Ten Years Ago Microsoft Bought Nokia's Phone Unit, Then Killed It As a Tax Write-Off (theregister.com) 82
The Register provides a retrospective look at how Microsoft "absorbed the handset division of Nokia" ten years ago, only to kill the unit two years later and write it off as a tax loss. What went wrong? "It was a fatal combination of bad management, a market evolving in ways hidebound people didn't predict, and some really (with a few superb exceptions) terrible products," reports The Register. From the report: Like Nokia, Windows Mobile's popularity peaked in 2007, then started to drop away. The iPhone was the tech item of choice for fashionistas, Blackberry was seen as essential for serious business, and Android -- with Google as its new owner -- was gaining traction. Microsoft by that time had a new CEO in Steve Ballmer, who completely and famously failed to see the shifting sands in the mobile market. He dismissed the iPhone as a threat to what he thought was Windows Mobile's unassailable market position, and was roundly mocked for it. So the scene was set for a mobile standards war, and Steve Ballmer staked his professional pride on winning it. Microsoft recruited Nokia to help out. [...]
Under [Executive VP of Microsoft Stephen Elop's] leadership, a closer working relationship with Microsoft was a given -- but in 2013 Redmond announced it was going the whole hog and buying Nokia's handset business outright for $7.2 billion. The deal was done in April 2014, a decade ago from today. Microsoft also got a ten-year license on Nokia's patents and the option to renew in perpetuity. It also got Elop back, as executive vice president of the Microsoft Devices Group. That meant stepping down as CEO of Nokia, for which he trousered an 18.8 million bonus package -- a payoff the Finnish prime minister at the time called "outrageous." Nokia retained its networking business in Finland. It purchased Siemens' half of the Nokia Siemens Networks joint venture and renamed in Nokia Networks. The Nokia board rolled the dice again on hiring another non-Suomi manager, Rajeev Suri, and this time hit a double D20 in D&D terms.
When Ballmer stepped down from the helm at Microsoft in 2014 -- shortly before the Nokia deal completion -- he left a hot mess to deal with. His plan had been to develop the mobile operating system in conjunction with Windows 10, and Windows Mobile 10 was supposed to be a part of a unified code environment. While Windows 10 on the desktop wasn't a bad operating system, Windows Mobile 10 really was. The promised synergy just didn't happen -- it was power-hungry, clunky, and about as popular as a rattlesnake in a pinata. It was this mess that Satya Nadella faced when he took over the reins. Nadella was never very keen on the phone platform and spent more time in press conferences talking about cricket or the cloud than Microsoft's mobile ambitions. It was clear to all that this really wasn't working. Elop was laid off by Redmond a year later.
It was clear that Windows Mobile wasn't going to work. Android and iOS were drinking Microsoft's milkshake, and Redmond realized the game was up. Microsoft started shedding mobile jobs -- both in Finland and Redmond. While mobile was still publicly touted as the way forward for Microsoft with Ballmer gone, the impetus wasn't there and support for the mobile OS shriveled. In 2015 Microsoft declared it was writing off $7.6 billion on the Phone Hardware division as "goodwill and asset impairment charges" -- $400 million more than it had originally paid for the Finnish firm. Nokia bought European networking giant Alcatel-Lucent in a $16.7 billion deal in 2015. Around the same time, Suri announced a move into tablets, since it had a non-compete agreement with Microsoft on mobiles. Meanwhile a bunch of former Nokia execs who'd fled Elop and Microsoft had started a mobile biz of their own: HMD. It was Finnish, but outsourced production to Foxconn in China, and was planning to make cheapish Android devices. In 2016 Microsoft sold its mobile hardware arm to HMD for an undisclosed -- but probably not large -- sum. Nadella clearly wanted out of the whole business and the Finnish startup concentrated on selling good-enough Android smartphones to Nokia's traditional cheap markets.
