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« Humanity are the data wells that make the black gold of the 21st Century | Main | Elop 25 Million Dollar Golden Handshake for Destroying the Company - How Could This Happen at Nokia (analysis and speculation) - Tomi plays detective again »

September 23, 2013

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Listed below are links to weblogs that reference Now We Know Why - Nokia's Elop had a $25M personal bonus clause from the Nokia Board if he was able to sell the handset unit to Microsoft:

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concision

Tomi, must you include each and every concept and data point from every article you've ever written, just to simply update the "Elop effect/Trojan horse" narrative?
My god, we've read and reread (ad nauseam )most what's in this "Now we know why" update to the point that the only new information seems to all be within the title.
"Now We Know Why - Nokia's Elop had a $25M personal bonus clause from the Nokia Board if he was able to sell the handset unit to Microsoft".
Is their anything else new and current to be found within this, your latest prime example of keyboard incontinence?

Take a writing course that addresses CONCISION! Please....

Tomi T Ahonen

About repetition and being concise

Hi consision - you make two very good points. There is very much repetition here. That is for a reason. The regular about 3,000 daily visitors we get, know the story, for those of you this is clearly very repetitive. But often on the Nokia stories recently (like Apple, Motorola etc stories in the past) we get a lot of first-time readers.

Those first-time readers will not know the details. It is a VERY widely held myth, still perpetuated by the press now, that Apple had defeated Nokia when Elop took over. The facts obviously tell the opposite. It was Elop's surrender, that gave some of Nokia's market now to Apple but most of Nokia's loss has obviously been Samsung's gain. Anyway, I HAVE To repeat those stories - about Nokia in 2010, about the ecosystem, about Qt, about MeeGo etc - else someone, who means well, but doesn't fully know, will misunderstand the article. If a reader, for example, thinks that Nokia had lost the battle to Apple in 2010, then that reader can see an alternate motivation for Elop - he came to rescue the ship that was sinking. This is also perfectly in synch with the Burning Platforms memo - again, if you didn't know the facts, its a very easy-to-swallow lie that gives the Elop analysis a distorted view.

That is why I HAVE To repeat myself on the major points, on these big articles on the 'judgement' haha... Obviously I haven't done that on the detail blogs about some individual misgivings.

that was about repetition, I'll also comment on the length next

Tomi T Ahonen :-)

N9

What would be cool is a FAQ-like document with information about Nokia's downfall. And answers which are supported by references to the original source of information.

Tomi T Ahonen

Then on the length.

Sorry about that. But consision, you clearly are not a regular reader here. I am a full-time employed consultant, analyst and statistician. Even though we get 1 million readers per year, this is not a professional news site. This is a 'hobby' blog. Yes, my hobby is to come here and share with my friends and readers and fans.

There is no advertising here. You are not asked to register. I don't spam people who visit or leave comments. This blog is 8 years old, it is not for sale, will never be. There is no financial gain to me.

This is an 'honest' blog, my thoughts. My web log, my online diary. My thoughts about the industry, and recently a lot of it has been around the world's largest corporate collapse story - happens to be my former employer - Nokia. I write here only because I have a passion for sharing, and I do it my free time. Like this article, took me four hours to write today. It runs over 8,000 words. I don't have a professional editor - this is not a news site - so the only person who could edit it, is me. If I spent another DAY, I could maybe edit it down to 6,000 words that are far better written.

Where can I get that day compensated?

My readers are loyal, have been here for years. They appreciate it, that while my writing is rough and long-winding, I make good points here, and I am quite often right - and I am the first to tell them when I am wrong - which also often happens. They appreciate that they get Tomi's thinking here unfiltered. They also have seen that often, days, weeks or even months later, they will find mainstream tech press writing those same points they first read here.

So I hope you can appreciate it, that this is a work of passion here, I do the best I can. If you don't like it here, feel free never to come back.

Tomi T Ahonen :-)

Micromeme

Tomi,
It seems possible, even likely, that the 25m went in to elops contract after the board decided to sell this year, rather than in the beginning. Ceo contracts are always being juiced up for the latest board intentions. I happen to agree that elop made scandalously bad decisions, but the current reporting ( that I've seen) doesn't actually say it was an original term and its really disgustingly common to give a prize to ceos to retain management across acquisitions.

Peter

Tomi - Microsoft just announced 1 yar free international calling with Skype if buy a Surface. Is this finally going to kill Windows Phone?

