Lets do some Nokiamyths! New and improved: Now fortified with Facts! I have recently looked at Nokia CEO Stephen Elop performance, and frankly have called him incompetent and fit to be not just fired, but to be sued for mismanagement of Nokia. Please allow me my opinionated views from time to time. As I am Finn and am an ex-Nokia executive, and Nokia has kindly supported me with tons of consulting work over the past decade since I left Nokia, and I have tons of friends still working there, I have a passionate personal connection with the biggest mobile phone maker of the world. And no doubt, that has colored some of my observations about how Stephen Elop has run the company recently. This blog is not about Elop's failings. This blog is about Nokia's survival. I am loyal to the bone. Not to the boneheaded management style of Stephen Elop. I am loyal to Nokia. And I don't want Nokia to die. And even more than that, I believe Nokia stood for many of the better aspects of business, they always championed open systems, of partnering, of ecosystems, of a migration from hardware to software, of becoming an internet-like company.
So there are some myths about Nokia, its smartphones and its ecosystem, that need to be cleared up. This is my blog to expose those myths. And sorry, this is another long blog, but these are complex issues and I want to deal with them thoroughly, not superficially. And where we deal with myths, as you've no doubt seen on Mythbusters, the matters have to be examined in detail.
Understand that Nokia is no stranger to change, it was once a papermill and rubber factory. As a kid if Finland I wore rubber boots made by Nokia and our family car had tyres with the Nokia brand. Toiletpaper was made by Nokia etc. So for Nokia to face its transition from making voice-oriented basic mobile phone handsets, to inventing the smartphone, and then guiding that change from enterprise/business oriented smartphones (like the Blackberry) to consumer-oriented smartphones (like the iPhone), that transition too was invented and pioneered by Nokia. If you are addicted to Angry Birds and download tons of games to your smartphone, the company that dared to put 'frivolous' videogames on 'serious' tools like a telephone - was of course Nokia. And if you think Apple's App Store that bypasses mobile operators/carriers and sells those games directly to your phone is a great idea. Have a guess where Apple got that idea? Nokia pioneered that too with what was then the biggest app store and the most content you could buy to your smartphone completely bypassing the carriers, for a smartphone called the N-Gage.
But Nokia is a massive global organization of 120,000 employees making 58,000 US dollars of revenues (and 2,400 US dollars of profits too) last year. That kind of ship does not change course quickly. Nokia was however, managing the transition from cheap basic phones to smartphones by far more successfully than any of its traditional rivals, Motorola, Samsung, LG, SonyEricsson etc. Each of those four had experienced at least some quarters of loss-making while Nokia's handset unit had never produced a loss in Nokia's history. And better than that, Nokia led all of its rivals in transitioning from 'dumbphones' to smartphones - Nokia was the only handset manufacturer which had for every single year, a better market share in smartphones than it had in its dumbphones unit. So when Nokia was transitioning from the old to the new, Nokia was 'picking up' new customers, not 'abandoning existing' customers like for example Motorola, LG, SonyEricsson etc did regularly (and these three were frequently reporting a loss too).
IMAGINE IF APPLE ENTERED AS A RIVAL TO YOUR COMPANY
The problem for Nokia back then was two-fold. First there was Apple. Before Apple, everybody loved Nokia. Nokia had the best customer loyalty, Nokia had the best user experience, Nokia had the coolest features and everybody wanted a Nokia. Nokia also sold some of the most expensive phones (under its own Nokia brand, the iconic N93 cost over 1,200 US dollars in unsubsidised form ie without 2 year carrier contract) and even launched a luxury brand called Vertu if that was not enough. But when Apple launched its iPhone, suddenly Apple became the darling of the industry and everything Nokia did fell into that shadow. And Nokia honestly speaking did not know how to deal with that change. First it tried to ignore and belittle Apple saying things like the original iPhone was not even a 3G device etc (which was technically true but consumers loved it anyway). Then Nokia embarked on a bizarre path to try to be like Apple, now resorting to designing iPhone look-alike phones like the N8 and N9 with iPhone-like touch-screen operation etc.
And the devastating effect of the 'Golden Age for Apple' is that someone was going to get hurt in that process. Some forget that less than two decades ago Apple was near bankruptcy. But now Apple makes the biggest profits of any tech company, by a wide margin too. So soon we had the casualties to the iPhone: Palm. Died. Microsoft's Windows Mobile. Killed by Microsoft. Google's Nexus One, the so-called 'superphone'. Died. Microsoft's Kin phones. Killed by Microsoft. Now in trouble and on life-support: RIM the maker of the Blackberry.
The only major smartphone maker of 2006, before the iPhone launched, that seemed oblivious to the rise of the iPhone was.. Nokia. Yes. The conventional wisdom says Nokia is dying because of the iPhone. That is totally mistaken. Nokia was plugging along very happily through the first two years of the iPhone as the others fell by the wayside. Who came along two years ago? Google's Android. It is not the iPhone that is killing Nokia, it is Google's Android. Take the numbers and plot them over time. Nokia was sustaining strong growth alongside the iPhone's strong growth from 2007 to 2009. It was not until the Androids came along, that Nokia started to falter. And as Android picked up speed in 2010 to 2011, that is when Nokia's bigger troubles started.
But back to Apple. Apple made the profits! Nokia had been a profit factory. Many quarters it was almost a given, that Nokia easily made bigger profits than its 5 nearest competitors added all together. The investors liked to think of a few ironclad certainties: Nokia towered over its rivals in handsets. Nokia towered over its rivals in smartphones. And Nokia made the biggest profits in the mobile phone industry. That all started to crumble with the iPhone. Now Apple makes far bigger profits than Nokia in its best days. And Apple sells less than one fourth the number of handsets than Nokia. The timing for Nokia's transition from 'dumbphone' maker to smartphone maker could not have been less fortunate, than to face Apple's sudden interest in mobile phones, from 2007 to now. If there was no Apple, most analysts would look at Nokia's transition and applaud it for being the only major handset maker to make it through the most difficult time in the global economy of our lifetimes, and do that profitably while holding onto most of its market share. Compared to Motorola (which was ruined and had to be split) or SonyEricsson or LG, Nokia is pure gold. Even compared to Samsung, Nokia comes out smelling very good most of the recent quarters, head-to-head.
Nokia utterly failed to win the mindshare battle compared to Apple. The truth is that of the first 12 changes and improvements made to the original iPhone (from 2G to 3G to 3GS to 4) and to Apple's iOS operating system - and I don't mean trivial upgrades, I mean the big changes that Apple itself highlighted in its press releases when celebrating its latest edition - 11 of those existed on Nokia's bestselling smartphone from before the original iPhone. I am not saying Apple isn't the best at user experience - of course it is. But the perception that many people have, that Apple is the innovator in the mobile industry, is simply not true and all major mobile industry experts acknowledge, Nokia is by far more innovative, has been in the past, is now, and is still today leading Apple by a mile. As you may have noticed, a few months ago, Apple settled its patent lawsuits with Nokia and who is paying whom? Apple paid Nokia not just a big lump sum, but now pays royalties for every iPhone sold. Who is copying whom.
