I have argued that Stephen Elop made a massive strategic error by choosing Windows Phone over Android; coming from Microsoft, he failed to appreciate that Nokia’s differentiation lay not in software, but in everything else in the value chain. It would have been to Nokia’s benefit to have everyone running Android, including themselves. Everyone would have the same OS, the same apps, may the best industrial design, distribution, and supply chain win.
Elop threw it all away.
Will Elop be CEO? If my original theory is true – that Nokia was on the verge of leaving Windows Phone, either for Android or bankruptcy – then Elop simply can’t be a serious candidate.
The problem for Microsoft in mobile is that Android has completely destroyed the value of a licensed OS; Microsoft’s traditional software model is broken. The only way to make money is to sell hardware to a segment of the market (with lower margins relative to software), or services that sit on top of OSs (with lower prices relative to software).
If you believe that strategy is about making choices, then it’s clear that “Devices and Services” isn’t a strategy at all.
They ought to pursue a strategy – services – that entails just that: being everywhere. Unfortunately, they now have $7 billion more reasons and the distraction that comes with them to pursue a strategy that they themselves see as winning only 15% of the market.
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