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ON FRIDAY the genius of Microsoft CEO Steve Ballmer as a master strategist was once again revealed when we learnt that his company has effectively infiltrated, bedevilled and possessed Finnish cellular giant Nokia. It was a swift move by Ballmer, and not the the first of its kind.
The new CEO of Nokia, Canadian Stephen Elop, announced his company's new strategy last Friday, after only 100 days on the job. Elop is a former Microsoft exec, having headed up the Redmond company's business division.
Despite insistence that Nokia has also considered switching to Google's Android operating system, it came as no surprise when Elop unveiled his plan to partner Nokia heavily with Microsoft. In this way, he effectively abandoned the software platforms his predecessors had poured billions of dollars into developing, in favour of Microsoft's Windows Phone operating system.
Nokia says it is not abandoning those platforms, but you'll find very few analysts who believe them.
It's a massive move - both for Nokia and Microsoft. Business agreements don't get more significant than this. And Nokia's investors aren't convinced. The share has tumbled by about 14% in the couple of trading days since the announcement.
Microsoft's share price - one of the most boringly consistent of all time - shifted down slightly, but held steady for the most part. The market clearly thinks that this is great news for Microsoft and crap news for Nokia.
The same was true of search engine company Yahoo! that turned down an acquisition by Microsoft last year, only to hand over a golden partnership for gratis months later, effectively giving Ballmer everything he needed from Yahoo! for nothing.
The Nokia agreement isn't free, however, and both Elop and Ballmer have hinted at "billions" flowing from Microsoft into the Finnish company as the partnership progresses.
I'm personally undecided as to whether this was the best move for Nokia. Let's consider the good first.
Nokia had a problem. It is the world's largest manufacturer of cellphones, and continues to sell more than anyone else. But at the very top of the market - the lucrative smartphone segment - it was having its lunch eaten by Apple and the plethora of Android devices now available from dozens of other vendors.
There weren't many options. It has formed a strategic alliance with Intel to launch a new operating system called MeeGo - and indeed, Nokia is continuing to develop this platform. It has to, of course, to make good on its agreement with Intel.
Could MeeGo have saved Nokia in the smartphone space? Probably not, for a number of reasons we don't have space to work through here.
There wasn't much of a choice - Nokia either had to conduct a major overhaul of Symbian or switch platforms and, given the choice of Android or Windows Phone 7, it's not difficult to see why it went with the latter. Elop talks about creating a third major ecosystem to stand against Google and Apple, and he has a point.
So Nokia now has a powerful ally in its fight to maintain relevance in the smartphone arena. And Microsoft has the world's largest phone manufacturer as a launching pad for its new operating system, which has been underwhelming the market until now.
Now the bad.
This is the end of an era for Nokia. Its Symbian platform was far from perfect and losing out heavily against the competition, but was on a trajectory that might have worked for it if the Finns had stuck to their guns.
Nokia has a strong services play via its Ovi range of products, including a world class online music store, the best mapping platform in the world and a content and application store that was just starting to take off nicely. These are now being merged with Microsoft's Market Place and, again, are likely to benefit Ballmer and his clan more than Nokia.
Nokia was narrowly maintaining a lead on the market, and working on an ecosystem that I believe would eventually have rivalled the best of what the competition had to offer. Let's not forget that we're talking about the world's biggest mobile handset company here - not some floundering startup.
But shareholders were impatient. They ousted CEO Olli-Pekka Kallasvuo and marginalised other company stalwarts such as Anssi Vanjoki. They opened the door to Elop and Microsoft and the resulting move could prove disastrous.
Before announcing his big plan to save Nokia, Elop sent out an internal memorandum to Nokia employees, telling a story of a worker standing on a burning oil rig.
"Our platform is burning," declared Elop on Wednesday, providing one of the worst analogies in the history of corporate communications that effectively implies he is throwing the whole company into the ocean to die of hypothermia.
Nokia spent just short of $4bn on R&D in 2010, and the consensus is that this will for the most part dry up. This will cost the industry, which benefited from Nokia's contributions to standards, technologies and software.
You can also expect Nokia's other operating software projects - such as MeeGo - to fall by the wayside, along with Symbian. This will remove one of the biggest supporters of community-developed, open source software from the market. It's another loss to the industry, and something open source developers are already up in arms about.
Many Nokia employees are also likely to be relieved of their duties.
So far the only entity clearly benefiting from the move is Microsoft. It's too early to see this working for Nokia - it could go either way. The company will either become just another me-too manufacturer or, together with Microsoft, grow the market share for Windows Phone and its profits alongside.
