Microsoft Shakes Up Its Leadership and Internal Structure
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Ex Microsoft Manager went to Nokia, destroyed its Market Value, sold the debris back to Microsoft is now leaving Microsoft again. Time to short whatever company he is going to next. ;)
1. Nokia had a Maps business. Obviously, Elop wanted to see it on the chosen platform. 2. Nokia had a host of apps that they wanted to see on the chosen platform. 3. Google refused to allow modifications to their MADA. 4. Meego/Maemo were not viable/not ready. 5. Microsoft's offer came with an infusion of cash.
(Bloomberg article: http://www.bloomberg.com/bw/magazine/content/11_24/b42320567...)
That's being overly generous to Elop. The 'Burning Platform' memo was by his own volition and it played a big part in the decline. This essay nails what Elop did wrong[1] (a bit over-the-top though). Namely, he called his own product crap, and when he distributed the memo, Nokia had no solution ready - they were waiting on Microsoft (Osborne effect). "Hey guys, our phones are currently crap. That Maemo phone you're about to buy - we're discontinuing it. We will have awesome ones sometime in the future though. Remember to by a Nokia ;-)".
1. http://communities-dominate.blogs.com/brands/2011/08/coining...
He wrote the memo but the question is to what extent it simply described the situation as it actually existed. If he had never written that memo, would Nokia be a competitive mobile platform ecosystem today? I find that hard to believe. I don't think it's realistic to blame so much on a few hundred words.
You do not expect a company CEO to do negative PR - he damaged Nokia's brand and greatly harmed the confidence developers/consumers had in Nokia.
> I don't think it's realistic to blame so much on a few hundred words.
From the article I previously linked: "Gerald Ratner[1] was CEO of British jewelry group Ratners (since renamed Signet Group). He made a famous speech in London to the Institute of Directors in 1991 in which he said his company products were sold for such low prices "because its total crap." This remark was then published and caused his company to collapse and was only saved by his departure - and the rebranding of the company to Signet."
Ratner destroyed his company in 43 words (relevant part of speech is on Wikipedia).
http://www.zdnet.com/article/apple-takes-89-percent-of-all-s...
Apple is, I think like 20% of the smartphone market worldwide? But about 90% of the profits. And Samsung has to make almost all of its profits at sale, with Google making all the ongoing profits from stuff like Maps and app stores; if Microsoft cut Nokia in on any of that money (Nokia shipped mapping and music apps for their Windows Phone, for example), it may have looked like a better deal than Android offers Samsung currently.
Compare the sale price of Motorola Mobility to Lenovo (after Google stripped it of its patent portfolio) to how much money Nokia's handset business sold to Microsoft for without patents attached. What Elop did with Nokia's phone business may have been the best case scenario for it.
The first Samsung Galaxy was shipped in 2009[0] -- over a year before Elop was made CEO of Nokia [1] and nearly two years before the "Windows Phone Strategy" was announced.
In 2011 -- years before any strategy shift to either Windows or Android would have been able to be implemented, Samsung was already shipping more smartphones than anyone else -- including Apple [2]. Nokia didn't ship their first Windows Phone device until November 2011.
It would have been a Blackberry Storm kind of stupid to try taking on Samsung with Android as the platform. There's no compelling reason to pick Nokia over Samsung when the target market is just looking for value. At least with Windows Phone, there was some differentiation they could hope to appeal to consumers with.
[0] https://en.wikipedia.org/wiki/Samsung_Galaxy
[1] https://en.wikipedia.org/wiki/Stephen_Elop
[2] https://gigaom.com/2012/02/07/npd-apple-sold-most-smartphone...
Nokia hardware & Android software could have been a pretty killer combo, and a sufficient differentiator to get some extra profit margin; plus Nokia was (is) very experienced in producing at huge volume.
Unsurprisingly, the rump of Nokia that was not merged into Microsoft is now climbing on the Android bandwagon in a big way... but unfortunately everybody else now has a 10-year headstart.
Now that Apple has solved the "I want a big screen" problem, I think those people will run back to iOS.
I'm sure Elop thought MS was going to put some more effort behind WP. They got a lot of things right, but not the UI and certainly not the marketing.
