Microsoft Capture Nokia On Transfer Deadline Day

Yesterday was the day of the big spenders. Gareth Bale became the world’s most expensive footballer and joined Real Madrid for £85 million,  Vodaphone announced the selling off of its huge stake in Verizon for a mere £84bn and Microsoft has agreed a deal to buy Nokia's mobile-phone business for 5.4bn euro ($7.2bn; £4.6bn).

Tottenham have already spent the cash and replaced Bale with half a team of international talent. Vodaphone are planning on giving their shareholders a huge dividend of some £54bn to sweeten the windfall and true to their nature will avoid paying any tax on the deal. But what of Microsoft and is the deal going to reverse their fortunes under its new leadership?

Only some ten years ago Nokia ruled the mobile world and was the device of choice for the majority. However, Nokia made some fatal errors of judgement around its operating system and also failed miserably to compete with its new competitors from the Far East and Apple. Today it finds itself with saes falling at the rate of 24% in the last year. Microsoft, like a giant tanker spent 10 years trying to change course in changing seas and took too long in doing so.

So will a marriage of two of yesterday’s men make any difference to their fortune moving forward?

Microsoft will now license Nokia’s patents and mapping services and take on some 32,000 Nokia employees but will it win the consumers over? Microsoft will also licence the Nokia brand for the next ten years which may sound a good move but may also not appeal to the consumer.

Mobile is the area of tremendous potential but it has been one of weakness for Microsoft. There attempts to fix their OS offer have had the hype but delivered little. Microsoft’s Surface tablet should have been a winner but turned out a loser and its weakness was down once again to the OS and its offer.

Nokia greatest weakness has been their inability to adapt and sort out its OS. So will Windows OS mobile be the new must have or will it merely burn a deeper hole in Microsoft’s purse?

The new Lumia phones, which run a Microsoft operating system, may offer a small rest bite and the potential for greater integration, but will the marriage also drive other mobile manufacturers away from Windows offers and yet closer to Android?

Real Madrid have already covered their expenditure with the sales of Kaka and Ozil and in shirt sales. Vodaphone believe they can survive as a smaller global player and have a wedge of cash to soften the move and we now have three clear mobile offers; Apple, Android and Windows/Lumia/Nokia/whatever brand they finally choose? 

Digital Platforms Are Strategically Changing

This last week we have seen three pieces of news which were all worthy of note but when taken together offer us an interesting insight into the strategies players need to adopt moving forward. Today is no longer a case of simply having one compelling offer or thinking that you own a slice of the market. Tomorrow will be won by those with broad appeal and that add real value.

First there is the launch of BT’s digital sports television service. We already have a saturated market in the UK with players such as Sky dominating. Taking on Sky with a straight head to head offer would have been yesterday’s approach, would have probably resulted in a bloody price war and could have been an expensive failure. So BT bid a won some significant rights to live sports including some 30 Premier soccer matches but how would they use these to build their consumer base?

The answer is now out, they will effectively give it away on the back of their broadband service. Those that subscribe to their broadband now get free access to live soccer over the internet. This not only captures the heart and minds of soccer fans who up to now have to buy it as a secondary added service but introduces that magic consumer word ‘free’. Consumers can pay an extra subscription to BT and get it delivered onto their TV through a set top box in HD but many will happily watch on their tablets, laptops and even smartphones.

BT has not only slapped Sky across the face but it has put pressure on those broadband providers that have been eating away at their business. The move reinforces BT broadband services and is a smart move.

Second we have the news / rumours that Microsoft (MS) are about to splash out $1billion to fully acquire Barnes and Noble’s Nook digital world. The hardware is already being phased out and discounted and the partnership / joint venture that offered so much is now being taken over by the Seattle giant.

This would bring MS into the media battles again. Remember Zune that music competitor to the iPod, or their latest damp squib Surface, the tablet that choose the wrong operating system – again. Microsoft has a track record of getting things wrong and playing catch-up. However when they do acquire a readymade solution such as SKYPE they can screw up over engineering something that didn’t need the attention. Try accessing Skype today on Windows 8, through a browser or on an Android smartphone and you would think you were connecting with three different applications.

So what will Microsoft do with Nook? Maybe they will focus on education, but exactly what will it give them? Perhaps they believe that they can take on Amazon but do they really understand media or just bits and bytes? It’s a great financial exit for Barnes and Noble but what’s in it for the consumer?

Thirdly we have the rumours that Amazon is planning to launch its own smartphone.

We often ask what is amazon. Is it a media retailer, a publisher, a one stop shop, a marketplace, a technology company? The answer is probably all the above but primarily it’s a community hub that attracts many through not one but many offers and its quality service.

