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« Last Lifeline from Microsoft to Soon-to-End Lumia Handset Unit - 7,800 more jobs lost and $7.6B written off the books | Main | Matchmaker Matchmaker Make Me a Match - What if Microsoft sold Nokia back to Nokia »

July 10, 2015



Tomi mercyfull killing would be fast and painless ;)


I`ve enjoyed and learned a lot reading your blog since the Nokia burning platform disaster in 2010. However I really miss some insight (or even speculation) on what happened behind the scenes during all this time. Elop can hardly be more than a convenient scapegoat. I mean what could possibly be the strategy of the board that hired him, put in his strange bonus, and why they didn`t stop him when it became obvious he was trashing the company.

I suspect they might be your friends, customers or even perhaps idols, so perhaps this is not the best blog to get such insights.

Tomi T Ahonen

Hi tk and Imbro

tk - haha yeah, true. This is actually 'cruel and unusual punishment' by dragging it out..

Imbro - great comment, thanks and yeah. No, no longer anyone I'd know at the top so its not that. I know some things from my many moles at various companies that I can't really talk about or I can only hint at, and obviously those are given in confidence so I can never publish them as sources etc. But I heard regularly from many at Nokia back in the Elop days about how he hated reading my blog but every Tomi blog was read by top management - and they did all that lunacy regardless (the sensible voices had jumped off that sinking ship the moment they understood the reality of Mr Call Me The General).

I did a few speculative pieces when it was relevant, about how that decision process may have gone that selected Elop (over Vanjoki) and about how could he get that nutty bonus clause, etc... Elop was obviously a con man. And a Finnish Board and Chairman would be exceptionally vulnerable to a really polished good bullshitter - like Elop. He also tricked many in senior and mid management with his 'honest' style until they saw that he used everything to weed out all the voices of reason and killed all sensible paths. The really sharp cookies left during 2010. The rest of the smart ones left when then read the Burning Platforms memo. They knew reading that memo, that the author would destroy the company and if Nokia was going to go down, get out as soon as possible to get as good a job anywhere else as possible, before the big layoffs would be coming when the job market would be flooded with highly competent and high-paying execs seeking a new job...

(Wait, I'll post this and respond a bit more directly on your specific questions)

Tomi Ahonen :-)

Tomi T Ahonen


Ok, strategy and the Board. It is rather well documented that the hiring process of Elop did not include any discussion of abandoning Symbian (that was already decided before he came in) nor of the future of MeeGo & Meltemi. What Elop was no doubt told to do, is to examine everything and try to fix anything. If you remember when his hiring process was happening secretly, in summer 2010, the latest Nokia quarterly results were very bad - in the world economic crisis - and the Nokia share price was falling fast. So whether it was Elop's idea before he came in to try to switch to Windows or he thought of it when he saw MeeGo, one doesn't know. But Elop had to get Ballmer's permission to interview at Nokia for the job and his blessing to take the job - at some point Ballmer must have mentioned the Windows opportunity. Especially as Microsoft past buddy and recently more rival Intel was in that MeeGo partnership with Nokia. I would guess that Ballmer would have been totally happy with just getting Nokia to add Windows to its E-Series enterprise smartphones where a lot of cooperation already existed from back when Elop was still at Microsoft as their Nokia partnerhip manager.

What no doubt triggered the real motivation for Elop to go full out to end MeeGo and go full Windows-only, was his bonus clause. That bonus clause was the invitation to only gamble huge. No sensible middle-of-the-road rational and 'incrementional' behavior would be rewarded. If Elop's Windows strategy worked out well, Nokia would have big business and he'd get a nice 'normal' bonus and his share options would be worth something. Or if that gamble failed and failed badly enough, he could sell the handset biz to Microsoft - and earn even bigger bonus. So the bonus clause is obviously the cause for this madness. At no stage after the ball was set in motion, could Elop make sensible rational middle-of-the-road decisions. He had to go all-out nutty at every stage.

I did write a blog about how could that CEO compensation negotiation have gone, pure speculation, on how that could have happened. Let me go find that link, hold on...

