Behind every great man…

The Nokia Microsoft drama went a bit Game of Thrones this week (thankfully without the gratuitous nudity) as accusations of back-room treachery came thick and fast. Stephen Elop was cast as the villain of the piece, amid suggestions that the sale to Microsoft—and events between that sale and Elop’s arrival at Nokia—were part of a sophisticated, pre-conceived intrigue that has delivered Elop a rich personal reward. And when calls subsequently came for Elop to accept a lesser payoff for overseeing the sale, he reportedly claimed he needed the money to pay for his divorce.

September 27, 2013

12 Min Read
Behind every great man…

By The Informer

The Nokia-Microsoft drama went a bit Game of Thrones this week (thankfully without the gratuitous nudity) as accusations of back-room treachery came thick and fast.

Stephen Elop was cast as the villain of the piece, amid suggestions that the sale to Microsoft—and events between that sale and Elop’s arrival at Nokia—were part of a sophisticated, pre-conceived intrigue that has delivered Elop a rich personal reward. And when calls subsequently came for Elop to accept a lesser payoff for overseeing the sale, he reportedly claimed he needed the money to pay for his divorce.

The power is often with the woman behind the man in Game of Thrones and the Informer favours the notion that Mrs Elop used her influence to orchestrate the entire deal in a bid to maximise her alimony.

So, what happened? Nokia chairman Risto Siilasmaa was caught out after providing misleading information to the press about the terms of Elop’s $25.4m payoff, received as part of the sale of the firm to Microsoft. Having previously claimed Elop’s terms were essentially identical to those of his predecessor, Olli-Pekka Kallasvuo, Siilasmaa was forced to backtrack when Finnish daily newspaper HelsinginSanomat dug up one key difference: Elop stood to reap significant gain (where Kallasvuo did not) in the event of a “change of control” at Nokia. A change of control, for example, like the sale of Nokia to Microsoft.

So, did Elop engineer the sale to get his hands on the $25m? And in doing so did he cynically drive down the share price at Nokia to the point where the firm’s valuation became attractive to Microsoft—from whence Elop came and to which he is expected to return, possibly as CEO? There are some people who think so, with one noting here that Elop’s “change of control” clause required only that he bring about an increase in share price from its lowest point during his tenure to earn his bonus, rather than from its value at which he joined.

Nokia’s share price was around $10.00 when Elop took over, collapsed to $1.17 in July last year and was at $6.60 this week, up from $3.90 immediately prior to the Microsoft takeover announcement.

Opponents of the conspiracy view point out that change of control clauses are commonplace in senior executive contracts, particularly when the companies they are recruited to are floundering like the fleet of Stannis Baratheon at King’s Landing. Maybe Elop had been reading Game of Thrones when he conjured up his famous Burning Platform memo. Once the wildfire has been lit, it’s very difficult to stop.

But even if Elop did have his eye on this outcome all along, he can hardly be blamed for the state Nokia was in when he took over. And he wouldn’t be the first CEO brought in for the short term to do something that the board knew would not be welcomed by a wider audience. No doubt there are many Finns who resent the jewel of their corporate crown being unceremoniously levered out of its setting but it’s fair to say that the problems at Nokia started long ago.

Everyone loves a good conspiracy theory, however, and Nokia hardly snuffed the flame when its chairman appeared to claim that the controversial clause in Elop’s contract was inserted because of an administrative error. A chairman, it should be noted, who will himself trouser half a million Euros for acting as interim CEO while Elop plays “one for you, one for me” with his soon to be ex- wife.

Whether Nokia’s lot will improve at Microsoft remains to be seen. Certainly the firm’s performance in the tablet market is hardly a ringing endorsement. The Surface product cost Microsoft $900m in unsold inventory, selling less than one million units in its first three months of availability and Microsoft has hacked at the price, bundled accessories and even offered trade-in deals to iPad owners in a bid to move stock.

But it is not to be dissuaded. The firm will launch the Surface 2 and 2 Pro in October, marking the first deployment of Windows RT 8.1 and 8.1 Pro on a tablet. Microsoft promises improvements across the board—processing power, battery life, display and camera resolution—and is bundling free Skype calls to landlines in more than 60 countries for a year and two year’s 200GB SkyDrive storage. Prices start at $449 for the base model and $899 for the Pro.

