Where Next for Nokia and Microsoft?–Be the Best Windows Phone Partner or Be Irrelevant

So Nokia has decided to partner with Microsoft. The details may have changed, but my strategic advice to them remains the same. They need to analyze their strengths against the competitors and combine those with the strengths of the Microsoft platform in order to out innovate Apple and Google. They will not survive if they don’t create the ultimate Windows phone. HTC and others are creating credible phones. Nokia cannot just create a credible phone, they have to use their supply chains, cameras, screens and design acumen (including close listening to customers) to compete at an unprecedented level against Apple and Google’s Android partners.

The phone market is a fickle, commodity-based landscape. Motorola has shown that a handset maker can survive on periodic innovation, but Motorola is now just an adequate phone maker. Their marketing partnership with Lucas Film to use the term Droid is probably more important than their engineering. They are a brand people have heard of, partnered with another concept people know from popular culture. Nokia needs to take a multi-pronged approach that includes marketing as well as skillful engineering and innovative design. And do all of that in a package that, after subsidies to the carriers, costs a consumer no more than $200 dollars…and is likely to only be in the market for a year or so.

Nokia’s first new phone will be important, the second one will be critical. As they execute, they will have dozens of devices from other manufacturers swirling around their heads with all kinds of little tweaks and challenges. They need to be aware, but not distracts—they need to be fast, and they need to be deadly about differentiation.

People aren’t upgrading just because their phone isn’t cool any longer. The reason phones stop being cool is because something wears off of them over time. The little nagging misses by the software and hardware designers add up. Hardware gets faster and of higher quality (like longer batteries and higher resolution cameras). Nokia needs to learn to anticipate, not follow.

Nokia needs to out innovate Microsoft by taking the lead in turning the Windows Phone into a credible, relevant platform. Unlike Apple, Microsoft can’t do that alone, and they won’t do it with a bevy of players. Microsoft needs one developer to step up and take the lead. Strategically, Nokia needs to be that handset manufacturer. If Nokia can’t meet that challenge, then they will remain a less-than-relevant player until they decide to reinvent themselves again, if they have the luck and survival instincts of their competitor at Motorola. We’ll see over the next several months if they step up, or if they become another story about another storied handset maker trying to reinvent itself again.