That is the facts. Nokia was hopeless in the PR battle against the master of the tech space, Steve Jobs who mesmerizes his audiences. Against that, Nokia rolled out Finnish - at best we can say 'wooden' speakers like past CEO Olli-Pekka Kallasvuo, who would do very engineering-oriented and boring presentations that inspire nobody. Nokia has a tech leadership in mobile phones with current patents and innovations that is a mile long. Even today, look at the latest phones just coming to the market from RIM and in the Android family, and rumored for the next iPhone 5. Take Near Field for example - a critical element for mobile payments and the mobile wallet. Nokia not only sells Near Field enabled smartphones today, Nokia is so far ahead in mobile money and payments, Nokia Money has launched in several countries such as India, the world's second largest mobile phone market (China is the biggest). But Nokia lost the 'mindshare'. Reality doesn't matter, it is the perception of reality which only matters. And the perception was everywhere that Nokia is falling behind Apple. Even in Nokia's home country of Finland, the tech analysts regularly celebrate how advanced Apple is, and how much Nokia is losing it.
THE ONLY FUNDAMENTAL PROBLEM WAS EXECUTION
If the problem of Apple was external and a PR disaster, the other big problem Nokia had, was completely home-grown. Nokia had grown fat and inefficient and notoriously bad at its execution. One delayed phone launch followed with the next delayed even more. Phones shipped with problems, software fixes were delayed and the mess kept getting worse and worse. By the time of the N97, Nokia's flagship phone for 2009, the situation had gotten so bad that Anssi Vanjoki admitted in public that the phone was a fiasco and Nokia had totally messed up its release. Anssi then pledged not to repeat that mistake again. So what we got in 2010 was the delay of literally 12 months of the launch of the next flagship phone, the N8, which was originally scheduled for Christmas 2009 sales but was delayed three times and hit the stores for Q4 of 2010. While the N8 was a highly successful Nokia new phone launch and highly praised and remarkably bug-free for a first edition (having had a year of internal repairs) - it was also mentioned by many, that if it had been launched when originally intended - in late 2009, when its rival would have been the Apple iPhone 3GS - the N8 would have been legitimately called an iPhone killer. Now, in 2010, against the iPhone 4, the N8 was just another iPhone clone, but one with a darn good camera, yes.
So Nokia's real problem was execution. Execution execution execution. And when Stephen Elop was hired from Microsoft, a man who worked in the software industry, and Nokia was seen to be transitioning from a 'box mover' handset hardware maker, to a 'software company' and where most Nokia execution problems related to managing its software, a new 'outsider' from the software industry seemed to be exactly what Nokia needed. Stephen Elop, the man from Microsoft, if anyone, should be able to streamline Nokia and make it efficient in delivering the software parts of the phone business. Nobody could argue that Nokia was by far the most efficient manufacturer of the mobile phone hardware, thats a given. So Elop was seen as the answer to Nokia's 'execution' problems. And as he was 'US trained' and clearly a gifted speaker, Elop as CEO could help fight back some of the 'mindshare' from Apple (and Google) to get Nokia more fairly recognized for its leadership.
WHAT WAS NOT BROKEN
Then the conventional wisdom says some of the following: The Symbian operating system was obsolete and failing in the market. Nokia was losing the war of ecosystems. The battle had shifted from selling hardware to winning the apps race, the race of the app stores. And that Nokia had no future on its path, and had to abandon Symbian and select either Android or Windows for its future. That all sounds very reasonable and it seems also that the facts even as we speak, confirm all those beliefs.
Now the truth. Nokia is not a pure smartphone maker like Apple or RIM or HTC. Nokia cannot afford the luxury of making one super-premium smartphone like the iPhone, and only sell that. Nokia has factories in 9 countries (Apple doesn't even own a phone factory, its iPhones are made by subcontractors in sweatshops in China). Nokia has carrier relatinoships with almost every one of the 600 carriers/mobile operators of the world, which means a huge sales organization and even bigger distribution network. When I provided some consultancy for DHL the parcel delivery company (who ships phones from Nokia factories Nokia resellers worldwide) we calculated that Nokia was shipping one million new phones every single day (Saturdays and Sundays included) - and this was years ago. So Nokia does make premium phones that cost 600 dollars like say the E7 now, a flagship smartphone in the class of the iPhone (by price, obviously not in the same class by desirability - nobody is as desirable as Apple) or say the new Samsung Galaxy S II. But Nokia also sells ultra-basic phones that cost 50 dollars that sell in Africa, in India, etc.
Nokia cannot be (fairly) compared to pure smartphone makers on Nokia's smartphone strategy. A pure smartphone maker like Apple, RIM and HTC, will have all of their phones on their smartphone platform(s). Nokia sells far more 'non smartphones' and has a vast loyal global customer base who buy Nokia brand again and again, but who today cannot afford to even consider a smartphone. Nokia cannot stop serving those markets. Nokia would lose four fifths of its business! And here is the most relevant argument - essentially all mobile phone industry experts now agree, that all mobile phone 'dumbphones' will evolve so, that before this decade is done, they will all be classified as 'smartphones'. Much like early DOS based basic personal computers would evolve and today all computers run on something like 'Windows'.
Nokia faces a totally different challenge than Apple, RIM or HTC. Nokia has to design a transition strategy - how to transition ever more of the low-cost 'featurephone' users from dumbphones to smartphones. That means, first of all, that Nokia has to find ways to mass-produce lower cost smartphones. Then it means, that Nokia has to continue to be a brand leader in the low-cost segments, to keep the loyalty of the dumbphone buyers of today, to get them to upgrade to smartphones some time in the future. And Nokia has to manage a continuous process of getting mid-prices phone users to 'upgrade' to Nokia branded smartphones. This is an iterative process, Nokia has to bring ever cheaper smartphones to the market, and then continue to successfully transition more of the ever-lower-value customers to become first-time Nokia smartphone users.
