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« Elop, Nokia, Tablets, Location Based Services and Product Line | Main | Disappointed Buyer = Returned Lumia = Salespeople Avoid = Growing Nokia Retail Problem »

March 12, 2012

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Bart

This truly makes me wonder how decisions are being made inside Nokia atm. The problem with the company doesn't seem to be a lack of vision or direction (however, one might disagree severely with it), but more the way Nokia is seemingly is being handed over to the whims of one CEO. What about the checks and balances? As history has tought us: the only thing necessary for the triumph of evil is for good men to do nothing. So, where are the good men within Nokia and why aren't we hearing from them?

zlutor

Unbeliveable...

As said in a Hungarian joke: 'it must be serious because it would be too harsh to be a joke...' :-(

incognito

It's an act of shear lunacy, nothing more to add. As I've commented on your previous post, by the rate Elop is dismantling Nokia, I really wouldn't be surprised to hear that they'll shutting down their feature-phone development. What baffles me is - how come nobody, not even the Finnish government which lost a great deal of tax money last year, is not at least raising an eyebrow with news such as this.

I never sided with the conspiracy theorists, but more and more that becomes the only reasonable explanation of what Elop is doing with Nokia. Or as great Sir Arthur Conan Doyle through the mouth of Sherlock Holmes would say - ...when you have eliminated the impossible, whatever remains, however improbable, must be the truth.

elm70

I'm shocked.

Nokia Money was an example of Nokia being exceptional in the emerging market.
Now there will be 1.2 millions of people that will hate Nokia in India.

What companies needs are army of funboys ... and Nokia is creating an army of hate boys.

Indians have been already punished by Elop memo, in which it stated that Symbian is junk.
Indians have been resilience on buying Nokia, and appreciate the brand, but with additional 1.2 millions of Nokia hater it will be a further downhill for Nokia

Tomi, you state it again, on more time ... Elop need to be fired ... but this is not going to happen.
In May 2012 3 new board member will be appointed in Nokia, this means excluding few exceptions all Nokia board member have been hired from May 2011, together with Elop ... now, for me it is 100% clear, Nokia is controlled by few strong share holder that love Elop and love his work that give and will give terrific benefit to Microsoft and other American company

Tchuss

e_lm_70

Tomi T Ahonen

Hi Bart

I agree. I am devastated by this news now but it has been a pattern by Elop ever since February 2011. I have not seen one action by Elop since then, that has not been inherently damaging to Nokia's leadership position, excepting for those cases where he had a 'corrective' action after the initial damage (like reversing the idiotic naming decision or the crazy product design decisions like abandoning forward-facing cameras or microSD support etc).

I have tried to do my part on this blog to at least draw attention to the mistakes as they were made. I am stunned by how silent the Finnish media has been about the obviously blatantly damaging decisions made by Elop. If this was a CEO of a US corporation, the Wall Street journalists would have yelled bloody murder at these mad decisions. But even with all that, where Nokia truly had a genuine competitive advantage against all other handset makers, and already a stong foothold in India's early mobile money market - which is scheduled to have 100 million users in three years - that Elop now kills it, right after they are on their feet. This simply makes no sense at all.

Thank you for writing. I am trying to recover my balance for today, haha..

Tomi Ahonen :-)

ste

After 13 years in mobile money (according) to your history) just 1.2 million customers and a coverage described by you as "it has launched in several countries in Asia including India [...], and other big Asian countries like Pakistan."

Sorry but I don't see that in your description: "But in the case of Mobile Money, Nokia has literally been ahead of the curve, and literally years ahead of any other handset manufacturer"

Why does it not have 1.2 million customers just in Finland? M-Pesa has 14 million customers in Kenya alone. Amazon and Apple severeal hundred million.

JD!

And this all happened when Indian Govt allowed 100% Foreign Direct Investment for Nokia Money like ventures! They are now being considered seperate than banks i.e. now Nokia doesnt need any help from banks which they had tied up and can have full control of transactions. Even a seperate category is getting created for Mobile money just like Banks! And Damn it is getting killed :(

Mobile money is something which all companies are targetting and Nokia had already a base of 1.2 million... Now getting screwed.

Kirill Zelenski

just one word - Great job, Elop! ((

don_afrim@twitter

Tomi, you're forgetting that Nokia at this point in time is incapable of doing anything just like Microsoft. They can't even make a decent phone just like Microsoft can't design a decent OS. They copy all the bad things from the iphone (non removable battery, micro sim, etc) and forget to include all their great inventions like xenon flash, fm transmitter, dual screen, etc... they are stupid!!!

It will run out of business any minute now just like Microsoft.

Whoever in Finland decided to partner with Microsoft wanted to destroy Nokia.

