My Photo

Ordering Information

Tomi on Twitter is @tomiahonen

  • Follow Tomi on Twitter as @tomiahonen
    Follow Tomi's Twitterfloods on all matters mobile, tech and media. Tomi has over 8,000 followers and was rated by Forbes as the most influential writer on mobile related topics

Book Tomi T Ahonen to Speak at Your Event

  • Contact Tomi T Ahonen for Speaking and Consulting Events
    Please write email to tomi (at) tomiahonen (dot) com and indicate "Speaking Event" or "Consulting Work" or "Expert Witness" or whatever type of work you would like to offer. Tomi works regularly on all continents

Tomi on Video including his TED Talk

  • Tomi on Video including his TED Talk
    See Tomi on video from several recent keynote presentations and interviews, including his TED Talk in Hong Kong about Augmented Reality as the 8th Mass Media

Subscribe


Blog powered by Typepad

« Mid-year Update to Nokia Smartphone Forecast to 2011, with View to 2012 and new Microsoft based phones | Main | The Ten Million Dollar Man - Stephen Elop Costs Nokia 10 Million Dollars More of Lost Profit - Every Day He Remains as CEO of Nokia »

July 25, 2011

Comments

jo

now tomi u are not alone on this..


many other analyst are predicting the same microsoft +nokia project its going to turn into a big failure.

microsoft have no marketshare and their phone are given away with a free 360. or free on contract.

nokia it's bleeding marketshare and they have uphill battle in a stronger apple and google.

if microsoft wanted nokia to carry wp7 on brand name by the time it's released its going to be dead brand.

Stanil

As always excelent analysis!
Couple points:
NOKIA will ship(not sell) 1,5M WP7 devices in Q4. Effectively stuffing the channel. Maybe two models one around 150-200Eur, and another 300Eur(Sea Ray).
Symbian will continue to crash even faster, just look at the portfolios of major european operators, it's non existent.
Operators will not allow Nokia to rise to pre Elop days, it's exciting to have several OEMs with comparable market share.
In Q3 HTC will pass Nokia in smartphones.
In Q4 Nokia will have the same martketshare in smartphones as Motorola, SE and LG.
In Q4 Samsung may pass Nokia overall, some say even in Q3 :) , we'll see the trend in couple days.
Operators are hating, realy realy hating, the two SIM phones, Elop is so eager to promote.
In 2012 there will be another OS transition of Microsoft, will Win8 be a smartfone OS, or only PC and tablet OS, or will WP7 continue to be developped? No body knows for sure.
Funny thing is that N9(MeeGo) may outsell N9(WP7) initialy despite the price premium that Nokia is demanding for N9(MeeGo), if ever Elop allows N9(MeeGo) to market :)
Operators are demanding BIG marketing budget for Nokia phones, the ASP will continue to fall, as will the earnings.
In weeks, maybe days, depending of the earnings of Samsung, Nokia will release info of it's tablet, just to garner attention, they may not ship it ever :)

cycnus

Wow Tomi,

You under promise over deliver.
this is a really awesome article.

AF1

Tomi, I like Ur view on mobile market, I like Ur topics and sense of humor. Keep up this way!
One and only thing that bothers me - man, U're typing waaaaaay too much text... I mean, all the thoughts that are under th topic can be shortened easily in half.
Readers are readers, U know. Not everyone will sit still for half an hour reading one topic from all over the net ;)

Peace!
A.

Adrian Bunk

"With Symbian, Nokia needs to pay no royalties. If Nokia had gone with MeeGo, its home-grown OS, there would be no royalty to pay (and bizarrely, even the Google Android option would have meant no royalties to pay). But only the Microsoft Windows Phone smartphone OS option has a royalty that Nokia has to pay. Forever."

Tomi,

while many of the other things you are writing are true, this Symbian/MeeGo to WP comparison is not fair (but the Android one is a point):

Nokia will have to pay royalties forever, but it will also save money in development costs forever.

vvaz

Tomi, you are mistaken in one point. Some (not all - yet?) Android manufacturers are paying royalties on OS to... Microsoft. Supposedly HTC pays 10$ per handset - similar amount to what Apple pays to Nokia in patent royalties.

