Curated by Stuart Fogarty stuart@admaticallycom for AFAO'Meara Advertising, Streamabout The Video Agency and Admatic Ireland.
All comments will be posted - promise!
Most of us probably grew up with Nokia. The Finnish cutting-edge mobile phone manufacturer that was first to market. And that eventually dominated the market globally. I remember staying at an upscale Helsinki Hotel with a person from Nokia and they paid the bill with their business card. In other words, the Hotel would simply invoice Nokia, no questions asked. It was a tech giant. Like Microsoft or Apple. It was the brand of reliability. And it's no more. Bought by Microsoft who announced last week, they'd be dropping the 'Nokia' brand on devices. And what happened? Well we all have Samsung or Iphone devices now. So the reason for that was that Samsung and Apple built better phones and Nokia customers switched - so there was no real brand loyalty to Nokia. It was just a phone (compared to say Apple, who's customers are product devotees). But the real reason was innovation. Or lack of it. You can even be the 80% market dominant player and in a few short years be gone. They simply didn't innovate as quickly as they could and sat a bit on their laurels. Stand still and you're dead. Remember Nokia.
So much ado about nothing. Or is it? Apple's long awaited, over excited, highly pumped PR launch of the new Ipad (the first launch was in 2010), the 'Ipad Air', just didn't seem worth the 'long-awaited' wait. Okay it's much lighter and slimmer, about 20% less, which MD Tim Cook said took "years" to develop and heralded it as a big "leap forward", a new generation but then there was little else to say. It replaces the IPad 4. It comes with a better HD camera for 'Facetime' and dual microphones but regrettably, the same battery life. Don't know about you but speed has not been an issue with my IPad, nor camera, nor microphones - but battery life has. As the Ipad moves into movies, extended battery life will be key and that hasn't been fixed.
Innovation has to solve a problem, rather than just for the sake of it. The Ipad Air is much, much faster too (A7 chip) and it comes with free Mac software, although costing £739 stg for the 128 gig, Wifi enabled version, it's not cheap. The entry level 16 gig version, will be about £399 stg when it's available on November 1st. But 16 gigs, is really of little use in my view. It's an increasingly competitive market too with Samsung and Nokia "phablets", although Apple's is guessed to have a 32% market share having sold 170 million Ipads. Nokia of course, have just been bought by Microsoft for over 5 billion usd and launched their new Windows 8 tablet this week too. Microsoft's own 'Surface2' went on sale yesterday but nobody seemed to care. They were watching Apple. So it's a hot space to be in. One of the great criticisms after Steve Jobs (I know, yawn) is that Tim Cook's leadership hasn't brought real innovation to Apple since. If this is a sign of it, I'm inclined to agree. A lighter, faster, more expensive, Ipad might be good and useful but it's hardly, earth shattering. And earth shattering was how Apple used to be.
So Wow, they were able to sell Blackberry..for a 9 dollar a share price bringing in 4.7 billion us dollars. Extraordinary. The buyer is Fairfax financial, a Canadian Insurance fund (Blackberry is Canadian too) who were also Blackberry's largest shareholder. Blackberry was, Canada's greatest star. It has come after a weekend of speculation, notably by the excellent UK 'Telegraph', when Blackberry announced losses of almost 1 billion usd in Q2 and planned to slash 4,500 jobs with shares slumping by -24% on Friday last. Shares were trading at circa 8 dollars and I remember them at 138 dollars. It had officially put itself up for sale last month having hired PWC to help. Amazon and Microsoft had considered buying it previously but Microsoft's Nokia deal put paid to that. The BBM (Blackberry messaging service) is the golden egg with 60 million users although the once dominant company has really struggled against Apple, HTC and Samsung since 2007. Blackberry once controlled half of the US market (!), now that's under 3%. The BBM service had one great advantage - as London rioters and drug dealers knew - it was hard to intercept. Hence it became popular with drug sellers and became known as 'Crackberry'. It only shipped 2.7m of its latest Z10 phones out of a planned 6.8m although it sold 5.9m smartphones in Q2, well below expectations. Apple, for example, sold 37m and the Iphone 5S sold out online.... in 5 minutes. Blackberry had slashed phone prices so effectively, they couldn't give them away. Its losses reflected a big write-down on this stock of unsold phones. The story of the downfall of Blackberry (if you call a sale of billions a downfall) is that they stuck with a corporate market and a keyboard, largely ignoring connectivity to the internet as having value. When they realised their mistake, it was too little, too late. Keyboards had their day, internet connectivity was king and the corporate market became a personal market. Executives choose their own phone for business and personal use, rather than a company bought phone. It's a sad story in one way but ultimately a good story in that they've done well to attain a good price now. Or lucky to have a shareholder like Fairfax, prepared to protect their investment and obviously being cash-rich enough to do so. Still. A once dominant brand like Nokia, bit the dust. Or has it?
