Bloomberg BusinessWeek has a fascinating article today on the behind-the-scenes maneuvering by Microsoft on the Nokia devices acquisition. The four page article is mostly about how CEO Nadella is putting things back together, and asserting his vision, but there are some enthralling tidbits too about how the Nokia deal came to be.
In the report, it’s revealed that the original deal included Nokia’s HERE Maps in addition to Nokia’s hardware division. That’s interesting, if only because many arm-chair CEOs have suggested that Microsoft should just buy everything from Nokia. The Microsoft board, however, disagreed. The main complaint? The deal was “too expensive and complex” and the mapping division was not even needed (between Bing Maps and licensing, it’s not clear why Microsoft needs to own HERE Maps).
Even more revealing was a straw poll on the initial purchase. Future CEO Nadella was initially against the deal, though he changed his mind on the final vote. Outgoing Tony Bates was “staunchly opposed” and probably the biggest blow was Bill Gates was not on board either, expressing concern whether the company really needs to head into hardware. From the report:
“Gates didn’t agree that the world’s largest software maker should produce its own mobile devices, and Ballmer was hurt that Gates didn’t back him, the people said. At November’s shareholder meeting, General Counsel Brad Smith had to persuade them to take the stage together.”
Ballmer reportedly yelled a lot during the meeting, and some board members have hinted to Bloomberg that it was him not listening to their concerns that finally began the push to oust him from CEO.
New vision, new identity
It seems to be apparent now that Microsoft’s foray into hardware, including the Surface – which was critically praised, but suffered from lackluster sales – was not something the company was united on. Divisions, often reflecting the siloed nature of the company, seem to arise around this question of should Microsoft make its own hardware, and specifically, mobile phones?
Nadella was reportedly against this move, but has since come around. But the divisions the Nokia purchase wrought are obvious, with Tony Bates moving on from the company and other reorganizations expected in the future.
While Microsoft buying Nokia, who controls around 80% of the Windows Phone market, seems evident to outsiders, it’s clear that Microsoft’s board was much more hesitant. But with rumors of Nokia making Android phones after the February 2014, it looks like time was of the essence back when talks began in February 2013.
The Microsoft-Nokia deal is in its final days of approval, although Samsung and Google may delay things.
Source: Bloomberg BusinesWeek