Microsoft almost bought Nokia

http://www.unwiredview.com/2013/06/20/nokia-in-acquisition-talks-with-microsoft-so-thats-why-meltemi-had-to-die-and-elop-kept-his-job-after-2012/

by twidlit • 13 years ago

73 85 13 years ago

unwiredview.com

schuke• 13 years ago

It looks Nokia is in the vantage position now. Nokia can afford walking away from Windows Phone. But Microsoft can't. Nokia accounts for roughly 80%* of all Windows Phones. If Nokia leaves, WP is basically doomed.

*http://blog.adduplex.com/2013/05/adduplex-windows-phone-stat...

josh26004• 13 years ago

Correction, windows phone is doomed, irrespective of Nokia or Microsoft's actions. People just hate windows; Microsoft should just change the name and I swear they'd sell like gangbusters.

You have to understand, Nokia and Microsoft Both lost position in the market as a result of working together. There's a big portion of the world that would buy a decent nokia phone, just because of the history. Fuck Microsoft, make the world's most badass android phone and they stand a chance. Standing with Microsoft is killing them.

sliverstorm• 13 years ago

Microsoft should just change the name

How about "Portals"?

CamperBob2• 13 years ago

That's what's so incredible. Again and again, Microsoft has persisted in their delusion that the trademark "Windows" somehow holds value in consumer space. The Windows brand has yet to earn them a dime's worth of consumer attention or goodwill, but Ballmer keeps humping the chicken. He just knows that there's a golden egg in there, somewhere amongst all those feathers.

The only thing "Windows" means to the consumer is the certainty that, whenever they see the term come up at work, for whatever reason, in whatever context, they are going to have to call the helpdesk. Again.

ohwp• 13 years ago

Fun fact: I heard of several ex-iPhone owners Nokia with Windows is the perfect phone.

But yes, Microsoft still has a bad name. Maybe they should call it NokiaOs

surjithctly• 13 years ago

Nokia can still control the market by releasing Android phones.

josh26004• 13 years ago

But they suck and they won't do it.

I hate to put it that way, but how many years has this bullshit been going on? I loved Nokia. They made amazing phones once upon a time, but it has been a decade of crap. When's it gonna change? What's it gonna take?

I thought when marten from Eucalyptus and MySQL joined the board things would change but that hasn't been the case.

orenbarzilai• 13 years ago

Betting on microsoft wp was a bold move! unfortunately (for them) it didn't pay off so far... They can still change their mind and start producing great android phones improve their revenue and tag behind samsung & htc.

mtgx4• 13 years ago

Nokia is doing so badly with WP8 even Microsoft doesn't want them. What does that tell you about their current strategy?

I've always believed, and I still think it would be true - if Nokia would adopt Android, they could probably even beat Samsung. It would've certainly been true if they did it 2-3 years ago, before Samsung got a chance to become the king of smartphones, but I think it can still happen if they do it now, and wait 2-3 years for it to happen. Obviously it won't happen overnight, but at least they have a shot at it with Android.

They'll never do it with WP8. The math just doesn't add up. They'll always be limited by the WP ecosystem and the WP market share. Samsung has 30% of the smartphone market, which is about 40% of the Android market share.

Nokia will have at most 50% of the WP market share. It only has more now because the market is very tiny, but that would change if WP market grew. That means that for Nokia to beat Samsung, WP will need to get to 60% of the smartphone market share, and it means beating Android in market share. WP will never get that much market share, and even the most optimistic (and I believe, unrealistic) predictions by research firms put WP at 20% - 5 years from now.

So if Nokia wants to stop being more than a niche smartphone player in the future, they'll have no choice but to at least also adopt Android. It's the right strategy for the Nokia board to pick. They just seem to be very stubborn about it, just like they were too stubborn to fire the Nokia CEO before Elop, for 4 years after the iPhone launched. The Nokia board needs to smarten up if they don't want to make an almost fatal mistake once again. Or the shareholders need to overhaul the board. One of the two needs to happen.

fpgeek2• 13 years ago

From what I understand, it's not entirely stubbornness. The exclusivity agreement they made with Microsoft has significant penalties if they pull out - starting with paying back all of Microsoft's "platform support" payments (over USD 1 billion at this point, IIRC), but not ending there, I believe.

