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« The Ecosystem Myth and Stephen Elop's Alternate Universe at Nokia | Main | To Save Nokia Would Take These Steps - Urgently As In Right Now! »

June 09, 2011

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Vikram

Nokia would have been in this position whether Stephen Elop was there or not. ZTE, Huaweii, Micromax etc... were already positioned to take away share with the new cheap chipsets and now Android and prior to Elop, Nokia was already falling off a cliff.

Stephen Elop isn't the problem. The Board needed to do something 5 years ago. The leadership at Nokia failed Nokia by failing on MeeGo and not replacing Symbian earlier. Symbian and by extension Nokia, regardless of its popularity was a dinosaur with its inability to adapt to change and we all know that when the environment changes, how fast the dinosaurs died off.

The Board should fire themselves.

Vikram

And to be more clear:

Nokia feature phones - already under pressure from ZTE etc... Elop choosing MSFT has nothing to do with the low end market where the average users in Asia and Europe don't care what OS they are using and whether Symbian is being deprecated or not. The average user doesn't care.

Nokia smartphones - well underway to being destroyed by iPhone and Android phones. MeeGo was a terrible failure in execution that Nokia couldn't recover from and Symbian was outdated and quite terrible when compared to iOS and Android and couldn't be upgraded to that level.

See the recent Bloomberg Article on Nokia and Elop

http://www.businessweek.com/magazine/content/11_24/b4232056703101.htm

Money Quote:

"...On Jan. 3, Chief Development Officer Kai Oistämö walked over to his boss's tiny cubicle to share his concerns about the MeeGo software that was supposed to be Nokia's answer to Apple and Android. The pair decided to quietly interview two dozen influential employees about MeeGo, from executives to rank-and-file engineers...When they finally spoke late on Jan. 4, "It was truly an oh-s--t moment—and really, really painful to realize where we were," says Oistämö. Months later, Oistämö still struggles to hold back tears. "MeeGo had been the collective hope of the company," he says, "and we'd come to the conclusion that the emperor had no clothes. It's not a nice thing..."

MeeGo killed Nokia and that is the fault of the Board and prior management.

The seeds of Nokia's destruction were sown years ago and are only visible now. Elop is a convenient excuse.

n900user

I totally agree fire him immediately before too late.

So Vatar

Vikram, it is true that Nokia's downfall began no later than 2007, possibly earlier. It is true that board and management failed to come up with the right responses.
However, when the board - under pressure - decided to hire a new CEO, it was (should have been???) with the intention to turn the company around.

The problem now is that Elop is not able to turn the company around, on contrary he accelerated Nokia's downfall. To the point where Nokia will not be able to survive as an ongoing independent concern.

Elop is the wrong CEO for Nokia in the condition Nokia finds itself now.

Now, is there a manager out there that is able to turn Nokia around? I bet there is, however it must be someone of the caliber of a Steve Jobs.

So, yes, the board is responsible and the board members should be ashamed. However, watching Elop steering the company towards the cliff with accelerating speed does not solve any problem.

Nokia: Yesterday we stood at the edge of the cliff. Today we are one step further ...

HCE


I think I largely agree with Vikram here. If Symbian and MeeGo were in as wonderful shape as Tomi seems to think, there would have been no reason to fire OPK, no reason to hire Elop. I'm pretty sure the board hired Elop, fully aware that he would probably dump the homegrown platforms and go with a third party OS. If MeeGo was indeed "the world's most complete, modern, open and powerful ecosystem" then Elop would not have decided to dump it. Symbian was dumped because it was really long in the tooth and MeeGo was dumped because it was nowhere near ready for prime time.

Of course none of this explains why Elop compounded Nokia's problems by announcing the switch to Windows when Windows-based phones were still a year away. This is probably the only screw-up that I would largely blame on Elop - and even here I have my doubts. Perhaps it was Microsoft that insisted on the early announcement. As to relationship with carriers, that is an area where Elop has precious little experience and he may well have screwed up there but I'm not too sure one announcement of dual-SIM phones is enough to come to that conclusion.

Frankly, I think Nokia's problems started a long time ago (long before Elop was hired). If they had stuck with their original OS plans, they'd probably on their way to destruction. With their current switch, if they can pull through this year, they have a fighting chance of turning things around.

- HCE

Anonymous

I have to say. I have wondered whether or not Stephen Elop intentionally is de-valuing Nokia to make this scenario possible. Specifically on Microsoft's behalf so they could purchase the part of the company, smart phones division and good hardware people, that they really need.

