Microsoft's Billion-Dollar Nokia Dilemma
Wait a minute -- thanks to Nokia? What about the underwhelming reception for Nokia's Windows Phone-powered Lumia smartphones that didn't send a single ripple of fear through Cupertino, or the Pacific Rim?
The thing is, there's no denying that Nokia's marketing efforts (even if sometimes ill-conceived) have at least made the public aware that Microsoft even offers a smartphone OS. And Nokia is really the only major phone maker that's given Windows Phone a prominent position in its lineup. Samsung makes Windows Phone handsets, but when you think Samsung, you think Android-powered phones like the Galaxy.
Why should Microsoft wring its hands over Windows Phone? Because one of the costliest failures for Microsoft over the years may have been Windows Mobile 6.5, the predecessor to the current Windows Phone. The welcome that WM 6.5 was met with from reviewers could be summed up by this 2009 Tech Crunch headline: "Windows Mobile 6.5 Review: It Still Sucks."
Microsoft lost the chance to get its foot in the door, and the company's execs could only watch from their corner offices as the iPhone turned Apple into the juggernaut it is today.
However, the latest Windows Phone iteration, 7.5 Mango, has received much kinder reviews and has given Microsoft a viable combatant in its fight for smartphone OS market share. That is, only if a large and powerful phone manufacturer could put its shoulder to the boulder and help Microsoft with its Sisyphean challenge.
So, those Microsoft bigwigs should be deeply concerned about Nokia's decreasing survivability quotient given its smartphone and feature-phone lineup problems, the recent downgrading of its credit rating by Moody's to junk status, and, of course, Nokia's warnings that its woes will probably continue through the year.
Is it so far-fetched, then, to even speak of having Microsoft take over Nokia to keep the Windows Phone flame alive? Almost half of the respondents to a Light Readingpoll believed that to be the most likely outcome. Of course, season that with almost one-quarter believing Nokia will just wither and die.
And what would happen to Windows Phone if Nokia does go belly-up? Seriously, would another major manufacturer be likely to step forward and take the kind of gamble Nokia did? On the surface, Windows Phone may seem like a relatively minor product for Microsoft to fret over. It's not the Windows 7 computer operating system. It's not Microsoft Office. It's not even Xbox. Microsoft has launched plenty of other products over the years that didn't quite catch on, and the company still survived on the strength of its core offerings.
Remember Microsoft Bob, the cartoony user interface for the computer-challenged? If not, that's because it was born in March 1995 and died only one year later. And the Zune's fate was sealed the moment Microsoft brought it out as its answer to Apple's (NAS: AAPL) iPod. Not a bad product, but at its height, Zune garnered only a low double-digit share of the portable music player market versus the iPod's 65%. Zune did last longer than Bob, however -- from 2006 until 2011, when Microsoft decided no mas.
And then there was Windows ME, and Windows Vista. Both of those operating systems made PC users cringe until replaced by Windows XP and Windows 7, respectively.
But Microsoft has managed to float above those miscues. The question is, would buying Nokia finally make it a smartphone force to be reckoned with? Or would it be much more trouble than it's worth?
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The article Microsoft's Billion-Dollar Nokia Dilemma originally appeared on Fool.com.Fool contributorDan Radovskyowns shares of Nokia. The Motley Fool owns shares of Microsoft and Apple.Motley Fool newsletter serviceshave recommended buying shares of Apple and Microsoft and creating bull call spread positions in Apple and Microsoft. The Motley Fool has adisclosure policy. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.
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