Microsoft’s Stephen Elop takeover of Nokia VS. NeXT’s Steve Jobs takeover of Apple
February 13th, 2011
Daniel Eran Dilger
For a historian, the only thing more fun than seeing how history repeats is examining what elements do change as events recycle. Looking at Microsoft’s takeover of Nokia, I can’t help but contrast NeXT’s takeover of Apple Computer in 1996. Despite the similarities, there are stark differences that promise to make the results predictably different.
This all happened before
Apple was in dire straits in the mid-90s, with a dead end platform that it had been struggling to reinvent or retrofit for the last half decade. But it did still have customers and a strong brand. Nokia is now in much the same position, struggling to keep its profits up while the smartphone industry it helped to originate is being pulled out from under its feet by none other than Apple itself, as well as a series iPhone knockoffs mostly powered by Google’s Android software.
Like the Old Apple, Nokia’s problem isn’t that it can’t build hardware, but rather that its software platform is simply failing to remain competitive with more modern alternatives. Also like Old Apple, Nokia realized that it couldn’t develop its own way out, because it simply didn’t have enough time to start from scratch again.
So like the Old Apple, Nokia looked at its options. It could align itself with a platform popular amongst nerds, one that served as essentially a slicker-looking version of its own. For Nokia, this meant replacing Symbian with Android, while for the Old Apple this would have meant replacing its old Mac OS with BeOS.
The problem for both Nokia and the Old Apple, however, is that they weren’t incorporated to impress nerds, but rather to return a profit to shareholders. Neither Android nor BeOS represented software that could make those companies profitable or unique; they would simply make them cooler amongst a small population that doesn’t put its money where its mouth is.
Instead, Apple went with NeXT, while Nokia went with Microsoft. NeXT was originally a competitor to the Mac OS, intended to deliver a more sophisticated experience based on better quality development tools, a more standardized and modern OS underpinning, and a stronger set of business-friendly features. One could say the same of Microsoft’s Windows Mobile/WP7 compared to Nokia’s Symbian.
This is the part where things diverge
Once the Old Apple acquired NeXT, it inherited an initially reluctant CEO who turned around and revamped the company into a viable entity, mercilessly slashing all sorts of products that had little realistic commercial prospects or which could simply be better replaced by open technologies.
Steve Jobs was so active in killing off dubious projects and products that “steved” became a verb within the company. Jobs steved the Newton OS and its MessagePad and eMate, QuickDraw 3D (shifting Apple’s efforts behind OpenGL instead), QuickTime Interactive and HyperCard 3.0 (both of which were essentially competing with the web), QuickDraw GX (replaced with a new, open PDF-based imaging model conceptually derived from NeXT’s Display PostScript) a confusing series of PowerMac models, and a bin of other old legacy, ranging from serial ports and other proprietary connectors to software that was falling behind the times. In its place he created a clear, very limited set of new products: Mac OS, iMac, the G4, and so on.
Nokia’s new boss is, in contrast, at least saying that everything Nokia is doing will remain in place before gradually fading away into a WP7 future. The company is still planning to release its next MeeGo device as an “experiment,” and continuing to push out Symbian releases. Elop has even suggested there will be minimal layoffs due to the Microsoft deal saving it so much in forward research and development costs. Really?
Unlike the series of decisive, hard choices made by Jobs, Elop appears to be consistently saying that Nokia will simply proceed forward with little real disruption or change thanks to a huge influx of billions of dollars from Microsoft.
Recall that in the Apple acquisition of NeXT, the money went from Apple to NeXT while the product went from NeXT to Apple, a transaction that makes sense. Here, Nokia is getting huge amounts of money to shift its products to WP7, a platform that indisputably bombed in the marketplace.
That’s not a straightforward business transaction; it sounds more like a bribe to influence a terrible decision. Microsoft desperately needs customers for WP7, and Nokia desperately needs an OS strategy, very much like NeXT and the Old Apple each did fifteen years ago. How they’ll work to make that happen is clearly different.