Compare Microsoft selling less than a million tablets in three months with Apple selling nine million smartphones in three days. The devices in question were the new 5s and 5c iterations of the iPhone and supplies of the flagship 5s have apparently been exhausted (again the cynics might argue this situation is engineered to help drive demand).  But the fact that the new model supports a far wider range of LTE frequencies than the first LTE-enabled iPhone may go some way to explaining the surge in enthusiasm.

In a less positive development for Apple, German security and hacking organisation the Chaos Computer Club announced that it had successfully bypassed the firm’s fingerprint recognition solution, one of the headline capabilities of the 5s. The CCC said it had achieved the hack using readily available items to take copies of fingerprints and replicate them.

“We hope that this finally puts to rest the illusions people have about fingerprint biometrics. It is plain stupid to use something that you can´t change and that you leave everywhere every day as a security token”, said Frank Rieger, a spokesperson for the CCC. “The public should no longer be fooled by the biometrics industry with false security claims. Biometrics is fundamentally a technology designed for oppression and control, not for securing everyday device access.”

Apple? Control? What’s this guy on?

There were also reports from Japan that new owners of the 5s had managed to get the fingerprint scanner to work with other body parts, both human and non-human, including cat paws, noses, nipples and even less conveniently accessible appendages.

It was more booby prize than nippletech at Blackberry this week as the Canadian vendor wearily reported that it expects to lose almost a billion dollars during its fiscal Q2. Another 4,500 jobs, some 40 per cent of the global workforce, will be sacrificed to the accountancy gods as a result. Blackberry tried to stay upbeat, making a few promises about product and market realignment but these hardly changed the tone and later that same day a new allegiance between houses was struck.

The firm announced that Fairfax Financial, a Canadian investment firm that already holds ten per cent of Blackberry, had appeared on the field as a knight in shining armour, having pulled together a consortium with a view to acquiring the device vendor for $9/share, or $4.7bn. The BlackBerry Board of Directors has approved the terms and the consortium, which is seeking financing from BofA Merrill Lynch and BMO Capital Markets. The deal would see the company taken private subject to a number of conditions.

Prem Watsa, Chairman and CEO of Fairfax, promised to deliver “immediate value to shareholders, while we continue the execution of a long-term strategy in a private company with a focus on delivering superior and secure enterprise solutions to BlackBerry customers around the world.”

Jan Dawson, chief telecoms analyst at Ovum, burst the balloon by suggesting that taking BlackBerry private doesn’t solve its fundamental problems. “First, the company’s device sales are cratering, and its announcement last week that it no longer intends to pursue the consumer market is essentially the death knell for this business,” he said, like a heart surgeon who’s just been asked to ‘give it to me straight, doc’. “BlackBerry’s supply chain relies on scale for profitability, and it will never again be able to achieve the scale necessary to make money on devices. It’s likely that BlackBerry will be out of the device business entirely by the middle of next year.” Of course, the company has quite a presence in the automotive market with its QNX-based CAR software but it remains to be seen if that in itself is enough.

Staying in Canada, Rogers Communications has tapped Polish software vendor Comarch for a solution that allows it to offer a new loyalty programme to customers. Rogers said that it first launched its First Rewards loyalty programme in selected markets earlier this summer but is now rolling it out across Canada. The Comarch solution offers a suite of loyalty marketing tools, including targeted promotions based on individual customer involvement in the programme. It also processes loyalty transactions, assesses the value of members over time and manages rewards catalogues.

In other business support news meanwhile, Ericsson has won a deal with OrangeSwitzerland for the supply and management of BSS solutions. The two firms entered into a managed services agreement in early 2013 and this latest announcement expands the scope of the deal. The project will initially comprise the billing of prepaid subscribers and the so-called “multi-mediation and multi-activation” features, which will be harmonized on a common platform, according to Ericsson.

Now, the Informer has seen a lot of radio network equipment in his time, and remembers a visit from one small cell vendor’s marketing man who brought micro, pico and femto products to the office in a wheelie suitcase. But he’d never seen a network radio carried about in a handbag until this week.

But that’s Ericsson’s new Radio Dot; the small cell for the discerning lady and not some remote controlled, chain smoking, washer woman. Notoriously dismissive of “femtocells” (Ericsson only joined the Small Cell Forum after it was renamed), the Swedish vendor has spent the last two years working on a solution that it claims will redefine the indoor coverage market. And it looks to have signed up US operator AT&T as its first trial partner.