If Nokia is successful in this transition, it will be seen to have won three cycles of the mobile phone industry - the first was analog phones, where Motorola first ruled, but Nokia took the crown in 1998. The second cycle was the digital phones, where Nokia obviously won being so dominant, it was often as big as the next four biggest rivals put together (and making more than half of all profits by all handset makers of the world). Now we see the third cycle, that to smartphones. But, no matter how great a premium smartphone Nokia might be able to produce, as an 'iPhone killer' for example, if Nokia fails in transiting its existing dumbphone user base to smartphones - and this is taken by one of Nokia's main rivals like Samsung, LG or ZTE - then Nokia will be seen to have failed the industry transition, regardless of how good or bad its luxury flagship phone might have been. If Nokia fails to transition its dumbphone users to smartphones, then Nokia will collapse as a dynosaur, its cost structures overwhelmingly destroying what is left.
The battle for Nokia is the battle of the mass market. The rival is not Apple. Apple sells 4% of the worlds' phones. Nokia's main rival is Samsung who sells over 20% of the worlds' phones and is closing fast on Nokia to challenge Nokia for number 1 status. To use a tired analogy, Nokia is like Toyota, selling everything from Lexus luxury cars to Toyota Camry taxicabs to Corolla family sedans to MR2 sports cars to HiLux pickup trucks to Land Cruiser serious off-road vehicles. And many many more. Apple is like Porsche, who do rare updates to what is essentially only one model in one form factor for the ultra-luxury segment. They are very desirable, with huge passion of their customers and incredible loyalty. And their profitability is second to none. But Toyota would be destroyed if its management suddenly tried to position the Toyota corporation, its dozens of factories worldwide, its tens of thounsands of dealerships etc - to make one iconic sportscar to rival the Porsche and quit selling all other types of Toyota cars. It would be corporate suicide.
THE RIGHT STRATEGY, 95% COMPLETED
If you are an analyst who looks at the smartphone in your pocket as a kind of pocket computer and internet device and gaming device with tons of apps, and you think the battle of the smartphone is a 'battle of computers' then you can very well see that Apple is clearly a big winner in that battle and Google Android is a clear winner and Microsoft is a likely strong player for the long run, as is likely Hewlett Packard with Palm. And if you see most Symbian based phones of the recent past, and even including the current crop, you will probably see that Symbian is tired and honestly does not have another decade in it. Symbian was designed as a PHONE first, and computer second. Symbian was conceived at a time when screens were tiny and the standard interface was the keypad of the phone, or a stylus. Touch screens were not seen as viable at the time. The modern smartphone operating systems were designed to be touch-screen operated and function far better as computers - and perhaps even ironically, most are far less user-friendly as 'phones'.
It would be fair to judge Nokia and Symbian to have fallen behind 'irretrievably' in the race to win the pocket. But that is NOT what Symbian is, or was meant to be, for Nokia's smartphone strategy. Nokia has to transition its dumbphone customer base to smartphones. To CHEAP smartphones. Then over time, building on its loyalty, migrate those customers to ever more powerful - but still Nokia branded smartphones. If they ever reach the 5% or so of the planet's population who can afford an iPhone, then yes, Apple will be taking a lion's share of those premium customers. But Nokia is in the mass market space. Nokia needs to keep its lead in the less-affluent markets. The smartphone owners who cannot afford more than 300 dollars (a typical Blackberry) or less. The average price of Nokia smartphones sold last Christmas was 200 dollars. Average price. Many of Nokia's lowest cost smartphones now cost under 100 Euros (under 130 dollars).
Symbian is Nokia's low-cost smartphone platform, for the mid-term time frame. Symbian is truly an old OS in many ways, and has many faults and is notoriously bad for developers to make applications for example. But one of Symbian's best features is, that it is of all current OS's (except Samsung's bada) the least demanding of the system resources. Symbian runs happily along with modest power CPUs and with minimal onboard memory. This means, that for like-for-like features and abilities, a Symbian based smartphone can be manufactured at significantly cheaper cost, than any rival Android or Windows or Blackberry or Palm or iPhone. Remember the mission for Nokia. It is not to somehow match Apple. Nokia's mission is to bring smartphones to the masses in this decade and to continue to be the biggest at the end. That means.. low cost smartphones!
The pundits punish Nokia for Symbian not being a match for the iPhone. Its like punishing Toyota for the Land Cruiser not being able to win a drag race against the Porsche 911. Thats a bit unfair. What about the jungles of Brazil. Want to try your Porsche ground clearance there? What of the deserts of Africa? How quickly is the Porsche stuck on a sand dune. Or just take a family. How well will the wife and kids and dog fit into your two-seat sportscar? But the Toyota Land Cruiser happily moves lots of people and their dogs and bags and stuff safely from one point to the next, whatever the condition of the roads - or lack thereof. Its not a fair comparison. Symbian is not 'supposed' to be a match for the iPhone (or Android). Symbian is the OS to power Nokia's cheap mass-market smartphones, for those customers who of course would want to buy a cool ultra-desirable iPhone but will settle for a Nokia.
That doesn't mean that Nokia can sit still. It doesn't mean that Nokia can be complacent. But it does mean, that Symbian should be judged in its intended target market - and in its price bracket, Symbian blows all rivals away. Just like Toyota, go to Nigeria or Indonesia or Brazil or the outback of Australia and start to count how many Toyota vehicles you see (and compare how many Porsches haha).
So you say but there is America, Europe, all the wealthy countries and a huge affluent client base who are growing tired of Nokia and abandoning the brand in favor of iPhones, Androids etc. Yes. That is true. Even with all the updates to Symbian, it was not able to be fully competitive to the iPhone or Android. One should note, Symbian keeps evolving and improving. While Palm - DIED - while Microsoft's 10 year project Windows Mobile - DIED - while Blackberry is dying - Symbian was still holding on quite well for an old-timer. The Symbian S^3 operating system (on the N8 and E7 for example) is considered a very worthy touch-screen optimised OS. Not as good as the iPhone or Android, but far better than the rest. How good is good. This latest edition of the old dog Symbian managed the very rare trifecta in Q4 - Symbian based Nokia smartphones grew unit sales - AND grew average sales prices - AND grew profitability. Usually for you to grow sales, you have to drop prices - and the average Nokia price drop per quarter is about 7%. Now new Symbian managed a jump of 14%, a Nokia record in fact. And profits? Yes, Nokia profits leapfrogged up 68%! In one quarter!
This is absolutely impossible if your customers think that your product is 'obsolete' or 'undesirable' or 'not competitive'. Absolutely impossible. If you increase sales and it was not done by lowering price, usually then you have to increase your marketing efforts, big advertising campaigns etc - but not in Q4. Nokia grew Symbian sales while also increasing its profitability. Not by big expensive marketing campaigns.