Peter

Very interesting! Please elaborate, because if Nokia wants to focus on the core, would that not be handset making? I can not find using the mobile as a wallet on your top ten list on what we do on our phones in the Tomi Ahonen almanac 2012. Will even the best wallet service be enough to sell a telephone in the years to come?

anamika

I am not sure how Nokia Money works but Airtel india's biggest mobile provider launched its money service recently http://airtelmoney.in/wps/wcm/connect/airtelmoney/airtelmoney/home

Tomi T Ahonen

Hi zlutor, incognito, elm70

Thanks all, I am devastated by this, really, I am very depressed. This is 100% wrong decision by Nokia in every possible way, whether the 'real' needs of Nokia customers or the trend of the industry or the emphasis of BRIC countries or Nokia's stated goal to serve the 'next billion' or Elop's strategic mission and his description of ecosystems etc. And it was a true leadership position, all abandoned.

zlutor - haha, thanks. I hear you :-)

incognito - thanks and me too. I thought there has to be some sanity to Elop's actions, some tiny sliver of sense. And when you read the Burning Platforms memo, and all the statements since Elop has said about need of winning in ecosystems and focusing on Nokia's strong market positions in the Emerging World etc. And then this..

elm70 - haha, sadly, yes, Communities Dominate Nokia too. You are so correct, those 1.2 million loyal Nokia users will now become Nokia-haters. What Nokia really does not need in India is to have an army of fanatics who feel betrayed.

Also good point about the evolution of the Nokia Board.

Thank you all. Please keep the comments coming

Tomi Ahonen :-)

vladkr

Nokia loyal customers/fanatics don't feel betrayed in India only. It seems that E. Murtazin's prediction of Nokia's death by the end of 2012 - beginning of 2013 is more and more realistic unfortunately.

I still don't see the point of all that. Even if the goal is to make Nokia less valuable and easier to acquire by Microsoft, what would MS do of a dead cow ?

There is no engineering, almost no production, no programming anymore.

Nokia will organise its "Nokia World" venue in Helsinki this year; isn't it a bit risky, regarding that Elop achieved to ruin a company and a whole (Salo) region ? Is it just provocation ?

chip_mk

It seems Elop’s mission is to lobotomize Nokia and turn it into dumb OEM, apparently with wider consent of relevant factors for some undisclosed reason. My condolence to all Nokians who‘ve invested so much effort in putting Nokia to the leading position in so many areas (being in similar position, I know how much hurts).

KPOM

Is it possible they concluded that 1.2 million customers after 13 years wasn't enough of a head start? What are Microsoft's plans regarding mobile money? Obviously we know Google's, and it's presumed that Apple will be out with something (if the next iPhone has NFC, that would be a strong indicator). Maybe something is happening behind the scenes between Visa, MasterCard, and the major manufacturers. Apple tends not to roll something out until it is ready to offer a full product, so that may be another year or so, and it could be a deal with one of the credit card processors (look how Apple has successfully strung deals with the record labels and Hollywood studios). Maybe Microsoft is planning something similar, or plans to join an alliance.

Tomi T Ahonen

Brief comment to all

I notice some have read somehow that the 1.2 Million Nokia Money users were achieved in 13 years. No. Mobile Money was invented in 1999 (by Coca Cola) and has hundreds of millions of users worldwide. Nokia Money was launched 2 years ago and just in India has already over 1.2 M users a very strong start and a head-start ahead of the other rivals in the India market.

Tomi Ahonen :-)

n900lover

KPOM:

In other words nokia is now ms ward, waiting for redmond to move first and then meekly follow, if they are allowed to do so.

Btw I'm curious what synergies this brings to the supposed meltemi linux os for featurephones. Will be even the nokia's own meltemi permanently tied to microsoft and it's various solutions, or is it that Elop just doesn't plan to have money on featurephones at all?

Oliver

There is an infamous picture of Elop, probably during a joint event with Microsoft, with his finger pointing down. I have never been comfortable with the CEO of a company vivdly expressing such an image. But that was over a year ago, now we see what message he was conveying back then.
The sad thing is that he is being paid so much to vandalize the company. Nokia could have got some idle youths to do it for free.

One manner of spell are the shareholders under. Are they blind to the destruction taking place?
Can't they hear the collective cries and anguish of thier customers and well wishers, with every unimaginable decsions and turns they take?
Or have they all signed a suicide pact like those dooms day cults?
Is there something much more sinister involved?
Are we dealing with a very powerful entity that sees NOKIA as an obstacle to its ambitions and are using a few shareholders to actualize their objectives?

It seems there is no fight left in the once mighty NOKIA!!!. We are now left with a corporate mouse.

