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Zune 2: How Microsoft will slaughter Windows Phone 7 using Nokia

Daniel Eran Dilger

For a historian, the only thing more fun than seeing how history repeats is examining what things do change as events recycle. Looking at Microsoft’s takeover of Nokia, I can’t help but bring up Microsoft’s attempts to kill the iPod with the Toshiba-built Zune, an effort that backfired, killing Microsoft’s Android-like, “open” PlaysForSure platform instead.

Zune 2: Como Microsoft masacrará Windows Phone 7 utilizando a Nokia (en español)
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The Zune Phone arrives
What Microsoft is really doing is converting Nokia into its primary Windows Phone 7 manufacturer in order to finally deliver that Zune Phone that a handful of fans have been waiting for ever since the iPhone crushed the second generation of Zune players in 2007.

If you’ve forgotten, Microsoft rolled out Zune after realizing what a mess its Android-like PlaysForSure program for media players was turning into. With Zune, Microsoft thought it would run the music store and manage the platform itself, and Toshiba would build the hardware.

Instead, Zune killed the entire PlaysForSure ecosystem and screwed all its remaining licensees, despite Microsoft’s assurances that Zune would somehow only compete with Apple iPod and leave PlaysForSure licensees unharmed.

This all happened again and again

In 2009, I observed that Microsoft was gearing up to similarly slaughter its Windows Mobile licensees under Pink, a project that intended to release a phone based on elements of the Zune HD and Windows Mobile 6.5, without actually being compatible with either.

The Pink team acquired Danger, the Java-based platform vendor behind the T-Mobile Sidekick and Hiptop. Microsoft subsequently released the KIN, a product so bad it was canceled within weeks, destroying the remains of Danger and casting a shadow of death over the launch of Windows Phone 7.

Not satisfied with throwing Danger into the chipper/shredder to destroy one of the world’s few viable mobile platforms (which Google essentially selected to form the basis of its Android platform), and still smarting from an embarrassing launch failure of WP7 (which was beaten by Samsung’s Bada and, it appears, even the relaunch of iPhone 4 on Verizon), Microsoft is now turning to Nokia, the world’s largest phone maker.

Why Microsoft Will Slaughter Its Windows Mobile and PC Partners

Disregard ecosystem, acquire partners.

Microsoft isn’t interested in the majority of Nokia’s business, which revolves around low end S40 Java phones. Instead, Microsoft wants to repurpose Nokia’s Symbian and MeeGo smartphone business into its premier manufacturing partner for WP7 devices, just as it partnered up with Toshiba on HD-DVD and Zune.

This has got to make other WP7 licensees feel a bit stupid for being duped into another PlaysForSure-type backstabbing, particularly Dell, which recently made a splash about how it would be shifting all of its users to WP7 phones in a bid to cozy up with Microsoft. LG and HTC are probably not exactly stoked to be reading about Microsoft’s plans to give Nokia special treatment either.

At the same time, all of Microsoft’s WP7 licensees should have figured out by now that their Windows Phones are not selling and not going to sell. LG, a master in setting lowered expectations, said it planned to stick around to see if WP7 might sell on low end devices to users content with a “boring” smartphone. There’s not much room left for disappointment.

It’s hard to feel too much pity for these companies; it’s like watching an affluent man excitedly buying wedding rings with a woman who he knows has been married to a string of wealthy men who all died under mysterious circumstances.

Windows Phone 7: Microsoft’s third failed attempt to be Apple

What happens to Nokia?

But what about Nokia? It’s getting married with Microsoft at a shotgun wedding. Its only alternative was to do nothing and die in a fire, or adopt Android and relive its history with Symbian all over again, this time being the minority player in the open platform game rather than the ringleader calling the shots. Nokia appears to simply be following the advice of Mae West: “When choosing between two evils, I always like to try the one I’ve never tried before.”

How will that work out? It didn’t work out so well for Palm back in 2005 when it partnered with Microsoft to deliver a Windows Mobile Treo; Palm’s market share collapsed. It didn’t work out so well in 2006 when Motorola partnered with Microsoft to deliver the Windows Mobile Q; Motorola’s market share collapsed.

In 2007, Microsoft described Windows Mobile as the “fastest growing mobile operating system,” noting Toshiba as a new licensee. That worked out so well that Toshiba sold off its smartphone business to Fujitsu to focus on making chips for other companies in the smartphone business. Japan’s neighboring Casio, Hitachi and NEC have all experienced so much success with Windows Mobile that last year they merged their smartphone operations in hopes of simply staying alive.

In 2008 Sony Ericsson showed off its XPERIA X1 and Samsung demonstrated its Omnia, with both of their new flagship models running Windows Mobile. Both subsequently flopped, sending the companies to Symbian to show off Idou and Omnia HD, which both flopped, sending the companies to Android.

In 2009, LG formed an “enhanced partnership” with Microsoft to deliver WiMo 6.5 phones as that ship sank. It stayed aboard as the ship was rechristened “WP7” this year, even as it began to sink faster. So who’s to say whether the “enhanced partnership” between Nokia and Microsoft will work out well.