In one of his last great acts, 'Crazy' Steve Ballmer, the Microsoft CEO has agreed to buy Nokia, for about 4.6 billion stg/7 billion us dollars. Nokia, the one time Finnish world leader in mobile phones, has worked with Microsoft since 2011 on the Lumia phone. More importantly perhaps, former Microsoft executive, Stephen Elop and current Nokia CEO, was tipped to replace Ballmer. So is this case of getting a new Microsoft CEO with the company? Buy one, get one free? It's yet another Microsoft deal that seems on the surface, "bizarre". They all do at first and then when you reflect....well, they all still do. Firstly Microsoft already has working relationships with other hardware manufacturers, notably Samsung, who'll see this as competitive. A huge conflict of interest anyway. Secondly a price tag of nearly 7 billion usd seems high for a company that had its stock recently at 'junk status' and frankly, that has little brand status remaining in the smartphone market. All to be paid in cash. Thirdly, 32,000 employees come with it. That's a big, huge ongoing cost and basically increases the Microsoft workforce by a third. As one blogger put it, "This would be the deal of the year....if it was 1997" Another suggesting they should buy AOL and Betamax next. In other words, it's all a bit late and a surprising concept for Microsoft to tackle Apple/Samsung mobile dominance, now. That game, one would have thought, is well and truly over. And you know what? Microsoft just do things and leave them there. Perhaps like the Skype acquisition, there just isn't, a plan. Here's Ballmer note to staff about the Nokia buy;
From: Steve Ballmer To: MS FTEs Date: Sep. 2, 8:00 PM PDT (Sep. 3, 6:00 AM EET) Subject: Accelerating Growth
We announced some exciting news today: We have entered into an agreement to purchase Nokia’s Devices & Services business, which includes their smartphone and mobile phone businesses, their award-winning design team, manufacturing and assembly facilities around the world, and teams devoted to operations, sales, marketing and support.
For Microsoft, this is a bold step into the future and the next big phase of the transformation we announced on July 11.
We are very excited about the proposal to bring the best mobile device efforts of Microsoft and Nokia together. Our Windows Phone partnership over the past two and half years has yielded incredible work - the stunning Lumia 1020 is a great example. Our partnership has also yielded incredible growth. In fact, Nokia Windows Phones are the fastest-growing phones in the smartphone market.
Now is the time to build on this momentum and accelerate our share and profits in phones. Clearly, greater success with phones will strengthen the overall opportunity for us and our partners to deliver on our strategy to create a family of devices and services for individuals and businesses that empower people around the globe at home, at work and on the go, for the activities they value most.
This is a smart acquisition for Microsoft, and a good deal for both companies. We are receiving incredible talent, technology and IP. We’ve all seen the amazing work that Nokia and Microsoft have done together.
Given our long partnership with Nokia and the many key Nokia leaders that are joining Microsoft, we expect a smooth transition and great execution.
As is always the case with an acquisition, the first priority is to keep driving through close, which we expect in the first quarter of 2014, following approval by Nokia’s shareholders, regulatory approvals, and other closing conditions.
But I also know people will have some questions about what happens post-close. While details aren’t final, here is what we know, and how we’re generally approaching integration:
1. Stephen Elop will be coming back to Microsoft, and he will lead an expanded Devices team, which includes all of our current Devices and Studios work and most of the teams coming over from Nokia, reporting to me.
2. Julie Larson-Green will continue to run the Devices and Studios team, and will be focused on the big launches this fall including Xbox One and our Surface enhancements. Julie will be joining Stephen’s team once the acquisition closes, and will work with him to shape the new organization.