MikaA

Hello Tomi,

I agree that board's should be investigated along with Elop. It cannot be so that the decision of selling has been kept secret from the shareholders, nor have they been told about plans of selling the handset unit in the year 2010. Additionally, Elop's 25 million bonus for selling the company is again something that the shareholders have (according to my understanding) not been informed of. How is it so that the owners of the company do not know what the company's governing body is doing???

Currently, the common topic here is that whether board has decided that Nokia will be "sold" to Microsoft already in 2010. Nevertheless, Finnish shareholders did not sound very happy.

I wish I could be in the shareholders' meeting...

fubar

Tomi

Why would Elop have let an Android Lumia be developed as reported here, do you think? http://www.zdnet.com/nokias-secret-weapon-in-microsoft-sale-negotiations-a-working-android-lumia-7000020704/

RottenApple

@fubar:

That was probably just to put pressure on Microsoft in the negotiations but never a serious product development.

Imagine the horror: Nokia making an Android phone! That would have been Microsoft's ultimate nightmare so it became either buy or die at that point, seriously improving Nokia's position in the negotiations.

steve bald

@fubar

Because Bill Gates want to cancel buying nokia.

Android is nokia plan b to make bill gates buy nokia.

on a side note, BB CEO got a larger $$ for selling the company, and that's why he's shooting down BB10.

crizh

Holy Cow!

Working my way through the Proxy pdf.

Has anyone noticed the bit about the convertible bonds?

The board have already sold 8.9% of Nokia to Microsoft for 1.5 Billion Euros.

Every shareholder effectively holds only 91.1% of the stock they thought they held after that dilution.

Which means a competing bid would need over 56% of the stock to have a controlling interest and M$ would make out like bandits if a competing bid drove the stock price up.

Even if they lost they could make a profit by converting the bonds and selling them to the 'victor' at the inflated market price.

Olav

"What I did not see - could not see, could not imagine was actually contractually offered to Elop, was that Elop was indeed doing this deliberately, for his personal purpose"

What he did was just like what the other softers are doing. The ones that have gotten into the Finnish (and other countries) university system are pulling an Elop there, too. It's lower key and hidden behind a lot of bureaucracy but it is there and rotting into the fabric of the institution.

The threat of a general Linux, in the form of Meego, made Gates' crowd go after and shutdown Nokia's phone unit. The threat of Linux in general has made them go after the teaching and research that is supposed to be producing the quality engineers that made the pre-Elop Nokia possible.

Recovery might come through Jolla. It is unlikely to come through Newkia. The latter is too soft on or blind to what Gates' crowd pulled on Nokia. But new engineers are essential to recovery and part of any long term plans. Preventing engineers effectively prevents long term viability.

RottenApple

@Baron 95:

Your argument falls apart for one single reason: You can't judge past decisions from today's world of things.

Had Nokia taken MeeGo seriously before the market exploded I seriously doubt Apple would be anywhere close to where they are now.
Pre-Elop Nokia had the chance, they threw it all away. Without any strong competitor at the time, had Nokia produced a desirable product, they would still be king of the hill. Apple in 2007/2008 was just an upstart in the mobile phone business that managed to fill a niche all the established players missed - especially Nokia's old management - and Apple is still living off this single stroke of genius.

By the time Nokia finally woke up, I agree, it was probably too late - and they still didn't come off their high horse and refused to go with the majority. They still wanted to stay apart - and that's the only thing that finished them off.

Not the lack of American made software, not the lack of Asian manufacturing or any other American-centric economic bullshit you like to pull out of your hat.

NS

Hi Tomi, Readers,

I am a Senior Mobile Industry guy from India and apart from being longtime follower of your blog-- have had the pleasure of seeing you speak- and really appreciate the current blog-post.

2 questions (to Tomi and knowledgeable readers):
(1) Is Elop's current action legal-- of leaving Nokia at last moment to become EVP Devices of Microoft-- and "Microsoft's Internal candidate for CEO Position" (Ballmer's words) even while Nokia is in process of selling ?

(2) Assuming Nokia board OR shareholders reject deal OR there are other speedbreakers in Nokia sale deal--- can Elop come back to Nokia CEO position ?

Logically, both his actions in case (1) and the position (2) sound highly immature-- like a child wanting to enjoy cake amd food of 2 parties at the same time--- but I am curious-- what's your opinion of this ?