Microsoft Improves World’s Fastest-Growing Mobile Operating System
The Egregious Incompetence of Palm
Did Microsoft kill Android at Mobile World Congress 2009?

Why Nokia decided against Android

The only thing Nokia would have gained by going with Android instead would have been the adoration of nerds who don’t buy things. They’d loved to have been able to say that there is an Android licensee that sells more phones than Apple, or that even more of the world outside Apple is collectively using the same software. But bragging rights aren’t the same as profitability.

Since the WP7 platform is essentially stillborn, Nokia can adopt it without any real competition. As an Android licensee, it would be making phones that compete directly against Samsung, HTC, Motorola and Sony Ericsson, with little to offer apart from hardware differences. Being an Android licensee would mean that everything Nokia sells would be compared in price against the cheapest devices running the same software, rather than standing out as something people might choose for its features and overall package like the iPhone.

Even the mobile carriers were opposed to Nokia using Android, wishing for at least a three horse race in the mobile handset market. And based on Verizon’s about-face on Android, combined with comments from LG saying that carriers don’t like Android because users think it’s too complicated, and looking at the approval ratings from Android users, it appears that there’s a problem related to selling Android phones that involves getting lots of complaints and returns.

By backing Android, Nokia would have put itself in the bargain bin of smartphones alongside Samsung, LG, Motorola, Sony Ericsson, and that mysterious cloud of no-name “others” that sells the majority of the phones running Android. By backing Microsoft’s WP7, Nokia can hold onto its unique identity and remain in the rarified air of RIM and Apple, continuing to act as one of the top three smartphone makers who actually controls its own platform, at least in a tight partnership with Microsoft.

Microsoft is just as desperate as Nokia, and neither have any real options. It’s like a very ugly man who needs a green card marrying an insane woman turning 40 and still hoping for a baby. Neither can really walk out on the deal, and yet neither can really say they are happy about it either. The best they can say is that they’re not giving it away for free and will never be alone.

Nokia is not also alone in being wary of Android. HP is trying to achieve a similar control of its own destiny with its Palm acquisition. Samsung is doing something similar with Bada, and even HTC is hedging its dual bets against Android and WP7 with its own embedded platform running BREW. When the top three smartphone makers reject Android, while the next two in line initiate fallback plans, it makes you wonder why Android proponents haven’t contemplated why commercial entities with money on the line don’t share their own ideological enthusiasm for Android.

Windows Phone 7 developers fear platform flop
Microsoft announces an inventory of 1.5 million WP7 phones
LG: WP7 falls short as carriers tire of “too much Android”

The good news about Microkia

We do have some reason to rejoice that Microsoft and Nokia aren’t going to simply sink alone, in parallel within their own leaky boats in the mobile market. The partnership provides additional competition in the market, offering an alternative to the monoculture that an all-Apple or all-Android world might offer, and a third option to a simple duopoly of iPhone-like platforms.

It gives Microsoft a suitable place to dump billion of dollars from its Windows and Office monopolies. It keeps Finland employed. It proves that Symbian was the crufty mess it was profiled as back in early 2007. And it verifies my prediction that Microsoft would eventually slaughter its Windows Mobile licensees by repeating its Zune strategy, twice in a row.

Best of all, it keeps alive a comic foil for my future writing, as well as fractionalizing the fan base of Apple haters, who will now have to decide which of the two second rate iPhone platform clones to back in their hatred of Cupertino, something that is always fun to watch and lampoon.

Further, by keeping the mobile market competitive, it opens a greater opportunity for new platforms, such as HP’s webOS and Samsung’s Bada, neither of which could stand out in a world dominated by a duopoly of a minority innovator on the high end and a boorish monoculture monopolizing everything else. And who wants to just relive the platform history of the 90s again?

Readers Write About Symbian, OS X and the iPhone

51 comments

1 LunaticSX { 02.15.11 at 1:01 am }

Here’s something for a future blog post:

How does the billions of dollars Microsoft threw at the Xbox to make it a success in the marketplace (whether or not it’s yet paid back that investment) compare to the billions they just threw at Nokia?

Also, how much did Microsoft pay for Danger, Inc, again? They must have felt the real problem with that acquisition was that they simply didn’t flush enough money down the toilet to make it a success.

How many other times has Microsoft unsuccessfully thrown millions or billions of dollars at something to try to relive their past market dominance glories? MSN, Hotmail, Bing, .Net, WebTV, Zune, Surface, Windows for Pen, WinPad, UMPC, Windows 7 for Tablets, Spot watches, Windows Home Server, Multimedia PCs, HD-DVD, Win CE, Windows Mobile, Windows for cars, etc, etc.

It’s too bad Nokia couldn’t have partnered with HP, instead, to adopt webOS. HP wants to be successful at selling hardware, though, and wouldn’t want Nokia competing directly with them there. Besides, they wouldn’t have the amount of ready cash needed to play at the same high stakes table that Microsoft and Google were playing on to win Nokia.