I am not trying to sell you any cooky idea that Symbian S^3 is somehow now an iPhone killer. Of course it isn't. Nokia did grow Symbian sales and average prices and profits in Q4 yes, but the growth in unit sales was not at the pace of the industry growth (but growth in average sales price, and growth in profitability far exceeded the industry, so Nokia was perhaps not prioritizing correctly - this goes again to 'execution' rather than any claim of a 'failing' operating system), so Nokia lost market share even in that good Q4 of 2010. While Nokia was growing less fast as the industry itself - meaning Nokia was gradually losing market share - this too is a bogus crticism. Would you be critical now of Apple's iPad? What if you look at the iPad market share and see it is declining. Is Apple somehow doomed? No. It is making oodles and bundles of profits with the iPad and the iPad is selling many times over more than any of its rivals.
The same was true of Nokia's Symbian based smartphones. Nokia invented the smartphone, 15 years ago. Nokia thus started with 100% market share. Then when others joined, Nokia would lose some of that market share. That is inevitable. First there were few who dared to venture into the smartphone space. If you remember Compaq and Sendo and other pioneers (like Palm). Then we have RIM and HTC and SonyEricsson and others. By 2006, the year before the iPhone, out of the Global 500 biggest corporations of the planet, 7 were manufacturers of smartphones. That is a lot of giant competitors for Nokia. Have a guess how many there were by 2010? After the massive visibility and success of the iPhone, the smartphone market had become so intensely competed, that 23 - yes 23 - of the Global Fortune 500 corporations had become smartphone makers. In terms of giant brand corporations, the smartphone market is perhaps the most competitive industry that ever was. You can't find 23 car manufacturers in the Fortune Global 500 haha, nor 23 airplane makers or 23 home electronics brands etc.
2010 was so severely competitive in the smartphones space, that on this blog I called it the year of the Bloodbath, and we tracked here how the mighty fell (like Palm, like Microsoft's Kin) and how new rivals jumped into the game (like Google, like Vodafone) and how even the new rivals fell (like Google's Nexus One or yes, Microsoft's Kin). In such hypercompetition, if you are the global market leader - of course you will see market share erosion. But this is the part that should shake some readers. Today Apple and Samsung (most likely) have passed Nokia as the world's biggest smartphone maker (due to Nokia's mismanagement, mostly). How 'badly' was Nokia doing in 2010. As late s the fourth quarter of 2010, Nokia was not just the world's biggest smarphone maker by a huge margin - Nokia's (Symbian based) smartphones unit was bigger than all Apple iPhones and all Samsung smartphones, added together! That is market dominance! And Nokia was doing this, in the most fiercely competitive era of smartphones, in one of the most competitive years of any industry, all the while producing healthy profits. Its smartphone unit - get this - grew profits by 68% from the previous quarter. That is what we call a slam dunk.
Yes, Apple was growing. Yes, Google's army of Android smartphone makers was creeping up on Nokia's alliance with Symbian based manufacturers and yes, HTC is out there doing very well as is Samsung. But the honest truth is, if you ignore the hype, look at the numbers. Nokia sold 28.3 million smartphones just in Q4 of 2010. Nokia's market share was 29%. Apple sold 16.2 million (16% market share) and Samsung sold 10.5 million (11% market share). Ford would dearly love to be bigger than Toyota and Volkswagen - combined! Thats the truth. That is not a 'losing' platform. That is sheer market dominance. Yes, the trend line has been downwards, but that will ALWAYS be so, for anyone who invents a new industry and starts with 100%. The trick is to stay bigger than the rivals. And Nokia had easily stayed bigger than any of its rivals in smartphnones - for 15 years straight. For 60 straight quarters. That is a not a winning streak. That is a dynasty. And still only six months ago, Nokia (smartphones) was comfortably bigger than Apple and Samsung (smartphones) all added together.
Everyone, including me on this blog regularly, and including Nokia management years before Stephen Elop came along, has said that Symbian is not viable for this decade. It is too old and complex and fragmented, it was not designed for touch screens and the mobile internet and apps. So Nokia did what any smart company owning this market would do. It built a replacement operating system.
Lets be clear about something. If you do things the 'right' way as the technology purists say, for long term viability, how do you develop a platform? You make it an open system, open source and you build it with competitors, for use not only by you, but also by your competitors. This is 'textbook' the right way to achieve a long term success. The alternate is to make it proprietary, closed and only limited to your own brand. That kind of super-closed system allow much faster development and short-term competitive advantages and technology leadership but will always lose to the open systems in the long run. Look at Sony Betamax vs the VHS alliance in video recorders for example. Or close to home, how one Apple Macintosh PC on only Apple brand, was overwhelmingly beaten in market share by the vast army of Microsoft-compatible PC makers running on Windows.
Now. We can see how Apple runs its iPhone operating system iOS. It is closed. It is proprietary and it is not licensed to anyone. That is how RIM runs its Blackberry. What of Nokia? With Symbian - remember this is nearly a decade before anyone had touched an iPhone - at the time, Nokia invited all of its biggest rivals - Motorola, Sony, Panasonic, Siemens, Samsung, Ericsson etc - to come and build it together, and it was called Symbian. And Symbian is of course open source and at its peak there were two dozen brands who licensed Symbian based smartphones. Nokia invented the smartphone. It could have gone the 'Apple route' to smartphones and dominated the tiny market in the early part of the past decade. But if Nokia didn't do this with Symbian, someone else would have (like Microsoft would try later, and Google would succeed now).
So. That was Nokia 1.0. What did they learn in the past decade of building smartphones. Well, they learned that the new OS needs to be touch screen of course and web optimised and support apps etc. But as the operating system development? Did Nokia learn anything. Two powerful lessons. First, Nokia was studying the PC landscape and saw that Microsoft's dominating position in the PC market was being eroded by an unanticipated disruptor - Linux based open-source, crowd-sourced and free - operating systems. So Nokia decided its 'next generation' operating system would be all the best that Symbian had been, but would be Linux based. And so Nokia developed its Linux based smartphone OS called Maemo, and released its first smartphone on it called the N900 in 2009. Maemo was heralded as a bold move, very advanced, very smart, very user-friendly and very promising. But the N900 was a costly smartphone and as Maemo had almost no apps, this was seen as a development phase, to seed the market and start the migration process.
And for those doubting Thomases who might now interject, that a Linux based smartphone operating system is a moronic idea, it can never fly - the Google Android operating system is also Linux based. So there. Taken 45% of the world's smartphone market already in just over two years. So shut up.
A funny thing happened on the way to Maemo. Nokia had been partnering for a long time with Intel in various mobile-related projects. Intel had wanted to come into mobile in a more forceful way, and had been developing its own Linux based smartphone OS, also of course open source and all that. It was called Moblin. So some smart heads got together, and Nokia felt very comfortable sharing the OS development with Intel (remember, it had worked with many direct rivals in Symbian, so this was far 'easier') and thus they merged their projects and MeeGo was born. But this change did cause some delays in the development of Nokia's own Maemo based systems and the related handsets. (Nokia's problem again - is not the software or mobile skills or mobile strategy itself, it is the execution. These kinds of delays are costly). But the benefits of Intel's partnership were seen as far better as Intel brought also many major brands into the new MeeGo family. Nokia knew its OS would be far stronger, if it powered many non-Nokia branded smartphones as well as tablet PCs, netbooks, TV sets, car systems etc.
