[By Duncan McLeod]
The technology industry has never been as volatile as it is now. For two giants of the sector, Microsoft and Nokia, it’s do-or-die time. They’re either going to beat back the new behemoths of mobile computing, Apple and Google, or fail trying.
Microsoft has a habit of coming from behind. In the great browser wars of the late 1990s, it came from nowhere with Internet Explorer to trounce Netscape, the market leader at the time. It also attracted endless and damaging antitrust scrutiny from regulators, but it went on to dominate the Web browser market for more than a decade.
Now, as the world moves to new technology form factors and as computing becomes increasingly mobile thanks to smartphones and tablets, Microsoft is once again coming from behind. Its biggest rivals, Apple and Google, have taken a powerful early lead — the former with its tightly integrated hardware and software and the latter with its open-source Android operating system.
It’s hard to be optimistic about Microsoft’s prospects in the new era. Despite introducing a new and much-admired smartphone operating system a year ago in the form of Windows Phone 7, it continues to lose US market share. It has slumped by 38% since the new software was introduced, according to research firm Comscore, and now stands at just 5,8%. Android, on the other hand, has, by most estimates taken more than 40% of the US market.
This has prompted some commentators to wonder if Microsoft has left it too late. It took forever to replace the prehistoric Windows Mobile — with its stylus-driven, PC-like interface, which always seemed ill-suited to a mobile device — with Windows Phone. In the intervening time, Google and Apple have been making hay in Microsoft’s back yard.
The new Windows Phone software is fun to use and powerful, and its Metro user interface, with its “live tiles”, brings a new level of innovation to smartphones. The Mango update now being rolled out has brought Microsoft back into the game, at least from a software design perspective. But will it fail in spite of this?
The answer, I suspect, is “no”, and for one very important reason: Nokia. The Finnish handset manufacturer has fallen from grace in the past two years as the Symbian operating system which it relied on for its smartphone offerings failed to keep pace with the innovation and user friendliness of Android and Apple’s iOS. Legions of fans have deserted their Nokia phones as better alternatives emerged and the company failed to keep up.
Now Nokia is pinning its future on Microsoft and Windows Phone 7. Led by Stephen Elop, a former Microsoft executive, Nokia is expected to take the wraps off its first Windows Phone-powered devices at an event in London late next month. A Windows 8 tablet could also be on the cards.
Whether they like it or not, the two companies — sometimes referred to as Microkia — are now joined irrevocably at the hip. If either one fails, it will drag the other down with it.
But there’s good reason to believe the partnership will succeed. Though it’s losing market share, especially at the high end, Nokia is still by far the world’s largest handset manufacturer, thanks to its affordable, low-end “feature phones”. The smartphone opportunity in the developing world, where Nokia is strongest, is still relatively untouched. It’s this market that will be next to latch onto smartphones as prices continue to fall.
If Microsoft and Nokia play their cards right, they can win over a big chunk of the next billion people to switch away from feature phones. But time is running short.
- Duncan McLeod is editor of TechCentral; this column is also published in Financial Mail
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