Found it. Here it is

Its a long and purely speculative blog but even re-reading parts of it now that is pretty sound thinking of how the negotiations could have gone, where absolutely innocently without any trojan horse intentions, that three-part bonus clause got added to the contract where nobody seriously expected it ever to be needed. And then how it eroded the sense out of Elop as his high-gamble strategy started to fail.

On why not stop him.. That is really the Board's fault and there may even have been collusion in stock manipulation by that stage etc, but to assume no malice of intention and just poor oversight, Elop was a silver-tongued liar, he didn't keep the Board or the Chairman well informed of what he did (his relationship with Ollila was quite strained). So part may just be human relation matters. But part is probably a gentleman's agreement type of Finnish sense of fair play. That when the wild Windows strategy was pitched at the Board, and then approved, Elop no doubt warned them that Finns will be hostile to it, the Symbian and MeeGo people will be angry and there will be lots of attempts to sabotage the whole project. That Elop needed the Board to trust him and stand by him come hell or high water.

So they probably said, ok we'll give you two years. From February 11 2011 to February 2013 when the first negotiations started with Microsoft, thats two years. And the Board should have fired Elop latest in the summer of 2012 when it was very clear the Lumia plan was doomed and Nokia should have rushed Android phones out for early 2013 sales - which would have saved the company, but I am guessing they gave a handshake deal, you have 2 years of total non-interference from the Board, as this will be troubled times, and then Elop destroyed everything in the interim knowing he can't be fired. By February 2013 when negotiations started with Microsoft, Elop knew he would collect his 25 million dollar bonus, all the parts were fulfilled except the signing of the contract. And Ballmer being the asshole he is, of course negotiated hard-ball style and that took another half a year.

I was not the only one here calling for both Elop to be fired and the Board to be fired, and both be investigated. There were many such voices from the summer of 2012 when it was really clear that the strategy had failed and yet Elop refused to do any of the logical things to rescue the Nokia handset business.

So yeah, thanks, I wish at some point someone who was there, writes an actual tell-all book about the inside story about Elop's bizarre management and how he duped the Board (or were they perhaps in collusion with him)

Tomi Ahonen :-)

abdul muis

I think the income of Coffee shop around Redmond & Helsinki will go up by 30% for 2 weeks.


I have read about a contrarian explanation about the sale of Nokia mobile phones to Microsoft.

Namely, Nokia actually outwitted Microsoft by offloading, at what now appears to be an astronomically inflated price, a business segment that the Nokia board had decided was

a) either steadily fading and condemned to disappear in a matter of years (feature phones);

b) or doomed because of complete failure on the market (WP smartphones) for the reasons described in detail by Tomi (design shortcomings, immature OS, Skype, etc).

In that sense, Nokia astutely got the better part of the deal as soon as the Lumia fiasco was evident.

The basic idea behind this theory is that historically Nokia never hesitated to get rid of business divisions and divest whatever corporate parts whenever it had decided they no longer fitted: tyres, cables, televisions, set-top-boxes, professional networks (TETRA), pagers, accessories...

This means that the Nokia board might have been first fooled by Elop and Microsoft, but then followed a shrewd corporate logic -- a far departure from the "fair" approach traditionally ascribed to Finnish people against the "ruthless", hard-nosed North-American businessmen...


@E. Casais, Occam's Razor is more consistent with your interpretation. After all, if the Board had confidence in the Meego strategy, they would have hired a new CEO from within. If they were leaning toward Android or genuinely were weighing Android vs. Windows Phone, they'd have brought in an outsider without a natural bias (Elop was obviously biased in favor of Windows Phone).

It seems to me in retrospect that they figured that they would give themselves a chance to reignite their business model by partnering with Microsoft, using a sale to Microsoft as a backup plan.



"they would give themselves a chance to reignite their business model by partnering with Microsoft, using a sale to Microsoft as a backup plan."