For what it's worth, I've been using WP for about 3 years now. It's performance is underrated, but Metro went too far as a flat UI.
http://www.forbes.com/sites/terokuittinen/2013/09/24/nokia-a...
http://blogs.marketwatch.com/thetell/2013/09/24/nokia-board-...
Note that Blackberry, Motorola, and Palm also died, and LG and HTC aren't doing so hot.
The excuse they were too large and bureaucratic to change does not fly when you are the CEO - he had the power to make the required changes. Nokia also had good technology, on par with Android, at least. The mistake was not to realize that iOS's and Android's strength is not on their technology, but the rich ecosystem built around it.
Assuming that you're right that iOS and Android's strength is their ecosystem rather than their technology, there's no way Nokia could've capitalized on that. They couldn't bring on hardware partners, like Android, because all of the hardware partners were their competitors and wouldn't trust anything they did. They had no expertise in engaging independent developers; Nokia has never had a product where they've had to, and their OS (Symbian) was reportedly a pain in the ass to develop for. And while they knew how to build a mass-market consumer product, they didn't know how to build a mass market consumer platform - first-hand experience of what consumers could do with an open-ended computational device wasn't in their DNA the way it is in Apple & Google's.
The first reaction to the iPhone was to buy Symbian in 2008, which in retrospect is so wrong that's surprising, but the vast majority of people at all level (people in the street, geeks, executives) didn't understand the real change that iPhone was bringing until maybe 2009-2010.
Then Nokia tried to fix the software problem buying Qt. That ended up as being a mistake as well. Qt was built on the idea that you can create a UI framework that unifies all platforms; that was realistic when the support OS were all desktop and thus similar in main concepts and interaction patterns; Qt also nominally ran on embedded at the time, but the experience was suboptimal at best. So Nokia drank the idea that adding "another backend" to Qt was the solution, also because developers loved Qt. But of course it's not that easy. It took them 2-3 years to come up with a new codebase that could handle the new interaction patterns (QML) and that's a geological era in smartphones. At that point, they still didn't have a complete working solution for a qt iPhone killer, and Elop had to cut the chord. That day, the fate of Nokia was already written.
Very few also had the opportunity to see a Nokia 7710 live besides us, as it was quickly killed after a few months on sale.
Also the famous blog post about how shitty Symbian C++ was, that only Nokia employees would be willing to use it.
Some years ago The Register had a pretty good report about the internal politics going on there.
This person was the chairman of the board, read through his profile:
https://en.wikipedia.org/wiki/Jorma_Ollila
>Prior to joining Nokia in 1985, Ollila worked for eight years in corporate banking at Citibank's London and Helsinki offices, and when he joined Nokia his tasks involved international investment deals. A year later, in 1986, Ollila found himself as head of finance during Nokia's renewal under then CEO Kari Kairamo. He was appointed as chief of the mobile phones section in 1990, and CEO two years later in 1992. When Ollila first came to power, the company had suffered from internal disputes and had had a financial crisis for a number of years.
>As CEO of Nokia he has led the strategy that restructured the former industrial conglomerate into one of the major companies in the mobile phone and telecommunications infrastructure markets.
>In 1999, Ollila seriously considered taking part in the Finnish presidential election, following a request from a member of the National Coalition Party, Sauli Niinistö[citation needed] who was at that time Finnish finance minister and who later became Speaker of the Finnish Parliament. This was in spite the fact that Ollila belongs to a different party, the Finnish Centre party, which he has been involved with since his activities in student politics at the University of Helsinki[citation needed].
>He was CEO of Nokia from 1999 to 2006. He was succeeded as CEO by Olli-Pekka Kallasvuo. On 15 September 2010, he announced he intended to step down from the position of Chairman in 2012[2] and did so on 3 May 2012.[3]
>Ollila is the Chairman of the Research Institute of the Finnish Economy (ETLA), the most reputed economic and social studies think tank in Finland. Since 2005, he is chairman of the European Round Table of Industrialists (ERT).
That doesn't look like someone who would trash a company they built for whatever conspiracy theories people cook up about how Elop got hired.