3. As part of the acquisition, a number of key engineering leaders will be joining Microsoft from Nokia, reporting to Stephen in his new capacity:
· Jo Harlow, who will continue to lead the Smart Devices team
· Timo Toikkanen, who will continue to lead the Mobile Phones team
· Stefan Pannenbecker, who will lead Design
· Juha Putkiranta, who will lead the integration effort on Nokia’s behalf
4. Regarding the sales team, we plan to keep the Nokia field team, led by Chris Weber, intact and as the nexus of the devices sales effort, so that we can continue to build sales momentum. After the deal closes, Chris and his team will be placed under Kevin Turner. We will develop a single integrated team that is selling to operators, and there may be other integration opportunities that we can pursue. Kevin will work with Chris Weber and Chris Capossela to make those plans.
5. Our operating system team under Terry Myerson will continue unchanged, with a mission of supporting both first-party and third-party hardware innovation. We are committed to working with partners, helping them build great products and great businesses on our platform, and we believe this deal will increase our partner value proposition over time. The established rhythms and ways of working between Terry and his team and the incoming Nokia team will serve us well to ensure that we do not disrupt our building momentum.
6. We are planning to integrate all global marketing under Tami Reller and Mark Penn. It is very important that we pursue a unified brand and advertising strategy as soon as possible.
7. Finance, Legal, HR, Communications, DX / Evangelism, Customer Care and Business Development will integrate functionally at Microsoft. Sourcing, customer logistics and supply chain will be part of Stephen’s Devices organization. ICM / IT will also integrate functionally for traditional IT roles. We will need to work through the implications for factory systems given the differing manufacturing processes and systems at both Nokia and Microsoft.
8. We plan to pursue a single set of supporting services for our devices, and we will figure out how to combine the great Nokia efforts into our Microsoft services as we go through the integration process.
9. There are no significant plans to shift where work is done in the world as we integrate, so we expect the Nokia teams to stay largely in place, geographically.
10. Tom Gibbons will lead the integration work for Microsoft.
While today’s announcement is big news, we have to stay heavily focused on running the current business. We have a huge fall and holiday season ahead of us, so we need to execute flawlessly and continue to drive our business forward. I have no doubt we will.
Anybody with a doubt in their head about how brands can suffer, who aren't prepared for the digital age, should look at the demise of Japanese electronics. Once held up in universities worldwide in the 80's, as the model for enterprise are now in deep trouble. They weren't prepared.
The continuing decline of brands like Panasonic, Sharp and Sony, and the incline of Samsung, show how the world has changed. And it's a lesson.
Sharp, a 100 year old company, has now raised concerns that it might no longer be a "going concern". Posting a loss of over 3 billion usd for the last quarter, Sharp it estimated to reach combined losses of 10 billion usd and now has problems raising finance. As well as, share price declines.
Because Sharp is burning through cash, it had approached private equity to shore up its position but rumours abound that it has failed and instead, has turned to the Japanese government for what is, a 'bailout'.
Sony has just posted its 7th straight quarter loss (this one was 194 million usd) and is cutting 10,000 jobs. Sony was for so many years, the dominant premium brand. Panasonic is also forecasting dramatic losses.
All three are having nightmares on the Japanese stock market and reaching "junk status" quickly.
These brands have been wiped out by companies like Apple and Samsung in the new world order. Whilst they remained part of the old world order, they did not settle into the Internet world quickly enough.
Sony, inventor of the Walkman, Bravia TV and so much else, took a back seat because they felt that their position was "too big to fail". Most Japanese producers did the same as you can see as indeed have Nokia.
The Internet has become a great brand leveller.
Who'd ever have thought that a South Korean company (not exactly silicon valley is it?) like Samsung, would outsell Apple by a big margin? Never mind leave the Japanese in its wake.
It's extraordinary stuff but extraordinary lessons.
Brands that ignore the online revolution will pay a heavy price.
The decline of these, once world class brands, only illustrate how quickly it can happen through a lack of innovation but also, a pooh-poohing of the online marketplace.
So many established brands have such a poor online strategy that they'll be doomed to fail. Most even still, have poor websites.
Why does every Tech CEO want to do the Steve Jobs style of presentation even when it doesn't suit? Thorsten Heins above, CEO of Blackberry, thinks taking off his tie and wandering around the stage, clapping, is eh, jobs-esque. "Have a great Blackberry world", he says "And let's rock and roll this". Really. Sometimes you're just better off just being you. It's 35 minutes long but you get a sense of Thorsten after 5 minutes.
And if you haven't seen Microsoft's CEO Steve Ballmer, another man under real pressure, go to the other extreme, do it. http://streamabout.blogspot.ie/2012/07/vanity-fair-august-article-to-add-to.html Honestly it's cringe worthy.