It’d be more interesting though seeing a race between three able contenders than between a thoroughbred, an engineer’s mechanical horse, and a lame mix breed that’s barely taken a first step.

[And it's interesting Google is now doing the same thing: taking a single business that makes tremendous amounts of money and then burning it by the millions in one failed attempt after another. Makes it pretty freaking amazing that Apple has had a string of failures that can be counted on one hand across 30 years, and has pretty unerringly created one multi-billion dollar business after the other in the last decade. - Dan]

2 addicted44 { 02.15.11 at 1:04 am }

@Dan, your last few pieces have mentioned how other companies (MS in particular) have ignored history, which tends to repeat itself.

Don’t you feel Apple is also ignoring history? I increasingly feel that the iPhone, with Apple’s current strategy, is heading along the Mac trajectory.

Now, let me say, the difference this time is that SJ is aware that market share is important (Gruber had linked to a quote of his which blamed Apple’s pursuit of profit, and not market share at a critical period for the decline of the mac). I think Apple is aware of this, and we will see a significant change in strategy. There need to be 2 prongs to this:

1) Cheaper price points for developing markets.
2) More “openness”. While I don’t think the freetards are an important market segment, the echo chamber in the online, and offline press, about the wonders of openness are hurting Apple.

[The price premium that the Old Apple kept the Mac at was way above that of PCs in the early 90s. You simply couldn't buy a decent Mac for less than several thousand; Apple was offering a 5 year old retread for $999, a low end dumper for $1500, and everything else was closer to $3k before you started getting crazy with RAM and found yourself in $10k land. Basic PCs were selling for ~$1000-1500 at the time as I recall. That's nothing like today's iPhone market, and the reverse of iPad, where Apple is selling the cheapest good product. Even the crap Galaxy Tab is more than iPad!

So no, I'm not at all worried that Apple's pricing will cause some niche-ification of iOS. Look at the last decade of iPod to get a sense of Apple's ability to price its products in a competitive market. Also, Apple now controls software AND retail, something it had no handle on back in the day. There will not be a repeat of Windows/Mac, and can't be unless Apple sues all competitors out of the market apart from one. The more competition Apple has, the better it will perform. Which is why it is good to see HP and Nokia back in the game in a fashion. - Dan ]

3 beanie { 02.15.11 at 2:41 am }

Daniel Dilger wrote:
“Microsoft would eventually slaughter its Windows Mobile licensees”

I disagree, since WP7 is licensed model. So Microsoft set out to get the top phone manufacturers onboard…#2 Samsung, #3 LG, and now #1 Nokia. Google partnering with Samsung to make Nexus S does not slaughter Android manufacturers.

Daniel Dilger wrote:
“Zune killed the entire PlaysForSure ecosystem”

That does not seem true. Zune devices were a flop, so it could not kill PlaysForSure. PlaysForSure probably declined because online music stores using it were shutting down and surviving ones switched to MP3 format. Also, Microsoft introduce a new DRM system called PlayReady in 2007.

Daniel Dilger wrote:
“It proves that Symbian was the crufty mess…2007″

The updated Symbian, Symbian^3, with QT and multi-touch, is probably decent. Also, Nokia has recently released some phones with capacitive screens with the release of Symbian^3. All this time, Nokia has been using resistive screens on almost all their phones. So maybe part of the problem was also the hardware.

4 Ludor { 02.15.11 at 3:28 am }

This article goes in the Essential Dilger category. A total blast to read.

Do you think these Nokia Zunephones will be sold in those Microsoft stores? And beside them, what else?

5 LuisDias { 02.15.11 at 4:22 am }

All fine and dandy, but to call WP7 an iPhone clone is just the worst kind of idiotic handwaving I’ve ever seen. I understand the temptation of writing a “full house” piece, with the scent of “pwnage” all around it, and for achieving it, perhaps you have to cut some corners, but please, if there’s anything we can say about WP7 is that they really were original on that one, with a completely different architecture, design, look-and-feel, a totally different experience from iOS and Android.

IDK, it could be that Microkia can somewhat succeed. WP7 is *not* WM 6.5. The idiotic “start” button is gone, all the idiotic UI details are gone, all of it completely rethought and well thought at that.

Now, I am just filing a minority report here. I do suspect it will go badly. Not just as badly as you think.

And HP Web OS can be huge. Real huge. Let’s wait and see. At least, we are witnessing the surge of next-generation OSes, and that can only be good for our future.

6 Berend Schotanus { 02.15.11 at 5:16 am }

Fun to read, well done!

“It’s like a very ugly man who needs a green card marrying an insane woman turning 40 and still hoping for a baby.”

