Eadon on Tech: Microsoft’s Alleged Assassination Of Nokia

How to beat up an iconic European mega-corp then buy it for peanuts.

1) Install your own man as Trojan Horse CEO.
2) Trojan Horse CEO makes irrational decisions and destroys profits and shareholder value.
3) Trojan Horse CEO sells you your competitor’s corpse for loose change so you can pick the pockets for precious jewels.
4) Welcome your Trojan Horse back into the fold with rich rewards.

Freaking insane Conspiracy? The instant Microsoft inflicted step number 1 on Nokia, Geeks world-wide predicted steps 2, 3 and 4. Here is the longer version of the alleged scam.

A deuce of recent Microsoft news: Long-time CEO Steve Balmer has announced he will resign within the year. Microsoft have confirmed they are buying Nokia (via their Trojan Horse Nokia CEO, Stephen Elop), which is criminal. Maybe literally.

Those in the know understand that Microsoft CEO Steve Balmer is a salesman, he was the wrong guy to lead Microsoft and he has steered the lumbering Microsoft tanker to its impending doom on the rocks of Has Been Land. The greatest failure of Microsoft has been its abysmal performance in mobile computing markets, leaving Microsoft to defend its existing cash cows in the important yet stagnant PC market.

Let us see how MS failed in mobile and why it allegedly assassinated Nokia.
Microsoft co-founder, Bill Gates, is a ruthless businessman. By non-techies, Gates is thought to be a visionary, but in reality he made money by coping or buying other companies. Gates’ vision was so poor that the first issue of his autobiography, The Road Ahead, failed to even mention the Internet at at time of the dot-com bubble boom. Gate’s vision of the future had no Internet in it.

At that time PDAs were commonplace. Microsoft wanted that action and they managed to kill PDA-maker Palm with gadgets running Microsoft’s first mobile operating system, called Win-CE. (Aka Wince.)

Then colour-screened mobile phones came along and MS made Win-CE based smart phones. The Microsoft phones did well in the market.

Nokia were dominant, selling phones running a non-smart phone operating system called Symbian. Blackberry burgeoned into a serious player in the business market.
Steve Jobs went and created the iPhone. The iPhone had an excellent touch interface implementation and it integrated with iTunes (making it iPod-compatible). Microsoft’s Balmer laughed at the beast, saying that it could never own more than two percent of the market (not one to learn, he similarly dismissed the iPad when that came out, playing catch-up when it was far too late). As if the gods wanted to mock Balmer, the iPhone (and later the iPad) quickly became a massive hit. (It now makes more profit than all of Microsoft’s products and services combined!)

In cruel contrast, Microsoft’s Win-CE phones garnered poor reviews and their market share went over a cliff.

Microsoft have always copied Apple, but now the envy became obsessive. Balmer decided he wanted Microsoft make huge profits on cool consumer products, like Apple. He brought out the Zune (an iPod competitor) and it flat-lined. He acquired a mobile phone company, Danger, only to mess up what made them successful. The result was the infamous Kin phone, which bombed spectacularly and lasted only a few weeks in the market before being culled.

Shortly afterwards Microsoft released “Windows Phone 7”, which was promoted as a serious iPhone killer. Windows Phone 7 was practically still born despite a billion bucks marketing budget. It was the first phone to feature a new mobile user-interface by Microsoft, which you may have seen in Microsoft’s fugly Windows 8 desktop operating system.

At about this time a director at Microsoft, Stephen Elop left Microsoft to become the CEO of Nokia.

The iPhone was dominating the smart-phones market and was making Apple extremely rich. Google entered the market by way of its open source mobile phone operating system, Android, which itself is based on Linux. Because Android gave both manufacturers and users many more freedoms than the locked down Apple, Blackberry and Microsoft systems, Android was immediately adopted by geeks who then recommended it to their families and friends. Android phones now represent over three quarters of all smart phones sold.

