Gates, Nadella, Bates reportedly opposed Microsoft's acquisition of Nokia smartphone unit at first

In a new tell-all article about Satya Nadella's rise to CEO at Microsoft, an interesting fact has surfaced: He and co-founder Bill Gates, among others, initially opposed the company's deal to acquire Nokia's smartphone unit.

According to a Bloomberg report, Gates, Nadella and former Skype leader Tony Bates all "initially balked at the move" to purchase Nokia's devices and services business, as did several board members. The debate became so heated that former CEO Steve Ballmer reportedly shouted he couldn't be Microsoft's chief executive if the board wouldn't agree with him.

Nadella later changed his mind, the report states, and an emailed statement to Bloomberg said he sees the impending acquisition as "the right move for Microsoft."

Ballmer's deal originally called for Microsoft to acquire Nokia's devices and services unit as well as its mapping division. The board, however, said Microsoft didn't need the mapping unit. While Nadella eventually came to Ballmer's side for the smartphone unit, Gates "remained staunchly opposed" to the deal, according to Bloomberg.

Microsoft has struggled to regain its once strong foothold in the smartphone marketplace, with the company's Windows Phone platform making up just a tiny fraction of the overall landscape. Windows Phone's marketshare continues to grow at a steady pace, however, and the company is expected to announce Windows Phone 8.1 next month at its Build 2014 conference. Several new features, such as its Cortana digital assistant, should bring the operating system more in line with Apple's iOS and Google's Android in terms of capabilities.

The revelation of Microsoft's formerly fractured leadership team comes just two days after Bates' departure was made official and the same month the Nokia smartphone unit acquisition is set to be finalized. Microsoft's deal still faces some final hurdles, however, as Samsung and Google have voiced opposition in Chinese filings.

Ballmer confirmed his disappointment with Microsoft's place in the smartphone landscape during a presentation at Oxford University on Tuesday, saying Microsoft "would have a stronger position in the smartphone market" if he and the company "could redo the last 10 years."

Source: Bloomberg

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So if they opposed it at first then maybe its not such a good idea. Personally I think that history will show that it was not a good idea and the Nokia buyout will do nothing for Windows Phone penetration or marketshare and cause problems for Microsoft. I expect the Nokia part of Microsoft to be sold off in a few years and looked upon as a huge mistake for all concerned.

derekaw said,
I expect the Nokia part of Microsoft to be sold off in a few years

The moment this happens Microsoft has given up on the consumer space and starts transforming into the next IBM…

For those complaining about what WP7 did or didn't have, you clearly didn't own that device. I had an iPhone 4 and went to a HTC Titan WP7. I have never looked back. Were there some apps missing sure, but what you don't know because you lack the time to investigate is that WP7 did many things better than iOS...Live tiles, facebook baked into the people hub, better ring tone support (free is always nice), better app navigation look and feel, it had siri before siri (although siri can take longer dictations now), And don't forget it didn't have to rely on that the worst PC software EVER written ITUNES. I can't tell you how man man days that stupid software has cost me.

I went from an HTC Pure Windows Mobile 6.5 Pro Device to a Lumia 900 and loved it Granted i'm still a bit bitter about my 900 being killed off so quickly but my 520 fills that hole enough at least until I can get a 1520 i still miss my Pure though XD that stylus was murder on my hand

I wish they had handled their Mobile strategy better they had a really nice market share with Pocket PC and Windows Mobile Hell they would of done better in the tablet space but they were ahead of their time and by the time it came back around it was too late.. now they have an uphill battle against products that are already well established.

Devmer11 said,
I wish they had handled their Mobile strategy better they had a really nice market share with Pocket PC and Windows Mobile Hell they would of done better in the tablet space but they were ahead of their time and by the time it came back around it was too late.. now they have an uphill battle against products that are already well established.

Yeah because there really were no other competitors in that space at the time, their market share was also strong in the business and business user space but very poor in the consumer space. That's where apple changed it by mass producing and attacking the base of the user pyramid (consumers) they were able to lower the costs of what were traditionally expensive devices and targeted them right at consumers - not business.

Obviously the fusion of devices and the friendly touch ui all helped but they viewed consumers as a very viable market whilst MS either wasn't interested or kept going for business.

OEMs like HTC did try to go for the consumers a bit with some cheaper devices like the HTC Touch which was the first to have its UI overlay windows mobile but once the user left that home screen they were into windows mobile which wasn't user friendly or even touch friendly (historically rooted in use with the stylus).

