Header image alt text

simon collis

musings of an omnivorous biped

Microsoft just bought Nokia phones

Posted by Simon Collis on 2013/09/03
Posted in CommentTechnology  | Tagged With: , , , | 1 Comment

Microsoft just annouced it’s going to buy Nokia’s handset business.

There’s some interesting things to note…

  • It’s cheaper than Skype
    About a billion dollars cheaper. Does that mean Nokia was a bargain – or Skype was a bad buy? Either way, I think there’s scope for lawsuits here – either from Microsoft shareholders against Ballmer for paying too much for Skype, or from Nokia shareholders against Elop for selling Nokia too cheaply. Worst case scenario? Both.
  • Elop will be Microsoft’s new CEO
    He has to be. I can’t imagine anyone else who wouldn’t come in and say “OK, let’s drop all the businesses that are losing money” – or worse, “let’s concentrate on everything that makes over a billion dollars a year”. That would leave the handset business high and dry. Turns out one or two people agree with me
  • No MS breakup… probably
    As Mary Jo Foley points out, Microsoft management aren’t keen on a split up. They want to be a GE style conglomerate. But the issue might not be what management want – antitrust may yet come back to haunt them. Even if the DoJ don’t say anything, you can be guaranteed the EU will be paying close attention.
  • The takeover is good news for Google, bad news for Microsoft and Nokia
    Seriously, this is the big takeaway. Nokia couldn’t make money on it despite their in-depth knowledge of the phone market going back years. But can you see any other phone builders (HTC in particular) sticking with Windows Phone when Microsoft are competing against them? If anything, this will lead to manufacturers looking to build quality Android phones that compete with the low end Lumias, rather than leaving Windows Phone to pick up that market – and let’s face it, Windows Phone is really only competitive with low-end Android handsets right now.
  • Danger
    Remember what happened the last time Microsoft took over a handset company? Yeah, the KIN. Enough said.

On the face of it, this looks like a sensible deal. But the truth is, with Ballmer set to retire, the only way this deal makes sense is it’s bringing back Stephen Elop as the new Microsoft CEO. I think otherwise, there are way too many risks for it to make sense.

There’s been an awful lot of rumours about Intel and takeovers recently. One, that Intel is about to buy (or merge) with AMD. Another, that Apple might be about to buy Intel. Well, there aren’t that many companies that have the financial clout to buy Intel, but there are a few that might want to buy them. Here’s what I think.

  • Apple
    A takeover of Intel by Apple would make perfect sense for Apple, if not Intel. In fact, I’d say it ought to be right at the top of Tim Cook’s “To Do” list.Apple have recently started designing their own ARM chips for iPads and iPhones. It would make sense to buy Intel, decommission some of the products and turn their fabs over to making their own chips – which they’ve been designing themselves for a few years now. It means not having to deal with pesky outside suppliers like Samsung, with whom they have a bit of a history.

    It would prove disruptive in the external market too – they could easily drop the mobile chips for external suppliers, which although it would pass the market over to AMD for Windows laptops, and effectively kill the Surface Pro, it would have a strategically far more important result – ending Intel’s push for Android. And more traction for Android is something Apple can’t really allow to happen.

