Telecoms

Andrew Hill

It’s sad to see Eastman Kodak reduced – at least in many investors’ eyes – to a punt on the photographic pioneer’s patents.

On Wednesday, its shares jumped by a quarter on the suggestion that its intellectual property could be worth more than the company itself. It’s a sign of the times as much as it is a sign of Kodak’s failure to find a convincing answer to the digital photography challenge: Google’s $12.5bn agreed bid this week for Motorola Mobility was largely based on the value of the mobile phonemaker’s patent portfolio

Andrew Hill

One problem with examining the road not taken is that it’s usually impossible to tell whether you took the right route until it’s too late to change course.

The announcement of the Google-Motorola Mobility deal sent me back to notes from an interview with Nokia’s chief executive Stephen Elop in March, to remind myself how difficult it is to make strategic leaps in a fast-changing industry. You’ll recall that the Finnish group ended up selecting Microsoft as its smartphone partner rather than Google. 

Andrew Hill

I’m fascinated by Huawei Technologies: it encapsulates all the challenges that fast-growing Chinese companies face – from governance to branding – and then some.

It’s already the world’s second largest manufacturer of mobile network equipment by revenue, but Huawei’s latest big bet is to be one of the world’s top three mobile handset brands by 2015. Wan Biao, chief executive of Huawei’s device unit, set the target at Wednesday’s launch of its cloud-computing smartphone, the “Vision”, based on Google’s Android operating system. 

Andrew Hill

My favourite bon mot from Richard Rumelt, the UCLA strategy expert whose interview fuelled my column this week, was his comment that in any boardroom discussion of strategic options, acquisitions should be “guilty until proven innocent”.

Prof Rumelt’s new book Good Strategy/Bad Strategy makes clear he is no fan of M&A. “The problem with engineering growth by acquisition,” he writes, “is that when you buy a company, especially a public company, you usually pay too much.” 

Andrew Hill

One of Nokia’s biggest challenges is to maintain its home-grown Symbian operating system, while simultaneously producing attractive Windows-run smartphones under its brand-new partnership with Microsoft. Exactly how that would be done was one of the questions I couldn’t yet answer in my recent two-part analysis of Nokia’s future.

It turns out the challenge will be met, in part, by offloading it onto Accenture. On Wednesday, Nokia announced that 3,000 staff – mainly Symbian software engineers – would transfer to the consultancy (an additional 4,000 jobs will be lost across Nokia).

I don’t know what the Finnish for “hot potato” is, but Accenture has been handed one. 

John Gapper

Huawei’s attempt to soothe fears about the US government and investors about its corporate governance by disclosing the names of its board members – not too radical a step, one might think – begs some questions.

Huawei has two image problems – its links to the Chinese government and People’s Liberation Army, and the degree to which the family of Ren Zhengfei, its founder and chief executive, are involved in running the business. Mr Ren is a fomer PLA engineer. 

One day in early February, Samuli Nyyssonen of Nokia boarded a plane in Bangalore working for one company and disembarked in Helsinki working for another.

While the software engineer was in the air on February 11, Stephen Elop, the company’s chief executive, had told its 130,000 employees about a sharp change of strategic direction. Nokia would ally with Microsoft in smartphones, while at the same time boosting the group’s basic phone business in an effort to reach the “next billion” users. 

Andrew Hill

There is no doubting Stephen Elop and his lieutenants’ resolve to rebuild the mobile phone company’s platform, having declared that it is burning. But having interviewed the chief executive and some of his leadership team – as well as current and former staff – for my two-part analysis of the company’s management challenges, I’m left with a nagging question: is the crisis at Nokia grave enough to trigger the necessary cultural and behavioural change at the Finnish group?

It remains a profitable company, with a strong balance sheet and the largest share of mobile phones by units shipped. Barely five years ago, it was riding high, the darling of business school professors and commentators, and that good feeling is hard for veteran Nokians to forget. 

Perspiring slightly under the arc-lights of an in-house television crew, Stephen Elop, Nokia’s chief executive, is about to deliver for the 10th time his “town hall” address to staff. He must sell to them the most radical strategy change since the historic tyres-to-timber Finnish conglomerate turned itself into the world’s leading mobile phone company in the 1990s.

John Gapper

Twitter’s fifth birthday today comes as  AT&T’s announces it wants to buy T-Mobile USA for $39bn to form the largest US mobile provider.  The two events are more than a coincidence.

AT&T produced some slides for its announcement showing the rapid growth in mobile data use – 8,000 per cent over four years according to its calculations – and is justifying the acquisition partly by warning of spectrum exhaustion.

Twitter, meanwhile, is the first big social media company to be conceived with mobile in mind. It’s 140-character limit for messages was based on the original 160-character limit for phone text messages. 

John Gapper

Nokia’s disappointing announcement this morning of a “strategic alliance” with Microsoft to create a “third ecosystem” in mobile phones put me in mind of the old Stealers Wheel song Stuck In the Middle with You:

Well I don’t know why I came here tonight,
I got the feeling that something ain’t right,
I’m so scared in case I fall off my chair,
And I’m wondering how I’ll get down the stairs,
Clowns to the left of me,
Jokers to the right, here I am,
Stuck in the middle with you.

Nokia, which used to dominate the global mobile phone market when there was hardly any such thing as a smartphone, has found itself in the worst place of all – stuck between cheap phones made in Shenzhen, and the high-margin Apple iPhone.

 

John Gapper

Stephen Elop of Nokia surely wins the Lucy Kellaway prize for blunt speaking in a corporate memo when he warns that the Finnish company has a “burning platform”.

There are lots of things to admire in the memo in terms of clarity and the willingness of the new chief executive to spell out publicly exactly how dire Nokia’s crisis has become: 

John Gapper

The rise of Android, the open source smartphone operating system pioneered by Google, continues apace. According to figures from NPD Group, Android was installed in 44 per cent of all smartphones sold in the US in the third quarter, compared with 23 per cent for Apple’s iOS.

Apple has already responded by agreeing to Verizon, which has the most solid US mobile network, selling a CDMA version of the iPhone from next year.

The intriguing thing about the Android vs iOS battle is how closely it mirrors that between Microsoft and Apple’s past battle over PC operating software. Microsoft won on volume with Windows but Apple’s tight control of its OS operating system allowed it retain the quality edge. 

John Gapper

As Robert Andrews of Paid Content notes, the appointment of Stephen Elop as Nokia’s new chief executive included a Sarah Palin-esque moment in which he emphasised his natural links with the Finnish company because he is Canadian:

“That process has been greatly assisted by my heritage. As you may know, I’m a Canadian citizen, you may also know that Canada and Finland share the Arctic Circle, that’s something that holds me in good stead as I move forward.”

Depending on your point of view, this is either a laughable cover story or a highly inventive attempt to get around the fact that Nokia is reaching outside its Finnish roots and culture to rescue itself from its current malaise. 

John Gapper

Net neutrality was always a slippery concept, which may account for the fact that the New York Times and the Wall Street Journal have such different accounts of talks between Google and Verizon over the vexed subject.

For the NYT:

Such an agreement could overthrow a once-sacred tenet of Internet policy known as net neutrality, in which no form of content is favoured over another.

Contrariwise, according to the Journal:

The two companies have been negotiating with each other for months on a compromise on the thorny issue of so-called net neutrality – the principle that Internet providers such as phone or cable companies should not deliberately slow or block Internet sites or services.

The problem, and reason Google and Verizon have been talking to each other, is that no-one can exactly define net neutrality, and it would be devilishly difficult to draw up a law to enforce it, even if that were desirable (which I don’t think it is).