This is also consistent with a variety of background information showing that right in 2010, the Nokia board knew that serious trouble was brewing: market share was good, sales were up, but ASP was down (one of the reasons OPK was fired); the new Symbian generation was late because of the difficulty to migrate to a full capacitive touchscreen UI (Nokia released quite good Symbian products in 2010, such as the N8, but significantly later than expected); Nokia's image in smartphones had been seriously dented by the N97 fiasco; and Meego was not yet ready for production (as what seems to have been the conclusions of thorough strategy meetings between Elop and top-level Nokia people at that time regarding the Meego roadmap).

But all this is inconclusive.

In fact, there is one other major point that had bugged me as soon as I learned about it, and it is the one that gives credence to that theory: the fact that the incentive package of Elop included a juicy bonus (€ 20M or so) in case he managed to sell off NMP. It is inconceivable that the Nokia board would have accepted such a stipulation had it not viewed the divestment of NMP very favourably.

So in fact selling NMP (not necessarily to Microsoft) might even have been plan A all along: make a transition to a new OS, brush up the product lineup, become the privileged WP device vendor, and then sell NMP to an aspiring North-American or Asian mobile phone manufacturer -- before Nokia endures the fate of Windows PC vendors, i.e. becoming a razor-thin-margin OEM box pusher. Elop was so incompetent that he completely ruined the business and the value of the firm, but Nokia still managed to sell the remains of NMP on what now appears to have been very favourable conditions. Notice all this took place while Jorma Ollila was on the board -- the person who had systematically shed lots of divisions and businesses from the old Nokia in the 1990s and 2000s.

One of the assumption so far in the Nokia saga was that the Finns were naive participants, fooled by hard-nosed North-Americans deal-makers. We might have to review that part substantially.


"And only because of Elop personal interference on the design (team) and possibly influenced by Ballmer, they made crappy iPhone clones."

Tomi, I remember that an important reason for the "last year's specs" of the initial Lumia models was the bad design of WP software that literally did not support better specs than last year's iPhone. Bad software design being the halmark of MS.

So maybe the blame for the low Lumia specs must be laid at the misserable design team of WP.


Great article as usual, thanks Tomi :-)

One particular aspect not named in the article is why Windows Phone was renamed to Windows Mobile and what "Mobile" means in that context:
"Windows Mobile - A version of Windows for industry devices that need mobility"

The scope was extended from smartphones to mobile devices including IoT like environmental monitoring devices which happen to be connected and mobile but not in smart massmarket pockets. Point is the rebranding underlines the shift away from Windows Phones to a wider range where massmarket Phones are just one sub-category of Windows "Mobile".

So, in a sense the sentence

> the next version of Windows after Windows 10 will not bother with a smartphone form factor and screen size

is to a certain extend true already. The extend isn't the form factor or screen size but optimizations, focus and investments that need to happen especially for smartphones. Smartphones are just one of many categories of IoT-devices. Windows Mobile runs on and will continue to run on but thats it. No huge marketing, app and service story, sells-department to focus on smartphones. Not for the mass-market.

Thats very much inline how I interpret the "Enterprise" part: for very special use-cases like when a certain customer needs smartphones with only one inhouse-app for its stuff, not more, locked down, maybe connected with some sync-service to read email-alerts. Such enterprise-customers are able to buy software+hardware+support direct from Microsoft. Its not about the enterprise-massmarket, not Blackberry-like from some years ago. Its just like Windows 10 Compact Embedded, not for the mass-market.



> I remember that an important reason for the "last year's specs" of the initial
> Lumia models was the bad design of WP software that literally did not support
> better specs than last year's iPhone

Correct. A few things to remember here:
1. WP7 was CE-based, new UI on top and .NET ported over. Rushed to market to keep replevant, since CE6 was showing age like nothing else, and buy time.
2. Behind the scenes work on NT-based WP8 to replace CE-based WP7 was ongoing all time.
3. Any (limited) resources used to improve upon the shortcomings of dead-end CE was delaying WP8 future.
4. There where many shortcomings far beyond the famous 112 ones every customer noticed first hours.
5. Nokia had at no time access to the code to invest own resources. So, any demand - like work to run WP7 on more low-end devices - had to be negotiated (Ballmer & Elop during his seattle-trips) and balanced (limited Microsoft resources and other interests like getting Windows8 and WP8 out of the door). The balancing got as bad as Microsoft leaving WP7 Lumia in dust when WP8 neared while Ballmer noticed the limited WP7 Lumia success resulting in public complains from Nokia/Elop about Microsoft/Ballmer's committment. And of course the WP7=>WP8 upgrade-disaster which of course was not up to Elop to decide on.

