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From Nokia, an Executive Who Knows the Difficulties at Hand

September 3, 2013 by

What Mr. Elop’s Nokia experience doesn’t show is a history of engineering turnarounds that could be translated to Microsoft. Before Microsoft’s $7.2 billion purchase of Nokia’s devices and services business was announced late Monday, Nokia’s stock was off about 60 percent since Mr. Elop joined the company in September 2010.

Mr. Elop made many tough choices, including major layoffs, selling office space and shedding pet technologies like an aging operating system for mobile devices. Those calls prevented an even worse outcome, and gave the Finnish company a badly needed sense of urgency, analysts said. But he failed to stop the company’s declining market share and he leaves — at best — a work in progress at Nokia.

As part of the Microsoft deal, Mr. Elop agreed to step down as Nokia’s chief executive and rejoin Microsoft when the deal closes, which is expected to happen in early 2014. He will lead an expanded devices team inside Microsoft, responsible for both hardware and Microsoft’s business in things like games and music.

He also puts himself in the running to succeed Steven A. Ballmer, Microsoft’s chief executive, who last month announced he would be leaving within 12 months. “His hat is firmly in the ring, running a very important division for Microsoft’s future,” said Crawford Del Prete, an analyst at IDC who has known Mr. Elop for many years. “He could have just exited Nokia, but the fact that he’s there shows he is a very ambitious guy.”

Mr. Elop, a 49 year-old Canadian, came to Nokia from Microsoft, where he ran the business division, a senior leadership job that includes Microsoft’s lucrative Office software. Before Microsoft, he ran the information systems of Juniper Networks, a computer networking company, and ran field operations for Adobe, which makes tools for digital content. He came into Adobe from another acquisition, when Adobe purchased a company he ran called Macromedia.

He is a father of five, including triplet girls and a daughter he adopted from China. He is close to his family, uprooting them for his first Microsoft job only at his son’s urging. But then Mr. Elop left his family in Washington while he relocated to Espoo, Finland, where Nokia is based.

“It’s a beautiful place, but it’s very hard to be that far away from your family,” said Leslie Nakajima, a former Nokia executive who now runs communications for the Mozilla Foundation, makers of the Firefox browser. Through a spokeswoman, Mr. Elop declined to be interviewed.

When Mr. Elop arrived at Nokia, it was still the world’s leading maker of mobile phones. But it had been struggling for years to match smartphone competitors. First, BlackBerry wooed business customers with phones that had an easy-to-use keyboard for typing out e-mails. Apple’s iPhone, which came out in June 2007, and Google’s Android operating system in October 2008, represented an even bigger challenge with smartphones that closely tied hardware, software and a wide variety of customer-pleasing applications.

Nokia had turned down an early chance to be Google’s partner in Android, partly because its purchase of a mapping company could have presented a conflict with Google Maps. That relationship went to Samsung, now the world’s biggest smartphone maker. Instead, Nokia’s strategy involved managing five different operating systems, and making scores of different phones for markets across the world.

“A kind of arrogance had crept into the company, a feeling that they really understood exactly what consumers wanted,” said Mr. Del Prete. “That was a real problem when they were assaulted by BlackBerry and Apple.”

Early in his tenure, Mr. Elop wrote an internal memo that compared Nokia to a man on a burning oil platform who is forced to jump into icy waters. Mr. Elop’s point: If the company didn’t make some drastic, risky decisions, it was doomed to fail. Mr. Elop’s “burning platform” memo recalls a similar missive written a few months earlier by Ray Ozzie, Microsoft’s chief software architect, as he left Microsoft. Mr. Ozzie wrote about a company in thrall to its past success, troubled by internal complexity and unable to react to fast-moving competitors, particularly in a world dominated by new mobile devices and services.

Mr. Elop could see that Nokia faced similar issues, but he may not have been prepared for the firestorm when he announced in February 2011 that the company would drop development on multiple operating systems, switch to Microsoft’s Windows Mobile operating system and lay off thousands of employees. Older-model Nokia phones were orphaned, and newer phones with Microsoft software did not arrive on the market for months.

