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The Nokia Trojan Horse Theory

Did Microsoft plant Nokia’s CEO, Stephen Elop inside Nokia to destroy the company?

brunch Updated: Sep 29, 2013 13:51 IST
Rajiv Makhni

T he world of technology is usually dismissed as dull, complicated, jargon-filled and obtuse. The products may be exciting but the people and the companies behind them are taken to be boring. Nothing could be further from the truth. Nothing comes close to the incredible stories that come from within this space. Stories of war, victory, strategy, subterfuge, falsification and espionage and spy stuff that make James Bond look dull in comparison.

And the greatest amongst them is the Trojan Horse theory – that Nokia’s CEO Stephen Elop was planted inside Nokia by Microsoft to destroy the company and buy it out at a price brutally cheaper than just a few years ago. While it’s a hotly debated and very controversial theory, it’s time to stop skirting the issue, to play devil’s advocate and understand both sides of the greatest conspiracy theories of our time.

When he switched to Windows, Samsung was selling half the number of phones Nokia was

Theory 1: Elop was a Trojan Horse perfectly planted at the perfect time
More people believe in this story today than before and that’s because the arguments for it continue to be more convincing.
Number One to None: When Elop came in as Nokia CEO, Nokia was Number 1 in smartphones sales. In fact, it was Number 1 by a wide margin; Samsung lagged far behind. Nokia was selling about 10 million smartphones a month, more than twice as compared to others. Then came the famous ‘Burning Platform’ memo and the decision to abandon the OS that was giving it amazing smartphones sales and switch to Windows. The result – Nokia has very low sales of smartphones in the world today.
Meego Murder: While Symbian smartphones looked antiquated, Nokia did have an ace up its sleeve. It had the MeeGo OS – and its first MeeGo device actually got rave reviews worldwide as the best smartphone of the time (current users still swear by it). This was the device Elop abandoned and threw out!

Android King: If there had to be an OS switch, why wasn’t the switch made to Android? Samsung, the dominant Android smartphone player today, was selling half the number of smartphones Nokia was when Elop switched to Windows.

If Nokia has gone the Android way, it could have been the dominant player by a long margin. It could have kept Symbian momentum for a while, slowly eased into Android and enjoyed rocketing sales from both. Nokia was always the best in hardware and quality. An Android phone from Nokia may well have been the best smartphone the world never got to see.

Cheap at 7: Nokia, one of the world’s most valuable brands, most recognised names and most iconic companies, was picked up for just $7.2 billion. What would Microsoft have paid if they had tried to buy them before Elop had come in? Most put that value between 5 to 7 times the current buyout price!

25 mill to destroy: The most damning argument for this comes from Tomi Tahonen, a very influential blogger who writes that “Elop had a contract that would pay him 25 million dollars if he managed to sell Nokia’s handset unit to Microsoft. This is a blatant conflict of interest, and one that incentivises Elop for destructive behaviour against Nokia”.

It’s a strong argument that reasons that a new CEO coming in with a pre-intention to make the very company he is supposed to rescue, actually sell out to another company (that he worked for before), would do everything to destroy its value.


Theory 2: Hogwash; The facts don’t add up to Elop being a Trojan Horse

Most people once told the above facts immediately agree that this was a brilliant strategy to pick Nokia up for a song. That’s until they hear these facts.
Hara-kiri? Would Microsoft or even Elop have had the guts to embark on such a risky strategy to just buy a company cheap? Would they have risked ‘destructive behaviour’ with their own product and commit hara-kiri? For Microsoft, their Windows on a phone strategy is critical for future success. Would they haemorrhage their own product line, their own future and their own OS just to buy one company cheap later?

Would Microsoft destroy themselves now for something they hoped to buy in the future ? After all, it isn’t as if Microsoft doesn’t have the money. If they wanted Nokia that much, they could pay a premium rather than destroy their own OS in the bargain. They bought Skype for top dollar without destroying them, why not Nokia?
What if: With hindsight, the Trojan Horse theory seems plausible. But what if Nokia smartphones with Windows had taken off like a bomb and sold in excellent numbers. Microsoft then would have made Nokia, the Number 1 then – even more powerful and dashed all hopes of ever buying them out.

7 V/s 4: Nokia had to switch from Symbian, that is a given. While they were selling smartphones in millions at one time, they were losing market share fast. It’s all very well to say that they could have done it with MeeGo and Symbian but that’s purely speculative. BlackBerry is an example of how sticking to your guns and then bring in another new home brew OS doesn’t always work. Nokia sold for $7 million, Blackberry for 4!

What happens now
Thus both sides of this conspiracy theory become stronger every day. Regardless of whichever camp you belong to, the real question is – Nokia and its future? This is a company loved by all, a brand that evokes a warm feeling of joy and comfort, a brand that is identified with starting the entire mobile phone revolution. It’s starting to improve market share, it’s starting to sell more Lumia phones than ever before. The only hope is that it continues on this journey and does well. The world needs a Nokia – whether it was Trojan Horsed or not!

Rajiv Makhni is managing editor, Technology, NDTV and the anchor of Gadget Guru, Cell Guru and Newsnet 3

From HT Brunch, September 29

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