Microsoft's $7.1bn Nokia gobble: Why you should expect the unexpected With Microsoft’s purchase of Nokia’s mobile business for $7.1bn, the Redmond software giant has finally become a phone and device maker. The deal gives Microsoft Nokia’s global handset engineering, manufacturing, sales and distribution business; the family of Windows-Phone-powered Lumia smartphones; a war chest of 8,500 Lumia …
Of course. If the Nokia board had said "no" to his Windows Phone plan then he might have left.
Looking at the graphs of income and profit it seems when Elop joined there was a spike in income and profitability, so he must have won over the Nokia board. But this spike was sadly short lived and he made his burning platform speech instantly killing any confidence in current products.
While I've no doubt that senior execs calling their platform a burning one does have influence, don't let the tail wag the dog on this one. The market was being torn away from it's long standing affair with Nokia in a powerful way and Nokia had no products that could compete on the level of innovation and slickness that the new arrival of the iPhone had. Nokia had become slow and complacent.
Even my old Nexus One was some way off the polish that Apple had achieved. It was Jobs that tore Nokia a new one, I don't think the average guy on the street cared very much about Elop talking about burning platforms.
>Nokia had become slow and complacent.
Unlike Microsoft, who are fast and humble?
Nokia certainly had serious issues, not least of which were the disastrous effects of the increasing Americanisation of its corporate culture. But there was a huge amount of talent and potential there, and a good CEO could have turned the Big Finn around.
Instead Nokia got Elop.
Still - Elop haters will have their revenge if he gets the top job at MS, because he'll run MS into the ground too, turning a corporate farce into a rather predictable Greek tragedy.
As for the products - given WinCE, Kin, Win RT, Surface, Win 8, and other Redmond dodgy-fat-uncle-at-the-student-wedding products, it's hard to imagine a future that doesn't include a tsunami of utter mediocrity.
WinPho might be okay at some point. But okay is nowhere close to good enough. And MS really doesn't have the talent - or more specifically, doesn't have the management or the culture - to do better.
It's the shareholders who will seal the deal on November the 19th. They may also decide that their shares have not been valued high enough.
Lets face it, Microsoft is desperate and they should hold out for more. Of course Nokia is also desperate, desperate to offload a division producing products in a very difficult market.
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"Nokia’s stock actually rallied on news it was finally going to stop trading as an independent company"
They are buying one of its divisions (the loss making one) for about half of its market capitalisation at the last business day close. From a stock perspective Nokia is going to remain as an independant company, just not making phones any more.
>remain as an independant company, just not making phones any more.
Well considering they killed most of their internal software on the phone side I am sure this is just a small bump and they will be just as big a few years from now. Probably not of course but they might actually start making money again I guess.
Hum, I wonder what this means for Windows. Is Microsoft more than just assuming or betting that phones are/will be the natural evolution of the desktop?
If so, here we could be witnessing the beginning of the decline of Windows--desktop version. In the future, historians may call this date a turning point.
In the short term, I wonder what effect it'll have on the next few desktop versions of Windows.
They bought aQuantive to challenge Google, and in doing so dissolved $6bn dollars to nothing in a matter of months. To challenge Google they've thrown cash at Bing, and created the search engine nobody uses. The wasted money on Soapbox to challenge Youtube - anyone remember Soapbox now? They blew billions adding a touchscreen interface to Windows 8 to challenge Android, and the world and his dog hate it. They conjured up Surface to challenge Chromebooks even after Google had largely strolled on from them.
Seems to me that Microsoft are really desperate to be Google, ignoring the fact that Microsoft investors can already have their share of Google simply by buying the shares. Like a badly dancing dad, Microsoft are embarrassing themselves with failed attempts to keep up with the kids. Nokia have actually done the decent thing here, and let go of a business that they can't be successful in any more. Microsoft on the other hand have failed to learn that their business is a monopolistic enterprise gouging cash cow, and that's all their investors want. The laugh is, that even if they did make a Googlealike, by the time they have achieved that Google and its current business model will have either been supplanted by a newcomer, or morphed into something different.
