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« Ballmer Aftermath Part 1 - Future of Microsoft, especially in mobile | Main | Ballmer Aftermath Part 3 - Ballmer replacement and specifically Elop? (Spoiler alert: Elop won't become MS CEO) »

August 26, 2013

Comments

Tester

@Hansu:

Don't be so naive. Big Business is not about honesty. It's not about talking openly about one's plans. It's not even about making sense. It's all smoke and mirrors - lies and deceptions - keeping a public image that doesn't match with the truth. It's about desperately trying to avoid a stock price crash. A company that appears to act out of panic may be considered weak and with how stock markets work that's a dangerous game to play.

Don't even try to use common sense to find some meaning in there. It will fail. Big business in that regard is no different from politics. Everybody got an agenda and using whatever tactics necessary to achieve one's goals.

The Nokia episode is just a particularly vile story from this shark tank where the strong ones mercilessly rip apart the weaklings.

About some specific points:

>> if they had a clear strategy and it was the execution that was lacking didn't they simply hire a person who would complete the execution faster.

That's what they wanted. They picked wrong. It just occasionally happens that someone finds the right means to cheat oneself into such a position by knowing what to say to get the job.

>> As for the sale of Nokia a hostile take over could have been done by a third party in a jiffy no question and whoever would bought Nokia would have been able to sell it of for pennies and still make a healthy profit.

Not really. Doing a hostile takeover is a very risky and costly thing. Remember, you got to buy the majority of stocks and once you start buying and your intentions become clear, the price won't stay low and you may not be able to get majority. It couldn't have worked out for Microsoft

>> Nokia is like Samsung both make phone in every price spectrum from 30usd dumbphone to top of the line smartphone they are the 2 biggest phone manufacturers still today in numbers

Right. But Nokia's share in the profitable zone is far lower than Samsung's. Back in 2010 this was different and had they been able to transfer this momentum to Android, things would look quite differently these days.

>> As for Ballmer if they really wanted him gone he would be gone in a heartbeat there is no sentiment in big corporations if CEO has to leave he's outta there in a heartbeat.

No, not really. Firing a CEO can be a costly action. You do not do that unless you find better options. Having Ballmer 'retire' just looks far more orderly and controlled.

>> As for WP being dead not anytime soon knowing MS and giving them some credit were credit is due they are rolling out a update for WP soon an they are still supporting WP7 until next year

Yes, because they are contractually obligated to do so. This has nothing to do with doing a good service. Someone could sue the hell out of them if they did not.

>> if this was Google they would have rolled out the software made one update then made a new one and forgotten about the old one.

Utter bullshit. The reason why Google can safely forget about the old versions is because Android remains compatible. WP7 hardware is incompatible with WP8 so it's a completely different scenario.

>> Microsoft atleast supports their programs way longer than is neccessary no matter if it's a succes or failure

Again, remember what I said about contracts? This support is one of the inevitable necessities of doing their business.

Hansu

@tester The break up value of Nokia in 2012 was almost double the share price it would have been a textbook take over of a company that was dirt cheap but had alot of good assets to sell patents factories NSN etc it was like a brand new Ferrari with a scratch on it left in the middle of nowhere with the door open and keys in the ignition along with a spare key and complete service history book with a full tank of gas. So they had a competent guy inside Nokia who would have gotten things done Anssi Vanjoki why not him and Elop as I recall had pretty cushy job at Microsoft he had no particular reason to cheat his way in. As for support yes but then again WP7 apps work on WP8 as for contracts there's allways a loophole and yes it is a neccesitie but then again how is that a bad thing and Google go to wikipedia or somewhere else and see how many products and see how many discontinued products and services there are. And if they wanted Ballmer gone they could have searched for a new CEO behind the scenes or even do so that they would have had Bill Gates take back the position until a new CEO was found altough the latter would have been more unlikely. If Nokia had gone the Android their market share should and would have been alot bigger but who knows or the MeeGo route.

So Vatar

A new game:

I agree with many things written, however I feel we do not know enough to be sure what happened between MS and Nokia, but I am sure that Elop and Ballmer worked together.

Looking forward it will be a new game, and stopping WP is just one of several options. What will happen with WP will be highly influenced by MS Board's assessment, MS' strategy and the person hired as new MS CEO. We will not know the direction until we know who the new CEO will be, and we won't know if the direction will be successful until we see how the new CEO executes.

Tomy offered the "WP will be stopped" scenario. This is not unlikely, but also not certain as of yet.

A different scenario could be fixing WP as part of a strategic change at MS. MS could choose to change into a more nimble, more customer oriented corporation, competing on merits to customers instead on monopolistic lock-in and squeeze-the-customer.

