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« Do I Really Have To? Ok, ok, ok. I will do update to Nokia disaster year, after Profit Warning | Main | Deluded? Seriously? Can I really honestly claim that Nokia's CEO Stephen Elop is deluded? Unfortunately.. yes. »

June 02, 2011

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Vikram

Nokia was losing the the 50M smartphone sales that you are referring to regardless to Android and iPhone. Elop's Microsoft message had very little to do with that.

Lower priced Android smartphones work much better than S^3 on higher end Nokia models. The only thing that Nokia has an advantage on is the beautiful hardware but the software was, is, still behind.

Nokia was going to crater regardless of Elop's message. It's not something that he could have hid till late this year when making the decision to go to Microsoft because the whole company would be positioned to work on the platform and he would not be able to keep it secret.

There is no way when you make such a big switch that he would have been able to keep it secret for that long.

What killed Nokia was the inability to get Meego to Android/iPhone standard and the idea that S^3 is at all comparable to iPhone or even Android is wrong - S^3 is clunky and poorly functional. It may be better than other Symbian but that is not saying anything. This is not 2005 or 2006.

virgil

Another possibility (a longshot, yes, but still worth pondering): he says it's a war of platforms, maybe he truly believes that.
In this light, it's important to give a headstart to the platform. If Nokia developers commit to QT and Symbian, they'd feel tricked in the summer, and Nokia would be left with second-class applications from the Windows Phone Market that were not designed with Nokia hardware in mind.

Maybe Elop simply sacrificed the (current) business to give an early boost to the platform, and thus to increase the chances of future success. It's a longshot, and it's a questionable strategy - but it's a very real possibility, just like your hypothesis that he was panicked about Symbian's return
(also, your hypothesis is that he can't change his mind in the light of new data - in fact he is so fixated on his "strategy" that when he sees that there are good reasons to change it, he sabotages the company just to avoid the "good reasons to change". Possible, but if true, that's a very, very sad story for Nokia, and it means that they did a LOUSY, LOUSY job when hiring the CEO).

Alighieri

NOKIA AND MICROSOFT WANTS THE CHINESE MARKET. APPLE IS EXPENSIVE FOR CHINA FOR THE MIDDLE CLASS.

THIS IS TO HAVE A FUTURE VISION

THE PEOPLE OF CHINA´S AD INDUSTRY :TOM DOCTOROFF

by Daniel Gilroy on Thursday, June 2, 2011

Tom has lived and worked in Shanghai since 1998, previously heading up the Greater China office at one of the largest and most respected advertising agencies in the world, JWT. Now he is the agency’s CEO for the entire North Asia region covering countries such as Japan, China, Hong Kong, and Korea – not an easy task. His key clients include: Unilever, DeBeers, HSBC, InBev, Ford, Nokia and Microsoft and leading local enterprises such as Lenovo, COFCO, renren.com, China Unicom, Yili dairy and Anta shoes.
The “joys” of working with local companies, despite the operational and relationship management challenges, is that they are genuinely passionate about their brands. Their ambitions are huge. They also have a natural appreciation of the ins and outs of both the Chinese market and the Chinese consumer, leading bolder experimentation, assuming the stars are aligned in terms of clear objectives and open communication.

From an ad agency’s perspective, it’s very much high-risk, high-return. I’m as proud of the work we do for our local clients such as Anta or COFCO (China’s largest food conglomerate) as I am from some of our largest multinational companies such as Ford or Nokia or Microsoft.
There is a middle class in every city (click here to watch Tom educating Microsoft about the Chinese ‘middle class’). Once you realize that individuals earning 20,000 RMB per month in both Shanghai and Wuhan have more in common with each other than do denizens of specific cities in at different socio-economic strata, things become simpler.

Apple is a middle class hit…everywhere. Inland consumers who can afford, say, a Ford Focus are almost as sophisticated in terms of buying an auto as their coastal cousins, with the caveat that care must be taken to keep messages simpler for first-time, usually lower-tier, buyers.
That said, brand tiering is a fundamental challenge for brands as the expand geographically. Practically all of Procter & Gambles products have cheaper variants and they have pursued this strategy with a relative degree of success. In the Apple era, Nokia‘s non-smart phone range at the rural fringe is a powerful weapon to win “the next billion” mobile phone buyers.