MS wants 15$ per handset from Samsung and Samsung would agree to 10$. In foreseeable future MS will earn more in Android royalties than on its own OS...

Boris

MSFT profits more from Android than from WP7 now, not in the future ;-).

And even more, I agree with some poster from several days ago when he stated that main MSFT task was to kill Symbian sales, and to sunk MeeGo, as that would prop up Android sales, as they already earn more money on Android than WP7.

Remember, MSFT earned nothing from Symbian sales.

So:
1. Kill Sybian and MeeGo =>
2. Larger Android market share.
3. Profit from royalties from Android manufacturers.

1 billion $ they gave to Nokia is nothing compared to rolayties from Android OEMs.

I am sorry if somebody thinks it sounds like conspiracy theory but this is how real world function (welcome to corporativism).

And I guess the only reason why HTC and Samsung manufacture WP7 phones is because of MSFT patents. To explain, if they refused to manufacture them, they could ban via court their Android phones from USA because of patents. Simple as that.

Youssef Mrabet

I think that there's almost no way Nokia will drawback from its Microsoft strategy today. The only realistic scenario that I can see for Nokia in order to succeed is maintaining a Meego lineup at the high-end in parallel with its Windows Phones strategy. Starting with the N9, and updating it quickly with another similar phone that would sport better hardware specifications, Nokia can show its commitment to this lineup and attract a lot of buyers.

I don't believe in the strategy of marketing several variations of the same product (C7, N8, E7, X7...), cause it proved not being adapted anymore. It's hard to maintain, needs specific and separate marketing effort for each phone, and dilutes the brand image and effort. Moreover it increases the costs without necessarily producing better gross margin.

To efficiently counter-fight the iPhone, Nokia needs a highly visible product that would be almost perfect and efficiently marketed as so. Such a product can really be the N9. Its unique and very simple UI/UX is a real advantage for non geek users, I see it democratizing the multitasking, enabling a larger user base to see its benefits and use it. All it needs is a quick tutorial at the phone's first setup. The N9 also have all it takes to convince the geek and hardcore users, with its open and highly tweak-able linux based OS. Even fashionistas would be convinced by the device's seamless and unibody design.

Nokia needs to hit Apple with its own weapons, simple and practical ads emphasizing the UI/UX and phone capabilities, perfect design, high value... The Nokia brand is falling quickly, but still didn't vanish or become irrelevant, it is still time to do something!

Earendil Star

Just a thought on the hypothesis of Nokia having to pay royalties -on Android- to MS.

This would not have happened. Normally, these royalties are paid if the company has little IP to counter the suitor's (MS in this case) claims.
For Nokia, this means forgetting that it even managed to get royalties from Apple!
Nokia is the INVENTOR of smartphones in the first place, and has such an IP warchest in this field that it is inconceivable to think that they would need to pay anything to MS.

On the contrary! NOKIA COULD PROBABLY HAVE SUED MS AND GOT ROYALTIES ON WP rather than the other way round.

This is the terrible irony: Nokia will now pay MS for royalties on WP, instead of what would probably have happened if they had kept their independence!
Because Elop made no real negotiation with MS. He simply offered Nokia as a gift to MS, as he was supposed to do!

It's a total disgrace, but it must be deriving from a calculated albeit hidden plan.
Hopefully, one day, we will discover what happened behind the scenes in 2010, when Nokia's board chose TH Elop as CEO.
Only then will we understand exactly why Nokia died.

Now, the most likely outcome, is simply that MS will buyout Nokia. It will keep its interesting leftovers (IP, software & hardware technology, know how, carrier relations network, etc.) and sell the rest. This will be much more valuable to MS than having an independent Nokia selling its own WP phones. And the lower Nokia stock falls, the cheaper it will be.

harry in singapore

iPhone/iPad is very successful as of now. Android also.

The world of mobile phones esp on the business users part will get very exciting with more apps and esp Office365.

2 major developments will make business use of mobile phones more pervasive and accepted. One is the corporate acceptance of Cloud Computing and adoption by smaller companies. Second is the increasing user friendliness of the apps. Lots of older businesspeople are really lazy to learn too many things and will appreciate the ease of use. The new kids coming into the workforce, expects the use of SmartPhones and Tablets or something similar. They are not necessarily enamoured or dependent on PC.