Milk the existing franchises, but stop pretending you're going to create anything new, Steves.
Suppose somewhere in the Nokia patent portfolio there is one on saying the word "hello" on a mobile phone or something similarly ridiculous - that Microsoft can use to threaten all the other makers.
Remember they already make about 4x as much from patents on Android phones as they do on their own winPho.
"Remember they already make about 4x as much from patents on Android phones as they do on their own winPho."
Wouldn't it be nice if those companies paying that patent fee found a way out of it. It would do them good. It's bad strategy in the long run to keep financially supporting a monopolistic tyrant company that exerts control over the computer industry. One that is doing great harm to it with that control.
I will admit Bing is quite good for video searches, it even plays previews on mouseover. Which can be more of a hindrance than a help if you accidentally leave the mouse in the wrong place and the audio of a, er, Party Political Broadcast starts blaring through the house...
"...thrown cash at Bing"
But ... Microsoft’s Bing uses Google search results—and denies it.
They need to make products that CONSUMERS want. Right now their strategy is to force feed consumers what MICROSOFT wants consumers to want.
Until they understand that they can't polish the Windows Phone, Surface Xbox and Windows 8 turds to be any brighter, and that they need to reboot, nothing is going to change, no amount of acquisitions, no amount of changing of CEOs, no amount of press bribery.
We know that, and many wish Microsoft would change. But think of it from Microsoft's perspective: the way MS has been doing business over several decades has made shareholders, Gates, Ballmer et al filthy rich. As Sir Humphrey would say, it's a courageous decision to bet the company on a complete change of direction.
As they say, watch this space.
Where have I read this before...
Oh, here: http://forums.theregister.co.uk/forum/1/2013/09/03/microsoft_just_bowled_a_googly/#c_1945098
Hmmm. Anti-Microsoft; overuse of capital letters; repeating the same line over and over; bellicose language; posting anonymously (perhaps to avoid some sort of ban)........
Could it be....?
So:
MS fail to negotiate a Nokia buyout around 2 months back
Last week or so we discover Lenovo failed to negotiate a buyout
Today MS rush into a buyout
Tempting to think someone just shafted MS before Elop could destroy enough value, using Lenovo to panic them into hasty action. Wouldn't want them talking to Google or Samsung and buggering up the plan. Helped by Ballmer quitting, any trojan horse plan would need finishing in a hurry while people that knew about it were still employed - there won't be a paper trail.
If true, just how little is Nokia really worth right now if $7.2bil is assumed more than it's worth?
"A very poor one then. Lumia sales are increasing at over 30% a quarter and Nokia were expected back into profit before the end of the year..."
Hmmmm ... unrealistic conclusions drawn from unsubstantiated figures. If it wasn't for the fact that Elop's ego wouldn't allow him to admit being "poor" at anything, I'd suspect that AC might stand for SE!
So who makes MS phones?
To their advantage, they aren’t major shippers of Windows Phone handsets: 81 per cent of Windows Phones sold were made by Nokia, with Samsung third a long way behind on 11 per cent, according to number crunchers at IDC.
So No 1 makes 81%, number 3 makes 11 percent leaving at most 8% for number 2, err that's less than 11%?
I'm guessing they've amassed those from their decades of work on materials, earlier UI/X design work (e.g. the NaviKey, menu structures, and fancy hinges - even if they never used them in Lumias/Ashas); baseband technology (e.g. ISI, antenna design, and power management) - even if some of it was hived off onto Renesas, who eventually flushed it away; core telephony standards; cameras/imaging tech (especially after they absorbed Scalado), and probably whatever they acquired from Symbian, SmarterPhone, and a bunch of other companies, or otherwise developed themselves.
I'm assuming that a ton of patents went to MS, and some troll/"licensing" firms, though.