Under [Executive VP of Microsoft Stephen Elop's] leadership, a closer working relationship with Microsoft was a given -- but in 2013 Redmond announced it was going the whole hog and buying Nokia's handset business outright for $7.2 billion. The deal was done in April 2014, a decade ago from today. Microsoft also got a ten-year license on Nokia's patents and the option to renew in perpetuity. It also got Elop back, as executive vice president of the Microsoft Devices Group. That meant stepping down as CEO of Nokia, for which he trousered an 18.8 million bonus package -- a payoff the Finnish prime minister at the time called "outrageous." Nokia retained its networking business in Finland. It purchased Siemens' half of the Nokia Siemens Networks joint venture and renamed in Nokia Networks. The Nokia board rolled the dice again on hiring another non-Suomi manager, Rajeev Suri, and this time hit a double D20 in D&D terms.
When Ballmer stepped down from the helm at Microsoft in 2014 -- shortly before the Nokia deal completion -- he left a hot mess to deal with. His plan had been to develop the mobile operating system in conjunction with Windows 10, and Windows Mobile 10 was supposed to be a part of a unified code environment. While Windows 10 on the desktop wasn't a bad operating system, Windows Mobile 10 really was. The promised synergy just didn't happen -- it was power-hungry, clunky, and about as popular as a rattlesnake in a pinata. It was this mess that Satya Nadella faced when he took over the reins. Nadella was never very keen on the phone platform and spent more time in press conferences talking about cricket or the cloud than Microsoft's mobile ambitions. It was clear to all that this really wasn't working. Elop was laid off by Redmond a year later.
It was clear that Windows Mobile wasn't going to work. Android and iOS were drinking Microsoft's milkshake, and Redmond realized the game was up. Microsoft started shedding mobile jobs -- both in Finland and Redmond. While mobile was still publicly touted as the way forward for Microsoft with Ballmer gone, the impetus wasn't there and support for the mobile OS shriveled. In 2015 Microsoft declared it was writing off $7.6 billion on the Phone Hardware division as "goodwill and asset impairment charges" -- $400 million more than it had originally paid for the Finnish firm. Nokia bought European networking giant Alcatel-Lucent in a $16.7 billion deal in 2015. Around the same time, Suri announced a move into tablets, since it had a non-compete agreement with Microsoft on mobiles. Meanwhile a bunch of former Nokia execs who'd fled Elop and Microsoft had started a mobile biz of their own: HMD. It was Finnish, but outsourced production to Foxconn in China, and was planning to make cheapish Android devices. In 2016 Microsoft sold its mobile hardware arm to HMD for an undisclosed -- but probably not large -- sum. Nadella clearly wanted out of the whole business and the Finnish startup concentrated on selling good-enough Android smartphones to Nokia's traditional cheap markets.
I still curse Elop's name... (Score:5, Interesting)
...for killing off my beloved N900 device family for the dumpster fire the business ended up as. The N950 would have been wonderful.
Absolutely loved that phone. Still, at least I still have Jolla.
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I think there were some hobbyist variants of N900 "v2" stuff for a while, and Nokia did take a shot at it with N9 but I personally found that unimpressive. Maemo/Meego claim to UI differentiation initially was "fewer external buttons in phone mode" and then they gave up on it in N9 as a part of the last effort to make it work.
I personally find volume buttons and lock buttons being physical is way better than gestures, as I can use them in my pocket.
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Re:I still curse Elop's name... (Score:4, Interesting)
I was just in the process of working out which Symbian Nokia to buy for my first smartphone, then that email made the rounds. I few months later I bought my first Samsung Android device instead. Using the word "leadership" in conjunction with "Stephen Elop" looks very strange, he himself has always denied being a Trojan Horse and the only other explanation is incompetence, for which he was paid 18.8 million Euros.
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When one cannot tell the difference between incompetence or malfeasance , they'll use that to their advantage every single time.
We need to start asking that as a question: "Are you incompetent or evil?" Those are the only two reasonable alternatives.
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I think it's a false dichotomy. In the past I've worked with a number of people who were clearly both incompetent and evil. In fact, someone seems to be circulating some secret playbook amongst these types to teach them how to use the excuse of incompetence to maximize their evildoing without actually accidentally becoming competent at anything other than that.
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Thank You. I'll update my question to be more complete.