Meanwhile Nokia were doing extremely well with dumb-phones and feature phones. They also had a superb new open operating system called Meego. Although Nokia were losing share to Android they were well positioned. All Nokia had to do was to maintain their dumb-hone (Symbian) cash cow whilst improving Symbian towards full smart-phone capability. In parallel they could sell their excellent new smart phones such as the Nokia N9, which was well loved.

Nokia also had the option of selling Android phones in parallel. Many have said they hanker for a Nokia Android phone. It was a win-win situation. Nokia could share in the huge Android market and it could grow it’s Meego market, whilst enjoying profits from its dumb-phone market.

So what did Microsoft’s Stephen Elop do in his new role as Nokia CEO? As predicted by geeks galore, he killed Nokia dumb phones, he killed Nokia Meego phones (RIP N9) and he ruled out Nokia Android phones. Instead he forced Nokia to produce only Windows Phone 7 phones. And Windows Phone 7 was a three-legged dog.

What could possibly go wrong?

Long story short, Nokia’s share price imploded. Nokia fired most of its engineers and closed down factories and sold buildings. Profits turned into losses. They were now dependent on a billion bucks per year infusion from Microsoft.

Nokia said that Microsoft’s new mobile operating system, Windows Phone 8, would be its salvation. But Windows Phone 8 has been a total disaster, just like Windows Phone 7.
So, now that Nokia have been practically destroyed by Elop, this has enabled Microsoft to buy the once-proud Nokia from their petty cash box.
Conspiracy? It is difficult to argue otherwise.

Nothing good will come of this. Buying Nokia will not help MS sell phones because the problem is with Microsoft’s unpopular Windows Phone 8 operating system. This is all about Microsoft obtaining Nokia’s valuable patents. Microsoft has a new biz model, which is dangerously akin to a Patent Troll. They use patents to sue manufacturers of Android and other technology companies. It’s all part of the fracked up modern patents system that encourages mega-corps and unscrupulous firms of lawyers to use patents as lethal weapons to rob enterprises and kill the little guy. (“We were only protecting our IP”, quoth the Patent Trolls). Patent Trolls ruin industry, which needs both small and large firms to be healthy, they discourage start-ups and in the end it is the consumer who pays.

So to recap. Microsoft installed their erstwhile exec, Stephen Elop, as a Trojan Horse CEO at a major mobile competitor, Nokia. Elop sold the family jewels and made insane decisions that maimed Nokia in terms of size and share holder value. Elop then sold Nokia to Microsoft at a knock-down, rock-bottom, bargain basement price.

Trojan Horse Elop has been welcomed back into Microsoft and is tipped as being the successor to Balmer. Even ignoring Elop’s dubious history prior to joining Microsoft and then Nokia, all of this looks very much like Elop has acted with malfeasance, that he acted for Microsoft’s benefit, not Nokia’s.

The direct and indirect costs to Nokia’s shareholders and European industry of this alleged sabotage are enormous. A much loved and iconic European technology company together with thousands of jobs seem to have been unethically and possibly unlawfully destroyed. RIP Nokia.
An EU investigation seems in order here. I’d much rather the EU focus on investigating possible fraud and corruption than spend our taxes on Big Brother laws for installing cameras and speed-controllers in our cars.

Deeper Nokia/Elop analysis by ex-Nokia men:
the-do-it-yourself-elop-analysis

This witheringly insightful analysis of Elop’s disastrous strategy was written a year ago:
2012/10/the-there-pillars-of-nokia-strategy-have-all-failed-why-nokia-must-fire-ceo-elop-now

If you would like to encourage the EU to investigate, formal complaints can be submitted via
http://ec.europa.eu/commission_2010-2014/tajani/contact/commissioner/index_en.htm
Which is the office of Antonio Tajani, Vice-President of the European Commission, B-1049 Brussels, Belgium

See you next week for more Geek news.