And then Nokia studied transitions in technology. How was it, that when the Macintosh PC came along and totally transformed the PC indsutry, how could the legacy market leader, Microsoft, take its obsolete DOS operating system, and achieve same level of market dominance in the new Windows era? Why didn't the Macintosh crush Microsoft when that was built on DOS. It was something very special that Bill Gates did with Microsoft in the 1980s. He built a migration path. The secret to keeping your market share going from one obsolete platform to a newer 'next generation' platform - after your market has been disrupted by Apple no less - is to have a migration path.
Migration paths are not cheap. It cost Microsoft Billions to create several editions of DOS with Windows, Windows with DOS, Windows with DOS embedded and finally only Windows. But Microsoft did it, and has reaped not one decade of the best profits in the software industry, but three and counting. And with that migration path, Microsoft, when led by Bill Gates, actually defeated Apple in the desktop and laptop PC era - the only company ever to manage to do so.
So what do you think Nokia did? Of course Nokia did the right thing. They built a migration path for their developers, to go from Symbian to the new Nokia Linux based operating system, MeeGo, using a set of application development tools called Qt and with the help of Nokia's Ovi branded store (incidentially, both Qt and Ovi also support Nokia's mid-range non-smartphone 'featurephones' that run on the S40 operating system, so actually the migration path was a kind of three-way-migration: even better).
Does this guarantee that Nokia's 29% market share in Symbian would be transferred to become 29% in a future powered by MeeGo. Of course there are no guarantees. But one thing is certain:
NOKIA HAD THE BEST SMARTPHONE STRATEGY
You may love your iPhone. Fine. But Apple is destined to be only a bit-player in the overall smartphone space, because its OS is closed, proprietary and not licensed to third party manufacturers. I am not criticizing Apple. They are magnificent. They will continue to do so well, what they have done with the Mac and iPod and iPad and iPhone. But don't think that 20% market share in smartphones today (and 4% of global handset sales) can mean Apple sells 20% of all mobile phones in 2020. It ain't gonna happen. It will be JUST like the Mac, with premium phones, with highly loyal Apple fanatics, bought at specialized Apple churches, sorry, Apple stores, and sustaining the best profits in the industry. It is the best strategy for Apple clearly. But there is not a market for 15 other brands all doing like Apple.
There will be a couple of mass market brands in smartphone operating systems, who will have 15% or 20% or 25% and likely one superbrand which has 40% or 50% or more. Today the early betting says Google's Android will own the biggest share of the mass market. But you can be very profitable if you own your OS, and have a good large chunk of the market.
CONTRAST THE BIG 5
So. Who are in the running for the mass market when all current 'dumphones' have been upgraded and replaced by smartphones? Motorola? It abdicated its control of its destiny. While it was previous part of the Symbian alliance and made also Windows Mobile phones, Moto left Microsoft in disgust and now set all its eggs in one basket, and has become slave to Google's Android. Android is now free. It may always be free, with Google's 'Do No Evil' philosphy, but who knows. What if Google decides to start to spy on its smartphone users - the Android system has the spyware already built in (as does Apple's iPhone). Motorola has no options. Motorola is not in any way in control of its future.
Then SonyEricsson. Like Moto, SE used to support Symbian and Windows Mobile, but has placed its bets into two baskets. SE provides smartphones on Android and on Microsoft's new Windows Phone OS. but SE finds WP is not selling, so they do most of their production on Android. SonyEricsson has abdicated control of its own destiny but does have two rival OS platforms it can alternate between, if one proves nastier than the other. Obviously there is no compatibilty between the two platforms.
Then comes LG. Like Moto and SE, also LG supported both Symbian and Windows Mobile. LG made a strategic 'all eggs in one basket' move to Microsoft about two years ago, to disasterous effect. It spent all of last year back-peddaling away from that and now prioritizes Android. But LG also says it will produce some Microsoft Windows Phone based smartphones. And LG supports.. MeeGo. What LG has is also like SE and Moto, it has abdicated control of its destiny but where Moto has one and SE has two, LG has three choices of where to go if things don't turn out well with one OS or another. There is no compatibility between the Windows Phone OS and the other two, but Android and MeeGo are both Linux based, so there is some commonality.
And then we have Samsung. Samsung like LG, Moto and SE was also part of Symbian and part of Windows Mobile. Samsung now supports Android - is in fact the biggest supplier of Android phones currently in the Android family but also provides a select dribbling of Windows Phone based smartphones. Samsung has done something different. Samsung has developed its own OS for smartphones, called bada. So out of these four, only Samsung is in control of its own destiny. If ever it finds that the third-party OS developer is not willing to do some software development that Sammy wants, Samsung can always do it by itself, using bada, and have true competitive advantages using its own OS. And obviously, Sammy doesn't need to pay royalties for using bada (nor of Android currently, but Microsoft does require a royalty payment for every licence of Windows Phone). But bada is still a closed, proprietary OS that is not licensed to third parties. So Samsung does not have 'partners' among handset vendors to help grow the bada system. And there is no compatibility between any of the three OSs that Samsung supports.
Contrast that with Nokia. Nokia supports Symbian and MeeGo. In both cases Nokia is a major developer/owner/controller (Nokia actually set Symbian up as a foundation, strictly speaking). So only Nokia is completely in control of its destiny. And Nokia has a full migation path tying both Symbian and MeeGo together, so sales of one will always support sales of the other. Symbian still at the end of 2010 had half a dozen handset manufacturers supporting it - you didn't know that? Global Top 10 smartphone vendors Sharp and Fujitsu among the group. Yes, Symbian is not only Nokia. Symbian is a family thus more viable than any single vendor OS like Blackberry, Palm, bada or iPhone. And MeeGo? Has already four other handset makers signed up - ZTE, LG, Huawei and Panasonic - with another two dozen brands in the PC, laptop, tablet, home electronics, car manufacturing etc industries. So MeeGo is already a very robust and healthy new OS - but still in very early days. And to be clear, Nokia does not need to pay one penny of a licence royalty for using Symbian or MeeGo.
