Is there more at stake with Nokia/ MSFT than an mobile phone OS?
Much has already been written about the Nokia Microsoft strategic alliance for use of the Windows Phone OS for Nokia handsets and what great timing ahead of Mobile World Congress this week and as a follow-up to the Burning Platform memo. Opinions range across mud slinging from fan boys, heretics and doom mongers; few outspoken and a some considerate, thoughtful and strategic. Therefore, this piece is about what the announcement did not say as my instinct says there is a wider strategic issue that is worth considering. There is a third way to view the alliance announcement beyond defence against Google and Apple and I highlight an alternative scenario in this Viewpoint.
140 character Summary
Nokia/ MSFT don't need to have the best OS, UI or UX as there is value in being the provider of Payment, Identity, Location & Reputation.
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The alliance has also forced me to think about what market research to focus on in March/ April. Please can you take 2 minutes to answer 10 questions on this survey. Thank you in advance.
What Nokia Microsoft said
The key themes from the Nokia Microsoft announcement are:
- Nokia will adopt Windows Phone and together they will closely collaborate on development,
- Bing will power Nokia’s search services,
- Nokia Maps will be a core part of Microsoft’s mapping services,
- Exploit Nokia’s extensive operator billing agreements,
- Microsoft development tools will be used to create applications, and;
- Nokia’s content and application store will be integrated with Microsoft Marketplace. Sources Nokia and Microsoft
Whilst the British psyche supports the underdog at all costs, sees the best in something even when it is not there, refuses to acknowledge that the loser lost and hangs on to hope even when the evidence may support a different outcome; in the case of this alliance the issues are more complex when I view the announcement through my rose tinted spectacles of "Digital Footprints".
Wider Implications
The Nokia Microsoft alliance could have much wider implications than just an OS battle, even if you consider it as narrow as a single platform for mobile, desktop and TV. There is the entire issue of collecting user data, storing user data, analysing your data, creating value for you and your social group and controlling the feedback loop. I believe that there is a third way to look at this deal and see substantial value which can be addressed outside of the narrow OS focussed opinions that have been prevalent which are:
Focus 1. It is all about the OS which are the crown jewels as it is all about UI, and;
Focus 2. It is about two weaker player combining to take on the big boys
Focus 1. So the saying goes "In a world full of hammers, everything looks like a nail." The crux of the arguments that support Focus 1 are centralised on the re-structuring of the mobile value chain and is positioned as Google Vs Apple. The Nokia Microsoft alliance is not the outcome of Google Vs Apple. Forgive me for pointing out that mobile operators have a critical part to play and that the mobile industry is more than an OS. I agree OS is important, as is the UI, as is ease of use, as are tariffs, as is network capacity, as is handset form-factor and so are retail shops, call centres, experience and branding. Least us forget the rest of the ecosystem with names such as Vodafone, Verizon, Telefonica, China Mobile, HTC, Samsung, Sony Ericsson, LG, Intel, Qualcomm, ARM, Oracle, Amazon, PayPal, Yahoo, Facebook and Twitter. Just because the fan boys says they have won is no good reason not to consider alternatives strategies. Did you consider who wrote the OS on your digital TV box or did you buy based on a brand, service or access to content?
Focus 2 [two weaker players combining] depends on what you centre your argument on. If the only component at stake is the OS, and that is the centre of the entire industry then I expect that there may some merit to Google and Apple fighting for control over the platforms (mobile, desktop and TV). BUT, if the centre of your argument is "who owns the customer data and who has rights to exploit it" then the Apple vs Google view of the world become one silo of web services, competing with other web companies who all in turn compete with the wider industries including finance, telecoms, services providers, media, consumer electronics, government and maybe yourself; if you were empowered to 'control' your own data. You controlling your own data is not wishful thinking but is a model gaining traction.
Symbiotic data based business models (free service in exchange for your data) underpin Google, Twitter and Facebook and are increasingly dependent on, and demand, relationship, conversation and engagement with customers. To achieve relationship, engagement and conversation you need data, data which comes from three currently distinct yet increasingly convergent platforms: mobile, desktop and TV and the ability to deliver services back on the right screen at the right time, underpinned by context and personalisation. Whilst others in the digital ecosystem like user data as it creates incremental value on top of their core income sources, they are not as dependent on it.
The Link
Even if a company can gain access to data from mobile, desktop and TV, it does not guarantee that they have access to all the relevant data that has value as not all data is created equal. Indeed inferred intelligence based on your analysis of data, which is not good data, can be dangerous for your brand. Just because you know that your user is searching for "business continuity" does not mean they are about to buy it or that they want to discover CSR. Therefore, do you need to have access to all data (by having the OS and great UI/ UX) or only be the controller of certain high value data classes?
Who is the Source?
Considering alternatives it is possible to conclude that there are several differences between Google vs Apple in an OS battle and the Nokia Microsoft deal. As Apple becomes Microsoft and Google slips into the gap left by Apple; Is Microsoft and it new partner free to become the new IBM?
Apple is about the 'Steve Jobs way' Apple will tell you what is best and you will do what they say. A strategy based on control, just as Microsoft was in the 1990's. Google enters the gap left by classic Apple, open and creative but Google may already have too much dominance that means they come close to crossing the creepy line. But Microsoft is free from it past controlling and monopoly position to become, with its new strategic partner, the new IBM - a global services player.
The deal as presented is not a contract manufacturer or supply agreement but of two parties of equal market power. What the announcement does not say is that Nokia/ Microsoft can be the source of your identity, location, payment and reputation (PILR) across all sectors and all screens; indeed become your PILR service provider of choice (not passport). Google/ Apple and other players need PILR to access other's silo's of data, which they may not be able to get, they are a user of the service that Nokia/ Microsoft could provide. This does assume they go down a broadly open and collaborative route and show an understanding of what privacy is and how to stay on the right side of the creepy line; showing empathy towards these characteristics themselves would gain support.
So What!
This Viewpoint is not clutching at straws aka British psyche as it is a viable stand alone strategic option. I expect that someone at Nokia will be very pleased that they bought into location, mapping and payment as these shifted the deal from a subordinate supplier relationship to alliance, but if they are able to convert this into a form that creates digital services will be down to vision and drive.
The take away therefore has to be: Nokia Microsoft don't need to have the best OS, UI or UX as there is have substantially more value in Payment, Identity, Location and Reputation which they can offer to everyone else and become the defacto source.
Plan B!
Worth a quick read is another alternative presented by a few x-employee shareholders who want to return to the good old days .....
What is at stake?
The next 1 billion internet users will be from a mobile device and Bing is an advertising model.....