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Microsoft-Nokia: A Tale of Two Broken Business Models

[The launch of the Lumia line marks the pivotal point in the Microsoft-Nokia partnership. But how successful will it be? VisionMobile Strategy Director Michael Vakulenko voices his concerns about the partnership between Nokia and Microsoft.]

VisionMobile: Nokia + Microsoft: A tale of two broken business models

[updated] Nokia and Microsoft are fighting two very different battles: Microsoft is trying to protect its aging PC software licensing business. Nokia, on the other hand, fights to survive as a as a handset manufacturer, hoping to see profits of the smartphone business. There is one thing in common, though: Both were disrupted by fundamental shifts in the mobile industry.

The basis for competition in software and mobile has changed – the once-successful business models of Microsoft and Nokia can no longer ensure profitable growth. The partnership between the two companies cannot change that. Vic Gundotra of Google once cynically said that two turkeys don’t make an eagle. Or do they?

Microsoft: A PC company in the mobile age

Reports about “Microsoft making more money on Android than on Windows Phone”, make for a catchy headline, but miss the point. Microsoft’s mobile strategy is about reducing ecosystem churn, i.e. protecting revenues from Windows and Office licensing. Every iPhone or iPad sold, represents a user who might choose to move away from a PC or Office license. Every iPhone developer represents a developer who adds value to Apple ecosystem and not Microsoft’s.

As of January of 2012, Microsoft Windows & Windows Live, Server & Tools and Business divisions were responsible for over 75% of the revenues, but, more importantly, practically all of the operating income. The company reported weaker than-expected PC demand in the last quarter of 2011. Revenue of Windows & Windows Live Division fell 6 percent year over year (and this is during the lucrative holiday quarter!), and yet worse – operating income declined by 11 percent.

The company’s core business is challenged at multiple levels. iPhone and iPad users are increasingly choosing Mac as their next computer – Mac success means less Windows licensing revenues. Moreover, tablets are displacing netbooks and laptops, which were the hope of the PC industry until recently. Google and a slew of Internet startups are opening cracks in Microsoft Office defenses by pushing migration of productivity tools into the cloud.  The end result is ecosystem churn, which means less and less Windows and Office licenses sold.

Microsoft badly needs to renew its growth. See this excellent analysis by Adam Hartung, Forbes. But, Windows Phone is a “loss leader”, not a growth engine. It’s daydreaming to expect that Windows Phone license revenues will be able to pay back all the investment that was made and is being made into the platform. Even at a $20 license fee. As reported in March 2010, the Windows Mobile R&D team headcount back in FY 2009 was 2,000 staff with a total OPEX of $900 Million. The numbers could only have grown since then.

Partnering with a fast-declining Nokia buys Microsoft neither market share nor new revenue engines. First and foremost, Microsoft needs to establish significant market share for Windows Phone in North America — the hotbed of mobile innovation.

However, Nokia is traditionally weak in North America in both market share and brand awareness. Plus the European reception of Lumia was lukewarm with slight above one million devices sold during the Christmas launch season. Instead of placing so much faith in the partnership with Nokia, Microsoft could have focused their efforts on a close alliance with the faster-moving Samsung as the key OEM for the Windows Phone platform.

Microsoft will be challenged to find new growth engines. Up until now, Microsoft has been losing money in Internet and mobile. In the last quarter of 2011 alone, the company’s Online Services Division lost $458 Million adding to mounting multi-billion loses in the last six years (see this revealing Business Insider chart).

Throwing boat-loads of money at mobile and Internet without a winning business model can only work for limited time for Microsoft. Mounting costs will inevitably raise the concerns of impatient investors over the viability of its mobile strategy.

 

Nokia: a handset maker in the software age

Apple has outpaced Nokia not only because of better products, but because it changed the basis of competition. The competition has changed from a competition of devices to a competition of software ecosystems. Nokia understood the challenge back in 2007, but in a classic case of Christensen’s Innovator’s Dilemma, was late to respond.

Today, the mobile handset market is driven by owners of software ecosystems, companies like Apple, Google and Microsoft. The role of handset OEMs has been reduced to that of a foot solder in the broader battle between ecosystems. OEM business 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”. Michael Porter calls competition to the best “the granddaddy of all strategy mistakes”.

