February 15, 2011

Something is rotten at Nokia

As you probably have heard, Nokia and Microsoft recently announced a new partnership. Nokia will be delivering smartphones with Windows Phone 7 with it's first product release later this year, and Microsoft's Windows Phone 7 operating system has now become Nokia's primary platform.

Some of you may think this is just a bad move for Nokia, or some of you might even think this is really good news for both companies. Well, future will tell if it's a good or bad move, but I do think something is rotten here.

First, consider that Nokia owns Trolltech (creators of Qt, http://qt.nokia.com/), Symbian (which is open source) and they are also co-deveoping the mobile Linux distribution MeeGo with Intel. Sounds like a really open source friendly company, right? They clearly see the value in opening up their software and distributing it as free (as in speech) software.

Then something happened.

Late last year, Stephen Elop joined Nokia as President and CEO. Elop is a former Microsoft executive. He owns a lot of Microsoft stock, 174 000 to be exact.

Before Elop joined, there was an article on Nokia Conversations web site about his joining of Nokia. The article said:
"Nokia is transitioning from a hardware manufacturer of mobile devices to a software and solutions business."
Does the Microsoft partnership deal move Nokia towards being a software business? Not by any means. Instead, by placing Windows Phone software (developed at Microsoft of course) on most of their smartphones, Nokia remains a hardware manufacturer, instead of moving towards software. Sure, they will probably develop some Windows Phone apps at Nokia, but that would not be comparable to the commitment they previously had to MeeGo and Symbian. It's not even close. In fact, Nokia workers fear that there will be massive job cuts because of this deal.

Nokia's MeeGo partner Intel was also caught by surprise. They knew nothing of this change in Nokia's strategy, and say they will continue work with Nokia on MeeGo, but just not as close as before.

These are only a few of the things that proves this deal is a very sudden move. It was not planned (not by Nokia anyway) when Elop first joined, according to the Nokia Conversations web site. It is very easy to think that the man who owns 174 000 Microsoft shares is the brains behind this decision.

The Nokia employees are not the only ones who are disappointed, Nokia's share holders also took a stab when the partnership was announced. The Nokia stock dropped significantly, and in the last 3 days (10 feb-14 feb, excluding the weekend) it has gone down almost 25%. Doesn't seem like the market thinks this move is good for Nokia, right? Microsoft stock prices only went down 2,65% in the same period.

Nokia is of course a desperate company right now, Elop is not hiding that fact. And desperate times call for desperate measures. Giving up on all their investments in open technologies like Symbian and MeeGo and other promising projects such as the Ovi Store, and instead joining Microsoft with it's proprietary platform Windows Phone 7 is of course a desperate move, especially since the WP7 sales are not looking that good. Nokia is placing all eggs in the Microsoft basket, and if the market doesn't like WP7 Nokia will be history.

I think something is really rotten at Nokia, and the stench seems to come from the top floor...