It's funny how Microsoft is ascribed the superpowers of a comic book super villian around these parts while they barely break 3% in the mobile market.
However I do believe he wasn't a mole rather another manager driven by greed alonside the board members.
Once upon a time I worked for that Finn company.
On the other hand we now have Jolla so it's not that bad.
Leo Apotheker?
The company is profitable, its market cap is around $26 billion USD, and they recently announced a major deal to acquire Alcatel-Lucent. They seem to have survived the amputation of the mobile phone division quite well.
Buying Alcatel-Lucent suggests to me they aren't all that healthy, based in part on my working at Lucent in 2001 and paying attention to that field since then. And "amputating" what was once more than 2/3rds of the company, going back to 2002, yikes. But, still, you might be right depending on how you define this sort of business health.
Scary how their revenue peaked the year the iPhone came out....
If Jobs hadn't been available, who could have saved Apple in 1997? I can't imagine a non-founder CEO up to the task.
Nokia had been fatally wounded by the short-sighted strategy of Elop's predecessors. He took a risk -- jumped off the famous "burning platform" and drowned. But the platform was already going down in flames.
IIRC, they did it mostly, because they were under investigation for antitrust charges (and very nearly were broken up), so they could show the DOJ they had an actual competitor. If that is true, they seem to have gotten a little more than they bargained for (the stock they bought must be worth a fortune today, though).
I dont have the source to back me up but I read MS sold the stock long time back even before the iphone.
Having said that, committing to Office on the Mac was significant.
San Francisco Canyon Company was hired by Apple to port QuickTime to Windows, later it was hired by Intel to do some work on Indeo. Intel and Microsoft used the work done by San Francisco Canyon Company to jointly to improve Video for Windows performance, but San Francisco Canyon Company allegedly included QuickTime code and proprietary information without Apple's permission.
Things got nasty but Jobs opted to use this leverage to give Apple some credibility when it had suffered a serious blow from the Copland wreck.
Jobs set the terms: Apple and Microsoft agreed to cross-license each others patents, current and prospective lawsuits were dropped, Apple agreed to make IE the default browser, Microsoft agreed to continue developing Microsoft Office for Mac for 5 years and Microsoft would announce the purchase $150 million in non-voting stock.
It wasn't done out of pity, Microsoft's lawyers likely believed they would lose the case and this was a sweetheart deal which it would have been stupid to refuse.
I would buy stock in MS if Gates ever came back, but I don't expect it.
Strategically I think it was a better plan for Nokia to go with Windows regardless of the CEO. Apple doesn't do partnerships and the only other popular option was Android, which was ruled by Samsung and to compete against them would be to compete against a Goliath. So indirectly I think MS did help them even though it was for their own gains.
Also keep in mind, only the phone division was sold to MS. The rest of the company is intact and still trading in the stock market.
Let's just pray he doesn't go to Blackberry. QNX deserves better.
Kirill failed to cloudify. Qi isn't interested in the Dynamics business. Benioff couldn't get on-boarded. Guthrie is happy to step in.
* Azure can improve with Dynamics. Can Dynamics business improve with Guthrie? * Will cloud revenue reporting get more "obfuscated" in quarters to come?
Terry's and Elop's orgs were a) building cohesive/unified experiences and b) fighting conspiring threats to their long-term business solvency. Consolidation chose the most prominent leader.
* Does the bench of Terry's replacements change? * Could it be the first step towards scaling down hardware and devices?
There used to be a CEO of Bing (Qu Lu and Nadella had been in that slot) but last year, Bing was split up under 5 VPs; there's no longer a real Bing organization.
It's strange. Bing has 20% market search share under its own name, plus 13% under the Yahoo brand. That's 33%. Google has 64%, so Bing is now more than half the size of Google in terms of searches. That's OK market share; it's like being Chrysler vs General Motors.
Bing's profits, though, are awful. Microsoft apparently loses money on Bing.[1] It's hard to tell from the way Microsoft reports online services. Google's advertising revenue is 18 times Microsoft's. That's Bing's problem. Nobody buys Bing ads. It's surprising, with the the market share, that Bing can't fix this.
