The Snowden revelations shook the tech giants, but they had plenty of their own problems to deal with
Tight integration of hardware and software has become the norm following Microsoft’s purchase of Nokia.
This was the year the technology industry faced a pivotal moment in its evolution, all thanks to a certain NSA contractor based in Hawaii who decided that the world needed to know just how invasive the surveillance-industrial complex had become.
When Edward Snowden decamped to Hong Kong in May and revealed the breathtaking scale of surveillance of our digital communications, the most basic perception of our online lives was forcibly altered, and with it our attitudes to the technology companies that had enabled those communications.
Technology giants have since been scrambling to adjust to the altered reality, culminating in the open letter published in early December in which eight of them – Apple, Google, Microsoft, Facebook, Yahoo, LinkedIn, Twitter and AOL – demanded dramatic change in the way US intelligence agencies gathers data on terror suspects.
Will it be enough to salvage customer trust, or will it be seen as a belated move prompted by concerns over revenue rather than principle?
Trouble at Microsoft
The problems ailing the former big kahuna of the tech world, Microsoft, are rather more homegrown – years of failure to keep up with the pace of innovation in the computing industry all culminated in a real annus horribilis at headquarters. Shortly after announcing a major internal reorganisation of its corporate structure, seemingly in an attempt to replicate Apple’s functional structure, and just after booking an embarrassing $900 million loss on its Surface tablet project, larger-than-life chief executive Steve Ballmer announced he was retiring after 13 years at the helm.
Not many believed Ballmer’s line that the decision was his own – few doubt the board initiated his departure after years of seeing the software giant drift into irrelevancy in the post-PC era, and the markets reacted with a euphoric spike in stock price.
But rather than behave as a lame-duck chief executive until a successor was found, just a week later Ballmer announced the €5.44 billion acquisition of beleaguered Finnish telecom giant Nokia’s handset business, including 32,000 staff, its devices and services business and a licence to its patents. The purchase will see further vertical integration in the industry – following Google’s purchase of Motorola in 2011, it seems the Apple model of tight hardware and software integration is now the conventional wisdom, after being seen for years as the idiosyncratic philosophy of Cupertino’s perfectionists.
Ever since his appointment, conspiracy theorists had been loudly suggesting that Elop was a Trojan horse from Microsoft, a hypothesis that accelerated when he killed Nokia’s Symbian and MeeGo platforms and bet the house on Microsoft’s Windows Mobile operating system instead.
By the time of the sale of the handset business, Elop had overseen a 95 per cent decline in Nokia’s profits, a tenfold collapse in its market share and 60 per cent drop in its share price. When he then picked up a €18.8 million bonus, contractually agreed in the event of such a sale, the conspiracy theorists seemed utterly vindicated.