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« Reading the Tealeaves: My Outline of Stephen Elop Strategy Presentation - REVISED | Main | To Nokia colleagues being laid off or fearing for job survival - here a little bit of advice »

February 11, 2011

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Chris

"The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same."

Utter failure of Nokia.
Nokia had 2 problems:
1) Carriers in the US
2) Execution

As you said, the first problem will not be solved by this stupid move.
And execution will be even worse:
- 2011-2012 will be transition years. No 2011 has to be the year Nokia starts performing again. It could have been possible with Meego and updated Symbian.
- "Nokia will have 2 distinct business units with profit-and-loss responsibility and end-to-end accountability for the full consumer experience, including product development, product management and product marketing." Great, so now the customer will have 2 distinct user experiences, inconsistency between Nokia products, etc.

If Nokia improved their execution, they could have pulled of an Apple, now they get a melon.

Gouge

I wholeheartedly agree and boy am I glad I don't hold Nokia shares, might put on a short though, as Stephen Elop pours more gasoline on the burning platform he setfire to when he joined in 2010. I cannot believe the shareholders agreed to this surely they can influence the decision. Microsoft is on a win win and has the finances and revenue keep adding gasoline for years. They couldn't even confirm to a shipping date for a new WM7 phone and yet they could have launched a new Meego one at WMC 2011. 2011 and 2012 will be transition years? Yeah, during whcih Nokia's burning platform will sink as will MS WM7. Stephen Elop is merely a Judas betraying his employer and the Finish people. He was inserted by Microsoft with the sole purpose of this action and the last few months noise was merely smoke and mirrors to prevent the inevitable dissent in the ranks at Nokia. Behind he scenes Elop will be getting a massive pat on the back by his chums at microsoft. Nokia has little to gain from this but Microsoft has masses. Microsoft made it's money from the OS in MSDos Windows etc. not from the hardware. Nokia will now have to pay a premium to use WM7 in each device it sells which will reduce profit margin. R&D expenses will be considerably restricted and as the post mentions Symbian will be sidelined and franchised so will be sold off to be used by other manufacturers in the medium and lower end. Nokia will become MS's lapdog and will merley be a handset manufacturer. Elop said they would only get one Meego device to market this year. How ironic that Apple managed 4 years ago to revolutionise the market with one device and Apple are the ones making the most profit per handset unit sold, how? By operating within their walled garden, not making multiple firmwares for multiple providers but maintaining control and therefore quaity levels over software and hardware. Nokia will not even be able to do this now as they will have to work with MS who have only ever been able to create bloat ware that is force fed via monopolistic tactics and through outright cheating. If you look logically at the figures Nokia was actually holding ground given the expanding market size and to suggest they could not weather the storm, well I feel sorry for the fins as after having Nokia reimagine itself many times since 1865 from welly boot maker to global dominant phone provider how much more face can be lost by admitting it cannot reinvent itself and needs Microsofts help . To say that Nokia did not have a device that could compete with iphone is just nonsense. The N8, as much as many criticise it, is a fantastic phone, albeit in need of some minor tweaks to the UI. If you compare Android, iOS and Symbian 3 they are all much the same, the difference is the apps. Ovi store has been growing at an incredible pace and was perfectly positioned to continue to become a viable ecosystem and Nokia had map services and infrastructure far in advance of any other company to be able to scale up and distribute a Jesus device once one had been finalised. That will now be a WM7 device with blood on it's hands and given that WM7 figures show a reduction in market share can hardly be expected to compete with Android or iphone. A sad sad day and to be honest for Nokia a TOTAL FAIL!!!!!!!. As a long standing customer having had over 10 handsets in the last 10-15 years,see ya be missing ya......

Thinkaboutit

Well remember what you said about Motorola when they went smartphone? You said they were dead for good and now look where they stand today.

Of course the next two years will be very tough for Nokia. The days with above 30% market share will well be gone forever. But they would have been even more so if they had decided to stay with Symbian and do nothing.

