Microsoft’s Nokia smartphone blunder evidence that tech and mobile telecom just don’t mix

by Matt Klassen on August 27, 2015

With the announcement that most of Microsoft’s Nokia related operations in Finland have been closed, this effectively draws to a close the failed marriage between the computing giant and the once great mobile superpower. Microsoft also confirmed that along with the closure of Nokia Oyj’s former handset product development unit in Salo,Finland, that 2,300 jobs will be cut as well, part of the widespread cuts the company announced in July.

That being said, this closure has not stalled Microsoft’s mobile aspirations entirely, as the company noted its remaining two Nokia operations sites in Finland will remain open (for now) and recently affirmed the company’s commitment to first-party mobile operations.

Nevertheless, with the $7.5 billion write-off of its Nokia operations, Microsoft has learned the same very expensive lesson ($7.5 billion) that other tech and Internet giants have also learned of late: the mobile market is a peculiar, finicky thing, a quagmire of technology, emotions, and hype where even the largest, most accomplished companies can get bogged down.

Say what you will about Microsoft’s catastrophic misstep with Nokia, the tech giant remains in good company. Let’s not forget that Google has already tried its hand at the smartphone business, selling off the scraps of Motorola Mobility to Lenovo last here for a fraction of the purchase price. And then there was Amazon, who recently abandoned its Fire phone series. The only difference, Microsoft took far greater a hit as Google only wrote off about $375 million related to the $12.5 billion acquisition and Amazon wrote off even less, $170 million, on its failed mobile gamble.

Not only that, but both companies had far less riding on their forays into the mobile world than Microsoft did as well as the latter had its entire mobile first Windows strategy riding on its acquisition of Nokia.

Microsoft’s “grand scheme was to have a single platform that ran on PCs, laptops, tablets and phones, and to be able to sell applications that run Windows,” said Nicholas Economides, an economics professor at the Stern School of Business at New York University who specializes in network economics and electronic commerce. “That failed.”

That said, it’s hard to blame Microsoft’s failed mobile attempt when so many others are in the same company. “Most people didn’t believe that such a catastrophe could occur this fast,” said Horace Dediu, who spent eight years at Nokia during its heyday and is now at the San Francisco research firm Clayton Christensen Institute. Microsoft “just couldn’t imagine that a company that was once as strong and dominant as Nokia could have virtually no value.”

Simply put, Microsoft’s Nokia failure comes in a market where so many have failed before. Not only that, but how could Microsoft truly know that the Nokia brand was more than damaged, but destroyed altogether, when it acquired its mobile division?

That said, with Nokia virtually nonexistent Microsoft has changed its course, abandoning any mobile-first projects in favour of growing a “vibrant Windows ecosystem.” That this Microsoft 2.0 will still dabble in mobile, it will, like most other tech giants like Google and former mobile stars like Blackberry, be nothing more than a side project, proof again that tech and mobile telecom just don’t mix…unless your name is Apple of course.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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