Believe it or not, only four years ago Nokia -- poor, dying Nokia -- was the No. 1 mobile phone company in the world. Since then, it was bought by Microsoft, which last week announced that it's firing half of Nokia's workforce. So tell me, what exactly was the point of that $7.2 billion acquisition just over a year ago?
Stock market wonks may love those layoffs -- they love anything that makes the next quarter look good and don't much care about what things like that do to a company's long-term future -- but $7.2 bIllion is real money, even for Microsoft.
But that isn't all the money that Microsoft is throwing around in the great unwinding of Nokia. The company will have to spend $1.1 billion to $1.6 billion to reduce its workforce, with about half that amount going toward the Nokia layoffs. So tack another $550 million to $800 million on to the Nokia bill.
But at least Microsoft benefits from Nokia's lineup of mobile phones, right? Not so much. Microsoft last week also said it was giving up on Nokia's low-end feature phones and its Nokia X Android phones. Microsoft CEO Satya Nadella wants to focus on Windows Phone 8.x instead.
Second-guessing the CEOs of high-profile companies is great sport. Usually you can concede that the CEO might be on the right track, though you might have done things differently. In this case, however, all I can do is scratch my head. Really, Nadella? You're going to bet everything on devices that rely on a mobile operating system that's a distant third to Android and iOS -- an operating system that's actually falling further behind its rivals?
Everything I've seen makes me think that Nokia's days are numbered. Mind you, Nokia was already in trouble before Microsoft took over, but this acquisition has been a case of taking a bad situation and making it worse.
Things started to sour once a critical mass of consumers started turning away from feature phones in favor of smartphones. Nokia's Symbian was a great operating system for feature phones, but it doesn't work at all well on smartphones. Once it recognized that it needed a Symbian successor, Nokia floundered about, experimenting with several Linux-based operating systems, such as Maemo, Tizen and MeeGo, but they went nowhere. Apparently not wanting to offer me-too Android smartphones, it steered clear of that operating system (until shortly before the Microsoft deal closed, that is). Samsung, meanwhile, went all in for Android and has done very well with its Android smartphones and tablets.
As Nokia began to wobble, it hired as its CEO Stephen Elop, then the head of Microsoft's business division. At the start of his tenure, Nokia had a 34.2% share of the global smartphone market (http://blogs.computerworld.com/management/22845/stephen-elops-reward-running-nokia-ground-25-million). Three years later, as Elop engineered the sale to Microsoft, Nokia's share of the global smartphone market had declined to a lousy 3%. In the midst of that death spiral, on Sept. 4, 2012, Elop introduced Nokia's new topline Windows Phone, the Lumia 920. The next day, I wrote, "The truth about the viability of Windows Phone 8 can be seen by the simple fact that after Nokia introduced the new model its stock dived over 13%. Any questions?"
That wasn't a one-day phenomenon. By the time of the sale to Microsoft, Nokia's stock price under Elop's "leadership" had dropped by almost a third. And before Microsoft got a chance to fire half of Nokia's remaining employees, Elop had already fired 20,000.
It's no wonder that some people say that Elop was a Trojan horse, sent to Nokia for the express purpose of wrecking the company to make it cheaper for Microsoft to pick up. The problem with that theory is that, as I noted earlier, it's hard to see how the acquisition has benefited Microsoft. Maybe Elop is just better at wrecking companies than anyone ever suspected.
If the acquisition benefited anyone, it was Elop. He was paid $25 million for his part in the deal. Nice work if you can get it. And he ended up back at Microsoft, where today he is executive vice president of the Devices Group.
Well, maybe Nokia would have gone down in flames anyway. It was already in trouble when it hired Elop. But certainly with Elop as its CEO and Microsoft as its ally, it didn't have a snowball's chance in hell.
So I'm afraid this is goodbye, Nokia. You may exist still as a brand name on smartphones manufactured in Vietnam, but the mobile phone company, and its expertise, is gone. There are other remnants, including Jolla (http://jolla.com/), the maker of Sailfish OS smartphones, and Nokia Advanced Technologies, which will manage Nokia's patents. But they are nothing compared to the mobile giant that was once the pride of Finland. Still, it's just possible that sisu -- the Finnish spirit of determination and bravery that has served Finland, its people and its companies well over the centuries -- will carry them through.
Steven J. Vaughan-Nichols has been writing about technology and the business of technology since CP/M-80 was cutting-edge and 300bit/sec. was a fast Internet connection -- and we liked it! He can be reached at firstname.lastname@example.org.
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