15 comments on “Eadon on Tech: Microsoft’s Alleged Assassination Of Nokia

  1. Rocco
    September 7, 2013 at 2:44 pm #

    So James, essentially this happened because governments enforce “intellectual property” laws?
    IP is the real villain here, am I right?

    • James Eadon
      September 7, 2013 at 3:37 pm #

      @Rocco – my view is that Microsoft have a history of highly unethical business practices. Concomitant to that, modern IP law is creating all kinds of distortions to the free market, tipping the balance into the favour of lawyers and mega-corporations. IP law is unnatural, when it comes down to it.
      Possessions are concrete things. The moment you try to define a possession as some kind of idea, some kind of information, then the matter goes to the devil. You have corrupted the free market.

      • Rocco
        September 7, 2013 at 4:43 pm #

        Cool. But if we assume Microsoft has indeed acted unethically in this instance, the sole reason would be it’s desire to possess patents and copyrights previously belonging to Nokia.
        Hence (by extension) were it not for the existence of IP, there would be fewer ethically questionable business practices in the world today. And, therefore, the free market would get a far better press than it does currently.

      • Rocco
        September 7, 2013 at 4:44 pm #

        Sorry. Not copyrights, just patents.

      • dr
        September 7, 2013 at 7:10 pm #

        Not sure that it is as simple as “scrap IP law, problem solved”.
        IP law exists to allow someone who invents something to benefit from their invention before their idea is gifted to the “commons”.
        If you have strong IP law, then big business can go round buying patents or copyrights, and then suing people for infringement, to make money, and this activity has low risk. This can be monopolistic behavior and damage the market. So you have a problem.
        If you don’t have IP law, then big businesses can go round buying newly launched products from startups, reverse engineer them, then sell them globally, reaping the rewards that would have accrued to the inventor. So you have a problem.
        Now you could ask, “Well if the big business brings the benefits to the world, why shouldn’t they be rewarded for that?”, well part of the answer to that question, is that the inventor may have had to put capital into a development programme, and having it copied quickly after launch, potentially destroys any return on the original investment. This undermines creativity and hence productivity growth, thereby damaging wealth creation. Essentially, this is discouraging effective allocation of capital, alternatively promoting mis-allocation of capital.
        The free market is trying to match buyers and sellers. But you also need a mechanism whereby you can reward creation, and IP law tries to do this.

      • Rocco
        September 7, 2013 at 7:41 pm #

        No, man, it really is that simple.
        Patents are State granted monopolies. They are an assault on genuine property rights.
        Therefore, they should be scrapped immediately.
        As to the ‘practical’ problems you mention, consider “that which is unseen”. What about all those things that could exist today (the future too) were it not for the fear of being sued?
        But like I said, they should be scrapped on principle.

      • dr
        September 7, 2013 at 7:22 pm #

        To reply to myself, one option might be to ban the sale of copyrights and patents.
        So then a creator can create something, and sell it directly, or licence it to have it made and distributed and sold and be rewarded. But they can’t sell the IP, it would just be transferred to the commons in that case.
        Hence there would be no IP for patent trolls to buy.
        Not sure if there would be any severe unintended consequences though.
        One company that has a business model in this area is Disney, and they have drawn criticism for the way that they operate.

      • dr
        September 8, 2013 at 3:25 pm #

        @Rocco
        “Patents are state granted monopolies.” Yes. They are granted to the creator / inventor, to allow that person time to commercialize and sell products or services derived from their idea. This facilitates the reward of the creator/inventor and therefore maintains an incentive for people to continue innovating.
        ‘Consider “that which is unseen”’… All those things that could exist, but don’t for fear of being sued… They will likely be very similar to something that already exists, since, if an creator / inventor is rational, they will not fear inventing something that is new or different to other things that exist, whereas they will fear being sued if their idea is similar to another patented idea. So society only loses ideas that are similar to others in existence for the duration of the respective patents.
        This is a small price to pay in comparison to a reduction in the level of creation, due to fear of idea theft, since ideas could be stolen that were similar to other ideas that were already in existence or very different.

