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« LG Q2 Results: Smartphone sales 5.4M edges past SonyEricsson for 6th biggest | Main | Thinking the Unthinkable: What Value if Nokia Returned to Symbian - and MeeGo / Our movie today: Back to the Future »

July 28, 2011

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cycnus

the 2-11 event is as bad as the 9-11 event.
elop should be condemned as terorist.

LeeBase

I haven't said this in a while, but that was a brilliant analysis. I completely agree on all points.

I have this to add. It will be Microsoft who buys Nokia. I do not agree with the conspiracy theorists who suggest this was the plan all along. However, Microsoft NEEDS Nokia to succeed. Microsoft has sustained losses in the billions in their online businesses but considers it too important to not be in that space.

Likewise, Microsoft cannot abandon mobile and has the resources to sustain billions in losses for years in order to stay in that game. Microsoft's best chance still lays with Nokia. They will not let HTC or ZTE buy Nokia.

Apple will likely partner as they did with the Nortel patents to keep the patents out of Google's hands. Apple doesn't want or need Nokia but they do want to keep the patents away from any Android player.

Samsung and google will assuredly make their own bid for Nokia as well.

No matter who buys Nokia, I agree that the end of Nokia is rapidly approaching.

Lee
Ps: set up google reader rss feed, and then Flipboard on the iPad to read your blog. Very nice combination.

elmo

Dodge & Cox, just extend their older on Nokia to over 5% few weeks ago.
Capital Research and Management, few days ago also got over 5% Nokia share holding.

Is looking like that the American Funds that pur eFlop on power in Nokia, want that eFlop complete his mission, without any risk that somebody could come and undo the hard work of eFlop.

Timo, why you never speak about the mayor share holders of Nokia that dictate the board member and the CEO inside NOKIA ?

Tchuss

e_lm_70

E.casais

Tomi insists that retailers have been boycotting Windows Phone and Nokia devices (especially Symbian ones). The assertion is disturbing, but he has not really provided any factual evidence for this, just hints, and this does not seem to square with what I can observe around me.

I therefore embarked on a little empirical investigation. In Switzerland, the firm MobileZone is a major retailer (perhaps the main one) for mobile phones, comparable to Carephone Warehouse in the UK. MobileZone sells phones with contracts or in pre-paid SIM-locked configurations for all major operators and several MVNO in Switzerland, as well as the same models without contracts and unlocked. The company publishes a monthly catalogue with the current and latest offerings that is deposited in every postbox in the country. A catalogue dated YYYY-MM is distributed at the very end of month MM-1.

I have taken the MobileZone catalogue for 2010-12 (before the platform burning shock), 2011-05 (just before the acquisition of Skype by Microsoft), and 2011-08 (after the disastrous results of Nokia and the announcement of the Meego devices). I counted each ad for each model separately, and tallied the results for each manufacturer in % of the total number of models listed. Here are the summary results:

2010-12 2011-05 2011-08
Nokia 31.67 30.00 29.11
Samsung 21.67 27.14 29.11
SonyEricsson 20.00 15.71 16.46
LGE 8.33 4.29 7.59
HTC 8.33 15.71 8.86
Apple 5.00 1.43 3.80
Huawei 0.00 0.00 1.27
BlackBerry 0.00 2.86 0.00
Miscellaneous 5.00 2.86 3.80

all W7 phones 3.33 1.43 0.00
Nokia platforms
s3 8.33 14.29 11.39
s60 13.33 2.86 1.27
s40 10.00 12.86 16.46

Total models 60 70 79

I could list a long disclaimer: the sample is small, one should weight ads by their surface in print, Switzerland might be an atypical market, etc, etc.

Nevertheless, one can draw some conclusions:
1) The data are entirely incompatible with a boycott of Nokia.
2) The data for s60 are evidence of the wind-up of this obsolete platform.
3) The data for s3 are compatible with lacklustre sales, not with a systematic boycott.
4) The data for W7 are compatible both with a boycott (zero references after May 2011), as well as with a brutal failure of the platform on the market.
5) Except for SonyEricsson, which is surprisingly present in the offerings of mobile operators, the % are very roughly consistent with the market shares and the market share evolution of the major manufacturers (see for instance the evolution of Samsung, now at par with Nokia, and the share of Symbian devices overall).
6) More daunting is the complete absence of Motorola and the near disappearance of RIM.