Ballmer talked about this in his masterclass (or whatever that college interview was). And it makes sense that this kind of movie would get a lot of opposition. Microsoft has Always been a software company.

But I agree with Ballmer's reasoning. They were first with the tablet and before Apple with the smartphone. But they could never bring it home because they lacked the hardware muscle. All of their computer OEMs failed to act and let Apple take the cake. Now they can respond to changes all on their own. And its up to the OEMs whether they want to follow MS.

very true, the only reason google let motorola go was that samsung is already all-in for android, but no other OEM is all in for Windows Platform except for Nokia. If they wouldn't have acquired them, they would have gone to android for highend category as well as low end and that was the end for Windows Phone.

Google ditched Motorola as part of their deal/contract with Samsung(10yrs) or whatever it was.. Samsung would of splintered off from google otherwise

dingl_ said,
Google ditched Motorola as part of their deal/contract with Samsung(10yrs) or whatever it was.. Samsung would of splintered off from google otherwise

While that is a somewhat different scenario the sentiment is the same. Google didn't need Motorola to keep Android on the edge of smartphone development.

Ronnet said,
But I agree with Ballmer's reasoning. They were first with the tablet and before Apple with the smartphone. But they could never bring it home because they lacked the hardware muscle. All of their computer OEMs failed to act and let Apple take the cake. Now they can respond to changes all on their own. And its up to the OEMs whether they want to follow MS.

...and don't forget "timing" as well. When they released those items, they were all designed for business in mind and not consumers because the cool factor of the Internet was not available to everyone.

However, they failed to change course on these devices until recently and thus, MS is trying to catch up with tablets and smartphones markets. Now they are being pushed out of the automobile industry. They have Sync and Entune, and both are just sitting idle, and Sync is about to get pushed out of Ford.

We don't know what they're doing behind the scenes. It could very well be that they have special teams on it. Personally I would do just that. I would create an innovation and production cell to specifically target the automotive industry.

Ronnet said,

While that is a somewhat different scenario the sentiment is the same. Google didn't need Motorola to keep Android on the edge of smartphone development.

Maybe not, but they need Samsung to stay in their game. So if Samsung wants Motorola HW gone it is. If Google loses Samsung on 'their' Android that would be a major issue/problem as it would basically splinter their massive front to bits since Samsung virtually _is_ their front.

paulheu said,
Maybe not, but they need Samsung to stay in their game. So if Samsung wants Motorola HW gone it is. If Google loses Samsung on 'their' Android that would be a major issue/problem as it would basically splinter their massive front to bits since Samsung virtually _is_ their front.

I know. Google can't have been too happy to be 'forced' to do something. But it's not as if Motorola was going that great for them anyway. Motorla was producing cheap devices, not cutting edge hardware that would drive innovation. They were operating as a lose and they were producing devices that wouldn't just kill WP but also their own bottom line and that of their OEMs.

I'm sure many people inside Google were actually happy to drop Motorola. So yes Samsung will stay around and be the driving force behind innovating Android hardware. The deal lasts a decade and 10 years from now the world will be very different anyway. I can see how its a good deal for both parties.

paulheu said,
Maybe not, but they need Samsung to stay in their game. So if Samsung wants Motorola HW gone it is. If Google loses Samsung on 'their' Android that would be a major issue/problem as it would basically splinter their massive front to bits since Samsung virtually _is_ their front.

Google needs Samsung, but the masses will not buy a phone with a forked-Android or other OS that does not have ecosystem support and the apps that Google has in their Play Store. So I'd say Samsung needs Google just as much as Google needs Samsung.

Ronnet said,
We don't know what they're doing behind the scenes. It could very well be that they have special teams on it. Personally I would do just that. I would create an innovation and production cell to specifically target the automotive industry.

I'll believe you on that up to a point. I would think they do, but only because of necessity.

This is definitely one instance where Ballmer made the right move, and proves that he did have some business savvy. Too bad the stars didn't better align during the rest of his tenure, but this is one move that could shape Microsoft's future, and for better or worse, commits them to the phone space now more than ever in a much more personal way. Hopefully we will see Microsoft fight for innovation on this platform as they have for their Windows, Office, and Server products. Microsoft's future may depend heavily on the smartphone as the computer market reinvents itself, as the masses potentially cast aside traditional desktops and laptops away from the workplace.