These business apps are usually not free and lots of $ can be made, when volume is achieved. $10 monthly for 50 million phones is $500m monthly!!!

With Nokia maps and great stuff from Nokia, the eco from MS could mean a lot of $ for Nokia.

I am looking forward to Nokia Windows Phone; primarily for business use. I will subscribe to the useful business apps and my friends who are not that savvy would gladly have a phone that can help in getting their business and daily process more productive. Music & games and videos for entertainment are nice to have BUT not compelling.

Peter

@tomi, solid prediction, well done.

After years huge investment on R&D, after the lauching of symbian ^3, ovi store, comes with music, free gps for ever, nokia existing and prospectives consumers love them.

nokia management knows it, nokia board knows it, but why hiring the criminal stephen elop to destroy nokia right when it is turning back with symbiam ^3 and leaps forward with Meego ?

My conclusion is the board planned and stephen elop is the man who executed well.

It is not for the interests of nokia shareholders, employees, distributors, and most importantly nokia precious consumers.

with the sabotaging on the back of nokia precious consumers, they won't go back to nokia any more. they are gone forever.

More blogs/predictions do not make any sense any more for nokia when it is full of crime from the board and the management.

now it requires action to sue them in a Finish Court to bring justice back. it is time put Jorma Ollila and Steven Elop into jail. cancel the enslavement of nokia from ms partner agreement.

with new board and new management, nokia can propel itself with Meego and its own mature ecosystem for sure.

Get away, janathan, you are a garbage, no mre post,please.

Tomi T Ahonen

Hi Everybody - thanks for the comments. I will respond to each of you individually as per usual. The only thing is, I will of course not keep any comments by people who did not read the article, so I have removed some who did not read the blog which clearly stated - for example - that the evidence says Nokia Symbian had turned into growth...

Now to the actual comments. I will do these in smaller groups

Hi jo, Stanil, Cygnus, AF1, Adrian, vvaz and Boris

jo - thanks. Yes, its getting worse every day. Also pls monitor my blog, I will shortly blog my calculation of how much Elop is actually costing Nokia every day

Stanil - Thanks. Good views. On the 1.5M shipment number for Q4, I am actually doubtful of that, as Nokia will be ramping up the production, it will come from Taiwan and only sold in limited countries, so I think it would be optimistic to get 1M Nokia branded WP7 phones shipped by Q4. But yeah, 1.5M is still plausibile. I think its quite unlikely they can manage two actual devices to ship prior to Christmas.

About the dual-SIM phones, I hear the same. They are mostly only sold in markets where the handsets are sold primarily through third party resellers - who like them (consumers also obviously like dual SIM) but even in those markets, the carriers/operators hate Nokia and Elop for launching the dual SIM phones and are now punishing Nokia. The problem gets far worse for Nokia as most significant national operators are part of major carrier groups so they can retaliate against Nokia in their full footprint of markets. Again this is something Elop has seriously miscalculated.

As to N9-MeeGo vs N9-WP7 - I totally agree. If Elop were to allow N9-MeeGo to be released in all major Nokia markets, it would certainly outsell the Microsoft version, because the carriers would love to sell a highly desirable non-Symbian Nokia phone but don't want to sell Microsoft. So both they would suppress the WP7 version N9 sales and would promote the MeeGo version. I am sure Elop knows this, has heard this, and still he obstinately refuses to release MeeGo to the main markets. He is simply a coward, he fears if MeeGo is a success, Elop is seen as a failure and incompetent.

Also good point about operators punishing Nokia with marketing budgets. We saw Nokia smartphone marketing shot up 6% in just one quarter and they've slashed after that, their prices by 15% - I am sure when Q3 results come out, the marketing costs of the smartphone unit have again shot up considerably more. Good stuff Stanil, thanks!

cygnus - thanks! Wait until the next installment. I am building a really robust model 'beyond any reasonable doubt' of what is the real cost that Elop is now inflicting on Nokia as permanent irreversable damage... I hope to post tomorrow

AF1 - I hear you. I wish I had the time to edit these down for shorter articles, but please note, AF1 - there are no ads on this blog, you are not charged to read it, and you are not asked to register. I ONLY do this blog out of a hobby and an interest in sharing. I have a day job, I cannot spend days editing the long analysis pieces down into shorter articles like a professional journalist could - honestly, I don't have that kind of time. So please accept, this is the best I can do - and I challenge you to find any other blog with more data, facts, stats and analysis of our industry for free, than mine haha. The 'cost' for you is, sometimes the blog articles may be long. I also warn readers when it is a long article..