In conclusion: there might well be a boycott of Windows Phone under way, but it is difficult to see one affecting Nokia. More likely, people are just not buying Nokia terminals, and this without any boycott campaign by retailers. If Tomi has figures that substantiate his claims, I would be interested in seeing them.

David

Hi, very nice reading, but I do not agree that current Nokia situation is caused by Microsoft cooperation which is very often linked by analysts together. The picture I see is that every single Nokia touch screen smartphone performs far below expectation in both sales and data attach rates despite majority of customers have no clue about any future commitment towards Microsoft. Touch screen experience and application ecosystem matters in customer choices and today Nokia devices simply do not satisfy this demmand very well. Not becouse Microsoft, but becouse Nokia was constantly failing to deliver on that, which resulted in the partnership.

I do not defend the Microsoft partnership - especially announcing it so soon before all possible impacts have been carefully analysed (and it wasn't as Nokia was not clear for long time about strategy over remaining platforms). I just believe Nokia would sit in very similar position anyway.

Stanil

The most on spot analysis ever!!! Congratulations,
YES there is a boycot of nokia PHONES, why buy them?
YES Elop is incompetent( at the least)
THERE is a thresold of the NOKIA share price if it falls bellow of $19B MKT/cap some one or a consortium will buy the remains.
Tomy, you underestimate the value of NSN to nokia, not a long time ago in a country not far and away from London, if an operator/carrier bought non NSN hardware nokia would not work properly, this was dreadful because nokia phones where market leaders.ONLY NSN hardware supported EDGE!!!

What you maybe miss about iPhone and android is that they're NOT smartphones, they're full blown desktop class operating system attached to fast application processor and wireless connectivity with acceptable battery longetyvity devices, in one word WEB phones! Nokia never made them, they imagined them, dreamed about them, but....

The death of nokia(nothing will save them) in a perverted sense maybe positive overall, they sucked all the brains( in telecommunications in Europe ), now new entrepreneurs may start new businesses and not go to work for nokia.

What Elop has done is incompetent and borderline criminal.
LG the biggest WP7 supporter posted a loss, it can be attributed to the flop that is WP7.

Apple/google/Microsoft don't care about smartphones, phones. What they care is that the computing platform they provide is the one that is most used. Apple/google/Microsoft will not blink if they fall bellow 1% of the "smartphones" market, if they control more than 30% of the future COMPUTING platform(be it tablets, ultraportables etc...)

Btw sorry for any misspellings, written from my iPad :)

kevin

Good analysis, Tomi. Even if there is no explicit "boycott", Symbian phones are seen as end-of-life by carriers and thus "worth" less, so I agree that Nokia is in danger today. I agree its troubles were made worse, not by the switch in platforms, but by the early announcement of switching platforms. I expect that Nokia weighed the risks and decided it was worth it; in hindsight, it was the wrong decision. (It would've been very difficult to have kept this transition a secret until August, plus Nokia would've had to continue to waste big money on Symbian and MeeGo software development in the meantime.)

I agree with LeeBase that Microsoft is the most likely acquirer if they decide they need to go the Xbox business model route instead of the Windows route. They would sell off NSN, integrate NavTeq, and continue patent licensing to Apple and others.

Some hope: WP7 Mango was released to vendors recently (and I have not seen any grumbling) so its quite possible that Nokia WP7 with the N9 body will be out by October, and ramp into Christmas.

Brian S Hall

Wow. You are on a roll.
I don't always agree with you re the *causes* of Nokia's problems, with their heavy focus on Mr Elop. Still, the end result is the same. Doom, death, destruction.
This was brought home to me yesterday. I was working on a podcast re smartphones in China and repeatedly used old Nokia share numbers because sometimes I forget just how rapid Nokia's decline has been. Shocking. It's as if they made typewriters in the 1980s, only everyone with a typewriter turned it in for a shiny new PC -- in the span of 18 months.
Time may be running out for Nokia. Sad.

Gerard

1st part


Well, nothing to say about the 2nd "event", but regarding the first ... Symbian would have experienced huge losses, with and without Elop. This is a fact, you don't know but 99.9% of possibilities said that nobody likes symbian, and that very soon you'll have low-cost versions of iphones and androids.