You didn't know that? Clearly. Clearly. Clearly. Of any traditional 'dumbphone' maker - think Motorola - who has to transition to smartphones - in a very costly and time-consuming complete transformation of the company, Nokia has the best smartphone strategy, the only one completely in control of its destiny, and the one most friendly to its developers and customers. This is not the cheapest option - remember Microsoft going from DOS to Windows - but Nokia's strategy was by far the most promising - and Nokia had managed the very costly transition - with its mobile phone handset unit generating a profit like clockwork every single quarter for the past 15 years. Even if total Nokia corporation reported a loss (because the Networks unit was unprofitable) then the handset unit - where this transition was being managed - remained very profitable every quarter in history. And now in Q4, the profits jumped 68%. Of the total profits generated by Nokia in all of 2010, by all four of its main business units - the smartphone division in Q4 alone, generated about one fourth of Nokia's total 2010 profit. That is how you execute a transition in smartphone platforms. And all this while the world economy was struggling with the biggest decline since the Great Depression.
Nokia is no Apple. But if you honestly measure what was Nokia's real task, and against that mission, not to try to become Apple, but to migrate its cheap phone users to smarpthones - and to migrate the old Symbian system to a modern OS - what it was achieving. Nokia was performing admirably. And crushing its real rivals, with a far better strategy for smartphones, with far better success than the other biggest phone makers with global mass market footprints.
BUT ITS A BATTLE OF ECOSYSTEMS
But Tomi you are totally missing the point, the smartphone battle is not won or lost on who shifts the most boxes, it is who controls the biggest ecosystem. And Apple is running away with this race, beating Nokia like a rented mule.
I know that sounds very reasonable and 'smart'. And yes, I agree with the sentiment of the growing importance of the ecosystems but ... I go with the facts. I think those who preach the ecosystem mantra are on the wrong side of chasm, as in Geffrey Moore's Crossing the Chasm. If you think ecosystems today rule in deciding smartphone sales, you are by definition an early adopter - some might call us geeks - and we do indeed value our apps and know our versions and updates. But the evidence says otherwise. The world has not caught up with you and me, my dear. Surveys this year repeat the story, time and again, the latest I saw from the USA last week, that the smartphone OS, the app store, the number of apps etc - do not decide who buys your smartphone. Apps and ecosystems come down, way down, typically ranked as the 5th most important criterion. In 2011 what is the most desired feature of a new phone buyer of smartphones - in the USA - it is as it has been for years, SMS text messaging.
I am not saying ecosystems do not matter. But we cannot be delusional. The average user is not like you and me, on this blog, with two smartphones in our pockets. The average user is far less sophisticated, and the camera resolution, the SMS, the screen size - these come to most buyers today far ahead of apps or ecosystems or the operating system. I just want to be clear. This is not Tomi telling you this. This is consistent studies from all major markets, from Europe, from America, time and again. Apps are not in the top 3 most important things that buyers want when they come to buy a new smartphone.
But hey, I am NOT disagreeing with you. I just want us to deal with facts. Apps are increasingly more important. The app store is increasingly important. The ecosystem is important today, it will become the most important element for smartphone success long before this decade is done, I totally agree with you! Its only the timing, lets deal with facts here on this blog, not fantasies, ok? But yes, lets go to the ecosystems.
NOKIA OWNS WORLD'S BEST MOBILE ECOSYSTEM
Tomi now you lost most readers. Did I? I deal with the facts. I know the Apple loyalists like to quote download numbers and number of apps. Lets start with the ecosystem, honestly, completely. The single most important part of the ecosystem is its 'inhabitants' ie its population. Far more important than how many apps, is the total size of the ecosystem. Who rules? Nokia has an installed base of active Symbian users of over 230 million (plus countless dozens of millions more of non-Nokia Symbian users). That is not the 'cumulative sales' of Nokia Symbian. That is the active installed base today. The world's second biggest smartphone installed base is the iPhone. Apple has shipped a cumulative 129.2 million iPhones since it first launched in June of 2007. And those are not all in use! Barclays said last year that only 73% of iPhones were in use anymore (it will keep coming down as the total fleet of cumulative shipped iPhones keeps growing older). 73% of 129.2 million is 94.5 million.
By the most relevant measure of any ecosystem, Nokia's Symbian based smartphone ecosystem is more than twice as big as the nearest rival. Makes you think?
But the app downloads. Oh? You want more. Before we can talk about app downloads, we have to look at the second most important element of any ecosystem in software - the developers of it. Nokia's Symbian developer community is massive. 400,000 strong. It is by far the biggest developer community of any mobile platform. By far.
But the downloads. No. Before we can get to downloads of apps, we have to go to the number of stores. Or more precisely, the number of national resellers. How many partner resellers does your ecosystem have? Its not that Apple sells independently through its own stores and online. Nokia has gone the extra mile to convert OTHERS to sell Nokia Ovi store product. Yes. Nokia has an army of partners to sell it. A reseller channel. A whole layer that Apple doesn't have. And how many of these partners does Nokia already have? 130 carriers have already started to offer 'carrier billing' so not only do they sell Nokia Ovi - they even let their own customers buy at a click, with the purchase showing up on the phone bill! This is what every developer says is the preferred way for their customers to pay. Any other way to pay, credit cards, Paypal, whatever, causes greater drop-off and unsatisfied customers. Nokia's ecosystem has 130 carriers who support it so strongly, they have integrated Nokia Ovi to their billing system.
That takes years of effort. That is a Herculean task. No other smarpthone OS platform comes anywhere near this. This is what Microsoft was drooling after, when it wanted Nokia's ecosystem 'crown jewels' added to Windows Phone (and typical Microsoft, no royalties paid to Nokia for this, but Nokia would have to pay royalties to Micrsoft for using Windows Phone, that is the typical Microsoft definition of fairness).
Nokia has BY FAR the most advanced, most complete, most wide-reaching and most robust ecosystem ever created in mobile.
But the app downloads? Yes yes. Next, we go to number of apps. Here Apple leads. Apple has now I have lost count, over 400,000 maybe 500,000 apps. Fine. Nokia has only about 50,000 apps. But Nokia is far bigger than Blackberry or Palm or Microsoft etc. But yes, Apple leads here. And Android has gone past Nokia too now in 2011, and is starting to close on Android, soon Android will have more apps than Apple.
Then we go to the downloads. Yes, Apple's iPhone App Store does have the most downloads. But you know who was number two as recently as early February of this year? Nokia that is who. Ovi store number 2 in downloads. Far ahead of Blackberry or Palm or Windows or bada or any other stores, except now after the 'Burning Platforms' Memo and other statements by Stephen Elop, Nokia's ecosystems have been damaged and Android has passed Nokia. But even if we agree that now Android is number two, and Nokia down to number 3 in downloads. Take this big picture view.