“People were already sore, because they felt like there would be a deal with Microsoft as soon as he came on,” said a former Nokia executive, who requested anonymity to maintain professional ties. “There was uncertainty, there was infighting, and the market share plummeted.”

Mr. Elop was making a risky decision that still hasn’t paid off.

“He had to do something,” said Mr. Del Prete. “Smartphones change so fast, and this was a company where workers expected to stay their whole lives.”

While the first models of Nokia phones running Microsoft software were expensive and failed to excite consumers, Mr. Del Prete added, “they are making progress. They are adding developers. It will take longer than people envision, and it will take the coffers of Microsoft.”

Article source: http://www.nytimes.com/2013/09/04/technology/from-nokia-an-executive-who-knows-all-too-well-the-difficulties-at-hand.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

I.M.F. Tells China of Urgent Need for Economic Change

July 17, 2013 by Leave a Comment

“Since the global crisis, a mix of investment, credit and fiscal stimulus has underpinned activity,” the I.M.F. said in a major annual assessment of the Chinese economy. “This pattern of growth is not sustainable and is raising vulnerabilities. While China still has significant buffers to weather shocks, the margins of safety are diminishing.”

The report emphasized downside risks to the Chinese economy, touching on familiar themes though imparting more of a sense of urgency than it has in the past.

The country still has large foreign currency reserves and plenty of room for new government spending to buffer against any unexpected shocks, said Markus Rodlauer, the I.M.F.’s China mission chief, in an interview. But he said the Chinese economy was looking more and more vulnerable, with changes getting harder to make as time goes on.

The I.M.F. — along with a range of international economic officials, research groups, academics and financial market participants — has raised concern that money is pouring into mispriced real estate and infrastructure investments in China that are increasing growth in the short term but might do little for the Chinese economy down the road.

For decades, a cheap currency, cheap labor and huge infrastructure investment fueled enormous growth in the Asian nation. China has made “substantial” progress on rebalancing its trade deficits with the rest of the world, the I.M.F. said, and its current-account balance as a share of its total economy is less than a quarter of its precrisis peak.

The fund described the Chinese currency as “moderately” undervalued, as it has for about a year after a long stretch of describing it as “significantly” undervalued — a policy maneuver that helped increase China’s exports but angered many foreign countries whose goods became relatively less competitive.

But imbalances in China’s domestic economy “remain large,” the I.M.F. warned, as Chinese consumers fail to take over for consumers from the United States, Germany and other countries who helped stoke China’s growth for years. Consumption rates have barely budged from last year. But net purchases of physical assets like roads, hospitals and commercial buildings grew further as a share of the economy.

“A decisive shift toward a more consumption-based growth path has yet to occur,” the I.M.F. said. “Accelerating the transformation of the growth model remains the main priority.”

The I.M.F. focused on a few spots of acute risk in the Chinese economy.

One is the financial system. The country has experienced a huge boom in lending through “less regulated” parts of its financial system, it said. The report raised concerns about the adequacy of the country’s regulatory controls, and about the quality of underwriting and the pricing of risk.

The formal banking sector might not be as strong as it looks, either, the I.M.F. warned. “Based on reported data, bank balance sheets appear healthy and loan books show only a modest deterioration in asset quality,” it wrote. “However, banks remain vulnerable to a sharper worsening of corporate sector financial performance.”

Another issue is a proliferation of debt-financed spending by local governments without adequate tax bases, often through “local government financing vehicles” that have long been fingered as a weak spot in China’s markets. “Further rapid growth of debts would raise the risk of a disorderly adjustment in local government spending,” the I.M.F. warned.

Finally, it also cautioned about the possibility of sharp price drops in the real estate markets, which remain “prone to bubbles,” the I.M.F. said, in no small part because many Chinese savers do not earn interest on their deposits and thus push money into the housing markets.

Bettina Wassener contributed reporting from Hong Kong.

Article source: http://www.nytimes.com/2013/07/18/business/global/imf-tells-china-of-urgent-need-for-economic-change.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Media Decoder Blog: TVs Connected to the Internet to Be Counted by Nielsen

February 21, 2013 by Leave a Comment

Americans who have spurned cable, but who have a television set hooked up to the Internet, will now be counted as a “television household” by The Nielsen Company, potentially adding to the sample of homes that are rated by the company.

