Microkia or Nokisoft? The puzzle of the Nokia-Microsoft agreement

Nokia, the giant cell phone manufacturer, is in deep trouble. It’s new CEO (since September 2010), ex-Microsoft executive Stephen Elop, stated that clearly in an all-hands memo to Nokia employees that compared Nokia’s business position to being on a burning oil platform. The only way to survive, he intimated, was to jump to a radically different business model.

On February 11 Nokia and Microsoft announced a joint alliance, with Nokia committing to use Windows Phone 7 as its primary smartphone OS. To date, Windows Phone 7 OS hasn’t had much acceptance in the marketplace. Apparently, Microsoft is going to pump “billions” into Nokia to attempt to get more Windows Phone 7 phones into the market.

The stock market reacted negatively to this news, and disheartened Nokia employees left work. The Joy of Tech thinks it’s just Nokia rearranging the deck chairs since the launch of the iPhone.

I’m skeptical this is going to work to Nokia’s benefit. In my view, Microsoft has a dismal record of new product development and marketing outside of its captive Windows OS and Office product lines. Nokia probably jumped off their burning platform too late to catch up with the iOS and Android mobile platforms. By the time Nokia gets its first Windows phone out, Apple will likely have released the next two versions of its iPhone series, pushing down in cost and up in features, and Android phones will continue their stellar sales.