That was probably the biggest mistake 2 years ago - not just making the wrong choice (which is fixable), but walling off the best alternatives.

cmccabe2• 13 years ago

Yeah. What a ridiculously one-sided deal. Heads I win, tails you lose.

If Nokia had done well, Microsoft would have acquired them for an artificially low price. Now that they have crashed, Microsoft is free to walk away. Nokia can't get out of the deal without making ruinous repayments to Microsoft. Meanwhile, MS is developing its own hardware, which will compete directly with Nokia. In the long term, who knows? They might even perhaps to scupper the whole Windows Phone project, like Windows CE before it.

As I said at the time, the absolute best case scenario for Nokia under their current course is to become another white-box OEM for Windows, operating on razor-thin profit margins. And we all know how Microsoft treats its OEMs.

Probably the best thing they could do now is go declare chapter 11 (or whatever the Finnish equivalent is) and sell the component businesses. NAVTEQ ought to be worth a lot-- after all, TeleAtlas went for several billion a few years ago. Bankruptcy might give them a chance to get out from some of these pound-me-in-the-butt contract terms, too. At this point, the company is probably worth more broken up than whole.

hkmurakami3• 13 years ago

Was this agreement signed by the current, ex-MSFT CEO? In that case, I honestly wonder if there's going to be a shareholder lawsuit against management or board of directors oversight on making such a fatal deal.

Even if such a suit would have little merit, I wouldn't be surprised to see one. Maybe the fact that it'd a Finnish company makes it less likely? But they are listed in US markets...

pavlov2• 13 years ago

So if Nokia wants to stop being more than a niche smartphone player in the future, they'll have no choice but to at least also adopt Android. It's the right strategy for the Nokia board to pick.

This is exactly the same thing that everyone was saying about Apple in 1996. Apple's board had to decide between several OS alternatives to replace the failed homegrown Copland project. There were BeOS and NextStep that could be bought outright, and they also considered licensing Solaris or Windows NT.

A lot of observers were saying:

"Microsoft has won. If Apple wants to be in the computer business, they have to adopt Windows. It's the right strategy for the Apple board to pick."

Would Apple be around today if they had decided on Windows NT instead of NextStep? Not likely. The obvious popular choice is often not the right one -- it's "skating to where the puck was".

rodgerd2• 13 years ago

Unfortunately Nokia have not merely gone for the lowest market-share/mind-share mobile OS (which could work out for them, I guess), Elop has gutted everything else about their industrial design and manufacturing (which is what Nokia really did well) and turned them into just another box-shifter of generic parts chucked together in a generic form-factor by the same factory in China that all the other generic flat rectangles are made in. Nokia have abandoned everything they used to do well.

fpgeek2• 13 years ago

There's a difference between choosing to control your own destiny (Apple and NeXT) and choosing between different masters (Nokia and Android vs Windows Phone). I think it's obvious that Android would have been a better master 2-3 years ago and there are plenty of reasons to think the same holds true today.

Would a path where Nokia tried to stay in control of their destiny have been superior to both? I think so (and I have my ideas about what that would have looked like), but that's a separate question.

quattrofan• 13 years ago

There is a big difference between customer loyalty on a desktop vs a smart phone. Most people rely on specific software they like and use on their laptop/desktop PC to do their job, in the case of Apple DTP back in the 90's was a huge advantage for them. If I am forced to swap my smartphone, far less of a big deal.

molmalo• 13 years ago

I think that's not a valid analogy. First, the last time I checked, Apple is still a niche player in the global computer market. Their current success is not because of their position in the computer market, but because of their current position in the MP3-Player (iPod) and smartphone markets.