Not saying it is true or anything but the thought certainly has crossed my mind. I know it has crossed other employees minds also, as we have chatted about it.


Omar Moya

I agree with with Vikram's comments, but I think there is additional analysis to add. Elop came as CEO, and quickly moved to WP7 as a solution, dismissing everything that was done before. It was clear that it would affect the value of the company, but the aim ( I assume this is how Elop presented it to the Board ), was to define the strategy, and recover confidence in Nokia doing the right thing and taking the proper steps to maintain its role of leader, or at least keep being one of the main players.

WP7 is a failure on Sales. Microsoft has tried to cover this, and tried to hide the truth by not revealing official numbers. Even Ralph de la Vega (AT&T CEO) confessed that the sales were poorer than expected. And we're talking american market, Microsoft's nest.

Taking this into consideration, let's picture what was going on when Microsoft and Nokia were shaping their deal. Ballmer knew their Operating System (UI copied from Zune, which was a big failure) was about to collapse and become a second failure (after Kin One and Two) so he presented his OS as the solution to Nokia's needs for a new OS. Giving instant, out of the box, ecosystem solution with Office integration, maybe even mentioning that they were planning to acquire Skype. Nokia took it, and gave away Ovi Maps, Ovi Store, and its reputation.

Once this deal is decided. Why would you announce it one year in advance of your plans of having a WP7 phone in the market? It represented a bold move, and most of the analysts assumed a position of "let's wait and see", while Nokia shares are nose-diving, not only because sysmbian and Meego were killed, but also because in the mean time, WP7 situation is coming to light, and we start to realize that WP7 is a failure.

The February 11th announcement, only helped Microsoft, to give additional few weeks/months of life to WP7, while it's killing Nokia. This (IMO) seems more like Microsoft's agenda, than Nokia's agenda, taking into consideration that Nokia presented it as its main and only OS from 2012 onwards.

What if WP7 was not announced? market share would still be going down, that's for sure. Bold move was required, but the execution is completely flawed. Regardless if WP7 is a failure, or if Nokia could make it survive. I agree Meego might not be the solution with its current state, but it is the closest Nokia has to a competitive OS, where it still had control and could make use of all the tools it has (including its own work force).

Who is with Elop now? analysts are killing Nokia, Employees are migrating, market share is dissapearing and distribution channels seem to start rejecting Nokia products. Nokia seems to be being used as a dying muppet.

hari

Tomi - great analysis as usual..

Question for you.. what would be your advice to bring Nokia back to profitability..?? Can you give insights there.. we all know the story of the current situation.. no point in doing post mortem..

pls shed some light there..

Boris

Some of you just don't read what Tommmi wrote:

"Then I wrote why we now know the biggest error CEO Stephen Elop made, was not the decision to select Microsoft, it was his timing of that decision which now is destroying the company."

The main problem is timing! Nokia would lost market share anyway, it's clear, but it wouldn't crash dive!

former N900 user

It's completely ridiculous to think someone like HTC would be interested in buying Nokias smartphone unit. Nokia has become a tumbling giant with still way over a 100.000 employees worldwide. Why on earth should a tiny highly innovative and competitive company like HTC with roughly only 4000 employees even care? They can just do their thing, grab market share and make more profit out of their own products.

Nokias demise is particularly painful for Finnland, but you can't blame anyone else for it. Not the americans, not Microsoft, not Elop... this is clearly Nokias own fault.

hc kek

I have been a great believer of Nokia, running a business writing sw for Symbian. Disappointed many times with Symbian; and the hardware quality and worst of all: the very slow response on the browser when using Nokia phones.

Nokia's management in terms of product innovation in smartphone and quality is really bad. Nokia deserves the predicament it is in. I am now using Android on Samsung Galaxy but I am still not satisfied with it.

I would gladly buy Nokia Windows phone when it is released. I have fantastic memory of the first Nokia Communicator.

If the new Nokia Windows fail, then Nokia deserves to die.

GJW

"I will post my view of what needs to be done now to restore Nokia to at least moderate health (ie get it out of the emergency room..)"

Like you stated once, they won't listen to you. So that means Nokia is doomed, a terrible thought actually.