So then, symbian was dead before Elop.

Then you have to make a decision. Meego is so cool, but at 2011 still no devices. You cannot risk the entire future of a company to a OS that looks like vaporware. So you decide to move to Windows, probably the only train you can catch if you don't want to be diluted.

Ok, you move to Windows.

Option 1)

Do not say anything fancy. Just wait until you have a device. Symbian sales will resist until Apple has its low-cost iphone, you N9 perhaps gives you some air, although there is a high risk to be another palm-like phone, so cute, so good, but people don't buy it. And finally, you have your first Windows mobile. Then you claim for attention ... and, guess what, you are the 3rd o the 4rth to present a Windows mobile. Ouch, big deal. Nobody is really interested. Nokia is already down, nobody knew what is Nokia doing. Nobody cares now. You don't know how, but you're already the 15th company of the world.

Gerard

2nd part


Option 2)

You know that Option 1 will happen. And you don't want it to happen. What can you do??? Easy. You still have momentum. Everybody expects something from you. So here we go. You burn Symbian (who had only 1 year being optimistic), you burn Meego, and you say you are gonna make impressive things with Windows.
You create BUZZ, you make your own VAPOR, suddenly, people say you are crazy and you've killed Nokia. Well, Nokia was already dead. However, suddenly, everybody is now waiting for Nokia. Suddenly, Nokia has a very big opportunity to do something, he has the attention of the next Windows phone, everybody is talking of it. You are the star.


And guess what, they've chosen the second option. I could agree with the analysis, but the author does not say how Nokia was going to survive when Symbian died. So, Elop has commit suicide one year before Nokia was going to die, in exchange to one shoot, in exchange to an impressive marketing. We are talking about Nokia, don't we? Are we talking about Siemens? Motorola? No, but we are talking and WAITING for Nokia.

Chapeau


Of course, as a user of an n900, I'm very sad that nobody is gonna buy the N9 after Elop's intervention. But if it was my money, I think I wouldn't bet all I have to Meego. Microsoft is just Microsoft. Difficult to think they will not succeed in mobiles.

Robert

Why would it be such a tragedy if someone buys Nokia. The current management is horrible. They are currently very busy digging their own graves.

Being under new management could only improve the situation. I bet that if Nokia announce that Elop is fired and are looking for a finish CEO, share prices will go up by 5 points in an hour..

Price of CoIP

Hmm. Maybe the reason why Elop originally said we'll get "billions" from Microsoft is because they both knew Symbian will be dead very soon and that would instantly put Nokia in serious position.

So maybe it was not just marketing money. Maybe it was related something obvious - something Elop can't say. Maybe, just maybe MS will help Nokia over difficult transition period.

Well, we'll see.

Sami

Complete and utter BS. I wonder Tomi's motivation; his comments on Elop sound like those of extreme right-wing people talking about immigrants. Pure hatred, speculation, generating fear and even twisting some key facts (comparing q1 to q4 is quite odd).

Would be nice to hear his opinion on Ollila and other board members. How come all this is Elop's fault? How come Tomi gets so personal? How would you comment e.g Siilasmaa's work (I guess he was key person in nomination process).

Regrading an earlier comment about E being a terrorist: in the light of 911 and recent events on Norway, I sincerely hope I would not need to read such disrespect towards victims and their loved ones. Disgusting.

Earendil Star

@ Gerard Elop

1st: it's Windows Phone you thought you were talking about, not Windows Mobile. Windows Mobile was the legacy OS MS itself dumped with the introduction of WP7.

2nd: Nokia is already the umpteenth company that will sell WP. No big deal here and no need to anticipate a product many other companies are already selling. Therefore, no "novelty" effect foreseeable from a OS that's been out for months, save probably a couple of services that MS might decide to leave to Nokia (e.g. maps), which I doubt.

3rd: risk management is about diversification. Placing bets on more OSs is safer than pointing all one's cards on a single OS, even more so if:
a) you do not control it
b) it has a teeny tiny market share (despite all the MS muscle behind it)
c) is developed by a company that for the past decade has miserably failed in the field
Diversifying with Meego, an OS which is now being boycotted by its own creator, would have been at little additional cost: all Nokia had been geared for that step, a transition strategy was in place, everything had been ready for months.