Corporate cowards.

Oliver

@Don Afrim

Nokia is very well capable of making a decent phone, matter of fact they'd be spoiled for choice what level of features they should adorn the phone with.

As Tomi has said over and over, it is not a lack of capability that has been Nokia's problem. Go back a few years to the early Nokia Communicator series, these were phones that were way ahead of their time. Yes they were not touch screen phones. But a touch screen is only a glorifies mouse or directional key.

All Nokia needed to do in response to Android and that other fruit device, was to take a deep breath and then take steps purposefully.

Elop was just the very wrong kind of leader for this organization. He can't even inspire a dog to bark.

vladkr

@Oliver :
As a small shareholder of Nokia, I just don't know what to do.

Nokia never contacts shareholders for any decision, no offer to vote is made... to Nokia we just don't exist.

So what can we do? Sell all the shares and let the company sink peacefully?

elm70

@vladkr

I'm also a small shareholder of Nokia, I think many small Nokia shareholder are ready Tomi blogs.
I know that other share owned companies are offering vote from online to their shareholders, even the little one.
But it is not the case of Nokia.
The only way to control Nokia is to go to shareholders meeting, in May it will be the next one.
There is possible to vote for Nokia board members, as well it is possible to make new candidates (I'm not sure how this process works, since 3 new board members have been announced, but still they need to be voted)
The only way for little investors it is to join forces. Get delegates from other Nokia share holders and join the Nokia shareholders meeting.
The day after the mad Elop strategy has been announced there was on internet, the Nokia-PlanB, unluckily it did last only 24h, what it is needed is a way to collect shareholders against Elop strategy.
Maybe Tomi could be nice enough to offer his web space for collect shareholders delegate. Else it would be needed to organize a web space for it.
Next meeting is on May ...
In the past I was trying to find consensus for go against Elop, but I never found enough shareholders.
At the end, a smart shareholders is the one that sold on 11.2.2011 ... fighting against huge American Funds, it is maybe a mission impossible.
The little shareholders are so many and so dispersed in the world that is almost mission impossible to collect a small percentage of them.
Other option, is a Class Action, like it has been done by small shareholders with Fortis some years ago. But it would be needed to know if Class Action are possible in Finland.

shavy

What's the reason for ending nokia money? Money is important, why would a ceo take away the pillar of support? Clearly elope knows once the pillar is taken away, the oil rig will collapse.. is there another direction we could look at towards the closing down of nokia money?

Baron95

@Oliver, ELM70, Tomi, etc... EVERY shareholder can vote against Elop. If you think his strategy is wrong, misguided and will lead to ruin, all you have to do is short the stock. That will both make you rich as well as send the board a signal of no-confidence.

Now lets make some corrections to the group think.

1 - NFC is not synonymous, nor necessary for mobile money. If Nokia had in-fact managed to ship NFC in 100% of their smartphones, 99.9% of those would be un-used, simply increasing the BOM of the handset for no benefit. Tomi, you yourself notes that Smartphones are on 18 months replacement cycle. There should be no need to "pre-roll" extra cost until the full payment ecosystem is ready.

2 - Being first means nothing. Who cares what DoCoMo was first in? FACT - Today, DoCoMo has THE WORLD LOWEST smartphone penetration of any major develop market operator. FACT - Today, DoCoMo is way behind industry leaders like Verizon in 4G/LTE.

3 - Doing a science experiment with Nokia money in a couple of poor countries is NOT A BUSINESS. A business has a plan to MAKE MONEY. Not units, not even revenue, but profits. Nokia has absolutely NO VIABLE WAY to generate profit from Nokia money. There is NO MONEY to be made in Nokia money in places like India. It is at best a race to the bottom on who can do it at scale and for less. There is no lock at all.

4 - When you decide to join an ecosystem, you leverage the ecosystem, and shut down your native costly alternatives. Overtime you kill your Nokia/Meego spend to leverage Windows Phone. You kill Ovi/Qt to leverage the Windows Phone market and developer tools. You kill your Ad platform to leverage Microsoft's. You kill your money loosing payment platform to leverage Microsofts. That puts you in a position to ONLY HAVE UPSIDE. If you get a cut from all these initiatives and you have near zero costs, you always have positive margin from them. The alternative is to have huge R&D with no guarantee of profits. With Nokia's track record, it is a no-brainer which to choose.

So everyone just relax. If you are surprised by this move, you must not have understood what Elop meant by "joining an ecosystem". Do you think that every Android OEM will develop their own payment system or use Google's? Same here. Windows Phone OEM's will leverage Microsofts investment and ecosystem for payments, just as they leverage the OS, the apps, the developers, the search engine (Bing), the music service, etc.

