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« Am Ready to Call it: Apple iPhone world's biggest smartphone maker Q2 of 2011 | Main | The Ecosystem Myth and Stephen Elop's Alternate Universe at Nokia »

June 07, 2011

Comments

Martin Wilson

Tomi,

A great post. The position that Nokia find themselves should not be a surprise - many of us saw this coming a long time ago and yes warned this would happen.

Nokia are fare from unique. The challenge, as many other organisations are also finding out - including the good old Yellow Pages publishers - the market environments is rapidly changing. Yet, these organisations have consistently failed to adapt. WHY? Two simple reasons: Management and Process.

Management: Nokia like others are being run in the same way, by the same team that they have seen historic success. They use to get away with this when they were dominant, remove the dominance and they start to see their business rapidly fall away. They fail to adapt because the senior team life is too comfy, very few are willing ruffle feathers and stick their head above the parapet in case they get struck down. They become nodding dogs and the business starts to falter as more agile businesses start to take share.

Process: Nokia are tied to process this means that agility to change and adapt takes far too long. The market moves in quarterly cycles (or quicker). Nokia seems to not understand. The Smartphone market is fast moving. The Microsoft deal was announced in February yet we are still yet to see anything resembling a Nokia device with a MS operating system some 4 months later or anytime soon. This is just too slow and has killed device sales.

Nokia is going to suffer from this without doubt. Their Brand and market share will be hit. But can they survive? Absolutely! Get some of the basics right they can again become a force to be reckoned with. They need stop feeling sorry for themselves and pretending this is not happening, get the right people with the guts and inclination to take risks to get this ship back on course.

Martin

Michele

I'd rather be honest, so this is not totally a comment, but an observation about Nokia in the past years. I owned many N phones, starting many years ago; my first smartphone was 3650 (awfully designed with round keyboard) and then many others more till N97. In the past years N gives many impulses to the market but two of them in my opinion were mainly missed. First, the design: this is a big point 'cos N design was indubitably on top but this was ported in several models as a lack of usability (strangely shaped keyboards, buttons moved or missed through models). I mean the design in some models was gorgeous but in some others... damn too bad. I remember the waiting for the leaks of the new model photos on the internet sometimes turned in frustration for a bad form factor o lacking feature. Second, the bugs. I don't remember a N smartphone without a serious bug at launch. And this is totally unacceptable for what was such a huge brand. I turned to Android after a disastrous N97 and I came to the best phone experience of my life even I missed (and I still miss) really something from Symbian.
And there were many other mistakes:
The too anticipated exhibition of new model before market launch (often delayed).
The great slowness in software updates even in presence of main bugs.
The feeling of not met the needs of consumers or mainly, not totally listen them. And so on...
I don't know the reason of these mistakes, but I can observe they were ignored on the base of market sales. They don't needed to fix them, they anyhow sold. Now that music is changed they not only cannot ride the WP7 horse now (because of all the things Tomi said) but they must fire Elop, they must join Google and for God's sake absolutely face these main points and don't repeat all these mistakes.

Crowbar

Sorry Tomi, correlation does not imply causation. All of the stuff you're bringing up now was known already around summer time last year.

Andre

when Elop signed up as CEO I thougt what a lucky bastard. OPK and Anssi had the good strategy with the QT bridge. apps were groing, downloads were growing. the n8 was about to be launched was an awesome phone. meego had full support and huge financial resources from intel.

you are right elop is killing nokia. was just in mexico and wondered why i don't see any of the s3 phones nore medium priced nokias in the big phone stores. nokia used to be extremelly strong in mexico.

not sure who can now save the nokia smartphone brand as symbian is declared dead :(

JukkaGM

"They will not let go, until Nokia Board of Directors fires the CEO and reverses the stated strategic direction to Microsoft."

This will save nothing, in fact, Nokia is doomed for a couple of years. Last fall, Anssi Vanjoki convinced everyone at E7 launch keynote, that you can forget about compatibility issues between different phone models. Qt will fix it. Some coders started to develop Qt - and then Nokia pulls the carpet from under their feet. Nobody trust Nokia, because they have failed to deliver the promise and the MS announcement was simply betrayal for everyone who invested in qt. It takes time to earn back that trust, it does not happen overnight. What if Nokia reverses the MS decision? Nobody will believe, everyone thinks that they will reverse it again in a couple of months.

