With possible Nokia deal, Microsoft could try to become the next Apple

By on Jun 1, 2011 at 1:45 PM
Featured June 1, 2011

Apple, a company many said had repeatedly delayed the development and launch of the iPhone for fear that it might cannibalize its iPod business, is now a “mobile devices company” with a smartphone that is undoubtedly its flagship device. Chief Executive Steve Jobs and Chief Operating Officer Tim Cook have both publicly acknowledged this major transition on several occasions, including on stage while unveiling the iPad and on earnings calls while speaking with analysts. Apple is growing at an unheard of pace and stockpiling mountains of cash, all thanks to its mobile business. Personal Computers, Apple’s core business for nearly 30 years, now play second fiddle to the company’s mobile devices in terms of both revenue and mind share. On the other side of the table, old rival Microsoft is doing all it can to regain its footing in the mobile space after letting its Windows Mobile platform grow stale and moldy. Windows Mobile’s replacement, Windows Phone, is still in its infancy but early reports have suggested adoption has been slow at best. So where does Microsoft go from here?

The Internet erupted following our report covering industry insider Eldar Murtazin’s claim that Microsoft has struck a deal to purchase Nokia’s cell phone business for $19 billion. Murtazin has a long track record of solid Nokia scoops, and he was the first person to report that the Finnish phone maker would adopt Microsoft’s Windows Phone platform for its smartphones starting later this year. While his new claim is anything but confirmed, it’s not as far fetched as some might think. In fact, a deal to dump Nokia’s phone business could actually be considered a continuation of former Nokia CEO Olli-Pekka Kallasvuo vision.

The ex-Nokia chief lead a major reorganization that began several years ago in an effort to transition the company away from being a devices company. Instead, Kallasvuo believed Nokia’s future was in software and services. Subsequent acquisitions of companies like Navteq and the eventual launch of Nokia’s Ovi suite would set the phone maker on this new course, but the transition came at a time when the company’s smartphones were leapfrogged by Android and iOS devices, and revenue began to sink along with the firm’s market share.

But perhaps Nokia was on the right track. Perhaps Kallasvuo’s vision of Nokia as a software company is shared by new CEO Stephen Elop, who some pundits believe was brought on board solely to preside over a union with Microsoft, his former employer. Those pundits were painted as conspiracy theorists until Nokia announced this past February that it would adopt Windows Phone as its smartphone platform of the future. Was that deal just the beginning? It’s not so crazy to imagine a role reversal of sorts, where Microsoft could orchestrate the bigger picture while Nokia supplies the software and services that power the Windows Phone platform. Plenty of companies have built monstrous businesses by supplying software to hardware makers — one such company, of course, is Microsoft.

But Microsoft is a different story right now. It is a PC OS company at its core, and therein lies the problem: the PC OS business isn’t what it used to be. As such, Microsoft has spent a considerable amount of time and resources fanning out its software and service portfolio in order to spread out its net. It’s doing a good job, all things considered, but one company found a better path to take not long ago. That company is Apple, and that path is mobile.

It would certainly be quite an interesting piece of irony. For years, Apple nipped at Microsoft’s heels while chasing the Redmond-based giant’s computer business. Then in 2007, Apple planted seeds that would sprout into one of the most successful technology ventures of recent history: iOS. The iPhone, the iPad, the iPod touch… a trio of mobile devices that have made Apple one of the biggest technology companies in the world.

Apple spent decades trying to become the next Microsoft. Now, from atop a mountain of mobile devices, Apple may finally be able to sit and watch while Microsoft tries to become the next Apple.

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  • drew dogg

    They nvr mentioned that Windows OS has been on mobile devices for years and years! BGR is completely wrong on this one… Apple hardware is what was the game changer… Well that and apps realistically. Apple need not worry about Windows on the mountain top anyways… its a green half human, half machine! Dro dro DROID!

    • Anonymous

      The iPhone hardware wasn’t revolutionary. It was iOS. Remember smartphones before iOS and how clunky they were to use? It didn’t matter if they had great features, they were annoying to use.

      • Shanghai Dan

        I remember when iOS was announced, and thinking “this is a restricted UI version of HTC TouchFLO and SPB MobileShell”.  It brought literally nothing to the table, other than great marketing and a few million die-hard Apple fans who would buy it because it came from Apple.

