Microsoft's Gates, Nadella, Bates Initially Opposed Nokia Acquisition; Said Microsoft Should Stick with Software
March 5, 2014 1:33 PM
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Former CEO Steve Ballmer threw a fit until he got his acquisition
Microsoft and Nokia have had a close relationship over the years, where Microsoft provided the Windows Phone software and Nokia made the hardware. But when former Microsoft CEO Steve Ballmer wanted his company to become a hardware maker, many top executives disagreed with such a move -- including current
CEO Satya Nadella
, Ballmer was set on getting his way when it came to the acquisition of Nokia's Devices and Services division last year, despite opposition from top-ranking execs in the company. Ballmer reportedly threw a fit that everyone could hear last year when he learned of their opposition.
Microsoft co-founder and current Technology Advisor Bill Gates along with Nadella and former Skype CEO in charge of Microsoft's business development Tony Bates all initially opposed Microsoft's move into hardware, as well as the idea of an expensive Nokia acquisition.
The board didn't back Ballmer's plan to acquire two Nokia units at the time, but after Ballmer's hissy fit in June 2013, the board signed off on a
$7.2 billion USD purchase
of Nokia’s mobile phone business. Nadella had also reportedly changed his mind about the Nokia acquisition, saying it was a good idea after all.
“Nokia brings mobile-first depth across hardware, software, design, global supply chain expertise and deep understanding and connections across the mobile market,” said Nadella. “This is the right move for Microsoft.”
Bates, on the other hand, remained strongly opposed. Earlier this week, it was announced that he is leaving the company immediately, which could be a result of being passed up for CEO earlier this year. There could also be internal frustrations with his opposition of Microsoft's move toward hardware.
But Microsoft team members had a right to worry about the company's future in hardware, as the past has been quite telling. For instance, Microsoft's first homemade tablet called Surface was largely a flop at launch in October 2012. Windows RT was seen as a half-baked Windows product that didn't run legacy apps, and the Windows 8 Pro version was much too expensive for the typical consumer, and Windows 8 in general created a storm among users who just wanted their Start button back and the live tiles on their desktops to go away.
In July 2013, Microsoft reported the largest earnings miss in at least a decade and took an unexpected
$900 million charge
due to the Surface flop.
Ballmer announced that he would be
retiring as Microsoft's CEO within a year
last August, and Nadella was named CEO in January.
Nadella is currently shaking up the executive ranks and unraveling certain parts of Ballmer's restructuring process.
This article is over a month old, voting and posting comments is disabled
3/5/2014 5:09:12 PM
See now, in principle Gates is right, and in a world without vertically integrated, borderline duopolistic competition that would be the proper course. Ballmer was running a company however, not an ideal.
"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer
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