The weird thing about the Microkia partnership is that neither of the partners wants to call it a marriage. But they might very well be forced into monogamy by the outside world.

by keeping the mobile market competitive, it opens a greater opportunity for new platforms

The new compatibility layer is likely to be HTML5. Here comes in another brilliant move of Steve Jobs: he invested heavily in the completely open Webkit. Why, he didn’t have to? Why did he give all those goodies away for free to anybody instead of keeping them for himself? Why did he enable the fast rise of the “other” smartphone platforms that in fact was only possible because they were leveraging the capabilities of Webkit?

I think the answer is he had a vision of what the market place should look like.

7 Mr. Reeee { 02.15.11 at 6:22 am }

Good read!
OMFG, I spit coffee halfway across the room with some of your snarkiest lines in recent memory!

A 40 year old woman still hoping to have a baby IS the definition of insanity. EGAD! ;-)

I find it amusing that the Windows apologists gloss over, or completely ignore the fact that Microsoft screwed every music partner they ever had. Microsoft is a short, hopelessly dorky fratboy with a small penis trying to prove to everyone his manliness by screwing everything in sight… Live, dead, animal, vegetable and mineral. That’s in the Microsoft DNA as much as throwing buckets of cash into the wind, thinking some it will land in a profitable place.

8 tamajama { 02.15.11 at 7:05 am }

What was that sound? CA-CHING, CA-CHING. Oh, Bill Gates dumping more MS stock.

9 TheMacAdvocate { 02.15.11 at 7:37 am }

@LuisDias
I must have missed the part where Dan called WP7 an “iPhone clone”. Maybe you can “wave your hands at” the part where he does?

10 kdaeseok { 02.15.11 at 8:25 am }

TheMacAdvocate// Maybe he meant here…

Best of all, it keeps alive a comic foil for my future writing, as well as fractionalizing the fan base of Apple haters, who will now have to decide which of the two second rate iPhone platform clones to back in their hatred of Cupertino, something that is always fun to watch and lampoon.

11 tundraboy { 02.15.11 at 9:16 am }

Wow, Dan, you’re in a zone. This is great insight AND great writing. I swear you could teach a college course in magazine feature writing.

As a side note to the main thrust of the discussion, I kind of pity LG who’s coming across as this eager beaver who so desperately wants to crash the smart phone party but keeps getting turned away at the door because he always brings an ugly date. So it’s down to this as you so eloquently put it:

“LG, a master in setting lowered expectations, said it planned to stick around to see if WP7 might sell on low end devices to users content with a “boring” smartphone. There’s not much room left for disappointment.”

I think LG, since it doesn’t have a Bada play in the wings, would be better off giving up its smart phone frontline brand ambitions and just use its production line to be a contract manufacturer for Apple. Sure, the margins are thinner, but its steady work and that’s better than losses trying to sell their own brand. Apple is hurting for more production capacity and I expect it will get even worse.

I don’t know why any of these Android manufacturers went into that business thinking that their fate would be any different than the Wintel PC manufacturers, i.e. that they would end up in cutthroat price competition with each other.

12 tundraboy { 02.15.11 at 9:20 am }

Sorry, that should be “Android and WP7 manufacturers . . .”

13 SkyTree { 02.15.11 at 9:40 am }

For Google, the GOOD NEWS is that it just saved about slightly less than $8 billion that it may have bid for the phone OS for Nokia. The EVEN BETTER NEWS is that it just forced Microsoft to spend $8 billion for the phone OS for Nokia.

14 Steve W { 02.15.11 at 9:48 am }

@TheMacAdvocate “…which of the two second rate iPhone platform clones…”

15 gus2000 { 02.15.11 at 9:53 am }

Virtually every smart phone today is an iPhone Clone.

Go back to web posts and news stories in 2006, when iPhone speculation was at fever pitch but the product remained unannounced. No one, NO ONE imagined what the iPhone would actually look like. Most of the imagineered mockups were iPods with full RIM-style keyboards grafted on top. Instead, the revealed iPhone barely even looked like a phone at all. Where’s the microphone and earpiece? Where is the dialing pad? Hell, where are the buttons??!?

The iPhone was so different, it was openly mocked. Ballmer LMAOed it on camera. No buttons?? No stylus?? WTF?!? You’re going to scratch the screen and cover it in fingerprints! You can’t possibly type without haptic feedback! You’ll be raped while trying to dial 911!!!

Now look at the current crop of Smartphones. No keyboard? Check. Full-size touchscreen? Check. No stylus? Check. Multi-touch? Check. “Swipe to Unlock”? Check. Headphone jack? Check. Multiple sensors (accelerometer/etc.) check.

Before iPhone, there was nothing even remotely approaching this description. Now, you can’t find a Smartphone that doesn’t have all the above and more. Yes, all the iPhone competitors have designed unique UI elements and features, but all take their cues from the one, revolutionary phone.

And THAT’s what Daniel means by “iPhone platform clones”.

16 gctwnl { 02.15.11 at 10:09 am }

Very entertaining marriage analogies, made me LOL.

The whole Microkia deal does indeed feel a bit like the Hindenburg coming to the rescue of Titanic passengers. And I feel very sorry for Finland.