Now they can move on. When the first Nokia WP7 device will come out, WP7 as an OS will surely be much better already. It has some substantial advantage over IOS and Android due to Microsofts dominance in PC-OS and Office software.

That is no guarantee for success, but it might lead to the so much desired third player in the market that can actually compete against the other two.

Brett Kromkamp

Tomi,

I don't think I could agree more with someone, with regards to this issue, than with you. Spot on. Will be coming back for your further analysis.

Regards,

Brett

n

Tomi,
I, like you, am too disappointed with today's announcement and share most of what you said..

don_afrim@twitter

Tomi, Microsoft is not a winner yet.. all they have is a deal with Nokia to put Windows into Nokia smartphones.. BUT.. that's in a year or TWO!!! I think Windows Phone will not sell even if Apple announced tomorrow they'll bring out an iPhone with Windows Phone OS! Customers are fed up with M$ and they will NOT buy it! You can put lipstick on pig all you want but at the end of the day its still a PIG!!!

The biggest loser here is Nokia, and I can see this as devastating as mirroring Motorola's fate! Nokia's trojan horse is Stephen Elop!!! A virus in his brain injected from Microsoft!!!

Nelson

Like the Monty Python once said: "This is the mother of a blow-out."
Tomi I have a question for you: What on earth has passed on Jorma's mind (a person to whom I have the most respect) to let this happen? Was it the american investor's? I guess Anssi and OPK must be atonished right now, seeing the work of years going down the drain.

Andrew Flowers

Hello Tomi, it's Andrew Flowers here from Nokia. Thanks for your opinions on this over the past couple of days, but if I may I would like to briefly present Nokia's side of the story ;-)

By joining forces and combining complementary assets, we believe Nokia can help bring Windows Phone to a broad range of devices and new markets, while Microsoft brings a next generation platform and can enable Nokia to bring services to market that are not available through other mobile companies. Together, Nokia and Microsoft plan to bring a combined services portfolio covering location, search, entertainment, social, advertising and commerce

But it's about more than that. Because we believe that there is also an opportunity to disrupt the current trajectory in the market, if an ecosystem emerges that can innovate and differentiate its products and services and achieve global scale. This would create opportunities for operators, developers and consumers beyond anything that currently exists today.

And we sstrongly believe that the planned long term strategic partnership between Nokia and Microsoft can build this powerful ecosystem, and deliver leading, differentiated products for consumers out there.

Andraz

As a developer house, we are shocked. Nokia has been punishing developers for quite some time now, and only loyalty and contacts with fantastic Nokia individuals kept many Nokia developers going. After ditching maemo and its promised multi development environment support, introducing QT as leading platform, all this in a year, this seems to be the third time developers need to start from scratch basically.

Ecosystem is important, we all agree on that. Nokia is bringing hardware to the table, operator based billing and its support that is miles better than anything from Apple or even Google (but both have awesome community support ecosystem). OVI is still a half baked product, so are maps (compared to google). So, what is MS bringing in? Market is even worse than OVI, their email services cannot match google's, WP7 is still in very early stages (but we all agree that it has some great usability features), Bing is, well, not Google, same with maps. The only insanely great thing MS can bring into the deal, is XBox integration.

But putting all this together, and even if everything pans out in the most optimistic way, they still have a lot less competitive ecosystem then Google or Apple. And the gain of joined forces seems less impressive.

Sure, when dust settles, people will start behaving a bit more rational and pragmatic. But from how things look at this point, extremely loyal Nokia developer community has to either start sacking QT/Symbian developers or retraining them to new platforms. And knowing QT developers, we wonder, how many of them will pragmatically switch to Windows platforms? Not many. We bet majority would rather join google android development forces. And all this is putting huge risks on small development houses, like ours.

As a very realistic outcome: where does Nokia end up with even less development support?

Less the Best

I think this move was what big institutional investors, the owners of both Microsoft and Nokia, wanted. There were rumors that Jorma Ollila was pressured to choose Elop and I'm sure that they were not discussing only about person it was also about strategy.

