Thursday, September 5, 2013

Vendors Survival: Nokia the new DEC



When I begun posting about Vendors Survival, I had to explain why I doubt that even the strongest vendors, e.g. Microsoft, Apple, Google, will surely survive for at least 10 years.

The easiest way to explain it was by Digital Equipment Corporation (DEC) ill fated history.

The IT leaders of the 80ths were IBM, HP and DEC. However, they had to adapt to a new model inspired by Microsoft and other Software vendors.

The Hardware Centric Model was changed to Software Centric Model.

IBM, HP and DEC could no longer rely on Hardware sells high profit margins and Software as Hardware complementary low priced product line. 

IBM and HP adapted successfully. DEC failed.
DEC Strategy relied on Alpha chips based Servers.
After unsuccessful quarters DEC sold product lines (e.g. System Management software to CA, Communication Hardware to Cabletron).  

Finally, DEC sold their Alpha chips patents to Intel.
I immediately notified my DEC based clients that they can count DEC days until it will be acquired by another company.

Nokia strategic business is Cellular phones.  
Nokia was the Leader of this market. 
Like DEC, it failed to adapt to a new paradigm led by Apple: Smart Phones or actually Mobile multi-function small computers instead of Cellular phones.

The acquisition of Nokia's phone business by Microsoft for 7.2 billion USDs is not similar to the acquisition of DEC Alpha patents by Intel: Nokia sold the business and the patents. 

It is comparable to DEC selling the patents to Intel and being acquired by Compaq.   

According to Wikipedia, Nokia employed in 2012 97,798 people. Even after layoffs, the estimated number of employees who will be Microsoft's employees is 30,000. 

As we already know from the unsuccessful acquisition of DEC by Compaq and the unsuccessful acquisition of Compaq by HP, acquisition of a large company by another large company is not simple.

Expect Corporate Cultural differences, difference in Processes and layoffs. 

Microsoft: another non-adapter?
Smart Phones are not only immediate threat to Cellular Phones maker. They are also a Long Term threat to Microsoft's core Desktop business.

Microsoft's vision of Windows as the Mobile Operating System (Smart Phones and Tablets) failed.
The two dominant Operating Systems are Google's Android and Apple's IOS.

Android role could be compared to Windows Desktop role many years ago. many years ago you could buy Desktop Computer from any vendor, excluding Apple, but you Operating System will be probably Windows.

Today, you can buy any Smart Phone, except Apple's  iPhone and Microsoft and Nokia's phones, and use Android Operating System. 

After announcing that he will step down as the CEO of Microsoft, Steve Ballmer was interviewed by many papers. According to one article in Hebrew, he was asked what was his biggest failure in Operating Systems? he answered Windows Vista
Wrong answer: The biggest failure was Windows8

Windows8 promises were Smart Phone like user interface for Desktop and Mobile version aiming to be "a little Android", e.i. usage of Windows8 by different Mobile Hardware vendors, similar to Android's usage.

Will Microsoft-Nokia be a key player in the Mobile market?
I suspect that the answer to this question is a negative answer. 
In my opinion, the probability that the acquisition consequences, will remind you of Compaq acquisition by HP or even EDS acquisition by HP is high. 

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