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Devices/smartphones

The Nokia/Microsoft Conspiracy Theory

The first thing that sprang to mind when I saw that Nokia was handing over its mobile handset crown jewels to Microsoft in exchange for just a few billion dollars was that this was a classic corporate Trojan Horse maneuver. (See: Nokia Sells Devices Business to Microsoft .)

Is it just a coincidence that a former Microsoft Corp. (Nasdaq: MSFT) executive became Nokia Corp. (NYSE: NOK) CEO in late 2010 and, less than three years later, the former global handset market leader announces the sale of its core business to the software giant?

When it comes to conspiracy theories, this isn't up there with presidential assassinations or alien landings, but hey -- we're limited to Close Encounters of the Microsoft Kind.

So, what might lead anyone to even think this was a stitch-up job? Here's the background, for those who haven't kept an eye on Nokia in recent years.

In 2010, Nokia, having failed to deliver a decent smartphone strategy, was getting spanked by the likes of Apple Inc. (Nasdaq: AAPL) and the Android brigade. So, a new CEO was appointed -- former Microsoft executive Stephen Elop. (See: Nokia Dumps CEO, Hires Elop.)

He began his tenure by highlighting, in October 2010, Nokia's "unpolished gems," such as the MeeGo mobile device operating systems. Months later, in February 2011, such gems were cast aside, and the Symbian platform mothballed, in favor of Microsoft's Windows Phone OS and a host of other Microsoft's applications and services, such as the Bing search engine and adCenter for advertising services. (See: Nokia Unveils Major Revamp.)

Following that move, more Microsoft executive talent was hired to bolster the Nokia management team. (See: Nokia Adds Another Microsoft Vet.)

Since then, under the stewardship of Elop, Nokia has continued to lose market share, reported multiple quarters of major operating losses, has handed over the market leadership crown to Samsung Corp. , and now sold what's left of its handset business to Microsoft for a sum that would have been scoffed at only a few years ago. (See: Nokia Loses Its Mobile Crown.)

For Nokia staff and investors (who have seen the value of Nokia's shares half since late 2010), Elop's time at the helm of the Finnish firm looks nothing short of a disaster. That's not a view shared by Elop or his old mates at Microsoft -- just see this joint letter from Elop and Microsoft CEO Steve Ballmer about the takeover deal and partnership. Any layperson reading that would think Nokia was still in the ascendancy.

The future is uncertain for all involved, yet Elop looks set to be rewarded by Microsoft, which he will rejoin as part of the acquisition. Could he even be in line for Ballmer's job? (See: Euronews: Nokia CEO Tipped for Ballmer's Job.)

So, has Microsoft got what it wanted all along? And was Elop the right man in the right place to help deliver the goods?

Crazy, mindless conspiracy theory, right? Right??

— Ray Le Maistre, Editor-in-Chief, Light Reading

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sam masud 11/20/2013 | 3:15:07 PM
Re: The truth is simple I'm too chicken to be a betting man, so agree with you that a comeback is highly unlikely. Few companies have risen from the ashes like a phoenix (especially in telecom industry), and the competition is just too far ahead.
Kruz 11/20/2013 | 11:58:11 AM
Re: What's Msft's mobile story though? Not defending his case, but were you in his shoes heading Nokia, what would you have done? Obviously secure your personal continuity, at Nokia and later at Windows that goes without saying but also:

- Support the existing Oses, Symbian, MeeGO/Meebo, Asha: 

Obviously all 3, except Asha, were not doing well. And that was not a time to reinvent the wheel or adjust your Oses, it takes too much and cash is lacking. Look at Rim now.

- Be like the rest of the players and adopt Android and not fight for a place in the leading position - that was simply no for a 14 years leader in the Market. Look at HTC or Sony

- Go with a technology you are used to and that can inject direct cash to the company - MSFT deals injected cash to Nokia's bleeding account - and have an exclusive partnership with an entity that has partners, is big. Moreover, MSFT has an ecosystem, and this is not a battle of handsets anymore. MSFT is here to stay, at least for a while as it has the cash to survive. 
DanJones 9/10/2013 | 2:06:08 PM
Re: What's Msft's mobile story though? It was in decline before Elop arrived to be fair.
sam masud 9/10/2013 | 1:57:45 PM
Re: What's Msft's mobile story though? True, but MS got what was formerly a crown jewel of the mobile industry pretty cheap because of the less than stellar tenure of Mr. Elop.
DanJones 9/4/2013 | 11:41:00 PM
Re: Patents Microsoft is not hurting for mobile patents itself, the Android device makers all pay fees to Redmond already.
mendyk 9/4/2013 | 5:53:11 PM
Re: The truth is simple The track record for companies trying to reinvent themselves by venturing into (for them) new areas is not particularly strong. Add in the fact that MSFT has to adjust to being one of several (or many) competitors rather than being the dominant supplier and you see even more reason for skepticism.
pzernik 9/4/2013 | 4:58:17 PM
Re: The truth is simple I'm not sure how you repackage a failing OS come back from 4% market share and still shrinking.  Perhaps just being as anti-Google as you can get is a good start.  People are starting to be concerned about security and privacy and Microsoft could rise from the ashes (with a faster, sleeker, safer, mantra), possibly.  But, it will be a long bumpy road back.   Constant shuffling management and strategy will be the nail in their coffin...
mendyk 9/4/2013 | 2:41:43 PM
Re: The truth is simple Well-placed incompetence suggests yet another level of conspiracy. In theory.
-0 9/4/2013 | 1:32:00 PM
The truth is simple I don't believe into conspiracy theories. I think it is as simple as hiring unfit CEO who leaned on familiar people and technologies. And when it all failed he ran from angry investors and staff under protection of mighty partner in need.

No need to invent complex conspiracy theories where all too common incompetence explains it all.
[email protected] 9/4/2013 | 1:11:22 PM
Re: THE BIG QUESTION HERE.... Yes, that was significant, but actually missed by a lot of people. I actually read an article today in a London financial newspaper (not the FT) that was arguing that MSFT had acquired Nokia's handset biz so it could own the patents.... nil points for that columnist...
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