Chinese revere scale and “big brands” — i.e. ones that extend across price tiers — reassure; to boot, any brand that does not boast both margin and scale will have a difficult time taming unwieldy distribution channels. However, we need to keep in mind that the “cheaper” products are targeted at less affluent consumers.

Extreme care must be taken to avoid equity adulteration of the premium variants as the brand is extended downward. This is a tricky minuet and some of the best marketers have fallen by upsetting a delicate price-value equation. As a rule, expensive brands should be used to build image and tactical promotion of inexpensive versions should take place closer to the point of purchase.

http://advertising.chinasmack.com/2011/t...

LOOK VIDEO.

http://research.microsoft.com/apps/video/dl.aspx?id=104377

SMELL A MANIPULATION.
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GREETINGS,

A.M

Charlie

You say Balmer would have waited, but are you certain of that?

In Feb 2011, Balmer would have known that WP7 sales were less than spectacular, so getting Nokia to announce their 100% support for the WP7 platform would have been a positive endorsement of Microsoft technology when it needed it the most, even if it was verging on a suicidal move by Nokia. We know MS are bank rolling Nokia and with their cash reserves they can prop up Nokia until they start cranking out their WP7 devices. As a side benefit, they also kill off the threat posed by MeeGo and Qt.

Indeed, by getting Nokia to announce their old platform was dead they would have no option but to commit to WP7 wholeheartedly (I believe some have call this the burning of the boats analogy), strengthening the hand of Microsoft significantly. Basically, Microsoft would have the upper hand in February, and would have the deal signed in May but 9 months in the mobile phone business is a long time and the deal might not happen if they wait until October to announce/sign.

And by getting Nokia to commit to WP7 in Feb even if they won't produce a phone for a year, it keeps the tech blogs talking about WP7 while everyone waits for Nokia to pull the trigger on their device. Nokia going batshit crazy on their own platforms has ensured WP7 remains in the news, at a time when people couldn't care less about WP7. Look, we're talking about it now when we wouldn't be if Nokia were continuing to plough full steam ahead with Symbian and MeeGo. Without Nokia, WP7 would be a slowly fading memory.

But why would Nokia be so stupid to follow Microsoft's lead? I can easily imagine Balmer getting quite worked up about any procrastination from his buddy Elop in terms of delaying the announcement, maybe even throwing a few chairs around or doing a monkey impression. I can also see Elop continuing to be a weak-willed subordinate in awe of his former boss, with Elop naiively doing whatever he was asked to do without considering the full ramifications for Nokia.

Besides, after the leak of the burning platform memo the Feb 11 announcement was pretty much a done deal - much of the damage had already been done by that memo. As a CEO you don't publicly describe your main cash cow as (effectively) "crap" and then get away with it - just ask Gerald Ratner.

For what it's worth, I also believe that Symbian was on the up (daily downloads from Ovi Store were growing at a very respectable rate, great devices, just needed a new lick of paint in the UI department) and the decision to ditch it in February, along with Nokias first sane and well thought out long-term software strategy of Symbian/MeeGo/Qt, will prove to be a very costly mistake for the current 130,000 employees of Nokia. But not for Microsoft, who will walk away, largely unscathed.

Mark

Is it possible the announcement was made in February because Nokia is fundamentally honest? Perhaps it didn't want a backlash from customers (and developers etc) who felt they'd been duped into buying/supporting an obsolescent OS. Now they have a promise of support until 2016 - which is more than customers with the latest Windows Phone, Android or Apple OS have.

writing thesis

thanks for the post) very interesting)))

KO

@Mark: a (smart)phone in the hand is worth a lot more than a promise of two in the bush

Charlie

Read the article:

http://www.engadget.com/2011/06/02/the-oh-sh_t-moment-that-nokia-decided-to-abandon-meego/

it adds some flavour to when/how Elop sealed the deal (assuming anything he says can be believed, of course).

