Rajeev Suri, newly appointed head of Nokia, has plenty to tackle at the Finnish group, but one challenge relates to the part of the business he no longer oversees – the handset business that has finally transferred to Microsoft’s ownership.
As head of Nokia Solutions and Networks, Mr Suri developed the telecoms equipment business, which now makes up the largest part of “new Nokia”, more or less autonomously from the devices business. Its culture is likely to dominate the Finnish group as it now evolves. But what of the deep-rooted residual link with the handsets in our pockets?
Even if the Nokia brand is quickly stripped from smartphones, I wonder whether the Finnish group will experience the business equivalent of “phantom limb syndrome” – twitching and wincing as though the amputated devices arm is still attached to the rest of the body corporate.
EE is the descendant of one of the most ridiculous brands in corporate history – Everything Everywhere, which turned out to mean Nothing Anywhere – so I feared the worst when I saw the UK digital communications group had signed a partnership with what it inevitably calls the “iconic” Wembley Stadium. Football fans already chant about “going to Wemb-er-lee”, so the brand gurus could so easily have renamed the ground “WemblEE”.
Wembley Stadium, as it will be, sEEn from the air (source: EE)
Happily, common sense and history prevailed. Fans will have to survive a blizzard of EE branding, including the illumination of Wembley’s arch in EE blue, but the press statement is clear that “the world-renowned name of the stadium will remain”. It usually does. When new names are applied to old stadiums, often either the name doesn’t stick – or the company doesn’t.
BlackBerry bosses’ thumbs must be getting tired. The company’s acting CEO John Chen has banged out another open letter to “valued enterprise customers and partners”, sprinkled with acronyms and suggesting a return to the group’s “heritage and roots” in “enterprise grade, end-to-end mobile solutions”.
Stephen Elop, ex-Nokia, soon-to-be ex-husband
I firmly believe boards need to be less squeamish about prying into their senior executives’ private lives, particularly when divorce is looming, because the corporate consequences can be grave. Now researchers at Stanford’s Graduate School of Business have broadened the debate to suggest that shareholders should worry about chief executives’ marital disharmony, too.
Divorce, they write, could undermine CEOs’ control and influence, affect their “productivity, concentration and energy levels”, and have an impact on their attitude to risk. They cite Rupert Murdoch’s split from Wendi Deng and the divorce of Harold Hamm, CEO of Continental Resources, from his wife. News of the first, thanks to a pre-nuptial agreement, left News Corp shares unmoved; news of the second, with no pre-nup, knocked 2.9 per cent off Continental Resources’ stock price as investors worried about the fate of Mr Hamm’s 68 per cent stake in the group.
A new account of “the fall of BlackBerry” in Canada’s Globe and Mail sheds light on the torment of the country’s once-mighty technology champion with some new revelations of internal rifts and missed opportunities. Four stand out for me.
There is more than one way to lead in the smartphone industry, and China is at work on all of them.
No longer content to copy foreign products. China is developing brands to compete with Apple and Samsung. Xiaomi is known as its answer to Apple, and Huawei and ZTE, the equipment companies, have moved into handsets.
I blame Wayne Gretzky.
Ever since the world’s greatest ice hockey player said a tearful good-bye to playing in Canada way back in 1988, his fellow Canadians have been smarting at the rules of big business.
Then, it was Gretzky’s move from snowy and quiet Edmonton to showy and glitzy Los Angeles. Now, 25 years later, the woes of BlackBerry, our one-time technological champion, have led some to wonder if national pride is again at stake. The putative bid by Toronto-based Fairfax Financial to take the company private has only added to the concern, with many analysts and investors unconvinced of the business case.
Many years back, an American friend who was visiting London from New York remarked on the odd way in which people were walking around with blocks of plastic held to their ears. “Why don’t they just use normal phones?” she asked.
First came Ben & Jerry’s. Now we have a new brand: Steve & Stephen. It sounds like a men’s hairdressing salon, but turns out to be the sign-off used by Steve Ballmer and Stephen Elop in their open letter telling the world that Steve at Microsoft has bought Stephen’s Nokia handsets.
The effect leaves me feeling slightly queasy. The ampersand usually belongs to more formal pairings – Johnson & Johnson or Dun & Bradstreet – and to see it joining two first names like that gives the new “brand” a cheeky, snappy feel.
What is the Finnish for “I told you so”? That is how plenty of Finns – including a large number of ex-Nokians, swept out in successive restructurings since Stephen Elop took charge of Nokia in 2010 – will greet news that Microsoft is to buy the mobile company’s handset and services business.
It won’t make any difference to them that Nokia has an increasingly important telecoms equipment business, NSN, which guarantees a future to the rump of the company. Since the radical strategy shift of the mid-1990s, when the timber-to-tyres conglomerate refocused on its fledgling telecoms operation, Nokia has been identified with home-grown phones. But a second coming under Finnish ownership for the country’s best-known consumer brand turned out to be impossible: its future will now be dictated from Redmond not Espoo.
This outcome, or a version of it, was already in the air in early 2011 when I visited Nokia’s headquarters to look at the challenges facing Mr Elop. His decision to leap from a “burning platform”, as he called it, into the arms of Microsoft as software partner for its smartphones certainly ruled out other options, such as using Google’s Android or a home-grown operating system. But a full takeover of the phones business by the US company was not inevitable.
Four elements have conspired to make it happen.
Ivan Seidenberg struck Verizon Wireless deal…
…with Vodafone CEO Christopher Gent in 1999
Verizon Wireless is one of those awkward corporate offshoots plenty of experts think are lucky to survive, let alone flourish into their teenage years. As I’ve written, the rough rule of thumb is that between half and two-thirds of business alliances and joint ventures fail. Yet while the 55-45 Verizon-Vodafone ownership of the US wireless group created plenty of headaches for both parents as it grew, from a management point of view it always looked pretty mature.
By buying Siemens out of their telecommunications network joint venture, Nokia has strengthened the part of its business that is doing relatively well. But it does little to stop the rise of China within the industry.
The telecoms network industry is under extreme margin pressure and Huawei and ZTE, the two Chinese competitors, continue to expand their share. Meanwhile, both Nokia and Alcatel-Lucent have struggled.
Spend one-and-a-half days at a Founders Forum event and it’s impossible not to get infected by the techie-enthusiast bug. The day after last week’s big get-together I found myself beginning a Bob the Builder story with my two-year-old: “It was a busy time in Silicon Valley.”*
The Financial Times is media partner with the event, and this year sponsored two prizes. Founder of the year was won by Ilkka Paananen, chief executive and co-founder of Supercell, the Finnish gaming company behind Clash of the Clans and Hay Day, while Eben Upton, founder of Raspberry Pi, the credit card-sized microcomputer, was awarded the One to Watch prize.
When Nokia chief executive Stephen Elop booked the Grand Tarabya hotel in Istanbul for the group’s annual leadership meeting at the end of January, he planned a spectacular finale. As the meeting of 200 senior executives drew to a close, musicians introduced themselves into the room, playing Ravel’s Bolero, until the whole orchestra was present for the climactic bars.
What happens when the cluster you helped create falls out of love with you? It is a question BlackBerry may be asking itself just a week after relaunching with a new name and a new phone.
According to a New York Times report, after years of being the beating commercial heart of Waterloo, Ontario, the company formerly known as Research in Motion is no longer the destination of choice for top talent. “BlackBerry is now a last resort,” it said.
And if that wasn’t tough enough for a former emblem of Canadian ingenuity, its position has been usurped either by US companies, “including Google, Apple, Facebook and Microsoft” or graduates launching their own businesses.