A Microsoft Nokia Mobile Reflection

It did not take as long as I expected but as of last week Microsoft determined its acquisition of the Nokia Mobile device business was a failure. Microsoft announced it was cutting 7,800 jobs and taking a $7.6 billion dollar charge related to its acquisition if Nokia.  Most jobs being removed would be in the mobile device business.  This comes after former Nokia CEO Stephen Elop stepped down from hos role as chief device guy at Microsoft.  It has been along road to get to this point, a little over 8 years since the launch of the Apple iPhone, which started the downward tailspin of what once was an aspiring division at Microsoft.  Sometimes a company’s culture gets in the way of doing what is right and what is needed, but that did not start to change until Satya Nadella took over the reigns of the company

I have to admit the litany of excuses I have heard from Microsoft executives over the years when it comes to mobile makes this move by Satay somewhat satisfying.  Starting with the king himself, Steve Ballmer, the quotes are comical.  I remember, regarding developers for mobile devices “There needs to be a third mobile ecosystem”.  No there does not need to be.  On the Apple iPad, “They will never sell those things”.   Yes they will. On iPhone pricing, “Who wants to pay $500 for a phone?”  Billions and billions of Apple dollars later. On the mobile strategy, “We just got the formula wrong”.  You think, Mr 3% global market share..  All these quotes without ever having the courage to say I failed.  As Bill Gates once said, “It is fine to celebrate success, but it is more important to heed the lessons of failure”.

Before Microsoft acquired Nokia, Microsoft exec Stephen Elop had left Microsoft to become CEO of Nokia.  Early on in his tenure he wrote the now infamous “We are on a burning platform” email to Nokia employees..  After this Nokia was open for business, they needed a new platform as they needed to ditch the aging Symbian.  There were only two contenders, Google’s Android Platform and the Microsoft Windows Mobile platform.  The issue before Nokia was Google wanted Nokia, but they did not need them.  Microsoft, on the other had, desperately needed Nokia.  In the end two sinking ships got together and the Nokia Lumia brand would come to life.  After the deal was announced Nokia VP and ex- Microsoft GM Vic Gudotra tweeted, “Two turkeys do not make an eagle”.

It was rumored at the time of Ballmer’s initial inkling’s to buy Nokia that Satya was not on board withe the idea.  Then over time Satya was persuaded by Steve that it was the right thing to do.  When I first heard this story my reaction was “Satya was not won over to this point of view”.  I think it was more a case of Satya is a team player and since Steve seems hell-bent on doing this I might as well get on board.  As would later come out Steve had wanted all of Nokia but the board restructured the deal and brought it down to a more streamlined acquisition (this effort was led by Bill Gates). When the deal was announced what I always found interesting is that Steve seemed to be buying into the Apple model.  I always viewed the Google model much more in line with Microsoft’s DNA, perhaps it was the open source component of Google’s model that made Microsoft uneasy.  It just seemed more consistent with Microsoft developer and partner story than doing proprietary hardware.

Following the deal there were some exciting announcements and glimmers of hope, they were just that glimmers.  Global market share would go from 4% to 5%.  The challenge with Microsoft was they were never able to sustain momentum.  Thy never could get developers excited.  Steve wanted a third ecosystem, but as former Microsoft executive Ray Ozzie said later after he had left Microsoft, “Developers only have so many calories they can burn”. With each release there was an uptick and then a drop.  Time and time again we were told, “wait until Windows x”.  It has become a “boy who cried wolf” kind of thing.  The bottom line was and a big problem for Microsoft, people were happy with their Apple and Android phones..  To get people to move you have to change the playing field, something Microsoft was simply not able to do, with or without Nokia.  It is hard to get satisfied customer to move.

Is Microsoft done?  No there are plans to release more Windows Phones.  At a reduced pace. I don’t think Microsoft will ever be a major force  in the hardware segment, at least for mobile devices.  However I think Satya is being smart and pragmatic.  What has happened over the last 8 years has been a mobile nightmare for Microsoft.  When you are sitting at 3% global market share that means 97% of the phones on the planet, most users have a near zero percent experience when it comes to having any Microsoft software at all on their device.  Though some may say Steve started development on Microsoft Office for the iPad, which he did, he was slow and failed to pull the trigger.  Satya on the other hand has quickly released these apps to market.  When Microsoft talks about a Cloud First, Mobile first world, I think they understand that they don’t have it all.  The bigger challenge here will be creating those experiences that mobile users have to use, both professionals and consumers.

