'Microsoft deal was our best alternative': Nokia chairman on his sleepless nights over the future

'Microsoft deal was our best alternative': Nokia chairman on his sleepless nights over the future

Summary: Risto Siilasmaa has opened up about the decision to sell off Nokia's devices and services business to Microsoft saying the company had no place in mobile phones any more.

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TOPICS: Networking, Nokia, EU
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Nokia's chairman Risto Siilasmaa at a press conference last month. Image: Nokia

There may now be a Microsoft logo on its famous Espoo headquarters, but Nokia chairman Risto Siilasmaa can finally get a good night's rest. In an interview with Finnish broadcaster YLE, Siilasmaa opened up about his sleepless nights over the company's future and its renewed hopes for the future now the Microsoft deal is done.

"It was difficult to sleep a few months prior to [the deal] when I understood that the company's situation was such that something major had to be done," Siilasmaa said.

"What has now happened is actually the best solution of all the alternatives. I can't imagine any other realistic alternative where the company's future would look as bright as it does now.

"Nokia was in a situation where its chances of success in this [mobile phone] business were becoming increasingly small. If we had walked that path long, enough major changes would have occurred, irrespective of Nokia. A company that is running out of money and is making a loss is in a situation where others make decisions for it.

"As some analysts have described, the smartphone business is structurally unattractive at his time. We have moved on to a phase where two big players dominate the market with their strong ecosystems. Everyone else is making losses or breaking even at best. And there is no clear end in sight for this phase."

It's all change following the Microsoft deal. Siilasmaa highlighted that Nokia is now a profitable company with a strong balance sheet and that, from a market perspective, its business value has increased almost tenfold since the Microsoft deal and buying out Siemens' stake in its joint networking venture.

The former handset giant is now focusing on three business areas:  its mapping unit Here; its infrastructure arm NSN; and its R&D unit Advanced Technologies.

Siilasmaa sees plenty of growth opportunities in each, but highlighted smart devices, especially development of smart cars, as the Internet of Things takes hold. He painted a picture of a future where not only garage doors open when we drive home or the music a driver plays in their car syncs with their home stereos, but also where self-driving cars can pick up people from their doorstep.

"We offer a wide range of products for companies building self-driving cars and services," he said. "We are developing these systems in cooperation with Mercedes, for example. It is a very interesting growth opportunity for us and we are investing significantly in it this year."

When asked whether he believes Nokia can grow back to be the pillar of Finnish economy it was in its glory days, Siilasmaa was hesitant to answer.

"For Finland's sake, my hope is that no company would rise to that kind of position," he said. "It would be better that we had many big, globally successful companies. But of course Nokia needs to have strong ambitions to grow."

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Topics: Networking, Nokia, EU

Eeva Haaramo

About Eeva Haaramo

Eeva Haaramo has covered the Finnish startup and tech scene for the past seven years. As a freelance journalist, she enjoys writing about entrepreneurs, innovation and industry trends in the Nordic region.

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21 comments
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  • Freelance What?

    It's a genuine tragedy that not one 'journalist' asked if if he regretted the suicidal decision to choose Windows over Android a couple of years ago; once that decision was made, there was an obvious inevitability about Nokia's future.

    Well, obvious to everyone except Nokia and journalists, it seems.

    A second, unasked, question is, "With so many unemployed ex-Nokia Phone engineers, is there any chance Nokia might re-enter the phone market?" - let's face it, all they'd need to do is buy out one of the start-ups using old Nokia technology ...
    Heenan73
    • And the Nokia X is flying off the shelves LOL

      Their decision to use Windows phone over Android was a risk that simply didn't pay off, however if you look at HTC, sony etc who all have failing mobile strategies their decision to stick in the sheep market and go with Android was also a bad idea, most are now trying to manoeuvre away from and find new platforms.

      People who honestly believe if Nokia had of chosen Android they'd now be a power house of mobile devices again are deluded, they tried to have a more USP to customers and given a few more years its could well of paid off, with Windows phone gaining traction all over the world and even surpassing iOs in some markets.

      Sadly I think their decision to sell to Microsoft was a decision fueled by negative ill-informed opinions.
      Mrclaret
      • Nokia X is not the same android

        I don't expect big sales, but nobody compare them with other Google based android devices - they are just two different things.
        Comparing Nokia with Sony or HTC is wrong. Nokia used to have a way bigger brand recognition. If someone thinks that is a fair comparison, let's compare HTC sales of windows devices vs android devices, let's compare Samsung sales in the same manner.

        Windows phone with its live tiles was a failure from the start, a failure extended to the desktop OS - Windows 8. While nobody can say for sure that Nokia would be an amazing success with android, we can say now without margin of doubt that choosing Windows was a mistake of epic proportions.
        AleMartin
        • so much of a failure

          That it has better market share in the segment it competes in after 2 years of WP8 than Linux and MacOSX do on desktops after 14+ years...

          The haters can keep dreaming of failure while the market share still outpaces their own beloved OSes in eachs market segments.

          Nokia was a dead man walking with Symbian so had 3 choices - jump into a market that Samsung was gobbling up, jump into and become the dominant maker in the WP market or try to build up Meego as another OS. And yeah yeah HTC is still surviving - but for how long? They don't have the have the income streams from rebranding for O2, iMate etc anymore so its down to their own sales.