The partnership with Microsoft might not be able to save Nokia from the perils of commoditisation. Windows Phone is a very attractive product, but it arrived to the market two years late. Apple and Google had enough time to establish strong network effects for their iOS and Android platforms. These network effects between users and app developers ensure explosive growth, user lock-in and multi-billion dollar investments by developers (see our recent post on how platforms are not created equal). In these hyper competitive conditions, Windows Phone devices will be challenged to command premium prices – like it it not, Nokia will have to compete on price with Android devices.

In retrospect, Nokia associated itself with a fledgling software ecosystem that is yet to build strong network effects. With both profitability and volumes in question, Nokia finds itself in a one-way street, depending on Microsoft to help support its smartphone business (see how Microsoft paid $250 Million to Nokia in Q4 2011).

Given the new market conditions, Nokia’s real competition is not iPhone or Android, but Samsung.  Samsung is not only the largest, but also the most profitable Android OEM. Its true competitive advantage lies in its vertical integration across the most expensive smartphone hardware components: the display, application and baseband processors and memory. Samsung even owns the fabs that manufacture many of these components. Samsung’s superior business model has launched the company to the second place of the industry in terms of profit share, second only to Apple.

Nokia’s business model of high-margin, branded OEM is in question and its dependency on Windows Phone alone is a weakness.  Nokia would be much better off if the company manufactured both Android and Windows Phone devices. Nokia, with its economies of scale and strong brand name, could auction placement of either OS to the highest bidder on its devices.

Nokia is running out of time and Samsung is gaining market share eagerly. How soon will Microsoft need to knock on Samsung’s door offering to pay billions for promoting Windows Phone on millions of Samsung devices?

 

Insisting on sailing upwind

In this partnership, Nokia and Microsoft insist on sailing upwind with their sails flapping (those of you who’ve had any experience sailing will know how boring this can be). 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, like Apple, Google, Amazon and Facebook.

As it seems, the only way out for Nokia and Microsoft would be the acquisition of Nokia’s smartphone business by Microsoft, as Andreas Constantinou predicted a year ago on this blog.

— Michael
[Michael Vakulenko is a Strategy Director at VisionMobile, where he focuses on mobile platform research and mobile ecosystem economics. Michael has been working in the mobile industry for over 16 years, starting his career in wireless in Qualcomm. Michael has a broad experience across many aspects of the mobile industry, including smartphone ecosystems, mobile services, handset software, wireless chipsets and network infrastructure. He can be reached at michael [/at/] visionmobile.com]

From MeeGo to Tizen: the making of another software bubble

[Just a short 1.5 years from MeeGo’s birth, Intel dumps it to shift focus to a new platform, Tizen, in partnership with Samsung. Guest author Dave Neary discusses the underpinnings of Tizen and why both MeeGo and Tizen are software bubbles].

VisionMobile - From MeeGo to Tizen: A software bubble in the making

Eight months after Nokia embarrassed Intel by withdrawing support for the MeeGo project, Intel has followed suit. On 27th September, Intel and Samsung announced the birth of a new mobile platform called Tizen. After only 19 months, MeeGo has been left parentless, and appears to be on life support. Tizen is, in fact, a successor of the Samsung Linux Platform, a reference platform of the LiMo operator consortium, with some components taken from the MeeGo stack.

Given that LiMo and MeeGo have both failed to set the mobile computing world alight, and Android has a four year head start, can we expect better things from their offspring? What has changed with this announcement? Is this Intel’s last chance to have a stake in a credible smartphone platform? And what  should Samsung, Intel and the Linux Foundation do to give their new platform a fighting chance at success?

The Birth of Tizen

Last year, when reviewing the progress which MeeGo had made in its first few months, we reserved judgement on the project, on the grounds that it was “too early to be able to tell how the final product will compare to iOS or Android”, but we noted that there had been some growing pains between Nokia and Intel.

Those growing pains stretched to breaking point earlier this year, when Nokia finally gave up on MeeGo and turned to Windows Phone to revitalise its smartphone products. Intel was left looking for a heavyweight consumer device partner to come in and lend credibility to their claim that MeeGo was no longer a one-man show. Rumours that LG would be joining the project failed to materialise. Finally, Intel ran out of patience, and partnered with Samsung on a new platform, Tizen, to be based on SLP (Samsung Linux Platform), a platform which Samsung have previously provided to the LiMo Foundation to be used as a reference plaform for its members.