Yeah, I know, MS, Nokia's current Dark Lord, would not have appreciated. Therefore... ZAP!

And regarding Vapor, nobody has been earning anything from it since the times of the steam locomotive...

Roo

@E.casais

What you may be missing in your analysis is that there ads are purchased by manufacture, it placement in the catalogue requires a fee to be paid. In many case catalogue like these can be a profit center for a retailer.

So there may as well be a boycott of Nokia phones. It does not mean MobleZone is not more then willing to take the "slotting fee" from them. In fact it could be argued manufactures may even spend more if they are feeling the pressure of not being supported and try to push the product through the channel. So even though there may be ads in a catalogue it does not mean the firm is carrying inventory to support the ads.

While I think your case study is inconclusiveI, I too would like to see more tangible evidence of a "boycott".

Tomi T Ahonen

Hi everybody! Thanks for the comments. I'll respond to all. I will do it by name in short sets.

Hi cygnus, LeeBase, elmo, E, David, Stanil and kevin

cygnus - yes, for Nokia definitely (arguably worse, the USA didn't die because of 9/11) and to some degree also Finland, I agree

LeeBase - thanks, really! and yes, very likely that Nokia will end in pocket of Microsoft as an outright purchase, either because a, Nokia Board finally figure out the basic math, see MS strategy is certain ruin, fire Elop and Nokia terminates MS alliance. In this scenario MS is instantly out of the mobile game. All other significant 'partners' of the WP7 handset makers have already recently announced they hate it and are going full speed to Android. If Nokia quits MS, MS is out of mobile. But MS is rich enough to buy Nokia outright now and due to problem 2, they don't have to pay much for what they want - the smartphone unit and Nokia's sales channel. They'll sell dumbphones, most of the factories, the Nokia brand (their own phones would be sold as Microsoft phones anyway) and of course sell NSN. They'd keep Navteq and Nokia's patent portfolio.

The second option is the share price dive, and the moment 'anyone' be it Google or Samsung or HP or Lenovo or ZTE or Huawei or HTC or perhaps an Indian company like a Reliance or Tata, or for example the world's richest man Carlos Slim - express the slightest interest to buy Nokia - MS will pounce. I am sure they have that scenario ready, and they have their cash ready.

The third option is the 'long' game, if Nokia suffers into mid-to-late 2012 with ever dwindling market share and ever deeper into losses, with the cash reserves spent, MS would come in as the 'saviour' and 'rescue' Nokia. I don't see Nokia limping along that long without part 2 kicking in haha.. especially considering the battle for IPR, Nokia's patent portfolio is like a pirate's treasure waiting out there for anyone to put 2 + 2 together and notice, that because of the share price, with Nokia, 2 + 2 = 6 today, gives you the patents for free...

elmo - thanks and good points. Yes, it looks like some big investors are indeed acting to safeguard their investment. I am not sure they want to hang onto Nokia when the share price drops below 4 dollars and 3 dollars haha..

As to why not talk about the institutional investors, haha, thanks. This really 'is not' a Nokia blog haha.. I really do want to talk about other smartphones too, now as this is the Q2 results and we get very important market data on the dramatic races there. And I want to talk about more than phones in smartphones, the apps, etc. And I want to talk about non-smart phones, ie dumbyphones. And I want to talk about the far bigger mobile industry (most of that is the operator business and I have some important blogs to write, waiting) and I want to talk about the even bigger digital convergence world in anytyhing from media, advertising, social etc to things like money, telematics, robotics etc. Tons and tons of other stuff.. So yeah. I know we could dig ever deeper into this, but I am REALLY hoping to inspire others to start to write about the Nokia disaster. I would hope to read such analysis and numbers by someone else so I don't have to do this amount of writing haha...