Archie_

Who ever says that Nokia's aren't used as smartphones are so far out of touch with reality. I disagree, I disagree - you simply have no idea. Just rate the N95 & E90 Communicator against its direct competitors circa 2007 - at the height of Symbian's dominance. These mobiles where top notch, feature-packed and high powered in their day. It is testament to their design & build quality that many remain in use to this day, and continue to attract app software upgrades -- notably mobileways.de's Gravity twitter app, Nokia Maps, and QuickOffice amongst other core user items.

Probably the main difference between Android & Symbian is speed. And between Symbian & iOS, apparently much more intuitive UI. By the way to posters, the author does not say that high-tech Japan sets the pace for mobile communications, rather that Symbian meets their (Japanese) needs well enough.


What Mr Elop has done is truly shocking, outrageous. It is the ultimate fail in tech history -- it is so shockingly bad, it may be the worst industrial fail ever. This is blue screen 101. Symbian did not kill Nokia. Elop is close now. And, I do get all those complaints on Nokia Discussions.

This is classic #REDBLUE -- and will be study material on the matter.

KPO'M

What good would firing the CEO do? It would show that Nokia has no strategy whatsoever. Going back to Symbian is not an option. Who'd believe them, even if they brought Anssi Vanjoki in? We can argue that Nokia should have kept it a secret until the phones were ready, or gone with Android, or any other number of moves, but the strategy is Windows Phone and they are stuck with it.

Anyway, it's disingenuous to point to the 2007 iPhone as a "failed design" because it didn't sell in blockbuster numbers outside the US. It was an EDGE phone, which has nothing to do with the software design. Indeed, the iPhone 3G was essentially the same phone but with a 3G radio, and it sold quite well in Europe. Apple and the "west coast guys" weren't trying to release cutting edge hardware with the original iPhone. They were establishing a market presence with what they had (great software with only basic phone hardware knowledge). They were starting from scratch. Anyway, the "west coast guys" also designed Android, which led to hit phones like the Droid. Nexus One had a flawed sales model, not a flawed design. It was more of an experiment for Google, anyway. Unlike Apple, Google shows no signs of wanting to be big in the hardware space.

Phil

Tomi, wise post as always (with some weird mistakes here and there, like the skype thing, but that's not your field plus it's pretty much irrelevant).

"A Reader" is absolutely right and I can't understand why anyone else here (including you, Tomi) is not considering what we all know very well: Nokia has already tried all the alternatives we're talking about.
If there's something we will never say is that Nokia board hasn't slept during these sad years of demise. Since the very first signs of decline they've taken action and they've tried this and then that and they've followed the manual word-by-word. Not one of their steps was wrong. Can you go down even when you're doing it right? Of course you can. Even when you are Nokia and your products are the best in any way and you have all the resources and you know exactly what people desires...even in this situation, once in a lifetime, comes a period of disruption that can take you down.
So, not the board's fault, they've done everything right...but Nokia was still going down. So what? Mid-2010 they followed the manual anyway (there are centuries of knowledge in that manual, let's not kid around) and took the very last resort you take when you're in the mud: you change everything. You start "doint it wrong" (or, at least, what seemed wrong till that point). You hire someone completely different that tells you that he will destroy everything you have. First, that's a political move (you tell people you understand you were wrong and are brave enough to set the house on fire) and second, that's probably the right thing (or, the only thing).
So, let's not talk about Nokia shares in the market (being comfortable in dominating the market while you lose share is exactly the mistake the board didn't do, and thank God for that), let's talk about trends; let's talk about the direction they were going long before Elop arrived (and the reason why Elop is there in the first place). The board in 2009 realized they were going to be extinct very soon (not 2011? maybe 2012). The board also knew they were going into single digit adopting a disruptive approach (it's not like they're stupid, that's their job to know). It's not like they expected employees to enjoy the process or shops to be friendly (not in this economy...). They knew they were going to get where they're about to get. The hope was (and I guess still is) that this disruptive plan reverses the trend that Nokia is suffering since 2008.
Tomi, if you think the board didn't expect all this it's ok, you just think they're idiots. And you treat them like idiots when you advise they get back on the same route where they were facing death. Plus, when you have made your choice and you're already are where we are, you're just dumb to go back. And you also look like someone who's lost confidence in his own choices (yeah, your advise to replace Elop is probably the only bad move for Nokia at this point in time).
So, I don't know how many of you play poker, but what we're observing from the comfort of our sofas is Nokia going all-in. When you go all-in you know you're taking a risk. This risk can be small or huge, but here's what most people think: if I'm wrong, a small risk will only wound me while a big risk will likely kill me. That's wrong. When you go all-in the difference between small and big risk is in the chances you have to not get killed...but if you're wrong you're dead anyway.
Thus, I don't think we're looking at a slow death (as it seems pretty obvious to paint), I think this is just a process and it has to follow its curve. Next year, Nokia phone unit could very well be dead (not for Elop but 'cause this was its destiny) or it could have reversed its trend and, while still in the single digit, have a strong successful future. We've seen this happening many times in history.
Tomi, I'd just like you to answer to this question: don't you think that a "non-disruptive treatment" of the Nokia patient (like in the pre-Elop era) is a bit cruel? Going slowly down, for years, while firing people and down-sizing your company and selling assets. I don't like to follow your analogy till the point where I have to advise euthanasia, but...yeah, if death is the apparent future then try to take me back to life even if it can kill me in the process.

