A Tweet bomb

On Feb 8 2011, Google's vice president, Vic Gundotra, posted a tweet on Tweeter, that Nokia's CEO Elop called a tweet bomb, "Two turkeys do not make an Eagle". This was at a time Nokia was talking with both Microsoft and Google on where its new phone software was heading to. All conversation was supposed to be confidential. But Google's Vic probably had sensed that Nokia won't go with them. The deal probably didn't matter to Google but Microsoft saw it as a big boost to their mobile computing ambition. Microsoft seemed deserved the deal too as Ballmer himself flew to Helsinki to cut the deal. His private plane was disturbed by snow storm and had to get there by commercial plane, which was risky in personal safety and commercial information sense. But he did that and the deal was strike. Microsoft would pay Nokia billions of dollars of multi-year agreement to help Nokia market and develop Windows Phone equipment.

On Feb 11 2011, Nokia announced alliance with Microsoft. Since then, Nokia didn't fare well, it announced 10,000 layoff because of higher costs. Was this alliance sentenced death since Day One? Far from it.

Nokia's new Windows phone released not long ago. Market reception wasn't as warm as it expected. Users wait to see how the new phone integrates with new software. Another problem is Nokia's higher phone costs, which is harder to resolve without heavy software involvement. The marriage between Microsoft and Nokia actually provide all ammo to Nokia's return.

One way to lower handset cost is use cloud computing techniques. This is actually where Apple is doing. Moving memory and processing load to the cloud and out of the app would make headset cheaper to build. Microsoft has release their cloud platform in April on PC. The new Window Phone 8 will be released soon. Microsoft has many cards to play with the new Phone 8, either from app development or cloud stand point. The speed from Phone 7 to Phone 8 can tell how serious Microsoft is. Competition may help Microsoft/Nokia this time, even most time competition was wasteful in mobile computing. Microsoft Surface tablet and Skype are two important ingredients too.

Nokia, the designer of GSM that uniformly adopted in Europe, is a 150-year company that was envied in 1990s by American phone companies. While too many wireless companies in the U.S. wasting money to develop various standards, Nokia focused on the GSM flagship and quickly conquered the world. But wealth eroded their mind so that they were so slow when smart phone market were opened by RIMM and iPhone (maybe Palm should be mentioned too). Google and Apple came from nowhere in wireless world to seize most of the value. Now, household cell phone maker names are Android, iPhone, Samsung, and HTC. Low cost Chinese companies like Huawei and ZTE also set their sights on smartphones.

I believe the duopoly in the marketplace where Google, Apple, and Microsoft/Nokia is taking shape quickly. This was Nokia intended to do in 2011 and now it is realized, unlike Nokia demise from criticisms. Once the new phone product line is formed, the ecosystem is there. Given Nokia's phone base, there is still advantage in the global market. Google claimed that they activate 300,000 Android powered devices a day with 170 devices on the market and 169 carriers. If this is true (always question Google's claim such as their pay-for-rank-ads), there is much to do for Microsoft and Nokia.

So the phone is far from end. It just starts.