Nokia-Microsoft Alliance: Reasons for Failure

Strategic partnerships are common phenomena in the cooperate world. Companies form alliances for several reasons such as sharing risks, accessing new markets, utilizing shared resources, adding strengths while minimizing weaknesses, or acquisition of diverse technologies. In February 2011, Microsoft and Nokia announced an alliance that would see both firms focusing on the Windows Phone as the smart platform for the two companies. Initially, both companies expressed optimism towards the deal indicating that it would be favorable for customers, shareholders, and employees of both companies. It was the intention of the firms to combine Nokia’s brilliance design with Microsoft’s powerful software to create a product that would compete favorably with those from Google and Apple. However, as it has turned out, the alliance has been a failure for both firms.

A primary factor is that the foundation of the partnership was a weakness, not a strength (Blass, 2016). For many years, Microsoft had been appealing to phone manufacturers to acquire the Windows operating system. Many manufacturers were reluctant to use Windows. Nokia for its part was experiencing unbearable competition from iOS and Android. Hence, even though the firms declared that they were combining the strengths of each partner into a great product, the alliance was a desperate move in their attempt to mitigate effects of market pressures. Both Nokia and Microsoft saw the other party as a potential savior. It is evident that they rushed into decisions without evaluating the possible outcomes.

The second reason is to do with Nokia’s long history of elegance. Nokia lovers associate its products with smart hardware design. They expected the Windows Phone to follow a similar suit. For a fact, when Windows Phone was released, it was the most innovative smart platform on the market of its day. However, many of its features remained unchanged probably due to technical disagreements. By the time it attained maturity, iOS and Apple had created strong market bases that Windows Phone would hardly match. Moreover, the phone did not have a dynamic application ecosystem like the two competitors. When it failed to meet consumer expectations, Nokia experienced a sharp decline in its sales. Nokia lovers could only watch the once-unbeatable brand lose its ground. The third reason for the failed merger was Microsoft’s mobile strategy. The company favors the scattergun technique. In this method, a firm introduces a broad range of similar products into the market. It then selects the one that finds favor with consumers and develops it. This approach did not support Nokia in the light of strong competitors like Apple and Google that preferred the systematic method. In the end, many customers opted for competitor’s products leaving Nokia languishing in declining sales.

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