Was the Nokia acquisition Microsoft’s plan from the start?
Microsoft rocked the tech world early this morning with an acquisition some claim to have predicted from the very beginning of the tight-knit partnership. For a cool $7.17 billion, Microsoft will acquire Nokia Devices & Services business, and it will license Nokia’s patents and HERE mapping services.
Nokia CEO Stephen Elop will step down and become Nokia Executive Vice President of Devices & Services. Upon completion of the takeover, Elop will join once again the ranks at Microsoft as the head of its devices team. All of this is happening in the wake of Steve Ballmer announcing his retirement, which will happen in the next 12 months.
Pair this with a good bit of other serendipitous events, and some have started to believe this was the plan all along, that Elop was a sleeper cell sent by Microsoft – a theory some are no stranger to.
Elop, a former Microsoft exec, stepped down from his post in September 2010 to become CEO of Nokia. Three years later, after partnering up with Microsoft in early 2011, the business sells the vast majority of its devices and services business to Microsoft.
This series of related events, for some, reads too much like a well-executed plan to be pure happenstance. If you hold the facts in a certain light, it seems as if Ballmer chose Elop to grab the reins at Nokia and quickly form a partnership. Elop was aggressive and turned Nokia’s hardware direction almost entirely towards Microsoft, cutting back its Symbian efforts to low-end Asha devices in emerging markets and completely cutting ties with its co-developed initiative, MeeGo, with Intel.
It was a lot of change over a short period of time for the Finnish-based firm. And it just so happened that the stars aligned and a Microsoft acquisition of its Devices & Services division began just three years after Elop took the helm.
Even Nokia’s former Lead Program Manager of Imaging Experience, Damian Dinning (@PhoneDaz on Twitter), noted the existence of conspiracy theories on Twitter following the news. It’s just too perfect to be a coincidence, right?
There’s plenty of loosely connected events and facts to make a haphazard assumption. It makes a great story, and if you’re a conspiracy junkie, this one might have you running in circles for all of eternity. But there’s not nearly enough evidence to draw a serious conclusion or to prove much of anything.
I would venture to say that, at best, Elop and Ballmer likely devised at least half of the above plan – Elop becoming Nokia CEO and developing a tight partnership to promote its up-and-coming mobile platform, Windows Phone.
Having a well-known global manufacturer like Nokia, albeit far less notable than it once was, on board and dedicated to your platform looks great, especially for other prospective OEMs. Theoretically, it would inhibit competition and pique interests. Paying Nokia $1 billion over the course of a couple years probably seemed the better option than a purchase at the time, a much smaller risk. It seems entirely believable that two companies working very closely together over the course of two and a half years that further ideas of streamlining would arise.
Not to mention, Nokia’s market cap at the time was also significantly higher – roughly $90 billion in Q3 2010 versus the $18 billion market cap today. The troublesome part in believing that Ballmer sent Elop to Nokia are the implications it would entail, such as Elop purposefully botching launches and not pushing the company towards growth in a purposeful devaluation of the company. That would be a tough pill to swallow for most, and a difficult story to convince anyone of.
Frankly, there are oodles of theories that seem far more feasible than a three-year-in-the-making plan coming together without a hitch.
In fact, I’d say it’s even more plausible that Elop simply jumped at a CEO opportunity. His work history should lend enough credence to that. He’s been jumping between executive positions in tech companies ranging from Adobe Systems and Macromedia to Juniper Networks and now Microsoft and Nokia for the better part of two decades. Separately, he worked at both Adobe and Juniper exactly one year to the day, according to SiliconBeat.
Elop has been jumping around for ages, and he signed on with Nokia for a cool $6 million as compensation for lost income, plus his $1.45 million annual salary. Point being, there’s just as much to support the theory that he was looking for another CEO position and, well … more money. Self-preservation.
Honestly, we’ll probably never know the truth. Ballmer told The Verge:
“I wouldn’t say this was always in the cards. Over the last few years we have thought about our possibilities and strategic options to make sure we had success in phones. I would say I was going through a fairly diligent examination of that at about the time Nokia decided to take a look at opportunities two and a half plus years ago … And we leapt at the opportunity to form a strategic partnership, we invested in that partnership, as has been well documented. We love the partnership.”
And frankly, whether this was the plan all along and Ballmer is just blowing smoke or not, it doesn’t matter. One thing is certain: assuming the deal goes through, there’s no turning back for Microsoft. Windows Phone has always been a secondary initiative – a Plan B – for HTC, Samsung, Huawei, and practically all other OEMs. The slow growth and licensing fees paired with in-house competition may very well put those loose partnerships on the fritz. And Microsoft might become an Apple of sorts, the only (notable) manufacturer making hardware for its own platform.
The only thin thread of hope Microsoft will have for keeping mobile OEMs around is the loose, poorly developed ecosystem between PCs, tablets, and smartphones. And that only appeals to a handful of the current Windows Phone makers.
Grab your popcorn, folks. Things are about to get interesting.