And second, because Nokia is not betting on their own OS (as Apple did), but in someone else's OS. That means a different kind of pressure from their investors, and a real submission to another company. And they put all their eggs in the same basket. They did that in order to have something really different to offer (they were afraid to compete without a real differentiating element, and not just a different launcher). But that strategy is not working and Microsoft is trying really hard to get other brands to use their OS.

So, if MS is not putting all their eggs in the same basket, why should Nokia do it anyway? Just staying on the same road, knowing that there's a cliff ahead, in hopes that something will happen... may not be the best strategy. Even if they really believe that Windows Phone is the future, they could use another line of smartphones, with a different OS (even using stock Android could be considered a differentiating element...) just to get some cash that gives them some air (especially from their investors).

iamshs5• 13 years ago

You are always on a MS bashing diatribe. Interesting thing I noticed.

Well if they go Android, they have to include Google Maps to make their phone a viable contender to Galaxy series. And that directly undermines their HERE maps business, and navteq data source.

Besides, How do you explain HTC's slide, Sony's non existence, LG's mere presence among Android vendors?

zainny• 13 years ago

To be fair, it's not as if MS is hitting home runs with their Windows Phone devices. What the OP is doing is just discussing reality, here and now.

EdiX• 13 years ago

if Nokia would adopt Android, they could probably even beat Samsung. It would've certainly been true if they did it a 2-3 years

2-3 years ago definitely, now: not a chance. They fired all their linux talent and burned their brand.

_pmf_• 13 years ago

With iOS 7 now copying the clean look of WP8, there's one reason less to use WP8.

dolphenstein• 13 years ago

I'd love to see a Nokia Nexus phone!

yread• 13 years ago

Nokia will have at most 50% of the WP market share.

It currently has 83.3%

http://blog.adduplex.com/2013/06/adduplex-windows-phone-stat...

bergie3• 13 years ago

Which is not that surprising given that none of the other manufacturers is forced to take WP8 seriously. Sure, they'll happily release some devices alongside their Android offering, probably reusing a lot of the hardware and industrial design.

For company like HTC it doesn't really matter which third-party OS wins. But at the same time, because Android is selling better they're better of focusing more efforts there.

blub• 13 years ago

While that might be good for Nokia (I am not personally convinced), it brings nothing to the consumers except another shiny vehicle for Google's OS.

Even with being open-source Android is almost impossible to use securely and privately. From Google to every minor app developer everyone is trying to syphon data. One can install CM, but the permission system is still broken and the moment you install gapps over it one cannot even save contacts locally any more. I could go on, but my conclusion was that it's not worth the bother to try and get Android to be more respectful of one's information, it is designed to do the opposite.

So, no thanks from me. The market needs fresh ideas, not the same semi-open OS with a nicer Nokia camera.

jacquesm• 13 years ago

As long as Elop (ex Microsoft) is there Nokia will not move to Android.

Nokia makes super hardware though, they could still turn the ship around if they wanted to and give Samsung and Apple a run for their money.

Microsoft got all the advantages of owning Nokia without having to pay for it, windows phone is so rare I can't even find someone that has one in my circle of friends. The only person that owned a windows phone received it from her employer, promptly bought an android phone and switched the sim over.

nestlequ1k• 13 years ago

Agreed, I'll be instantly interested in buying a Nokia phone once they start shipping the latest version of stock Android (ideally without any bloatware and useless customizations that Samsung / HTC pushes).

Elop needs to go now. What an ass clown. It's been a while since we've seen someone with such bad ideas making such horrible decisions, one after another. He reaped what he sowed, and the board can thank him for decimating a once fantastic phone company.

jad• 13 years ago

Elop needs to go now. What an ass clown. It's been a while since we've seen someone with such bad ideas making such horrible decisions, one after another. He reaped what he sowed, and the board can thank him for decimating a once fantastic phone company.

