Microsoft, a PC company in the mobile age and Nokia, a handset maker in the software age: both out-paced by their competitors. Even If I decided to spare Microsoft for now, considering they have just signed a high value cheque, we cannot discount the fact that the mobile handset market is driven by owners of software ecosystems, companies such as Apple, Google and Microsoft. The role of handset OEMs (original equipment manufacturer) has been reduced to that of a foot soldier in the broader battle between ecosystems. OEM has become a commodity business, where OEMs have little room for differentiation, besides price.
Since Nokia was slow in fostering its own software ecosystem, the company had little choice but to join Motorola, Sony-Ericsson, Samsung, LG, ZTE, Huawei and a host of smaller OEMs in the fierce ‘competition to the best’. Nokia’s business model of high-margin, branded OEM is in question and its dependency on Windows Phone alone is a weakness.
Nokia would have been much better off if the company manufactured both Android and Windows Phone devices. Nokia, with its economies of scale and strong brand name, could have auctioned placement of either OS to the highest bidder on its devices. Microsoft, however, sealed the deal and for Nokia, this is the best price they could have gotten keeping in the mind the double-whammy from Samsung and Apple.
This to me denotes an end to an era. Microkia, will survive for few more years till we move to the world which is made of glass. Combining two business models of the 1990′s won’t help the two companies regain their positions in the new world order, dominated by companies with internet-age business models – cases in point, Apple, Google, Amazon and Facebook.
There is nothing to look forward to. Some people had money, some people made money. That’s all.
The author, Arnab Mitra, is the Co-Founder of LIQVD Asia