This move was as much about "saving" Nokia as saving Microsoft. The investors don't care about companies - they want to secure their investments (and our pensions). Investors ae competing to create and own the "Microsoft" of mobile - a company that dominates the gadgets of the future. So this was obvious solution for them, especially if you want to make a bold move.

This is little bit sad because Nokia was nice (and open) counter force for Google (the Internet Company), Microsoft (the Computer Company) and Apple (the Closed Company)

... I think this was the biggest drawback for open source community because Nokia was the big promise.

Jussi

I think we really do not know what the major stockholders think. At the moment I do not understand what is the positive thing in announched partnership for Nokia. But, what if the major owners of Nokia and MS are more or less the same (I don't know and I haven't checked this) and if they see that in total they see that they will win more/quicker with this move? For that capital it does not really matter what you lose with Nokia if there is bigger gain via MS.

Knijert

Tomi I think you are right. Nokia just sold away its future, however, for shareholders it is irrelevant how Nokia makes its profits, so long as it does.....
Whether they are a powerful players controlling its own destiny or an OEM, they don't care.
It's just us that care....

If they had announced that they would be delivering one super hgh-end WP7 device this year (maybe even on the same hardware as their MeeGo device) I would have thought of it as a smart move. You are able to test reactions, while you keep your future in your own hands. They should p[robably also hav had to introduce an Android device on that same hardware, as to give consumers the choice of software, while guaranteeing hardware quality. Again only in the very high-end, where margins are high...

This is just another fine mess they've gotten themselves into!

Sander van der Wal

For Symbian developers, the only disappointment here is the abandonment of Qt. It has always been crystal clear that with Symbian OS being pushed down to cheap phones, the amount of app money to be made would never be great. People without the disposable income to buy an expensive phone certainly don't have the money to buy lots of apps.

The reason people stayed with Symbian was Qt. Qt would offer source code compatibility with Maemo/MeeGo and with other PC platforms and possibly mobile platforms. That is a good reason, not good enough to not develop on iOS and/or Android, but a good reason to keep developing Symbian next to iOS and Android.

But with Qt not being available on Windows Phone 7, the business reason to port S60 apps to Symbian or to develop new Qt apps for Symbian have disappeared.

And, Nokia has defaulted on it's promise to use Qt to future-proof developers working with them. That isn't the way to get developers, developers, developers.

It is worse for Qt. With Qt not being a primary asset anymore, why would Nokia keep subsidizing Qt development on PC platforms?

Wolfram Herzog

If Nokia can Show a Windows7 phone prototype next monday in Barcelona, then it may be a clever step in the right direction.

If it takes the usual 15 months until Nokia can show a new and sexy smartphone with Windows7 then there is GAME OVER for a strong Nokia as we knew it until yesterday...

saurabh

What about existing users
What about Symbian 3?
What about the Nokia bubbles ???

What about the infinite possibilities of OVI Store?
What about New browser on N8/E7/C6?

Why did I buy a phone which would not have developer support in terms of firmware and OS upgrades?


DARN IT

Tell me all this is a dream and would go away when I check the news feed tomorrow?

Please

Den

Thank you for analysis...
Personally me - I do not want to buy WP7 based phone.
I hope Nokia will finally release it's MeeGo based smartphone... Otherwise I'll be forced to seek other platform based phone...

Sad news...

Dano

I do not know about the rest of the world but in the USA Nokia has been dead for some time. No one here gives a damn about Symbian. Nokia has been touting Symbian for years in the US and no one wants anything to do with it. They should have dumped that platform in the US years ago. Their device line up has been absolutely horrid the past few years, not one decent smartphone, dated technology, slow to produce new models, and lacking in quality that used to be a Nokia flagship.

It was their refusal to work with new technologies that made them irrelevant. The partnership with MS is the first decent idea from Nokia in years. Samsung, LG, HTC all make devices running the new MS platform, Android devices, and their standard assortment of quick messaging devices. It is about time Nokia put forth some effort to jump on the bandwagon and perhaps become relevant in the US again.