As for MeeGo mentioned in the article, isn't it odd how Nokia actually planned to release a device based on Maemo6 before MeeGo, and that this Maemo6 device (which is meant to be _very_ good, both hardware and software) has been ready for months (certainly since late 2010) yet Nokia exec now constantly stall on it's release. Why would that be? Maybe because not released the Maemo device allow Elop to spin stories about MeeGo (getting into bed with Intel and combining with Moblin was Nokias biggest mistake there - it's just resulted in MASSIVE delays with little real upside so far).

Victor Szulc

First of all: Announcing the switch as early as it happened, was simply the right thing to do, in regards to develeopers, partners and even customers. That way they all have a long transition period, and won't waste ressources on an OS that only has a short-term future.

Secondly, you seem to be looking for a conspiracy that never really happened. Elop didn't need to rush with the announcement or somehow conspire to kill Symbian or Meego. The two were uncompetitive and walking dead already. Nokia managment and board KNEW this. Even Kai Oistamo, who used to be a cheerleader for Meego, knew that Meego simply wasn't able to compete with Apple and Android.

(Nokia was set to release 3 Meego handsets between now and 2014. THREE!)


Finally, you seem to be confusing the symptoms of Nokias woes with the consequences of their plan to save the company.

Nokias falling marketshare isn't BECAUSE of the Feb 11. announcement, and it would have happened regardless. It's dropping because of Symbian being obsolete and uncompetitive, and people are choosing Apple and Android phones because they're more modern and user-friendly.

Most customers don't realize that Nokia is changing it's OS, and those that do are smartphone enthusiasts who don't necessarily care about what happens in two years, since they change handsets every two years anyways.

arild

Hmmm... you have some interesting ideas in this post but I think that it really bases itself on a revision of recent history, which I will get back to. However, I think we can all agree that Elop did a major mistake in overlooking the Osborne Factor (http://en.wikipedia.org/wiki/Osborne_Effect) which he should really know about if he has done his tech company CEO home work. Perhaps one way out of this quandary could have been to present Windows Phone as a replacement of Meego (only a single phone planned for it at that point, no biggie to lose a few sales), then kill of Symbian as the Nokia Windows Phone price point fell. But, it is easy to discuss this afterwards...

However, the idea that Symbian is now good enough to compete with Android and iPhone is really extraordinary, and more based on personal emotions than reality I think. When we talk about competitiveness for mobile phone operating systems we have at least 3 levels: The end user experience, the developer experience and the manufacturer experience (which is Nokia and Elops point of view). I am here ignoring a fourth one, the telco experience, which I do not know much about.

The first one is very personal of course, one person's hero is another person's zero. However, having tried out the N8 myself I have to say it felt nowhere as smooth as Android or iPhone (and yes, I have had the Nokia 9210, E90 and E71, I am not a Nokia hater, but I do admit to never wanting to buy an iPhone, so there's my bias :-) ). And most phone buyers use their own 3 minute experience in the shop and friends recommendations to decide which phone to buy, not reviews in tech blogs or magazines. So to now claim that Symbian is on a level with iPhone is really a skewed view that jars with most people's experience. At the same time any references to improvements in (now dead) OVI and Symbian usability are always highlighting small, incremental changes when the competition is jumping ahead in leaps and bounds. Thus a slight improvement in scrolling in Symbian is mentioned again and again by people sympathetic to Symbian/Nokia when the competition was there years ago and are now busy developing new features.

As for the developer experience (not the financial side!), having written one tiny app for Symbian and tried to do one for Maemo (later Meego of course) and now trying out Android I have to say: no contests. I was in business in less than 10 minutes with Android, whereas Maemo took me several hours to get a virtual machine downloaded, then updated (why was it not the latest version?) and it then ran rather slowly and was very flaky, so I just walked away in the end. Symbian was years ago, but as far as I gather it is still awkward to work with (although QT helps). And just to stress, I am not discussing which is the "best" language to program in, I am talking about that crucial first experience when smaller companies/hobby programmers (who often provide a lot of small useful apps that add to a platform's attractiveness and also improves the all important "app store numbers") decide to check out a platform.

