The Heartbreaking Fact is - That Nokia CAN be Fixed in Just One Quarter (as in right NOW)
Nokia is a devastating disaster. Nokia's sales are crashing in smartphones and in dumbphones. Nokia's brand new 'savior' software, Windows Phone, is not helping and its biggest product launch ever, for the Lumia series of smartphones, is barely registering sales. The prices are being slashed. One year ago Nokia towered over its rivals, literally more than twice as big as its nearest rival and today Nokia has shrunk to one third the size of the biggest rival. Nokia was generating enormous profits in its smartphone unit even during the worst economic crisis we have witnessed in our lifetimes. Now when the world economy is recovering, Nokia's smartphone unit is generating massive losses. Even after the 'Microsoft bribe' of 250 million dollars (!!!) per quarter is added to Nokia's smartphone unit profitability. Nokia is in exceptionally bad straights right now. Hire McKinsey strategy consultants to a company this badly messed up, they will give a strategic plan of many years to turn this wreck of a company around.
(Update 23 April - I am sorry for the delay in finishing this blog, I was out of open internet access in China for part of the past week and then had heavy travel with some travel hassles. Now the links are added to the blog, and the last part, the 'regional analysis' has been added after the fold)
But what makes me weep is that the solution is simple. Nokia can be saved. And this is not Rocket Science. This is basic marketing. Marketing 101. If we examine the very simple facts, we find the very obvious problem - and by happenstance, also an existing 'salvation' already waiting to be deployed.
If you want Nokia destroyed, cheer on Mr Elop and the current strategy, it will kill Nokia. But if you love Nokia, read this blog. I will show you where the problem is, by the process of elimination. Then I will show you the specific problem and give you proof of it. Then I will end with a few very simple steps to solve Nokia's crisis. Nokia can be returned to profits within one quarter and I do mean now, if implemented today April 12, the Q2 results would show a modest profit, not a 3% loss for Nokia. This blog article cannot be short, it is a very complex matter and Nokia has just set a world record in suicidal self-destruction. The primary part of this blog runs 9,000 words and will take you about 20 minutes to read. So this is facts and data and deep analysis, point by point, to show how to fix Nokia. If you read this blog carefully and you have a business/marketing background, you will agree with me. Nokia can be saved.
PRODUCT, PROMOTION, PRICE AND PLACE
I learned my marketing like most, that there were the classic 4 P's. Lets not argue about how many P's there might be, or what clever new theories have also appeared. Lets keep this really simple, this blog is long enough as it is. Even if there may be other things that impact the sales of any goods or services, we can all agree, that these four issues are among the most meaningful items, in every market, every country, every segment, every product. The classic 4 P's. Product means the product's design and manufacturing (and in the case of a smartphone, such things as its software and services etc). Promotion is often simplified to mean advertising but it of course means all promotional activites such as publicity and PR. Price is yes, the price. Place is a memory gimmick to cover the distribution channel (the place where your good is sold, but in reality includes the wholesale and global distribution issues too, in the case of mobile phones for example).
Is Nokia's product suddenly undesirable? One can see a lot of evidence that the Blackberry is losing its cool in many especially government and corporate business uses, where many people want phones with larger screens like the iPhone. Similarly the Motorola Razr was a hot phone, but its successor, the Motorola Rokr was a total failure, undesirable at any price. Has Nokia lost its mojo? I please ask you to not consider your 'own' view. Lets keep this to the facts. Lets only talk about what are public published data.
Nokia's 2010 flagship smartphone, the N8 won the best cameraphone of the year awards, it was that good. It is so good, still this February 2012, it was winning side-by-side comparisons against all rival top cameraphones one year newer. The next Nokia flagship, the N9 (the smartphone running the new MeeGo OS) was universally loved in every single review published - in fact it has had the most positive reception of any Nokia phone ever released from the beginning of time, whether smart or dumb. It is the only phone, the N9, among any manufacturers since 2007 (when the iPhone launched), to be regularly rated either as good or indeed better than the contemporary iPhone. As for the N9 in October 2011 that was obviously the brand new hot iPhone 4S, that is truly amazing praise for the N9 and its MeeGo OS. Now in February Nokia's top device in the Windows Phone line of smarpthones, the Lumia 900 won the phone of the event award in the USA.
Then the latest Nokia uber-phone, the 808 PureView won the most coveted award, the 'Oscars' or the 'Nobel Prizes' in the mobile industry, the biggest telecoms event on the planet, Mobile World Congress in Barcelona now in March. This is where all the manufacturers bring their best phones to launch. Nokia's 808 PureView beat out the Samsung Galaxy Beam, yes the hyperphone with that mesmerizing built-in pico projector. Yes, THAT phone (I have 'the Beam', and I truly love it!). Oh, and this 808 PureView? It runs on the 'supposedly obsolete' Symbian OS. An OS so advanced, that Microsoft's Windows Phone cannot support its features until 2013 at the earliest, so says Nokia, not me. I know many of us geeks feel Symbian is past its bedtime, but the facts are, it is an excellent OS that is very robust for 'traditional' phone needs such as the cameraphone, messaging etc. But it was not designed to be a touch-screen OS, so of course its touch-screen lags those who were built to be touch-screen OS platforms like the iPhone and Android. But Symbian today supports tons of features you can't do on an iPhone or Windows Phone or Blackberry etc. Do not misunderstand me now, I did not say Symbian is good for Nokia's future; it is not. But Symbian is not dead either. It is particularly strong on more basic traditional needs (like calls, battery life, messages, camera etc). While Palm died, Windows Mobile is dead, Blackberry OS is obsolete, Symbian is not. Symbian once again produced the absolute run-away best cameraphone ever deviced. With techncial abilites native to Symbian that more 'modern' OS platforms like iOS, Android and Windows Phone cannot support.
