"Any opportunity for great reward often comes with great risk, and I think that's what is facing them now," said Xylotek's Grosfield. "The mobile or smartphone market is so highly competitive and is so reliant on the whim of what's favored, that the risk of failure is extremely high for anyone trying to get into that space. With Microsoft, that's a lot of money they're investing. If they want that to pay off, the only sure bet in this scenario is that their partners are going to be the ones that can see it through and help them succeed and make this a wise investment. If they want to see a return on this investment they need to involve partners fully, right from the get-go, and be very transparent throughout that process, or the likelihood is that they will fail."
The blockbuster deal opens the door for Microsoft to redeem itself with partners that feel burned by the Surface distribution debacle. "If they handle it the same way they did with Surface, it's going to be a disaster," said Grosfield. "The partner community is heavily involved in growing a mobility practice as part of our business, and part of that is partnering with companies like BlackBerry and some are partnering with Apple ... and you're counting on them to walk with you together through growing this part of your business. And if Microsoft [doesn't] involve the partner, wholly, it's going to be pretty hard to come back from that one in terms of credibility with their partners."
Microsoft's success or failure will hinge on whether it leverages its dominant share in the business market to succeed in the mobile device market, said Grosfield. "Microsoft has such a stranglehold on the business community as a whole, in terms of desktop and server operating systems and collaboration software, adding in the ability to seamlessly integrate your smartphone into that environment and manage it using the same tools that they already provide to manage all their other technologies, they have a massive advantage over the competition," he said. "If they can focus on ensuring the software that they run on the Nokia platform is tightly integrated with their desktop operating systems and applications, they are going to be a formidable player in the mobile space in a heartbeat."
Michael Goldstein, president and CEO of LAN Infotech, a Fort Lauderdale, Fla., Microsoft partner, said the deal will make it easier for Microsoft to innovate against Apple in the smartphone and tablet markets. "This is a great thing," he said. "When you own the software and the hardware, it makes it easier to innovate.
"The Nokia 1020 with the 41-megapixel camera was kind of cool, but I want to see something new," said Goldstein. "I want to see Microsoft put their touch on a new device. ... This comes at a perfect time, a week before the new iPhone release."
LISA BARRY contributed to this story.
PUBLISHED SEPT. 3, 2013