Who has biggest installed base? Nokia. Who has biggest number of developers. Nokia. Who has most retail outlets? Nokia. Who has most apps? Apple. Who has most downlods. Apple. So. Apple's ecosystem is more 'vibrant' and 'active' but Nokia's is far bigger and has far greater long-term viability. And Nokia was ramping up its Ovi store downloads and actually catching up to Apple, the gap was closing in downloads, when the CEO started to sabotage his own ecosystem this February.
And if you say but in the USA. Yes. In the USA, Nokia is nowhere. I grant you that. Nokia has almost no hope of even recovering in any meaningful way there. But didn't you pay attention? The world's biggest mobile phone market is not the USA anymore. It is China. And have a guess who has most downloads in China? Nokia Ovi Store. And the world's second biggest mobile phone market is... India. Who is number one app store of India? Nokia. The number four country (3 is USA) is Indonesia. In Indonesia who is biggest app store? Nokia Ovi.
I can easily grant you the argument, yes, that ecosystems are very important. But then all the real growth markets, where half the population of the planet lives (in Asia) and in all those biggest markets, Nokia totally rules. If you are talking of the future, sorry, the USA will not be the main show. It will be China (so says, for example Google's Chairman Eric Schmidt) and India and Indonesia etc. And Nokia Ovi store, which launched a year after Apple, has ALREADY PASSED Apple iPhone App Store in all those markets.
No we are not finished. Nokia's Symbian based ecosystem which is open source and open to third party manufacturers with half a dozen handset makers still supporting it today like Sharp, Fujitsu etc - has the world's most advanced mobile operator/carrier NTT DoCoMo as a loyal supporter of it (until this year's February). So yes, NTT DoCoMo, the company that launched the world's first mobile cellphone network. That very same NTT DoCoMo that invented the mobile internet. The same NTT DoCoMo that invented the app store. Etc etc etc. So in creating the most advanced phones ever on the planet, NTT DoCoMo did that always on Symbian (if you liked your WiFi on your iPhone 2G - NTT DoCoMo did that first. If you liked your 3G on your iPhone 3G, NTT DoCoMo did it first. etc etc etc). There are no carriers supporting the iPhone OS nor the Android OS nor the Microsoft Windows Phone OS nor Palm nor Blackberry etc.
Now the kicker. Nokia's migration path. This is sheer genius. All the benefits of Symbian and Ovi in the above, will be migrated to MeeGo using Nokia's Qt development tools and the Ovi store will seamlessly support the MeeGo environment as well. Now Nokia's world-leading best ecosystem just grew bigger still. It adds Intel (bigger IT company than Apple by revenues). It adds LG (sells more phones than Apple). It adds ZTE (sells more phones than Apple). It adds Panasonic and Huawei too. And then the trump card. With MeeGo, Nokia adds - China Mobile! China Mobile is the world's largest telecoms operator. It is so huge, if it was a country it would be the third largest nation on the planet. Its subscriber base is more than twice as big as all US carriers added together. So if you thought it was a 'big deal' for Apple to add Verizon to the iPhone family this January, Nokia gets about 8 Verizons all rolled into one, in just China Mobile. (for the record, China Mobile doesn't currently even sell the iPhone). And yes, in MeeGo, this becomes only the second smartphone OS platform that has a carrier as a major supporter of it. Second only to, Nokia's other OS, Symbian.
Nokia wins. If the battle is honestly about ecosystems, don't come talk to me about Blackberry or Microsoft or Palm or bada or yes, iPhone or Android. Nokia had BY FAR the most robust, the biggest, the most healthy, the most nurturing ecosystem ever created. If you say ecosystems will win, Nokia is then years into the future with only Apple and Android conceivably in the same race and all others are not even pretenders. The Nokia lead is that enormous. It is number 1 in most counts, and was at worst number 2 on a few counts but closing in on number 1 (by February) and even now, after the CEO of Nokia has done some sabotage, the Nokia ecosystem is still no worse than number 3 on some counts.
Yes. The 'mindshare' of US based developers is totally different to this. Yes, we can survey 1,000 US developers and none were prioritizing Symbian I am sure. Just remember, that only 8% of the planet's mobile phone subscribers live in the USA. I know this is an English language blog, and those who read it will often read US based tech blogs and tech press etc. What do you think if you went to read a Chinese language tech blog? Chinese language is now the most used language on the internet, you knew that, right? Won't be the Apple App Store. The China based developers do Ovi store. What of Hindi language websites? Do you think they will rave about Apple iPhone App Store or Ovi Store? The USA myopic view will sometimes blind readers to the global picture. But that is partly what I am here to help with. My clients are often global giants with global footprints like HP or Google or Nokia or Ericsson or Intel etc, or here where I live in Hong Kong, the regional powerhouses among my clients like say, China Mobile or NTT DoCoMo or SK Telecom or Axiata etc.
There is a very widely held myth, that Nokia had somehow 'lost' the ecosystem battle to Apple (and to Google). The facts absolutely concretely prove that to be false, indeed a myth. Nokia had by far the best ecosystem. But - again - Nokia was horridly bad in trying to explain this. To communicate its leadership, its vision and to promote its ecosystem. Apple and Google are masters at this, they celebrate every milestone and do big press events of their successes. Nokia mostly used to be shy, almost apologetic about its achievements. That is part of the execution - and the market perception - which Nokia's new CEO should have come in to do better.
Instead he issued a memo claiming that Nokia's platforms were on fire. And he took a series of steps to destroy Symbian and Nokia's ecosystem, gutting it from the inside firing thousands of staff. And then he went and BOUGHT the smallest weakest under-performing smartphone operating system out there, Microsoft's Windows Phone - abandoning the best strategy for smartphones and adopting one that is condemning Nokia at best to being a slave to Microsoft - literally going from best strategy to worst - now even Motorola's 'all eggs in one basket' strategy is better because at least Android is a success. Nokia stuck all its eggs in the one basket which is broken. And at worst, Nokia will die in this unnecessary, incredibly costly and disruptive transition, which screws Nokia's customers, developers, carriers and of course Nokia owners, the shareholders. The new Microsoft phones cannot come to the market until the end of hte year in tiny numbers and next year in larger quantities. Nokia's market leading market share of 29% will crash to 7% by year-end (I am not kidding, it is down to 15% already, Nokia lost half of its loyal custoemrs in only 5 months. This is the biggest destruction of corporate value ever seen. But thats another blog.)
But we need to be clear. Nokia did have the best strategy. I am not saying Symbian could beat the iPhone or Android. It was not even ever supposed to. It was Nokia's answer to how to get low-cost handsets evolved into smartphones. The new Microsoft WP7 powered phones are not suitable for ultra-low cost components, they require high spec CPUs, tons of memory etc just to run properly. Symbian ran happily on modest spec equipment.