The change, Nielsen said in a statement, was necessary to “more completely reflect media consumption.” It comes nearly two years after Nielsen said it was thinking about redefining the term “TV household” to include those that stream shows. The industry’s collective sense of urgency has increased as new Web services like Aereo have allowed people to watch TV channels, ads and all, without a cable subscription or an antenna.

The new definition “will include those households who are receiving broadband Internet and putting it onto a television set,” said Pat McDonough, the senior vice president for insights and analysis at Nielsen. Currently a “television set” is the flat-screen kind, but in the future a tablet computer like an iPad could also be considered a TV set.

Six-tenths of one percent of households in the United States meet the description of households that have TV sets hooked up to the Internet but have no other source of TV. Some of these may be “cord-cutters,” people who have chosen to stop paying for cable. Others may be people who have never subscribed to cable. Nielsen says it believes the number will increase in the future, so it’s trying to get ahead of the change.

There isn’t likely to be a sudden change to the Nielsen ratings that govern billions of dollars in advertising decisions, however. Right now most Internet views of TV shows aren’t counted in the TV ratings that this blog and others write about, either because there are no ads attached (see Netflix) or because the ads aren’t exactly the same as the ones that appeared on the original TV broadcast (see Hulu). The ratings exist for the advertisers, after all.

But new services are popping up that stream TV shows and ads without the need for cable.

Aereo, which is available in New York and is expanding to other cities, is one. NimbleTV, which is in a test phase, is another. Further into the future, Intel is planning to start a cable-like subscription service that would be delivered over the Internet, and a bevy of other companies are interested in doing the same thing. If and when these services steal customers away from cable, advertisers will need to know if their spots are being seen and Nielsen will need to track it.

Alternatively, cable companies and the owners of cable channels are trying to keep customers by streaming shows in a manner known as TV Everywhere. In some cases, these services need to be rated, too.

Ms. McDonough said in a telephone interview Thursday that viewing on Aereo will now be included in the Nielsen ratings sample. Theoretically, a cable-like service from Intel would be included, too.

The changes emanated from a measurement committee comprised of Nielsen executives and two dozen representatives from networks and advertising firms. The committee met in New York on Tuesday and approved the changes. The Hollywood Reporter described a source at one of the big broadcast networks as being “ecstatic at the prospect of expanded measurement tools.”

There is intense anxiety within those networks because, in some cases, their ratings are slipping rather dramatically. The culprits include digital video recorder usage, delayed viewership thanks to the existence of Netflix and other online sources of catch-up TV, and increased competition overall from other channels and the Internet. Counting the small sliver of homes that have Internet-connected TVs, but not cable, won’t make a big difference.

Then again, as Ms. McDonough put it, “It’s up to the networks to decide how best they want to monetize their content.”

If a network like ABC decided to run the same commercials with “Modern Family” on TV and on Hulu and on ABC.com and on its app, Nielsen would count all those views equally. Then again, some commercials on TV are out of date in a matter of hours. Commercials on the Web can be tailored to the minute they’re viewed and to the man or woman viewing them. That’s the clash between old-fashioned TV and the on-demand world — one that no measurement tool can solve.

Another problem: tablet computers like the iPad. Some cable companies have created apps that turn tablets into fully functioning TV sets, but viewership on these devices does not count toward Nielsen’s totals. Ms. McDonough said Nielsen was conducting tests of iPad TV measurement and expected to be able to add it to the ratings sometime in the future.

Article source: http://mediadecoder.blogs.nytimes.com/2013/02/21/tvs-connected-to-the-internet-to-be-counted-by-nielsen/?partner=rss&emc=rss

Filed Under: Media Business Tagged With: , ,

Fancy Batteries in Electric Cars Pose Recycling Challenges

August 31, 2011 by Leave a Comment

Yet even as automakers vaunt the ways these cars can benefit the environment, they are divided over how best to handle the refuse: recycle or repurpose.

That is worrying some companies involved in “urban mining” — a voguish term that refers to extracting valuable metals from all kinds of discarded electronics, from power tools to mobile phones. They have already begun spending money to build an infrastructure to handle the flood of partly depleted battery packs that are expected to enter the waste stream; Frost Sullivan, a consulting firm, puts the number at about 500,000 a year by the early 2020s.