[What a wonderful analogy. I should dust off my graphics tools and illustrate that for the story. I do miss drawing pictures - Dan]

17 ChuckO { 02.15.11 at 10:14 am }

I think this is a bit different than Zune as Microsoft’s existing WP7 partners only released WP7 phones to avoid lawsuits and hedge their Android bets. I doubt any of them are therefore shocked or concerned with Microkia.

How’s that pronounced by the way? Micro-Kia or like a baltic country: My-Crokia?

I kind of like My-Crokia.

[I like it with the Steve Ballmer/Finland sound: Mock-ia - Dan]

18 donarb { 02.15.11 at 10:22 am }

beanie, you’re wrong about Zune. As posted previously here on this site, Microsoft told their partners that PlaysForSure was here to stay, all the while secretly developing the Zune. This was a strategy to get the market to stand still while Microsoft moved ahead. Microsoft then abandoned its PFS partners and all those players flooded the market for cheap. Microsoft thought they had a brilliant strategy, but those cheap players helped stall initial Zune sales. That’s Microsoft, too clever by half.

19 Alan { 02.15.11 at 10:48 am }

“The only thing Nokia would have gained by going with Android instead would have been the adoration of nerds who don’t buy things. ”

Seems like the nerds and a lot of others are buying quite a lot of Android phones, so I don’t see why you would make that comment. Even if you hate Android, you can’t just summarily dismiss them as irrelevant. Android along with iOS will continue to gain at the expense of other niche players.

[Yes FOSS nerds buy hardware, but they don't buy software, media, services and other things that support mobile platforms. They like ads. Good for Google, at least in the short term, but not really what Microsoft wants, given that it sells licenses, hopes to sell apps and services, and build a viable development platform. - Dan]

LG recently introduced a very impressive android model called the Optimus 2X and is already being sold in Korea and will probably go abroad shortly. http://www.engadget.com/2010/12/15/lg-optimus-2x-first-dual-core-smartphone-launches-with-android/

Samsung also recently announced their galaxy II series: http://www.bgr.com/2011/02/13/samsung-galaxy-s-ii-gets-offical/

There are a lot of very nice phones coming out for Android this year so I look forward to how the iPhone 5 will compare. Companies like HTC, LG, and Samsung are probably very please that Nokia will go exclusively towards WP7 because it means less competition for them in the market that really matters and sells phones. They could easily choose to just stop making WP7 completely if their current models don’t sell well. I don’t think Samsung would ever stop making android models to focus solely on Bada. Although Bada can be used for smart phones I think their main intention was to use it for their feature phone market like HTC plans to do with Brew. That does not mean they will ever abandon Android. Web OS is a really nice OS, but HP chose to stick with the failed Pre design. If they can make better hardware, say a slab like 4″ touchscreen only device with nice specs they might have a winner.

With Verizon now selling the iPhone, I have no doubt that this will decrease Andoid sales on Verizon. But like it or not Android is here to stay and as much as Microkia would like it to be a 3 horse race, my money is on a 2 horse race with the rest fighting for scraps.

20 John E { 02.15.11 at 12:00 pm }

So what will the OEM’s do? they’ll drop WP7 like a rock now (unless they can get the same per-unit MS bribe for using it that Nokia did).

they can continue to crank out Android phones in a commodity race to the price bottom, watching their profits sink along with it, or even turn into dangerous losses. (e.g., Motorola has pretty much bet the farm on Android.)

only Sony/Ericcson has an original idea for Android to get out of this trap – the new PlayStation Phone, combining it with Sony’s PSP franchise and PlayStation Store (a competing non-Google ecosystem). a Nintendo Phone, anyone? bet you we see such a “partnership” announced this year.

or what? RIM, HP and Samsung aren’t going to license their proprietary OS’s – it’s all they have to avoid the same fate. and it’s very hard to build a good one of their own. i don’t think LG is up to it.

so … we’ll see a shake-out and consolidation over the next few years – basically a series of forced sales. Palm was the first to go, but not the last.

oh, and the new no-name OEM’s of Asia will take over the low-end of the market globally (probably running forked non-compliant mutations of Android), especially in the second/third world as Symbian collapses. you really think Windows Phones will hold those markets for Nokia?

21 nextguy { 02.15.11 at 12:13 pm }

“[Yes FOSS nerds buy hardware, but they don't buy software, media, services and other things that support mobile platforms. They like ads. Good for Google, at least in the short term, but not really what Microsoft wants, given that it sells licenses, hopes to sell apps and services, and build a viable development platform. - Dan]

Yes, but again, the FOSS nerds buy Nokia N900′s. Android phones aren’t quite the free as in open they are looking for.

But the other points are spot on. Perhaps comparing Android to “Plays For Sure” works somewhat, but didn’t they have to pay for it?

