Elop + Microsoft = Potential Disaster

By Doug Mohney November 12, 2013

Stephen Elop, former CEO of Nokia, appears to be lobbying hard to get the top job at Microsoft, or at least talking loudly enough about what he'd do if he gets the top job that makes me think he's not the right person for the position.

Elop's accomplishments to date aren't great.  Named CEO of Nokia in September 2010, revenues at the mobile phone manufacturer fell 40 percent, profits 95 percent, and its market share went from 34 percent to single digits, according to reporting by the Financial Times.   

Nokia ended up being acquired by Microsoft in September 2013 for $7.2 billion.  Some critics in Finland think Canadian-born Elop was a plant to prepare Nokia for acquisition, shedding 21,000 employees and driving down the stock price during his three year run.

Elop's thoughts on what he'd do with Microsoft if he becomes CEO are, shall we say, rather public? When Elop was at Nokia he wrote the infamous "Burning Platform" memo, describing how the company was surrounded by disruptive changes with part of the problem due to lack of accountability and leadership within the firm.

One can't argue with the conclusions of the memo, but the fact it surfaced rather publicly before Elop was to announce changes to Nokia's strategy and senior management strikes me as ill timed.  Why didn't Elop make this memo an actual presentation to the company and analysts?

In Elop's latest leaked thought piece, he would focus on expanding the reach of Microsoft Office to Apple and Android, with less of the spotlight on Windows.  He'd also apparently sell or shutdown the Bing search engine and spin off the Xbox division, as suggested by at least one Wall Street analyst.

I'll be the first to admit Microsoft doesn't know how to move quickly and needs to streamline its operations, but Bing and Xbox are both strategic pieces that should be handled with some forethought. Bing represents the only large scale counter to Google's search engine.  It would mean Microsoft is willing to adopt Google's search engine or be depending on a third-party?  Maybe Bing could be sold to Yahoo, but that presumes Yahoo could come up with the cash or some sort of financial deal to acquire full control of the search engine along with having a long-term plan to improve the technology.

In addition, a strong search engine capability is necessary for enabling voice search and personal assistants for mobile and desktop platforms.  Forgoing Bing means Microsoft would have to give up core technologies and become dependent upon another firm to fill in the gap.

Xbox is making money for Microsoft.  It has nothing to do with Office or the enterprise, which really is a good thing because it gives the company diversity outside of its historic core moneymakers.    Further, of the consumer big three of Apple, Google, and Microsoft, only Microsoft has a footprint into the living room by virtue of being connected to the TV for games.   The next generation Xbox One is designed to overlay onto existing TV and cable TV connections, allowing it to intermediate TV watching with the ability to inject Skype calling and add voice control for the selection of TV shows.

Apple and Google would like to be stronger in the living room; with constant rumors Apple will deploy its TV experience for the rest of us while Google nibbles away at bits and pieces of the problem.  Neither has established the sort of living room presence of Microsoft, Nintendo, or Sony.

If Elop wants to dump Xbox, he'd better get a ton of money for it. If I in the running for CEO of Microsoft, I'd make it known I'd want to take Xbox to the next level by buying TiVo and integrating its user experience onto Xbox -- making it into a "killer device."




Edited by Stefania Viscusi

Contributing Editor

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