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Kagan: Solving the Microsoft Nokia LinkedIn problem

So Microsoft is changing direction. It has thrown in the smartphone towel by saying goodbye to Nokia and is now acquiring LinkedIn instead. Will LinkedIn provide growth or will they too struggle going forward? And this is not the real Microsoft problem. Let me explain how Microsoft should strengthen its weakest link in order to grow.
First of all, Microsoft will no longer be a competitor in the smartphone sector. This has been a long time coming and many say it’s about time. Microsoft has been trying to succeed in the wireless business for a decade or longer, starting with plain wireless phones, then evolving to Lumia and then Nokia smartphones, but the company has not been able to move the needle.
Second, this morning there is news Microsoft is acquiring LinkedIn. These two events signal a change in strategy and direction for the company. Will this latest move help Microsoft grow? Not unless it corrects its real problem, which I will address shortly.

Welcome back, Nokia

Let me start by saying, as Microsoft departs Nokia is going to try to make a comeback. This rapid movement in recent years is enough to make anyone dizzy. While this column is about Microsoft, let me take a moment and wish Nokia good luck and success coming back to the wireless world. I will be writing quite a bit on Nokia and their comeback efforts going forward.
This shows how successful companies can screw up as often as they succeed. No company is successful at everything it tries. This is part of business. It’s normal. You’ve got to take the good with the bad. Even Google fails at several businesses it enters.

Is Microsoft in trouble?

Now Microsoft is changing directions and is going to try to tackle another industry: social networking. Like smartphones, social networks have a limited number of heavy hitters. While LinkedIn is a heavy hitter, the real question is: Does a software company understand how to grow this business? If not, will it take a hands-off approach? I fear the answer to both questions is no.
Then again, it’s hard to feel bad for Microsoft. According to many, the company has been abusive to customers for so many years that many users don’t feel a good connection to the company. And that is one of the key reasons for its smartphone failure.

Microsoft hurting itself

The real problem is, if you pull the camera back you see Microsoft as the bully, not the friend. Compare this to Apple, which has created a warm and personal connection with its customers. Apple customers love Apple. They love anything Apple does. This has created an incredible opportunity for that company.
Microsoft, on the other hand, has never showed respect for its customer base and now it seems this attitude is coming back to bite the company in the rear end. The latest example, many say, is how Microsoft is tricking customers to upgrade from Windows 7 or 8 to Windows 10. If customers wanted to do this, they would do it on their own. And many have.

Microsoft tricking users to upgrade to Windows 10

However, many have not. And they feel betrayed and abused by Microsoft, which they think tricked them into upgrading when they weren’t looking. Now many complain their other programs no longer work, or they have lost valuable data, and even if it works they now have to spend lots of time learning this new OS. Either way this is not what they wanted to do.
Microsoft should be ashamed of its recent behavior. Is this a way to take care of customers? Of course not. This is the Microsoft problem. Does this show respect and care for the customer? I think not. This was not a choice the customer made and they are angry with Microsoft. This is costing users time, money and aggravation.

The Microsoft problem

The smartphone business is a growing sector. When we take a step back and look at the wireless business we see lots of growth, lots of success and lots of potential for tomorrow. However, when we focus we see that success only applies to certain companies. Others just can’t seem to jump-start growth to save their lives.
Apple iPhone, Google Android and Samsung Galaxy are the only real success stories regarding handsets. These companies control roughly 90% of the U.S. handset marketplace. Microsoft was the next with a few percentage points. The rest have to battle over the scraps in market share that are left on the table.

Huawei, Lenovo Tango and Nokia

That handset success may be changing as well with Huawei, Lenovo Tango and Nokia gearing up. Now that Microsoft will no longer be a player in the smartphone battle, where will its small market share go? Will it go to Apple, Google or Samsung? Or will it go to Huawei, Lenovo and Nokia? And what about the others like Xiaomi, HTC, LG, Sony, ZTE, Motorola, BlackBerry and others?
Nokia wants to make a comeback on its own, without Microsoft. That whole acquisition was a disaster from the get-go. Maybe now Nokia has a chance. We’ll see.

Microsoft challenge with smartphones and social networks

So, as you can see, the wireless handset marketplace is a vibrant, competitor-filled environment. Why only Apple, Google and Samsung seem to move the needle has always been a big question. Even Google, which is successful with its Android system, is not as successful with its own Nexus handset or its mobile virtual network operator service business.
Social networks are also a successful and growing business. But like smartphones, this level of success is not experienced among all players. So Microsoft faces the same kind of challenge in social networks as it faced in smartphones.

How will Microsoft succeed with LinkedIn?

Microsoft was not able to crack the smartphone opportunity, so what makes it think it can crack the social network opportunity? This is the environment that Microsoft was playing in over the last decade as it continued to miss the mark, year after year, on the wireless side. Now it is paying the price.
Perhaps it should stop and pay attention to what it is doing wrong. One thing is the way it treats customers. Like the entire cable television industry with players like Comcast, Charter and Time Warner Cable is struggling to hang onto market share simply because they never cared about the customer in the past.
Microsoft faces the same threat – it never learned the simple lesson of caring for the customer so the customer cares in return.

Self-inflicted wound

Microsoft has been fortunate to have practically owned the marketplace since its early days. That way the company didn’t pay a price for its abusive customer experience. However, as the marketplace continues to grow and competitors and technology change things, the challenge and the threat to Microsoft will only grow.
Like the cable television industry, it’s time for Microsoft to realize the error of its old ways and start to improve customer relationships before it’s too late. However, I see no movement in that direction. I am getting a gut sense there are tough times ahead, even with this LinkedIn acquisition, and it’s all due to Microsoft’s own past and present behavior.
Microsoft can grow and succeed going forward, if it understands the issues. The question is: do they?


Jeff Kagan
Jeff Kagan
Jeff is a RCR Wireless News Columnist, Industry Analyst, Key Opinion Leader and Influencer. He shares his colorful perspectives and opinions on the companies and technologies that are transforming the industry he has followed for 35 years. Jeff follows wireless, wire line telecom, Internet, Pay-TV, cable TV, AI, IoT, Digital Healthcare, Cloud, Mobile Pay, Smart cities, Smart Homes and more.

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