        There really was nothing innovative that Apple brought to the table – UI, apps (Handango was out years before), etc.  It’s just Apple marketing which is quite top-notch.

  • Anonymous

    OMG, that made me laugh, too.

    ‘Windows Mobile’s replacement, Windows Phone, is still in its infancy but early reports have suggested adoption has been slow at best. So where does Microsoft go from here?’

    Microsoft should buy the entire fleet of retired space shuttles, so that their execs’ (including Ballmer) can escape to Uranus (no pun intended) when all of this
    Windows Phone/NOKIA biz’ implodes.

    By the way, great picture of Satan!!

    • RDiddy

      The:

      Worst.  Troll.  Ever.

      Is sadly back.

  • Danheb

    Yea sure!!!

    the lack of vision shown by MS in the last 5 years clearly state about that!!! since it’s debut MS has made a name for itself by buying good products from others, breaking it down and selling it to others while keeping the good aspect of it….but when we’re talking about developing great ideas making good products….You must really be kidding…
    If MS would buy Nokia’s cellular division, It would for sure be the last we see of Nokia….

  • http://www.alandesigns.co.cc Alan

    Everyone’s trying to beat Apple. Now I finally understand what everyone meant by World War III.

  • Tinda

    There is no space for a
    second Apple economic model in smartphone market.

    There is only space for
    android like models (like Meego).

    Blackberry is suffocating
    (44% to 23% market share for smartphones in only 18 months and will continue to
    fall as ANDROID will continue to increase: at this speed, blackberry should be
    not more than 5% market share in 18 months)

    Microsoft should probably
    remain “very little” in smartphones (because Microsoft will never
    adopt ANDROID economic model). NOKIA, with WP7 will lose market share. I am
    hoping that they will develop too Meego in order to avoid this fall.

    • Anonymous

      There’s little point now in looking at “smartphone” market share.

      So many people are buying Samsung or LG Android “smart phones” instead of their original Samsung or LG “cell phones” that their really is only one market. The cell phone market.

      And RIM’s share of the global cellphone market remains pretty stable. 

      What has happened is that the bleeding of market share away from Samsung and LG etc has stopped and is rebounding for those manufacturers that have switched to Android.

      Little wonder. Take an Android phone on a three year plan and you get it for free.

      Apples market share is growing slowly, but even they will be decimated by free Android phones. Only the true believers will continue to pay good money when they can get the equivalent for free.

      And for Apple to compete they’ll have to match the price. Lowering their ASP; decimating their revenues; and demolishing their stock price.

      Don’t get caught holding Apple. Take the profits and move on.

  • Senor Chang

    It just seems silly to compare the weakness of one corporation to the strengths of another.

    “Apple spent decades trying to become the next Microsoft.”
    yeah, sure, and in what arena during those decades?  Home computing and software… of which Apple is STILL LAGGING BEHIND.

    I never will argue that Apple is DOMINATING the mobile space, along with the arch-nemesis Android and this is where MS is far behind.  If you were to state “MS wants their mobile products to become the next Apple”, I could totally get behind that statement.  Otherwise, this just sounds like an extra long comment from any one of the lame BGR readers.

    • Anonymous

      I think it’s more that Apple admitted it lost the PC war and carved a (profitable) niche doing what they do best (while dominating the high-end market). They then focused their efforts on the next big thing, and got ahead of the curve. 

      Microsoft, seeing that the market is heading to a post-PC environment, now is trying to buy their way into the curve.

  • Anonymous

    Hah, funny considering that Apple is probably headed toward being the next Nokia.

  • James Bond

    I paid $32.67 for a XBOX 360 and my mom got a 17 inch Toshiba laptop for $94.83 being delivered to our house tomorrow by FedEX. I will never again pay expensive retail prices at stores. I even sold a 46 inch HDTV to my boss for $650 and it only cost me $52.78 to get. Here is the website we using to get all this stuff, MadCent. com

  • Major Plonquer

    Try to become the next Apple….   Hilarious.

    In case you haven’t noticed, Nokia have ~22% of the mobile phone industry.  If Apple keep going at this rate, in 5 years they’ll have ~2%.

    Meanwhile Microsoft have 93% of the computer market while Apple are rapidly approaching 3%.