Notice every single thing you have named were purchased back when Billy G was running things on a day to day basis? Have to give the man credit for being so good in the late 80s and early 90s to allow the company to not only print money in the 90s but coast on autopilot for ten years after that making bank.
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The Machurian candidate shows his true worth.
Expect a continuing exodus of brains from Nokia. Microsft is not a loved company in the halls of Nokia, and not a lot has changed since they put their Trojan Horse in charge of Nokia,.
Expect the low end and Asha lines and others to be sold off, along with manufacturing facilities, lots of basic research R&D and anything else that is not specifically "smartphone" related. Apple doesn't manufacture, they contract that task out, and Ballmer desperately wants to be like Apple with a cool Smartphone. He doesn't want 90% of the stuff that is the Nokia handset division today - he doesn't want to be in the phone business - 70% of it will be on the block in the blink of an eye.
Dweeb (who has owned his last Nokia - sniff)
R&D stands for research and DEVELOPMENT.
Microsoft has always lumped in product development with its stated R&D "investments."
So almost all the billions you might think they're spending on research are going to the middle managers and code monkeys that iterate Office, Windows, etc.
I do think it's a shame they won't be Nokia phones, since they are not buying Nokia as a whole, that's a big brand name to lose.
But Lumia is developing as quite a strong brand (whether you like it is a different story) and they could for instance integrate Skype into the phone even more tightly.
WP8 is arguably MS' best product right now, though unfortunately one of their worst sellers!
I'm sure there were lots of engineers hoping for a second great time for Nokia, perhaps with Maemo or Meego or whatever. A time when they will be allowed to make actual smart phones and not just app-execution devices. However that ship probably has sailed now.
They will probably now see a lot of experienced engineers leaving with the bad ones staying behind. At first nobody will notice, but eventually the devices will become worse and worse.
"I'm sure there were lots of engineers hoping for a second great time for Nokia, perhaps with Maemo or Meego or whatever"
Unfortunately Nokia senior management with their internal turf-wars between the Symbianites and the Meegoista had succeeded in comprehensivly fucking that duck before MS came on the scene.
"The engineers will learn to appreciate Stack Ranking ... or Else!"
Stack Ranking did one thing successfully in the company I just came from. It INCREASED employee turnover levels to the point they couldn't run new people in the front door fast enough to keep up with the ones running out the back. One of my tech support team members even ended up in a ER on night thinking he'd had a heart attack due to the stress caused by working under the Stack Ranking system there.
Unfortunately, this is doomed to what has become "normal" in terms of Microsoft failures.
The problem is that neither of those guys look good enough that people "want to be them or be with them". Jobs, for all his weird crap, at least had a sexy appearance. Google? They still look like college kids. In both cases you have good looking people that others want to be like... so they buy their crap.
The MS/Nokia leaders? Well, they look like the kind of people I'd be afraid to leave my kids alone with for 10 minutes. Actually, a little more than that. If they lived next to me I'd run background checks on them.
If they want to turn this around then all MS needs to do is hire some people that you actually want to see pictures of. It's not like anyone really listens to the crap that pours out of their mouths anyway. Quite frankly, those Apple ads that showed the "PC guy" pretty much nailed it: these people are creepier versions of "PC guy". Surely there are still smart/talented/good looking people out there willing to take the reigns of those corporations.
That's an interesting idea: pick business leaders for their appearance. Well, it might work. But the alternative sounds quite good, too: don't do that. Do you know or care what the leaders of Samsung and Toyota look like? Maybe a bit like the Swiss head of state (which is actually a committee, apparently).
Quite frankly, those Apple ads that showed the "PC guy" pretty much nailed it: these people are creepier versions of "PC guy".