While the move has obviously been in the planning for months, Samsung were perhaps encouraged to partner with Intel on the back of the news that Google has acquired Motorola Mobility in August – a view supported by their recent settlement of an Android-related patent dispute with Microsoft. In addition, as LiMo members, most notably Vodafone also ran out of patience, SLP was left as a platform without a home.

MeeGo on Life Support

How does MeeGo fit into the big picture now? High profile participants like GENIVI, China Mobile, Asus and Acer have committed to shipping MeeGo devices. Will they be based on the unreleased MeeGo 1.3, or the previous 1.2 release? Or will these companies move en mass to Tizen?

Given the lack of reaction from partners like GENIVI, we suspect that the Tizen announcement caught these vendors unawares. Jerermiah Foster, a community manager working for one GENIVI member, informed me that his company would reuse MeeGo 1.2 in the short term, and while Tizen looked interesting, there were no current plans to move development to the platform. He also confirmed that he found out about Tizen through the project announcement, and not before.

In spite of vendors withdrawing their support, part of the community is banding together to salvage their work. After Nokia pulled out of MeeGo, community developers working on the MeeGo Handset UX banded together to continue work (with several Nokia engineers) in the MeeGo Handset Community Edition, aiming to provide MeeGo support for the Nokia N900, N950 and N9 devices. In spite of the Intel announcement of Tizen, these developers have vowed to continue the development of MeeGo on ARM, and released the MeeGo Handset Community Edition 1.3 at the end of September. The current plan proposed by these developers is to create a lightweight core distribution based on Qt, under the brandname “Mer” (“MeeGo Rebooted”), on which vendors can build custom user interfaces. The MeeGo Handset Community Edition will be the first consumer of Mer’s core operating system.

The MeeGo community mailing lists are full of developers wondering where they stand now. The announcement suggests that no software will be released from the Tizen project for another 6 months. According to Joel Clark, MeeGo IVI Program Manager, the MeeGo 1.3 release has been shelved, and only incremental updates to the previous 1.2 release can be expected until then. While the MeeGo community certainly has some enthusiastic community supporters, it is unlikely that any major vendors will adopt the community-supported Mer.

Ironically, the move away from MeeGo comes at a time of potential wins for the project. Nokia’s MeeGo-based N9 is finally shipping, and getting rave reviews. And continued demand for netbooks has fueled the launch of several MeeGo based netbook and tablet products, including the Asus EeePC X101, the Acer Iconia M500 and other devices from Samsung, Lenovo and Fujitsu.

Perhaps Intel ran out of patience just as the project was about to take off.

Tizen = SLP, with a pinch of MeeGo

Technically, Tizen is a successor of the Samsung Linux Platform, a reference platform of the LiMo operator consortium, with some components taken from the MeeGo stack. The project governance and infrastructure, however, will look a lot like MeeGo. According to Imad Sousou, the director of Intel’s Open Source Technology Center, and head of the MeeGo project: “in the new project, a lot of things will be the same as they were in the MeeGo project”.

We also know is that the primary APIs for 3rd party developers are targeting HTML5 and WAC environments. WAC stands for Wholesale Applications Community, a set of APIs for building and delivering rich HTML5 applications, based on APIs from JIL (Joint Innovation Labs) and BONDI (a platform specified by the now-defunct Open Mobile Terminal Platform, OMTP). The Enlightenment Foundation Libraries (EFL), are also set to be a key part of the platform. We can infer two things from this: Qt will be taking a back seat in Tizen, if it is part of the platform at all, and it appears that SLP will be the basis of the Tizen platform.

One thing which has not changed from MeeGo is the wide range of participants being targeted by the project. At the moment, the target audience can best be summarised as “everyone”. Tizen is aimed at platform developers, integrators, vendors, application developers, and mobile enthusiasts. That’s a very wide range of target audiences, each with different needs and expectations. Not knowing your target customer is a surefire way to throw money down the drain.

Challenges, challenges, challenges

Tizen’s main difficulties at this point can be broken into three groups.

First, there will inevitably be teething problems between the project founders. The fact that Samsung have not yet mentioned Tizen in any press releases or announcements, and the lack of new information coming from Intel representatives since the launch announcement, suggests that there may be some communication issues to be worked out in the relationship. In fact, at this point it looks like the active partners have not yet agreed on what will and will not go into the platform. Intel and Samsung will have to work hard to overcome the cultural dissonance which is inevitable given the very different corporate DNA.