22 kdaeseok { 02.15.11 at 12:21 pm }

John E// I don’t see any reasons to see Nintendo doing a partnership to do a mobile.
3DS might be able to support Skype video chatting, but that’s about it…

23 John E { 02.15.11 at 12:24 pm }

ah, very on point is today’s article over at Fortune: “How LG lost the smartphone race”

http://money.cnn.com/2011/02/15/news/international/lg_smartphone_failure.fortune/index.htm

describes in detail how LG bet on WP7 instead of Android in 2009 and had a terrible 2010 as a result, leading to a current crisis. obviously written before the Nokia bombshell tho.

24 John E { 02.15.11 at 12:27 pm }

ah then we also have this today at ComputerWorld: “Motorola exec: Microsoft’s Windows Phone was too little, too late”

http://www.computerworld.com/s/article/9209538/Motorola_exec_Microsoft_s_Windows_Phone_was_too_little_too_late

25 John E { 02.15.11 at 12:28 pm }

or would you prefer Mary jo Foley’s “Is Microsoft Zune about to be Kinned?” at ZDNet?

http://www.zdnet.com/blog/microsoft/is-microsoft-zune-about-to-be-kinned/8712?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+ZDNetBlogs+%28ZDNet+All+Blogs%29

lots of fun stuff to read today.

26 tundraboy { 02.15.11 at 12:44 pm }

@John E. What you said about race to the bottom with Android and those no-name Chinese clone meisters who will take over a big chunk of the 3rd world smart phone market as well as the bottom end in the wealthier countries. I don’t see Motorola’s big bet on Android thriving in that environment.

HP and Dell know all too well what it’s like having your OS supplier pit you against each other. HP decided they’re not going to do to that music all over again with phones and tablets, they either succeed with their own OS or not participate in the market. Dell is plunging ahead anyway because that’s the only thing they know how to do. No in-house OS design chops there at all.

It’s exciting to watch creative destruction up close.

27 Derek Currie { 02.15.11 at 1:10 pm }

Most excellent sarcasm Dan.

I’ve realized that the big problem going on right now is that there is no serious competition against Apple’s iOS devices. That’t not good. The copy machine culture also points out that business these days has fallen down and is not bothering to get back up. I point to the lousy MBA mills in the USA as a major source of biznizz lusers. Apparently innovation has become such a meaningless word, thanks to disinformation from the likes of Microsoft, that biznizz has no idea what it originally meant or that it is a main driving force of actual business. What do we call this Era? The Era of the BizTards?

As ever, thank goodness for Apple.

28 TheMacAdvocate { 02.15.11 at 2:17 pm }

I guess I read “iPhone platform clone” differently than “iPhone clone”. Maybe I’m parsing.

29 daryl4d { 02.15.11 at 3:01 pm }

Dan, part 1 + 2 were very insightful… just one thing, I’ve been reading around and I can’t find anywhere where they say that Microsoft has thrown billions at Nokia to carry their software… you mentioned it in part 1 of your article and now many are chiming in and repeating it in the comments, almost as if it were a fact. To dispel this rumor, could you identify your sources on this or a link that spells out how those billions are being given to Nokia… I mean, was it a direct payment, an investment in their stock or another indirect investment.

I meant to bring this up in part one of your article but had trouble logging in so I created another acct. Since yesterday, Engadget has written something contesting that Microsoft has given any money to Nokia, ( http://www.engadget.com/2011/02/15/debunk-elop-never-said-microsoft-is-paying-nokia-billions-of-do/ )
so I would like your comments… thanks.

[ http://www.google.com/search?q=nokia+billions+microsoft

You're witnessing one of those moments when something very clear is stated, its widely reported, and then a "debunk/retraction" is made that suggests that there may be some wiggle room in the wording, and that therefore everyone else was completely wrong about everything they wrote. Elop clearly said Microsoft was transferring wealth to Nokia, and that it would be in the "b not m's," and in his backtracking he only says the terms of the deal are not articulated. If Nokia wasn't taking billions from Microsoft, he could have flatly said it was not. It obviously is, and the "debunking" by Engadget is just a rim job. - Dan]

30 scottkrk { 02.15.11 at 4:00 pm }

Great post. I would love to see a graphic of Elop handing over the dieing Nokia fish logo to Ballmer, who promptly eviscerates the carcass and chops it up into worthless pieces. It’s a brutal image but I think it sums up what we have just witnessed.

31 bazza_clarke { 02.15.11 at 4:55 pm }

“It gives Microsoft a suitable place to dump billion of dollars from its Windows and Office monopolies. ” – Dan

Hey, maybe Nokia will get lucky with all the billions Microsoft is giving them and invest in MeeGo the same way Microsoft used IBM’s money to invest in Windows 3.0.

And is it intentional that Dan posted this on Valentines Day, except this being about a messed up relationship, and one Dan predicts will end badly?

and my monkier: Nodows (NOkia + winDOWS) (pronounced like ‘No-Doz’)

32 relativity { 02.15.11 at 8:02 pm }

Excellet post Daniel.

