Why did Microsoft and Nokia ally?
The big news over the past week has been the Microsoft-Nokia partnership, where Nokia will adopt Windows Phone as its primary smartphone strategy. The news has had a mixed reaction, as the value of Nokia’s shares fell 14% the day of the announcement. That however, was before news came out regarding the billion+ dollar investment and incentives going to Nokia as part of the agreement.
Why did Nokia go with Microsoft? According to the Wall Street Journal February 18, Google was also courting Nokia, but Microsoft offered them considerably more money and other incentives. It came down to who was the highest bidder. And an alliance – albeit with Microsoft or Google – also means Nokia doesn’t need to develop its own smartphone technology.
Why did Microsoft court Nokia? Losing the deal to Google wouldn’t have helped Microsoft one bit. While Windows 7 Phone has had positive reviews, it hasn’t gotten far in making a dent in the smartphone market. Losing Nokia to Google could have been a fatal blow to Microsoft in the mobile market. Microsoft needed to do something to get momentum.
It probably didn’t hurt that Nokia’s new chief executive, Stephen Elop, had a former boss named Steve Ballmer. What someone is willing to pay and how well you know them can make a difference. If this is a bet-the-company decision for Nokia, let’s hope their alliance with Microsoft proves to be the correct one. For Microsoft, it gives them a platform and partner they need to make a bigger splash in the market.