Thing is: As we know now, NokiaX, Android AOSP was forked by Nokia and worked on. During all the time Nokia had resources to work on Android and they had the code and freedo to do so but they had neither with WP. All Nokia every could do, at WP, was apps on top like any other end-users too. At no point in time where they able to just make things happen below that. And they payed the price.


@Wayne Brady

> I no more believe Msft can build a mobile ecosystem for WP/W10 than I believe Samsung will with Tizen

To be honest: Msft had and has way more skills, resources, committments and a better strategy building up a mobile ecosystem then Samsung ever had with Tizen. And that while Msft burned there ecosystem each year down!

So, no, Tizen will never succeed in building up an ecosystem. *BUT* Samsung also never went on a war of ecosystems like Msft/Ballmer/Elop did and lost! Samsung just didn't notice, care and/or even understand that they have to up until recently.

Now, both lost. And both apply *NOW* the Meego/SailfishOS strategy to bring in external ecosystems. HTML5, of course a common fail by buzz, and Android. Yes, Tizen has an Android runtime now in its appstore just like SailfishOS and eben BB10 has and afaik WP10/WM10 gets a similar xternal-ecosystem-strategy.

Earendil Star

From BBC News: "Who knows what would have happened if Nokia had tried to carry on as an independent business - but it could hardly have turned out worse."

Just as I said all along, to dispell the cries of the softie propaganda agitating this blog's commenters.

Now: vindicated. WP burning platform was a scam.

The only obscure part still: what happened to the board to take this kind of decision? I.e. the decision to hire Elop, i.e. to adopt a known unfinished platform such as WP7?


@Earendil Star

Elop was named Nokia CEO in September 2010.
WP7 was released in october 2010 when first devices running WP where sold.
Add a quarter, february 2011, and everybody know how it performed.Like for example that in Q4 2010 the old Windows Mobile CE6 outsold WP7.
In january 2011 an LG exec named WP7 sells disappointing,, even the old Windows Mobile CE6 outsold WP7 in Q4 2010, etc.
One month later, in february 2011, Elop wrote his famous burning platform memo setting the stage to osborn Nokia's sales and start the irreversible collapse. In the same month Nokia announced going all-in on WP.
Of course before the before the burning memo and the official announcement following it the deal was sealed, contracts signed, etc.
It was literally days to late *if* ....

.... *if* waiting for the official numbers confirming black on white what was known long before. See for example this fro november 2010:
Of course before the first release of devices running WP7 in october 2010 in particular handsetmakers had very early access to what got WP7 RTM in october 2010. And of course was Nokia on that, knew it, was well aware of the situation before february 2011.

Not assume bad will when stupidy can explain it too since stupidy is more widespread then bad will. But in this case I not see how stupidy could explain anything. Every single step starting from Elop's burning-Nokia-down memo looks like agenda rather then strategy and somehow he had support from the board during all that.

My guess? Certain investors got majority of the board to apply a certain strategy in best interest for sayed investors (if worked out, did it work out? maybe it did depending on the goals).

Hey, let me spin that a bit future: in times past Snowden there was probably enough dirty survilance data collected about every board member to put them under pressure and "guide them". If the goal was to destroy the non-US market-leader it worked out, goal reached, partly at least. Business is war and there are no ethics where there are secret wars.


Android makers are mostly profitable. I am pretty sure that the dozens of Chinese Android makers don't operate at a loss.

And certainly no Android maker sells their handsets at negative margins (meaning selling at a loss before R&D or marketing are counted). But Lumia did.

