Microsoft's Nokia 'Deal' is More Like a Takeover, Patents Pose a Problem

Dr. Roy Schestowitz

2011-02-11 21:48:24 UTC
Modified: 2011-02-11 21:48:24 UTC

"In private a government delegate compared Microsoft’s public affairs methods with the scientology cult." --FFII member in attendance

Summary: Microsoft's entryism at Nokia expands with a new deal, the addition of former Microsoft veteran Chris Weber, firing of older management, and potentially patents too

ELOP is a very hated man right now, and not just among Linux advocates (there is a whole article in The Register about just that). The state of Nokia's stock speaks volumes (Nokia is down sharply). For the uninitiated, here is the press release from Nokia. There is also one from Microsoft and a video announcement. So much was written and is still being written about it in the press; moreover, since we expected this all along, there is not much to add. In chronological order, here are some pointers to posts we wrote since Elop had first entered Nokia:

This new deal with Microsoft did not shock us as we had expected it with great disdain for several months and we explained its implications (some people did not comment on it until the ninetieth minute). In this post we'll limit ourselves to new information. Dr. Glyn Moody quotes a comment that agrees very much with what we've worried and warned about: "perfect trojan strategy: msoft puts elop w nokia; nokia embraces windows phone; nokia shares tank; msoft buys nokia"

Another aspect of it is the patent ownership we alluded to in the previous post. If an analogy helps, think of CPTN in the context of Novell. See posts such as (also chronologically ordered):

Apart from sarcasm about Nokia's Windows phone (picture), there is very harsh criticism that includes a good post from Eric Raymond, titled "The Smartphone Wars: Nokia’s Suicide Note". Here it goes: "Stephen Elop has jumped his company off the burning platform, all right. And, I judge, straight into the fire.

“It’s the way Elop has failed to resolve Nokia’s drift and lack of a strategic focus.”
--Eric Raymond"No, the choice that seals Nokia’s doom isn’t the tie-up with Microsoft (though that’s problematic enough, and I’ll get back to it). It’s the way Elop has failed to resolve Nokia’s drift and lack of a strategic focus. Instead of addressing this problem, Elop plans to institutionalize it by splitting the company into two business units that will pursue different – and, in fact, mutually opposing – strategies.

"After the brutal clarity of the “burning platform” memorandum, this is deeply disappointing. And not viable. One of my commenters voiced my very thought: the death spiral begins now.

Yes, Microsoft loves a "death spiral". It is a term that Microsoft uses internally. In this case, Microsoft has nothing to lose and Nokia has everything to lose. They privatise the benefit and socialise the risk, to to speak. If Nokia goes under, that too is a win for Microsoft. The same scenario applies to deals between Microsoft and companies like Yahoo!, Corel, Novell, and others. It's parasitic and exploitative. Here is one way of putting it:

Lets start with the obvious. Microsoft wins massively. One of the biggest wins in history. The whole PC industry is singing in chorus that the future of the PC is mobile. Microsoft which built its massive and profitable empire on the PC, was never able to do so in mobile (their peak market share was about 12%, and they currently have 3% but that includes the about-to-be extinct Windows Mobile. Microsoft's new OS, the one Nokia will adopt, called Phone7 has only 1.5% in Q4. Nokia had 33% for the whole year; Who is the winner here?).

So, Nokia kills Symbian (that's one competitor less for Microsoft) and Nokia's reasons for avoiding Android (by its own explanation) apply exactly to Vista Phony 7, so they can easily be viewed as lousy excuses. The issue of distinguishing oneself cannot be resolved with a Microsoft platform that is used by other hardware companies too. Stephen Elop is lying through his teeth to justify an atrocious deal with his colleague/boss Stephen Ballmer. Ballmer sent him there amicably (see the official statement from him) and now they shake hands for the cameras, ushered by sympathisers like Andrew Orlowski, the MSBBC, and Microsoft booster Preston Gralla. Now, watch who else is joining:

Following Nokia‘s strategy shift announcement, the Finnish mobile phone giant has just announced that it has appointed former Microsoft executive Chris Weber as President of Nokia Inc. (United States), and head of Markets, North America.

That means Mark Louison, a long-time Nokia employee who was appointed that role back in March 2007, is out to “pursue new career opportunities”.

Weber comes to Nokia from his own consulting business, but he’s mostly known for his career at, yup, Microsoft. Weber was with the Redmont-based software juggernaut for 16 years – he held several senior executive positions in sales, marketing and professional services.

They are likely to appoint some more Microsoft cronies.