On top of this, unless something changes soon, there could be a major mismatch between the reality of working with Tizen and the public positioning of the project. The project isn’t yet open for business, and when it is, it will only be useful for a small subset of its target market. If it were a new project, they might get away with it. But with the legacy of MeeGo, Moblin and Maemo, disappointing early adopters could be a very dangerous thing to do for Intel and Samsung. Getting the project governance and community dynamics right from the start is vital to learning from the mistakes of MeeGo and Moblin.

Beyond the community, there are question-marks over Tizen’s potential to make an impact in the industry. Google’s purchase of Motorola Mobility, not just a patent portfolio play, has created a disturbance in the force around the Android universe. Samsung does not want to find itself competing with Google at the same as they are dependent on them for their smartphone platform. This creates an opportunity for Tizen which it is too immature to exploit. For third party developers, concentrating on HTML5 is great. But will there be a demand for a native API also? And if so, will Tizen be capable of providing the kind of unified developer experience you get on iOS or Android?

It will be interesting to see if Intel and Samsung manage to get substantial support from other ARM vendors. As long as Intel are seen as the main custodians of the project, that seems unlikely. It will also be interesting to see the effect which Nokia’s first Windows Phone based devices, due to be announced at the end of October, will have on the project.

The main challenge for the Tizen partners will be getting devices to market. The key constituency for the change, vendors who were committed to MeeGo before, appear to have been neglected during the announcement. Intel and Samsung need vendors to adapt the platform to sell more chips, to give breadth to the ecosystem around the project, and to give credibility in the industry that this is not a party of two.

The Long Road Ahead

To succeed and make a space for itself in the mobile ecosystem, execution will need to be flawless on Tizen. If the internal bickering which dogged MeeGo rears its head again, if the initial release of the platform does not meet vendor and community expectations in terms of functionality and quality, or if there is an 18 month wait for well integrated finished products running Tizen, then the project may not have a second chance to make good.

Tizen seems set to be another victim of misaligned incentives across several industry partners. Samsung is bringing SLP to the “standards” table simply to find a new home for it, now that LiMo is winding down. Intel is seeking another marriage of convenience, trying to tempt a major OEM to ship significant x86 chip volumes.

– Dave

[Dave Neary is a regular columnist at VisionMobile writing on how companies can work more effectively with open source community projects. Dave is the founder of Neary Consulting and  has also been an active member of the GIMP, GNOME, OpenWengo, Maemo and MeeGo communities, with over 10 years of experience in open source community issues. He can be contacted at dave (at) neary-consulting (dot) com]

Is Microsoft buying Nokia? An analysis of the acquisition endgame

In a surprising move, Nokia and Microsoft decided to enter a strategic relationship for the OEM’s smartphone business. While the marriage appears promising at the outset, Research Director Andreas Constantinou argues that the only way for that marriage to succeed is for Microsoft to acquire Nokia’s smartphone business.

VisionMobile - Nokia & Microsoft deal_pic

The Elop and Ballmer duo on stage on February 11th was the main topic of discussion at this year’s Mobile World Congress. The reverberations of the Microsoft-Nokia announcement were felt even by the huge green robot tucked away at Google’s stand in Hall 8.

Following the news of the Nokia and Microsoft tie-up, Stephen Elop’s appointment to the helm of Nokia seems like an arranged marriage – and one whose best men were the carriers who wanted to avoid an all-out Android coup. It was also a marriage of desperation, which Elop memorably described in his memo as ‘jumping into the unknown’ from the ‘burning platform’ that is Symbian.

A marriage of desperation
Microsoft has been desperate to see its mobile business succeed. After a decade of lacklustre efforts at mobile device sales and severe product delays, Microsoft was getting desperate; it needed to stop the churn of Microsoft users to the Apple ecosystem and plug its $1 billion-a-year operational costs for its mobile phone business. Even having spent most of its $500M marketing budget for WP7 it had only got breadcrumbs in terms of sales, with Microsoft reporting 2 million shipments but no comment on sell-throughs (which leads us to suspect this was not more than 1 million of actual end-user sales).

