Microsoft and Nokia: Death by management

When Steve Ballmer announced that he was retiring, I said on Twitter that the announcement was unsurprising but that Microsoft needed a surprise to replace him. Ever since Microsoftie Stephen Elop took the helm of Nokia, everyone has been predicting that Microsoft would scoop up the fallen mobile giant. The speculation only intensified when Elop decided that the only way to save Nokia’s burning platform was to abandon its own operating system and adopt Microsoft’s minority mobile platform. At a conference in 2011, I asked fellow speaker and media innovator Robert Tercek what he thought of a potential Microsoft-Nokia tie up, and he said, “Tying together two rocks doesn’t make them float.”

Now Ballmer has followed up his rather predictable decision to retire with a rather predictable acquisition, a big chunk of Nokia. I am sure that in Ballmer’s mind he was trying to demonstrate boldness. He has instead shown just how unimaginative he is as a leader. He’s run out of time to launch Microsoft into a new era of growth so instead he’s decided to build a bigger corporate beast.

Microsoft’s Windows empire is besieged by Google’s Android and Apple’s iOS, and Ballmer and his lieutenants knew they needed to boost their mobile efforts. But how does this acquisition help that? While Microsoft feels like it is just past its peak but still has its strengths, Nokia’s position is much more precarious.

In the PowerPoint explaining the acquisition, Microsoft said that this acquisition would accelerate growth. Pray tell how? Nokia has seen its smartphone share collapse in the last three years, from 34.2 percent to 3 percent. Looking at that slide deck, I see a company in denial. They say that success in phones will drive success in tablets and success in tablets will drive success in PCs. To achieve this, Microsoft would need Nokia’s Lumia line to take off like a rocket, and they also need to sort out their own tablet strategy. Writing off $900 m on their Windows RT Surface tablets means they need a tablet strategy. It doesn’t mean they have one.

Microsoft is facing The Innovator’s Dilemma. They have a couple of lucrative business lines that are under pressure – Windows and Office, but both face competition. PC sales are flagging, and many people are finding that tablets are good enough for most of what they do. In terms of Office, Microsoft is under pressure from cloud competitors such as Google.

Now there is a lot of talk of Elop replacing Ballmer at the helm of Microsoft? Really? He has done precious little to right the ship at Nokia, and most of his strategies have yet to show real results.

Microsoft and Nokia both needed a new vision, a coherent strategy to the relentless change in technology, but instead of inspirational leadership and a clear headed view of how the companies need to adapt, they have an uninspired tie up.