But I'll save you the trouble...what the?
Thorsten presides over continued troubles this week at 'Research in Motion' the Canadian public quoted company parent of The 'Blackberry'. A company which a lot of Canadians held up as a "national treasure" because it was the inventor of "mobile mail".
And it's the story of how a one-time market dominant player is struggling.
You have to see parallels between Blackberry and Nokia. Old world dominant brands who have lost their value because they didn't keep up. Online bloggers now are referring to it as 'The Blackberry death spiral'.
The first Blackberry (named by Lexicon branding by the way) appeared in 1999 as a two-way pager in Germany. Today, it retains about 3% (a massive drop from 9% in a year) of the smartphone market competing with Android, Windows and iphones where it has really struggled. Whilst, at the same time, Samsung, Apple and HTC have boomed.
With over 70 million subscribers, the Caribbean and Latin America (yep, you know that) have the highest penetration of Blackberrys.
Although considered as "more secure" as an email sender, it's widely known in the US as "The Crackberry" which indicates its high usage amongst drug dealers because of that security. It was famously used in the London riots by thugs. However another well known "user" is Barrack Obama whom during his 2008 Presidential campaign became dependent on it and it acted almost as a celeb 'endorsement'. Which should have done a great marketing job for Blackberry, but didn't.
The problem is sales.
Up to March 2012, they shipped 11 million Blackberrys which was down 21% on the previous quarter. In its fourth quarter it announced a loss of 125 million usd and plans to save 1 billion usd this year by cutting up to 6,000 jobs out of its staff of 17,000.
Morgan Stanley downgraded the stock and shares have hit an all time low this week, down 94% off their peak value. That's 94%. Which is why its investors are not happy - not one tiny bit - and they're saying it loudly. Employees too are writing letters and posting about how unhappy they are with the company direction.
New CEO German Thorsten Heins (ex Siemens) who took over in January, promised investors he'd transform Blackberry into a "lean mean hunting machine" (I wonder did he mean "fighting machine" and it got lost in translation?) and used real rallying cries of corporate pride. The share price fell a further 5% as he spoke.
As the "new" CEO he says a lot - "Blackberry will be in the top 3 smartphone producers, soon" - but it should be remembered that he's actually been with the company since 2007.
"I have assembled a leadership
team for RIM that's truly capable of taking us into future," he told shareholders but at the same time, pushed back the launch of Blackberry 10 until next year, missing out on the holiday sales at the end of this year. This will allow his competitors to further extend their lead on Blackberry and of course, they'll have to suffer the launch of iphone 5 which might take more Blackberry customers.
Seemingly Thorsten felt that they'd rather postpone their launch until they got the new Blackberry "right". Quality before Speed. Hmmmm, great if you have the time luxury to do that - which this company just doesn't.
Apart from what is considered his "poor" communication skills (one reason perhaps is because he's hard to understand - never a good start in the old communication stakes) and the company's poor R&D (no touchscreen for example), he has an inability to convince staff to remain with the troubled company.
On Wednesday the head of the Australian/New Zealand operations stepped down only months after he was given the job in April. The head of the business in India left in November and a steady stream of senior staff have left too including its head of legal, head of global sales, a CEO and head of software.
It's really extraordinary that Blackberry can't plough on with a base of over 70 million loyal subscribers (they have to be loyal at this stage). But it's become an old world, Nasdaq quoted, middle aged corporate with no right to be involved in the new space. A lot of companies are going to go this way in a lot of sectors.
But perhaps I'm being unfair - maybe they will do it - a lot of people don't think so though.
Think what happened to video stores when Netflix came along and ask yourself, how did they let that happen? Think about major book chains who let ebooks get past them. Think about how mobile carriers (I know this is heresy but it will happen) are going to be decimated by Skype/voip? Think about traditional TV/Press broadcasting compared to online publishers? And it goes on and on.
The Web is the great brand leveller.
Funny really that no one in Blackberry even had the commonsense to see an irony as to where they had chosen to have this weeks investor meeting in Canada.
This is Steve Ballmer. CEO of Microsoft. The man who took the reins from Bill Gates in 2009 when Gates stepped back. Hardly Steve Jobs now is he? Although I think he tries to be. I mean who came up with the track "get on your feet"? Kind of like playing "simply the best". Cringeville.
