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« No Straight Lines: an open access participatory book | Main | Smartphone Final Numbers 2011 - All the stats including Q4 by handset brands, operating systems and installed bases »

February 13, 2012

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F. OO

Stephen Elop is not only delusional. He is incompetent.

Think about it: his first goal was to promote the "third ecosystem" -- Windows Phone. He bet the farm in this platform; if Windows Phone fails, Nokia fails.

Now, let's suppose that the Microsoft ecosystem thrives, and the market is split as follows: 1/3 iPhone, 1/3 Android, and 1/3 Windows.

This would be a dream coming true, right? Wrong!!!

Even in this rosy scenario, Nokia would split the Windows Phone share with other manufacturers -- because in his crazy strategy Elop invited other companies to abandon Android and adopt Windows Phone.

So, what would happen in this unlikely success of Windows Phone?

Nokia would have 1/3 of the Windows Phone market share; HTC, Samsung and others would have the other 2/3, plus everything they sold in the Android side.

Conclusion -- in the best scenario, Nokia would end with 1/9, or 11% of market share, which is well below it used to have.

That's a losing strategy -- except for Microsoft, that would jump from zero to 1/3.

KPOM

Elop's goal was to make a strategic shift. Having done that, he isn't about to go out and claim that he shouldn't have done it, and that they would have been better off staying the course.

Nokia has made their strategic bet, and their best course of action, from where they are today, is to stick with it. It is impossible to go back to Symbian/MeeGo. Intel, for one, has moved on and is courting Samsung. The Symbian talent is mostly gone. All a new CEO could do is decide between Windows Phone and Android.

Anyway, have you paid attention to the Windows on ARM announcements lately? I think there is a future for Windows 8 on tablets, and that was something that was sorely lacking from Nokia's previous strategy. Android so far has yet to take off (apart from the Kindle Fire). What this means is that even a new CEO (and I suspect that even if you were named CEO tomorrow) would likely stick with Windows Phone for the foreseeable future.

Sander van der Wal

Said it before and will say it again, Nokia's developer ecosystem wasn't the biggest. No way there were 400.000 developers working on Symbian and/or Maemo/MeeGo apps.

And Elop stating they are on the right track, what would you expect? Elop telling everybody things didn't work out and Tomi Ahonen should take over?

Elop is doing what everybody else would be and is doing, stating his interpretation of the situation again and again, until everybody is fed up and gone away to watch some new train wreck. One should never listen to those statements in the first place, it's all smoke and mirrors.

karlim

Maybe,last year, Elop just saw the internal numbers, actual end user sales and reception of Symbian 3/N8. And those numbers indeed showed that it was a burning platform?

Nokia shipped 5 million Symbian 3 devices last in Q4 2010.Shipped. Not sold to end users. There is no public evidence that users bought those 5 million S^3 devices. Unless you have access to paid Analyst House reports. None of them said publicly that n8 and other S3 end user sales in Q4 were good. Not Gartner, not Strategy Analytics, not Canalys, not IDC. And there’is quite a few indirect signs of inventories piling up already, unhappy users, high return rates, etc;. Especially since N8 was shipping with a buggy pre-Anna version of Symbian then.

The big profits in Q4 2010 could have been a one quarter phenomenon, based on unsustainable shipments into the channel and previous Nokia carrier relationships. But with much lower end user sales. And Q1 drop in sales could be more about the market realities catching up, then a huge damage of Burning Platforms. After all, the old Symbian^1 smartphone sales were crashing in Q4 201 already. They sold something like 3 million less S^1 then they did in Q3. Cannibalization can not be a big factor,, given the price difference between S^1 and S^3 phones.

Also, market share loss in Q1 2011 was in line with losses in Q3 and Q4 2010. Nokia managed to grow Q4 numbers because market grew smth like 40% QoQ. When QoQ market growth stopped, and the inventories in the channel didn't move - there was nothing to propel unit volumes too. Hence Q1 drop.

You probably know about this better then me, having worked at Nokia and Elisa. Isn't there something like 4-6 week lead time in operator/wholesaler orders to OEMs? When the contracts for phone deliveries are signed and pretty hard to cancel? If that’s the case - orders for 2/3ds or, this being Chinese New Year quarter, even 3/4ths of the Q must have already been in, before Feb. 11th. And those Nokia customers who decided to cancel - had to go and find the replacements in few weeks, before the end of Q1. Which probably was an almost impossible task back then, given the demand and manufacturing capacities. So the amount of damage Feb. 11th could do in Q1 2011 should have been pretty limited?