Shipping phones running Android is far from a guarantee of success. Indeed, only Samsung is doing well with Android right now, and even then only in the last year or so. Every single other Android handset maker is struggling. Android turns your hardware into a commodity, just as Windows turned PC hardware into a commodity. It's very hard to overcome this simple fact, even if you do make great hardware (see the HTC One). Don't take my word for it, ask HTC, ask LG, ask Motorola/Google, and so on.

Elop surely doesn't deserve to be dismissed as an "ass clown" for adopting what almost every critic agrees is a first rate phone OS. If Windows Phone had just a tiny bit of momentum, partnering with Microsoft would be a great strategy for establishing differentiation from Apple and the various Android phones.

tjmc2• 13 years ago

Nokia was in serious trouble before Elop joined. Remember his "burning platform" memo? It was right on the money. Nokia's nascent smartphone platform would have been stillborn. The head start that Apple and Google had in terms of apps was just too great.

His mistake was choosing Windows phone over Android. They really were the only 2 realistic choices. With Google producing their own competing hardware and buying Motorola on one side and his former employer offering bags of cash on the other, is it really that surprising?

Looks like history will judge him harshly, but I think he took a hospital pass.

thirdsun• 13 years ago

I think Nokia is pretty comfortable with being the de facto standard when it comes to WP8 hardware. Sure, they have a long way ahead, as does Windows Phone in general, but there's some value in being THE major player in one ecosystem.

Furthermore, I've yet to meet a Lumia user that doesn't rave about his device. Hell, even I had a good time with the Lumia 920. However I'm quite deep into Apple's ecosystem, which makes the iPhone the overall better choice.

dottrap• 13 years ago

Also agreed. Microsoft doesn't need to throw money down a hole when Nokia is already doing Microsoft a favor for free.

Microsoft doesn't need to buy a huge company like Nokia that makes phones that nobody wants. Microsoft can make their own phones that nobody wants for much cheaper.

wwweston• 13 years ago

An MS buyout is exactly the end of the Nokia story I'd anticipated once they set the Windows Phone course, so I guess the only thing I'm surprised about was that it somehow fell apart.

Looking back, maybe I overestimated the value of Nokia's patents and distribution reach -- maybe the patent war flamed up/out too fast, maybe competition already made the distribution moot.

Or maybe it's hard to convince MS that Nokia really has much value to offer them after they were essentially able to get Nokia to yield significant control to them for almost nothing.

rurounijones• 13 years ago

Nokia hardware is pretty legendary. I echo other comments that Nokia hardware combined with Android would give Samsung a good run for its money.

Still annoyed about the N900 and Maemo/Meego/whatever it is called now.

kryten• 13 years ago

This.

I'm writing this on a 2 year old Lumia 710. This replaced a 6303i. The thing has had the crap bashed out of it but it has never faltered, not once. In that time it has never crashed as well.

To be honest, the only bit I don't like about this as a Windows Phone is Microsoft. If someone else came up with it, I'd be happy.

tomflack2• 13 years ago

What's the value of your anecdotal experience? I can add my own - my 6 month old Lumia 920 has been back to Nokia for repair. Twice.

Nokia hardware may have been legendary, but it certainly isn't any more. Some of the fit-and-finish on their stuff is weak now (sim tray on 920, dust getting in the front facing camera on the 920) and the rest of the industry has moved on.

The 710 isn't even two years old. It's at most, 19 months.

nikster6• 13 years ago

I know!

Nokia reduced to competing on distribution, marketing, and hardware alone? Why that's what they've always done, and they owned 30% of the market by doing that extremely well.

mhomde• 13 years ago

"First they ignore you, then they laugh at you, then they fight you, then you win."

The common perception seems to be that WP & Nokia is failing but I actually think they've managed to turn things around, there's a little inertia but they're getting there

1) Major players has started developing and supporting windows phone apps. Twitter, Tumblr,Facebook, WhatsApp, Foursquare all have quality apps. Maybe they're not updated with the frenzy of the pace-leader Apple but what do people expect when they're coming from behind. Compare that to blackberry which is a true wasteland

2) Nokia has been stellar in its support of its Windows Phone users, pushing out excellent updates, services and apps. Perhaps its partly because they're fighting for their life but I'd argue that Nokia is one of the best phone manufacturers there is right now from the users point of view.

