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There are two ways of looking at the deal between Microsoft and Nokia. You could interpret this as masterstroke by Microsoft, or you could say it has just accelerated its route to destruction. Which interpretation is right?

Actually I can think of five key considerations to factor in when considering the future of Microsoft.

Number one: The importance of proprietary. The big coup that Microsoft pulled off in its early days was to help create a non-proprietary hardware standard, but one in which the software was very much proprietary. It created a market in which anyone with sufficient resources could produce an IBM compatible PC. Only Microsoft could produce the software. The IBM PC was successful at first because of the name IBM. Later however, as the letters IBM were dropped, the market’s strength was defined by the sheer multitude of hardware companies that were backing it.

Nokia played the proprietary card quite differently. You may recall that the Symbian operating system that gave Nokia its edge for so many years was developed by the British company Psion. At first Symbian was to mobile phones what Windows or DOS was to PCs. It all changed when Nokia bought Symbian out, and made the operating system its own proprietary system. I think that was its first major mistake. Just imagine if Symbian had remained independent, I reckon that Android would have found it much harder to gain traction.

Android and Linux are the very opposite of proprietary. When you take on Android, you are not just taking on one company, you are taking on many and that makes it formidable.

This takes me to factor two: design. Apple is the essence of proprietary. It works because Apple has managed to force high standards. Its products are more reliable, less inclined to be infected by viruses, and, of course, they work beautifully. Apple is about design excellence , and by that I don’t just mean nice looking hardware, the overall customer experience has been carefully thought through.

Microsoft is neither a supporter of non-proprietary nor a great advocate of design. I am sorry; I use Windows for my work. This article is being written on a Windows PC, and I hate it. I just don’t trust my PC. I live in constant fear of it crashing, of being unable to reboot it. I get frustrated beyond words, when the speed with which I can write an article is determined not by my skill as a writer, but the mood my PC is in. Sometimes it is just terribly slow. Microsoft is just not as good at Apple at getting design right.

Now let me turn to factor three – Microsoft as specialist business to business provider. I don’t like my PC but I use it anyway. My iPhone is great, and I research a lot of articles on it, but let’s face it, for word processing, spreadsheets, databases, etcetera you need a proper computer. I read that Rick Sherlund of Nomura Securities suggested a couple of months ago that Microsoft should forget about hardware and consumer electronics, and just focus on licensing Office for Apple and Android machines. I get that argument, although I would add the caveat that Microsoft has to find a way of making its software less cumbersome. Maybe Microsoft is big enough for two strategies: to go for consumer electronics dominance, and push Office. But I am inclined to think it would find it much easier to get support from the Apple and Android community if it wasn’t in the business of promoting a rival smart phone system.

Factor number four: Kinect. This is one of the most truly innovative products to come out of Microsoft for years – in case you don’t follow the Xbox, it is about being able to control your computer by a wave of your hand. Instead of a mouse you can just point – or that’s the theory. I guess that if Microsoft can somehow learn how to combine its Kinect technology with the Nokia hardware expertise that it now owns, then it may yet find a way of being as innovative as Apple.

Factor number five: the Internet of things. Cisco predicts that by 2020 no less than 50 billion ‘things’ will be connected. So what is meant by things? Well, as examples, we are talking fridges, heaters, cars, watches and TVs. Personally I am hoping for socks to be connected, for if this were to happen the riddle [J2]  of why I have so many odd socks may finally be solved.

Let’s assume Cisco is right. Some companies will do very well indeed out of the internet of things. The list of companies with the potential to benefit big time includes Cisco itself and ARM in the UK. IBM, Apple, Google, and Samsung are all contenders – Facebook may be too. And of course Microsoft wants to be part of this massive opportunity.

And now the conclusion: Microsoft has now taken on more risk, it has allowed itself to get sucked into the hardware game, and that carries massive exposure. Its demise may be hastened as a result. But it has USPs, among them Office and Kinect. To take advantage of the opportunity that the Internet of things may bring, Microsoft has to think big. By taking this approach, the strategy may backfire, but frankly if it doesn’t take risks Microsoft will become an irrelevance, a minnow as the Internet of things expands. I am not a fan of the company. I think there are others players who are better able to exploit the Internet of things, but I am not ready to write Microsoft off yet.

These views and comments are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

Showing 1 comment

  1. To what extent is it safe to identify large corporations with individual attributes ?

    Is it unreasonable to think that Nokia might add a further layer of security and diversity to the Microsoft portfolio thus making investors and employees less PCM dependent. Or are all Company ambitions ultimately about individual world domination by power crazed senior executives ?
    (Via wife’s iPod!)

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