So Nokia is consistently able to deliver absolutely stunning super devices that win awards as the best phones - and note, in just a period of 6 months, Nokia managed three superior phones that ran on 3 separate operating systems with dramatically different features and abilities. Nokia has tons of problems today, yes. But designing superior phones is not the problem for Nokia today. The same is true down the line, even the very cheap 'Africa phones' such as the new dual SIM phones have been highly praised and very popular.
IS IT PROMOTION OR PRICE THEN?
So if not product, is the problem with Nokia's promotion? It may have been last year, lets not dig into that. Lets look now over the past 5 months. Nokia's Lumia launch has been the biggest, most heavily budgeted massive product launch in the handset industry history. The promotions are enormous in every Lumia launch market, including such phenomenal gimmicks as in the UK, there were free Xbox 360 videogaming consoles given to customers who bought a Lumia 800. That is marketing with a bang! There have been gigantic promotions on Times Square in New York City with Nicki Minaj doing live music etc. In shops from Finland to Australia the store sales displays of Lumia have dominated the stores, as they do also here now in Hong Kong.
In some countries Nokia has even taken to sponsoring a whole TV channel as they did in Britain to flood the chanel with Lumia marketing. But wait. Did I say Nokia spent the biggest marketing budget ever seen for any phone launch? Wait. Then there is Microsoft which threw hundreds of millions more across the globe. Just in the USA, on AT&T, Nokia and Microsoft paid literally 100 million dollars to AT&T, so that AT&T staff could have Lumia 900 phones as employee phones. Talk about spending the money around. No. Promotion and advertising is not the problem for Nokia right now. Over-exposure may be a problem down the line, but right now Nokia is burning cash to be seen.
If the problem now is not product, or promotion, so is it the price then? Nokia launched the Lumia 800 and 710 in the best of its countries among the wealthy industrialized world, such as the richest European countries like Germany, Britain and France, and here in Asia-Pacific, such as Hong Kong, Australia and Singapore. All early reviews of the Lumia series suggested the price was reasonable, the Lumia series was a good value. Nobody said the Lumia was priced as too expensive, at launch. Since then - in every market, for both the Lumia 800 and 710 (and now for both the Lumia 710 and Lumia 900 in the USA as well) the price has since been dropped! Some analysts are very alarmed that early price drops tell of poorly selling handsets, they should not see such early price drops - but the fact is - the fact is - that the phones were initially not seen as too expensive, and since their prices - across all markets - have been cut, sometimes slashed (as Lumia 900 now in the USA where the effective price is zero dollars rather than 99 dollars). Price is not the problem.
Four major aspects of marketing that cause sales success of any service or product - Product, Promotion, Price and Place. Lets think like Sherlock Holmes. If you eliminate those that are not the cause, the remaining item - no matter how implausible - has to be the cause. So the cause has to be 'Place'. Is there a problem with the distribution channel?
Funny you'd ask. Yes, as it happens, there is a huge, almost unprecedented problem specifically in the reseller channel, and very weirdly, it is across cities, across carriers, across countries, across continents. There seems to be a sudden comprehensive global reseller boycott organized against Nokia, Lumia and Microsoft.
Please reader, do not argue this point. I have gone through painstaking detail chronicling here on this blog how it happened and why it exists, what is caused by Nokia's actions, what separate boycott emerged last year against Microsoft and why these two combine to make Lumia the most hated phone in handset stores globally. I am not going to litigate that here now with you. Lets go to the facts.
Right after the infamous Burning Platforms memo and the Elop Effect, Nokia sales support collapsed. It was reported that in many countries store sales staff refused to sell Nokia whatsoever. It is no longer in dispute. Nokia's own quarterly reports last year told the grim tale such as in the Q2 Results: "During the second quarter 2011, distributors and operators purchased fewer of our devices across our portfolio." That is marketing spin way for Nokia to admit that 'our sales channel is refusing to sell our products.' Meanwhile in China, Nokia's most important market and the world's largest handset market and the world's largest smartphone market, where Nokia's 2010 market share of smartphones was 70% according to Strategy Analytics - Nokia's flagship stores started to sell phones by rival handset makers! Imagine walking into MacDonalds and the guy with the apron with the 'golden arches' tells you he will sell you a Burger King burger and fries! Or imagine walking into one of those uber-cool Apple stores, and when you ask for the iPhone 4S, the guy pulls out boxes of Samsung Galaxy S2s instead! That was about the boycott against Symbian based Nokia smartphones.
UPDATE May 3, 2012: The Nokia Annual Shareholders' Meeting was held today, and in it, in reply to a direct question by a shareholder, Stephen Elop admitted that there is in-store sales staff reluctance to sell Lumia phones. This matter is now closed. It is proven as a fact. Elop himself admits there is a reseller in-store staff 'boycott' or refusal to sell Lumia. Please accept this as a fact, if Elop himself admits it to the shareholders' meeting. Read more here: 3 things we learned from the shareholder's meeting.