There's an awful lot of people having a go at Microsoft at the minute. And it has to be putting immense pressure on CEO Steve Ballmer. One wonders if he'll survive it and especially after an article in Vanity Fair due on the newsstands in August.
But they're having a go firstly, because it's the launch of Windows 8 coming up. Oh, didn't know? Exactly. And remember the excitement, the queues for 95.
Secondly, the acquisition of Yammer for 1.5 billion (yep, billion) of a company few of us ever heard of, and which earns little revenue, is being seen as a bizarre way of buying yourself onto the front pages. One way to get that Facebook/Instagram 1 billion limelight. I blogged about it here http://streamabout.blogspot.ie/2012/06/microsoft-acquires-yammer-for-12.html
The official Microsoft announcement photo two weeks ago, did little to help things too and here it is. Steve Ballmer and the Yammer boys looking like something from the 70's rather than the new leaders in Social Media. Shocking.
As an aside, interesting too that when you go onto the Microsoft news centre and search 'Yammer' - nothing comes up. So Microsoft could do with updating their site - which for Microsoft, is pretty poor.
Thirdly, Microsoft have just taken a 6.2 billion write down this week following their disaster purchase of digital network aquantive in 2007 - then the biggest deal in Microsoft history. The 8.5bn acquisition of Sykpe by Microsoft in 2011 beat it. And what exactly have they done with Skype? Nada. Looks the same to me except with higher prices and more advertising. Vision?
But this write-down, wipes out fourth quarter earnings and that will have a stock/investor issue, adding more pressure.
The acquisition was seen at the time, as a response to Google's acquisition of Doubleclick (with which I was involved in a small way in Ireland) because the Microsoft move came only a month later. Kind of a "anything you can do" thing. But one huge 6.2 billion loss.
Fourthly, the success of Apple has been one-in-the-eye for Microsoft and continues to be. Apple's iphone division alone is worth more than Microsoft. Here's the genius Steve Ballmer in 2007 on the iphone. "500 dollars for a phone? You're kidding".
I could post the video where he laughs off the ipad or indeed this next one where he's not a fan either of the Android phone from 2011. Jesus.
And of course he teamed up with Nokia...who've recently had their ratings cut to "junk status".
So "visionary" doesn't exactly spring to mind and the company is slowly disappearing into a morass. Yes I know about Bing and Xbox but this was THE dominant player worldwide that now is being, well, just eroded.
But lastly, the real crowning glory this week is an article in Vanity Fair August edition which seems to slam work practices at Microsoft and makes the company totally uncool. This sort of publicity might be the straw that broke it because it will be hard for Ballmer to escape it.
Sometimes publicity is the killer blow because it's so public.
Titled 'Microsoft's lost decade' it's written by well regarded scribbler, Kurt Eichenwald.
It's not on the newsstands yet, but Geekwire have seen a full copy and refer to it as "epic". In other words, explosive.
Forbes have referred to it as "a devastatingly destructive management technique at the heart of Microsoft’s problems" and others are calling the exposure "Microsoft's downfall".
Techcrunch don't have the story because when they asked for a preview, they were asked for a fax number to "fax it on over". Honestly. And they've written a good humorous piece on that...... http://techcrunch.com/2012/07/03/can-someone-send-techcrunchs-fax-number-to-vanity-fair/
The controversy, supported by interviews and emails collected, is about management style and creativity. Or lack of.
It's based around a work system for employees in Microsoft called 'stack ranking' where employees are rated from good to poor. And according to Eichenwald that meant that "Every current and former Microsoft employee I interviewed—every one—cited stack ranking as the most destructive process inside of Microsoft, something that drove out untold numbers of employees.”
“If you were on a team of 10 people, you walked in the first day knowing that, no matter how good everyone was, 2 people were going to get a great review, 7 were going to get mediocre reviews, and 1 was going to get a terrible review,” says a former software developer. “It leads to employees focusing on competing with each other rather than competing with other companies.”
Which could well be the reason why the company under Ballmer, flounders. Basically, it crippled the company and stifled innovation.
And from what I know it seemed to be a dreadful place to work which in itself is bizarre given the 'great places to work' awards Microsoft have achieved. I always wondered about those awards though, always did. I saw companies winning them who I knew to be dreadful.
But they were big companies who'd always take a table or two at the Awards dinner.
We'll see what happens when Vanity Fair comes out. Watch out for the noise and watch out for Steve Ballmer. Except it to be huge. His window is closing. (sorry).