[1] https://www.ventureharbour.com/visualising-size-google-bing-...
Bing is under Qi Lu, full stop. Lu is very senior VP who reports directly to Satya Nadella. Bing is NOT split among Qi and 4 of his VP peers. It IS true that Lu has split the responsibilities of managing Bing up among SOME of his direct reports, almost all of whom are themselves VPs. But the idea that there is no real "Bing org" anymore is just completely and totally wrong. They all answer to Lu, and they've split responsibilities along sensible boundaries, so that things like UX are under one VP and infrastructure is under another VP.
Second, Bing does not have 20% market share "plus" Yahoo's market share. Bing and MSFT properties like MSN have 20% market share. Yahoo has 12%. You can't just credit Bing with Yahoo's market share. That's a search experience they work hard on, and the fact that Bing powers Yahoo is largely immaterial to their consumers, who come to Yahoo for the Yahoo experience. They could switch to Google tomorrow and the vast majority of consumers would not notice or care. Truthfully, the biggest (and arguably only real) benefit for Bing is the increased ad revenue.
Third, Bing IS profitable. This is well-known and reported on.
Fourth, it is basically completely untrue that "nobody" buys Bing ads. Obviously it would not be profitable if that were true. Furthermore, the supposition that you should buy ads based on market share of the search engine is hilariously wrong. You should purchase ads on the platform where they will be more successful. A lot of times this is Google; sometimes this is Bing. The fact that the parent got this wrong basically indicates that they are not to be trusted on this subject, at all. If the poster doesn't know what they're talking about here, it's better to just stop talking then it is to provide information that is wrong or harmful to people listening in.
Bing traffic by and large tends to be older, more affluent, and less tech literate... people who don't tend to change their default search engine. For many types of businesses, this is ideal. Also we have had good results in tech B2B marketing with Bing. My theory is that most MS sysadmins don't want to run chrome on their servers but surf from their boxes and get lazy. Also porn.
The big story with Bing is its tight integration with Windows, XBox, Cortana, etc. Their research direction per Stefan Weitz has been to focus on making natural language search really work. Less effort has been invested in trying to keep up with Google and more has been trying to create a different search experience.
When Cortana really hits the main stage this summer/fall, we'll be seeing the manifestation of Bing at its fullest, and if they really get the Neural Networks nailed they could pull off a big shift in how people search, and also how people advertise...
http://blogs.windows.com/bloggingwindows/2015/04/30/cortana-...
That's hard for me to believe; where do those figures come from? No site I currently work on gets anything close to that much traffic from Bing and Yahoo compared to Google. Anecdotes vs. data and all that, but I'm talking about a few different sites on completely different subjects here. We see quite consistent traffic levels from different search engines if you compensate for active advertising campaigns and similar factors.
Google's advertising revenue is 18 times Microsoft's.
Is that specifically for adds on search engine results pages, or do the figures also take into account other advertising channels?
The Google percentage seems accurate, but there are other sources to consider.
Google is not just a search engine by itself. Most of everything else that Google does also aim to protect and increase search traffic.
And perhaps some "ding, dong, the witch is dead" from Redmond over those that are departing?
I won't be surprised if bing is handed over to yahoo completely.
I would be very surprised. As would all those MS employees working on Bing, it would be unprecedented for a company to hand a fully functional and somewhat critical leg of the company to a competitor.
Not sure the comparison with Box is that appropriate - Box is more comparable to SharePoint, which is a huge product (on-premise and as part of Office 365).
Rather, mostly Microsoft bit off more than it could chew, and somewhat the perf of .NET on the average machine of the day wasn't up to snuff. If I recall correctly, there were also issues with managed-native interop that really threw a wrench into the works when developing the new (.NET-based) shell.
EDIT: There could also have been issues due to the antitrust consent decree - but that's speculation - I don't remember the details of the decree. If that is the case, then parent comment could be correct.
Hence why the going native when the windows team won the redesign to Vista.
Everything that the .NET team has been doing in the last years in terms of compiling directly to native code via MDIL to Windows Phone 8 and now .NET Native, it is a consequence of that.