3) Nokia/Microsoft is between update cycles. Nokia won't and can't push out a major flagship phone before Microsoft has the next major version of its OS ready. A major complaint of Nokia phones has been hardware specs (which I think its a little retarted since WP performs as well or better than many android phones on "less" specs), with the next update MS will probably up the support for newer hardware and resolutions

4) Microsoft and Nokia has a very compelling ecosystem together, something that even Samsung is hard to match. MS has Office/Yammer/Sharepoint/XBOX and Windows. Nokia has a range of quality services within mapping, music, local transit. While most are not pack leader they're certainly not that far from it.

5) If anyone thinks Microsoft going to stop pouring money at the problem and/or adapting & improving they're crazy, and their coffers are huge. Tablets and Windows Phones are too important a segment for MS to ignore so they will continue to claw themselves to the top until they're at least firmly top 3.

6) Windows Phone at its core is one of the most recent & modern OS's there is. Android & IPhone have been around longer and has more bagage.

7) Windows Phone leads in user satisfaction so clearly they're doing something right. The only thing that's holding them back is "lack of apps". But I think what Windows Phone lacks is not quantity of apps, but what they need is a few unique "flagship" apps to show its a contender and they will start to change the impression of the platform around.

Also I think at its core WP is the only phone that has a UI paradigm that will work in the long run. Its flabbergasting that people can spend so much time arguing how the icons look in ios7 looks like and not that its an outdated limited paradigm. The future belongs with more glanceable / dashboard-oriented UI's

Microsoft have however dropped the ball a little, they should have been doing as good a job as Nokia: pushing out apps, updates and features more quickly. But we'll see, WP8 was the first version using the new kernel so there probably was some housekeeping to be done, once the behemoth gets rolling we'll see what happens.

I think Nokia made a good bet although its hard to say. Look at the trouble HTC is in now. Sure Samsung is up right now but all manufacturers are only one missed cycle from being screwed. Android is so commoditized that's its hard to differentiate. Meanwhile Nokia is owning a whole powerful ecosystem on its own.

In the end however I think any company that doesn't have an app store is pretty much screwed so that leaves Google, Apple, Microsoft and possibly Amazon

mahyarm• 13 years ago

On #1, half or more of these players have been directly paid by Microsoft to develop for WP, and many other popular app makers are being courted if they haven't said yes yet.

yajoe• 13 years ago

Living in Seattle, I happen to hear through the grapevine that most of the top 100 apps are funded by Microsoft (it's a mix of contractors, in-house, and revenue-sharing agreements). Spot on.

Recent, public example where it backfired: https://news.ycombinator.com/item?id=5715889

mtgx4• 13 years ago

Microsoft is refusing to buy Nokia, their largest asset in the WP market. That tells you they don't want to spend an unlimited amount of money to save WP.

corin_• 13 years ago

Or it means they are confident that Nokia will do well without being bought out.

Or it means that they think Nokia are a lost cause and that buying them out wouldn't improve anything.

Or they don't know how Nokia will turn out, but think it has a better chance without being MS-owned.

nikster6• 13 years ago

Nokia is near bankrupt and Microsoft doesn't want to buy them out anymore.

It's a very strange kind of success.

tkorri• 13 years ago

The whole news about Microsoft buying Nokia is just a rumor. It's probably something that might happen but it's still a rumor that has been circulating since they announced their alliance in 2011.

So I think writing "And it explains so much about the disastrous strategic choices Nokia made for its mobile phones division over the past year." is pretty far fetched stuff.