E - I know the evidence was not in this blog nor not for several in the recent past. That is because the reseller boycott (of Nokia) was reported back around March (might have been end of Feb) in several sources and I quoted those sources then. I would ask you to go back and see the early discussion of Nokia soon after the February 11 annoucnement (but it was not in the first week, I remember that, so its not the first long blogs I did around Feb 14 or so haha). I remember there was a story from CNBC, and there was a story from a mobile industry newsletter (I forget which) which had contacted several stores and their sales staff, etc. I think it became utterly academic at the point when Nokia write in Q2 official quarterly results that there were unanticipated moves by the resellers and that the retail channel has been reducing inventory (ie not buying Nokia) and we see volumes cut in an unprecedented level when the market itself is exploding. So Nokia has all but confirmed that their reseller channel is not selling Nokia actively anymore. I'd say thats a boycott verified, don't you?

but yes, thanks for the update on the Swiss market. If you scroll through all the recent messages here, we have several commenting from many countries who report the opposite, that they are clearly seeing Nokia vanishing in their countries. But thanks, for showing that WP7 is now disappearing from the Swiss market. That is interesting

David - I hear you. Your observation is very good and matches what is happening in the world. But you were not paying close attention to what happened in the market about seven or eight months ago. This is what happened. The consumers did not particularly like Nokia's smartphones and especially the Symbian system's touch screen around August and September of last year. It was clear, that to grow sales, Nokia had to be cutting prices and pushing phones with heavyt marketing support which cut profits. That changed for Q4 of last year. For the Christmas season, Nokia saw a growth in unit sales - AND a growth in average prices - AND a growth in profits. Nokia was suddenly VERY desirable. It is almost impossible to have all three at the same time - which means customers love your product so much, they are willing to pay 'extra' to have it. They don't ask for discounts etc. Nokia had a RECORD jump in average price and while they do not report smartphone division profitability beyond 2010, I believe the jump in profits was also a Nokia record. So Nokia customers LOVED the new Symbian S^3 based phones (like the N8) and the new touch screen phones. I am not telling you this, that is from the Nokia Q4 quarterly results (and the new profitability info we got this summer from Nokia). So your point, that consumers do not want Nokia phones was once true, last year, but was no longer true after October. The facts are irrefutable on this.

That growth rate continued through February 10. Then Elop announced that Symbian is dead and Nokia would go to Microsoft. That was noticed by us geeks and the tech press but the average mom or pop who happens to buy a nice Nokia phone has no clue that there is something called Symbian in it, and that there is Microsoft coming. The consumer is mostly ignorant of this. They would be buying Nokia Symbian phones quite happily right now, the phones are no worse, in fact the latest Symbian version, Anna, is even better than S^3. It is the resellers who suddenly notices that Nokia is obsolete and that to sell Nokia Symbian phones is stupid for any sales guy. Any client could walk back into the store, weeks or months later, and claim they were cheated and demand a full refund. For a phone that is out of the box, already worn, that has to be taken back, sent for refurbishing and packing - and the customer then will need to be given a new phone by another maker, and the salesguy goes through all that hassle - and gets NO new commission. FAR more work, for absolutely no gain. Of course the CHANNEL refuses to sell Nokia's obsolete line now. They'd be utter fools to do otherwise. I know, I was a salesrep for many years and a sales manager for many years after that (and then supported sales up to my last job at Nokia). The successful salesperson is always thinking money and there is no money in attempting to sell an obsolete device, only hassle and pain.

Stanil - thank you very much! and yes, we clearly agree.

kevin - thanks and yes, I very much agree with that point - that the decision must have seemed the right one at the time, and now ANY way you look at it, the math works out as 'death'. This Microsoft path (and Elop as CEO) is certain death, but that was not obvious back in February when the decision was made. Now it comes down to, 1 - will the Board understand this in time, 2 - will they have the guts to make the right move before its pointless, and 3 - even if they fired Elop tomorrow, it might be now too late and who knows what the next CEO does. I was thinking back in February that this cannot get worse - and then I saw what Elop did with Meego and N9. So as bad as things are - with the wrong guy in charge even if Elop is replaced, that guy could still make matters worse haha. But worse means Nokia dies sooner.

As to WP7 on an N9 by October, no way. It takes 18 months to design a new phone from scratch. Nokia is now pushing it ridiculously with the first WP7 phones they are releasing in modest numbers (more like beta test versions) just before Christmas and not done at Nokia factories, but at a Taiwanese factory. They are going to be a butcher-job, a hack-job, and trust me, that phone in December will be so full of bugs its not even funny. But Nokia will politely take them back in January and replace and 'fix' them free of charge, what Elop needs DESPERATELY is to prove that there WILL be Microsoft phones, and whatever problems the first phone has, he can apologize for, use Nokia's deep cash reserves to 'fix' at considerable cost - and promise the next WP7 phones out in Q1 will be better.