Stephens_Eloped

It's too early. Nokia might yet do some good sales with its Windows phones. Let's see how the rest of 2012 does for them; it's only been around 2 or 3 months since the 800 was released in the UK. People I know who have them love them, so I think it's subjective. Personally I think Symbian wasn't moving forward quick enough (Belle should've been a 2010 OS) and neither was MeeGo, although I think some executives MUST be kicking themselves that they booted MeeGo out of Nokia HQ so quickly, and then saw just how popular and wonderful their N9 was, all over the world. The reviews of the N9 - even from the most chilly reviewers when it comes to Nokias, such as Engadget - were *glowing*. But they all said the same thing, 'what a shame Nokia killed it before it was even born'. Yes, what a shame. Because now we read things like "there's no Plan B" from Elop and others. Really? Man, you've got some balls. Everyone should have a Plan B, and MeeGo is one-hell-of-a Plan B. The N9 could've been Nokia's saviour, it's *that* good. But for Nokia's sake, let's hope the masses start to buy Windows phones, or Nokia could be back to making TVs before we know it!

Per

Nokia will have huge problems selling phones in 2012, Andriod Ice Cream Sandwich phones are soon out with 720p and dual core processors with more functionality compared to 800x480 and single core WP phones. Nokia needs to lower the price to sell

What they need to do (to make some money) is to release a dual core MeeGo Harmattan Phone with 720p on all markets.

kevin

It's time to move on and look ahead. There's no going back even if Nokia replaced Elop today with a new CEO.

Nokia has placed their bet that MSFT will not fail, and will be a consistent, battle-tested partner in the phone and tablet space. I'm not convinced yet that it was the right choice, but I do think it was a much better long-term choice than Android. Though Samsung is the dominant Android vendor, it's hedging its bets with Bada, Windows Phone, and Tizen, and its own ecosystem because of something it sees in Google's future ambitions.

It will take some more time to see how this plays out. Let us move on and focus on discerning and understanding new trends and success factors for the mobile industry. The industry has already changed and continues to change in fascinating ways.

dr zorg

@kevin

To move forward does not mean to forget. Such things should never be forgotten and it's good to be reminded of what bad management can do.

dr zorg

@Tomi

I think Elop only means that his platform has finally burned out. There's simply nothing else to burn :)

Cayce Pollard

On the other hand, Nokia will soon be cheap enough for Microsoft to buy it and then Elop can go back to Microsoft as head of the Smartphone Unit. He's the one who is smart, as his Microsoft stock will go up, and we are the one who are dumb.

Earendil Star

Tomi, as I said in a previous post, THT Elop is NOT delusional. At all.

He is always speaking as a MS man working to ensure WP's success.

We all know that *** WP WAS THE BURNING PLATFORM. ***

After what he did at Nokia, WP is no longer a burning platform. He is right.
WP now stands the chance to grow to the top single digits.
Mission accomplished. And this is what he meant when speaking to the Southafrican newspaper.

Furthermore, THT Elop has also managed to give the following goodies to Microsoft:
Patents (see Mosaid), Maps (Navteq), smartphone know how, hardware brand (Nokia), carrier relationships (WW ex US),
former Ovi store audience, you name it. For free (payment was money Nokia had to spend in... WP Ads! Brilliant!).

Meanwhile, Nokia assets non core to WP are being divested, while Nokia is safely (for MS) morphed into a captive WP OEM.
As things are playing out, a fire sale of Nokia to MS might not even be necessary any longer.
Why should MS incorporate it (whith the associated risks), when all goals are being achieved while leaving Nokia independent?
When the transition to WP is completed, the likelihood of it being potentially acquired by someone else (hostile to MS) are minimal.
Plus, it might be perceived as too blatant an admission of the plot that has been carried out so far.

THT Elop's future in the MS ecosystem is as rosy as ever.
At the same time, what is happening to Nokia is no longer of any relevance.
Even if the usual trolls are mixing up what is better for Nokia and what is better for MS.
The market knows. That's why Nokia's shares are where they are... buoyed only by the hope of an imminent -yet now unlikely- buyout.
Nokia is now being priced as a low margin captive OEM.

jo

elop is a puppet, nothing more,

its scary how he cam benefit microsoft so much, while killing nokia, doenst nokia have board he have to reply too?

but i guess the board its a bunch troyans too.

bad for nokia windows phone never gotta take off. unless microsoft changes to a google like feature set.

DS

MS doesn't give a rat's bum about WP7 any more. They are all focused on Win8 for mobile now, something that is at least year off.
Nokia gave them an relief, saved face before investors and will be sacrificed. When Win8 arrives MS will happily embrace all Asian companies that failed on their Android tablet adventure and want to get back into market using MS Table+Phone convergence play. Nokia will be shown door.