"Are you incompetent or evil, or both?" :-D
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I am disappointed that the Neo900 project (which was an attempt by some in the N900 community to create a modern Linux phone with all the things that made the N900 great) never actually got anywhere.
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I have tried software development for the Windows environment on phones and I suffered a lot of cases of "The light is on but nobody home" when I tried to develop something useful. System calls in the documentation that I wanted to use weren't implemented in the OS.
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They were not "clunky", they were great.
Yeah, about that ... no they were not great.
101 things wrong with them:
https://communities-dominate.b... [blogs.com]
More from the same author:
https://communities-dominate.b... [blogs.com]
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Which launcher do you use that mimics the Windows Mobile UI?
I've tried a few and, astonishingly, the official Microsoft Launcher for Android doesn't look anything like Windows Mobile.
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Thanks! That's the one I used back in the old days.
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Not the worst mobile OS (Score:5, Interesting)
After having both iPhone and Android, I used Nokia/MS phones with the Metro interface - the one with a single long page of variable-sized icons which were actually widgets.
Apart from a bit of a mess in the settings interface, the OS was actually quite pleasant to use, and I still miss some of the features these days. Also having three competitors in this space would be nice.
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I really loved the tile-based user interface on Windows Phone and Zune HD.
It's mystifying to me that today's official Microsoft Launcher for Android doesn't use the tile-based interface.
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A friend of mine had a Windows Smartphone back around then, she was initially very happy with it but then - as the platform was dying - the available software died away with it.
Another friend bought a Nokia Android phone around six years ago. It worked reasonably well until a new major level of Android came out, at that point she lost all her photos on the phone because they were on the SD Card and the new level could no longer handle it in the same way - it was formatted "external" when it needed to be "i
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After having both iPhone and Android, I used Nokia/MS phones with the Metro interface - the one with a single long page of variable-sized icons which were actually widgets.
Apart from a bit of a mess in the settings interface, the OS was actually quite pleasant to use, and I still miss some of the features these days. Also having three competitors in this space would be nice.
Microsoft is often accused of always being behind the curve, but Microsoft went all-in on mobile at a very, very early stage. Bill Gates personally made it a priority. And they were big into phones early on. They just couldn't figure out the interface. They were working on Metro when the first iPhone blew the doors open on the smartphone market, but by the time they were ready to ship, Google had already copied the iPhone interface with Android, and it was too late. The market just doesn't want to seem to t
Re: Not the worst mobile OS (Score:2)
"And they were big into phones early on. They just couldn't figure out the interface."
I had an HTC Raphael 110 and the problem was not the interface, it was the lack of reliability. The phone would often get into a state where you had to reboot before you could make a call, it would occasionally reboot itself...
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Did you forget about Sidekick? Microsoft bought a trendy phone and then it died it because some manager thought they didn't need to backup the SAN before upgrading the drive firmware. You can read the story here [techcrunch.com] and here [slashdot.org].
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After all these years, I too miss some of the features. Especially the tiles for specific persons were lovely. A combination of person specific notificatios, previews, and if I don't remember incorrectly, photos, was rather nifty.
Yeah, I can get a separate icon for my wife for opening Whatsapp conversation currently. And it shares the notifications with the Whatsapp process. Meh.
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Microsoft destroyed the best mobile OS (Score:5, Informative)
It was a rather infuriating time. iOS was slick and fast, but so, so limited - nothing like it is today. Android was a slow pile of crap that Google bought probably as a knee-jerk reaction to iOS. Nokia had Symbian, which was not gonna cut it in the new touchscreen era, but also all the app developers, people had been building Symbian apps for years. /rant
So Nokia was developing their own linux based (but actual linux - native apps no VM) Maemo. The plan was both Symbian and Maemo would use Qt so the app developers would port easily. The development of Maemo (and after merging with Intel's effort, MeeGo) was not fast and smooth, as there was internal animosity between the Symbian and Maemo teams, but I was a user of the N900 with Maemo 5, and it was the perfect developer phone back in 2009. A full linux machine (including an excellent slide out keyboard), that ran its own touch apps. It was more like a tech demonstrator and developer phone, so it took almost 2 years to get the N9 ready, with a polished MeeGo "Harmattan". And what an OS that was...