The formal decision to select MS was done in the first week of February. The informal decision was made no later than December as a handshake deal between Elop and Ballmer and then the two months were getting the Nokia board to agree, and playing out the last steps of the 'dance' with Google Android. So Nokia has been able to start the design of the new WP7 phones from about December 2010. That means the first 'properly designed' phones would be out in tiny pre-production numbers (enough to say they are selling) in a handful of countries around March of 2012 and shipping in volume in Q2 of 2012. If you look at all major mobile specialist analyst houses, they have said immediately from February's announcement that volume shipments of WP7 phones won't come until Q2 of 2012 at the earliest... And Elop is only committing to one phone for Christmas now.

The sad thing is, that Nokia could be shipping four smartphones using MeeGo right now in full volume. The N9, the N950, plus the cancelled N9-00 (was ready in February) and also the older N900 can natively run MeeGo, Nokia could sell that as a new MeeGo device as a lower-spec 'discount' or 'entry level' model, much like how Apple sells the iPhone 3GS now as the discount model with the iPhoen 4 the main new phone.

Thank you all, please keep the comments coming

Tomi Ahonen :-)

@rodrigottr

Tomi


Please. Answer @Elmo's statement. He always says very relevant things!

For me it is very clear that Elop is there to save Microsoft from it's dead end on PC. All his decisions are in favor of Nokia being completely dependable of Microsoft no mater their prices are to Nokia. Even himself states there will be no plan B. Nokia has many other alternatives that Microsoft has not. Its Microsoft who is on a burning platform, we know it.

The killing of Symbian was due to success of N8 and E7. He needed to kill it while he still could. It is true that Symbian has not the same user experience iOS or Android has. But HEY! User experience is not everything! There are tons of users who still want rock solid phones, good qwerty keyboards, good battery life, more then apps.

If Nokia is going to be cut into pieces or not still a possibility. I believe that is part of the stupidness of Ballmer's and Elop's strategy to save Microsoft. As they parasite Nokia, they are taking the risk of killing their last chance of perpetuating Microsoft as a software company on mobile era. If Nokia be bought by ZTE or Samsung their WP divisions will be left as their plan C or D.

If Microsoft intends to buy some parts of Nokia, then I believe (and wish) European Union, or even Finland's government make a good investigation of it. Cause this entire story smells like shit. And where there is smell of shit, then is very likely to be some shit.

Tomi T Ahonen

Specific to the rodrigottr comment here a moment ago:

Hi. Thanks for 'fetching' me from Twitter haha. Hey, excellent point and yes, I totally agree. I think now with better hindsight, it is clear to see WHY Stephen Elop rushed his February 11 announcement. It was stupid from Nokia's point of view, it was foolhardy. It was clear to cause big damage to Nokia sales for at least three next quarters - and one didn't need to be Nokia's CFO to see that would cost Nokia billions of Euros in lost sales this year AND as the smartphone unit made most of Nokia's profits, losing that would cause all of Nokia Corp to go into loss-making. No new CEO would want to take a healthily profit-making - in fact growing profits company, and plunge it into loss-making within six months of taking office haha.

So Elop did do it for a reason. And we now can see what that reason was. First, he saw that MeeGo was a world-beater. He was well familiar with Microsoft's failing Windows Mobile back in the summer of 2010, and of Microsoft's glorious new WP7 project and its promise. So he knew what was possible out of Redmond. And then he came to Nokia, and got the first real look into MeeGo. And he was stunned. He was smart enough to see this was going to resurrect Nokia definitely, MeeGo was a true iPhone-beater and would fight Android neck-to-neck for the decade. Fine, if you are neutral. But Elop clearly came in with a mission to switch Nokia to Microsoft (that may have been promised to him in hiring him to Nokia even, in his negotiations for the job).

So that is the only explanation why Elop is so incredibly hostile to MeeGo and the N9 and the whole project - and explains why the three topmost Nokia execs involved with MeeGo resigned from Nokia within four months of Elop taking charge.