Finally, when it comes manufacturer experience there are two overriding issues of interest: How long does it take to update the OS to add new features (to keep it competetive), and how easy is it maintain (which is a cost centre). Both these points relate to the clarity and quality of the code written. It is clear from a number of articles (for instance http://www.theregister.co.uk/2011/03/10/nokia_ui_saga/ ) that Symbian was a lost cause here. The fact that they have just about managed to get it to feel usable in N8 does not mean it isn't a total mess underneath the surface in programming terms. And Elop is a software guy, he would understand that the more you get dragged into and committed to a cruddy piece of software, the more you pay later. I think the most telling piece of information which shows that Nokia really does not understand software (hence better to get it from the outside) is the fact that 5,000 people were apparently working on the Symbian "User Expereince". This is not just silly, it is insane. You can only write good software in small teams, Andy Rubin has stated that Android has much less programmers than what people expect.

So, I agree that whereas Elop did a big mistake in announcing the Windows Phone conversion in the way and at the time he did, killing Symbian is not. Tomi, your analysis might be right, Elop chose to do it so to kill off Symbian without others being able to opose him. But given the problems of Symbian, this is not a mistake, the mistake was to wait so long before decisively moving on!

arild

Perhaps worth revising this article in view of this in-depth Bloomberg article: http://www.businessweek.com/magazine/content/11_24/b4232056703101.htm

khim

This announcement most likely saved skin of both Ballmer (who faced serious crysis with WP7 fiasco - perhaps big enough crisis to lose his job) and Elop (who faced serious crisis in the likely case where WP7 will be discarded like a Kin).

Not sure what exactly happened but obviously at some point Elop was forced to do such announce to save his own skin... Nokia fate be damned.

Actually that's documented behavior of Microsoft: http://techrights.org/2010/09/26/independent-players-vs-cabal/

I'm not sure how exactly Microsoft forced Elop to abandon Nokia interest and do a suicide move which is mostly in Microsoft's interest, but... why are surprised? This is typical fate of the companies "helped" by Microsoft. Be it WordPerfect Corporation, SGI or Novel the result is the same: oblivion.

It does not mean it's impossible to succeed with Microsoft's help (think Intel), but the odds are so overwhenmingly in favor of death... I'm surprised Nokia shareholders ever interviewed Elop, let alone accepted him as CEO. But hey, it's their's money, not mine.

cycnus

Tomi,

As always... NICE article.

But I really wondering what took nokia so long for WP7 devices. Nokia didn't allowed to chose the CPU/GPU (must be qualcom), can't change it's home screen.... ALL in all, it's an OEM solution. Nokia only allowed to chose the casing material (plastic, aluminum, stainless) and color (red, green, blue, yellow, pink, purple, black). So, what's taking them so long???

I also want to put something here what I always said to others about Nokia-MS announcement.
Nokia don't need MS to be number one. It has been number one for 12 years, leaving MS as a footnote of history. On the otherhand, MS without Nokia is nothing.

cycnus

I think the shareholder of Nokia should SUE their CEO.
It would be really interesting.

Louis

Tomi --- Your conclusion seems like the right one, but there's an alternative reasoning, which is this: Whether or not the Symbian phones of late 2010 were better than the previous ones, Elop's general read on the broader situation looks broadly correct: Symbian was unloved by important App developers in the US, had a history of being late and buggy, and didn't show much sign of that chaning; on the other hand, MeeGo wasn't really going anywhere, if the BusinessWeek article is to be believed. So a drastic move has to be made. (We can debate if there's any point, or whether the market's already been "disrupted".)

Here's where S. Elop not being S. Jobs starts to matter. Elop probably believed---I think correctly---that Nokia's internal structure is based on diffusion of responsibility and inertia. As a new guy, Elop may not have had the free hand to wind down Symbian internally while ramping up WP7 for a Fall announcement. But if he doesn't do that, it's also likely he's forced into a *three* platform story, with all the baggage it carries. So, essentially, Elop decided to just make the decision and go public as a way of giving his new strategy any shot at all.