          Nokia made what appeared to be the best choice and they have done so again - this time to cut the handset side loose and concentrate on services, infrastructure and in car stuff.

          Microsoft did alright for themselves to because now they have all the expertise for handset design in house and so don't have to worry about treading on OEM toes (so the same situation as with the design of the Surface tablets).

          I'd like to see MS keep the Lumia line going, but also release one or two Surface branded phones done along similar design lines to the tablets.
          aesonaus
      • Fact checking is good.

        Just so you know Sony's mobile division has been making money for years now. Even while they were still tied to the dead weight of the Vaio pc brand the group was still profitable. So next time you might want to choose a different OEM to highlight your otherwise excellent point
        Daishi83
      • Fact checking is good.

        Just so you know Sony's mobile division has been making money for years now. Even while they were still tied to the dead weight of the Vaio pc brand the group was still profitable. So next time you might want to choose a different OEM to highlight your otherwise excellent point
        Daishi83
      • You dare..

        ...to compare that Microsoftized, underpowered, child out of wedlock OS with Android? Let me make something clear: That third-rate, "made for the third world" cheap monstrosity of an OS which Nokia cobbled together is NOT Android. It's BASED off of AOSP, but it carries no google services, is incompatible with many Android features we've come to know and love, and the hardware is out-of-date, out-of-touch and was pursposely built to fail in western markets. "

        Some nerve!
        wimp35
        • So what?

          It is still based on the Android foundation.

          And appears to be selling better than the Windows phone...
          jessepollard
    • That's been beaten to death already

      Nokia chose Windows Phone a) to differentiate and b) for the financial support Microsoft offered. Choosing any other route would have sped up their financial collapse
      SupaRawr93
    • Suicidal?

      So not going with Android was a "sucidal" decision? How about asking HTC how profitable it has been to compete against Samsung in the smartphone market. I'm not going to sit here and tell you that Nokia would necessarily have suffered a similar fate had it chosen to adopt Android, but I think you're make all sorts of unjustified assumptions if you take it as a given that Android would have saved Nokia.
      dsf3g
      • oh come on

        You didn't even challenge his question of sales of htc phones to windows phones. The fact is htc and sony are still in the phone biz and if nokia had chosen android over WP it most likely still wouldve been makng phones if not on the top with its brand recognition and technological prowess. Almost every review made of nokia windows phone until fairly recently all decried the OS while praising the hardware. The Nokia Board really made a fool of themselves.
        ArcaneAce
        • Coulda, shoulda, woulda...

          There's really no way to know what would've happened, so the point is moot.

          The reality is that Nokia technology & design live on as part of Microsoft, as do all of those jobs... and that's a good thing... for the market, and those workers.

          What I'm hoping for now is some real competition in the Windows Phone space, for some other OEMs to step up and really challenge Microsoft/Nokia with new designs. That would be the best thing for Windows Phone and the smartphone market.
          cybersaurusrex
        • Why does everyone think slapping Android on a phone generate success?

          First, Nokia was in horrible shape long before they switched to using Windows phone operating system. People like Heenan73 intentionally omit crucial data like this when ever it suits their agenda. Fact is Nokia was in trouble.

          Second, it is easy to point out companies that chose Android over WindowsPhone and are failing. There is no need to speculate about how almost every non-Samsung phone manufacturer that opted into Android is not doing well.


          Now people keep saying if Nokia had chosen Android they would have found success, but almost all available observable data says otherwise. There is nothing other than blind speculation to suggest Nokia would have somehow found success where almost every other company is losing to Samsung. None.
          Emacho
      • The crucial difference between Nokia....

        ....and the other companies you mentioned is that Sony, HTC, Samsung, Huawei, etc are still in the business of making phones.

        Nokia is not. The fruit of Nokia's decision...speaks volumes.
        wimp35
    • I assume...

      ...that Nokia signed a non-compete agreement with MS, and if so, Nokia is definitely out of the mobile phone business while the agreement is in place. But if there are a lot of unemployed Nokia ex-engineers out there, then someone had better hire some of them before the ones with initiative start their own businesses and start competing with them.
      John L. Ries
  • Any regrets?

    "Yes, a few. Top among them is that we never gave MeeGo a chance."
    Rabid Howler Monkey
  • 'Microsoft deal was our best alternative': Nokia chairman on his sleepless

    Now look at Nokia, made the best handsets, makes the best software for Microsoft Windows Phone. They are the only ones who gave Microsoft Windows Phone a chance.
    Loverock.Davidson
    • And it's working out great for Microsoft, right Mr. Davidson?

      I've got two (2) counter-examples for you:

      o the Nokia X smartphone (based on AOSP)
      o Microsoft is giving Windows Phone 8 to OEMs for free in order to keep their device costs down
      Rabid Howler Monkey
      • Too early to tell

        The acquisition just recently got approved but indicators say it will do well for Microsoft. They would do even better if they cut out the Nokia X so they could save on costs.
        Loverock.Davidson
  • Olli-Pekka Kallasvuo

    Credit where credit's due, lets not forget the person who was responsible for Nokia's demise. Olli-Pekka Kallasvuo was CEO of Nokia from 2006 after several years as Executive VP and head of mobile phones. So he ought to have known the business.

    He dismissed the iphone when it was released.
    johnafish