About the morass you mention, there was a unifying technology for writing cross platform apps, and it was called Qt.

John Fro

There are several reasons why Win Phone market share dropped in 2009-2010. For one thing, the US economy was highly depressed and worldwide not much better, particularly in Europe. For another, the new phone OS ("new" being debatable) was getting horrible reviews, especially vis-a-vis the iPhone, and lacked features that Win Mobile had previously been able to muster--And lacked any enterprise features at all, such as connections to domains on a network, and syncing with Exchange servers. Different versions of Windows would always limp along successfully enough feature-wise, but this was the first time that an OS issued by MS had serious regressions, with no great alternative options (like sticking to XP in the face of Vista). They felt confident enough that the XBox interface teenage boys were familiar with could be migrated over to both phones and the desktop, even though XBox doesn't need a ton of PC features to be a successful product. Or, at the very least, Ballmer was able to persuade the Board that his tile-XBox strategy would work, even if he and Sinofsky weren't so sure. Sinofsky was canned immediately after the launch of Windows 8, I guess in a move by Ballmer to save his hide, but only when insiders start spilling the beans do we have chance of clarifying this.

It's nice to finally know that this blog's hatred of MS is long-standing and not merely the result of things related to Nokia. I wasn't sure. The great sin done by Bill Gates in my opinion is that he made average users "fear" using computers because they would "break something", often for seemingly no reason. Rather than make PC's a joy to use with a great deal of confidence, MS allowed computers to be so fragile that just about any attempt to use them like a normal human would result in aggravation and disappointment, eventually developing into a type of PC PTSD. Apple doesn't really write great software either, but they do hide their insanity better. MS always spent "just enough" on their products to make them work, but not a penny more than necessary, lest the shareholders freak out.

When you lump Windows Phone 7, 8, etc. together with the other start-up and bit-player phone OSes out there, you can get the sense that there really isn't room for a third ecosystem. As with desktop PC's, a duopoly has formed, with Apple again playing the No. 2 role. However, the No. 1 player oddly doesn't generate monopoly profits for anyone. It's not terribly surprising that MS hasn't made a go of it because no one else has either. The lost market share happened to Nokia, Blackberry and MS, to be honest, though for three different reasons. I would be reluctant to say MS market share dropped on the same product line. The old product line disappeared and was replaced by a new product line--one that was inferior to the old one with fewer features and more bugs. The new product line market share should properly be counted starting at zero per cent. This would at least be consistent with the analysis done on the various Nokia platforms.


And here from Ballmer himself still before first Lumia came to market:

In August 2011, still before first Lumia, Windows Phone market share has fallen 38% since WP7 lunch:
"The question is for how much longer handset makers and carriers will consider it worth supporting Windows Phone 7. Microsoft's mobile market share has been declining at a compound rate of about 5% per month for the past six months. At that pace, its overall share may be be hovering around just 4% by the end of the year."

That estimate of 4% for end of 2011 is very close to the 3% we have now. Looks as Nokia had zero impact on WP but WP had 100% impact on Nokia...

But from above link my favorite is this (first Lumia shipped with Mango):
"Microsoft is hoping to gain some ground when it introduces an updated version of Windows Phone 7, dubbed Mango, later this year."

Some ground from the 4% before Nokia jumps all-in and ends at .... 3%. How unexpected!


@John Fro

> There are several reasons why Win Phone market share dropped in 2009-2010.

Ballmer in 2009 about CE6: "We Screwed Up Windows Mobile" [...] "This will not happen again"

Ballmer in jul 2011 about CE7: Windows Phone 7 has so far failed

Still all before the first Nokia Lumia device hit market...

> Apple doesn't really write great software either

No, but they sell products customers like and do that profitable. 3 things different to how WP did.

> The new product line market share should properly be counted starting at zero per cent.

WP literally started at 0% (well, 4%) when Nokia came into the game with Lumia and it ever stayed at 0% (well, 3%) since then.

Wayne Borean

The Manchurian CEO.


The magic bullet strategy would be for Microsoft to get rid of skype?

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