Adrian - first, it is factually true that Nokia did not need to pay royalties for Symbian and MeeGo but does now have to pay WP7. But if you argue that there are cost savings, fine, that is a fair point - but I would counter that it is now beyond Nokia's control - they will often have to make changes - or suffer the consequences - of Microsoft making changes - and the R&D of Nokia handsets is certainly more expensive in the short run due to radically different hardware component requirements than before. Maybe over time some savings can be generated, I would argue that would also have happened with MeeGo with the exception, that Nokia would have been in charge and could have directed that evolution to provide Nokia-oriented gains, rather than for example Microsoft own (own staff) or Nokia-rival ie Samsung, LG, HTC etc gains.

vvaz - royalties for patents are a different issue from royalties to use the OS. Nokia has the deepest patent portfolio in smarpthones -look at Apple, it is suing the others, but it settled with Nokia and pays Nokia. Nokia typically negotiates reciprical deals - so it would definitely not be paying anyone - until this ridiculous Stephen Elop-negotiated deal to pay Microsoft into perpetuity. That alone is reason to break the alliance and get rid of Microsoft now, that it has become obvious that Microsoft can never restore Nokia to reasonably strong sales.

Boris - good points. Microsoft knows all about royalties, they get all those royalties from Microsoft Windows sales and Office sales etc. Why is it that essentially all major manufacturers have gotten frustrated and broken their relationships with MS, from HP and Apple on down. Its their ruthless war on the royalties front. I totally agree with your comment, yes MS knows what it is doing. (But Nokia doesn't. They are the lamb being led to the slaughter-house)

Thank you all for the comments, keep them coming, I will return with more responses

Tomi Ahonen :-)

Asko

@Jonathan In many companies the CEO will prepare and present his proposal as strategy to the board and then the board will decide if they adopt the strategy or if they require some changes to it.

So it is very likely that Nokia's strategy has been written by Elop and he has managed to sell it to the board by being an excellent used car salesman.

Giovanni

Hi Tomi,
we all know Elop previous employer, but what about the BOD members? Ultimately it's their duty to monitor the CEO behaviour so if they don't act then they approve. But why they approve those catastrophic situtation? Who are those BOD members? Their relationships with MS and/or american corporations?
At the end what we're seeing is a (purposefully driven?) shift from european leadership (symbian) to american one (iOS, android and tentative to add WP). Initially it was only stated (even if untruth) but now it is real.

Day by day the conspiracy theory become more and more the only one able to explain the current situation. But can't be Elop alone, there must be the BOD involvement. I think that bloggers like you should press not only Elop but also the individual BOD members

Brendan

"Symbian will continue to crash even faster, just look at the portfolios of major european operators, it's non existent."

That's a ludicrous statement. It's all Nokia have at the moment. The problem is, as Tomi mentions there seems to be some kind of operator boycott of NOKIA in effect. The don't want to promote Nokia phones because they see it as a waste of their time.

jabra

Please Tomi, it's nice to read you but is it possible to improve your layout webpage? It's hard to browse between your articles: all the text are black, it's impossible to distinguish one article from an other.
Thanks.
(sorry, i'm not english native speaker)

Stanil

@Tomy Again thanks for the excellent and thorough analysis and response.
You’re too kind on NOKIA, the byproduct of food digestion (Elop) has hit with terminal velocity the air pushing device :)
NOKIA circa 2012(IF there’s an independent NOKIA by then) will be a very different beast compared to NOKIA 2010-2011.
History will decide what was the worst: hiring Elop or ousting Ansi :(

Crowbar

Tomi, you're making the mistake that a same-ol'-same-ol' strategy for Nokia would have worked out in the long run. Fact is that Nokia was losing marked share in the smartphone space constantly. Sure, we had good times the the N95, but once the iPhone and especially Android hit, it was game over:

http://www.asymco.com/2011/05/22/other-vendors-sell-10-of-smartphones-but-30-of-voice-oriented-phones/

Claiming that Symbian^3 could be competitive with iOS or Android is delusional. Even if it were, there are so severe execution problems in Nokia to deliver any update for Symbian it doesn't matter in the end. Resellers boycott Symbian devices because they don't sell, period. The X7 was cancelled by AT&T because customers in market studies have simply ignored it.