The US boycott against Microsoft started almost immediately after Microsoft purchased Skype last summer. It does not matter one iota whether that boycott is caused by carrier hatered of Skype as I claim or not. It does not matter if you love Skype or not. It does not matter if you have downloaded the Skype app to your whatever smartphone. That does not matter. What is true, is that anti-Microsoft smartphone sales boycotts based on in-store sales staff behavior surveys have been reported in separate newspaper articles from San Francisco to Boston. And you cannot argue this point - Microsoft's ex head of Windows Phone, Charlie Kindle admits Microsoft's carrier relations were bad before Windows Phone, but during 2011 they got far worse as Charlie admits that Microsoft itself poisoned those relationships during 2011. So I 'claim' it is because of Skype. You may think its because of the Eggman. I am the Walrus. Coo-coo, ca Choo.
It has been ADMITTED by Nokia and Microsoft executives that the carrier relationships today are worse than they were in the past. You cannot argue this point on this blog. It is a fact, ADMITTED by executives on both sides of the aisle on the Lumia partnership. That was then. Who cares. Lets fast forward to now. It is so bad, that in communicating the Q4 results, Nokia's CEO Stephen Elop admitted explicitly that there is reseller hostility towards Nokia Lumia sales in many early launch countries. He singled out the UK as an example. You my dear reader cannot come here and say there is no such thing. At this point it does not matter why or how. It is proven there is a definite, measured problem with carriers and store staff hating Nokia Lumia and separately hating Microsoft Windows Phone. And now we have explicit evidence.
Two independent surveys of major handset retail outlet sales in Finland, Nokia's home market, and the USA, Microsoft's home market have proven separately and conclusively, that if consumers walk into stores, they will not be offered Lumia at all at AT&T stores who will offer iPhones first, and Androids second, ahead of Lumia, even as Lumia is supposedly an AT&T 'hero' phone that they supposedly promote ahead of others.
Is that a sales boycott? I say so. It is even worse in Finland where Nokia's traditional smartphone market share has been around 90% and for example when it was the world's second biggest smartphone maker, RIM didn't even bother to launch Blackberries in Finland. A survey of stores across all three carriers and two independent handset store chains in the two biggest cities of Finland, revealed that in Finland, where Nokia is revered, if a customer walks in today, right now, asking to see a Lumia, in 8 cases out of 10 the sales rep won't do that. They will refuse to sell Lumia, they will push Androids or iPhones. Is this a sales boycott? I say so.
You cannot come leave comments on this blog about what you think about some Amazon sales number, if the AT&T store sales staff are proven to refuse to sell Lumia. You cannot tell me that some sales chart out of Finland has Lumia near the top, if the stores have been proven to refuse to sell Lumia. Whatever Nokia and Lumia now achieve in modest sales, it is inspite of a reseller boycott (that speaks volumes of how much Nokia customers are loyal, gosh!).
UPDATE May 3, 2012 - At the Nokia shareholders' meeting, Elop was also asked about the retail channel refusing to sell Lumia because of Skype. Elop explicitly admits that there are carriers who have refused the Nokia Lumia offering, because of Skype. This matter is now closed. It is proven and indisputable, if Elop himself admits to the shareholders' meeting that carriers refuse Lumia because of Skype. Read more at 3 things we learned from shareholder meeting.
THIS IS CRYSTAL CLEAR
1. By process of elimination we know there is no problem currently with bad phones, there is no problem with bad promotion, there is no problem with bad pricing. It has to be reseller channel. 2. The evidence is comprehensive and consistent, that in cases from China to Britain and from Finland to the USA, it is the reseller channel that rejects Nokia now utterly and totally. 3. An ex Microsoft executive admits the problem from Microsoft's side and Nokia has repeatedly admitted the problem from Nokia's side. Most recently, Elop himself has singled out reseller reluctance to sell Nokia Lumia specifically in Britain. I rest my case. There is one massive problem. Not a series of problems. ONE big problem. The reseller channel has put Nokia into a stranglehold. Nokia is in sales boycott (or in very severe sales suppression, if you don't like the term 'boycott'. You say potato, I say tomato).
HOW DO WE FIX THIS?
There are two boycotts. There is one that hits Microsoft Windows Phone so it does not hit all Nokia smartphones and obviously none of Nokia's dumbphones, but it extends also to other Microsoft partners like HTC and Samsung. There is a second parallel sales boycott that targets Nokia. The Nokia boycott clearly started on February 11, after the Elop Effect. The Microsoft boycott started clearly on June after Microsoft bought Skype. Their combined effect is devastating explicitly to Lumia sales where these two boycott effects intersect. Their effect is compounded.
The way to fix the first boycott is for Microsoft to immediately announce its fire sale of Skype and total unbundling of Skype with all Windows products on the PC and mobile phones and other Microsoft platforms. Even if Steve Ballmer announced that tomorrow in a press conference, he would not be believed as Microsoft is seen as utterly untrustworthy, being the proverbial Evil Empire. Microsoft's past history in mobile telecoms is a trail of devastation. But you could argue that it might work, especially over time. We all know that will never happen. Skype is a brilliant move by Microsoft to expand the power of Windows on the PC environment. As Ballmer has already learned from dozens of private conversations with the CEOs of the big carriers, this is a non-starter for Windows Phone, but he doesn't care, because smartphones are the ant where the desktop is the elephant over at Redmond. Ballmer will let Elop and Nokia strangle themselves in this conundrum.
In short, the boycott against Windows Phone will never be lifted. It will only get worse with Windows Phone 8. Let me repeat that - it will only get worse with Windows Phone 8. Microsoft will never get its 'third ecosystem' in mobile. The carriers have spoken loud and clear. They take Microsoft's millions with the big smiles, then they boycott the sales. Not my words. Microsoft's ex head of Windows Phone has admitted this problem is only getting worse. Getting worse.
