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Behind the Microsoft Write-Off of Nokia
UnknowingFool writes: Previously Microsoft announced they had written off the Nokia purchase for $7.6B in the last quarter. In doing so, Microsoft would create only the third unprofitable quarter in the company's history. Released on July 31, new financial documents detail some of the reasoning and financials behind this decision. At the core of the problem was that the Phone Hardware business was only worth $116M, after adjusting for costs and market factors. One of those factors was poor sales of Nokia handhelds in 2015. Financially it made more sense to write it all off.
Nokia was dying even before being bought by Microsoft. What killed them is Symbian, and their refusal to switch to Android when it was the time (2008/2009). When they decided to switch to Windows Phone, it was already too late.
What killed them is Symbian, and their refusal to switch to Android when it was the time
It actually was their refusal to open up Symbian at the right time and create a dev community around it . Had that been done, Nokia would have had the opportunity to leverage its dominant market share in the smart phone segment .
Actually what killed them was the CEO they hired to fix the company. Elop laid off most of the staff, bet the farm on using a phone OS that nobody wanted, ran the company into the ground and lost so much money that it had to sell the family silver to Microsoft.
It's almost as if companies exist to earn as much money as possible
How on earth does a $7.6 billion loss fit into the narrative of making as much money as possible?
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It was more about screwing Symbian developers (incompatible OS versions/ multiple APIs, then sudden abandonment of the platform after there was assurance to devs etc) and also the abandoning the one phone OS that was better than Android & iOS (I am talking about the Maemo/Meego as seen on the N9 of course) in favor of being a "me too" Windows Phone manufacturer, that killed-off Nokia in the end.
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The fact that Microsoft not only could write this off, but did write this off shows how little they care about anything but the bottom line.
Umm, writing this off does not in anyway improve their bottom line. Quite the opposite in fact. It's an admission that they bought something for a lot of money that is now worthless. What it shows is that they are not doing a very good job of maintaining the bottom line because the company is throwing money at bad investments. It's also a strong indicator that management at the time (read Balmer) was of questionable competence.
Actually what killed them was the CEO they hired to fix the company. Elop laid off most of the staff, bet the farm on using a phone OS that nobody wanted, ran the company into the ground and lost so much money that it had to sell the family silver to Microsoft.
Elop was obviously a Microsoft operative all along.
True, Nokia was in trouble well before the WinPho fiasco, but Symbian was just a sympton rather than the disease. Management had allowed the company to branch off into different product lines and encouraged competition between them with apparently little fiscal oversight and paying no attention to the third-party developer community. So, they had S40 engineers working on almost-smartphone handsets to challenge low-end S60/Symbian handsets, S60 engineers trying to widen their product range, and Maemo/MeeGo engineers trying and failing to prove that their otherwise unwanted bastard child was a much better platform. While the managers had their heads firmly esconced in their rectums, Elop took advantage of their indecision and gave them a false sense of hope. Or, maybe not. There's a theory out there that Nokia management knew that they had a shit sandwich on their hands before Elop came along, and sought a way to wipe the slate clean without taking the blame directly if things went wrong. Microsoft and Elop appeared at the right time with an offer that they would happily not refuse: take a large amount of money in exchange for them taking out the trash for you, money that you'll be able to use to restart your phone business from the ground up in a relatively short time frame.
In Soviet Russia, Jesus asks: "What Would You Do?"
Depending on how you look at it, Elop did a great job.
1) The comapny was already dead
2) He managed to get a lot of money for the company
I would say that that is a great job, unless that was not his (real) jobdescription.
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Nokia was still the dominate cell manufacturer at the time. Microsoft killed off Nokia once Nokia was bought. They didn't ship a new phone for a freakin' year and killed off Symbian and their other product lines. Nokia would have survived it wasn't for Microsoft. Mission accomplished.
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I owned a N800 and N900. Maemo was good and would have allowed Nokia to maintain the control and distinctiveness they had with Symbian. With support for Android apps, it was a win-win. They needed united support for Maemo internally, but instead got Elop. Elop decided to throw out Maemo and Sybian and throw everything behind Windows Phone. The rest is history.
Going Android would have been a bad move also, because they would have no edge over the other Android players. Having their own OS with support for Android apps was a better solution.
Windows Phone actually made sense for Nokia: they needed a software stack that let them differentiate themselves (and no one else seemed to be using WP)
There's no point in 'differentiating yourself' by trying to sell something no-one wants to buy. You won't make your new burger store a great success by using turds in your burgers instead of beef, but you'd certainly differentiate yourself by doing so.
Windows Phone is pretty nice. It's main drawback is the lack of apps (which is hard to fix, as no one wants to develop for a platform with few users and no one wants to buy a phone with no software). It's main problem selling is that people associate it with Windows on the desktop, which is a usability disaster that somehow manages to get worse each version, in spite of having passed the point where people thought it couldn't get any worse some time ago.
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