VisionMobile_Smartphone_Sales_2010_pic

Nokia has been desperate seeing its platform play fail spectacularly in comparison to its newfound competitors; Apple who had amassed a developer ecosystem and operator demand which was second to none, and Android who in 2 short years matched Nokia’s smartphone sales in Q4 2010. MeeGo was trumpeted as the big guns in Nokia’s arsenal in February 2010, but once again Nokia’s software R&D failed to deliver on the promise. More importantly, despite the 10+ acquisitions during 2007-2010, Nokia failed to amass a strong-enough developer and services ecosystem on Symbian, Java or Qt that could compete with Apple or Google. Like Elop said in his now-famous burning platform memo, “our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem”.

It was in an act of desperation that led Nokia to befriend the lesser of two evils in the shape of Microsoft. It is ironic how in mobile the least enemy is a friend, much like how carriers backed Android in 2008-9 to fend off Apple, and backed Microsoft in 2003-5 to fend off Nokia.

The courtship
Despite the surface-level coverage of the Microsoft and Nokia news, not much has been said about the two giants’ courtship and even less on the prenuptial agreement. According to our sources, Nokia asked both Microsoft and Google to bid for its smartphone business, with the help of a small army of McKinsey suits. Following a long negotiation cycle with both parties, Nokia came to a straightforward conclusion; it would back Microsoft who’s total bid equalled more than $1 billion (including patents, licensing fees, marketing support and revenue shares) and not Google who’s bid was about half that. Funny how cash-rich platform vendors are buying their way into the market these days.

Nokia announced its decision to Microsoft and Google on February 9th , only 2 short days before the Ballmer/Elop press conference – which prompted Vic Gundotra to pen the tongue-in-cheek tweet “#feb11 “Two turkeys do not make an Eagle”, scornful of both Nokia and Microsoft.

The last-minute decision meant that Intel heard the news at the very last minute, and in turn had to ask its MeeGo partners on Friday night (Feb 11th) to remove the mention of Nokia from the MeeGo PR quotes going out on the following week at MWC. This is the stuff industry disruptions are made of.

 

A chemistry mismatch
What Nokia announced was not just a marriage; it was a radical change in its business model, from a vertical powerhouse to an assembler – which is what prompted us to question the motivations and the end goal for Elop.

We already knew that Symbian had been demoted to an internal-only OS (see earlier analysis – Symbian is dead, long live Symbian). However we were expecting to see Nokia take a more measured stance; for example using Windows Phone 7 in certain markets (especially in North America where carrier handset subsidies are OS-led) or taking a classic dual-supplier strategy by inking deals with both Microsoft and Google.

Instead Elop presented a terminal picture for Symbian which would be destined to ship on only another 150 million devices until being completely replaced by WP7.  Elop knew that an all-out replacement of Symbian with WP7 would mean haemorrhaging valuable brainpower as the 7,000+ Symbian staff had spent 15 years on the anti-Microsoft camp. These are the decisions made by boards with long-term strategy agendas, who see organisations made up of ‘assets’ and not ‘people’.

Besides the death blow to Symbian, Elop relegated MeeGo to an R&D project with just a single device launch in the horizon, if any at all (which carrier is going to subsidise a platform that’s dead on arrival?). Moreover Qt’s future seems uncertain as it has no place on Windows Phone (Microsoft wouldn’t allow copyleft software to be used with Windows Phone), plus it is too heavy for S40 class devices and MeeGo is too small an addressable market to justify the Qt ongoing investment. Qt (and its 400 thousand developers) need a new home.

Nokia Mobile Devices Net Sales Mix

What appears somewhat suspicious is that Nokia went not for a tactical, but a deep partnership with Microsoft, solidified by the multiple revenue streams exchanged between the two companies, a kind of revenue ‘keiretsu’ that ties the two giants in a longer commitment.

More importantly, the marriage to Nokia’s smartphone business seems like it’s lacking in chemistry. For the last decade, Nokia has operated as a vertical silo, owning and integrating all value elements, from software, UI, industrial design, services, app store and developer ecosystem. That silo has now huge holes punched through so that it can accommodate Microsoft’s horizontal software-licensing business model. This situation is somewhat like trying to fit a square peg in a round hole.

There are fundamental conflicts here, as both Microsoft and Nokia want to own the developer experience (think APIs, support, tools, developer marketplace, conferences, marketing), and the application discovery and delivery process (think Windows Marketplace vs Ovi Store). This is a chemically unstable mix that won’t survive the test of time. It would be like having Nokia owning Office while Microsoft still runs the Windows business. Yet at the same time Nokia has little value to offer other than design, development, manufacturing and sales of handsets in the picture Elop and Ballmer painted. Something’s not right.