HOW TO END BOYCOTT AGAINST NOKIA THEN?
Ah. The problem that can be solved.. Simple. The boycott started on February 11 with the Elop Effect. What did Elop do back a year ago? He announced he will end Symbian (and shortly thereafter, the Ovi store too) and that he will not proceed to the promised migration path of MeeGo, the Linux based future smartphone OS, and that the migration path, via the Nokia Qt development tool was ended. And that it would be replaced by Microsoft's Windows Phone. Note, at this time there was no boycott against Microsoft, so this was not related to Skype, this Nokia boycott preceeds that Microsoft/Skype boycott.
Why do carriers want Symbian that you and I 'hate' as being so horrible and out-dated? Because the old 'nice' Nokia had gone through the trouble to build the most carrier-friendly environment out of Symbian, Ovi, Qt and MeeGo. The whole thing was carrier-oriented. Did you know that the Ovi/Symbian environment supports over 100 languages, that in over 60 countries there is 'carrier billing' ie one-button payments that go directly to your phone bill. You don't need a credit card to pay for anything. (Most people in Africa, Latin America, Asia do not have credit cards - even in 'advanced' Germany, yes, the majority of the population does not have a credit card! but carrier billing means anyone can buy directly from the phone, clicking one button, and have it appear on the phone bill - or be deducted from the prepaid phone balance). There are localized app stores in all those countries and more. Windows Phone does not even support the Arabic language (spoken by 340 million people - yes, more than the total US population). There are no apps in Chinese (thats 1.3 billion people, in case you are counting, ie 4x as many as the USA).
And the control of the Nokia/Symbian/Ovi/Qt/MeeGo environment rests with the carriers/operators. Nokia has been very open, it even invited NTT DoCoMo the biggest carrier of Japan to be a charter member with Symbian, and China Mobile the same with MeeGo - no such carrier involvement exists with any Microsoft software platforms.
LUCKILY NOT ALL EGGS IN ONE BASKET
If Nokia had all its eggs in one basket, and that was now broken, Nokia would be screwed. But it is not. Nokia is seeing a boycott against Windows Phone, and carriers hate it that Elop decided to kill Symbian and its successor, MeeGo. But Nokia has not yet killed either Symbian nor MeeGo. In fact, in the past six months, the two most highly praised Nokia superphones were not any of the four Lumia handsets announced, no. Not even that supposedly magnificent Lumia 900 that some US analysts seem to feel is amazing. Its amazing only if you haven't seen what Nokia can do when it is not hindered. Nokia's 808 Pureview won the far more highly contested and desired prize. That 808 PureView runs Symbian of course.
And what of the N9? Check this out if you think the Lumia 900 is hot. Every single review ever published, that evaluates any Lumia model, by a reviewer who has also used the N9, says without fail - that the N9 is the superior smartphone. Hundreds of those reviews in several languages now. Every one! If you like the Lumia 900, and you got to try the N9, you will love the N9, its that good. No. Its better. It is the only phone by any manufacturer ever, whose name is not Apple, that has been rated in most of its reviews as 'as good as' or 'better' than the iPhone!!!!!! That is as close to the 'god phone' as you can get to the 'jesusphone' haha.
So take the UK. In Britain they have the D&AD awards, the 'Oscars' of the design and advertising industry. Nokia's N9 was awarded the best design award of the year just now. Who did it beat? Pretty awesome competition including the iPad 2, and also yes, the Lumia 800. Here is the bizarre part, the UK design industry was so impressed, they awarded the 'best design of the UK' award to the N9 - even though the N9 is not sold in the UK (and the Lumia 800 is). How good do you have to be, to get that kind of victory?
Then the ultimate endorsement. I cannot make it more plain than this. Germany is Europe's largest nation and Nokia has had a huge market share there. Germany's largest weekly magazine, Der Stern (its like Time in the USA or the Economist in the UK) wrote its review of the Nokia N9 on MeeGo. Der Stern concluded its review thus, saying the phone is so fantastic, that while it is not sold in Germany, German citizens should travel to another country like Switzerland or Austria to go buy that phone! (This while Nokia's Lumia 800 was massively promoted in Germany at the time in a super-blitz marketing push). Think about that please. If the device is so astonishing, that the biggest magazine in your country recommends customers to go travel to another country to go get it. I cannot think of a more powerful endorsement that today, April 2012, this is the must-have phone in all Nokia markets, the N9 HAS to be sold immediately everywhere.
So yes, Nokia has currently in production genuine superphones that are not on Lumia on the Windows Phone that carriers do not want, but that are on those very exact Symbian and MeeGo systems, that the carriers used to want in the past. Nokia had wisely developed its eggs in three baskets. While one basket is now clearly broken (Windows Phone/Lumia), Nokia is in the position Motorola was not, Nokia has two other genuine superphone-class operating systems it still fully supports, for which it has in fact several highly desirable phones in production today. Today!
YOU WANT IT? YOU REALLY WANT IT? YOU CAN'T HAVE IT
The only problem is, that the CEO refuses to sell these superphones globally. Yes. You heard me right. While the Nokia CEO admits - admits - that the resellers refuse to sell specifically his much beloved Lumia phones, the rest of the world demands N9 and 808 phones so much, that at least one major publication suggested it worth flying to other countries to go get yours! The customer is suffocating, begging for air. Elop stops strangling the customer and instead starts to .. waterboard the customer!!!!!!!
No! You can't have the N9! No, You can't have the 808! You have to take this Lumia instead! You have to!