However, Nokia made the deadly mistake to hire Stephen Elop as their CEO before the release of the N9. It became to me (the company I worked for was in cross-platform mobile development at the time, so was following) immediately obvious he was sent by Microsoft as sort of a trojan horse. Instead of releasing the N9, he sent the infamous burning platform memo. His excuse was that with the slow development of MeeGo, the company would only be able to produce one new flagship per year (ehh, so exactly what the most successful company in the field did?), so they had to scrap Symbian and MeeGo and go to Microsoft Mobile. He alienated in one announcement all the app developers that had been working on the Symbian -> MeeGo transition with Qt, killing any goodwill Nokia had.
They had already manufactured several thousand N9s, so those were sold off to small poor markets in order to avoid any major reviewing and tech news. I had to source mine from Romania for example. My partner at the time saw it when it came and told me that compared to my latest iPhone, that one looked like it came from 2525. Which was true, both the looks and how it worked (the amazing "Swipe UI", plus native apps). It was by far the best mobile OS, but it was buried. It's quite hard to explain it to people who have not used it. I remember I had to switch to a Samsung Galaxy S3 android when important apps like banking stopped working. I chose the S3 to at least keep an AMOLED that the N9 spoiled me with and have enough power (4x1.4GHz cores) for Android. Despite 4x and faster cores (the N9 was 1x1GHz), the phone was much slower and the UI was a terrible downgrade. First time even an major phone upgrade took me so far back, I'd say I had to wait another 5 years to get to a phone that did not feel obviously inferior to the "ancient" N9...
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I used the N9 for more than eight years as my "main" phone for calls / chat / simple web browsing even though in the end I also had a secondary android phone for work / stuff that wasn't possible to do on the N9 anymore...
It was just the best phone I ever had with some features that even now are hard to come by: just pick it up and see the clock on the AMOLED display coming on without having to press anything. Put it down "face-down" for the night to mute it completely. While I did have to replace the scre
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It was a rather infuriating time. iOS was slick and fast, but so, so limited - nothing like it is today. Android was a slow pile of crap that Google bought probably as a knee-jerk reaction to iOS.
Only if Google secretly perfected time travel. They bought Android in 2005, and the iPhone didn't come out until 2007.
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Yeah, you are right about that, they did buy it before iOS came out, it was still a pile of crap that they bought to get their hands onto the mobile space faster. They just threw more when the iPhone came out. Which first iPhone was also quite crippled - no apps and for me the 320x480 resolution was the worst feature (an X50v I used to watch episodes on the subway at the time was twice that).
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Rumours that Apple was developing a phone started in 2002.
The snake, Eric Schmidt was installed on the board of Apple to steal early ideas and prototypes to empower Google.
This is how Google was able to release Android so early, and was pretty much a copy of the iPhone and iOS.
The only reason Google bought Android was to further spy on people using another attack vector seeing how popular and personal phones became. Android was initially going to be another blackberry-like device, until they saw what Apple
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Not sure Bill G was still in charge then, Steve B oversaw that particular debacle. At least he could still dance.
Re: Just like HP and Palm (Score:2)
I gave up on palm pilots when the second one broke in my pocket. Cool software, though.
Microsoft software quality (Score:5, Insightful)
While Windows 10 on the desktop wasn't a bad operating system
wat. Are you sure we're on the same planet?
Microsoft has never, ever made a piece of good or passable software during all of their history, despite having half a trillion USD in assets and quarter a million employees. Instead, they are masters of shady business dealings, corruption, taking over control of organizations. Nokia is small beans compared to taking over standard bodies in over 100 countries in order to get rid of office format interoperability.
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Compare to Turbo Pascal of the era - no comparison. QB had the same issues all MSFT development products have - poor documentation and limited functionality. It exposed what someone thought needed to be exposed out of the total capabilities of the machine. Whereas with TP you could do whatever you wanted since it permitted you to inline assembly and write interrupt service routines in the language itself.
