeed, for many consumers, Windows Phone and Nokia are now one and the same, and the strong link fostered between the two entities shouldn't come as a surprise to Microsoft.

Despite Nokia's troubled last five years, there are two qualities consumers still associate with handsets from the Finnish giant: Nokia hardware is well built, and the handsets are well designed.

It was Nokia's continued reliance on Symbian software that saw it slip from its position as top dog. The hardware, however, never really suffered.

The MeeGo-powered N9 wasn't a commercial success, but it continued Nokia's long history of delivering well designed devices

Given one of Windows Phone's key selling points is the design of its UI, it's natural that the wider public quickly saw a strong correlation between Microsoft's platform and Nokia's Lumia range – coloured, polycarbonate devices that, just like the OS that runs on them and sometimes to their detriment, stand out a mile on the shop shelves.

Whether or not consumers have actually purchased Lumias is a different issue: for most, Lumia and Windows Phone are a perfect match.

In contrast, Samsung's Windows Phone-equipped ATIV S stands in the vast shadow of the Korean firm's Galaxy S range, while HTC has struggled to bring its own flavour to Microsoft's OS.

To put it simply, Nokia's business is just a far better fit.

The man who saved Nokia

More interesting than all of this, however, is what comes next.

If the buyout is approved, current CEO Stephen Elop will be able to tout himself as the man who saved Nokia from the abyss.

That's an accolade that will do Elop no harm whatsoever if he fancies putting himself forward as the natural successor to current Microsoft CEO Steve Ballmer.

For Microsoft, the deal also allows the company to pitch itself as 'the good guy'. Had the firm swooped in for Nokia when – in Elop's words – it was 'standing on a burning platform', it could have been accused of picking at the carcass of a once great giant, forcing it to adopt a Windows Phone platform that, at the time, was entirely unproven.

Now, in stark contrast, the buyout appears an entirely logical one.

Nokia's latest flagship, the 41MP Lumia 1020

Outwardly at least, Nokia adopted Windows Phone of its own volition, and despite early protestations that Android would have been a better fit by many, it's a move that few would deny is now paying off.

Instead of buying a company on the way down, Microsoft is now acquiring a steady ship and adding to its smartphone arsenal with a rising force, rather than a declining power.

The dirty work required to prise Nokia away from what was a dying ecosystem (and the awkward headlines aplenty that generated) is now over. The Finnish firm is now firmly at the wheel of the Windows Phone ecosystem, shifting through the gears and driving the OS forward.

The Microsoft buyout, therefore, won't change the rules of the game, but it will give Nokia the power to push its pedal to the metal.

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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Keith Andrew
John - the chances of a comeback aren't slim. It's happening now. Week by week, as the stats come in, it's happening.

Windows Mobile had a far higher share of the global smartphone market than that I recall, but I was specifically talking about the UK. WM never took off in the UK, yet the UK is one of Windows Phone 8's strongest markets, passing 10 percent share recently. This is significant.

And Android just wasn't an option for Nokia. It would have become even more of an alsoran, serving up an OS that had already been highly saturated by OEMs more at one with its vision. Windows Phone, with its focus on design, is a far, far better fit for Nokia on every level, and is the only platform that enabled Nokia to stand out from the rest of the manufacturers on the market without all too much risk - it's been clear from day one that, however well/badly Windows Phone did in its early years, it is so fundamental to Microsoft's future Windows vision that it was going nowhere.

It was the only option, basically.
John Ozimek director
You are right for a section of the mobile-buying audience, and especially a PG reader! But when you get to the cheaper end of Android - where it is competing with feature phones - then OS really doesn't matter. Of course, it's true that MS/Nokia are desperate to play in that high-end segment where OS and apps is an issue, but I don't think it's as important as you are suggesting.