DS

Cont. Why MS waited so long before introducing native API on WP7, something that not only technically disqualify it as a smartphone platform but eliminates all "digital interface to reality" category apps that are at the core of mobile apps paradigm shift?
1st. because they still leave door open for Intel, yes way more important partner form them than any of mobile companies in the longer term.
2nd. they simply ARE NOT READY. MS is not a magician and as usuall the have slept behind the wheel and now trying to find loosers who would take the damage. They've cheated 2 companies selling them their unfinished toy OS as a real contender. LG has almost died from it, Nokia is on a downward spiral.

Knowing the past any sane CEO caring about the company s/he manages wouldn't touch such a "partner" with a stick, nevermind betting the company future on it.

Frank

You talk to much about Nokia. Who care´s about the old top dog. Tell more about the important guys like samsung and apple.

michael

Whichever argument is thrown in, the result is always "If it wasn't for Elop....".

So if the ONLY real argument for downfall of Nokia is that Elop is madman sent by Microsoft to destroy Nokia on behalf of US carriers, regardless of other arguments thrown in, then that's sad.

There are dozens of excellent articles out there describing in detail Nokia's downfall. Here it seems that everything is based on "mythical Q4 2010"!

Yes Elop may be a case for MBA colleges around the world, but decisions Nokia's management took from 2005-pre Elop could be enough to make a decent phD thesis about mismanagement.

It wasn't Elop who brought down Nokia. It was more people like me. If after 10 or so years after being a loyal Nokia user you switch sides because company you are loyal to doesn't deliver (and deliver it didn't), then things are simple. They are even more simpler if millions of people did the same thing.

It was long before Feb 11th that people like me stopped buying Nokia. When Elop came to Nokia they were clinically dead. At least somebody had enough sanity and stopped playing the role of Norman Bates at Nokia HQ.

vladkr

@Dr Zorg:
I don't know what to add to your posts. S Elop is right, Nokia isn't a burning platform any more, just like BP's famous Deepwater Horizon platform, it was burning, but it isn't any more -> it's dead.

Maybe Eldar Murtazin is right, and Nokia won't survive year 2012 (Q1 2013 at max). That's sad; a new Samsung era began.

Earendil Star

Micheal, nice try, but a bit clumsy.

The issue is that ALL facts & figures are against your theory.

Fact: until Q4 2010 Nokia had been for years n 1 worldwide while growing in smartphone sales and being profitable (so supported by lots of people... unlike you).
Fact: since Q1 2011, well into THT Elop's tenure, it started a downfall unequalled by any other company in the sector.

If Nokia had performed like RIM, a slow decline, then your point could have had some merit (and it would have meant, in any case, that THT Elop would have been ineffective to turn the tide).
But what happened was that its CEO, THT Elop, stated in February 2011 that all its company's products, all those offered to that point (oops, those responsible for its n 1 place worldwide), were POS and had to be ditched for some other minuscule platform (oh, what a coincidence, the one produced by his "ex" boss Ballmer), which -by the way- would only become available on Compal phones (oh, yeah, just the sticker said "Nokia") after months.

Incidentally, the issue being discussed here is NOT if the previous managment did everything ok or not.
Everybody agrees that execution by OPK & Co. could have been better.
What is being discussed is if the CURRENT management is working for the best interest of Nokia or not.

Otherwise, let's blame the current Nokia predicament on Fredrik Idestam, born 1838. After all, had it not been for him, Nokia would not have existed at all and therefore would not be suffering today.

jack1059

It has just occurred to me that Elop's strategy was based on his myopic view of the smartphone market as not world based, but US based. Elop's a MS man so he views "the world" as the US. He moves to Nokia, cant understand why its not dominating in "the world" (read the US) and ignoring any semblance of business acumen proceeds to try and make Nokia a US player. He may also be driven by the fact that he wont stay at Nokia, and wants to please the market where he'll get his next job (the US). He simply cant see China, India, Russia, etc. He looks across the world and only see's the US market.

Either that or, A-He's completely incompetent, or B-Is on a deliberate mission to destroy Nokia.

The only explanations I can see for his behaviour. At any rate, Im betting the university where he got his business degree is quietly cringing in horror hoping nobody notices them.

KPOM

@Earendil Star, in 2007, when Apple launched the iPhone, Apple and Nokia were worth about the same in market cap. By the time Elop came around, Nokia was in a slow but accelerating decline. Elop sped up the decline (partially intentionally, partially unintentionally) by announcing the abandonment of Symbian, but the old model left by OPK wasn't sustainable. They were "growing" sales, but only through fire sales at lower and lower margins. Elop didn't spend $8 billion to buy Navteq (which is maybe worth $1-2 billion right now - thank Google Maps Navigation for that). Elop didn't release the disastrous N97, or cause the seemingly endless delays to Symbian^3, Symbian^4, and Meego.