Following the Nokia mistake the next several years will be critical for Microsoft in the mobile space as it tries a new strategy to make itself relevant. Granted given the big miss with trying to be the operating systems for mobile devices it was necessary.  How Microsoft measure’s success will be important, so they have to win the hearts and minds of business users and consumers to be successful?  Will just one suffice?  Is this yet another attempt to tie the desktop to the device?  Microsoft needs to be relevant in mobile, it’s life depends on it.  In setting the course for this new strategy it also needs to be aware of shifts in the industry, it cannot have another iPhone moment.  That would just breed Nokia 2.0.

Good Night and Good Luck

Hans Henrik Hoffmann July 13, 2015

 

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Presidential Campaign 2016

Well it is that wonderful time in American politics where the drums begin to beat and the voices raise to a fever pitch as we march towards November 2016 and the next presidential election.  The candidates are lining up, though one sides line seems longer than the other.  They are making their pitch to the American people as to why they have a direction on where  to take the country, that is better than the opposing candidates.  They are making early gaffes that are pure joy to late night television.  Everyone claims to be better than President Obama.  How will all this play out?  What drama can we expect? Is the democratic candidate a foregone conclusion to be Hilary Clinton?  Is there another candidate that could emerge and surprise?  Who will emerge from a crowded and yet to be finalized Republican field? In fact, how large will the Republican field become?  It is a very important time in our democracy, and when it is all over we are all exhausted.  The 2016 campaign at first seems to be shaping up to be rather dull, but we have along way to go.  A lot of excitement on the horizon.  A new generation of voters.  Another generation dying off.  The 2016 campaign has started and it is running, lets enjoy the ride.

As Karl Rove said, “Campaigns are a marathon, not a sprint”.  Despite early gaffes by candidates like Jeb Bush’s handing of the question “If you knew then what we know now would you have gone to war in Iraq”.  They are only relative for the moment, not the duration.  I honestly think the question is rather useless and only aimed at getting news, but Jeb struggled in his answers and the press sensed an opportunity.  Hilary will see the same with Benghazi and her email server.  I think the latter is more concerning than the former.  Benghazi was a bad situation that occurred in a very unstable region of the world, but I don’t see this  as a campaign issue that people will base their vote on.  The email server issue on the other hand will raise the issue of, “Are the Clinton’s telling us everything?”.  It seems to have been with them since Whitewater (read James Stewarts “Blood Sport).  Little things are not issues in Presidential campaign’s until they become trends.  We are over a year away from deciding who the next President will be, but we are in for a thrilling, and yes, very annoying and frustrating ride.

As people start picking their candidate, one thing to keep in mind as you choose is the United States is made up of fifty states.  We all know to run a campaign the first thing you need is a lot of money, but beyond the money you need coverage in all fifty states.  Every election there is always several candidates who says they will run, win a few states and build momentum.  The reality is this very rarely happens.  The exception being Barack Obama. If you read his political strategist David Plouffe’s book, “The Audacity to Win”, you realize how much effort was put into Iowa to start the momentum. In most cases these desires tend to tire before they ever get started.  There are always Candidates people want to get in, only to watch them falter. Wesley Clark?  Fred Thompson?  Candidates who were urged to run but did not last long.  Wesley Clark did win Oklahoma.  Some candidates are desired but never throw their hat in the ring, Colin Powell?  Mario Cuomo?  Then there are candidates who have built the machine and win their party’s nomination despite being not wildly supported.  John Kerry?  John McCain?…Both these candidates had the political machine.  With the machine you can cover fifty states and raise money.  Money wins in the United States.  You always have the issue candidates, there to pander to the extreme left or extreme right a few who come to mind are Dennis Kucinech,  Rick Santorum, Ralph Nader, Mike Huckabee, Pat Buchanan, Pat Robertson etc…They have an impact in the Primaries, but rarely win the race.  The last time I can think of is 1964 election, where possibly the father of the modern-day conservative movement , Barry Goldwater won the Republican nomination, and was crushed by incumbent Lyndon B. Johnson.  All was not lost as 16 years later his disciple Ronald Reagan would win the election.

