After the Nokia & Microsoft partnership announcement last few days back, it has been the main news on the tech world. Many pundits have rushed to criticize the partnership and writing it off as failure even without knowing the full details, with Google’s Vic Gundotra leading the pack with his pre-emptive tweet “Two Turkeys do not make an Eagle”.
For me this deal can be best described as “The Devil is in the Detail”. At this moment, none of us know any details about the partnership, the timelines, money’s involved, exact IPs that will be exchanged – basically who brings what to the table. We only the broad one-liner – Nokia brings Hardware & few software assets like Maps, Microsoft brings the Operating System (Windows Phone), Bing! & XBOX Live. I have had few lively discussions on this subject this week with two of my good tech-buddies in the industry and it turns out I see this deal a little different from them.
Today my primary phone is iPhone4 which I upgraded after 2 years of satisfied usage with iPhone3. Last year once Windows Phone 7 came out I bought HTC Mozart with a BSNL 3G connection and I feel it is a promising device, yet it hasn’t replaced iPhone4 as my primary phone. Few months back I used HTC Legend (Android 2.1) for some days, though its touch is usable & comparable to iPhone I find Android to be less polished than WindowsPhone7 on the interface front. Many things in Android UI are counter-intuitive especially for me coming from iPhone world.
Coming back to the Nokia-Microsoft deal, inferring from what we know I see lot more positives than negatives. I see Nokia gaining more from the deal than Microsoft. For Nokia this is the only business they have, for Microsoft Mobile is just a portion of their $60B empire.
Other than iPhone & BlackBerry, all other smartphones including all the Android variants are pathetic when it comes to Battery life and voice clarity. A smartphone primarily is a Phone and as a Phone battery life is super critical. In this area, no one can beat Nokia. In general, all Nokia phones including their Smartphones or their Communicator easily last for more than 2 days on one charge. I believe the Battery Life is an area where the Hardware, Drivers and OS have to work together very tightly. That’s the reason why generic OS like Android or Windows Mobile have failed in the past, whereas vertically integrated players like Apple & Blackberry have succeeded. With Nokia-Microsoft, they can get this right by making WindowsPhone more efficient on battery usage.
So far both Nokia and Microsoft are not known for being agile. Both have wasted precious last four years in giving the lead they both independently on the smartphones to Apple & Google in a platter. But this time around the writing for both of them is in the wall and no company works great than Microsoft when it is paranoid. Look at how well Microsoft responded to competition including Netscape, OpenOffice, Java, Sony Playstation, Linux on Netbooks & Adobe Flash.
Nokia’s hardware is world famous for its reliability and durability. They still make the largest number of phones in the world. Outside USA, especially in Asia & Africa (which is where the next 1 Billion phones are going to be sold) Nokia is a much bigger brand than iPhone, BlackBerry, HTC, Android, Motorola, Sony – all put together. Nokia makes phones at every price point. Android OEMs like Motorola, HTC, Dell & others may find it difficult to play the low & medium end of this game. Apple always likes to keep its variations limited to 1 or few and I believe all the news about low-cost iPhones are nothing but rumours. The only player I see who can play the game across price points is Sony-Ericsson and they seem to have much bigger problems than Nokia or Microsoft.
Let us take one important feature in a Smartphone – Camera. Hands down Nokia Phones with their Carl-Zeiss lenses are the best, I find even my iPhone4 not able to deliver photo or video quality like a Nokia phone that costs half. Software features like HDR in iPhone does help a bit, but ultimately it is the optics and the physics there that matters.
How about manufacturing?. Today majority of the smartphones including iPhones are manufactured by contract manufacturers like FoxConn. Though these manufacturers help in reducing the cost, in the long term they offer no differentiator at the manufacturing level. Once consumers especially in Asia & Africa become more sophisticated they will demand better finished, well polished devices – which can be executed well if you own the manufacturing. For example, look at the Nokia’s manufacturing facility in Chennai (India).
Today’s Mobile Operating System are more like PC operating systems of the 90s. They are becoming more and more complex and I see them to converge/unify in the near-future with the PC Operating System. In PC Operating System if you take Windows – developing something like Windows today is like building a Rocket or even more complex. Only firms like NASA can accomplish this. The competition for Windows, Linux has struggled for last 20 years to make any significant impact in the Desktop market. Only another closed source OS, the Mac OS is able to garner about 10% market share from Windows. To continuously develop and improve an OS like Windows, you need phenomenal resources, engineering talent & discipline. Microsoft has proven time and again they have it. I don’t consider Windows Vista to be a failure, from an Engineering Perspective Windows 7 is nothing but faster Windows Vista. The reason I am bringing Vista is that Microsoft has proven it has the ability to recover itself from a failure as grand as Windows Vista and come out more stronger with Windows 7. Even in the development of Windows Vista, Microsoft did a complete over-haul, a complete reboot when it was known as “LongHorn”; to do something like that you need massive amounts of cash and resources and Microsoft has it. Even more relevant will be their Windows Mobile 6.5 (Windows CE) which was a failure, but Microsoft did a complete reboot and came out with a decent OS with WindowsPhone7. Compare this with the darling of the markets – Google with their Android. Google is struggling and delayed with their Google Chrome OS and they have no long term track record on managing & delivering a OS like Microsoft do. The only serious competitor to Microsoft on the Consumer Operating System who has done massive platform changes over the years and still succeeded is Apple – even their movement from PowerPC to Intel was not as smooth as Microsoft made the switch for developers and users not once but so many times from 16 bit to 32 bit or to 64 bit now.
Lastly, today’s smartphone it is all about Software & Apps. iOS has succeeded in making Apps the centre stage of activity in the Mobile world, and iTunes is the best marketplace out there for Music & Movies. In both these areas Microsoft has the best comparable offerings in terms of technology. For developers to develop great Apps, you need great developer tool & ecosystem. And no one knows developers & developer ecosystem like Microsoft do – remember SteveB shouting Developers, Developers, Developers. Yes, they have been late to the party with their Marketplace & Zune Marketplace doesn’t resonate anything with consumers like the way iTunes does. Still technically Microsoft has the best developer toolkit out there with their Visual Studio, SilverLight for the developers and it is free. Android can’t match this. You can show me number of Apps in Android is 100x like in WindowsPhone Marketphone, but look at the quality of Apps – Apps in iOS and WP7 platform are class-apart from the lousy Android Marketplace. And don’t get me started on the confusion with multiple Android Marketplaces and the fragmented Android versions and variations. Developers hate variations, users hate to spend $$$ and find the app not working on their firmware/device/OS. Lastly the one thing I hate in my Apple iPhone experience is their iTunes client software, Apple seems to have no clue on how to write a user friendly client software – I find it so confusing on how to organize my music files, editing meta-data of them, manage photos in iTunes (it doesn’t show photos at all). Microsoft makes the best desktop applications in the world including MS Office and Solitaire. I find Zune client software better with syncing, managing Photo Albums, allowing drag and drop and on many more. Compared to that, iTunes shows its age as a CD Music software.
Of course, all the above depends on how well the two companies (Nokia & Microsoft) are able to work together, execute and deliver. Overall, I will give the deal a 70-30 chance of success.