Just as Nokia adopts Windows Phone 7 as 'primary platform' (despite Vista Phony 7 failing in the market) we learn that Nokia's Linux efforts are at great risk (no official word about their death yet). "NOKIA PICKS WINDOWS" says this one headline among several similar ones. MeeGo/Qt are discussed in [1, 2] and Fab says: "Former Microsoft executive and Nokia CEO Stephen Elop has chained Nokia’s fortune to his former employer’s: Nokia is now effectively the main delivery platform for all Microsoft mobile and entertainment technologies. Although Nokia is denying this, this will probably spell the end of both MeeGo and Symbian — most likely sooner than later."

This is slowing down Linux development and harming KDE too. Nokia is currently one of the top contributors to Linux, so for Microsoft to disrupt Nokia would mean harming Linux in servers and desktops too. Here is what The H says:

What that MeeGo-related product is, was not disclosed. Notes on the Nokia's reorganisation in another part of the announcement offer a suggestion though; the company announced it was reorganising into two divisions: Smart Devices and Mobile Phones. The Smart Devices division will include "Symbian Smartphones" and "MeeGo Computers"; this may indicate that Nokia's future plan for MeeGo is on non-phone devices, a strategy reminiscent of previous Nokia tablets such as the Nokia N770 and N800; these ran the predecessor of MeeGo, Maemo.

In the Techrights main IRC channel we've discussed this many times today and there are many good responses in Identi.ca too (see our IRC logs from around 8AM onwards). This is an example of market distortion by Microsoft and a chain reaction will follow, just like done back in the days with Novell, shortly before the patent assault began, first with FUD, then with lawsuits.

Techrights has stressfully anticipated this deal with Microsoft but was a lot more concerned about patent provisions. To put a positive spin on what just happened, at least no patents are being passed to Microsoft (for now), however Nokia can end up like Novell with the CPTN scenario and Nokia can also sue companies that sell Android devices using its large patent portfolio applying to software and hardware alike. Nokia is pushing Windows, not Android or even Linux, so such lawsuits can be invoked by former Microsoft executives inside Nokia. "Elopocalypse" is the hashtag for this whole nightmare deal and Jeff Waugh posted some interesting thoughts about it, e.g.: "So it sounds like MeeGo will be used for tablets, mobile Internet devices (if that category even exists in 2011) and perhaps other form-factors… but then, check out the choice of words: “project”, “exploration”, “related product”. Elop all but confirmed the loose end nature of the project during the CEO Q&A.

"There’s no commonality whatsoever between MeeGo and the Windows Phone 7 platform (unless Nokia do something very clever with Mono, but I can’t see Microsoft allowing it), so now Nokia has Symbian, MeeGo and Windows Phone 7 for different device profiles… a confusing story for developers, don’t you think?"

“Intel have lost their 800lb smartphone hardware gorilla… does it make sense to continue investing in MeeGo?”
--Jeff WaughHe also wrote: "Then you have to consider Nokia’s partners in the MeeGo project: Intel and the Linux Foundation.

"Intel have lost their 800lb smartphone hardware gorilla… does it make sense to continue investing in MeeGo? Just for tablets or netbooks? Who else is going to jump on board, particularly since the HP webOS announcement this week?"

Where does the Linux Foundation stand on this, having preached co-existence with Microsoft in one form or another? Will Intel take over MeeGo? What happens with trademarks? What does Intel and the recently-added AMD have to say? "What MSFT is doing to Nokia would be illegal in most European countries. They are practically overtaking company for $0," gnufreex wrote in IRC. "This is hostile takeover. They stole entire company."

Here is something that Techrights readers can do to help. Sign this new petition which states:

We want Free Software based phones.

We pledge never to buy a Windows Phone from Nokia, or even to develop for it.

Petitions can help Nokia see what's coming or make its shareholders sue the company for committing suicide (one of our readers called it "assisted suicide" by Microsoft, "euthanasia", or Elop-"Kavorkian"). If Elop can be proven to serving Microsoft rather than Nokia, he too can suffer a blow. But customers and prospective/potential customers need to organise and make themselves heard. ⬆

Comments

Agent_Smith

2011-02-12 01:17:29

Oh, boy, how I wanted to write something about this travesty. Well, let's start enumerating the issues:

1-Where were the Nokia's shareholders minds, when they brought Elop onboard Nokia. 2-The man is a bureaucrat, he's not a techie. I mean, bureaucrats do what bureaucrats do: cut costs and fire people. 3-Nokia needs a visionary, not a bureaucrat. They need a Jobs, not another Ron Hovsepian. And Hovsepian things is what Elop will do 4-Oh, no, the guy says they're standing on a burning platform, and then, he tries to extinguish fire with gasoline... That's amazing. 5-Nokia has years of development with Symbian and a fair amount of time developing Meego. They crossed all the way the ocean, and, when they are about to reach the shore, the "CEO" says: No, let's backtrack and forget all we've done so far. Jeesus Merciful, what a MORON. 6-And then, he speaks about ecosystems, saying Nokia's attempts produced no results. Ok, I give him that, let's say that would be true(it's not). Well, what the Einstein does then? Chooses a platform with NO ECOSYSTEM AT ALL. Oh, boy, are you sure this guy is not suffering from detachment from reality ? 7-Then, make all that noise Nokia's in trouble. It's not. Actually, M$ is in more trouble than Nokia. The fact is, Nokia's suffers because it's big. What's easier to move around? An elephant or an ant ? Nokia's gigantic size is their problem, they can't move fast enough, and can't match Apple's speed, since Apple has only Hypefone to take care, nor Google's speed, since Google only makes the operating system, and does not have to care about hardware. 8-Then, I say: Choosing WMP7 over their own in house creations will fail to make waves, he's just exchanging a number six for half a dozen. Nokia's problem is not the mobile OS, it is its size, and, if they don't do something about it, not even Einstein coupled with, say, Alan Touring, can save them.

Let's say Nokia today is like IBM from the past 70's. IBM could not compete with the growing home computer market. Then, they hired M$ to make their operating system. Well, the rest of this history, everybody knows: IBM almost went down the drain, and M$ became a powerful behemoth, that still harms IT to this day. Seems like folks at Nokia haven't learned from history.

I've posted this rant too on ghabuntu's blog: http://www.ghabuntu.com/2011/02/on-nokia-going-down-microsofts-lane.html

twitter

2011-02-12 05:24:27

This is not cost cutting, it's Microsoft boosting. If Nokia wanted to cut costs, it would turn research into implementation with Symbian and MeGo instead of taking on Windows staff. Taking on Android makes some sense because there's enough in common with MeGo. Windows Phoney 7, on the other hand, is a huge expense with no obvious upside. Microsoft's Asian partners are way ahead of Nokia on that but it's a race to Microsoft's bottom. Windows Phoney 7 is like any other Windows mobile effort or Windows itself, a technical disaster that sucks the life out of anyone dumb enough to be Microsoft's next "one night stand" or "pawn." All I can imagine is that Elop is going to whore out like HP did and become just another brand name slapped on me too Asian hardware. So dies another great tech company.

Dr. Roy Schestowitz

2011-02-12 05:49:15

To Elop, this deal doesn't need to make sense, it needs to make Ballmer richer. And don't ask what the Hell he was thinking; he wasn't.

twitter

2011-02-15 04:54:00

Elop is promising to use patents. PJ found him saying this:

Microsoft plus Nokia has a remarkably strong IP portfolio, and we will use that appropriately with the context of our ecosystem. ... Ensuring that the value we create with our patents, we can defend from those who may take advantage.

How disgusting, Microsoft did not have to spend a red cent to be able to terrorize everyone with Nokia's patent pile and suicide a dominant competitor. Everything else I read is claiming that Windows will be the dominant OS on Nokia phones now. This destruction of actual value and patent hype earns a specail mention in the Microsoft patent extortion timeline. Elop belongs in jail.

Gizmo

2011-02-12 01:05:38

It says a lot when your stock loose 14% over a technological announcement in a single day. Kind of like a mining company announcing that they havnt found any gold yet. Do Finns plan to protest this hostile takeover?

dyfet

2011-02-12 05:41:01

But it all must be okay, after all MVP Miguel is all excited and about it!

More like the mining company announcing all the gold they were to mine is actually fools gold.

Dr. Roy Schestowitz

2011-02-12 05:45:02
So you too saw de Icaza's response, eh? Yes, I saw his response to it. It's rather telling, isn't it?

http://www.networkworld.com/community/node/71380

I didn't intend to post many repetitive items about it, but here's some stuff I fished this morning:
- Intel Won’t Forget About MeeGo
  
  MeeGo was a Nokia/Intel joint venture aimed at producing an acceptably good Linux-based mobile platform for devices. Now that Nokia is going WinPho, however, it looks like MeeGo will soon get short shrift. But, if Intel has anything to say about it, things will remain on course as previously ordained.
  
