"However as an outside observer this move looks insane. "
I really don't agree, unpopular as this opinion would seem to be
"Nokia has survived so long by producing distinctive phones which marry good hardware with good software. Sometimes it works perfectly, sometimes it doesn't. But it's their product from end to end and people buy a Nokia phone because of it."
Nokia haven't just survived, of course, they've driven things in the past, dominated the landscape. When mobiles "arrived", people preferred them because the software was intuitive and the signal & battery was great. That then made the Nokia brand reputation.
BUT, that period of Nokia driving the growth of mobile is gone - in the smartphone sector (the only growing sector) people DON'T buy Nokia BECAUSE they own the product end-to-end. In smartphones, it's all about what you can do with them. If you're in the Symbian garden, all you can do is compare with your iOS & Android mates and wonder where you can get a golf range-finder app or AR graffiti game too, and wonder why none of the small ultra-creative developers are building anything for you. iOS & Android are running away with the show
I kind of agree with you that Android is a better brand fit, but there is the extra element of tying yourself to the ultra-successful money machine that is Google. With Android, you really are just one of the pack. At least in WP7 there is a degree of differentiation, plus the Xbox/gaming angle
Nokia and Microsoft are on the same thinning ice, and both are running the risk of slipping into insignificance in the sectors they once dominated. One has a great track record in hardware, the other "specialises" (I know, I know) in software. To anyone who doesn't care what Nokia has previously "stood for", and to anyone who thinks Microsoft is being pushed off the top table, it looks like a great match
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