I.e., WP could be opened up, providing a stable core where handsety manufacturers, developers and service providers are able to add functionality, change designs, enable non MS services, etc. MS could be able to earn (small) license fees, and otherwise offer value add services handset customers would pay for (or accept ads to keep certain services free).

Or MS' new CEO (with board approval) could still go ahead and purchase Nokia's smart phone unit and run a strategy like Apple, where only MS-Handsets (ex Nokia) will offer phones and tablets that run a flavor of Windows OS.

There are many more scenarios, especially considering that there might come another technical revolution that makes the classic handset obsolete, and replaces it with something like a Google Glass / iWatch combo, or implants that let the human stay connected featuring a new kind of interfaces. Or what have you.

What does this mean for Nokia?
If there is any reason left at Nokia they need to work hard on plan B and plan C. Looking at their disastrous position in the smart phone area, they need to bring devices to market running non WP-OS in addition to their Windows Phones. Realistically the only alternative they have considering the urgency is Android. So Android must be their first priority. IF they are successful selling Android and WP devices, then they can start to build their own SW competence again, hiring people or buying technology (i.e. Sailfish) to bring their own offerings to market. But this will take time and lots of money, both very scarce resources for Nokia right now.

In any case they need to change leadership (Board and CEO). Nokia's current leadership is branded with Windows Phone / Microsoft strategy and they cannot bring on a new strategy credibly. Also, after replacing Elop they need to focus on the right strategy AND swift execution. While Nokia had the right strategy until Elop came, execution is and has always been Nokia's weak spot.

I would be surprised if we don't hear about Elop's resignation soon. If we don't then it is a sign that Nokia as we used to know it will cease to exist. Nokia's only outlet will be a split and sale of the Smart Phone unit to Microsoft. Which leaves a viable Network equipment part, a non viable handset unit (feature phones only), and a smart devices division within Microsoft. And a few other assets that may or may not have value for certain acquirers (Mapping solutions, manufacturing assets, certain patents).

geektech

Just for curiosity, the Nokia N9 bit the Nokia Lumia 925 and the new flag ship Nokia lumia 1020 by daily hit, been a 2 years old phone it is quite surprise.

tk

Nokia has a future; and a very bright one; it just needs to turn it on - it's called Harmattan v2.0 on quadcore snapdragons.

Tester

@tk:

Sorry, but no. That train has passed 2 years ago. Nobody, not Microsoft, not Blackberry and not Nokia will be able to establish a new smartphone OS these days.

If Microsoft really folds that game is over. Android and Apple will have won.

Every new OS will face the same problem: lack of apps and lack of developer support.

@Hansu:

You are still trying to scratch the surface to find out what happens at the core of the whole mess. You won't get any results with that.

>> The break up value of Nokia in 2012 was almost double the share price it would have been a textbook take over of a company that was dirt cheap but had alot of good assets to sell patents factories NSN etc it was like a brand new Ferrari with a scratch on it left in the middle of nowhere with the door open and keys in the ignition along with a spare key and complete service history book with a full tank of gas.

No, it would have NOT! The precondition here would be that they could buy all those shares for dirt cheap. But as it happens, the market will notice that someone is buying all the stock and prices will increase. If purchases exceed a certain volume, there need to be official reports and once it becomes clear that there's a takeover attempt it will be a lot harder to get the rest for 'dirt cheap'.


>> So they had a competent guy inside Nokia who would have gotten things done Anssi Vanjoki why not him and Elop as I recall had pretty cushy job at Microsoft he had no particular reason to cheat his way in.

Who knows what kinds of fairy tales they were told. I think it had a lot to do with scepticism that the Nokia management was too crusty and they preferred the outside guy to shake things up. I repeat myself: Common sense doesn't factor in here. Wishful thinking on the other hand does.

>> As for support yes but then again WP7 apps work on WP8 as for contracts there's allways a loophole and yes it is a neccesitie but then again how is that a bad thing and Google go to wikipedia or somewhere else and see how many products and see how many discontinued products and services there are.

It's irrelevant for support if WP8 supports WP7 apps. That's not what this is about. This is about devices. The WP7 devices do not support WP8 so any improvement to WP8 won't mean anything for WP7.

>> And if they wanted Ballmer gone they could have searched for a new CEO behind the scenes or even do so that they would have had Bill Gates take back the position until a new CEO was found altough the latter would have been more unlikely.