The Dot, at 300g and 9cm across, connects to indoor radio units over—and is powered by—standard LAN cables, while those radio units connect to a base station. Each radio unit can support up to eight of the Dot antennas. The solution is WCDMA and LTE compatible, and supports 2 x 20MHz MIMO, delivering 150Mbps in a recent lab trial over a 100m LAN cable, he said.

Despite being announced this week, the solution will not be commercially available until the second half of next year, a timeframe conceived to give operators time to devise strategies for planning, distribution and installation, apparently. The first trials are set to begin in the second quarter of 2014 with US operators.

In a guarded statement provided for the launch release, which would appear to confirm  AT&T’s involvement, Kris Rinne, SVP for network and product planning at AT&T, said: “Small cells are a key component of AT&T’s Project VIP network enhancement program as we seek to constantly improve our customers’ mobile Internet experience,” Such a solution could give AT&T, “another tool to choose from in its next-generation toolkit,” she added.

Meanwhile SK Telecom has completed lab tests of NSN’s Liquid Applications technology over LTE, enabling the carrier to deliver media-rich services and content directly from the base station. The technology, and NSN’s partnership with SK Telecom, were announced at MWC in February and focuses on moving intelligence to the network edge with a computing platform designed to run applications within the mobile base station.

The concept is designed to take some of the strain off the network and speed the delivery and localisation of services, but it seems to go somewhat against the SDN concept of using commodity hardware and software and keeping all the intelligence in the core.

Malaysian operator Celcom announced that it too has called on NSN’s services this week. The operator has partnered with the vendor for its LTE solutions and services in Klang Valley (Kuala Lumpur and the surrounding suburbs). NSN will supply the network infrastructure for the 2600MHz and 1800MHz frequency bands for LTE services, and refarming services for its 1800MHz GSM band.

The deal also includes NSN’s intelligent Self Organising Network (iSON) functionality to improve LTE network quality with self-healing, self-optimisation and self-configuration across the radio network.Turns out engineers are beginning to adopt SDN (software defined networking) concepts to tackle network complexity, which some have identified as a bigger barrier to network growth than bandwidth constraints.

Stu Bailey, CTO at Infoblox has collaborated with the University of Chicago’s Professor Robert Grossman to create Tapestry, an open source tool to help operators measure network complexity. The Bailey-Grossman equation for network complexity at the engine’s core, accounts for the number of endpoints on a network and how they interact to perform key business functions, rather than counting the number of network infrastructure devices and mapping the wires that connect them.

“For the first time in the history of the networking industry, it is becoming clear that complexity rather than bandwidth is the barrier to network growth,” said Bailey. “Today, discussions about network complexity focus on the tangle of wires and boxes, rather than the relationship of business processes to an increasingly large, dynamic, and shared global IT infrastructure.

Adopting key Network Functions Virtualization and SDN attributes, the Tapestry software can run on “virtually any computer or set of computers”, and harnesses an equation created by Bailey-Grossman to generate a Network Complexity Index (NCI) number based on endpoint interaction data from network-wide control systems such as the DNS.

On a grander scale, the idea is to help IT organisations evaluate the potential benefits and gain hands-on experience in moving from hardware-defined networking to SDN. New, low-cost SDN devices can instantly transform themselves from monitors to routers to switchers to firewalls to load balancers as needed. Being able to quantify network complexity for the first time with measurements such as NCI is an early example of how SDN applications may help CIOs cope with the increasing pace of business processes and the movement to virtualised, cloud and software-defined infrastructure, the engineers said.

That Tapestry sure better be rich as a lot of industry players are staking big bets on SDN and virtualisation being the Next Big Thing.

And finally rapper turned entrepreneur Dr Dre found out that the beat doesn’t go on (da da dum da dum da da), at least not with HTC anyway. It’s been confirmed that headphone maker Beats by Dr Dre is buying back the remaining 25 per cent of its shares owned by the Taiwanese firm for $265m. It’s been a poor deal for Dre – HTC bought 50.1 per cent of Beats in 2011 for a steal at $300m and flogged half of that back last year for $150m.

HTC has been struggling in the handset market recently and has seen another of its joint ventures, gaming platform OnLive, flounder. Beats however is looking quite strong and commands a good share of the premium headphone market. HTC says Beats will remain an important partner but it remains to be seen just how important, if the brand isn’t helping it shift handsets.

Well you know what they say, don’t forget about Dre.

Until next time,

The Informer



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