I always raise a wry smile when I look at how the respective careers of Mitchell and Webb have gone since they did that advert. Other than Pepp Show, and their joint venture, 'That Mitchell and Webb Look', David Mitchell, the 'boring PC' has had great success on a series of comedy panel shows, has a column in The Guardian, and has married Victoria Coren. Robert Webb, the 'trendy Mac' seems to have been consigned to a series of bit-parts, and a terrible 'look at the tiny mistakes that nerds have spotted in films' series. It's subjective, I know, but to me this perfectly exemplifies the 'style over substance' of Apple. Not that Microsoft are exactly a paragon of anything, mind...
My main issue with those Mac vs PC ads (the British version) was that anyone who watched the Peep show knew that…
Mitchel (PC) was a spineless buffoon who constantly screwed up and made bad choices but was still lovable in a pathetic sort of way,
Whereas Webb (Mac) was an arrogant dick who thought he was the greatest person ever, took advantage of people, rode the coat tails of Mitchel and was to busy being ‘creative’ to get a job.
Thinking about it they summed up PC and Mac quite well.
OK, so a dying company buys a nearly dead company, inheriting as CEO the very person responsible for "nearly dead", and this is a bold move?
Microsoft seems to be between a rock and a hard place -- everyone else is selling hardware with free software, and that's the opposite of Microsoft's model. So getting into hardware might seem a good move, except this strands all the hardware manufacturers with whom they currently have deals. I wonder how that's going to work out.
I was just searching for a reasonably priced, Android-based, dual sim smartphone and found them by the bucket full. There are now many makers in China flogging a useable phone starting at around £50 unlocked, no contract. Granted, these are not cutting edge tech and may only be 3G and/or not have GPS or two cameras, but for most people like me, those features aren't worth the extra money. With so many players out there and IOS and Android OS's dominating the market, M$ may be hard pressed to earn back their investment. They will certainly have a hard time making back the cash fast enough to satisfy stockholders.
When the iPhone 5 came out and the sales numbers weren't as strong as previous models, I started thinking to myself that the market may be very close to saturation. With the standard contract running 2 years, many people are sticking with the phone they have until it's time to re-up. The small tablets are also eating away at smartphone sales. Why not keep your phone and pick up a tablet for apps? Tablets are much like a giant screen smartphone sans voice (I have seen ones with voice and I'm not going to look that stupid holding one up to the side of my head.) There is a nice savings going with a 2 device system. Once you're off contract for your phone, you can go to a service reseller for half the cost.
Go ahead monkey boy, take the saturated market by storm with your "also-ran" mobile/desktop OS. You may wind up retiring even earlier then your current plans.
At least that's what came to mind as I considered the ramifications this morning... To the bean counters, the idea is trivial. They stick a number on the thing they want to buy, and then they see if they can buy it for less than that number. How can they deduct for Microsoft's abysmal track record in hardware? Especially small hardware?
Wait a minute? Did Microsoft ever make a profit on their mice?
Hi,
Microsoft's $7.1bn Nokia gobble: Why you should expect the unexpected. Tough going. Microsoft half-hearted acquisition of Nokia is too late. Microsoft have not considered market changes as Apple will lose dominance to Google und Samsung. Apple being too expensive flooding the market with too many models with Microsoft attacking using windows as operation system will lose out on compatibility questions and speed.
Maybe they could call this new venture and any new handsets MSN... no, wait...
+1 for the Patent Troll Division. I see profitability for many years to come, gouging fees from the competition, outsourcing all the hard work, developing, manufacturing and selling the hardware to the already dominant players in a market M$ still hasn't made significant headway in.
At least Mexico loves you Steve!
... is in the financials.
First of all, Microsoft is buying the Devices and Services business. Microsoft states they're paying € 3790 million for that. Microsoft is licensing the patents for € 1650 million - they are not buying them.
Now, the really fun part is, that the whole deal seems to be a question of profit laundering. Read the second paragraph of the Microsoft press release:
"Microsoft will draw upon its overseas cash resources to fund the transaction."