“There is no green car without green recycling,” said Ghislain Van Damme, a manager at Umicore, a company based here in Hoboken that is one of the world’s largest recyclers of precious and specialty metals from electronic waste.

Companies that fail to plan for recycling face “brand damage” at the very least, he said, as well as potential fines and legal action if the batteries end up being illegally incinerated or dumped in landfills. In many cases, automakers will be responsible for final disposal of the batteries — even if they did not actually manufacture them — because of stricter laws governing recycling, especially in Europe.

Any sense of urgency in developing recycling capacity has been dampened, however, by the cost factor. The newest, most-powerful lithium-based batteries are also less valuable to recycle than earlier ones.

Lithium is plentiful compared with the nickel and cobalt found in hybrid and all-electric car batteries developed earlier, even if the main sources of the metal, in countries like Chile and Bolivia, are far from auto production centers.

“You can count on a constant and growing thirst for metals including lithium,” said P.Aswin Kumar, an analyst with Frost Sullivan. “But lithium still costs about five times more to recycle than to mine, so environmental laws will drive recycling for now.”

Shoebox-size, lead-acid batteries have powered ignition and lighting in gasoline- or diesel-powered cars for decades. They already are widely recycled, mainly because lead is such a health hazard.

The batteries for hybrid and all-electric cars are far more powerful and much larger, with some weighing up to around 250 kilograms, or 550 pounds. They also can be the car’s most expensive component, mostly because of the complexity in making them, rather than the value of the materials.

Complicating the question of disposal, a large amount of energy remains stored even in partially discharged batteries. These could deliver harmful shocks and pose a serious fire hazard if mishandled.

For now, automakers are going their individual ways.

Toyota Motor, whose experience goes back to 1998, shortly after the introduction of the RAV4 all-electric vehicle, has established partnerships in Europe and the United States to recycle batteries, including from the hybrid Prius. This year, it began shipping some batteries from Prius models sold in the United States to Japan to take advantage of a more-efficient recycling process at home.

Honda Motor recycled nearly 500 batteries during 2009 from the electric hybrid models it began selling in Japan more than a decade ago. But it still is exploring ways to structure that part of its business as it rolls out models like the Insight and the CR-Z.

General Motors and Nissan Motor, whose Chevrolet Volt and Nissan Leaf are newer to the market, are taking a different tack. They have agreements with power companies to develop ways of reusing old batteries, perhaps for storing wind or solar energy during peak generating times for later use.

Bayerische Motoren Werke, known for its premium BMW line, still is carrying out research on whether to recycle or reuse the batteries from its Mini E, an all-electric car it began leasing on a limited basis in 2009.

Meanwhile, some governments have begun to get involved to ensure their car industries are not undermined by sourcing or safety issues.

In the United States, the Department of Energy has granted $9.5 million to Toxco to build a specialized recycling plant in Ohio for electric vehicle batteries. It is expected to begin operations next year, handling batteries from a variety of makes and models.

Article source: http://feeds.nytimes.com/click.phdo?i=b3f556573a8644ba870002a0e53ffacd

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Lawmakers Renew Push for Deal on Cutting Deficit

July 24, 2011 by Leave a Comment

“We are working, and I’m confident there will be resolution,” Mr. Boehner told fellow House Republicans on an afternoon conference call, according to participants. “There has to be.”

Yet an hourlong Saturday meeting in Mr. Boehner’s Capitol suite was followed by pessimistic assessments of the state of negotiations from the two top Congressional Democrats, Senator Harry Reid, the majority leader, and Representative Nancy Pelosi, the minority leader. They accused Republicans of refusing to give ground on how the federal debt limit would be raised.

“Their unwillingness to compromise is pushing us to the brink of a default on the full faith and credit of the United States,” Mr. Reid said of Mr. Boehner and Senator Mitch McConnell, the Senate Republican leader who also attended the session. “We have run out of time for politics. Now is the time for cooperation.”

The impasse over major elements of the agreement came even as lawmakers said they were determined to make a new compromise public on Sunday afternoon before the opening of financial markets in Asia to reassure investors there.