I personally am just shocked that any company OR any board of directors will tolerate such actions from their CEO-- infact let alone CEO, if even a watchman OR janitor did such stuff he would be fired.

Do share your opinions.

Regards,

NS

Sander van der Wal

So Nokia gets sold for 7.2 billion dollars, and Blackberry for 4.2 billion. Blackberry was executing the strategy that Tomi was recommending for Nokia, keep developing one's own platform. And that strategy has failed miserably, Blackberry had to write down 1 billion in unsold devices, they fired 40% of their staff.

Now look at the other smartphone makers from before iOS. LG, HTC, SonyEricsson, Motorola. Everybody is in trouble. It doesn't not matter what they did, Windows Phone, Android, their own OS, or all of them at the same time

But it is absolutely obvious that Nokia's problems are caused the new CEO. And everybody else's problems are clearly the result of actions by previous management. Because Nokia is Nokia, and they can do nothing wrong, being Finnish, European and whatnot.

Tomi T Ahonen

SVE

I had to delete your comment because of my long-standing rule here, if my reply to you would require me to write 'If you had read the blog'. If you feel your argment has merit, you will see here in the article where your claims were opposite of what I wrote. If you refer to what I wrote - and provide SOME evidence why my point is wrong and yours is valid, then your comment can stand. Don't come here posting stuff you believe in, which is contrary to evidence provided by the facts - from Nokia own documents

Tomi Ahonen :-)

Earendlil Star

Anyone comparing Nokia to BB clearly has no clue of the mobile space.

BB was an enterprise focused company, distracted by consumer sales, with few strenghts: its messaging system and the qwerty keyboard. Which are now both obsolete, not only in the enterprise, but even the more so in the consumer space (Whatsapp anyone?). Its original strength, the qwerty keyboard, has been surperseded by capacitive touchscreen technology. Furthermore, it took BB ages to release its new QMS based OS. Too little, too late. But at least the company tried to fight.

On the contrary, Nokia was a Super-Samsung, offering phones of all types to both enterprise and consumer. They covered the whole spectrum of company services, and were very well placed to serve consumers as well. Much better carrier relations than BB on a worldwide basis. And had a ready and working substitute for its aging Symbian platform: Maemo / Meego. They had execution problems and possibly were a bit complacent, but how can we blame them? Pre THTRH Flop they were huge comapred to the competition. Yet, they capitulated as soon as THTRH Flop (the guy with no previous experience in mobile) was unexplicably named Nokia CEO.

And if Nokia had embraced Android (as well), yes, it could have fared as LG, or Sony or HTC (all still profitable). But, maybe, it could have fared as Samsung. Denying this fact (forgetting that Nokia had outperformed Samsung for a decade) is just biased.

How did the two stories end? Well, both with a fire sale. Actually, BB is being sold at slightly less than Nokia, so the debacle at Nokia is far greater.
Yet, the press did not say anything about the Nokia fire sale. Only about the BB one. Power of MS propaganda money.
And did the MS WP strategy help? Not at all. Nokia even had to be sold *before* BB. So, if they had to be sold anyway, why bother adopting the MS WP failure?
Why sign an exclusive contrat with MS, making it impossible to have buyers compete for the sale, thus reducing Nokia's sale price?

And now the conspiracy theory. As I repeated time and time again, there is NO conspiracy theory. Everything is plain, clear and simple.

As Tomi said, it was not MS plan to destroy Nokia, at least in the sense it did not want to have its market share plummet to 3%.
MS hoped to exploit Nokia by forcing it to become a 100% MS WP captive OEM (= foregoing any future serious profit to MS), while transitioning existing clients and reducing migrations to other platforms at a minimum.
Yet the strategy backfired, and in the end killed Nokia. Why? Because WP is a (P)OS. And because MS thought that killing Nokia's cash cow, Symbian, and its natural successor, Meego, would not have harmed the company, even after THTRH Flop had badmouthed the company's current products at the time, without having any credible substitute ready (the first one was WP8, which was years away).

So, I agree that MS did not want to kill Nokia literally (although I believe it wanted to kill Nokia as an independent company, which I would argue is the same as killing it).
Yet, I do not agree that THTRH Flop acted indipendently. If that were true, he would not be back at MS, with MS footing 70% of the bill for accomplishing the fire sale of Nokia. No. THTRH Flop did exactly what he was told to do.