I do agree with your assessment that a duopoly – however exciting that may be for some – is really a repeat of the 90′s “boorish” Microsoft and “innovative” Apple. We’ve been there and wasn’t at all fun – or was it?

I really liked the 80′s microcomputer stage when you could have a Commodore, an Atari, a (god forbids) Tandy TRS, an Adam, or PCjr. I loved those days (I was in junior high, mind you) with my three platforms punching-in hex codes from magazines for a stupid game of alien blasters.

I hope the coming mobile landscape will have 3 to 5 good platforms to choose from – iOS, Android, webOS, WP7, even Meego-Qt. The mobiles do not have to have “walled” gardens since the web is as open as the world’s oceans connecting everyone. The web IS the platform and all “apps” are just widgets that are only differentiations of the hardware or software.

Why do I say this? I own two iOS gadgets – 3GS and 4. Sure I buy apps from the AppStore only because I can’t do it anywhere else unless I jailbreak the damn things (Cydia App Store, for those wondering).

But I also fell in love to the webOS 3 devices announced by HP’s Palm division. They all looked awesome and HTML5 browser will be a big feature (HTML5 is coming golden in 2014! You will be assimilated like it or not). The developer program costs an exorbitant price of…$0!!! Apple’s iOS developer program, by comparison, costs $99 per year for those charging their apps.

Buying a webOS tablet will not keep me from using my other iOS devices, and vice-versa. Most people will be like me – agnostic. Most will not care one bit what is under the hood. They just want to have a good looking phone/tablet that is usable, fun, and have good support.

I adore iOS’ elegance and usability. I respect Android for its sheer pace of development – 3.0 Honeycomb came a long-long way to match iOS 4.x, and then some, in just 2 years! I commend HP for commiting to webOS and its superb design and potential. I am skeptical of Nokia+Microsoft’s WP7 as it stands today but if Nokia can repurpose that ugly and “boring” interface and integrate that rumored Kinect-enabled feature and XBox Live then they may have a future – not big but a profitable sliver nonetheless.

Bring on the 4-headed Hydra.

33 maxijazz { 02.15.11 at 8:18 pm }

Nokia + Microsoft = NoSoft
So very true.

34 addicted44 { 02.15.11 at 10:52 pm }

Thanks. Great reply on my post. I agree now that there are sufficient differences from the mac, that its not the best historical reference to whether iOS will become niche or not (it still might, but I think I agree with you now that it wont be because of the same reasons as the mac).

[quote]Look at the last decade of iPod to get a sense of Apple’s ability to price its products in a competitive market[/quote]

I agree with this statement. However, I just hope you aren’t amongst those who believe that Apple’s dominance of the music player market is an indicator of whether they will dominate the tablet/smartphone market (the iPods are a good indicator of Apple’s ability to compete on price though). I think the major differences between the 2 markets are (1) Influence of carriers, who probably won’t let any 1 manufacturer become too big (2) The size of the cellphone market is miles bigger than the iPhone market…Its probably not possible for 1 company to manufacture so many devices by themselves (3) The iPods were never a software platform (they were a HW one, though). The iOS devices’ greatest strength is the software platform, and so the iPad and iPhone are not a good comparison to the iPod (not including the iPod Touch here, of course).

35 ronhip { 02.16.11 at 12:15 am }

Daniel,

Someone over at Nokia is reading your blog:

http://nokiaplanb.com/

36 The Mad Hatter { 02.16.11 at 7:43 am }

About the same conclusion that I had reached – but both of us wrote before Nokia Plan B had hit the web, and then failed.

It’s going to be interesting watching what happens to Nokia’s sales. I have a strong suspicion that Nokia will find Symbian outselling WP7 by a huge margin. And what do they do then?

37 gus2000 { 02.16.11 at 9:21 am }

Nokia + WinMo = NoMo?

38 kdaeseok { 02.16.11 at 10:18 am }

The Mad Hatter// Somehow I doubt that Symbian will outsell WP7… what’s so good about symbian?

39 The Mad Hatter { 02.16.11 at 4:05 pm }

Actually Symbian is outselling WP7, and always has outsold all of the Windows phone software. It may have it’s limits, but it’s been more popular than Windows.

40 PaulB { 02.17.11 at 11:57 am }

Nokia + Microsoft = okImSoft

41 David Dennis { 02.17.11 at 4:48 pm }

Luis, it appears that Windows Phone 7 was not a complete break from the past. Evidence for this is the continued use of an Internet Explorer variant as their web browser. That’s a strong indicator that the Windows Phone API is somewhere under the glitz. It would have certainly been stupid to port Internet Explorer to a new environment, since Webkit is available for free and according to reviews is a significantly better browser than Windows Phone IE.

What I will say about Windows Phone is that the user interface is interesting. I don’t actually want one, but at least it’s a change.