President Obama began a morning meeting with Congressional leaders at the White House by noting that global markets could react adversely to Friday’s collapse of his and Mr. Boehner’s negotiations as early as Sunday, before trading begins in Asia. His Treasury secretary, Timothy F. Geithner, reinforced the point at the meeting’s end.

The tense series of high-powered meetings on Saturday was reflective of the sense of urgency among lawmakers with little more than a week before the federal government risks defaulting on its debts, a fate that could be avoided if Congress agrees to increase the $14.3 trillion debt ceiling. Congressional Republicans, Democrats and Mr. Obama have seized on the debt fight as a way to win approval of a debt-reduction package but have disagreed sharply over what it should include.

The speaker, who abruptly broke off budget talks with Mr. Obama on Friday evening, said that he hoped the plan could be finished within 24 hours and indicated on the conference call with House members that the savings would most likely be achieved in two stages. As described by knowledgeable Congressional aides, the agreement under discussion would enact a first round of cuts of just under $1 trillion, an amount they said was sufficient to clear the way for a debt limit increase through 2011. A second increase would follow after a newly created legislative commission considered a broader range of spending cuts, program overhauls and potential revenue increases.

Democrats, who have dug in against anything they see as a short-term extension that would require multiple votes on the debt increase before the end of next year, said they accepted the two-stage plan but wanted the full increase in the debt limit now.

“I will not support any short-term agreement, and neither will President Obama nor Leader Pelosi,” Mr. Reid said in a written statement earlier on Saturday. “We seek an extension of the debt ceiling through at least the end of 2012. We will not send a message of uncertainty to the world.”

Following Mr. Reid’s criticism, Republican officials said they have for months stuck to a consistent position demanding that each dollar increase in the debt ceiling be offset with a dollar in savings. They did not appear ready to abandon that position, with a spokesman for Mr. Boehner saying a two-step process was “inevitable.”

Still, the spokesman, Michael Steel, said that “we continue to believe that defaulting on the full faith and credit of the United States is not an option.” An aide to Mr. McConnell said the negotiations aimed at preventing a default would continue.

Mr. Reid and the other leaders met at the White House on Saturday morning at the request of Mr. Obama. The meeting broke up without resolution just before noon, after about an hour of discussion.

In a statement after the White House session, Mr. McConnell indicated that he and his leadership counterparts were intent on devising a fallback measure to assure the borrowing ceiling was raised in time.

“The president wanted to know that there was a plan for preventing national default. The bipartisan leadership in Congress is committed to working on new legislation that will prevent default while substantially reducing Washington spending,” Mr. McConnell said.

The White House, in its own statement, said that Mr. Obama reiterated his opposition to a short-term extension of the ceiling because it would hurt the economy, prompt rating agencies to downgrade the nation’s credit rating and drive up interest rates for all Americans.

“As the current situation makes clear, it would be irresponsible to put our country and economy at risk again in just a few short months with another battle over raising the debt ceiling,” the White House statement said.

The rancorous ending to the debt discussions on Friday means that leaders of the House and Senate now have only days to find a debt limit solution that has eluded them for months, gaming out ways to get a debt increase through a Republican-controlled House packed with conservatives demanding deep cuts and no new revenues.

Republicans were taking pains to show that the new plan was different from an earlier proposal by Mr. McConnell that would allow Congress to clear a debt increase through a procedural maneuver.

Under that approach, Congress could vote to disapprove the debt increase but allow Mr. Obama to veto the plan and get a rise in the ceiling if the House or Senate failed to override the veto, a very likely outcome. Aides said, however, that the developing proposal was likely to be modeled in some part on the McConnell approach, which had run into resistance in the House and from conservative activists.

In weeks of negotiations, House and Senate members have identified more than $1 trillion in savings that they could agree on, including cuts in federal agency budgets, farm subsidies, federal pension benefits and Medicaid.

If the new talks collapse, House Republicans could ultimately devise an extension based on cuts they identify and send it to the Senate, daring lawmakers to reject it or the president to veto it.

Article source: http://feeds.nytimes.com/click.phdo?i=86f5fe73f35e487258d211d8baeb101e

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