Moreover, Microsoft faces a fundamental customer imbalance on its mobile platform. With such a strong endorsement of Nokia, Microsoft has placed too much favour and device sales expectations on a single vendor.

Microsoft did not only hurt the feelings of HTC, Samsung and LG (previously committed to launching 50! Windows Mobile handsets) with such an imbalanced endorsement. More importantly, with Nokia volumes likely to ramp up fast, Microsoft will have to deal with a single-customer monopoly and end up financing Samsung, LG or HTC towards ramping up Windows Phone production to balance it up. Windows Phone may quickly end up looking like a platform of unbalanced OEM interests – much like Symbian Ltd or Symbian Foundation were – and we know how these panned out.

There are two more troubling clues in the way this ceremony was setup. Despite fundamental changes to the handset business, Elop made no reorganization in the NSN business which is performing at marginal profit (operating margin at only 3.7% vs 11.3% for handsets). As Tomi Ahonen points out, Elop seems to be ready to get rid of NSN. Plus there was no announcement of Ovi plans or clear strategic guidance with regards to the Nokia services business.

 

The acquisition scenario
There have been earlier rumours of acquisition discussions between the two companies. We now believe that the only scenario for the Nokia and Microsoft partnership to succeed is an acquisition scenario; Microsoft buys Nokia’s smartphone business, while Nokia gets more resource to play with what it does best – that is creating mass-market phones at unbeatable levels of supply chain efficiency, unmatched supplier bargaining power and customisation to 100s of variants per handset model for distribution to diverse global regions, channels, carriers and retailers.

From a financial standpoint, Microsoft capitalisation stands at $220B, more than six times Nokia’s market cap of $33B at the time of writing. Microsoft would also acquire a high-profit margin business that would go a long way in helping the Redmond giant push its Entertainment and Devices division at high profitability levels for the first time. Despite Microsoft being a software business, it has experience in running hardware products, with the Xbox business doing well recently on strong Kinect sales.

For Nokia, a joint venture would make more sense than a pure sale of its smartphone business, given that the hardware giant is an important component of the Finnish economy. It would allow Nokia to focus on what it does best and substantially increase its S40 R&D budget (as Elop already announced it would) to rework its aging feature-phone OS. A joint venture would also allow Nokia to make a comeback when they are ready to take on the high-end phone market again.

Besides, with shares recently hitting a 13-year low and Nokia being owned by American institutional investors, the Nokia board has little they can do in the face of potential suitors. This makes Nokia a very interesting acquisition target, not just for Microsoft but for anyone with cash at hand and mobile ambitions, including Chinese, Korean and Japanese suitors.

The acquisition scenario would allow Microsoft to leverage on Nokia’s accounts with carriers across the world to woo them into moving subsidy budgets from Android into WP7. This is all too important, as the Microsoft brand enjoys little consumer awareness compared to Apple and Android, meaning that Microsoft is more dependent on carrier subsidy and marketing budgets than its nearest competitors.

Fundamentally, we believe there is no place for Nokia, an all-in-one integrated handset OEM and services company, in the new telecoms value chain. The old guard of top-5 OEMs are squeezed between leaders (Apple, RIM) who lead in terms of performance & profits, and assemblers (Huawei, ZTE, Dell, Acer) who lead in terms of me-too designs & razor-thin margins (see our earlier analysis on the evolution of the handset value pyramid). Nokia’s business needs to break-up into independent, self-sustained entities, particularly the smartphone business (within Microsoft’s new home) and the mobile phone business as an independent entity that can focus on competing with PC-borne assemblers.

The Microsoft-Nokia acquisition might not have been planned from the outset, but it is a scenario whose viability has been ensured from the outset. There are no conspiracy theories here, except that Elop (as the 7th biggest shareholder of Microsoft) would benefit greatly from trading Microsoft shares with Nokia ones, only to see them boost in value after being repatriated.

Let the debate begin!

– Andreas
you should follow me on Twitter: @andreascon

Andreas Constantinou is Research Director at VisionMobile and has been working in the mobile software industry since 2001, when he fondly recalls being a member of the team behind the very first Orange-Microsoft handsets which set the world of telecoms software in motion.