But that does not explain February 11. Feb 11 happened yes, like you say, because of Symbian's recovery. This took Elop by surprise! He had been convinced like all of us were, that Symbian is dead. But the Symbian developers were not told that. They worked meticulously on their plans and projects, and they did indeed turn the old turkey into a winner, and the S^3 was truly world-class competitive. Not an iPhone-beater, but truly competitive. As Nokia could sell Symbian phones at far lower price points than Apple, this meant Nokia customers could get a very good Apple-like experience at half the price. And with two nice flagship phones in the N8 and E7 - he was witnessing a genuine recoery out of Symbian. If that was allowed to run to the end of Q1 - the trajectory meant - remember this was the China quarter - Nokia sales up about 5% to 10%, market share UP first time in more than a year, to over 30% - and average sales prices into the 220 - 230 dollar range and profit margins over 15%. That was the trajectory by Feb 10. He saw the numbers from China in January. And I am sure after the Q4 results, he was looking at Nokia internal numbers daily. And he did his math, and knew, Symbian had to be stopped now, else Elop would not have his Microsoft Moment and no matter what was in his contract, the Board would not approve his decision to switch away from Symbian into Microsoft.

That is the only reason that explains the boneheaded move to announce Microsoft on February 11. Elop was freaked out by how well Symbian was doing. I have done the math using Nokia Q4, Q1 and Q2 numbers and the new profitabilty breakdowns, and its consistent with a huge surge out of China, that then was cut short in Q1 results as Nokia ended the quarter with the Osborne effect and the market share was down very dramatically by then..

I am hopeful that the Finnish, EU and honestly, Wall Street too, will be launching investigations into the wrongdoings of Elop very soon. I am so disappointed this matter is not getting major attention. But I am doing my bit and I am not yet finished haha. I think you can see the pattern emerging, that I am building to something haha. My last posting in this series will be one that will cause Elop the worst day he has had in his life, I am sure.. But yes, I am really disappointed especially in the Finnish press. Why the (relative) silence about this. Considering the scale of the disaster, when the Finnish telecoms operator was making management mistakes in buying some spectrum in Germany and wasting tons of money on it, the Finnish media was all over the story. But they seem very silent about the Elop fiasco happening now. I am disappointed at that. But even there, I have some... plans... haha. Stay tuned my friend, stay tuned. And keep the faith :-)

Tomi Ahonen :-)

Arild

Ummm.. OK, I think a line has been crossed here between blog/analysis and a a pretty messed up and obsessive discussion about Elop. You are comparing Nokia switching operating system for their smartphones to almost 3,000 innocent people being killed by terrorists? And claiming that Nokia's case is worse? Seriously, get a grip, this is pretty offensive, it is just a tech company who is now selling less phones than other tech companies, no-one died! Talk about losing your perspective.

LeeBase

I definitely think Microsoft will purchase Nokia before letting anyone else. I don't think Microsoft planned this destruction or hoped for it. Microsoft can't possibly benefit from the alliance with Nokia, if Nokia itself implodes.

I can see Microsoft having forced Nokia to agree to drop Symbian AND Meego in order to give Nokia the ability to modify the direction of WP7. And I can see how Nokia would agree to such a thing -- given that they didn't want to be "just another handset maker".

What I can't understand, is how it benefited either Microsoft or Nokia to announce things a year before they would be ready with product. That has to fall into the area of blunder. A blunder on Nokia's part for thinking of doing such a thing. Or a blunder on Microsoft's part for requiring such a thing.

The good news is that Microsoft seems to have a good product in WP7. Sure, it's not selling well -- but we all know that's not the whole story. Symbian sold REALLY well...when it was not even close to being the best.

It's also comforting that Microsoft makes so many billions from Windows and Office, that they really can sustain Nokia's operations during this transition. Look how many years Microsoft took losses on the Xbox before it finally paid off.

The damage is done. Firing Elop won't fix anything. Dumping Microsoft is even MORE suicidal at this point.

If someone thinks they can snatch Nokia up for a song, break it up and sell the pieces -- they will find Microsoft ready and willing to outbid them. I think that should be readily apparent to actually ward off any such attempt. Nokia likely will survive with wounded pride and much smaller market share.

If not, then Nokia will survive as well, as part of Microsoft -- protected by the endless moneymaking abilities of Windows and Office.