Ugh... Sorry, but that's not how perception is being played. We simply do not know what's really going on behind the scenes. If I was Bill Gates, after the February statements, I'd go looking for someone to take over as CEO, then push Ballmer out with some grace period to avoid making it look bad while at the same time the new guy gets worked in. For all we know, Ballmer's replacement may already have been chosen.

>> If Nokia had gone the Android their market share should and would have been alot bigger but who knows or the MeeGo route.

MeeGo would have been seen as a continuation of their previous strategy, not a disruption. Remember, Nokia still had decent market share in 2010 and there was a clear upgrade path for developers from Symbian to MeeGo. In other words: They gave the developers the clear message that if they start developing apps for Symbian using Qt, they'd be able to migrate their work to MeeGo with relatively little effort. So the transition to MeeGo would not have disrupted their sales.

Let's be honest about one thing: Android is far from a good OS, especially when it comes to software development. I don't know many people who enjoy making Android apps. Qt, on the other hand would have been a developer's dream and with Nokia and their huge market share fully backing it it would have stood a good chance hurting Android seriously in the app department.

MikaA

Actually, I don't believe that Microsoft would be acquiring Nokia any more. Buying Nokia smartphone division doesn't sound like a good idea for them, as all would depend on how well Microsoft itself would be able to sell things to markets - and do mobile phone hardware. This specifically doesn't work out if there is a threat of Skype looming in the background, and recent Microsoft hardware projects haven't really impressed either.

As somebody before put it, the irony of all this is that Elop did his job TOO well to support Microsoft in all occasions. But I'm starting to wonder if Microsoft even wants him back - losing this much wasn't part of the plan. Elop can easily end up in a situation where he has nowhere to go, the only possibility at the moment is Microsoft, other companies will probably give him a wide berth.

Timo M

This blog was certainly more speculative than usual... What I like about Tomi is how easily he can be verified, because his opinions are based on solid facts. He is a forecaster, never an easy job, but unlike most of those tech blogs written on "ur mum's basement", which occasionally get it right, Tomi delivers on target like a B-52.

I am afraid here as well much will turn out to be true. Personally I have refused to believe that Elop is a MS mole, because that would suggest that he was actually doing something right and I don't understand how this guy could do anything that is not retarded.

Winter

If I remember well, the majority of the Nokia had financial stakes in MSft. At least some had bigger financial stakes in MSft than in Nokia. They would all have gained if MSft would increase, even if Nokia bankrupted.

I believe there is no example of an ex-MS CEO that did not work to the benefit of MS against his new employer. So, if the board hired an ex-MS officer, it was to sell out to MS.

I also believe there was no actual official take-over of Nokia planned.

For $1B a year, MS got to dispense all of Nokia's assets to the benefit of MS. MS got free, unrestricted access to ALL of Nokia's patents. And they were allowed to wield ALL of Nokia's patents against MS competitors.

As the board of Nokia was more heavily invested in MS than in Nokia, they were able to wield tens of billions in Nokia assets to boost the value of their MS shares.

I do not see any reason for them to fire Elop while there is still money left in Nokia. That money can still be used to crank up MSft share value.

Winter

If I remember well, the majority of the Nokia *board* had financial stakes in MSft.

Tester

I think the majority of shareholders have no clue what the company does anyway. I even doubt that the majority of the board has. Just tell these people some fairy tales about great business prospects, give them some numbers that look credible on the surface (even better if you believe in them yourself) and you are done. The fact that almost all analysts in 2011 misjudged the market themselves is a clear indicator of how things were seen back then. It wasn't hard to convince non-tech people with a good projection.

But I consider this 'destroy Nokia for the benefit of Microsoft' pure and utter nonsense. It's nothing more than a stupid conspiracy theory and the nice thing about conspiracy theories is that there's no proof required to keep them alive.

On the other hand I can't remember a single real conspiracy that wasn't made public eventually. Someone who knows will always talk. And here enough people got seriously pissed off that they may have talked. But we got - absolutely nothing so far.

This conspiracy suffers from one critical error in thinking: Microsoft didn't gain from Nokia's demise. It quite badly tarnished their brand and may have destroyed any chance for Microsoft in the Mobile business. Remember: If you want to succeed you need some *success*! There is not a single shred of success to be found here, only comprehensive failure on each and every level. And that failure will stick with Microsoft for a long time.

So yes, Microsoft may have gotten access to some patents. But what are these patents really worth? Nokia never was a software company so it's nearly everything hardware related and therefore relatively worthless to sue a competitor (which competitor, btw? The big ones all do WP as a secondary system!) out of business, especially since lots of these patents have already been licensed to competitors. Nokia never was like Apple who hoarded the patents for solely their own use.