And Nokia had its migration path to MeeGo. It was 95% ready by January of 2011. Nokia had in fact its first MeeGo phone ready to announce at the biggest Nokia event in the Autumn of 2010. You know what CEO Stephen Elop did as his first act as new CEO. He cancelled that announcement that had already been promoted. He decided that Nokia will not show the hot new MeeGo based phone. Then he postponed MeeGo's official commercial launch. It was supposed to hit our stores for Christmas last year. The phone was ready, MeeGo was ready. Elop just pushed that to 'the new year'. The head of Nokia's MeeGo unit resigned in protest.
It was a phone known as N9-00 (not the same as the current N9). That was supposed to be Nokia's showcase phone for the biggest telecoms event in the world, GSM World Congress in Barcelona in February. And you know what the nurturing loving new Nokia CEO did. He cancelled the whole phone days before Barcelona! A fully developed smartphone with a brand new OS, that was announced, and was to be Nokia's future. The CEO cancelled it days before. Now all that development and nobody gets to buy one handset. The new head of Nokia's MeeGo unit? Resigned in protest.
So Stephen Elop then went on stage with Microsoft's Steve Ballmer and announced the Microsoft alliance. In that process he annoucned that the promised migration path from Symbian to MeeGo was cancelled. It was nearly finished. But he cancelled it in total. How did that go down? The Chief Technical Officer of Nokia resigned in protest! What does this Stephen Elop know, that he overrrides his head of MeeGo, appoints a new head. Overrrides him. And then overrides his CTO? And all are so principled about the colossal mistake - that three highly regarded specialist top managers of the most complex technology ever created - a smartphone - and its newest most advanced OS ever made - all resign in protest? Either Elop is a genius or..
If MeeGo is an utter failure, surely Intel knows this and is cancelling MeeGo as well. No? MeeGo is actually alive and well. During Barcelona week, Intel was happy to celebrate the first MeeGo based device commerically launched, a netbook by Fujitsu launched comercially in Singapore that week. So Elop is right. his MeeGo boss is wrong. His new MeeGo boss is wrong. The Nokia CTO is wrong. Intel is wrong. Fujitsu is wrong. Yeah.. Since then several more MeeGo devices have launched.
And Nokia has shown us the N9 running MeeGo. And all technology reviewers have fallen in love with it. This is the best Nokia superphone ever and the best smartphone OS this side of the iPhone, far ahead of Android or Palm or Blackberry (or Symbian) and yes, far far ahead of Microsoft's Windows Phone 7.
So Stephen Elop has a hit phone on his hands on a hit OS that everybody seems to love. This is the best possible moment for a new CEO? He gets to ride an unanticipated hit, boost his sales, his profits, run to all the big trade shows and have his 'Steve Jobs iPhone' moments showing the magnificent N9? Sounds fantastic.
And it gets better. There is yet another MeeGo device, the N950. This is an even more advanced version, with a full QWERTY slider keyboard, a kind of big brother to the hot N9. And it too is ready to sell now, in Q3. These are phones with price tags North of the iPhone, so as Nokia reported losses in Q2, these two phones could not come at a better time for Stephen Elop.
BEHOLD: THE BRILLIANT NEW CEO
This is what the smart CEO does. He cancels everything else. He takes the early excitement and uses his strong communication skills to go to every major market, every trade show, every tech TV show, every newspaper and magazine, use his new CEO status as the hook to get maximum publicity now for the N9 and N950. And as half of his smartphone factories are idle, he now authorizes tons of overtime and ramps up high volume production of his hit phones. Get early production models into the hands of every tech reviewer, in particular those in the USA and those who love Apple iPhones and Androids. The smart CEO understand that this kind of hit phone comes along only once in a career if you are lucky. Motorola had one such hit phone, it was the Razr. Apple had its iPhone. Now only 9 months since he took office, Nokia's new CEO finds his golden eggs being laid by the Golden Goose called MeeGo, right there before his eyes. So then the marketing budgets. Get Lady Gaga to do her Tweets on her brand new N950. Get Justin Beeber to prance around with an N9. Get the cast of Entourage to play with MeeGo handsets in the upcoming movie. Pony up the money so Mr Coolest on the Planet, James Bond will use an Q-modified N950 in the next 007 adventure, and so forth. That is what the smart CEO does with his superhot ultradesirable sexy new handsets. And then..
(Brrrr... The alarm clock rings. We are awaken to reality). Stephen Elop, the new CEO of Nokia, however, announces that the N9 will not be sold in most of Nokia's biggest and most important markets. It will not be sold in the UK, in France, in Germany, in Italy.. in India for goodness sakes. It will only be sold in 29 'countries' including such giants as UAE (3 million population), Singapore (4 million population), New Zealand (4 million population) and Norway (5 million population).
Then he says that the N950... will not be sold to anyone? Yes. It will only be made in small production runs and be given to some developers. No sales at all. This is how to market a hit product.
When the stock market fell in love with the N9 and the MeeGo story and Nokia's share price - which had been falling for 5 months straight, down 50% from its peak in February, and found the first meaningful uptick with the positive news about N9 and MeeGo. Elop killed the story the VERY NEXT DAY, showing a mock-up of the first Windows Phone based Microsoft phone by Nokia - a clone of the N9 - and this disappointed all tech and financial press, and Nokia's share price returned to its downward spiral. It hit a 14 year low last week.
And this is what Stephen Elop thinks of MeeGo and the N9. He told Helsinging Sanomat, the biggest newspaper of Finland, that "even if the N9 turns out to be a huge hit, there will be no more MeeGo phones from Nokia".
That is how you destroy your own company in world-record setting time. The burning platforms memo was no accident. I said in my analysis of the memo, that no sane Nokia CEO could have written that memo, that it would need to be a delusional psycopath to make such statements that Nokia is losing the battle for ecosystems and that Nokia's platforms were on fire. Now we know. If Elop, while his company just now, under his stewardship, posted its first-ever loss at its handset unit - and Elop finds the N9 and N950 highly desired highly priced highly profitable next generation smartphones that are ready to sell right now - and his smartphone factories are sitting idle. If Elop won't rush the N9 and N950 to every Nokia country and market and give it his fullest support, he is acting against the best interests of Nokia and has to be fired immediately. I calculated yesterday, that every day now that teh Nokia Board waits in firing Elop costs Nokia abandoned profits of 10 million dollars per day. He is the Billion-dollar man. Every 100 days he destroys another Billion dollars of Nokia profits just by showing up at the office. Even a monkey would now run Nokia better. Even a Stephen Elop stuck in a coma, would cause Nokia less damage than an awake Stephen Elop is doing now as we speak. He is causing the greatest damage to any brand in the economic history of mankind.
So thats the story of the myths of the smartphone OS and the ecosystem.