It seems awfully convenient that Microsoft has announced what could be HUGE, strategically acquisition over the Labor Day Holiday weekend…
It was announced over the weekend that Microsoft had acquired Nokia Devices division for roughly $7.2B USD.
I’ll be honest – I really didn’t see this one coming – for a couple – three reasons:
- Microsoft had tried to acquire them before, and the transaction never happened. Nokia pushed back.
- Microsoft just announced a huge reorg. The amount of change created here is enough to keep Redmond busy, let alone having that combined with
- Steve Ballmer just announced his exit from Microsoft. The $900M write off was the straw that broke the camel’s back.
Just to clarify the timeline for everyone, because its critical to see what Redmond might be planning:
- July 11: Microsoft announces a huge reorg.
- July 18: Microsoft’s quarterly earnings are released, including a $900M write off for unsold Surface RT inventory.
- August 23: Microsoft CEO Steve Ballmer announces he will be retiring.
- August 30: Investment fund, ValueAct joins the Microsoft Board.
- September 3: Microsoft buys Nokia’s handset unit.
There are a couple items here that should be brought to mind, related to the items on this list. First, the reorg, once thought to be set in drying cement, is now up in the air. With Ballmer exiting, any new CEO may come in, assess the plans and make changes or throw them out entirely. Secondly, there were no layoffs with the reorg. Most people were simply shuffled around. That is also completely up in the air now.
Thirdly, Investment fund ValueAct has been pushing for Microsoft to be split up into consumer and enterprise based companies. That is also a distinct possibility, as the new CEO could make the case and have that happen. Bill is still the chairman of the board, but clearly, it’s all about the dollars at this point. Bill gets to do his philanthropy stuff because Microsoft makes him money. Without that, Bill really can’t give it ALL away. Economics does play a REAL part here.
Given all of this, I was REALLY surprised that both companies announced the acquisition. However, many people are speculating that Nokia’s CEO, Stephen Elop, who goes to Microsoft as part of the acquisition, is now the front runner in Microsoft’s search for Ballmer’s replacement. If this is the case, it makes sense. Quickly, here’s why:
- Elop knows and understands mobility. It’s clear from what’s happened with and to Microsoft in the past 13 years of Ballmer’s run as CEO that he couldn’t even really spell mobility let alone understand and lead the company in that direction. Microsoft missed the boat with WindowsCE and PocketPC, blew the opportunity to create a solid mobile name with Nokia as simply a smartphone partner, and doesn’t know how to create an ecosystem around Surface and Windows RT. The company’s future is uncertain due to its disjointed approach to mobility, CoIT and BYOD. The window for fixing this is closing fast, and if they want to turn things around, they need a leader who understands this sector and isn’t afraid to make bold decisions.
- Splitting the company may, or may not, be easier now. With Elop now on board, envisioning a separate mobility based division or company is easy to see. Perhaps the board wants to take enterprise and mobility and draw the line there, with the mobility business handling the consumer end. When you bring in the Nokia mobile division into the picture, it’s very easy to see things working this way.
- Nokia has been around for 150 years. They’ve sold everything from paper products to rubber boots and tires. The organization knows how to change businesses and focus, which is something that Microsoft clearly is having a huge problem with. Hopefully, Elop with bring at least this much of Nokia’s culture with him and instill that into the new organization.
I’m going to be watching this topic, and as more information comes to light, I’ll likely have a bit more to say. Why don’t you tell me what you think in the comments section, below?