Linked by Thom Holwerda on Tue 3rd Sep 2013 05:39 UTC
Microsoft Ever since Stephen Elop became CEO of Nokia we knew this outcome was inevitable. It was his job to make it as easy as possible for Microsoft to acquire the vital parts of Nokia, and here we are: Microsoft is acquiring Nokia's devices unit for 3.79 billion euro, and another 1.65 billion euro for its patents. It's a bit of a complicated deal in that Microsoft buys the Asha feature phone brand and Lumia smartphone brand outright, but will only license the Nokia name for current Nokia products; the Nokia brand will remain under the control of Nokia the company. This means Nokia as a phone brand is effectively dead.

In addition, Stephen Elop will return to Microsoft. I'm sure entirely coincidentally, Ballmer announced recently that he's stepping down.

All this was as inevitable as the tides rolling in. Nokia has been going downhill and has stagnated ever since the announcement it would bank its future on Windows Phone. It went from being the largest smartphone manufacturer to an also-ran, which is made painfully clear by the fact that Microsoft paid more for Skype than it does for Nokia's devices unit.

A painful end for a once-great phone brand. This was the plan all along, and in essence, Nokia's board has executed it masterfully; the Finnish company has switched core markets several times in its long, long history (it started out as a paper company), and the unprofitable phone business was a huge liability for the company, despite claims by some that Nokia was doing just fine. Nokia's board has masterfully gotten rid of this money pit so it can focus on the parts that are profitable.

And, as always, the next Lumia will turn it all around.

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RE[3]: Comment by MOS6510
by hhas on Tue 3rd Sep 2013 12:31 UTC in reply to "RE[2]: Comment by MOS6510"
hhas
Member since:
2006-11-28

Bingo. Nokia was already in serious trouble when Elop came aboard: its Symbian platform was clapped out and ripe for mass cannibalization by the rapidly rising Android, and their own attempts to create a viable successor were a complete mess. It's almost a mirror of 90's Apple, where Elop was supposed to be Nokia's Steve Jobs, sweeping in to save the day with fresh blood and clear direction.

Alas, as Radio says, he made one fatal newbie error by stating publicly what should've been kept utterly private, and causing such an instant and catastrophic run on stockholder and customer confidence that business schools will no teach it for decades to come.

It might seem incredible to bystanders that such a huge company could be brought so low by a few poorly chosen words. But, as pointed out, Nokia was already in an extremely vulnerable position, and Elop's Osborning of its existing platform before its replacement was ready was the only nudge needed to set far larger and more destructive market forces in motion.

Simple mistake, simple outcome; nothing complicated or malicious needed to explain it.


By contrast, paranoid "Prison Planet"-level gibber like Thom's own "It was Elop's job to trash Nokia from the inside so MS could pick it up in a firesale" may play well to the anti-MS zealots, but is utter incredulous toss from any sort of real world business perspective. I may not be a great businessman, but even I can put my brain into gear and figure out why this argument is not credible:

1. A powerful, independent Nokia that successfully translated its then 50% market share to WinPhone in the first two years of Elop's tenure would have been infinitely more valuable to MS than what they're getting now: a handful of patents and a struggling 5% market share.

2. Imagine the legal and financial shitstorm that'd land on both MS and Nokia if there was even the slightest indication that Elop was intentionally sabotaging Nokia on MS's behalf. Read the real press sometime: former CEO Jeffrey Skilling got 24 years for his part in bringing down Enron from the inside; even a lowly ex-network admin like Terry Childs received a $1.5 fine and four years in the big house for locking out San Francisco's IT systems for a fortnight. What exactly does the resident peanut gallery think the law courts and stockholders would do to Elop were he discovered to be pulling the same shit?

3. Why on Earth would Elop, who has just landed the top job at one of the biggest technology companies in the world, choose 1. to be another CEO's bitch when he's now a CEO himself, and 2. risk huge fines and jail times in the process? I can only assume Thom et al studied at the Chewbacca School of Law and Business, because their 'explanation' makes absolutely no bloody sense whatsoever.


To use the old axiom: "Never ascribe to malice what may adequately be explained by stupidity." I think that accurately describes Elop's tenure, though Thom's I am starting to wonder about...

Reply Parent Score: 5

RE[4]: Comment by MOS6510
by ichi on Tue 3rd Sep 2013 13:02 in reply to "RE[3]: Comment by MOS6510"
ichi Member since:
2007-03-06

Elop didn't have to trash Nokia from the inside, Nokia itself was doing a pretty good job at that.

The only thing he needed to do is turning a company in freefall into a WP shop. Even if Nokia itself was sinking it's assets would still remain valuable, and they could be obtainable a lot cheaper later on.

With Nokia 100% commited to WP it was just a matter of transfering ownership, as the migration to Microsoft's ecosystem had already been done at Nokias own expense.