    Microsoft are a software company. As a matter of policy they sell software to device manufacturers and they NEVER compete against their own customers.

    Just a load of Mac’n'Tosh.

  • Dvintin69

    microsoft will never be like apple because apples products are consistently well built and microsoft well, alot oftheir stuff sucks. 

  • Chut Pata

    Har har har har.  That was a good laugh.  Thank you BGR, you made my day.  Microsoft is trying to be apple for the past 30 years and more.  Apple came up with PC, Microsoft bought DOS and launched with the help of all mighty of the time IBM.  Apple came up with windows, MS followed with a poor quality version of its own.  Apple came up with laptops, no hardware here.  Apple came up with iPod, MS followed with its pathetic Zune.  Apple came up with iPhone, MS with tiles called WP7, and that too after many years.  In short, Microsoft will always be the dust eating follower of Apple, always copying and never innovating.

  • jezza

    terrible article . . .  please quit

  • Anonymous

    Not for long.

  • Anonymous

    That’s also MS’s weakness, since it’s hard for them to move away from outdated things like a registry, etc. Their legacy both helps and hurts them.

  • Anonymous

    Businesses are concerned with profits, not marketshare. When Apple is makin the kind of money they’re making and growing so quickly, any company is going to want to emulate them.

  • Anonymous

    Yeah, I remember Handango, the Palm Treo, etc. If you think those are equal to the iPhone or that Apple didn’t add anything to the smartphone world, you’re blinded.

    Modern smartphones owe a ton to Apple for shaking up the smartphone industry.

    • Shanghai Dan

      So what did iOS bring to the UI that didn’t already exist?  How is the App Store so different from how Handango works (other than Handango supporting a wide variety of platforms)?  I can browse, buy, and install right from my phone, and have done so for the last 5 years…

      What did Apple bring in the way of innovation?

      • http://twitter.com/imactokyo iMacTokyo

        The user experience dude… It works… And the hardware is not bad… That retina screen on the iPhone 4 is pretty good, the last time I looked… Everything is pretty fast on the iPhone and iPad, I thought…  If it already existed, why didn’t they sell a ton of them?  Lousy user experience, dude…  It’s the nice integration between software and hardware with iOS… You don’t have twenty, fifty, a hundred lousy companies making their own hardware and software tweaks to make a better product.  iOS is all there, dude…  You make it once and it works on all the devices, dude… So what if you can browse, buy, and install right from the phone… You use a PC right?  And come on, admit it, you browse on the PC to check out new apps, right? I mean, like, you’re going check out all those cool apps on that little dinky screen?  Wow, you like torturing yourself, eh? Your choice, dude…  And now with iOS 5, we can do a little more…
        Yeah, maybe in a couple of years with innovation, the rest of the OSs can catch up and become better…
        Live from iBoner…

  • http://twitter.com/JailbreakUnlock #iDeviceHelp

    I find it very frustrating that people compare Microsoft to Apple.Microsoft is bigger and used more than Apple’s OS.They are bigger in terms of dollars and usage.Microsoft is a pioneer and many of the things we use today are thanks to Microsoft.If you search on YouTube there are videos that point out Bill Gates as part creator of one of the first Macs.You may say well theres the ipod and theres the Zune…Think behind that! Microsoft is international in terms of technology and location!

    • http://twitter.com/imactokyo iMacTokyo

      Are you serious…  Bill as part creator… Wow, let me have some of that stuff you’re smoking, dude…  Yeah, MS is a pioneer for copying… And junky at that…
      We admit that there are more PCs on MS… But for the rest in the real world today, where eyeballs count, and people want, it’s all Apples, dude.  iPhone, iPad, iPods…  Even the GameCenter on iOS is almost twice as big as XBox Live, dude…Live from iBoner

  • iOS4ever

    iPhone 4 is almost a perfect phone. These other device’s/OS’s haven’t even catched up to iOS4 standard let alone the upcoming iOS5 and we are in mid 2011. iPhone was King in 2007 and will always remain King

  • http://twitter.com/imactokyo iMacTokyo

    Don’t know why I’m even commenting here… But what a thread that’s been going on for the last week…

    I don’t even care about MS… Who gives a crxp about what they do… Never had anything good…
    And now with the iOS 5 announcement and iCloud, should be an interesting few months ahead…

       Live from iBoner…

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