Can Two Smartphone Also-Rans Rescue Each Other?

Jan 10, 2012
Originally published on October 16, 2012 3:37 pm

Not too long ago Nokia was the largest tech company in Europe. Its market cap rivaled Microsoft's. It helped create the mobile phone industry as we know it. But the emergence of a new generation of smartphones — led by Apple's iPhone and Android-based offerings from Samsung, HTC and others — left Nokia behind.

Now Nokia, with the help of Microsoft, is trying to force its way back into the North American smartphone market. At the Consumer Electronics show in Las Vegas, Nokia said it will begin selling a new Microsoft Windows phone on T-Mobile on Wednesday — and is unveiling the high-speed Lumia 900 this week.

The Lumia 900 will be launched exclusively on AT&T and will take advantage of that carrier's new high-speed 4G LTE network. Executives at Nokia have to hope this represents a turning point for the company.

Nokia spent billions on research. Just a decade ago Nokia's dominance seemed unassailable, but the last five years have not been kind to the Finnish mobile phone icon.

As Nokia struggled to catch up with consumer tastes, the company's research and partnerships with other giants like Intel failed to bear fruit. And in late 2010 the company's board hired a former Microsoft executive, Stephen Elop, to try to turn the firm around.

Elop decided last year to abandon Nokia's own smartphone operating system, comparing it to a burning oil platform in the North Sea. He said the company's predicament reminded him of an oil worker trapped in a disaster:

"In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform's edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

"As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a 'burning platform,' and he needed to make a choice."

So Nokia jumped. It decided to commit the company to building new phones based on Microsoft's Windows operating system. Microsoft — like Nokia — had been left behind in the smartphone market after a series of false starts. Microsoft's market share was virtually non-existent.

After announcing the switch to Windows, sales of existing Nokia smartphones collapsed. It has taken nearly a year to bring new Microsoft-powered phones to market in the United States. In the meantime Nokia has been stuck — metaphorically at least — struggling to keep its head above water in the frigid North Atlantic.

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