Waking Up To The Nightmare

Dinosaur Wedding CartoonWell it looks like my worst fears came true, literally overnight. Maybe insiders at Microsoft and Nokia will be able to convince themselves that this is a refreshing, innovative alliance, but I think most others will see it as a dinosaur wedding. Two giant market leaders getting into bed together – and very likely pushing everyone else out.

It needn’t be. These may not be the most fashionable companies right now, but they each have histories of innovation. If we saw the best of them combined in one smartphone system it could be something to behold. But will we? It is hard to be sanguine. A move like this seems almost the opposite of a brave, independent vision.

I have argued that Apple are actually not a particularly innovative company, but here they did something that was truly game-changing. What Nokia and Microsoft seem to be doing though is not changing the game again, but trying to grab as much as possible of the game as it is. Between them, they reckon they have the hardware and software to go head-to-head with Apple. Well and good from a profit point of view, but it borders on the anti-competitive.

At the moment in the smartphone world we have winning products from Apple, Nokia, Google, Microsoft and RIM (Blackberry), as well as interesting outsiders like HP’s WebOS and various other adaptations of Linux and Java. When was any branch of the computer industry as open as that? Certainly not since the home computer explosion of the 80s; probably not since IBM’s rise to dominance. This is an extraordinary time for choice and innovation. Yes, it has to shake out and consolidate. Leaders must emerge. But when the people who are already the market leaders band together to protect their position, that is disappointing.

Nokia have said that they will continue to work with their own Symbian operating system for now, as well as MeeGo, the promising mobile version of Linux they’ve been working on with Intel and others, but it is hard to seriously imagine them putting their hearts into it when they are in partnership with the maker of a product competing with both. It seems more likely that they will atrophy, and the available choices will shrink. A Nokia-Microsoft product will almost inevitably rise to a dominant position. Not because it is better – Windows Phone 7 is still largely untried – but simply because of economies of scale. Because they are big.

In just a couple of years we may see a smartphone market that consists of little more than two giants – Apple and Nokia-Microsoft – and a plethora of minor competitors using Android. This will be a particular shame because it is so unnecessary. Unlike the desktop computer market there was no real argument for a natural monopoly here. Document compatibility and intercommunication are non-issues. It will just be too hard for smaller companies to get a look-in when giant competitors can work on graphene margins. So competition, and innovation, slowly dies.

And there is little we can do about it. Except of course refuse to buy the phones.

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8 thoughts on “Waking Up To The Nightmare

  1. I’m not at all convinced that a Microsoft-Nokia partnership is going to gain any real traction in the smartphone race. Both are certainly powerful companies, and both really need to get in the game, but both are ridiculously clueless. Like Google’s Vic Gundotra tweeted, “Two turkeys don’t make an eagle.”

    Microsoft has a long history of failed strategic partnerships, and its failed mobile strategic partnership list alone is long enough to make any kind of future success hard to imagine.

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    1. Indeed. What worries me most here is that Nokia have far more to lose than Microsoft. They’ve agreed to drop their development of a rival product. If things turn sour between Espoo and Redmond, Nokia would have little option but to become just another Android user. Their leadership position will be lost forever.

      Microsoft meanwhile have eliminated a rival. They don’t need Nokia. So I can see the Finnish company exhausting themselves just to make the relationship work.

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      1. Aye, it would be very easy for Nokia to become known as “the feature phone company,” and therefor within a few years as “didn’t they make phones or something?”

        Microsoft is in a tough position, though, too. Win Phone 7 isn’t selling for crap right now, and they have no actual tablet strategy. As computing rapidly moves to tablets and smartphones, Microsoft becomes less and less important. It isn’t hard at all to imagine that 10 years from now — and to a certain extent in just 5 — the only people who will need desktop-class computing will be those in science, engineering, and the people making software for all of the tablets and smartphones and such.

        If even they need such things, since tablets (especially down the road) make perfectly great front-ends for truly powerful computers off in the cloud somewhere.

        If I owned stock in either company, I’d sell all it tomorrow.

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