Gouge

You just couldn't make it up:-

http://www.phonearena.com/news/Nokia-chairman-Jorma-Ollila-picked-Stephen-Elop-as-CEO-under-threat_id16237

Shocking really.

wholesale iphone

This is reason enough not to grow, not IOS and / or Android, but a good reason to continue developing the next Symbian and Android is the IOS.

don_afrim@twitter

@Andrew Flowers
How in the world are you going to compete in today's market (sorry in two years) with a 1.0 OS that nobody wants on their phone?

Nokia will mirror Motorola going from biggest to smallest smart phone maker! If you don't see this happening then you really shouldn't work there.

I said it many many many times, Nokia should have bought Palm and use webOS as their main OS. By now they would have had a beautiful (E7, N9) working devices to sell to the market.


You people at Nokia have completely lost your mind!!!

The whole industry is laughing at you right now! Pathetic!

agoedde

Agree completely. Disastrous move for Nokia, huge win for Microsoft.
Just one correction:
Nokia will not be supporting three OSes, as MeeGo has effectively been killed off today (they just didn't want to word it that clearly - it's a research project now).
Also, I would count Symbian as only half an OS from now on, as all of the people who were working on feature updates etc. can be moved to other projects. Symbian will only see maintenance work from now on.

Eaglewing

Nokia stock down 10%

If this move was really pushed by American investors, then it seems that the market at large disagrees with them. Nokia investors have just lost $4Billion in a single day! Congratulations!

Vikram

Tomi I always enjoy reading you analysis but I have to disagree.

Nokia makes great hardware and are the only ones who have the ability to match Apple there but the fact of the matter is that Nokia's software is third-rate compared to Apple and Google and even WP7. The fact that is that Meego is no where near prime-time and on a level that is comparable with iOS and Android and Elop realized that he would have to wait for 12-18 months to get to a comparable level from a customer experience and developer/ecosystem equivalent in terms of usabilty and desirability for a developer.

Nokia sells a lot of phones but the software or the platform they have is not the reason why. They sell phones in spite of that, not because of it. That is what people need to understand. The only place where Nokia brings something that is market-leading/world-class in terms of software and user experience is in mapping. That's it.

Regardless of the bulletpoints that you note where Nokia has maps, an App store etc... the fact of the matter is that the whole platform/ecosystem was way behind as compared to Apple and Android and more importantly - awful relatively from a customer point of view. I travel and spend a lot of time in North America and Asia - I own all the phones and using Nokia phones now is such a backward experience compared to iPhones or Android. I do acknowledge that they make very good hardware but people no longer buy phones simply because of hardware.

Regardless of how many phones Nokia sells now, the graph was pointing downhill in a steep manner to the point that even you was shocked when you saw the results from the last two quarters.

The fact of the matter is that Meego was NEVER going to be ready on time. You speak of execution as the rational for Nokia's problems but that is something that was not going to be able to be changed fast enough for Nokia to survive. Elop in the last few months learned about this problem and made a decision and made the best of a list of bad choices.

The fact that Nokia spends much more on R&D than Apple and still can't get out a modern OS in time should tell you plenty about the problems that plague Nokia and what Elop faced.

As for Samsung - yes they are doing well but it is in no way because of bada! bada is a simple OS. Samsung is doing well because they copy other people's styles and they own the manufacturing so they can be cheap. You can expect Samsung to drop bada as most feature phones become smartphones and they will move everything to Android. This will happen.

Elop did what he could for short-term survival on a sinking ship. The fact that he isn't totally abandoning Meego is a good thing. Also Symbian is going to be put to pasture where it belongs.

Gouge

I think that MS and it's associated clout in the US probably had major influence over the investment community or even due to the level of Nokia stock MS, or the executives of Microsoft held to assist in appointing their chosen CEO. It'll be interesting to see what the MS share price does when the Dow opens.

At the end of the day as is common in the tech sector a bigger fish swallows the smaller one, digests it taking the good bits and poops the rest out the back door to be obscure. MS wins whether Nokia survives or not. Terrible terrible decision.

Gardon Lee

Is it a well planned and well executed infiltration of Nokia by Microsoft provided how everything happened sequentially ?

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