Nokia Deal May Not Fix Microsoft’s Mobile Struggles: 10 Reasons Why

by Don Reisinger

Nokia might have fine brand recognition, but let’s not get too carried away with its actual value to customers. The Nokia brand is by no means popular, and in fact, fails in many ways to appeal to consumer and enterprise needs. That the Nokia brand isn’t viewed so favorably is bad news for Microsoft.

Microsoft was quick to point out that Nokia’s feature phone business could come in handy as it tries to appeal to emerging markets. But what Microsoft failed to mention is that Nokia’s feature phone business is slipping at the hands of Samsung and low-cost Android handsets Google and its partners are offering around the world. Microsoft shouldn’t bet on emerging markets with Nokia.

Developers need to play nice with Microsoft and Nokia in order for this acquisition to make sense. The trouble, however, is that developers have a finite amount of resources and only want to invest in tried-and-true platforms. That means iOS and Android, not Windows Phone.

It’s entirely possible that third-party vendors are none too pleased by news of Microsoft acquiring Nokia’s mobile division. Previously, Microsoft was a partner. When the deal closes, the company will be a competitor. That might annoy third parties and only hurt Windows Phone in the long run.

During a conference call with analysts and the media, Steve Ballmer said that his company will produce the very best experiences on its own devices. That must mean that Nokia handsets will get the best software features and best components. If that comes to fruition, third-party vendors might not like that they’re competing against a company that has a significant advantage, and they have their hands tied behind their backs.

Trust is everything in the mobile space. The trouble is, Microsoft has not done enough to build trust with customers, and neither has Nokia. Until that changes, and the companies can find a way to improve trust with customers, don’t expect much change in terms of sales or market share.

Microsoft might be paying $7.1 billion to get its hands on Nokia, but the company must also find a way to see a positive return on that investment. Unfortunately for Microsoft, however, in order to actually break even, it needs to sell 50 million smart devices per year. That figure is nearly double the number of units Nokia ships right now. The very fact that Nokia’s devices are so expensive is a little concerning.

One of the biggest problems for Microsoft is that Google might just benefit from the company’s Nokia acquisition. After all, if Microsoft annoys third parties and can’t attract developers, they’ll run to Android. And when they run to Android, Google wins.

No matter how many companies Microsoft acquires, it will have no chance if it doesn’t start improving its software. Microsoft’s Windows Phone 8 is a nice upgrade compared with the previous version, but it’s not nearly as appealing to customers as Android or iOS. Microsoft needs to buckle down on software and stop thinking that hardware alone is the answer.

Although Nokia has gotten better about developing hardware, the company is still far behind the iPhone and Samsung’s Galaxy S line. Hardware still matters in mobile, and right now, Nokia is far behind. Unless Microsoft can help Nokia deliver better-looking products, don’t expect much from this relationship.