And do not heed the blabbering on "Nokia had some handsets ready with Android". It is utter BS. Just MS propaganda. They are trying to picture THTRH Flop as trying to maximize Nokia sale price. BS. The price was ludicrous. Especially considering what THTRH Flop had granted MS during his tenure. All the things he offered MS for free.

This is the truth. This makes sense. The rest is unbelievable propaganda.

Minna

Hi Tomi,

Have you read Ilkka Remes' latest novel Ylösnousemus? It introduced me to the story of Rauma-Repola Oceanics and the deepest diving submarines in the world even today. I was still in elementary school when the Oceanics Division went bankrupt so I didn't really know much about it before I read that book. I didn't even know the Mirs were built in Finland.

Anyway, Ilkka Remes got his inspiration to the book when decades after the fact one of the old Rauma-Repola bosses revealed in an interview that the Oceanics bankruptcy was declared not because of business or technical failure. They were blackmailed by the CIA to never build any submarines to anyone, or else the US would use its political and economic power to destroy the whole Rauma-Repola. Do you think there is a possibility that something similar has been done towards the Nokia Board to get them to go along with this madness? After all, the fall of Oceanics meant that apart from the 2 Mirs delivered to the Soviet Union no more subs would be produced in the world which could dive deeper than the Americans. Now the only ecosystem not in American hands (and therefore probably shielded from NSA) is being killed and everybody has to move to American OS. Jolla is so small, they don't count yet but Nokia running Symbian and Meego, well, that's big enough to trigger the American "if you don't play with your toys like I want you to, I'll break your toys" mentality.

What do you think?

specificimpulses

@Baron95 - How exactly was Meego slow? As a programmer I was heartbroken when I read the burning platform memo and realized what it meant for Meego and Qt. A fast JavaScript engine backed up by native C/C++ VS a questionably legal Java virtual machine with native code given second class citizen status.

Android succeeded IN SPITE OF being slow, not because it was fast and fluid (it wasn't).

John Fro

There have been several Microsoft executives that have left MS to run other companies and in many cases they were run into the ground followed by a MS buyout (or not). This sale is largely in that pattern.

The failure of Nokia might be easy enough to explain, and should be studied in MBA classes. However, there needs to be a counter-theory explaining the success of Samsung, particularly compared to other Asian companies like HTC. What is Samsung doing right and others doing wrong? Samsung was hardly a world-beater before Android. They were always a low-rent Sony, which cheaper and less reliable products and poor customer service. So, what is going on here?

Patrick

@Sander van der Wal
"Blackberry was executing the strategy that Tomi was recommending for Nokia, keep developing one's own platform. And that strategy has failed miserably, Blackberry had to write down 1 billion in unsold devices, they fired 40% of their staff."

Not sure if I'm allowed to comment on BB here, apologizes if wrong but:
Can't compare BB with Nokia (other than that they share an incompetent executive team) but two factors regarding BB that I find interesting:
1. The Z10 was upon release immediately priced out of market.
2. The BES10 strategy was terrible as it (amongst other) didn't support previous BB models.

Too bad for BB. "Like a Meego & Android had a baby" was a standard comment I heard from developers.

Tomi T Ahonen

Hey, Baron95..

Come on! You know the rules. If you try to argue that Nokia failed in this, or Nokia's ecosystem that, whatever - and I have FACTS in this blog proving otherwise, you cannot post that comment without first ACKNOWLEDGING that I wrote what I did, and then providing FACTS, not your own silly irrelevant opinion, of why my posted facts should not count.

Feel free to post the nonsense, it takes me one click to eliminate your comment. If you spout that rubbish, it is all gone. Read the blog, check the facts, come back with valid points and give us some EVIDENCE if you want to argue against my point. I am growing sick and tired of your counter-factual rants here

Tomi Ahonen :-)

Jack

Despite the fact that there's a solid case of criminal action by the ceo and the board, absolutely nothing will happen. Just like nothing has happened for the past 2.5 years. Rules are for the little guys sad to say. Where's the finish or European govts or stockmarket regulators? Asleep, complicite or unwilling.

Tomi T Ahonen

Patrick and Sander, lets not talk Blackberry on this thread, ok. I'll let your comments stay, but if you'd like to talk BB, lets take that to a previous blog about the smartphone industry or BB itself, ok? This blog was clearly about Nokia.

Tomi :-)

dansus

Enough about Elop, can you talk about the Board that allowed this mess?

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