Facts. Nokia's bestselling markets in the affluent industrialized world, where most smarpthones are sold, include Germany (population 80 million), UK (60), Italy (55), Spain (50) and France (65). And Mr Elop in his infinite wisdom? Refuses to let the N9 be sold in any of them. But he is willing to send the N9 to such far-away nations as New Zealand (population 4 million) or Singapore (4). Or in some of the poorest countries like Nigeria. Yeah.. Makes sense?
And the 808 PureView? The only Nokia Symbian phone recently that US press have liked? Elop refuses to sell it in the USA? True.
If the Lumia was a success, this wouldn't matter. But Lumia was supposed to be Nokia's big 'comeback story' where Elop would be the heroic savior of Nokia. That was the Hollywood script. The real world didn't work out that way. The Lumia is a failure, plain and simple. I showed with Nokia numbers, that for every six attempts to sell Lumia to existing (loyal, still-remaining) Nokia owners, five will refuse the Lumia - and buy Androids or iPhones instead!!!!!
It doesn't matter why the Lumia is now an utter failure and cannot with these models recover. It cannot recover. There are at least 13 reasons why these current Lumia smartphones will fail every market including the USA. But that is neither here nor there. We have the facts. The phone looks fine in pictures, on videos, and in the store. But living with Windows Phone as it currently exists, and the early Lumia phones with their severe limitations and drawbacks, is a nightmare that only gets worse. Not my words. The Guardian of the UK, after their living with Lumia test, concluded it is so utterly a failure, that they took the extraordinary step of returning the phone and recommended their readers do the same. This is total comprehensive failure. Don't you argue that you like the Lumia you saw in the store. The facts are now in. Facts. The customers have spoken. We just heard from Russia that Lumia is having Nokia's biggest return rates ever seen!!!
NO, YOU CAN'T HAVE THAT EITHER
The good news is, that Nokia has now, in production smartphones that are not Lumia. that also are not on any Microsoft Windows operating systems and are actually on two very different operating systems to cater to different customer needs. In addition to the N9, there is a sister superphone on MeeGo, the N950 (the QWERTY slider version for heavy texting, email and business users). Most bizarrely, this fully finished N950 superphone that runs the highly praised MeeGo IS BEING MANUFACTURED today, but not sold ???? !!!!! ?????
If this is not evidence of a lunatic in charge of Nokia, nothing is. You have the sister phone to the most desirable phone on the planet - a phone on the operating system that is often called better than the iPhone - and you ARE manufacturing it (in small numbers) but refuse to sell it? I have heard people saying they'd pay 1,000 Euros for an N950. I don't mean to price it there, but if the iPhone 4S unsubsidised price is 650 US dollars (ie the real price, when you don't include the AT&T contract for 2 years haha) then the N950 could easily be sold for 700 dollars - thats 550 Euros boys and girls - and it would still be hideosly profitable. The average price of the heavily discounted Lumias are now 220 Euros.
And you know what? Its not about the price, its about the profit. Check this out. Each Lumia has non-standard Nokia components (less bulk discounts) where the N9 and N950 use standard Nokia component providers with Nokia bulk disocunts. The Lumia series are produced in Taiwan at Compal's factory (yes, not even manufactured by Nokia, no wonder each of the first three Lumia models has been plagued with severe production problems that Nokia has openly admitted). The N9 and N950 are produced in Nokia's own factories - which are now idling! So Nokia has to pay extra to Compal if it tries to push production runs, but at Nokia's own factories there are workers with nothing to do!!! And the license! Every Lumia requires a royalty payment of about 25 dollars to Microsoft further sapping profits. No royalties needed for MeeGo sales.
This is the perfect 'no-brainer'. The N950 is the single most profitable Nokia phone right now, when Nokia is desperately in need of profits, as its smartphone unit is now producing its 4th consecutive quarter of an operating loss. And there is no comparable iPhone to compete against it! (at least not yet). And there is no comparable Lumia phone in the four units Nokia has announced! So the N950 is pure gravy, there is no conceivable down-side to rushing it to mass-production now!
Oh, and same goes for the E7 on the Symbian side, yes its a year old now, but there is a good QWERTY-slider there, if only the resellers would stop boycotting Nokia.
So yes, the bad news is the boycott, but there really is good news too. Nokia has two ranges of smartphones it can mass-produce today and sell globally, that potentially would break the boycott. Yes, it is theoretically possible, but now for the hard part: exactly how do we stop the global sales boycott by the reseller channel?
THIS IS THE HOW
I have proven to you that Nokia's problems are not in undesirable products overall (quite the contrary), not in promotion (gosh, massive marketing right now) and not in the pricing. Nokia's problem is clearly centered on the reseller channel. And if the reseller channel refuses to sell your product, you die. It is that simple. If the reseller channel refuses to sell your product, you die. No ifs, ands and buts. If the reseller channel refuses to sell your product, you die.
The retail problem is two separate boycotts, one that cannot be ended (against Microsoft) but the other (against Nokia) that can. Nokia cannot unilaterally end that boycott. It can only be ended by the carrier community. Which kind of tells us what is the crux of the problem. Elop has admitted to meddling severely in the Nokia sales. Elop himself has personally changed the top guy in charge of Nokia sales in the China market and the US market. These are the 2 largest smartphone markets on the planet. After those changes we see that China sales have collapsed and US carriers take Nokia millions but still sales refuse to sell the Lumia.