Maybe you didn't hear correctly. This is an all-in bet. All-in means exactly that - you pick all your chips and put them all down behind your bet. No chips are left behind.

If you will make a huge headline and a huge deal after everything from the previous failed ecosystem that Elop shuts down, you will be one busy fellow.

karlim

The mobile money as an opportunity may be huge, and the world may be moving towards it. The problem is - it is extremely hard to do. And very few yet figured out how to make it work, except in very unique and limited cases. For 13 years now, since, as Tomi says, mobile were invented.

Nobody outside Japan was able to replicate what NTT DoCoMo did. And, despite multiple efforts to expand to other countries, Vodacom's M-Pesa didn't come anywhere near to the success it had in Kenya. Philippines G-Cash and SmartMoney might be another example of only limited success - don't know much about.

Now let's see how Nokia Money was actually doing in India? It's been there for 2 years. Worked through two banks, and 3 months ago launched its own service too. At the end of those two years it had 1 million customers through banks and was able to sign up 200K new customers to its own independent service in 3 months. So it was getting less then 100K new customers a month.

Is it good or bad? Let's compare it to the success of M-Pesa in Kenya. In two years since launch (2007-2009) it grew to 6.5 million users. In Kenya. A country of 41 million people.

Compared to 1.2 million customers for Nokia Money in India. A country of 1.21 billion people. Where Nokia had 200K retail shops. Which translates into a less then 1 customer signing up for NM per Nokia retail store per month. Not exactly a raging success, isn't it?

The service like NM might have made sense for Nokia in 2009, when it was still believing it can make the OVI strategy work. Money service would have been a nice and logical addition to it. But in 4 years of trying and spending billions on it, Nokia was never able to make OVI work and abandoned it. OVI is one of the reasons Nokia finds itself in a position it is in today. (Do not confuse OVI online services platform with OVI store, which was only small part of the whole thing).

When you a true dominant player in an industry, with your own dominant OS, with plenty of resources and cash to spare - investing in trying new far off things which potentially huge payoff makes a lot of sense. Even if they are way outside your core competency. And this what Google and, maybe, soon Apple -are doing.

After two years of effort, when you were able to achieve only very limited success with a service, are pulling out of the platform game, strapped of resources and bleeding cash, it makes much less sense.

How much Money was costing Nokia? In money, time and resources spent? How fast was its growth rate? Was it accelerating meaningfully? Did it have any meaningful network effects? Barriers of entry/sustainable competitive advantage against current and potential well funded competitors? Was it helping to sell Nokia phones? Or keep current Nokia owners from choosing Android?

Why not try to at least consider these much more relevant questions? Instead of postulating the huge opportunity and payoff sometime down the road, calling Elop an idiot and leaving it at that?

Because these were the questions Nokia management had to answer before they decided to call it quits on Money. And, judging by the outcome, none of the answers were good.

F.OO

@Baron95 "When you decide to join an ecosystem, you leverage the ecosystem, and shut down your native costly alternatives. Overtime you kill your Nokia/Meego spend to leverage Windows Phone. You kill Ovi/Qt to leverage the Windows Phone market and developer tools. You kill your Ad platform to leverage Microsoft's."

I strongly disagree.

Elop had to make a decision: join a new platform.

He should have mantained the first platform until the second one was ready.

He is dismantling the first platform before the second one is ready.

He is selling Nokia's assets so it can survive his past mistakes.


"That puts you in a position to ONLY HAVE UPSIDE. If you get a cut from all these initiatives and you have near zero costs, you always have positive margin from them. The alternative is to have huge R&D with no guarantee of profits. With Nokia's track record, it is a no-brainer which to choose."

No. Selling the company assets makes it less valuable. First because the assets are undervalued; second because the money is used to plug holes that Elop caused to Nokia.


"So everyone just relax. If you are surprised by this move, you must not have understood what Elop meant by "joining an ecosystem". Do you think that every Android OEM will develop their own payment system or use Google's? Same here."

How can one relax while the CEO destroys the company?

Sure, he is following a plan. But the plan only benefits Microsoft.

By the time Windows Phone gets traction (if it gets traction) Nokia will be a much smaller company that doesn't build hardware, doesn't make software, and doesn't control customer data.


"Maybe you didn't hear correctly. This is an all-in bet. All-in means exactly that - you pick all your chips and put them all down behind your bet. No chips are left behind."

You *only* make an all-in bet if you have a strong hand.

Betting everything in the smallest platform -- and inviting other manufacturers to join the party! -- is simply dumb.

Elop is not working for Nokia's interest. He's working for Microsoft's.

Or he is delusional. (Which is also a possibility -- never attribute to malice that which is adequately explained by stupidity)

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

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