  In a short note, Intel informs the world that they’ll be sticking by the platform, thankyouverymuch, and nothing will change.
- Nokia Microsoft is like Yahoo Bing – Nokia’s days as innovator are over
  
  As I was plugging in to power my iPhone to live stream today’s Nokia press conference, I overheard someone lean over and say “This is the most important day of your life”. It was whispered into the ear of Nokia’s PR spokesman as he took the stage today to introduce Nokia CEO Steven Elop. It certainly was important – but not in a great way. Today his boss effectively ended Nokia’s history as an ecosystem of its own, laid down its guns, and gave in to a Windows Phone future.
- Nokia Commits Corporate Suicide
  
  In my opinion the losers are:
  
  1. Microsoft – WP7 isn’t ready for prime time. 2. Nokia – Adopting WP7 is like adopting buggy whips…
- Meanwhile, in the Nokia boardroom…
- Introducing The Microsoft Puppet
  
  Step 1: Install Elop.
  
  Step 2: Get him to make a crazy bold bet to move Nokia phones over to the struggling Windows Phone platform even though embracing Android would seem to be an easier and safer bet.
  
  Step 3: Install another Microsoft vet, Chris Weber, as head of U.S. operations.
  
  Step 4: Install other former ‘Softies in positions of power. (It will happen.)
- In memoriam: Microsoft’s previous strategic mobile partners
  
  Microsoft’s new “strategic partnership” with Nokia is not its first. For a decade the software company has courted and consummated relationships with a variety of companies in mobile and telecom.
- Nokia kicks FOSS to the Curb
  
  If you have been by my blog here before then you might know I really like my Nokia N900. It is one of the most flexible, powerful, open source friendly devices on the market. I bought mine and carry it with pride everyday (because I am an FOSS advocate). When Nokia announced they where merging Maemo into the MeeGo project I openly voiced my support. With a corporate backer like Nokia, Meego was sure to quickly become a forerunner in mobile technology.

dyfet

2011-02-12 05:42:17

Two words to consider for this story and a proper historical context: sgi and sendo. Well, three if one wants to add yahoo.

Dr. Roy Schestowitz

2011-02-12 05:51:04

I wrote about the story of Sendo 2 years ago. What was the deal with SGI?

dyfet

2011-02-12 08:29:10

One day SGI was developing it's own workstations around Mips, doing rather well thank you, and along comes Belluzo. They form a "strategic alliance" that abandons SGI's hardware for Itanium and it's own workstation software to become "another" Windows NT vendor. Sound familiar? Their destination was bankruptcy, and then the Microsoft mole went back to, guess where, at Microsoft. Was Elop promised to be Balmer's hair apparent now that Muglia is gone, once Nokia enters bankruptcy?

Dr. Roy Schestowitz

2011-02-12 08:36:15

I suppose he could be his heir, yes. Some people pondered that a year ago (or two).

dyfet

2011-02-12 08:31:31

Oh, I forgot to include a link:

http://www.urbandictionary.com/define.php?term=belluzzo

And as you might recall he transferred SGI's patents related to opengl/3d graphics to Microsoft, too. Yes, to me Nokia is being SGI'd...

Dr. Roy Schestowitz

2011-02-12 08:36:53

I believe it was you who told me about it last year (or in 2009).
twitter

2011-02-12 22:18:27

Yeah, Elop and Belluzzo are birds of a feather. Someone seems to be billing him as a motivational speaker along with Gulliani and Powel. I suppose this is a creative way to line the guy's pockets.
Dr. Roy Schestowitz

2011-02-12 23:35:21

TechFlash is hardly balanced and it's funded by B0ng (Microsoft). Moles should not be put on pedestals. They live underground, in a very dark world.

Mikko

2011-02-12 22:06:33

i stopped recommending nokia mobile phones to my family and friends (i still recommend nokia tires and nokia rain boots)
twitter

2011-02-13 06:39:53

Nokia workers have walked off the job to protest the Microsoft deal.

Dr. Roy Schestowitz

2011-02-13 07:14:28

Nokia's Elop has 261,302 Microsoft shares (apparently the 7th largest stakeholder) and 0 Nokia shares. See http://www.kauppalehti.fi/5/i/talous/uutiset/etusivu/uutinen.jsp?oid=20110260319

There ought to be an investigation here.

Agent_Smith

2011-02-13 18:06:58

Ha, that pretty much says it all: Elop's sinking Nokia to increase the value of his shares at M$. Oh, boy, white collar crimes anyone ?

Dr. Roy Schestowitz

2011-02-13 18:09:37

I heard that he would be sued.

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Microsoft's Nokia 'Deal' is More Like a Takeover, Patents Pose a Problem

Comments

Intel Won’t Forget About MeeGo

Nokia Microsoft is like Yahoo Bing – Nokia’s days as innovator are over

Nokia Commits Corporate Suicide

Meanwhile, in the Nokia boardroom…

Introducing The Microsoft Puppet

In memoriam: Microsoft’s previous strategic mobile partners

Nokia kicks FOSS to the Curb

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