The author also added "citations" from WSJ that don't appear in the original article (for example "... in part because of the price and Nokia’s own strategic predicament"). So I wouldn't give much weight on what this guy is writing.

bojan2• 13 years ago

I think most of the commenters in this thread are overestimating Nokia's capability to beat Samsung were it to switch to Android. Samsung's marketing budget is so huge that I don't see how Nokia could ever compete, unless they would release a phone that is so much better than anything Samsung can come up with that it compensates for marketing. And that is much easier said than done.

camus2• 13 years ago

it is not about switching 100% to Android. It is about, like Samsung or HTC diversification. What the h... were they thinking when they signed that agreement with MS , short term profit ?

bojan2• 13 years ago

They were thinking about survival maybe? I am not sure how much money they immediately received from MS for the deal, if any?

But even if they diverse, what would be their Android marketshare? Would they have resources do build properly for both Android and WP? Lumias are made for WP, even their design shows that, would that same design work for Android phone?

Ygg2• 13 years ago

I have to wonder, why Android? Why not other alternatives? Like FxOS? Or both?

mtgx4• 13 years ago

Because those are just like WP8, strategy wise, but worse (even smaller ecosystems). They need Android to truly succeed.

iamshs5• 13 years ago

https://twitter.com/asymco/status/309407743150784513

Ok.

claudius• 13 years ago

SailfishOS (your newest vaporware on the block) can apparently run Android APKs. And if it’s remotely similar to Meego Harmattan, I am more than sold.

Didn’t Lenovo want to start a phone business?

iamshs5• 13 years ago

Exactly. I would want FxOS on it. But the truth is, apps will still be a major problem, the one which plagues it right now.

_quasimodo• 13 years ago

Sailfish!

skc• 13 years ago

I'm pretty surprised by the fact that almost everybody in here is of the opinion that Nokias Windows Phone strategy is not working.

Last I checked, selling more and more smartphones per quarter while slowly growing marketshare, especially in Europe, is not the sign of a bad strategy.

It's amusing to me that people consider success to mean 50% marketshare overnight. It's equally amusing to me that people fail to see that Android is absolutley no guarantee of success either, see HTC for example.

Nokia made a bold bet, but because they chose a MS platform it's not surprising that the HN crowd see this as failure. I mean we have people in here saying they should even have gone with FireFox OS!

Wow.

My opinion, this is a slog, and Nokia is at least making a game of it and walking in the right direction.

nikster6• 13 years ago

There are no slogs in business. Nokia is on the brink of death.

The problem with the WP strategy is and always has been the exclusivity. From Nokia's perspective, why in the world would I want to exclusively sell WP devices, and not _also_ Android devices?

Note that that's what the others do. They're selling WP. Should it become a huge hit, Samsung and LG already have WP devices. Should it fail - well, obviously they've got tons of Android devices / experience.

Why would you want to tie yourself to a single technological choice like that? The answer is you don't want to, you never should, and Nokia is suffering because of this decision. I know they got cash for it - it was a very bad deal.

This bold bet idea - where did this come from? What's bold about limiting your own choices? That's not bold, that's stupid.

Spearchucker• 13 years ago

There are no slogs in business.

Careful. That's a view that can burn badly. A slog is nothing more than a strategy, which consists of many discrete tactical steps [1].

Dig into Microsoft's acquisition history - they never acquire market leaders. And the world is surprised when, 5 years later, that non-market-leading acquisition is behind a market-leading Microsoft product. Not all work out that way for sure, but those that do, do so spectacularly.

Microsoft's relationship with Nokia is not an acquisition but shows signs of a similar strategy, nonetheless. mhomde's points above [2] are pretty accurate.

Microsoft are masters of the long game.

[1] http://en.wikipedia.org/wiki/The_Art_of_War#Chapter_summary

[2] https://news.ycombinator.com/item?id=5910708

v0lta• 13 years ago

A point that a lot of people don't see with WP8 is that it runs great (compared to Android) on low-end devices. You can get a Lumia 520 for ~150€ where I live and it offers (theoretically) pretty much everything a Lumia 820 or 920 does, except Games.

wedesoft• 13 years ago

Maybe Nokia should consider Firefox OS.

Microsoft almost bought Nokia

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