The problem is not the sales staff of Nokia. It is the captain of the ship. The carriers don't trust Elop. That is unrecoverable. The evidence is most obvious in China, Nokia's most important market, so important, Nokia constructed the world's largest phone factory into Beijing to provide handsets to just China's domestic market. Before the Elop Effect, China's sales were continuing to set growth records, right up to Q1 of 2011, as Nokia proudly announced in its Q1 results. Right after the Elop Effect the China sales collapsed so comprehensively, that Elop complained in public and replaced the head of China sales. The guy Colin Giles, who was sent to go 'save' the Nokia China market, actually had to take a demotion but was the previous head of China sales, and Elop felt he must be able to return China to Nokia's friend. So how is that Lumia doing? Yes, Lumia launches in China now. Not on China Mobile the operator with 650 million subcribers (yes, SIX times as big as AT&T Wireless). Not on China Unicom with 150 million subscribers (bigger than AT&T). No. The Lumia 800C model is launching on only China's smallest carrier, China Telecom with about 45 million subscribers (about the size of T-Mobile USA).
The best China guy was sent to China to recover Nokia sales. He was not even able to get nominal support of Lumia out of the big carriers. Only managed to to land the smallest carrier. And this is one who uses the CDMA network which other Lumia phones do not use (they are on the GSM network). So Elop has to approve expensive changes to the Lumia for another technology and even then, he only lands the smallest network of China.
Maybe that is some kind of anomaly. Maybe the 'hero' salesguy managed to otherwise recover Nokia's sales back in China. Yes. Interesting proposition. Lets examine the evidence. Strategy Analytics just reported on China market shares in smartphones. Before the Elop Effect the market share for Nokia smartphones in China was 70%. After Q2 when the full effect was seen, the market share had plummetted to 32% !!! And what of Elop's emergency solution to send the best man to do anything to recover China? Since then Nokia's market share fell to 17% by Q4 (Strategy Analytics didn't have Q1 results yet to report).
This guy had over 70% market share year-out and year-in when he was head of Nokia in China. Now he is sent back, he cannot even stabilize Nokia's market share to 32% He lost almost half even after that. No. The sales cannot fix this problem in the reseller channel. Only one action can recover Nokia. It is Elop.
(UPDATE TO THIS STORY April 23 - at the Nokia Q1 results, we also heard that this Nokia top sales guy, Colin Giles will depart Nokia. So much for last-minute heroics. The problem IS Stephen Elop, and until he is gotten rid of, the carriers will strangle Nokia to death)
THESE ARE THE ACTIONS
If the reseller boycott is not lifted, Nokia dies. Nokia has lost 74% of its market since the boycott started only a year and two months ago. This is a world-record destruction of market share for any Fortune 500 sized company in the economic history of mankind. Understand what that means. Elop established a world record in being hated. It is not bad phones, it is not bad prices, it is not bad promotion. Even when the best Nokia sales guys are sent in, they cannot fix the damage. The problem was caused by Elop. He is the cause. This is against not Nokia, but against Elop. This is what he caused with the Elop Effect, the most destructive management communication ever, that destroyed the revenues the size of Oracle and the profits the size of Google. Or to put it in another way, Elop damaged Nokia so severely, he has cut off a part of Nokia as big in market share, annual sales and profits of a healthy RIM (the maker of Blackberry). He has sunk a whole RIM out of Nokia's business. And the damage is continuing as we speak.
We know there are two boycotts. We know nothing can be done about the one against Microsoft, Ballmer would be a fool to sell Skype (and even then, he would not be believed). We know Elop has moved heaven and earth but has not been able to end the boycott. It was first confirmed by Nokia a year ago but it has only gotten worse. Elop now admits the sales channel is not supporting Lumia specifically. The independent reporting of the sales channel verifies from Helsinki to New York City, Nokia Lumia authorized resellers who have Lumia in stock and feature massive Lumia sales promotion in the stores, actively push customers to rival phone makers!!!!!!!
This means the following steps. First of all, Nokia must announce immediately that it will somehow shift away from the Windows Phone based Lumia series. It could be the truly sensible and honest "Finnish" way of just telling the truth, stating categorically that the Lumia experiment has failed, will be discontinued and the partnership with Microsoft is ended effective immediately (and any payments from Microsoft would of course be returned by Nokia). But that is pretty drastic. I think the more sensible spin is something like 'we apologize to our customers, the Lumia series has been launched prematurely with the best of intentions, to try to bring it rapidly to the market but the early phone models are not up to Nokia standards and will be withdrawn for redesign' - that kind of marketing gobbledygook doublespeak. Then offer massive discounts and rebates to the reseller channel to sell as many Lumia as possible; what is not sold - give as Nokia gifts to low-income high schools in USA, get the best out of the brand and use the market where Microsoft is strongest. At least get some PR good will out of that wasted stock.
The point is, Nokia needs to acknowledge now, that the Lumia series has failed, and Nokia no longer forces these undesirable phones at the 'public' when in reality behind the scenes, Nokia promises not to push them anymore at the carriers.
That is not enough, but it is a necessary first step. Remember, the boycott started with the Elop Effect and Windows Phone was only part of the problem. Second step is a new lease-of-life officially to Symbian - while I am not suggesting we go back to Symbian. Just four months ago, Nokia was selling 17 million Symbian phones per quarter (68 million per year). Now they sold 10 million. But there are 28 million customers around the world with Nokia smartphones in their pockets, who are at 18 months of their ownership and are ready to come in to a phone store, to upgrade to a new Nokia phone. They know nothing of Elop or Burning Platforms or Windows or Lumia. They probably don't even know that their current phone runs on Symbian. They are just normal customers, who like their existing Nokia phone, and want to buy a new one. If the reseller boycott is lifted, no matter what their friends said about 'try the iPhone' etc, these customers are existing Nokia owners, most have owned Nokia for a decade, their first preference is to get a new Nokia phone now.
