February 26, 2020

In Nokia, Microsoft Bets on Apple-Like Revival

But Microsoft already bears a striking resemblance to Apple — the Apple of two decades ago, not the trailblazer of the mobile era. The $7.2 billion Nokia deal, which was reached late Monday, is unlikely to change that and catapult Microsoft up the ranks in the smartphone market.

That is because Microsoft, with its Windows phone operating system, is stuck in third place in that market, where all the oxygen has been drained by more established players.

Apple and Google have won the hearts and minds of developers, who design the apps that lure consumers to their devices, while Samsung is the dominant maker of mobile phones, most of which run Google’s Android operating system. Even though Microsoft’s and Nokia’s products have won praise for their quality, they have arrived late.

“What matters is not the phone per se but a dynamic app and services ecosystem,” said Brad Silverberg, a former senior Microsoft executive who is now a venture capitalist in the Seattle area.

Microsoft’s predicament is a flashback to the situation Apple found itself in during the early 1990s. At that time, Apple arguably had a superior computer product, the Macintosh, but it languished as PCs running Microsoft’s Windows operating system engulfed most of the market. One of the biggest problems for Apple then was that Microsoft had succeeded in gaining the allegiance of software developers, who produced a bounty of applications.

“They’re stuck in the same vicious cycle that Apple was in 20 years ago,” said Benedict Evans, an analyst with Enders Analysis, a research firm, and a former strategist in the wireless industry.

The challenges for the marriage of Nokia and Microsoft go far beyond support from developers. Microsoft is in the midst of the biggest organizational changes in its 38-year history. In mid-July, Steven A. Ballmer, Microsoft’s chief executive, unveiled a plan to restructure the company’s often clashing fiefs into business groups intended to cooperate more.

While the new organization seemed to set up Mr. Ballmer as the maestro in charge of keeping the various groups in harmony, he stunned the tech industry late last month by announcing his plans to retire from Microsoft within 12 months. Mr. Ballmer said he was leaving earlier than planned because he felt the company needed a leader prepared to stay longer. That fueled speculation that Mr. Ballmer had been encouraged to leave by Microsoft’s board.

Blending a major acquisition into a company is challenging enough in times of calm. Doing so with the unexpected management change at Microsoft could make it even harder, tech industry executives and analysts said.

“The issue I wonder about is the amount of complexity Microsoft is taking on its business by absorbing Nokia at the same time it is reorganizing at the same time Windows 8 is faltering,” said Michael Mace, a former executive at Palm and Apple who now runs an app development company in Silicon Valley, Zekira. “It’s scary from that standpoint.”

While Mr. Ballmer plans to leave Microsoft after a successor is found, he was very much involved in cutting the Nokia deal. Over the last several months, Mr. Ballmer and his deputies met in places like Redmond, Wash., London and Helsinki with counterparts in the talks, led by Risto Siilasmaa, Nokia’s chairman. The style of Mr. Ballmer, an exuberant leader with a booming voice, was a stark contrast to the reserved, gentlemanly manner of Mr. Siilasmaa, according to a person present during many of the meetings.

Microsoft is under enormous pressure to reinvent itself for a world where mobile devices are the animating force in technology, rather than personal computers. Sales of PCs are suffering the most prolonged decline in their history. Two powerful pistons of Microsoft’s business — Windows and the Office suite of applications — are tied to closely to the health of the PC market.

Article source: http://www.nytimes.com/2013/09/04/technology/in-nokia-microsoft-bets-on-apple-like-revival.html?partner=rss&emc=rss