by March 3, 2011 0 comments

A CEO wants to send a message to the world, ahead of an iffy mega-deal. What does he do?

Send a press release? Forget it. It would be ignored.

Ah, yes, of course. He sends a secret internal memo to all employees.

Stephen Elop’s memo said Nokia was on a burning oil platform… having to choose between staying put (and getting burnt), and jumping into the unknown, icy waters.

It caused a stir. But, as we know, the raison d’etre of a secret internal memo is to leak, cause a stir, and set the ground for something.

That something was the deal with Microsoft, tying Nokia’s smartphone future tightly with the Windows Phone platform. Nokia’s smartphones will sport Microsoft’s software, instead of Symbian, Meego or another platform.

The media and public reactions were scathing. Two losers don’t make a winner, was a common refrain.

Nokia’s choices were limited. It was getting marginalized in the smartphone arena-odd for a market-leader, but it does happen. Symbian is a dead horse, despite its high-but-declining market share, under attack from Android, Apple’s iOS, and RIM’s BlackBerry OS. So what was Nokia to do? Apple’s and RIM’s platforms are out, so if it didn’t want to keep flogging Symbian, or betting on an iffy Meego, it had just two choices.

It could have gone to Android, which, most believe, would have been the sensible thing to do. Nokia was in talks with Google. But it saw issues with Android, including the low differentiator versus hundreds of handsets sporting the Android platform.

For Stephen Elop, this was the only option, the only path he was comfortable with. He is no stranger to Microsoft-Nokia deals, having driven a major one in 2009 bringing Office and related software to Nokia devices… but then he was on the other side of the fence, as president of Microsoft’s Business Division.

For Microsoft, it’s a great deal. From a near-zero share of smartphone platforms, it’s suddenly looking at, potentially, a quarter of the market. As its release summarized the deal, “Nokia would help drive the future of Windows Phone.”

What Nokia gets is not as clear, except some software that is nowhere in the market-share pie today. And Bing. Er, what’s that? You mean Microsoft’s failed attempt to compete with Google search? You get the idea.

Yes-Windows Phone is a smart, snazzy and evolved OS, having left behind its atrocious, amateurish, honey-I-shrunk-the-desktop predecessors. But it’s still at a couple of points of market share, and it wasn’t going anywhere, on its own.

So together, will they retain or even grow Nokia’s smartphone market share? Tough. Look at the competition. The iPhone is uber-cool. Android is new (in a positive way), flexible, apps-rich. BlackBerry is the king of email and the office app. Versus that, Nokia and Windows sound rather… yesterday..

Yet, all isn’t lost. In the growth markets, especially India, Nokia dominates. Mostly with low-cost handsets, but its brand equity beats all others.

India’s low-tariff, cheap-handset market is stepping into 3G, challenging operators to innovate to recover investments and profits. These markets could hold the key, showing whether the icy waters Nokia leapt into from the burning deck were a lifesaver, or a watery grave.

Finally, we should never forget the one great great positive: more consumer (and developer) choice. Who knows, this duo may yet come up with great products that will change the game.

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