If the sales reps are willing to sell them Nokias, on any of the platforms, they will mostly take them, and judging by the recent reviews of new Nokia phones on Symbian and Meego, they will very likely be happy with those purchases too. I am not talking about tech geeks like you and me who want the best collection of the hottest apps etc. Just a basic phone for basic needs that happens to be a smartphone (and one that accepts Angry Birds - what Windows Phone currently doesn't even offer haha).
Even if both N9 and N950 are immediately put into mass production and sold everywhere, they won't cover most Nokia customer needs, they are far too expensive. So if we can't sell Lumias, then obviously it has to be Symbian smartphones today. How can you get the reluctant sales reps to stop refusing, and start selling Symbian? Their bosses have to tell them. How do we get that to happen? The best Nokia sales reps haven't achieved that? No. We need to get a public reversal of the silly Elop edicts of last year, that messed up the carrier relationships. That means, the carriers have to believe Symbian is not going to die. In fact the only way Symbian sales can recover - totally irrelevant whether there are 10 apps or 10 million apps, totally irrelevant if the camera has 1 megapixels or 42 megapixels. Totally irrelevant if it is 2G or 3G or 4G or 5G. The only way the sales recover for Symbian is, if the carriers believe that Symbian will not be killed.
Yes, this is the Osborne Effect part of the Elop Effect. If any company announces its platform will be discontinued, of course sales will immediately collapse. Only way to get those sales back, is somehow to convince the sales channel that the platform will live..
This is a paradox, it can't happen and even if it were to be claimed, of course it won't be believed.
EASTER TIME MIRACLE
This is how it is done. We resurrect the Qt migration path. Nokia has to announce that it made a mistake discontinuing the Qt migration path. You don't know what the migration path is? Let me give the quick version.
Nokia has currently an installed base of 1.3 Billion happy Nokia owners. About 1 Billion of those are on basic 'featurephones' using Nokia's proprietary operating systems, ie S40. And about 300 million are on Symbian. There are still some 50 million more Symbian handsets in the wild made by other manufacturers. The Blackberry installed base is something over 100 million. Apple iPhone installed base is under 200 million. Android installed base nears 300 million. But Nokia has in its S40 and Symbian installed base, over 1.3 billion mobile phone owners. Qt is a developer tool environment, to let application developers use extremely easy-to-use and extremely powerful software tools to make apps, that will be able to reach all S40 and Symbian phones! Smartphones and dumbphones! Imagine a potential customer base which is 4 times bigger than Android, and 6 times bigger than the iPhone and 13 times bigger than Blackberry (and 150 times bigger than Windows Phone).
Qt is not yet completed, and the S40 side at Nokia is not yet ready, but this was the vision. Understand how huge this is - Qt has a larger potential user base than all personal computers using Windows of any generation today! Qt reaches the biggest 'ecosystem' on the planet, and by a wide margin too. But wait, there is more. Qt also supports Nokia's older Maemo OS and the new MeeGo OS. Qt even supports Nokia's next OS called Meltemi. Now would be a good time to ask how many developers does Nokia have? Yes. They have shipped developer tools to 400,000 registered Nokia developers!!! Nokia has by far - by far - the biggest developer community. They hated coding for Symbian, especially after iPhone and Android came along, but they loved this idea of Qt to allow develop-once, publish five times utility across all Nokia platforms. Well, all platforms until Elop announced Windows Phone, which is the only OS Nokia uses, that can not be supported by Qt.
And here is the kicker. Qt can be used today to develop apps also for Android and will shortly support the next version of Blackberry OS !!!!! Develop on iOS and you can reach about 5% of the phones in pockets worldwide. I am not talking smartphones, i mean all phones. Develop on Windows Phone and you reach .. under 0.1%. Develop on Qt and (when the development is completed and the migration of phones done, about 2-3 years from now) you can reach 40% of all pockets - and a massive 80% of all smartphones! No wonder when Nokia announced this migration path, the developer community cheered.
Elop killed the Qt migration path. But Nokia still owns Qt and keeps developing it with tiny budget and slowly. If Nokia's CEO or Chairman were to say the end of Qt was a mistake, and were to apologize in public to all developers, and to announce Qt will be fully funded and developed rapidly, to support Nokia Symbian, Nokia S40, Nokia MeeGo, Nokia Maemo, Nokia Meltemi - and Android and Blackberry (And bada, Limo and Tizen) - this would show that Symbian is not 'dead'.
It is not enough, though. Nokia has to very publically return to Ovi store and all support Nokia had for its platform from Navteq maps and advertising and Nokia Money etc. Even that is not enough. Nokia has to make public clear statements, with the CEO very publically embracing Symbian - showing it is the ideal smartphone for some logical segment(s). And it is. The Emerging World. MeeGo currently is designed for high-end smartphones. Meltemi is not yet ready. Windows Phone cannot be used to sell under 200 dollar smartphones (remember, this is real price, not the contract-based price like 99 dollars at AT&T). Not my words. Microsoft itself says Windows Phone is currently not suited for cheap smartphones and Nokia says the same. You cannot argue this point. Windows Phone currently is not suited for low-cost smarpthones. But SYMBIAN IS PERFECTLY SUITED FOR LOW-COST SMARTPHONES !