Phil.

Cloud_Connected

Hello Tomi! Great and frightening post!

It´s hard to see Nokia struggling BUT if it´s the only way that the board of directors are forced to take action vs. this CEO it seems they have to do so.

I think business relationship to carriers/operators are very like diplomatic connections - hard to build up - easy to destroy... And if the CEO isn´t seeing that he should be forced to go.

I hope that Elop will be fired soon and that Nokia will follow a multiple OS strategy: Meego/Android and yes, even WinPhone as there seem to be at least a few people that are craving for such devices...

If HTC can do it, why ist it a problem for Nokia?

KPO'M

The carriers have no interest in killing off Nokia. They won't "force" the first Windows Phone Nokias to fail. Why would they? That would just hand more power to Apple and Google. Perhaps in 2011, the carriers could force Apple to delay the iPhone 5 (something I'm sure Apple did not want to do) to put the SIM slot back in, but Apple still managed to announce iMessage in iOS5 yesterday, which threatens the carriers' free profit stream known as SMS. Without a strong third player in the picture, what's to stop Apple from going e-SIM in 2012 or 2013? RIM clearly is floundering, and HP shows no real commitment to WebOS. The carriers need a strong third ecosystem to keep Apple and Google in check, and I'm still betting it will be Windows Phone now that Nokia has partnered with them.

Jarret

Great Article Tomi. Sad to see the demise of this once great company and I am not sure it will ever recover, because any change will take time and in this competitive market not moving swiflty leaves you in the dust!

Zeke

It seems logical to move away from older 2G services entirely. Why not have SMS and voice calls routed through a wide-ranging wifi network infrastructure that also provides mobile internet, rather than a mixture of 2G and 3G?

I doubt this is the Nokia plan but network providers having less leverage and putting the infrastructure more in the hands of the handset providers appears long overdue to me, and mobile media isn't even my specialist area.

KPOM

@Staska, a legitimate question is whether the N8 and now the E7 might have had better sales had Elop done a better job with the 2/11/11 Windows Phone announcement or delayed it until later. IOW, did the early announcement create an "Osborne Effect" that scared people away from the Symbian devices for fear of being left behind.

However, other comments make me wonder if that is the correct diagnosis. If Anohen is correct, Nokia is seeing a domino effect, not just on Symbian phones (which were losing popularity pretty steadily) but also on the S40 phones, which shouldn't be affected at all by whatever OS Nokia runs on their smartphones. If so, that would imply that the Nokia brand itself, and not just Symbian, is damaged. It's well known that OPK was buying market share (albeit a declining one) through the last two years of his management. Tomi blogged about it, himself. Such a cratering of sales of non-Symbian phone suggests to me that perhaps Nokia has decided to cut the cord entirely and to stop buying sales. That may be Elop's biggest miscalculation. I think going all-in with whatever OS decision (Android or WP 7) was the right strategic move. However, he may have underestimated the effect on the brand and should have been willing to increase carrier subsidies and in effect continue to buy market share during the transition.

kevin

Phil/Staska: Agree with both of you 100%. I commented here last June that Nokia and RIM were going down unless they really executed on a next-generation platform. S^3 and BB6+ fall way short.