This sort of thing takes time
Jobs hoped to transition Apple’s product line to use his own NeXTSTEP rapidly, but feedback from users and developers pushed that transition back for five years until the first mainstream release of Mac OS X 10.2 in 2002. Over all those years in the middle, Jobs’ Apple worked to sell the existing Macintosh as best it could, marketing Mac OS 8 and 9 as interim products and creating markets around Pro Apps, then iLife apps including iTunes, and integrating new products like iPod.
At the same time, both Nokia and Microsoft have proven themselves incapable of launching new supporting devices and services. Nokia’s Internet Tablets are a flop, as is its iTunes-like Ovi services. Its attempt to launch mobile gaming with N-Gage was also a huge boondoggle. It’s hard to point out any risky new endeavors Nokia has taken that have ever paid off, in contrast to Apple’s new apps and services and products over the past decade. Microsoft has suffered a similar series of flops, from SPOT watches to PlaysForSure music stores to the Zune to KIN to various tablet failures and even a faltering weakness in its core Windows business. How are these two crippled ostriches going to take flight together?
Remember too that two years ago, Microsoft partnered up with LG to push Windows Mobile 6.5 and build a Mobile Marketplace of apps. That collapsed, resulting in the need to start from scratch in developing WP7 as an alternative. After that collapsed too, Microsoft has started over again with Nokia. How many years does Microsoft have to rerelease its platform before a complete lack of buyers will catch up to it? What market exists for WP7, were it even possible to put it on Nokia hardware in a reasonably short period of time?
And with the window of opportunity closing rapidly, why is Nokia talking about potential WP7 phones as being vaporware still nearly a year away, rather than building a path towards its future with relevant products to sell along the way, as Jobs did once he realized everything was going to take longer than planned? One problem Nokia has is that it can’t simply rename WP7 “Symbian ^4” and pretend that this is a simple transition, because it doesn’t own its future. It’s throwing away everything it owns to adopt Microsoft’s future, while talking like nothing is being thrown away at all.
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Selling a good product vs paying for sales of a bad one
It’s useful to point out that NeXTSTEP, while a very highly regarded product from 1988 through Apple’s late-1996 acquisition, was mostly a commercial failure. The company created high profile partnerships with IBM, HP and Sun, all of which abandoned NeXT before actually delivering anything. But what products NeXT did build got respect. And those that paid a premium for them did so for high end reasons, among them being the CIA and NSA, brokerage houses, cutting edge developers, even the creator of the web itself.
NeXT didn’t have a technology problem, it had a marketing and sales problem. It couldn’t get its foot in the door to sell its product. Further, the PC market was monopolized by Windows, with Apple sucking up all the remaining scraps due to its position as the minority alternative platform. NeXT needed a partner capable of productizing its technical strengths and selling them to a ready, hungry audience.
In stark contrast, Microsoft has partnered with nearly everyone in the smartphone hardware business, and most of them have produced Windows Mobile phones. Each partnership has been a failure, not because those companies abandoned Microsoft, but because Microsoft failed to deliver a good product. Even Microsoft’s staunchest supporters have nothing good to say about Windows Mobile, a wheezing, clumsy, stupid dog of a product that was simply given a facelift to become WP7.
While Microsoft’s enthusiast supporters oohed and awed over the Zune-like interface of WP7, they didn’t convince anyone to actually buy the phones last fall. It’s certainly not some incredible technology in search of wider distribution. The only thing great about Microsoft’s mobile software is the amount of money Microsoft is willing to spend to promote it.
On the one side, Nokia clearly doesn’t have a ready, hungry audience for its high end products. Despite an entrenched position in the mobile business, Nokia largely sells low end phones, and has not been able to match Apple’s iPhone, nor the iPod touch, not even to mention the iPad. So while there are some similarities, there are also some vast differences that hold out little hope that Elop’s efforts to shift Nokia to a Microsoft platform will work out anything like Jobs’ efforts to move Apple to NeXT.
There’s another repetition of history occurring in the new muddling of Microkia, which I’ll address tomorrow.