Antti

To former N900 user: HTC has 8948 employees, 12943 including consolidated subsidiaries. Not 4000 as you stated.

agoedde

Vikram is spot on here: Symbian was no longer sustainable, and Nokia had, as a matter of fact, already annouced its demise. Take this as the edge of a cliff that the big train Nokia was driving towards, and where the tracks were ending. Rather than a quick killing, this demise was to be a slow phase-out and replacement with MeeGo, with Qt as a compatibility layer for transiting the app ecosystem intact. Take this as the bridge and tracks that Nokia engineers had to build out from the cliff. Not having MeeGo in place and ready when it was needed (which was no, this year, not next) wrecked this sound strategy. Nokia was now at the edge of the cliff, or maybe already a bit beyond it, with no bridge in place. The reasons for this failure go way back, and include starting late in developing a replacement for Symbian, poor technical choices on the way, infighting, bad management, and unnecessary delays (Maemo --> MeeGO transition). All of this happened way before Steven Elop came on board. He was onyl there at the edge of the cliff, looking for a ready-made bridge, a parachute, anything to prevent the catastrophic plunge that Nokia is now taking. I don't think there were any ready-made bridges, and parachutes don't work too well for things the size of a train. Did Steven Elop do well? That is very much up for debate. I'm just not sure there were all that many viable options at all in this situation.

Oh, and regarding Symbian and Nokia, and why the combination was unsustainable:
http://gzostinthemachine.wordpress.com/2011/06/08/the-symbian-myth/

Sergey

There is some strange logic in this post - first, it is stated that NOK has lost credibility with carriers and distributors. Then, it is suggested that ZTE might want to buy the dumbphone business for carrier links and sales channels. Both surely can't be right, either there is value in the sales channel still or there isn't. And I seriously doubt that ZTE could lower its cost per unit by absorbing NOK manufacturing, quite the reverse is likely to be true.

don_afrim@twitter

Agree. Elop must go and they should sue his ass for such a bad job. Tomi, why don't you make yourself available for the CEO job?

I said it many many many many times, Nokia should have bought Palm for it's webOS platform. It would have given Nokia in an instant the platform to compete with iOS and Android. If meego was really such vaporware like many on the inside are saying now then the biggest mistake Nokia did was not buying herself a new and capable platform to work with.

After missing that opportunity, Nokia should have worked in silence on a few Androids and WP7's phones and not announce them until they're ready to ship. They should have still released meego handsets and see how it does in the market, I mean the N900 wasn't that bad after all, it should have been more appealing in design but over all it was well received.

marco

Am I missing something? So many people are pointing out that the problems started before Elop... but surely he could have made the same announcement and the same strategy without totally killing all existing sales on the 11th of Feb? Surely just a slightly different choice of words there would still be some Nokia phones on the shelf? (last time i went to the local Orange shop there were only a handful of Nokia out of so many others - 6 months ago it was a different sight!)

Until recently I was waiting for the right moment to buy some Nokia stock at a bargain price - but if Elop has destroyed the channel relationships, destroyed the people working for Nokia, destroyed the Nokia brand, given up the only differentiating factors, and the WP7 ecosystem is so weak, then there is no hope!

At first I thought he could have made a mistake, and he would rectify it but months passed before he gave a lame statement about supporting symbian till 2016. Did it take him that long to recognise his mistake? but then why not make a stronger statement?

Then I thought maybe he is just very smart, but if he is smart then I don't see a way to profit from his actions... buying nokia stock doesn't seem to be a good move because he must be working towards something else other than a higher share price.

Paul Jardine

I have to admit, I've started saying that Nokia is dead now for a couple of weeks, initially only half serious, but with growing conviction.
WP7 has not sustained any of the early promise, so, even if it is better than other OS out there, which I doubt, it will be a hard mountain for Nokia to climb.
The way analysts and the market as a whole seems to have turned against them, is morbidly entertaining. I now walk past Nokia stores and count the number of customers in them - zero on most occasions now! Even the sales staff look like they are listening to the funeral march.
Nokia needed to switch operating systems but what it did was leap from the Titanic on the promise of another boat on the horizon. The water's cold and sharks are circling.

