Microsoft buys Nokia's mobile phone business in an effort to prove two geldings can produce a champion stallion
Sep 3, 2013
So here's another question: 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?
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. This won't do it, Apple and Samsung are over the hill sand far away and lumbering Microsoft won't catch up.
My colleague Ian Scales and I have reported on Nokia for getting on for quarter of a century. There was a time when we and the rest of Europe's technology journalists spent several weeks every year stumping around various parts of Finland watching in considerable awe as a lightly-populated Nordic country known, if it was known at all, for its primary industries such as fishing, logging and paper-making very quickly became a technology powerhouse and a world leader in mobile telephony.
I'm not going to rehearse the causes and circumstance of Nokia's fall from grace, they are well documented on this website and elsewhere and today Nokia is where it is - up Shit Creek with a broken paddle. And there's an end to it.
The Microsoft transaction has obviously been gestating for some considerable time, and, as is now par for the course in the global industry, was announced in a spate of email releases in the middle of the night. The first the Finns knew of this debacle was when they woke up this morning to hear it on the news.
Reaction there has been swift and often vituperative. One leading daily wrote "Minkä Jorma loi, sen Elop vei". What follows comes courtesy of translation software so may not be 100 per cent accurate but the gist is there, loud and clear. The sentence means "What Jorma built (constructed) Elop stole (made away with)."
The "Jorma" referred to is Jorma Olilla, the revered former Chairman and CEO of Nokia and the Finn who made the company what it used to be. Elop is the is the Canadian former Microsoft executive who was parachuted into Nokia by its cowed senior management and who made Nokia what it is today.
In a nutshell the deal is that Microsoft will “pay €3.79 billion to purchase substantially all of Nokia’s Devices & Services business, and €1.65 billion to license Nokia’s patents, for a total transaction price of €5.44 billion in cash.” Additionally Microsoft takes over Nokia's "long-term patent licensing agreement with Qualcomm, as well as other licensing agreements."
For its part, Nokia issued a statement saying, "After a thorough assessment of how to maximize shareholder value, including consideration of a variety of alternatives, we believe this transaction is the best path forward for Nokia and its shareholders."
If this is the best path available, God help them. There are going to be a lot of job losses following on from this and you can bey they won't be in Washington State. The "integration" process will be bloody, lengthy, difficult and very expensive and it will detract from the primary focus of mounting a challenge to the likes of Apple and Samsung.
This is what actually happened in Nokia's recent history. Remember, the company began life in 1865. Stepen Elop was there for three years. He moved from a powerful job in Microsoft (where he was a golden boy) to go to Nokia as the company's first (and surely last) non-Finnish CEO. On arrival he decides that henceforth Nokia will make only handsets powered by the Windows Phones OS. Meego and Symbian are canned, Android is ignored. Nokia is emasculated, and the company's credibility and market share dips and dips again. Value tanks, (since Trojan Horse Elop clopped into the Finnish stable Nokia's share price has fallen by 85 per cent) and Elop sells the mobile phone business to Microsoft at a knock-down price. Job done. "Can I come home and be CEO now, please?
According to Nokia' and Microsoft's coterie of spin-meisters, Elop is "stepping aside as Nokia President and CEO to become Nokia Executive Vice President of Devices & Services' where he will "lead an expanded Devices team, which includes all of our [Microsoft's] current Devices and Studios work and most of the teams coming over from Nokia, reporting to me.' The "Me" is, of course, Steve Ballmer until he finally leaves the company. I wonder who'll take over then?
Key Nokia staff such as Jo Harlow, Timo Toikkanen, Stefan Pannenbecker and Juha Putkiranta will keep their jobs and report to Elop. Meanwhile, various departments have been earmarked for "integration". For this read major Finnish job losses in areas such as HR (natch) customer service, business development, marcoms, finance and legal departments - among others.
A few minutes ago at Nokia's leased-back HQ in Espoo, a small chorus comprising the outgoing Stephen Elop and Nokia's stop-gap CEO, Risto Siilasmaa warbled that the sale was "a difficult choice but market dynamics made it the only practical one." Let us not forget that Mr. Elop was instrumental in orchestrating those market dynamics.
For his solo, Elop chirped, "We need more combined muscle to truly break through with consumers. I share the frustration that comes from being so far behind two very large competitors [but] our goal of becoming the third ecosystem is becoming real." That's OK then.
The rump of Nokia, (on which management is now going to "focus" - as if they have any other choice) comprises NSN (or what used to be known as Nokia Siemens Networks - until Siemens bailed-out and sold out its share to Nokia), HERE, a mapping and location-based services unit and Advanced Technologies R&D and licensing business. Not really gut-grabbers are they? Still Nokia can always go back to where it started and revert to making rubber boots. There's always a market for them in Finland and the technology doesn't change much, so R&D costs will be negligible.
According to Microsoft "Today marks a moment of reinvention". No it doesn't. Furthermore, "Together, we will redefine the boundaries of mobility". I don't know what that means and I'd be willing to bet the consortium of PR and marcomms execs who wrote it don't either but I'll also wager that the deal won't redefine the boundaries of anything other than the crass stupidity of Nokia's board.
It's sad day when Nokia sells the family silver for a mess of pottage. Another prediction? Well, we got the others right, so why not? It is that Nokia won't exist in three years time. It really is the end of an era.
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