Winter

@Tester
The point is not that there was a plan to destroy Nokia. There was a plan the *use* Nokia to boost MSft. The risk was on Nokia's side, not MS' side. And it was Nokia's assets that were spend.

If all had gone according to plan, Nokia might have benefited on the short term. Just like Dell has benefited for some time from MS. But in the end, it is MS where the money goes.

And it was not "some patents", it was all of them, and the map division.

Jack

Agree with the analysis but I think now that ballmer is gone its a question of who blinks first. MS needs Nokia, not the other way around though. So I think elop will be shown the door and the new CEO will work to rid the company of the MS agreement, then take sailfish as the main OS while maintaining wp8 in the transition. Don't see android but maybe. Mainly I see the company going back to the business strategy they know best, and that's the Finnish model that made Nokia Nokia.

chithanh

@Tomi:
I think it is the reverse, Bill Gates let Steve Ballmer go precisely because that was the only way to save Windows Phone, Bing, Surface, and the other money sinks.

Computerworld claims that Steve Ballmer was forced out by the board of directors following the $900M Surface RT inventory writeoff. If true, Bill Gates possibly saw it become increasingly difficult to assist both Steve Ballmer and Ballmer's loss making pet projects against the BoD. So he had to decide between defending Ballmer, or defending Windows Phone etc.

http://www.computerworld.com/s/article/9241867/Ballmer_forced_out_after_900M_Surface_RT_debacle

Tester

@Jack: If they go that route I predict complete and utter failure. That'd be the second time in 3 years where they replace their main platform with an unproven one that has no market traction. It failed once for Nokia, it's failing for Blackberry right now, so what makes you think it'd miraculously work for Nokia the second time around?

We are not in 2010 anymore when the market was still wide open. Sorry to destroy your hopes but right now it's either using Android or dumping phones at the lowest possible price. The geeks who might buy Sailfish have long been taken by other options in the market (read: iPhone and high end Android.)

@Winter: I still think you overestimate the value of the patents as a pressure tool.

Tester

@‼chithanh:

If that's true be prepared anyway for some of them to die. Since these projects are all money sinks as you so aptly put it, it's clear that they will be carefully evaluated - and if that evaluation results in a negative outlook, will be axed. I wouldn't expect all of them to die but some will for sure. My first bet would be RT because that's a system without any real value, once Intel manages to create better mobile chips.

togga

@leebase No. WP is not the third ecosystem. You have to look at installed Base for that. Nokia could easily be on the Android "disruption" in a good way.Look how dominating they have been in every ecosystem they've entered into. Their only problem is that they ditched all profitable ecosystems and jumped on a very weak one. I have to agree with Tomi that Elop is a fool.

Mikko

I have a hard time imagining that MS would just drop Windows Phone. Smartphones are not going to disappear and MS will want a presence in that space. MS has always had lackluster performance on phones, even at their peak, but they've always stuck to it. That said, I've been reading about all the internal problems at MS (buraucracy, a highly toxic version of stack ranking etc.) in the aftermath of Ballmer getting the boot. Reading all that stuff makes you wonder if they can be competitive any time soon. They're going to revamp their culture, and do it fast.

zlutor

@tk: "Nokia has a future; and a very bright one; it just needs to turn it on - it's called Harmattan v2.0 on quadcore snapdragons."

Telling the truth I would preorder that phone - what I never did before for anything!
I would preorder it even if it would run exactly the same sw currently running on my N9.
Just to give a little bit more CPU power - but dual core would be enough for that...

If they could improve camera capabilities a little bit further that would be my device for the next coming years. But unfortunately it is nothing more but sweet dreams... :-(

So, Harmattan UI + Quad Core Snapdragon 800 + camera from 1020 +( full HD Amoled screen) = instant buy from me...

Paul Ionescu

Microsoft should abandon its current strategy of using Nokia for its Windows Phone strategy. Microsoft really does not need Nokia anymore and Nokia should get away as far as possible from Microsoft and Windows Phone. The current Microsoft's strategy regarding Windows Phone is clearly a mistake (according to Gates). Having 3%-4% of market for Windows Phone (as it is today and with no chance to have it increased more in the near future) is not a profitable strategy on long term for Microsoft.

Microsoft should start from scratch with its "Windows Phone" strategy. If Microsoft has the balls it should do exactly the same like Apple with its Windows Phone (that is build its own phone from scratch) and not involve any other mobile phone manufacturer (like Nokia, Samsung, Huawei, HTC, Sony, LG, etc.) because it didn't work out in the past! If Microsoft does not have the balls to do this then they should stay out of mobile area, forget about it and focus on what they are good at making money (that is Windows for PC, Office, etc.)!

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