Tomi: Please provide a source/reference for your assertion that Apple delayed the "iPhone 5" to switch SIM designs. My inside sources tell me that's not the case; Apple long ago decided to switch to Sept launch for several reasons, and the CDMA and white iPhone launches were part of the plan.

Matthew Artero


Bravo Tomi, it's great when you give supporting facts. The only big thing in your post is what he has done to the relationship with the distribution channel because that is what makes him unable to recover from his burning platform mistake.

Everyone I know who has a data-plan has unlimited minutes for both data and voice, so I don't beleive Skype is an issue. If carriers want the business of people who travel a lot multiple sims are a must. I doubt if I showed up with my phone they would turn me down. The carriers here in Guam USA use multi-sims to attract business away from those carriers who don't offer it. I bet it is the same in Hawaii also.

You are going to see Elop's genius. He is going to say he made the burning platform announcement as way to be open an honest with the carriers. He regrets that he harmed them. He was trying to be helpful to them. Then they will forgive him and accept the WP7 phone.

What if when Elop says Apple is two years ahead of Nokia he is referring to profitability and not innovation?


Arun

Dear Tomi,

There are a few bold claims and a lot of interesting points. But
But.

Thats the most awesomest rant I've seen in a while. :)

Jarkko

Interesting post. My advice is keep on going with Meego. As simple as that. It is a good platform.

Phil

@Kevin: yes, I don't think invisible SIMs had anything to do with iPhone 5 future. Actually it's months I suggest the possibility that this year we won't see any new iPhone (or maybe just an iPhone 4S to revise the hardware and the demand). I was surprised that no one suggested too, but recently we start reading about that. Rumours, a couple of weeks ago, stated new devices release was moved to September, and this rumour appeared suddenly and was right on the money...so I think it was Apple who dropped it.
Apple has to move the release of new devices to a two year frame because from their brand his expected something "really new" each time, and they can't keep this pace because of hardware innovation scarsity). In fact my doubts started when they finally put everything in the iPhone, last year. They had created a false innovation scarsity by not introducing technologies that every device had, but last year had finally introduced the last bits so...where can they go now? They're just missing NFC, but they said they wouldn't use it (I'm sure they'll think again...). And it's not like Apple is going to introduce something when it's really new (like 4G or 3D), they are always at least a couple of years behind the competition technology-wise.
So, maybe an iPhone 4S, maybe no iPhone at all (especially if they are serious about releasing an iPhone Nano which, in my opinion, is a must if they don't wanna start going down like flies in a storm). Plus: iOS 5 is really behind the competition; Android general experience is a bit clunky, but it's getting better by the day, and Windows Phone was already better at the start and the new release is gonna be even better (in fact iOS 5 has introduced a lot of stuff they had). I think it's better if Apple introduces a new iPhone when they've completely revised and modernized their UX.

Yuri

The biggest irony in it all is that Microsoft decided to sabotage Windows Phone half a year before Nokia will even get a shot at its new strategy.

They announced that the touch optimized UI of Windows 8, their tablet OS, will be based on anew HTML 5-based framework, instead of the Silverlight-based one, already developed for Windows Phone.

It is not enough that Windows Phone is doing very bad on the market, that all of its current device makers are cold to the OS, and that the channel is choking WP7 too, but now this. No continuity of Windows Phone applications to Windows 8. Something that you get almost for free with Android and iOS.

Microsoft has done it again - after discontinuing Windows Mobile, now they do the same for Windows Phone. Simply unbelievable.
If I were a .NET / Silverlight developer I would be running screaming.

Microsoft, the stalwart of closed-source software is showing everybody why open-source is the only future-safe choice. And Nokia gave up its first-class open-source ecosystem for that. Truly ironic.

Boris

Nokia in Serbia is dying very fast.

Mt:s (by far the largest mobile operator) has formally only 3 Nokia phones and in reality none. They completely stopped selling (those left are stockpiles) and advertaising their phones! It's all about Android :-(.

Telenor and Vip mobile (=Mobilkom Austria) sells Nokia phones, but their advertise massively Samsung and HTC phones.

In our major tech forums nobody anymore talks about Nokia nor Symbian any more :-(.

This is just sad.

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