      • Rocco
        September 8, 2013 at 4:20 pm #

        Sorry dude, I stopped reading when you admitted patents were State granted monopolies.
        😉
        But seriously, your argument presupposes that all patents are only for things currently in production. This isn’t true. Even if it were, who’s to say that the loss of products similar to those that exist wouldn’t outweigh the supposed gains? Your basing your advocacy of aggression against legitimate property rights on the purest guesswork.
        Another thing: given that patents (under the correct name “monopolies”) didn’t exist until the 18th century, how do you account for innovation prior to that time? Surely everyone must have been too terrified to invent new stuff?
        Also “idea theft” is nonsense. Ideas are not a scarce resource. My using your idea doesn’t deprive you of it. It may mean that you don’t profit from it as much as you would like to – but so what? You don’t own how much you think something is worth’.

  2. right_writes
    September 7, 2013 at 3:34 pm #

    It seems to me that the problem with software patents is that such a legal device is in danger of killing an idea.

    If a piece of software were instead, protected by copyright, it would mean that a newcomer could legally essentially have the same or similar idea and express it differently, thus avoiding a lawsuit.

    Looking at some of the patents that the mega computer corps get away with in hardware is pretty difficult to justify too…

    I always thought that the whole point about patents was to protect someone’s good idea for a few years, to give people a chance to benefit a little from their idea.

    As for the Elop thing… It looks a bit dodgy, but I am not sure how one could prove it.

    • James Eadon
      September 7, 2013 at 3:44 pm #

      @right_writes – pretty much all non-trivial software is protected by copyright. My only strong criticism of modern copyright law is that copyright spans are now far too long, extending to over a lifetime. Also, I think that one should not have rights over things called Application Programming Interfaces – API’s especially if those API’s are published for others to use.

      Reverse engineering of software (and anything else) should always be a human right.

      The real issue is modern patents (which have spans that are way too long) for both hardware and especially for software.

      The very idea of patenting software is ridiculous and WRONG, as you say. Software is essentially logic and logic, like mathematics, or music, should never be patentable. It falls under the realm of copyright.

      Software patents have so many down sides and no reasonable up-sides they are simply not tenable, but that’s a topic for different post 🙂

  3. jazz606
    September 7, 2013 at 7:00 pm #

    Why did the Nokia board go along with Elop ?

    • James Eadon
      September 8, 2013 at 6:56 am #

      @jazz606 That’s a great question. Related to it is why the board tolerated Elop’s failed and unworkable strategy and why they agreed to a suspicious sale of the company to Microsoft. It was from Microsoft’s board that Elop had recently “retired” to become CEO of Nokia.
      Perhaps the EU might get to the bottom of it, these questions need to be investigated, this has all the hallmarks of a Trojan Horse attack on Nokia.

  4. dr
    September 7, 2013 at 7:17 pm #

    I also have to say that in situations like this, I do think of the shareholders and think, “were they asleep?”
    Afterall, they own the company. If a muppet is put in charge, and that person announces plans to tear the company to pieces, then really they should do something.
    I don’t know how activist Nokia shareholders were in this case, (it would appear not enough), but in my opinion most shareholders in companies listed in London, act like they are spectators of a company, rather than owners, who should be checking that the company has the right strategy and the right people to make it happen.
    Part of this problem is pension funds. Because pension fund managers have huge numbers of holdings and are investing other people’s money, they don’t give a sh!t about the performance of the individual companies, if they think things are going to go badly, they just sell, or do nothing and take the losses, hoping that they can be offset with another holding.
    But this issue isn’t really relevant for this thread….

    • James Eadon
      September 8, 2013 at 7:03 am #

      @dr indeed. This has not been a victimless move by Microsoft, it has, in effect, pilfered money from share holders and therefore from pension funds. All of that is in addition to throwing Nokia’s workforce under the bus and, by extension, an ecosystem of organisations lost business due to the ruin of Nokia.

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