One problem with examining the road not taken is that it’s usually impossible to tell whether you took the right route until it’s too late to change course.
The announcement of the Google-Motorola Mobility deal sent me back to notes from an interview with Nokia’s chief executive Stephen Elop in March, to remind myself how difficult it is to make strategic leaps in a fast-changing industry. You’ll recall that the Finnish group ended up selecting Microsoft as its smartphone partner rather than Google.
Here’s what he told me:
For Google, us joining the Android ecosystem and, let’s say, bringing in some tens of points of market share – 20 per cent, 30 per cent, depends how you measure it – to Android, combined with what they’ve already amassed and the growth that they’re seeing, would have changed the dynamics of the mobile industry for ever. And Android and Google fully understood that.
In the end, Mr Elop opted for the opportunity to stand apart from the Android masses and develop Windows phones with Microsoft. (Bluntly, as I wrote at the time, Google probably wouldn’t have offered as sweet a deal as Microsoft, given the rapid growth of its Android platform and the tough position in which Nokia found itself).
The Google-Motorola tie-up is about cementing the best position in intellectual property. This remarkably prescient blogpost at Unwiredview.com from early August – urging Google to buy Motorola Mobility – picked up the signals that Motorola might be prepared to sell and explained why it would make sense. In short: patents. As the FT’s Richard Waters has written, they are the key to fighting back against Apple and Microsoft. Motorola Mobility investor Carl Icahn had only recently urged the company to make more of the thousands it owns.
In choosing Microsoft over Google, Mr Elop also saw the value of pooling Nokia and Microsoft’s intellectual property. That was further reinforced by the Finnish group’s June patent victory over Apple, the value of which Nokia insiders unsurprisingly say has been underestimated by critical media and markets.
The noises from the Nokia camp on Monday suggested it felt the Google announcement vindicated its decision not to go with Android. Nokia’s own experience with its homegrown Symbian operating system indicates the “perils of licensing to your competitors“, according to Horace Dediu at Asymco.com. If Google’s Motorola deal alienates other Android phone manufacturers, they could choose Nokia-Windows. That’s one explanation for the jump in Nokia’s share price immediately after the announcement. Another, less flattering, is that the Finnish group is now itself vulnerable to takeover as competitors re-examine their position in the light of Google-Motorola. But predicting the outcome of the battle now being joined is hard enough for neutral outsiders – imagine the stress for board members staking the future of their companies on one outcome or another.
