The unholy - or perhaps holiest - alliance...

Watching Nokia’s slo-mo-but-steadily-accelerating crash and burn over the last couple of years has been painful to say the least. And there seems to be no end in sight, yet, perhaps, appearances aren’t, as they say, everything…

The collapse dates back to the Nokia reorganization in the mid-00’s that took a chaotic hodgepodge of nine devices Business Units and combined them into three new and focused Groups: Enterprise Solutions (aimed at dethroning RIMM), Multimedia (driving the future of mobile computing), and Mobile Phones (delivering bread-and-butter volume feature and entry phones). The unintended result was a strong focus on the high-end in Enterprise Solutions and Multimedia, and a natural gravitation towards the low end in Mobile Phones, which sought to capture and hold emerging market share. The door was left wide open for Samsung and LG to capture the mid-range feature phone space, where they continue to dominate today.

The acceleration of the meltdown came with another reorganization at the end of 2007, this time uniting the three separate devices Groups into one. Enterprise Solutions had essentially failed, Multimedia was poised to succeed, and Mobile Phones was chugging along in the low-end, so Nokia rightfully sought to achieve the efficiencies of a single devices Group, married up to a newborn Services Group, together meant to drive new hardware-software blended experiential Solutions into the market. The unintended result, in part influenced by an ill-timed global economic crisis, was the sacrifice of high-end device momentum - just as Apple was crashing the party and Android was a glint in HTC’s eye - as Nokia laser-focused on share, share, share. And that meant moving volume. And that meant driving low-end, entry-level phones.

There have been two additional reorganizations since, neither doing much harm nor good, neither speeding things up or slowing them down – just moving the pieces and bodies around. But, meanwhile, companies like China’s MediaTek are making Nokia’s much-vaunted global scale and efficiency less relevant in the low-end, enabling multiple Indian and other Asian companies to deliver the same $27 phones with $3 margins that have been Nokia’s mainstay in entry-level devices.

So, struggling to catch up in the high-end (where Apple and Android rule), just another middling player in the mid-range, and getting pressed hard and fast on the low end, and with its “me-too” suite of Ovi-based service offerings not having taken off to add value and differentiation to the Nokia device experience, and with its share price hovering above what would have been an inconceivable 5 Euros just two years ago, what is the one-time mobile giant and leader to do?

When I left Nokia a year-and-a-half ago, I recommended to senior leadership a North American recovery built on a departure from the global cookie-cutter approach. I have since repeatedly promoted that same strategy, both in this blog and in informal exchanges with Nokia: Scrap Symbian and deliver Android-powered devices. Just in North America. Recover here, where brands are made and broken. Then leverage that success globally.

Had Nokia taken that approach a year ago, Motorola would have crumbled, HTC would not now be a household brand, and RIMM would be yet more perilously hanging on than they already are today. But with seemingly Wang-like myopia, Nokia has stayed the Symbian course, pursuing Maemo (now MeeGo) on the side.

Notwithstanding my previous recommendations, frankly, a Nokia shift to Android at this point would be if not too little, certainly too late. It just seems so hard to fathom, a company with a history of risk and innovation watching the world go by… But, again, perhaps appearances aren’t everything.

Recall that there’s another tech giant out there struggling to succeed in the mobile space, a giant with which Nokia has had an on-again-off-again collaborative relationship, and with which, based on some personal historical knowledge, Nokia has maintained a regular senior level dialogue. Microsoft.

It’s a way out of an otherwise seemingly endless downward spiral, and I’d like to believe the plans are already in place and maturing. A Nokia-Microsoft alliance would shake the mobile space to its figurative knees. Indeed, as MS is poised to launch a refreshed mobile OS at year’s end, a suite of Nokia devices powered by that OS – if it’s everything it’s promised to be - could captivate the market. Such a bold move would certainly benefit both companies’ share prices, and, related, the sheer audacity of the move would give Nokia the opportunity to jettison it’s long-term commitment to Symbian as a mobile computing OS, instead allowing that OS to become the feature phone solution it’s destined to be. Wither Meego? I’m not so sure, but in the near-term we’d see the market boil down to three mobile computing OS’s – Apple’s OSx, Google’s Android, and Windows Mobile (or whatever it may be called) championed by Nokia. Yes, this would certainly eat into Nokia’s device margins, but it might also make Ovi much more relevant, and drive revenues through that channel that make up the difference.

Just imagine…