And again on your Meego argument, you still fail to realize that the N9 with Harmattan was turned into a zombie already 2010 when Meego was introduced. The N9 has had since then no future on the roadmap, since it is not a Meego device (despite all the marketing speak).

If you're looking for a comparison, Apple around 1996 is apt, as would be Netscape at the beginning of the browser wars. The mobile industry was disrupted by Apple and Google, and there was no turning back the clock.

As a Finn, you also must have read this series of articles from 2010, which reveals the real depth of the problems at Nokia:

http://www.hs.fi/english/article/Knock+Knock+Nokias+Heavy+Fall/1135260596609

John Phamlore

Tomi and Crowbar,
According to this article:

http://www.theregister.co.uk/2011/02/16/nokia_had_choices_but_couldnt_take_them/page2.html

in 2002, around the time when Nokia's true troubles of warring divisions began, Linus Torvalds had consulted with the company and convinced it to create a competing division within Nokia that would by necessity create a civil war within the company over the OS of the future.

It is astonishing to me that no one has connected the dots (not even TheRegister) that the creation of a Linux "skunkworks" by necessity would force the company to change its corporate culture from one of cooperation to one of competition between divisions.

The destruction of a great company because of a religious war in OS design over the use of microkernels is going to go down as one of the most pathetic moments in modern Western history.

John Phamlore

Tomi,

You may be the only one who can answer an alternate hypothesis I have about Nokia's problems, so please bear with me in this argument.

Not too long ago I would have argued that Nokia's existential competitor, the competitor who would have loved to have destroyed the company, was not Microsoft but was instead Qualcomm. I believe in 2008 Nokia and Qualcomm settled patent litigation. That to me was the point of no return, because Qualcomm was able to purchase from struggling AMD its mobile graphics unit and create a complete ARM SoC. Is it a coincidence that the first phones for Windows Phone 7 ran on Qualcomm ARM SoC's?

If we combine the strategies of Nokia's more successful competitors today, early in the 2000s Nokia should have been planning to create its own complete ARM SoC solution including graphics, one that could be extended eventually to tablets. As Nokia would have had its own hardware solution it would have not needed to have considered Linux because portability to other platforms would have been completely irrelevant. Instead Nokia should have simply extended Symbian, perhaps employing former BSD developers like Apple did not Linux zealots from Qt.

I can't help but wonder if TI is once again involved in the demise of a great tech company, now Nokia, then Sun. I believe once upon a time Sun was known for being the server manufacturer who did not own its own fabs but contracted out the work to TI. The problem to me is that TI concentrates only business lines that it can completely dominate. If TI doesn't think it can win going head-to-head vs. say Intel in fabs, it won't, which in my opinion killed Sun because Sun simply couldn't bring out fast enough the servers that would have exploited Java's multithread features. With all of the other ARM SoC contenders for phones and tablets, does TI really intend to devote much more energy in what in the end will only be a stalemate at worse, or will they instead try to dominate businesses such as analog technology?

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Your Information

(Name and email address are required. Email address will not be displayed with the comment.)

Available for Consulting and Speakerships

  • Available for Consulting & Speaking
    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

Tomi's eBooks on Mobile Pearls

  • Pearls Vol 1: Mobile Advertising
    Tomi's first eBook is 171 pages with 50 case studies of real cases of mobile advertising and marketing in 19 countries on four continents. See this link for the only place where you can order the eBook for download

Tomi Ahonen Almanac 2009

  • Tomi Ahonen Almanac 2009
    A comprehensive statistical review of the total mobile industry, in 171 pages, has 70 tables and charts, and fits on your smartphone to carry in your pocket every day.

Alan's Third Book: No Straight Lines

Tomi's Fave Twitterati