(This said, I think the discussion's largely academic, but thanks for the interesting post.)

blouechrism

There are two things that are the key things for me - One is that it's increasingly clear that MeeGo is not worth worrying about - The handset pre-view from Sanfransisco showed an OS that is woefully behind in development and supports the assertion in the bloomberg article that they may get only 3 devices out by 2014 running MeeGo.
As for symbian, there has been the suggestion from Elop (in last nights D9 talk, and at McMaster university) that Symbian developers had issues with Symbian and how long it took to change things in Symbian that ultimatly tipped the balance.

As for the timing - reading the bbloomberg article, it seems arbitary - He knew there was an investor conference on Feb 11 and wanted to announce his strategy then. He could have picked any data but arbitarily decided on then. However, you are right, he must have known the hit this would have on Symbian. Perhaps it would have been more muted had the buring platform memo not been leaked, but ultimatly, you either make it big or you don't. This announcement shook the mobile world and everyone now is in anticipation of the first Nokia Windows Phones. The cost is that because the message (by design or accident) was "Symbian is dead", not "We'll do this but Symbian will be around until 2016 still" (Rafe Blandford would disagree). He made it big, and although every Symbian/Qt guy they could get gave interviews for nokia conversations that week saying we are still here and not dead, the damage was done.

Windows announced Windows 8 yesterday, a year at least it sounds like before it's released. However, they are getting people excited, and devlopers will download the SDK and build apps etc. Yes, they could have left it until later in the year, and so could nokia, but perhaps the thought was to prepare the company, investors and customers for what they do next year, they would just go for it. Sadly, customer and investors didn't like the idea, and Symbian 3 is better than S60 but still behind. A more interesting thing right now is What's so wrong with Symbian that Anna has been pushed back again?

HCE


I've said this before on this blog - but I think it bears repeating. If he *had* to announce something, why not announce that Nokia would be using Windows Phone for its US phones! Say that everything going as per schedule with the other platforms and make the *big* announcement when you have some phones to announce as well! Given that Nokia has a tiny presence in the US market, the loss of market share there will be of no consequence and you have less of an impact on the rest of the world.

- HCE

Markus

I'm laughing at someone saying Symbian 3 was competive with Android/IOS. It sold in Q4/Q1 to old Nokia fans. It was never going to sell in Q2-Q4. This was delusions of OPK time. The current hardware and software is awfully outdated for modern smartphones. That´s it.

He had to announce it in FEB for

a) To convince dev support for Windows Phone
b) To get a bunch of people sacked at the end of the year.
c) This is a major strategy change. You can't hold this off for 6 months from investors

KPO'M

I agree with Markus here. Elop was left between a rock and a hard place. The BusinessWeek article, while obviously sympathetic to Elop, goes into more detail about his thought process. Google wasn't budging, and the Symbian team was a year late and billions of dollars short with every promised update. Sure S^3 was usable, but it was a great OS for early 2009, and it had no future in tablets.

With Microsoft wavering with WP7, Nokia couldn't afford to wait until October. Symbian's "natural trajectory" was still downward, and Nokia still would have faced the "what's next" pressure. MS would have a lot of analysts wondering why they cling to an OS with 1% market share. IOW, sooner or later one of the two companies would have had to make an announcement. Elop took a calculated risk that he could avoid the Osborne effect. I think his mistake was not reiterating support for updates. If Symbian Anna were ready then, it would have made it easier. Perhaps he should have kept QT going so as not to leave Symbian devs high and dry, but this would undermine WP7 app development.

pk de cville

"It has been number one for 12 years, leaving MS as a footnote of history. On the otherhand, MS without Nokia is nothing."

Totally Agree. Ballmer's genius seems to be in the area of hard ball negotiations often driving his 'partners' over the cliff. He did it to Yahoo, even without an agreement! (Just media reports.)