I'm suggesting that Nokia was in a position 3-4 years ago to try Android and compete against Samsung. You are right that today, Nokia is not the brand it once was - but that has been a rapid decline. Do you think that Samsung would be so visible without them outspending every other tech and mobile company - as well as very aggressive sales tactics? It understood what was needed to knock Nokia off its perch, and has spent accordingly whilst Nokia has been focused inwards. Samsung is mooted to be spending $4 billion on marketing this year - more than coca cola.

According to Gartner, Windows Mobile had 12% share of the global smartphone market in 2007 and 11.8% in 2008 - so it's still not where is has been historically (and if you remember Windows CE, it was an absolute dog).

We may have to agree to disagree on this ;-) My point is, I don't see this as a clever move, I see it as trying to stay at the table by any means, and the chances of a comeback are slim - and it's been on Elop's watch, so he has to take responsibility. Of course, we all know that being a successful and right CEO isn't always about being good at your job!
Keith Andrew
But that's not why anyone buys phones in 2013, John. It's all about the software, not the hardware.

Not individual apps, no, but the strength of the ecosystem. People buy iPhone or Android because of their respective app stores - the hardware is very much secondary to that.

Don't get the assumption that Nokia would have had an advantage over Samsung on Android "thanks to it's incredible marketing, distribution and retail organisation". I'm not sure Nokia excels at any of those three right now, certainly not more than Samsung.

As for 10 percent market share - I don't think Windows Mobile ever reached that level in the UK, so the fact Nokia has driven WP8 that high in two years is nothing to be sniffed at.
John Ozimek director
hmm, not sure I agree with you Keith - as even with WP installed, all Nokia's marketing seeks to differentiate via hardware features - especially the most recent phone with the uber-camera onboard. If Nokia had been brave and adopted Android at the high end - even if it was just a ploy to buy time whilst they improved Meego or came up with a different OS - it would have had an advantage over Samsung thanks to it's incredible marketing, distribution and retail organisation. Shifting to support an OS which wasn't even finished - therefore driving Nokia fans onto other platforms from the outset - was an incredible mistake, IMHO.

Yes, Nokia has made the OS its own, as it didn't have another option. All my experience in mobile since 2003 showed that for the massmarket consumer, the OS is one of the least important factors in choosing a phone; consumers choose based on hardware features, hardware brand, cost - and maybe then the choice of OS. And your argument that Samsung will force other OEMs to try different OS - it was the fact that so many of them persisted with crappy old OS or bad implementations of Windows Mobile that got them into trouble in the first place. Yes, they may be looking to create a totally new OS in order to compete, but I suspect it is more realistic that they will innovate and differentiate in terms of hardware. Nobody bought the Razr or the LG Chocolate for the OS, yet these were global best sellers back in the day.

And my third point of disagreement ;-) The value does matter, as for someone to become CEO of one of the world's largest companies they should not have presided over the collapse in share price of the company they are currently with. Elop rightly identified that Nokia was standing on a burning platform, and from what I have seen, he's just organised a fire sale of damaged goods rather than fix the problem.

A 10% market share isn't going to make Nokia or MS into a global force in mobile; MS had more than that before, and they were pretty much nowhere. What has changed?
Keith Andrew
It's all subjective, John, but I think adopting Android would have killed Nokia by now. Samsung has that sown up - a challenge this late in the day would have been utterly fruitless and left Nokia even less relevant than it is today.

Whatever people think about WP, Nokia has made the OS its own and it gives it a level of distinction Android OEMs outside Samsung just don't have - ask LG, ask HTC, ask Motorola. None of them will top Samsung and all will eventually be forced to consider other options as a result.

The value doesn't really matter, either. Elop's role from day one would appear to be to steer Nokia in a new direction ready for a Microsoft acquisition. He has - no doubt in my mind - saved the company. It just took a lot longer than most people expected.
John Ozimek director
Bizarre that the man who killed Symbian, decided against Android (a decision which could be said to have allowed Samsung to replace Nokia as global #1 thanks to the lack of competition, as they embraced Android when Nokia didn't) and has presided over the decline of Nokia is now being touted as its saviour for selling it for 1/24th the value of Motorola ($5bn versus $120bn).