Elop's bet so far hasn't paid off, but few were doubting that by February 2011 they had to make a big risky bet one way or the other. They could have doubled down on Meego, chosen Android, or Windows Phone. Android actually would have been the least risky move, as evidenced by Samsung's rise (they were the main beneficiary of Nokia's fall).


Sander van der Wal

Apple is selling all the iPhones it manufactures, and has been doing so since iPhone came on the market. Whether Samsung does sell all the Android devices it manufactures I don't know.

It is therefore possible that people bought a Nokia two years ago because they could not buy an iPhone or a Samsung.

With more and more iPhones coming on the market, less and less people have to buy a Nokia they do not want. This will also result in Nokia plummeting, by as much devices as Apple and Samsung were able to manufacture in addition to the ones in the comparison timeframe.

This is a calculation that can be made with available market shares, assuming both Samsung and Apple sell everything the manufacture.

Metal_Might

1. stephen elop was hired by nokia, in independent finnish company.
2. stephen elop was a successful executive in microsoft, and has proved to nokia shareholders that nokia can grow.
3. all that stephen elop says in the interview is that nokia fared badly then, now things are improving.
4. tomi ahonen: i have seen your videos in youtube, you come across as a normal person. why this much poison against stephen elop? he is just a human being doing his job that is monitored by his bosses.
5. critique should not get personal. it should be objective.

vladkr

@Metal_Might:
1. Nokia was independent, but Stephen Elop's hiring may have been result of promises that MS didn't respect.

2. Maybe Stephen Elop was successful at Microsoft, where he wasn't a CEO, but it was at Microsoft only. He was a real disaster for his previous employers, let's say Juniper, Macromedia/Adobe for example.

3. What things are improving ? Investors don't trust Nokia any more, Stocks are at their lowest level, credit/trading rates are just ridiculous for such a company. All that is going lower and lower.

New and future products of the coming year are already obsolete. It lost all it's knowledge throwing its engineers and technicians out and it's selling all its family jewels. What's positive about all that ?

4.

5. What isn't objective in data that are given to you ? What isn't objective in Nokia's Q4 report, which shows that situation isn't good at all ? What's not objective in the fail of Lumia sales ?

It's all facts my friend, not just an opinion. You're not obliged to agree with Tomi, but you can't say that he's not objective, especially if you read his pre-Feb 21st posts.

The only thing that can be subjective here, is the explanation of this disaster, as no one except few ones have the real reason for that.

Earendil Star

KPOM, I see you agree with me and with everybody else: past Nokia management was bad (for a company wanting to remain n 1 in smartphones WW).

However, that Nokia was having lower margins is false. Tomi, time and again, shows that margins were rising.
Still, under OPK and until his strategy was abandoned, Nokia was N 1 AND profitable. Fact. Full Stop. Period.
You may call this a failure, but I can assure you, most managers would be extremely happy with that.
Only with THT Elop this changed. Putting the blame on others is not supported by facts. As I said, blame Fredrik Idestam then.

Sander van der Wal: please provide evidence that people were buying Nokias because they could not buy iPhones or Samsungs or any other phone they wanted (why not Windows Phones then, which were widely available because nobody was buying them?).
It is just ludicrous. Reality is people (and businesses) started ditching Nokias after THT Elop's infamous February statements, as very well demonstrated by quarterly 2011 results and disclosures.
Would you buy a product from a company whose CEO says its products are failure and will be discontinued asap?

Metal might certainly be wrong. What are you saying? Can you read? Have you seen the latest figures from Nokia????
Do you see any growth?? GROWTH??? Do you see any improvement?? IMPROVEMENT???? What planet are you living on?
The joke "critique should [...] be objective" is fun though, after all the inaccurate statements you made.

What all the trolls are trying to hide is a very simple fact:
For Nokia, ditching OPK and AV would have made sense ONLY if it would have been instrumental to RETAIN ITS N 1 PROFITABLE POSITION -WW- IN SMARTPHONE ECOSYSTEMS.
Otherwise even the good old OPK or AV would have served Nokia's interests much better than THT Elop, without all the pain caused in the meantime.
Just think: the new target for Nokia is to become an (optimistically) 8% market share captive OEM! Wow! What an achievement!
Clearly though, with a continued OPK / AV strategy in place, WP would now be in a radically different situation... i.e. it would be going the Zune way down the drain...

kevin

@dr zorg: Sure, don't forget. Even better, learn from it; there were plenty of errors by Nokia before Elop arrived and after Elop arrived. Tomi has pointed out some of those.

But let's not just obsess about it, in the exact same way, over and over and over again.

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