Most of the tech press has it's anti-Microsoft bias so embedded into their souls, that they can't even recognize a good Microsoft play when they see it. And they have this deeply held notion that, because they are important and they live in the US, that their markets are the most important markets in the world.
But they are wrong, and this Nokia acquisition is case-in-point.
As I mentioned in my blog post yesterday, Nokia is the #2 handset maker in the world, second only to Samsung. Samsung is #1 because Asia is a huge market, and Asians love Asian brands (it's a patriotism thing, nothing wrong with that). But Nokia is right behind them, selling millions of feature phones to developing nations every quarter.
So far, Nokia and Samsung (plus a handfull of regional makers) are the only ones with the clout to really make any serious plays for the "next billion" smartphone users. Nokia is one of the most recognized brands throughout the Eastern and Southern Hemispheres, and is deeply entrenched in areas like mobile payments, operator billing, and phone experiences that bridge the divide between smart and dumb phones. There was a time not that long ago, when almost any cell phone sold in the US was either from Nokia or Motorola. Google bought one; now Microsoft has the other.
Apple has no such hold over the developing market. In a few days, you'll see Apple make it's first play into the "developing world" market with the iPhone 5C, which (no joke), stands for iPhone 5 Cheap. This is because Apple knows that it has already stripped its potential customer base dry, and is losing ground to Google consistently quarter after quarter. Sure, they get a bump every time a new version of the iPhone comes out, but then it's right back to losing ground. So they are just starting their push into the area of cheap handsets. But here, they will ultimately fail.
You see, Steve Jobs was an @sshole. He really was, you've read his biography. Most perfectionists are assholes. It's OK if you love someone who is an @sshole, just be honest with yourself about it. I'm both perfectionist and @sshole, and my wife loves me, so I'm all for it. The thing is, perfection doesn't come on the cheap. This is why Apple has always been a "luxury" brand. Because nice things that are made well are almost always expensive.
Every time Apple tries to do cheap, it fails. You could argue: "well, the iPod Nano is cheap", but it's not a standalone device. It requires a computter with iTunes to work, which is expensive, so that's not gonna fly in Africa. People forget that Apple was weeks away from total bankruptcy when Steve Jobs came back and borrowed a hundred million or so from Bill Gates. Now, Apple has come full circle, is without it's Chief of Perfection, and is moving back into the world of cheap. History will repeat itself again. What about Apple's current position makes you think they will be successful selling cheap stuff? Because they have a lot of money to burn?
UPDATE: Apple investigating worker-abuse charges at iPhone C supplier. Winners don't treat their workers this way.
Nokia, on the other hand, has a history that is several decades long of building quality, inexpensive phones. Its prior playes into smartphones, (like the N9 and the 808) never did very well before. Windows Phone is by far their most successful play into smartphones to date. But Nokia was extremely successful at the other end of the spectrum, and the Nokia acquisition brings the next billion smartphone users to Microsoft's doorstep on a silver platter.
As Nokia posted earlier today, Microsoft will continue evolving the Asha OS as their primary on-ramp to Windows-based smartphones in the developing world. They will bring more Microsoft services, like Xbox and Skydrive, to that platform. Along with the patents and manufacturing contracts, Microsoft now owns one of the most extensive set of mobile operator agreements on the planet. That means that Microsoft is now a huge player in NFC payments, and has the clout to push that infrastructure ahead in the US, where we are far behind.
Before, Microsoft had to bend to the will of the carriers when it came to updates, and didn't have the same clout as Apple. Now, Microsoft will be able to bully cell carriers into pushing out updates faster, so flacgship carriers won't drag their heels on updates (like AT&T and the Lumia 920).
And in the biggest coup for the company, Microsoft out-foxed Tim Cook's supply-chain expertise, by purchasing one of the most efficient production organizations on the planet. Now, when dealing with parts contracts from Asian, Apple will have to compete against Microsoft at every turn, instead of the other way around.
Apple was right, it is better to own the entire ecosystem. But Microsoft has *always* out-executed Apple in the end. Google out-Microsofted Microsoft with the Android platform. Now Microsoft just out-Appled Apple, and Google has a new problem in their rear-view mirror.