Edited by RabbitPunchies, Mar 5 2014, 11:37pm :

Starchild said,

Google needs Samsung, but the masses will not buy a phone with a forked-Android or other OS that does not have ecosystem support and the apps that Google has in their Play Store. So I'd say Samsung needs Google just as much as Google needs Samsung.


Why wouldnt the masses buy a forked android? As long as it can run their favorite apps, people will not give a hoot.

Shadowzz said,

Why wouldnt the masses buy a forked android? As long as it can run their favorite apps, people will not give a hoot.

How's Amazon's Kindle doing?

What usually happens is either people do not care for apps and they are probably not part of any ecosystem, or they wise up, root and install Google apps on their forked Android (there are articles on CNET on how to do this by the way ... just goes to show how popular the idea of installing Google apps on your forked-Android device is ... and this can already be done on the Nokia X ALREADY). This enters them into the Google ecosystem and Google does not care what device you are using as long as you are in their ecosystem.

Finally, the user realizes that he/she does not have to go through the hassle of rooting and installing Google apps if they just bought a Google Android phone in the first place, so the next time he/she is looking for a new phone, he/she purchases a Google Android phone.

All it takes is one app, and because of limited app availability in forked-Android ecosystems, Google's massive app availability will eventually attract all forked-Android users into their ecosystem and onto a Google Android phone. If it doesn't, the user is probably not interested in any apps at all.

Amazon Kindle isnt known with the masses. Doesn't matter what it runs.
It doesnt put as much in advertisement. Samsung does.
Fair enough plenty of people know what android sort of is, and want a phone running it for whatever reason (freedom, apps).

But people just want to have some sense of freedom ("its my phone, i can do what i want with it, even if i never intend on doing such"). And shallowly knowing the difference between iOS and Android, they pick android.

90% of the consumers fall in either of these 2 categories. OS is not important, they would be using Linux if it looked familiar and did everything they expect a PC or MAC to do.

Google apps are installed because... apps.

The moment their apps can run fine on Nokia X or a Samsung without any of Google's services... People will not care and go for the phone they think they want/need.

I don't think they made wrong decision. worst case they can just Use Nokia's top notch Map and navigation solution, plus some of other nokia services. Nokia devices are awesome, look at Lumia 2520, the only tablet they have and its awesome. its even better than surface IMO

What microsoft doesn't understand you can't just bring your product up to par. You got to give compelling alternative something that realy makes you want to jump ship.

Feature wise it'll be up to par, design wise it's leaps ahead. Nokia hardware trumps all else (especially on cameras) so once 8.1 is out they will have enough to make people jump ship.

Melfster said,
What microsoft doesn't understand you can't just bring your product up to par. You got to give compelling alternative something that realy makes you want to jump ship.

True, but it does offer things iOS and Android does not. The problem is getting developers to implement the features or OEMs to push the features.

Even with the OpenGL ES 3.x enhancements, it pales compared to DX9 on WP8. In terms of stability or reliability, iOS and Android are not even close, and there is also the security aspect, that many will still argue is due to obscurity, but is the only phone OS that is approved across hardware devices by US government certification and the NSA still hasn't gained access.

There are also a ton of other features that have slowly been adopted or recreated by Apple and Google, and they still don't do them as well. Just he People Hub with multi-service integration is enough of a selling point for anyone.

Microsoft has made mistakes, and one of them is showing off features before the OS versions launched. Go back to the original WP7 announcement and watch Android 2.2/2.3 add in several of the features, even watch iOS create a variation of the multi-tasking model.

Even if you hate WP, iOS and Android are better today because of it, more than they are better by competing from each other.


There are a lot things WP devices do that just can't be done on iOS or Android, and sadly, most people couldn't name one or two because they already dismissed it, just as you are doing.

Melfster said,
What microsoft doesn't understand you can't just bring your product up to par. You got to give compelling alternative something that realy makes you want to jump ship.
So explain how an up to par OS like iOS is doing so well?

If they had done a better job of the OS they wouldn't have had to buy anyone as OEMs would have been more inclined to make WP devices. Waiting 4 years to make your platform competitive isn't the way to sell devices.

That's what I was thinking, and they've still got a ways to go with 8.1 a step in the right direction (from what we can tell of the leaks).