In this case, I'd guess Balmer may have psyched his former subordinate out. The announcement's timing was all to the benefit of Msft - making iPhone 7 into a "real contender" over night, but absolutely demolishing Nokia in the same stroke. A genuine two for one play. Balmer may be the biggest genius negotiator of this era. Maybe it wasn't his dominance; the deal may have been done on a whole other (opaque) basis.

pk de cville

"However, you are right, he must have known the hit this would have on Symbian. "

I disagree. I think Elop did it becuase he didn't have a clue. He's from outside the handset industry.

Tomi said they there were many middle managers who would have known, but this was a top secret plan and Elop didn't speak to them.

I think Elop spoke to a few trusted souls and not one of those few convinced him the timing was a VERY BAD IDEA.

Tito Kiljander

Interesting pondering. thanks.

In quick killing of Symbian, I think Elop just made a unintentional mistake that will remembered for decades. He had no idea on Q2-Q3 negative impact on EPS. Personally I just consider him as a miserable CEO and an idiot. Dont EVER kill your milking cow whatever change of strategy your are going through.

Architengi

Tomi, you are correct. This is what I wrote before reading this article (and it is clear Elop did a very big mistake, maybe was under pressure by the rising Symbian who him wanted killed, coupled with pressure from MS Ballmer).
---

What CEO in the world, even one dumber than dumb with one neuron left in the brain, would do what Elop did:
Elop declared Symbian^3 died on Feb/11 when Symbian had the biggest market share, and the replacing WP was only coming in 10 months !

Then announcing Symbian^3 will be alive (but in an induced coma by Elop) for another 5 years!!!

This is a NO-NO by any sanity standards.

Symbian and Nokia Ovi had on Feb/11 an existing excellent eco-system around Symbian with millions of app downloads every day. It was downloading more than Android, with more revenue. It was having Nokia Ovi Music, which Android Google former CEO Eric Schmidt said he could NOT make the big music labels sign with Andorid, but NOKIA did it, had it, Nokia Ovi had the best offline Maps, Nokia Ovi had the best Operator payment of apps and music around the world.

Any OS has advantages and disadvantages. Symbian, WP, all. But you just don't kill an OS with 40% market share. Simply you don't, unless you are a Trojan still working for somebody else.

Rise nokians, rise. Don't let Elop destory your innovation, your dreams.

Nokia N8 is the most unfairly punished smartphone by American reviewers. So many lies.
We love N8 ! We love Symbian^3 Anna!
If only 20%-40% of your customers still want Symbian^3 Bella and Nokia is loosing hundred of millions of potential buyers. Why Samsung can make Android, WP but also Bada? Why LG can make Android, WP but also MeeGo? Why Nokia wants ONLY the trojan OS for smartphones?

cBeam

I don't pretend to know why Elop announced in February. One thing most of us agree is that Nokia's execution was painfully slow and organizational change was necessary. To turn an organization as big as Nokia around is a huge undertaking. By burning the bridge (Symbian) Elop made clear that there is only one way, his way. So, from an organizational change perspective the announcement at that time makes sense.

However, from a shareholder / business perspective the announcement was a catastrophe. What some posters seem to forget is that the question if S3 was better / worse is academic as Nokia's public strategy until Feb announcement was Symbian + Meego under Qt's umbrella. In this scenario Symbian was not dead, but transitioning to the medium tier, while Meego would be upper tier. Qt would be the glue. Investments into Symbian / Meego / Qt would not be a dead end for customers and developers. While Symbian was on a downward trajectory market share wise (AFAIK not unit sales wise), the proclaimed death of Symbian took the floor out of Symbian. The results are evident right now, no Symbian support from carriers, developers and consumers.

Weave

Elop is just Microsoft's man, nothing more nothing less. He will grind Nokia into the dirt until M$ can pick it up for a song.

It's a 'conspiracy theory' and he's denied it today but just wait and see. They'll be a leaked 'Nokia is on life support' type memo and then the announcement that Microsoft will be stepping in to save the day.

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