A decade ago, Microsoft, the world’s biggest operating systems vendor, made a significant move into the mobile market. It acquired Nokia’s handset division, the then-world leader in mobile phones. This acquisition was seen as Microsoft’s last push into the mobile market and Nokia’s final attempt at the smartphone market. However, the venture ended in a spectacular failure.
The acquisition fell apart barely two years after it was announced, and Microsoft wrote it off as a tax loss. The reasons for this failure were multifaceted. It was a lethal mix of poor management, a rapidly evolving market that was not anticipated by the decision-makers, and a range of products that were, with a few exceptions, subpar.
In 2007, Nokia was selling around half of the world’s mobile handsets. Its success was attributed to its early entry into the mobile market, relentless engineering focus, and a sense of style. Nokia handsets were known for their durability, reliability, and utility. They were the first to go all-in on SMS in the 1990s and built the first handset specifically designed for it.
However, Nokia’s downfall was its inability to keep up with the software side of things. It had been running a basic OS that could make calls, handle some data, and allow a few games. Then, at the end of the 1990s, it helped create Symbian, the first smartphone OS, which enjoyed enormous initial success. But as the market evolved, Symbian was left behind.
In 2002, the Canadian startup Research in Motion launched a proper smartphone with a QWERTY keyboard, and it quickly became a hit product. Around the same time, a group of engineers had an idea for a more flexible and app-focused mobile phone operating system called Android. Simultaneously, Steve Jobs started Project Purple to develop the iPhone hardware and an operating system to run it.
Despite having great hardware, the venture failed due to poor management and an inability to adapt to the changing market dynamics.
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