The ideas behind Longhorn could have been achieved if .NET followed the same compilation model as Ada, Delphi, Modula-2, Modula-3, Oberon or any other memory safe language with compilation straight to native code.
This is how I see it by reading between the lines from all those MSDN articles, Channel 9 videos and occasional forum posts.
I might be wrong, but that is how I see it.
Just like any compiled language there were multiple implementations of the Oberon language.
But Oberon was actually a systems programming language with GC, used to implement the Oberon workstation OS, which was used at ETHZ IT department.
Fully complete OS, Xerox PARC style, as Wirth was inspired by the Cedar workstation on his second visit there (the first one lead to Lillith and Modula-2).
At least here in Europe, some universities had some versions of those systems.
Besides that implementation, there were other ones based on bytecode and JIT compilation on module load, for example.
I've always been curious about Lisp machines... Was the Oberon OS composed of Oberon code from the lowest to the highest levels?
http://www.inf.ethz.ch/personal/wirth/ProjectOberon/
It includes the source code.
The original edition and many other books are available from his site at the university.
http://www.inf.ethz.ch/personal/wirth/
Some screenshots and information from the old days:
http://www.ethoberon.ethz.ch/native/WebScreen.html
http://www.ethoberon.ethz.ch/native/
Oberon was followed by Oberon-2, which you can find here:
http://www.ssw.uni-linz.ac.at/Research/Papers/Oberon2.pdf
http://ssw.jku.at/Research/Books/Oberon2.pdf
Which then gave birth to Active Oberon:
http://www.ocp.inf.ethz.ch/wiki/Documentation/Front
There was also the EthOS as Oberon evolution.
http://e-collection.library.ethz.ch/view/eth:38713
The Oberon operating system was fully implemented in Oberon, with some assembly for the kernel module and boot loader. In the later versions, the SYSTEM package gained all required intrisics to do everything in pure Oberon.
It is a bit confusing to speak about OS and language, because like Java, the same name is used for both.
Eventually they moved on to other stuff.
There was an Oberon evolution for .NET called Zonnon, but it is hardly known.
One of the guys working on Oberon as a student was Robert Griesemer, a Go designer. Hanspeter Mössenböck from Oberon-2 is one of the researchers working on Graal.
Oberon is related to Mesa/Cedar, not Lisp Machines. Basically something like a .NET/Java OS in the late 70's providing the same expressiveness of the Lisp and Smalltalk environments but in a strong typed language, capable of systems programming.
Although they followed the same principle as Lisp machines. On the papers they refer to Assembly as bytecode, because the CPUs were CISC with microcode for execution.
https://archive.org/details/bitsavers_xeroxparcteCedarProgra...
https://archive.org/details/bitsavers_xeroxparcteriencesCrea...
https://archive.org/details/bitsavers_xeroxparctddingGarbage...
So while AT&T was making UNIX, Xerox PARC had Interlisp-D, Smalltalk and Mesa/Cedar.
For example, it wasn't the case that Longhorn was code complete and the Powers that Be said, "You know, the perf isn't where we'd like it, so time to reset." Or that the only work that was happening was perf work.
There were just too many parts to the grand vision of Longhorn, and hence too many moving pieces, and it just never solidified.
IIRC, around the time of the reset, bugs were being opened at a faster rate than they were being closed. So not only was Longhorn not going to be ship-ready in any reasonable amount of time, at that rate it was never going to be ship-ready at all.
Mid-2003 is when I started at Microsoft. Though: out in MSN, not where the action was. :)
Has Moore's Law really broken down that severely 'lately'? I'm reminded of one of Kurzweil's books that shows 'Moore's Law' holding since before digital computers. But - the book shows - zoomed in, the trend line is actually a succession of periods of fairly rapid growth followed by stagnation. (Obviously though one question is how cherry-picked the underlying data was...)
Edit: The book was The Singularity is Near.
But as I said, it was most certainly political as well.
Anyone that went through such big rewrites at corporations similar to Microsoft, knows how much appeasing to different units has more value than technical merits.
Anyway that is just my opinion. For the real issues we would need insider info.
Frankly, Eric Rudder should promptly write a book about how to maintain a VP position at a bigcorp without actually doing anything for a decade.