Looking at the current crop of candidates many are forecasting a Hillary – Jeb battle.  The reason is simple.  Each candidate already has fifty state coverage and they have money, and big political names.  To set up national coverage can and will be done, like any startup you are building an organization.  They are big names in a crowded field, well at least for Republicans.  Consider them the Rock Stars of the emerging campaign battle. They are experienced and known.  However campaigns are long drawn out affairs.  One thing that seems to happen from time to time in elections is the demographics change and you witness generational shifts.  We saw this happen in 1992 when Bill Clinton defeated the incumbent President George Bush .  Prior to that every President had for the previous 50 years, ties to the second World War.  We may be in a new shift as Vietnam ended over 40 years ago and a new generation springs forward steeped in the history of the cold war, but also having lived nearly 25 years without the cold war.  The current generation is not as passionate about the different economic “ism’s” (Capitalism, Socialism, Communism. Fascism etc..).  In my opinion this shift will hurt Jeb Bush more than Hillary.  Jeb represents a political family and a political establishment.  He is older and his past is well-known.  The Republican party is still steeped in free-market economics.  He also has the  challenge of carving out an identity for himself.  His salvation may be his ties to the Hispanic community, a powerful voting block.  Everything I said about Jeb you could say about Hillary, the one difference is she is a woman.  Say what you want but in politics you use what you have to your advantage.  The country is ready for a female President.  I think it is way too early to say that Hilary versus Jeb will the final battle, but with money you are much better positioned to run a marathon.

We have already had plenty of stumbles.  Chris Christie had bridgegate, Hilary has an email server scandal, Donald Trump does not like Mexico, Jeb struggled with the , “knowing what you know now, would you go to war question, Hilary had Benghazi, Rick Santorum cannot believe there are gay people, Donald Trunp gets fired for his comments by MSNBC, Ted Cruz has Karl Rove and the entire Bush family livid with him over his negative comments in his book about George Bush, #41.  It seems like of late we can not blink our eyes without some issue taking front and center, nearly all of it negative.  But than negativity is a big part of campaigns (Thank You Lee Atwater).With big money and Super PAC’s this election will only build on the previous elections.  Though I will say that as the negativity builds I think the impact begins to lessen and people begin to tune out what is being spoon fed to them.  Modern elections are a bit overwhelming partly because there are so many different avenues we now receive information. Every time a candidate stumbles, their opponents will jump with negative ads immediately.  If it gives them a bump they will keep doing it until it no longer provides the needed returns.  It will cost lots of money and none of it will be pretty, but it is the world we live in until, we the voters, say we have had enough.

Issues are now coming at us right and left.  The Supreme Court upheld Obamacare and gave LGBT couple s the right to marry in all fifty states.  These two rulings tend to divide people along party lines.  For the Democrats this represents a huge victory, for Republicans it is a big setback.  It is clear in 2016 the Democrats will highlight these two landmark cases, a chance to pat themselves on the shoulders and tell America we were right and the Supreme Court back us.  For Republicans the question will be are these two issues we want to campaign against?  On Obamacare the argument will be less government bureaucracy,  but it i s not enough to say we will repeal Obamacare.  Republicans have to offer something to replace it and not just a free market hope and a prayer.  The challenge for Republicans on these two ruling is that they are popular with the American public.  They go against the DNA of the GOP.  They will be a part of mainstream America for the foreseeable future and GOP candidates would be wise to not campaign against them as it will distract from central issues, like immigration reform, a strong economy. social security, etc…

I probably have been a bit skewed so far in my analysis as I believe the GOP is struggling with the rapid changes happening in American society.  The Democrats will have challenges.  Though there are r candidates in the field so far in reality there are only two: Hilary Clinton and Bernie Sanders.  Mr. Sanders is a Left Wing issue candidate, not really a serious contender.  Jim Webb, who joined the race literally while I was writing this blog, could be a contender.  He is articulate and a dynamic speaker, my big concern is, will the American people rally to anther old aged, white guy? Which leaves Hilary.  A clear path to the White House for some.  But I am leery of anointing someone to America’s highest office.  I want a strong GOP candidate because I believe our democracy is entitled to a vigorous debate.  It benefits from such debate.  It lets us learn about ourselves and it lets us learn about each other, where we are weak and where we ares strong.  I don’t see it from the existing GOP field, though Donald Trump would be very entertaining in a live debate format.

We are over a year away but as we enter into 2016 , the momentum will start to shift drastically.  We will see highs and lows.  Early surges and late surges.  Someone will falter mightily at one point is the campaign, remember Gary Hart?  There will be a defining moment, like Michael Dukakis in the army tank.  Attack an opponents strength, Swift Boat?.  There will be lies and in the age of video everywhere someone will have their Mitt Romney moment.  All I can tell any candidate is you represent the United States of America and it’s over 310 million citizens.  Neglect one group and you neglect them all(Donald Trump has been very successful here).  Remember who you are and what you stand for.  Do it with conviction, not all people will like you for it but they will respect you for it  It’s too early to predict a winner but the race has started and we have yet to enter the first turn, but as the race progresses it will only get faster.  Lets enjoy the debate, lets enjoy our democracy.

Good Night and Good Luck

Hans Henrik Hoffmann July 6, 2015