September 2013...Microsoft & Nokia...Microsoft the software behemoth acquires Nokia, the inventor of the mobile phone, for a mere $13B. Are they two dinosaurs trying to mate? Or, does the data point otherwise? In this quick exercise, using strategic frameworks & heuristics,combining both companies' data with macro & category trends, I try to answer that question, and also to guide the spotlight to the best Innovation opportunity areas - where, when & how MicrosoftNokia should Innovate

1. STRATEGIC INNOVATION ANALYSIS for A NEWLY MERGED ENTITY
OCTOBER 23, 2013
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
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2. Created by
Noam Bernstein
http://www.linkedin.com/pub/noam-bernstein/1/ab0/651
https://www.vizify.com/noam-bernstein
Enjoy!
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
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3. http://www.forbes.com/sites/forbesleadershipforum/2013/09/04/microsoftand-nokia-a-marriage-made-in-hell/
http://www.forbes.com/sites/nigamarora/2013/09/04/why-microsoftwas-not-stupid-to-buy-nokias-phones/
http://www.zdnet.com/microsofts-nokia-acquisition-it-was-double-down-or-quit-7000020161/
http://www.microsoft.com/en-us/default.aspx
STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
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4. Where should
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
play to win?
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5. Size
Capital Needed
To sift through hype & rumor, data driven frameworks synthesizing external
opportunity with internal capabilities & assets should be applied
?
Time
Opportunity trends
(size & time)
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Core
Microsoft
Core
Far out
Assets filter
(customers, channels, knowhow)
Time to ROI
Capital filter
(advantage)
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6. Fit to Microsoft Customer
Customers
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Fit to Nokia
Fit to Nokia Channels
Fit to Nokia Customers
Customers are today, more than ever, at center; channels & regions are still very
real, hard won assets; these criteria help filter & focus where to innovate
Fit to Microsoft Channels
Channels
Fit to Microsoft
Geographies
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7. Microsoft remains a multi-product powerhouse brand in homes & offices
of millions of users worldwide, despite recent devices & performance
http://www.forbes.com/companies/microsoft/
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
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8. Microsoft led early on in the computer software services arena;
Today it competes with giants in many arenas; Apple & Google are strongest
1990-today
Microsoft
Apple
Google
2008 -today
https://www.google.com/finance
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9. Microsoft’s sheer scale affords it patience towards a longer term horizon;
Today a mere 3.1% of market, Windows Phone is expected to reach 10.2% in 2017
Today, 8.7 million Windows Phone smart phones make 3.1%
In 2017, Windows Phone is forecast to reach 10.2%
http://b-i.forbesimg.com/chuckjones/files/2013/08/IDC-Windows-smartphone-vendors-June-2013-qtr.png
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10. Nokia, pioneer of cellular phones, failed to identify the smart phone revolution;
No longer leader, Nokia still hold major market share in many global markets
http://www.forbes.com/companies/nokia/
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http://allaboutwindowsphone.com/images/news/misc/q113finan.png
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11. Nonetheless, and far from US hype, the Lumia smart phone sold 61.9 million units
(a feat few companies worldwide are capable of)
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
http://www.engadget.com/2013/04/18/nokia-hits-7-7-billion-in-revenue-for-q1-2013-with-5-8-million/ 11

12. Heritage, capabilities, assets; driven by a strong user-centered DNA,
Nokia’s distinct design & color identity, is produced, distributed & sold worldwide
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13. The Lumia+Windows Phone collaboration represents a fraction of the potential;
Smart combinations range over products, services, users, channels & regions
Windows
Store
Windows
Windows Explorer
Outlook.com
Internet Explorer
SkyDrive
Kinnect
Yammer
Skype
xBox
(Live/360)
Office
(Business)
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Business
Channel
Bing
MSN
Lumia
Smart
Phones
Windows
Phone/
Mobile
Azure
(Business)
50% market
Nokia
share of
BetaLabs
feature
“Here” Apps
phones
Design
Identity
Global User
research
Global
Distribution
Handset
& Hardware
design
Low cost
Nokia Networks
Manufacturing
Nokia Equipment
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14. With such a broad portfolio of products, assets & capabilities to work with,
an external industry & trend hypothesis is a more pragmatic focus method
External need hypothesis
Internal focus filter
Best Innovation Areas
Products Assets
& Capabilities
Industry
Analysis
1
Trends
“What they CAN do,
BETTER”
“What SHOULD be done”
3
2
Products, Assets
& Capabilities
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15. To be at the right place at the right time
should synchronize offerings to users & channels, “on trend”
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16. Macroeconomics, technology & culture are interacting,
impacting consumption around the world, and the way companies support it
Macro-economic
crisis
Millenials
(& digital natives)
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The “long tail”
Emerging
economies
Frugal
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17. Within and near Microsoft’s activity areas, expressions of macro trends
pose early signs of potential nascent categories & risky maturing markets
Smartphone
commoditizing
Consumerization
of Business IT
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Big Data hedging
(search social & location)
Internet of Things
Augmented
Reality
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18. Lumia
Smart
phones
?
Time
Opportunity trends
(size & time)
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Nokia
Others
Need
New
Core
Core
Microsoft
Microsoft
Core
Far out
Assets filter
(customers, channels, knowhow)
Capital Needed
Size
Growing trends attract everyone; however for Microsoft, longer term horizons,
requiring larger capital, will filter out & beat constrained competition
Other can do
too
Expensive &
long term
Others can do
faster
Too risky
Time to ROI
Capital filter
(advantage)
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19. Fit to Microsoft Customer
Customers
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Fit to Nokia
Fit to Nokia Channels
Fit to Nokia Customers
Leveraging Nokia’s user-centered approach, on Microoft’s huge business &
consumer user base, through existing channels, in best regions
Fit to Microsoft Channels
Channels
Winners
Forget
about it
Fit to Microsoft
Geographies
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20. Strategically recommending that Microsoft pair internal strengths & assets
to growing long term external trends, avoiding weaknesses
Focus
Avoid
When?
longer-term macro trend targets
short term ‘sprints’
Where?
growing, value add markets,
through owned channels
commoditized markets
How?
leveraging scale & capital
arenas where small can win
What?
integrated solutions
software + hardware
look beyond smart phones
Who?
future business workers
more of the same
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21. While preparing to capture larger cycle patterns, Microsoft should remember to
tactically leverage waning markets, such as non-smart phones, to the fullest
http://www.blogcdn.com/www.engadget.com/media/2013/04/idc-smartphones-featurephones-04-26-13-02.jpg 21
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22. To create “own-able” tech platforms & new categories, the best innovation areas
cluster large scale HW&SW integration at low cost with global distribution,
Frugal Innovation
Microsoft Cloud
Internet of Things
Nokia hardware
Cloud enabled Things
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STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
Consumerization of IT Emerging economies
Business cloud
Nokia hardware
IT-Net of Business Things
HW Product & Users
Millenials
Augmented Reality
‘Here’ by Nokia
Augmented Reality Things
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23. Nokia, ‘Internet of Things’ & ‘Transplantable Tech’ are self-disrupt opportunities;
Microsoft can recreate itself – software & hardware with a ‘twist’
Things
Atoms
Senses
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24. STRATEGIC INNOVATION EXERCISE – NOAM BERNSTEIN
INNOVATION EXERCISE
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