For now I'm feeling more bad than good about it all, but I am willing to give Nokia the benefit of the doubt. It's a tenacious company and maybe it can innovate success out of what at the moment looks like a terrible decision.
- Fin24
The new CEO of Nokia, Canadian Stephen Elop, announced his company's new strategy last Friday, after only 100 days on the job. Elop is a former Microsoft exec, having headed up the Redmond company's business division.
Despite insistence that Nokia has also considered switching to Google's Android operating system, it came as no surprise when Elop unveiled his plan to partner Nokia heavily with Microsoft. In this way, he effectively abandoned the software platforms his predecessors had poured billions of dollars into developing, in favour of Microsoft's Windows Phone operating system.
Nokia says it is not abandoning those platforms, but you'll find very few analysts who believe them.
It's a massive move - both for Nokia and Microsoft. Business agreements don't get more significant than this. And Nokia's investors aren't convinced. The share has tumbled by about 14% in the couple of trading days since the announcement.
Microsoft's share price - one of the most boringly consistent of all time - shifted down slightly, but held steady for the most part. The market clearly thinks that this is great news for Microsoft and crap news for Nokia.
The same was true of search engine company Yahoo! that turned down an acquisition by Microsoft last year, only to hand over a golden partnership for gratis months later, effectively giving Ballmer everything he needed from Yahoo! for nothing.
The Nokia agreement isn't free, however, and both Elop and Ballmer have hinted at "billions" flowing from Microsoft into the Finnish company as the partnership progresses.
I'm personally undecided as to whether this was the best move for Nokia. Let's consider the good first.
Nokia had a problem. It is the world's largest manufacturer of cellphones, and continues to sell more than anyone else. But at the very top of the market - the lucrative smartphone segment - it was having its lunch eaten by Apple and the plethora of Android devices now available from dozens of other vendors.
There weren't many options. It has formed a strategic alliance with Intel to launch a new operating system called MeeGo - and indeed, Nokia is continuing to develop this platform. It has to, of course, to make good on its agreement with Intel.
Could MeeGo have saved Nokia in the smartphone space? Probably not, for a number of reasons we don't have space to work through here.
There wasn't much of a choice - Nokia either had to conduct a major overhaul of Symbian or switch platforms and, given the choice of Android or Windows Phone 7, it's not difficult to see why it went with the latter. Elop talks about creating a third major ecosystem to stand against Google and Apple, and he has a point.
So Nokia now has a powerful ally in its fight to maintain relevance in the smartphone arena. And Microsoft has the world's largest phone manufacturer as a launching pad for its new operating system, which has been underwhelming the market until now.
Now the bad.
This is the end of an era for Nokia. Its Symbian platform was far from perfect and losing out heavily against the competition, but was on a trajectory that might have worked for it if the Finns had stuck to their guns.
Nokia has a strong services play via its Ovi range of products, including a world class online music store, the best mapping platform in the world and a content and application store that was just starting to take off nicely. These are now being merged with Microsoft's Market Place and, again, are likely to benefit Ballmer and his clan more than Nokia.
Nokia was narrowly maintaining a lead on the market, and working on an ecosystem that I believe would eventually have rivalled the best of what the competition had to offer. Let's not forget that we're talking about the world's biggest mobile handset company here - not some floundering startup.
But shareholders were impatient. They ousted CEO Olli-Pekka Kallasvuo and marginalised other company stalwarts such as Anssi Vanjoki. They opened the door to Elop and Microsoft and the resulting move could prove disastrous.
Before announcing his big plan to save Nokia, Elop sent out an internal memorandum to Nokia employees, telling a story of a worker standing on a burning oil rig.
"Our platform is burning," declared Elop on Wednesday, providing one of the worst analogies in the history of corporate communications that effectively implies he is throwing the whole company into the ocean to die of hypothermia.
Nokia spent just short of $4bn on R&D in 2010, and the consensus is that this will for the most part dry up. This will cost the industry, which benefited from Nokia's contributions to standards, technologies and software.
You can also expect Nokia's other operating software projects - such as MeeGo - to fall by the wayside, along with Symbian. This will remove one of the biggest supporters of community-developed, open source software from the market. It's another loss to the industry, and something open source developers are already up in arms about.
Many Nokia employees are also likely to be relieved of their duties.
So far the only entity clearly benefiting from the move is Microsoft. It's too early to see this working for Nokia - it could go either way. The company will either become just another me-too manufacturer or, together with Microsoft, grow the market share for Windows Phone and its profits alongside.
For now I'm feeling more bad than good about it all, but I am willing to give Nokia the benefit of the doubt. It's a tenacious company and maybe it can innovate success out of what at the moment looks like a terrible decision.
- Fin24
