Microsoft and Nokia have blown it

Microsoft and Nokia are betting big on Windows Phone, each hoping to gain some market share from Samsung and Apple. Although the companies have produced products with promise, they are also making a bizarre series of missteps along the way - a stumbling which may precede a fall, unless they pull themselves together.

It started years ago, with Nokia's decline from a seemingly unassailable position on top of the mobile phone market. From dumb phones to feature phones, Nokia continued to build its empire, leaving Sony Ericsson, Motorola, LG and others fighting over the scraps. The company's fall from grace is known well enough to gloss over the details here, but it ended with Nokia CEO (and ex-Microsoft exec) Stephen Elop's infamous “burning platforms” memo in February 2011, in which he publicly detailed how precarious Nokia's position was, and announced the switch to Microsoft. Windows Phone was the horse Nokia would back, for better or worse, in the smartphone race. (That memo has seen Elop dubbed the “worst CEO ever”, for its impact on the company.)

Microsoft is betting big on Windows Phone 8 - it is a key part of the company's strategy to capture market share in a mobile marketplace, which is dominated by other players. Microsoft owns the desktop world, but can claim only a tiny fraction of the smartphone and tablet markets, and as computing moves to those platforms, Microsoft is firmly behind. It needed a partner to accelerate its market presence, and Nokia was it.

Nokia, meanwhile, is betting the farm on Microsoft's Hail Mary pass. Nokia has more to lose: Microsoft has other partners, including Samsung and HTC, producing phones running Windows Phone. Nokia apparently has no plan B.

Eight months after Elop's memo, in October 2011, Nokia introduced the Lumia 800, its first Windows Mobile phone, and continued filling out the range with several other models including the Lumia 900, which won “Best Smartphone” at CES, in January. But “good” may not be “good enough” - the Lumia series has had positive reviews, but none of the models has won significant ground against the big incumbents - Apple's iPhone, and Samsung's Galaxy range.

Early sales traction stuttered when it was learned that the Lumia series, running Windows Phone 7 and 7.5 (based on the old Windows CE codebase), would not be upgradable to Windows Phone 8, the major new release promising a host of features. Lumia buyers responded angrily, and sales dropped. Even for the most keen potential Windows Phone customers, the best option was clearly to wait for the next generation of device.

Having effectively stabbed their first generation of comeback products in the back, Nokia and Microsoft were going to have to produce something special in the second round, and execute flawlessly on the launch.

Oops.

The Lumia 920, the flagship of the new Nokia range, was unveiled on 5 September, a date uncomfortably sandwiched between its major rivals. Samsung stole a march on Nokia and launched the market's first Windows Phone 8 models, its Ativ S, a week before Nokia came to the party. A week later, the much-anticipated iPhone 5 launch is now due. Nokia's timing couldn't have been worse.

The bad timing could have been forgiven if the phones themselves - the flagship Lumia 920 and the entry-level 820 - had landed with a bang, delivering features that clearly set them above the competition. Unfortunately, they did not. The phones were generally received as good, but not exceptional, and with Samsung getting the OS to market first, the Lumias failed to excite. Fighting for survival in an arena dominated by two heavyweights, being “good, but not exceptional” is not going to be enough. The stock market responded, with Microsoft and Nokia's respective share prices tumbling, the latter, already in junk bond territory, by as much as 13%.

After that, it only got worse. The Lumia 920 did grab headlines for some of its features, most notably its impressive camera and image processing software, inherited from the 808 PureView, the 41MP monster shown off at CES. With the same software and optical image stabilisation, the 920 promised jaw-dropping images and video. The promotional videos offered amazing examples of the camera in action, until a sharp-eyed observer noted that a video featuring footage shot by a Lumia user on a bicycle actually showed a reflection of a camera team, tripod-mounted on the back of a van. Nokia was forced to apologise and admit that the visuals, both video and still, were not, in fact, indicative of the Lumia experience. Make no mistake, the camera in the Lumia is really very good, but Nokia's shenanigans have turned a positive feature into a running joke, and greatly diminished the impact.

All phones are criticised, but now every small flaw (the 920 lacks SD card support, for example) is magnified by the background radiation of PR fumbles. The Lumia 920 and 820 are arguably very good phones, which deserve a much better reception.

Having painted the first set of Lumia products into a non-upgradable box, and fumbled the second generation's launch so thoroughly, if Nokia and Microsoft win any market share against the Android juggernaut and Fortress Apple it will be in spite of themselves, not due to any strategic or technological adroitness.

For Nokia, it's just another couple of blunders on a long and stumbling path downwards. For Microsoft, it's probably just a blip - other manufacturers may yet salvage some market share for the Windows platform. The endless anti-Android lawsuits, for example, may sway Samsung towards heavier support for Windows Phone. Nokia, meanwhile, still needs a miracle.