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Microsoft's Nokia Buy: Consumer Chase Is On
Microsoft can't live by enterprise dollars alone. By purchasing Nokia's device business, Microsoft has shown its consumer strategy will survive into the post-Ballmer era.
September 3, 2013
3 Min Read
And though some investors question Microsoft's consumer emphasis, others see potential. Richard Cook, whose capital management firm owns Microsoft shares, is one example. He told Bloomberg that the "genius" of the Xbox is that it allows the company "to put a Microsoft machine in everybody's living room."
But the question remains: If Microsoft is dedicated to chasing consumers, how will the company reverse its recent misfortune?
If Nokia's reported plan to launch a Windows RT 8.1 tablet at the end of September is any indication, Microsoft's purchase won't turn the tide on its own. Allegedly codenamed Sirius, the device is expected to boast competitive specs and components, but its core differentiation is still essentially the same as the disastrous Surface RT's: Sirius will be a laptop-like tablet. That tactic didn't work the first time, and it's hard to see consumers caring about Windows RT 8.1's additions, such as Outlook access and more extensive UI customization. Sirius' alleged $499 base price certainly won't help -- not with a new, identically priced iPad expected to hit the market around the same time. Sirius should be better than the Surface RT in every way, and it might sell better. But, is incremental progress enough to justify the "one Microsoft" vision?
Consumers aren't the only market for such a device, of course. An ultra-mobile device that supports Microsoft Word and Outlook might be attractive to schools and businesses, too. Some commercial customers have already embraced Windows 8 and Windows RT for their tablet-PC convergence, and the updates should attract new customers. But Forrester analyst David Johnson said enterprise customers still aren't interested in Windows 8.1. So again: How much growth will be enough?
The Nokia purchase supports that Stephen Elop, the company's CEO, is a leading contender for Steve Ballmer's job. But his appeal is predicated on advancing the course Ballmer has laid out. It's possible Microsoft devices will continue to progress slowly, and that enterprises will continue to resist Windows 8 and its consumerized UI. If these scenarios play out, the next CEO, whether Elop or someone else, might be forced to tweak aspects of the "one Microsoft" game plan.
Hoping to boost adoption of its own hardware, Microsoft has withheld Microsoft Office from iOS and Android, for example. The tactic hasn't worked and, though it might modestly boost enterprise sales as Windows XP winds down, the aforementioned Gartner study suggests iPads will nonetheless continue flooding into the workplace.
Steve Jobs once famously said, "If you don't cannibalize yourself, someone else will," and Microsoft should heed this advice. Microsoft won't win consumers by holding features hostage; it will win by delivering a product that people want to use -- and with Nokia's resources now in the fold, Microsoft has shown a willingness to gain the resources to do so. Now it has to execute.
Learn more about enterprise mobility and BYOD by attending the Interop conference track on Mobility in New York from Sept. 30 to Oct. 4.
About the Author(s)
Associate Editor, InformationWeek.com
Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 and, pending the completion of a long-gestating thesis, will hold an MA in Cinema Studies from San Francisco State.
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