Symbian will outsell Windows Phone for a long time to come, simply because Symbian phones are much cheaper to make. The first Nokia/Windows phone will be at the high end, because it will be a basic reworking of Microsoft’s reference design. Subsequent ones will show how well Nokia can send Windows Phone downmarket. We already know it will take about a year to come up with the first Nokia/Windows phone, and that probably means it’s going to take two years or more for any significant downmarket N/W phone to appear. This shows that for at least two years, Symbian will outsell Windows, and by a huge amount.

One thing distinctly unpromising for this combination is that Nokia will continue developing Meego. In their announcement, they appear to be saying that eventually they will create technology that will outsurf current phones. So this means they are planning on Windows Phone as an expedient and then they will return to homegrown technology in the future. This is showing an interesting degree of self-awareness, that a MS deal is a poor choice for anything but the short term.

We shall see … we do live in interesting times here.

D

42 KenC { 02.19.11 at 9:25 pm }

Nokia + WinPhone = NoWin Phone

43 OlsonBW { 02.20.11 at 1:01 pm }

What I don’t understand is why Nokia going to Microsoft was anything but a slam dunk. It was a slam dunk as soon as Nokia brought on a high ranking Microsoftian as their CEO.

From that point on it wasn’t a matter of “if” but “when” or maybe “how”.

For those of you who think market share is the total bomb (meant in a good sense), keep in mind that Verizon was “giving away” TWO Android devices for FREE when each and every person that buys an iPhone pays money up front. Keep in mind that the monthly plans are almost exactly alike.

Where are they making money on the hardware? For the most part they aren’t. With the vast majority of Android phones being 10% or less of the cost (on average as a whole) you can’t make as much money as Apple is.

Then what about software? Well people are not !!paying!! for nearly as many Android apps as they are iOS apps. Most of the Android apps that are “selling” are for free. Not much money there either.

It’s easy to see how Apple is now the second largest profit making company in the world behind a gas company and they are rapidly catching up to them.

I remember a few years ago when Apple opened up the iTunes store. Nobody expected Apple to sell anywhere near as many songs as CDs let alone anywhere near as much music as the top five which included Target and Wallmart. Now look. Apple is so far ahead of everyone else that you almost have to use a telescope to see second place in music sales.

Note: My wife and I are weird. I don’t think we are going to be buying smart phones the next time we buy phones. WHAT? True. The iPad is so much better to consume pretty much everything on that I’d rather spend my bigger dollars on new iPads (especially if the iPad three is going to be leaps and bounds ahead of the original iPad that I have).

My wife expected to either go with a new iPhone on Verizon or with HP’s WebOS (not that Palm is gone – she loved her Treo). Then when she found out that my iPad fits into most of her purses she started asking herself why she would want both. And the more I’ve thought about it, the more I agree with her.

We just need phones for making calls. Everything else can be done on the iPad. I could even get Skype for my iPad and use my bluetooth earpiece or handsfree in my car with my iPad and not buy a phone at all. Hmmmm

44 OlsonBW { 02.20.11 at 1:03 pm }

One last thing. I feel really bad for Nokia. I’m serious. I’m Norwegian American (I live near Seattle) so I root for companies that are based in Scandinavia and the surrounding area.

Again, how anyone could think that once they got an old Microsoft person as their CEO that they wouldn’t dump their phone OS for Microsoft is baffling.

45 Howard { 02.23.11 at 9:56 am }

Really excellent article Daniel. Loved recent “Does Apple deserve a 30% cut of iTunes in app subscriptions?” also.

Bookmarking you for regular reading.

46 gslusher { 02.24.11 at 12:20 am }

@OlsonBW:

“We just need phones for making calls. Everything else can be done on the iPad.”

I may end up with the same thing. I still have an ancient Samsung flip-phone on Verizon. It makes & receives calls reasonably well. It CAN send/receive text messages, though I don’t have a text plan, so I don’t use them. I had considered getting an iPod touch, but a 3G iPad might be even better.

47 Rasofiel { 02.25.11 at 7:36 am }
48 gctwnl { 03.12.11 at 4:23 am }
49 gctwnl { 03.12.11 at 4:26 am }

Not being able to differentiate on core OS, Nokia might be going for WP “with Nokia”, just as there is Android “with Google”. If so, Google and Nokia are on a collision course.

50 PhilipWing { 03.28.11 at 10:04 pm }

“an insane woman turning 40 and still hoping for a baby.” OK, http://www.imdb.com/name/nm0227835/ is both an American Citizen and handsome, but his wife was around 45 when she had her first baby. Yeah, his profile doesn’t mention this info – just means my next item is to email her to coordinate updating his profile.

51 Google moves Android from a PlaysForSure strategy to Zune strategy — RoughlyDrafted Magazine { 08.15.11 at 11:41 am }

[...] Zune 2: How Microsoft will slaughter Windows Phone 7 using Nokia Less than open HTC and Samsung can hope that Motorola won’t make good on its promise to sue other Android makers using its patent portfolio, now that its owned by the company that makes Android (and makes next to nothing providing them with Android). However, they’ll now be competing against Google’s Motorola Zunes like the poor schlumps who bought into PlaysForSure as a platform of choices. [...]

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