So why a smartphone? Well it’s an obvious extension of its hardware offer and remember when Apple went into the phone business we asked the same of that move. Unlike Apple it doesn’t need to plough its own furrow and can piggy back on a wealth of technology already out there. Maybe like BT it sees a way of being able to offer primary services with added value additional service that effectively lock in consumers.

Tomorrow is not about the best device, the best product offer, the cheapest price, the widest range, the fastest connection. It is about the best holistic offer that adds real value and is built around a primary driver.

Just Give Me The Right eReader?

Technology doesn't stand still and today’s desirable device soon becomes tomorrow’s yard sale or land fill.

When the first eink readers appeared they were novel, functional and expensive. They promised much and helped kick start the ebook movement. We now take them for granted, but they were always very limited in their scope and monochrome in the offer. We often referred to them as the ‘lookie likie’ devices, which  all offered the same experience, the same technology’, all promised to be the next biggest player, but all looked the same. We soon saw the casualties, as one after another they hit the wall and their technology started to follow eight track and cassettes and became history. Forget the recent claims made by IHS iSuppli of reader decline, what remains today are, the Kindle, Nook and Kobo and are becoming less a desirable present,  but more of an  unwanted one.

The tablet changed many people’s perception of mobile computing and playing media on the move. The iPad became the must have device and although many competitors appeared, few could compete with the Apple offer. However, as with all technology the serious competitors are now muscling in on the market and starting to redefine the tablet from their own perspective and in doing so offer real alternatives. Samsung clearly offer convergence from the smartphone through the tablet, ultra book, laptop to the TV, their pen technology is a clear winner and they continue to grow across all devices.  Microsoft have thrown the hat in the ring with Windows 8 and RT plus Surface. It is questionable whether Surface, as it stands today, will attract enough with its limited offer. However, Windows 8 is the key component and if as expected and by being pre installed and performing, it starts to dominate the ultra book and laptop market, it could strongly influence the smartphone and tablet markets and become a serious third player.

They are wild cards out there and Amazon’s holistic offer and Fire is a serious contender. They may appear to be ‘cheap and cheerful’ tablet, but by locking in purchasing benefits to the devices they will remain a contender. However, it is harder to see Nook and Kobo in the same league and playing catch up may be a step to far and maybe this is where they fall out. Nook and Microsoft could re-emerge, but it is hard to see how that will happen in the short term and today is about short term plays.

The real markets to watch are at either end of the mobile platform not in the middle. The Ultra book offered so much, but was upstaged in yesterday’s beauty contest by the bikini clad iPad. The ultra books were over priced, still wedded to the laptop form and burdened with legacy operating systems. However, we are starting to see real changes here with the emergence of hybrid convertibles – an ultra book with full office and PC strength, which flips into a tablet. The Surface was a perfect form, but unfortunately limited itself to the tablet internals. Samsung and others are close to delivering the answer and when it happens and at the right price then the market will change and business not consumers will drive that change. There are enough players out there to fix the price issue and that need to create the right device to ensure their own survival.

At  the other end of the sandwich we have the smartphone, which is no longer a mobile but a computer in the pocket. The Samsung Note II is a classic forerunner for what must happen next – the convergence of the mini tablet and the smartphone. Apple must have one in prototype and finally drop this nonsensical division between two devices, where the only real difference is the ability to make phone calls! The real challenge is getting that something extra inside the box. Voice appears to be a given and Apple have the lead there, whilst Samsung’s pen is both incredible to use and they have the lead there. We see these being the two contenders today and because they play on all the device platforms, they well positioned and are the clear favourites to succeed in the short term.

However, the other emerging driver is the cloud and the opportunities to de clutter the device of everything but the basics. Those ebook readers that boasted they could store thousands of books are fast becoming dinosaurs living in a forgotten time and saying the wrong message. We are now moving to  an on demand 24 x 7 with access to everything and subscription services replace outright purchases for what is an access licence after all. These change not only how we consume media, interact, purchase services but the devices themselves.

Finally, we have the ‘Ray Hammond’ mobile server that we wrote about earlier this month. The smartglasses are almost here, the intuitive gesture detection is still in the labs, the Bluetooth and wi fi connectivity is here. It’s now more about the packaging and creating consumer demand that will be the challenge.

Sacha Baron-Cohen in accepting his Lifetime Comedy Award this week, did so as his character Ali G. He took a humorous retrospective look at the changes since he last played Ali G some ten years ago, ‘there was no iPhone, no iphone 2, no iphone 3, no iphone 4, no iphone 5 and I wonder what is next?’

Perhaps its time for a step change in 2013?