Microsoft + Nokia: A Living Dog Is Better Than a Dead Lion

On Friday, February 11, 2011, Nokia, the world’s largest cell phone maker, and tech giant, Microsoft, announced an alliance to make smart phones to attempt to take market share of from Apple and Google.  Nokia will abandon its open-share smart phone software and use, instead Microsoft’s Windows Phone 7.  The announcement caused Nokia shares to plummet 14% in late trading later in the day.  Nokia shareholders were not the only ones who were disappointed with the announcement.  Employees left work early on Friday in protest to the announcement. 

Nokia has already lost 10 points of market share over the past year.  Google’s Android surpassed Nokia’s Symbian software and the world’s number one smart phone software at the end of 2010.  Microsoft has a long way to go catch up to Apple and Google in the number of user “apps” available that will attract more users.  We wrote about this in October of 2010 (MS Windows Phone 7:  MS ≠ Market Share). 

Over the weekend, a day ahead of the start of the Mobile World Congress cell phone trade show in Barcelona, Nokia CEO, Stephen Elop, himself a former senior Microsoft executive, told the press and industry analyst that, in addition to the benefits of the alliance that were laid out Friday, Microsoft is paying Nokia billions of dollars to switch to Windows Phone 7.  To add to the irony, it was revealed that Google had already offered its Android OS to Nokia. 

Microsoft, in effect, is attempting to buy market share.  Only time will tell if this strategy is a good one.  The behavior of Nokia shareholders and employees put this strategy in question.  However, for Microsoft, the ancient proverb (as translated from the Latin to English from Ecclesiastes IX by Wycliffe  in 1382) may suffice:

“A living dog is better than a dead lion.”