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Microsoft departs, Nokia tentatively comes back in - what was all that about?

burning platform

via Flickr © Micky.! (CC BY 2.0)

It’s been one of the most bizarre episodes in the mobile industry history (perhaps THE most bizarre) and this week the whole thing turned full circle as Microsoft waked away from god knows how many billions of dollars of investment as its rights to the Nokia brand for smartphones came to an end and, as a final bow of surrender, it took the opportunity to sell off the rump of its Nokia phone business - the feature phone bit - as well.  It just goes to show that capitalism is a really nice idea, just a shame it doesn’t always work in practice.

So, smartphones first

Nokia has taken back control of its smartphone brand (sold to Microsoft) but has elected not to re-enter the vicious smartphone market itself. Instead it has granted another Finnish company headed up by ex-Nokiaistas (all Finnish telecoms companies are headed up by ex-Nokia people), HMD, a licence to make smarties under the brand and it will take a seat on the HMD board. That’s to make sure the Nokia name isn’t further damaged by the sort of stupidity that characterised its life under Stephen Elop (more on him in a para or two). Nokia stands to make money through a technology licensing deal with HMD.

Microsoft says “Goodbye Vietnam”

Meanwhile, battered, bruised and thoroughly pained by the whole mobile phone misadventure, Microsoft has effectively decided to get out of the phone market (hardware)  although it pledges to continue supporting its Windows OS. It has granted the rights it holds to the Nokia name (a licence it held) for feature phones and the associated assets  to HMD and FIH Mobile, a subsidiary of the Hon Hai/Foxconn Technology Group, for $350 million, and as part of the deal FIH Mobile will acquire Microsoft Mobile Vietnam, the manufacturing facility Microsoft built to to produce its feature phones.

Microsoft says it will continue to develop Windows 10 Mobile and to support Lumias 650,  950 and  950 XL, and phones from OEM partners like Acer, Alcatel, HP, Trinity and VAIO.

That effectively puts Microsoft back at  square one as far as the overall mobile market is concerned. It now holds a tiny mobile OS share (as it did before)  and, as it has turned out, adding a hardware business to boost it along not only didn’t help, it probably hindered.

What happened?

Here’s a potted history of the sorry saga as played out in our pages for the last eight years, and a few of the stories we generated in the last three.

It all started with the iPhone of course, as most things in this industry do. It launched, Google made clear its plans for Android and Nokia, by far and away the leading smartphone vendor eight years ago, first froze in the headlights and then, in a panic, open sourced its Symbian OS in the hope of winning a little Apple magic. It didn’t work, although Nokia did hold on to over 50% of the smartphone market for rather a long time.

Be that as it may, it was clear that the challenger OSs (iOS and Android both gaining ground) would soon sink Nokia if something drastic wasn’t done. In the end Nokia hired in a North American executive from Microsoft to see if he could sort it all out.  Enter Stephen Elop.

Elop almost immediately collapsed the Nokia smartphone business by issuing a famous memo to all (which of course leaked) and which talked about Nokia riding on a ‘burning platform’. Predictably everything - confidence, morale, sales, share price - went south and if the platform wasn’t burning before the memo, it was blazing after it.

The Elop ‘solution’ was to do a deal with his old employer, Microsoft, under which Nokia took on Windows as its OS and was given a bundle of cash to market the resulting phones in return. Despite several tries, Microsoft’s Windows software and the Lumia phones produced under it just didn’t make an impact and (eventually) there were rumours that the Nokia board was mulling a switch to Android. If that had happened it would have sounded a death knell for Windows Mobile so - in for a penny, in for a pound - Microsoft was more or less forced to buy the whole thing. Which it did.

Here’s our coverage from that time forward

Three years ago: Microsoft buys Nokia's mobile phone business in an effort to prove two geldings can produce a champion stallion

We wrote: The whole sorry saga has panned out exactly as we here at TelecomTV predicted that it would, with the whimpering (and some say engineered) demise of a once great European company and a more or less forced sale to a US behemoth that has also lost its way and is floundering about trying to make itself leading-edge again.

How long will it be, now that Mr. Burning Platform has delivered Nokia's mobile phone business to Microsoft on a plate, before he takes over from Ballmer as the next chief executive of Microsoft?

Three years ago: Departing Nokia Fat Cat needs all his unfeasibly large bonus to finance his divorce

It’s all gone pear-shaped for Nokia, but Elop has arranged the sale of the phone division of the Finnish firm back to Microsoft.  Could it get worse?  Yes it could. We wrote: “Nokia’s top brass pleaded with the man who is already a multimillionaire to forgo some of the insultingly enormous payoff. Would he ? He would not.

In 2010 Stephen Elop left Microsoft to become the first non-Finnish CEO of Nokia. He got a US$6.2 million bonus simply for taking the job. Three years later, with Nokia now a complete basket case, he is to get a $25.5 million bonus to go back to Microsoft.”

Two years ago: Microsoft to slash 12,500 of the jobs it's just bought in

Elop sends out another memo. Many of his recently bought in mobile staff are about to become even more mobile as Microsoft applies the corporate slasher right across the company and takes out 12,500 staff from the recently bought in Nokia handset division.

Two months ago:  Microsoft to buy Telstra? Stephen Elop flies in to prepare the ground

So, Elop Redux? This story couldn’t finish on a more Kafkaesque note as Telstra hires Elop (does he have an endless store of embarrassing photographs?) We wrote: “Mr Elop, 52, will have responsibility for leading Telstra’s strategy to become a world class technology company. He will report directly to Chief Executive Officer Andrew Penn and be based jointly in the United States and Australia.”

Ah, this is starting to make more sense. Australians love an executive who spends most of his time “at the airport catching flights to somewhere else”.  It was one of the traits they most admired in former Telstra CEO, Sol Trujillo.

“Stephen will immediately add major firepower to our team with his extensive and deep technology experience and an innate sense of customer expectations. He is a recognised international technology leader and strategist from across a range of global organisations,” said Andrew Penn.

You couldn’t make it up.

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