So I don't think it was a sabotage, it was probably laid out clearly in front of the shareholders back when Elop was proposed as CEO:

"Your devices unit is irreversibly lost and it'll only drag the whole company into bankruptcy, but you can get out of this mess and still get a decent profit by going WP exclusive and placing the devices unit in a desirable situation for an acquisition from Microsoft.
And in the meanwhile you'll be getting a cash influx from MS to keep the company afloat.

Win-win, right?"

Reply Parent Score: 5

RE[5]: Comment by MOS6510
by BushLin on Tue 3rd Sep 2013 19:57 in reply to "RE[4]: Comment by MOS6510"
BushLin Member since:
2011-01-26

Your devices unit is irreversibly lost and it'll only drag the whole company into bankruptcy, but you can get out of this mess and still get a decent profit by going WP exclusive and placing the devices unit in a desirable situation for an acquisition from Microsoft.
And in the meanwhile you'll be getting a cash influx from MS to keep the company afloat.

Win-win, right?"


So presumably part of this fantasy deal you envisage also involves them saying that they'll only complete the buy out it when it's worth a fraction of what it is today?

I'm not buying it

Reply Parent Score: 3

RE[4]: Comment by MOS6510
by tonny on Tue 3rd Sep 2013 13:04 in reply to "RE[3]: Comment by MOS6510"
tonny Member since:
2011-12-22

Err.. did you know that many waiting rugged phone with Android inside? Many people hope for Nokia-Android phone. And what's Nokia response when google people make an offer to them to make phone with android? Well, you know the answer.

And like other said, there's Maemo. If it executed right, it will turn the table IMO.

They have opportunities, yet they are to blind to grab it.

Reply Parent Score: 0

RE[5]: Comment by MOS6510
by Nelson on Tue 3rd Sep 2013 13:20 in reply to "RE[4]: Comment by MOS6510"
Nelson Member since:
2005-11-29

Nokia makes an Android phone. Its Vertu. Go and buy it.

Reply Parent Score: 4

RE[4]: Comment by MOS6510
by kaiwai on Tue 3rd Sep 2013 15:23 in reply to "RE[3]: Comment by MOS6510"
kaiwai Member since:
2005-07-06

Just to add; the remaining business left with Nokia is still profitable and I could see Nokia turn into an IBM - the consumer side of the business is gone in favour of providing the sorts of infrastructure heavy lifting telecommunications equipment that aren't subject to the fickle whims of consumer emotions but rather whether the product does the job at the right price. Maybe long term Nokia might disappear as there is a merger with another telecoms infrastructure company like Ericsson or Alcatel.

Reply Parent Score: 6

RE[4]: Comment by MOS6510
by galvanash on Tue 3rd Sep 2013 23:25 in reply to "RE[3]: Comment by MOS6510"
galvanash Member since:
2006-01-25

Bingo. Nokia was already in serious trouble when Elop came aboard


I don't think anyone can rationally argue against that. Nokia has lost 90% of their market cap in the last 6 years, and they lost more than half of it before Elop... So yeah, they were in serious trouble all on their own - no doubt.

By contrast, paranoid "Prison Planet"-level gibber like Thom's own "It was Elop's job to trash Nokia from the inside so MS could pick it up in a firesale" may play well to the anti-MS zealots, but is utter incredulous toss from any sort of real world business perspective.


I think you are taking advantage of the literal interpretation of that statement to make it seem far more ridiculous than it really is...

No, Elop's job was not literally to trash Nokia. But his job WAS to turn Nokia into a tier one Windows Phone OEM, wasn't it? Isn't that, in light of the current state of things, the same thing?

And the "pick it up for a firesale" argument... Be realistic. Who, other than Microsoft, is a newly transformed but still failing Nokia worth anything to? Do you really think that the prospect of Nokia selling to Microsoft was never discussed when Elop was hired? Really?

No - I don't think there was literally a conspiracy in the works to trash Nokia so that Microsoft could buy it cheap. What I think is that there was a plan to make Nokia more attractive to Microsoft, that the plan all along was to sell to Microsoft, and that in order to become attractive to Microsoft Nokia had to become worth buying by transforming themselves into a tier one Windows OEM...

If Windows Phone had happened to become a dominant platform along the way and Nokia happened to make a whole lot of money in the process and turn the company around, well maybe things would have turned out differently in the end. But I would wager money that most of the board thought that outcome was a pipe dream - hiring Elop was the kickoff of a buyout plan, not an effort to turn Nokia around as a company...

Its simple, Nokia's fate was put in Microsoft's hands the minute they decided to hitch their wagon to Windows Phone. Once that decision was made, where things went from there was entirely dependent on Microsoft's performance, not Nokia's... And you don't think that there was a backup plan all along to sell in the event it didn't work out. Really???

I don't think anything Elop did was out of ignorance or stupidity. I think he did exactly what the board wanted him to - either get them out of the mobile phone market, or make them successful in it again (in that order). And they put together a plan to accomplish that. And now they have succeeded.

Reply Parent Score: 6