Comparisons confined to QB 4.5/MS Basic PDS 7 vs TP 5.5/6/7/BP1, which were all mostly the same produ
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By the time of MSC5.1 the writing was on the wall though, the future was Windows and C code.
Re:Microsoft software quality (Score:4, Insightful)
Windows 7, ran solid, fast, no ads or weird shit, clean UI
Earlier pre-Clippy versions of Word before they added 8 billion useless features when it was still fast and did its job well Wordpad, great slimmed down and fee version of Word. I wrote many college papers on it
Earlier Excel for single user smaller use cases (but was always inappropriate for large or shared file use for which it was never intended but used a lot)
Minesweeper, who hasn't played and then tried again and again?
The pattern here is that like all software companies, they create something good, then they destroy it by continuing to work on it. There's no reason to buy software again if it does everything you need, and Microsoft is too good at compatibility, so you aren't forced to buy it every three years because it broke in some Windows upgrade.
The only alternative for milking existing software is renting software, which sucks from a consumer point of view, but provides continuous revenue.
The right thing to do, of course, is to declare the software feature-complete and move on, dedicating only minimum employee time to maintenance, so that you get way less profit from that team every year, but have basically no costs, and shift the headcount to work on some new piece of software that will produce your next source of new profits.
But tech companies are lazy. They'd rather create something once and milk it forever and ever. Why is this a problem? Simple. 95-year copyright durations. If we rolled back to the original 1970 duration, when copyright was 14 years and renewable for 14, this wouldn't be an issue. Companies would have a limited amount of time to make money off of the software, because in 28 years, the software would be free for anyone to use, so with reasonable virtualization, you'd have folks using 1996-era versions of Word for free right now.
Add to that a second change in the law — making the cost of renewal be 5% of the total gross revenue for the product to discourage renewal — and you'd have a copyright policy that actually makes sense. If a company is making enough money for it to be worth that cost, then they should be able to extend it for another 14 years, but it should be expensive enough that they don't just automatically do so out of spite. That would mean that most software from 2010 would no longer be under copyright, and companies would not be able to milk software for every last drop of potential profit like they do now, and instead would be forced to actually innovate regularly with new products, thus promoting the progress of science and the useful arts.
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Like the poster above asked: are you sure we live on the same planet?
From what I've seen, Microsoft always looks at what other people have done, then tries to create their own version. The first version is always absolute crap, but they always say, "Wait until the next version. It'll be even better!" Then they use their deep pockets to keep working on it, and sometimes, by the t
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Excel was great.
OS-wise, for me their peak was XP, which I think was quite good at the time.
Re:Microsoft software quality (Score:5, Funny)
Microsoft has never, ever made a piece of good or passable software during all of their history
Best MS software ever - really good UI and no issues with functionality... I think it was called BSOD
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Best MS software ever - really good UI and no issues with functionality... I think it was called BSOD
Nah, FORMAT C: was the best, or did they steal that from Digital Research?
Re: Microsoft software quality (Score:2)
Or, its successor, Format C: /S - provided even more functionality over the earlier Format C: product.
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mkfs -t ext3 /dev/hda0
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Microsoft has never, ever made a piece of good or passable software during all of their history,...
Generally, I agree with you. The one exception (IMO) is Onenote. They didn't buy that but actually developed it in-house from what I know. It's the most underrated part of their "office suite". It's the standard by which I measure all other note apps. If only they made a native Linux version ... but at least most of the functionality is available in their browser version.
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OneNote is pretty awesome, but that annoying "We're sorry, but we need to clean up after the last time OneNote launched" bug stuck around for five years.
Re: Microsoft software quality (Score:1)
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The Windows 8/10 style looked decent on a phone though, even if under the hood it sucked up too much power. iPhone was frankly too sparse for an UI, non-intuitive, etc; Android certainly did much better in the UI there. What looked stupid on the desktop (square active icons) was suitable for a phone or small tablet. The idiocy of a touch screen for a PC or laptop was natural for a phone. A coworkers had a Microsoft phone and he loved it, and I have to admit it seemed nice. Get a lot of info at once with j
meh (Score:1)
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Either way Nokia was already a dead man walking. there only hope was a buy out that turned them around, turns out that wasn't MS, but at least the owners got something rather than watching Nokia spiral into doom with nothing.