In other words, they are buying Nokia with cash that they cannot bring back to the U.S. without that money getting taxed. This cash is parked in an overseas subsidiary and they can't really invest it in their U.S. operations. Basically, this money's sitting there, parked in money market investments that are earning an interest rate which is lower than the inflation rate. By spending the money on Nokia mobiles, they consolidate the value of the purchase divisions, and they integrate the Nokia numbers into theirs, hopefully feeding into their stock value at no real cost.
When (rather than if) they write parts of the acquisition down, this hits their reported profits (without generating a real hit to their operating income) and down goes their tax bill. So at the end of the day, Microsoft'll have gotten Nokia for free. All the costs will have been borne by the U.S. government, i.e. the great American tax payer.
I doubt it. Google's U.S., Motorola was U.S. - they would have had to bring the money back to the States to fund it with foreign cash. that would have defeated the point of using foreign funds.
This is the reason why foreign takeovers are a lot 'cheaper' to pull off.
Under the Dome is also sponsored by Microsoft. The main kids love getting their Lumia's and Surface tablets out at strange moments. The other day the main boy was showing his girlfriend some photos on his tablet and attached the keyboard for absolutely no reason whatsoever.
I know there is a ton of Apple stuff in nearly every modern TV show, but it just always looks so forced when MS do it.
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Elon (and Ballmer) have been planining this for 3 years - Why else would Nokia's business strategy have been pointed toward the ditch by Elon?
So, WTF is Elon going to do as the next President of Microsoft? Preside over the immolation, IMHO. Microsoft has never been anything except a pig at the trough. Elon, pretty good sized porker.
MS is not buying all of Nokia, just devices and services (phones and Ovi to you and I).
Nokia will use that cash and extra MS cash to help pay off loans it took to buy Siemens out of NSN.
http://www.microsoft.com/en-us/news/press/2013/sep13/09-02AnnouncementPR.aspx
http://press.nokia.com/2013/09/06/nokia-to-issue-convertible-bonds-of-eur-1-5-billion-to-microsoft/
Not half as much as it choked on Autonomy!
The MS embrace of death begins.
Stand by for the exodus.
Like all things Microsoft this will die on its arse, the only thing left "of value" being patents that MS will use to extort and bully companies that actually innovate.
Its a road we've all been down before and we'll all go down again.
Can't wait for Google to finally call them on their BS patents shakedown.
Nokia told Microsoft, "Win8 phone sales suck and are never getting better. We're going to quit making them."
Ballmer panics and buys Nokia's phone making division.
The deal is sealed, then Ballmer is fired when the board sees what he has done.
MS is already setting itself up as a patent troll shell company with all of those protection racket style agreements with Android phone makers. "Nice phone. Shame if anybody was to sue you over patent infringements..."
Once it splits off software/patents into its only money making division, the hardware division will go the way of RIM and Motorola.
No great expectations on MS executing on this, but it's probably a worthwhile gamble.
Nokia was the only big phone maker that makes Winphones. Having it in the MS mothership means that
- Nokia won't jump to Android (as 75% of commentards typically recommend)
- Nokia gets a lot of money to play with, to sell Windows phones
- MS may get a better clue at designing Win 8 Phone features that users want and has closer ties to the network operators. Nokia may get better corporate exposure.
On the other hand, big acquisitions often tank and MS hardly seem to have the Midas touch. But people, especially super-wise CEOs rarely plan to fail, so that's pretty easy to overlook.
Bottom line: MS spent money to move into the mobile space, somewhere where it has repeatedly failed. Might turn out to be money wasted.
But Nokia is a good gamble nevertheless. NOT doing this would likely have meant MS just giving up on mobile. A dangerous thing to do with a growing market that is quickly outstripping MS's core business and likely something investors would have savaged MS stock for.
My $.02: MS should fire its own mobile-related marketing drones and keep Nokia's who are the lesser of the two evils imho. And Nokia market drones should have less leeway to mess with desktop UIs than the Metro-tards have had to date.
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