Lee

MIP

Everyone assumes that MS would buy Nokia, but no one is mentioning all the questions and surely investigations such a purchase would raise regarding Elop and MS. I have a hard time seeing how such a purchase would be approved by regulators (though worse/more spectacular things have happened!).

SVE

Add this to Nokia's problems: in China (an important market for Nokia) Alibaba has just introduced its own Linux-based smartphone using its own mobile OS Aliyun (bit.ly/nLoCZF). It ships in China at the end of this month with a tablet before the end of the year. Where does Nokia-WP7 fit now in this list of iOS, Android, Bada, WebOS, QNX, MeeGo, and now Aliyun?

As should be plain to see by now, the assets of a phone company are just its software, not its production capacity. In this light, Nokia is already dead.

Jonay

Lee, do you really think that MS will hold Nokia on life-support for the transition to take place? Don't you remember Sendo? MS sees clearly that mobile is the future of computing, and so they are trying again and again to get into it. But they keep failing. I highly doubt they hit the nail right now with WP7, it is not selling, period (remember, from very little to very little).

I just hope Tomi knows something we don't know yet, that "Keep the faith" of his last comment here. I'd really love to see Nokia raise again on MeeGo's wings.

LeeBase

@Johay -- yes, I really do think Microsoft is just as invested in Nokia's success as Nokia is. Microsoft was never a Nokia in the mobile space, but no one was. Microsoft had a decent marketshare with windows mobile and was competitive.

Microsoft also saw the writing on the wall with the iPhone and acted long before Nokia (or Rim) did.

I know that Microsoft has not always been a great partner. I'm not evaluating this on the basis of Microsoft being "good to Nokia". I'm evaluating this on the basis of Microsoft acting in it's own best interest.

A devastated Nokia is clearly not in Microsoft's best interest. But that ship has sailed. We have a devastated Nokia and it's only going to get worse. So much worse, that Tomi's "point 2" is on the money. Nokia WILL be more valuable broken up than it's market value. So much more so by the end of the year, that somebody would try and do the "buy and chop" strategy. And that's just considering financial shark types.

Additionally, Nokia's assets are very desirable. Google would love the patents. Any of the minor players would love the name. Somebody has to want NSN if the price were right. Somebody is going to want those factories.

However, nobody is going to need Nokia for their own future interest than Microsoft. And Microsoft is going to want Nokia to be very successful in selling WP7 smart phones. And really, I don't see any other partner for Microsoft that would inspire "bad behavior" on Microsoft's part. Their record shows they'll stab partners in the back -- when it suits Microsoft's interest. I just don't see how it could be in Microsoft's interest for Nokia to be destroyed nor anybody else who would be a better partner for Microsoft than Nokia.

So given that -- and given Microsoft's vast financial power. And in light of Microsoft's established track record of being willing to lose billions for years if the market is important enough. I just don't see Microsoft losing a bidding war for Nokia if it comes to that.

Then there's Apple. I don't see Apple standing by and letting Google or Samsung buy Nokia. There would be anti-trust issues if Samsung were to try. And we see from the Nortel patents that Apple is more than willing to overpay just to keep Google from having patent protection for Android.

So you have two of the most financially able companies that would have a vested interest in Nokia. Microsoft for their own needs and Apple from a defensive perspective.

So no. No corporate takeover specialist is going to be able to put together a debt riddled "buyout then chop up" when Microsoft and Apple have cash on hand and a vested interest at stake.

And I just don't think Samsung, Google, HTC, or anybody else can outbid Microsoft alone, and certainly not Microsoft combined with Apple (say Microsoft get's Nokia and Apple gets the patents).

I think this situation is SO obvious, certainly if I can see it, the money folks can see it. As such, I just am not sure anyone will even try. I don't see Microsoft initiating a takeover/buy out/merge. I see them simply willing to step in if someone ELSE tries.

So, there's a good chance no one will try and Nokia will limp along on their own cash reserves and Microsoft "marketing support".

Lee

Reonhato

I agree with almost everything you wrote here aside from the "dual-sim" is a mistake.

Take a look at the market in India, China, and some parts of SE Asia that were some of Nokia's strong markets. You will understand why low-mid end dual-sim devices are essential. The mobile phone culture and/or operators on those areas are not like the USA/Europe. Prepaid plans mostly dominate.

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