Notification toasts on the lockscreen from FB and Skype are worthless because they only appear readable for a few seconds as well!

Or worse when there is some lag and you have a conversation on another device. Is the thousands of messages a second turning my phone into a vibrator. Hope that can be fixed with the new notification area and such.

Yes yes yes, but no.

You're right, if WP8.1 was released in 2010 instead of WP7 and the OS was stronger, they wouldn't have needed to buy Nokia.

But at the same time, look at Windows. Everyone and their mom is making Windows PC's, yet they're complete crap and the only companies I've seen who comes close to competing with Apple in the appearance department are Microsoft and Razer! What's worse is that they're both "new" PC companies.

If Microsoft goes full "services", they'll become like big blue. It's important that they keep a hardware unit, if only to pressure and provide reference designs for OEM's. They may not have needed to buy Nokia's phone division, but they needed in-house phone manufacturing and by buying Nokia they just prevented a symbiotic relationship (ala Google/Samsung) from happening.

Yes and no :-)

As Ballmer has said he wishes he could re-do mobile. In that case we'd have had WP8.1 in 2010 as you say (or earlier) and Android would never have had a chance. As it is they took forever and instead it's MS playing catch up. There's nothing wrong with WP, it's just not had enough time to develop yet.

Razer are super-niche, just gaming and "beauty" there is in the eye of the beholder. I don't think anyone outside hardcore gamers find those machines attractive. Personally I think ASUS (UX series) and HP (yes HP! with their Spectre - which I bought last month) are great looking machines and easily equal Apple on design. I do love what MS are doing with their Surface line, but the 10" form factor isn't for me. I'd like either a mini-8" or Pro Pro (hmmm) at 12"-13". 10" is ok for RT, but RT (like WP) is at least 3 years too late and needs integrated with WP before I'd consider it.

As for Nokia, who knows how much further down the X line they'd have gone if MS hadn't purchased them. There's many reasons MS need them now even if not every vision is seamless.

Steven P. said,
That's what I was thinking, and they've still got a ways to go with 8.1 a step in the right direction (from what we can tell of the leaks).

Notification toasts on the lockscreen from FB and Skype are worthless because they only appear readable for a few seconds as well!


Not to mention the Facebook and Skype apps suck toasty nuts on WP. I love my 1520, but the Facebook app drives me crazy. I don't understand why it's so behind the iOS app. I know WP doesn't have much of the market, but you would think Facebook/MS would still want to put out a quality app.

greenwizard88 said,
Yes yes yes, but no.

You're right, if WP8.1 was released in 2010 instead of WP7 and the OS was stronger, they wouldn't have needed to buy Nokia.

But at the same time, look at Windows. Everyone and their mom is making Windows PC's, yet they're complete crap and the only companies I've seen who comes close to competing with Apple in the appearance department are Microsoft and Razer! What's worse is that they're both "new" PC companies.

If Microsoft goes full "services", they'll become like big blue. It's important that they keep a hardware unit, if only to pressure and provide reference designs for OEM's. They may not have needed to buy Nokia's phone division, but they needed in-house phone manufacturing and by buying Nokia they just prevented a symbiotic relationship (ala Google/Samsung) from happening.

I don't understand why hindsight really matters in this instance. They sucked in the past, and now they're fixing it.

TheShark said,
Yes and no :-)

As Ballmer has said he wishes he could re-do mobile. In that case we'd have had WP8.1 in 2010 as you say (or earlier) and Android would never have had a chance. As it is they took forever and instead it's MS playing catch up. There's nothing wrong with WP, it's just not had enough time to develop yet.

Razer are super-niche, just gaming and "beauty" there is in the eye of the beholder. I don't think anyone outside hardcore gamers find those machines attractive. Personally I think ASUS (UX series) and HP (yes HP! with their Spectre - which I bought last month) are great looking machines and easily equal Apple on design. I do love what MS are doing with their Surface line, but the 10" form factor isn't for me. I'd like either a mini-8" or Pro Pro (hmmm) at 12"-13". 10" is ok for RT, but RT (like WP) is at least 3 years too late and needs integrated with WP before I'd consider it.

As for Nokia, who knows how much further down the X line they'd have gone if MS hadn't purchased them. There's many reasons MS need them now even if not every vision is seamless.

Android still would have had a chance because free is still better than licensing. If Android had came a year before iOS, iOS would have not stood a chance, and Windows Phone would have completely failed.