No. Nokia Mobile Phones was a dead man walking (after Stephen Elop ruined it as a MS trojan horse). The Nokia itself, with the Network business, was, and is doing just fine. The best evidence of that was the quadrupling its stock price after MS bought the loss making phone segment. They are, as of today, world's second or third largest mobile network manufacturer.
Talk in the late Balmer era (Score:3)
There was talk the Microsoft with its vast riches should consider exiting tech and selling off its tech products (that were good enough at the time according the financial press) like windows and office to care taker software houses like CA while turning themselves into a tech focused hedge fund.
I sure wish they had. It would have done a lot to take the Microsoft Management culture influence out of tech, and that would have been a good thing
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Well, that would probably have caused each license of Windows costing $1K.
I disagree. (Score:2)
I had an HP Elite X something phone that ran the Windows mobile OS. And I really liked it. The home screen was the most customize-able and useful of any mobile OS I have used before or since. But customize-able in useful ways, things that actually helped productivity and saved me time.
The reason Windows mobile OS failed was because it was only available on premium devices with big pricetags. There were no cheaper models and the used market at the time was non-existent. And perhaps at that point in time
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Add to it that it was a lot harder to make apps for the Windows environment because a lot of system calls weren't doing anything so you as a developer had to test by trial&error to get some things to work.
The Hell? (Score:1, Interesting)
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It was too late, with no path in sight to overcome the lead that Android and iPhone had gained.
Without enough applications, no one would buy the platform. With no one buying the platform, no one was making applications. That chicken and egg broke for Android/iPhone largely by virtue of offering vaguely "desktop grade" web experience which was the killer app for the consumer space. But Microsoft had very little to bring to the table to drive a big ecosystem change. Probably the one thing I could imagine the
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I disagree, the whole point of a smartphone, particularly back then, was "a phone, web browser, and applications". Well, iPhone and Android had all three, and Microsoft brought to the table a lack of applications, a better, but yet different web browser but probably good enough, and no applications. Subjective opinions about tiles hardly matter as you commonly had the info you wanted at your fingertips regardless of platform. There wasn't any value proposition to pitch to users, even if the people on the
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MAGAtard! (Score:1)
Embrace and Extend (Score:4, Insightful)
Easy to see what went wrong (Score:2)
Windows Phone was an immature phone operating system, with a primary handset manufacturer and didn't have the apps people wanted. So naturally the general public stayed away in droves. And other handset makers didn't leap at the chance to license and compete against Microsoft and its own hardware. And developers didn't see the point of porting their apps to some new platform with an entirely different development language and (limited) APIs.
So it died on its ass. Nokia handsets might have enjoyed more succe
What went wrong? Nothing.. Money was made (Score:1)
Don't look for what's not there. Ask instead, Who benefits? It's just business.
One of the worst M&A in the tech... (Score:1)
industry insider views (Score:2)
Historical Revisionism (Score:2)
The criticism of Elop is my nerd pet peeve. He took over a company that was already in serious trouble - the previous CEO had been fired for losing massive market share. Nokia at the time was basically in the business of selling dumbphones and feature phones in a world that already had the (very good) iPhone 4. Android 2.3 was good enough that decent sub $200 smartphones were becoming a thing and killing the 3rd world market for Nokia's dumbphones.
Elop either had to go with Windows Phone or become yet an
What went wrong? (Score:2)
Windows Mobile is Pants.
Windows Mobile could have worked, though! (Score:2)
Honestly, what screwed Microsoft was the original insistence on doing "Windows Phone" where the whole UI looked like a shrunken-down, locked-down edition of Windows for a desktop PC. Nobody I know wanted that on their phone.
By the time everything was revamped and sold as Windows Mobile on the last of the smartphones they manufactured? They had a really pleasant to look at and use UI, coupled with phones with superb cameras on them. The people I knew who bought one really liked it and were upset to find out
I loved Windows Phone (Score:2)