  • Oracle
    Oracle earn bucketloads of cash, and already own the SPARC architecture through Sun – a hardware business they’ve been growing. Owning Intel would give them a way into the x86 server market, either with Solaris on x86 or their own version of Linux. It would also essentially give Oracle a very hefty slice of the “Windows tax”, as they would now be providing the chips for probably 80% of the Windows market. It would give them access directly to Intel’s design department, with the inevitable consequence that Intel could produce a line of processors “optimised for Java”.If Oracle really wanted to play hardball, of course, it wouldn’t then be out of the way to suggest to Microsoft that if they want that ready supply of Intel chips to continue, they might want to consider discontinuing that pesky “SQL Server” product with immediate effect – whether that’s legal or not, I’ll let the lawyers fight over, but I can imagine it causing Larry Ellison to purr with delight; it is, after all, pretty much the same sort of squeeze Microsoft put on OS/2 back in the day.
  • Microsoft
    Legally speaking, this one would probably be the most difficult to achieve. I can imagine the DoJ would have something to say, and AMD would be right there, knocking on the door.Nevertheless, Intel’s recent announcement of upcoming Android notebooks must be alarming Redmond, and I can imagine that being pretty high up on Microsoft’s list of “things we really don’t want to happen”.
  • Google
    This one is quite the maverick on this list, but let’s think a moment.Google got into the hardware market by buying Motorola – mainly as a hedge to get Microsoft off Android’s back. That didn’t work. Owning Intel would pull the rug out from Microsoft, and essentially reverse the balance of power between the two companies, forever. Google would be able to dictate terms, and Microsoft could do little more than acquiesce meekly, knowing that Google essentially controlled enough patents, and enough of the market structure, to play enough hardball to strangle Microsoft’s businesses at any second. Certainly, the “Android tax” would stop overnight – it would have to, if Microsoft wanted to continue to work with the makers of Android – who would now be the largest supplier of the chips on which the vast majority of their software runs. Their only route out would be to push Windows entirely to an ARM-based infrastructure – something that’s not working very well right now.

As John-Louis Gassee pointed out, Intel are weak right now. They’re ripe to be taken over. For Apple or Google, Intel would represent the prize: control of the industry.

If Intel survives as a separate entity by the end of the year, I’ll be extremely surprised.

And once they’re gone, who’ll buy AMD?

Why Sinofsky leaving is good for MS

Posted by Simon Collis on 2012/11/13
Posted in News  | Tagged With: , , | No Comments yet, please leave one

Many of the press are reporting that the immediate departure of Steven Sinofsky, head of the Windows division, is a bad thing. Wall Street isn’t happy, they report. And yet, I can’t help thinking that this is a really good thing for Microsoft.

To be honest, the Surface has had modest sales. It’s not been the success many people were hoping for. The fairly pleasing early sales of Windows 8 might well be down to a huge discount (as low as $19.99, depending on when you buy it, or bought your PC) for downloadable upgrades. Many corporates, however, will be content to wait for Windows 9 – and many of those are still upgrading from XP, of course.

But this is a sea change – a complete change of focus to make Windows more relevant in the new touch tablet era. So why is the departure of the man who made it happen such a good thing?

If Windows 8 failed, the argument ran, the targets on the backs of both Steve Baller and Steven Sinofsky would be obvious to Wall Street. With Sinofsky gone, Ballmer now has the freedom to restructure. More importantly, he has someone to blame. Windows was one of Microsoft’s biggest cash cows – any blip in it can easily be attributed to its previous manager’s missteps, and corrected.

Of course, that’s a high risk strategy for Ballmer, but there are plenty of corporates who will sit on their hands and just pay the Select Agreement fees, thus fending off the end of the franchise for another dozen years yet. Windows doesn’t need to be relevant, except in the corporate world, if Microsoft don’t feel they want it to be. Other than the perpetually money-losing Xbox division, Microsoft’s not in consumer-land to a great extent (Zune? Bob? Encarta?) so it’s not such great shakes if Windows doesn’t enter the consumer market that much.

But the main issue, of course, is Ballmer’s beloved “developers, developers, developers“. With the confusion over .Net, the way that Windows Store is based around Windows RT, and that Windows 8 pretty much deprecates .Net, throwing away ten years of hard work building up the ecosystem around the very successful .Net / Visual Studio platform, many developers have been feeling that Microsoft just wants to make their life harder, not easier – as though MS doesn’t want a nice populated app store (the fact that they have two of them – one for Windows 8, one for Windows Phone – is a facepalm of catastrophic magnitude, but that’s an aside).

The truth is, in my view, the departure of Sinofsky is one of the best things that could have happened to Microsoft in years – before he did much more damage.

The Second System Effect

Posted by Simon Collis on 2012/04/19
Posted in CommentTechnology  | Tagged With: , , , , , , , , , | 2 Comments

Have you ever got to the end of something and thought “you know, if I did that over again, I would do this – and that – and the other differently”?

That, dear reader, is the second system effect. And it is, in my opinion, exactly what RIM are suffering from right now, what Apple suffered from in the 1990s, Microsoft have been there (twice) and it’s what essentially sealed Multics fate before it ever began. Read more