Eric

Even if there were Nokia phones on the shelf, would people really buy them? It seems that people are turning a very simple situation into a logical quandary. Symbian phones sales were falling off a cliff since last year because it was archaic in the eyes of even the casual consumer. The market hit an inflection point where phones with last-gen UIs (Blackberrys and Nokias) can only sell at cut rates to price-sensitive consumers. I think it's far fetched to suggest any strategy (other than shipping new phones that took a major technological leap!) would have turned this around. Elop really had nothing to lose so his first priority was to cut costs (ie the underperforming software department). Word would have gotten out quickly that Symbian was over with or without the announcement - at least the public and average employee know the roadmap.

cycnus

Tomi,

I agree that Mr. Ollila has to fired the monkey he hired before Nokia gone.

And for those of you that were saying that symbian is not good enough. I bet you guys were american that have not use symbian phone.

I'm from asia, and have use symbian since nokia 3650.
and only a handfull of asian would consider wp7 over android for symbian replacement.
if nokia use wp7, it would lost it's user based.
and it is easier to maintain user based (loyal customer) than to take new customer (american market).

and i agree with tomi. I would consider elop timing is a CRIME. and the share holder need to SUE him based on that.

CapitanSevilla

I just hope that Symbian updates arrive before Nokia becomes bankrupt.

Weave

In my experience the most obvious answer is usually (not always but usually) the correct one.

On the day Stephen Elop made his announcement about killing off Symbian I wrote to the DG Competition Unit at the European Commission stating that I believed this was a deliberate strategy to devalue Nokia in preparation for acquisition by Microsoft. I received a reply on the 18th of February saying the unit will 'closely monitor developments' blah, blah, blah...

I would like to point out to contributors like Vikram that before Elop's announcement Nokia's sales of smart phones was still growing, not as fast as the market as a whole (which is why their market share was decreasing) but they were not in decline.

Also Qt Creator was in beta and was/is better than any other development tool in the mobile arena. Qt Quick also made creating stylish, animated user interfaces a breeze. The lack of a pretty interface is really the only thing Nokia has been lacking.

There was really no need for Nokia to panic, they were doing a decent job of positioning themselves to cause the 'next major disruption'. Now they are a dead man walking and that's all thanks to Elop.

Leebase

The emperor had no clothes. What I hear is Tomi declaring how fashionable those invisible clothes were and how mad he is at Elop for acknowledging the obvious.

All of Nokias plans for the future COULD have worked IF ONLY execution had been what it needed to be. Tomi et. al. are simply refusing to accept that execution had failed despite the promise.

Msft is Nokia's only hope for salvation. It might not work, but what Nokia was already doing wasn't going to work either. Nokia did not have forever to make the best deal it could with Msft. Already Google had no reason to bargain with Nokia.

Elop is making the best of a horrible situation. If it fails, the blame goes to folks like Tomi (but who actually continued in leadership at Nokia) who were looking at the WRONG metrics for success.

Nokia had already lost 75% of it's market value -- before the recent further loss of 46%. But Tomi couldn't believe that such a metric was relevant to pay attention too.

Nokia is a sink hole and like all sink holes, the damage was long building before the final sudden destruction.

Lee

Weave

Elop killed the biggest selling smart phone OS on the planet and replaced it with the smallest and Leebase thinks that's the best plan he could have come up with 0_o

Here's a comparison of Symbian v WP7 functionality: http://www.mobileroyale.co.cc/windows-phone-7-vs-symbian-comparison/

You could create a similar chart of Symbian v iOS and Symbian would win that one too.

If Nokia had a problem it wasn't Symbian.

Leebase

Elop jumped off the burning platform that was Symbian. Yep. Symbian market share was already crashing. Symbian was SOOO bad, that EVEN AS it was the world leader in sales Nokia was looking to replace it with Meego. If Symbian was "all that" -- what was Nokia bothering with Meego in the first place?

Nokia failed on executing with Meego. We'll never know how great it could have been as it simply wasn't going to be there in time.

So. Symbian was in a death spiral and nobody was mad at Nokia for working on Meego to replace it.

Without Meego, what was Nokia to do? Android? Nokia is doing SOO BAD that Google didn't even consider it worth making concessions to get Nokia on board. Nokia could see the writing on the wall for Android phone manufacturers. There's going to be very little profit to be made just like the current PC industry. It's a commodity business.

With Microsoft, Nokia has a _chance_. They got concessions, they got billions in "marketing assistance". They get to make their own changes for their own handsets. And, while sales are small, WP7 is repeatedly given high marks as a smartphone platform.

I remain puzzled only by Elop's announcing the switch a year ahead of time, and making it all or nothing. But the choice to go to WP7 is fairly reasonable given the alternatives.

Lee

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