Yet Deloitte told us that this year 300 million smartphones will be sold that cost under 100 dollars!!! If not Symbian, then what? Symbian is perfectly suited for this segment. These customers don't want the biggest touch screens. They want simple basic smartphones. Symbian works perfectly there. Symbian & Ovi store already support languages of the Emerging World markets! More languages than any other OS - by a wide margin! There are local apps for Symbian selling in the massive quantities in India, China, Africa, Latin America. In the Emerging World, the competition will not be the iPhone, it will be a cheap knock-off Blackberry clone smartphone (RIM cannot afford to make Blackberries at this price either, but Nokia's E-Series QWERTY phones fit this segment very well, running.. Symbian!)
If the CEO of Nokia first announces that Windows is no longer the only way. Then the CEO returns to Nokia the migration path via Qt from Symbian to MeeGo - and then announces that Nokia reverses the end of Symbian because Windows 'is not suited for Emerging World markets' (currently) - then it can be believed. As long as Nokia tries not to suggest Symbian will live forever, or it will be the main OS to high-end phones. But that there is a 3-5 year window to come for Symbian in the lower-cost smartphones. That is plausible. I am not saying it will be believed. But it can be believed. This is the only way Jesus comes back after 3 days. This is the resurrection of the dead platform.
WHEN CUSTOMERS DON'T TRUST YOU, ALL FAILS
Unless Nokia can get the carriers to volunteer to lift their sales boycott, Nokia dies. So how can we make them believe this above total reversal from the very public statements by Elop?
He has to go. Nothing Elop can say, will be believed. This is not the need to fool the general public. This is the need to convince 600 CEOs of the carrier community who have decided Elop is now the little brother of the Evil Empire. He has no credibility within the carrier community whatsoever. He is being screwed as we speak - the carriers take his money - they allow all the big displays into the stores - then the sales reps refuse to sell the Lumias. This is not random. This is is global pattern. They are f*cking with Elop now. He is a dead man walking. As long as he carries a Nokia business card in any function, Nokia will not be believed. Nothing, absolutely nothing, anyone can say can fool these guys. They are very intellient and bright. They knew Microsoft's dubious history in telecoms and were watchful of any tricks. They saw right through Elop. Remember, these are only CEOs and in practically every country, they run companies that are among the 10 biggest companies in that country. The best of the best minds. And they talk to each other! Elop never had a chance. They saw right through him and his deceptions. If Ollila said something, if Anssi Vanjoki came back to say something, if Olli-Pekka Kallasvuo was brought back to say something, if Elop is still employed by Nokia, all the things said will be only words and not ever believed, because these smart powerful CEOs knew, Microsoft is out to screw them. And they saw on February 11 last year, that Elop was a Microsoft Muppet, not a Nokia Man.
Equally - if Elop is fired, the above becomes believable, instantly! The new CEO or the Chairman do not need to make ANY public statements about the real reasons why Elop is fired, but will call or visit all major carriers (About 250 of them) to inform them that all Elop silly decisions are now abandoned, the Elop Effect shall be totally reversed at Nokia, no matter how long it takes, and no matter how much money it takes. But that the carriers now have to help the new CEO recover Nokia to profits, else Nokia will be sold and the carriers lose their Symbian/Ovi/MeeGo/Qt based 'third ecosystem' and they will face a more hostile Microsoft instead.
So that is all said in private only, to the CEOs of the carriers. If the CEO tells the Sales VP that Nokia is no longer in the dog house, and please tell the sales reps to start to sell Nokia again - Nokia will recover! Not to 40% or 30% or even 20%. But the total collapse will end - remember, it is not handsets, it is not promotion, it is not price. The ONLY problem with Nokia sales collapse is the sales boycott by the retail channel. If Nokia can recover the damaged carrier relations, Nokia can recover (somewhat).
And that means what? Nokia needs a new CEO. Not a Finn. Not an American. Not from the Computer, IT or Software industries. Not from the handset or infrastructure business. Definitely not any current or ex Nokia guy. Nokia has a crisis of confidence by its most important stakeholder - the carrier community. They liked/tolerated and some even nearly loved the Nokia of old (except the US carriers, obviously, but note - both in Canada and Mexico the carriers liked the old Nokia a lot). Now they hate Nokia. The carriers decide who lives and dies among handset makers because they control the retail channel.
The answer is obvious. To restore its respect and trust among the distrusting carriers, you fire the Microsoft Muppet and hire a current active CEO from one of the carriers. Someone whom everybody in the carrier community knows and respects, who has been in that business for a good while, many years as CEO. And I would say, that CEO needs to come from Asia to be most insightful and able to see where Nokia's future will be.
So imagine if Nokia's Chairman, Jorma Ollila held an emergency press conference now, today, at say 3PM. He has a short statement. Elop is not on stage with him. He reads the following:
Ladies and gentlemen, I have a short statement about Nokia. Stephen Elop has just handed in his resignation, he is no longer Nokia's CEO. Mr Elop and the Board had differing views on the direction Nokia should follow. (the Nokia share price starts climbing on this sentence). We thank Mr Elop for his service to Nokia under these difficult times. He is not available at this press conference because he has already left Finland and is no longer in Nokia's employ. We shall be reviewing all decisions recently made by Mr Elop, including the statements about the future of Nokia's Symbian, MeeGo and Windows Phone based smartphones.
I can report that effective immediately, Nokia shall halt the shipping of Lumia smartphones because of production errors and we will offer anyone who purchased a Lumia phone a full exchange voucher option if they would like to exchange their Lumia for another Nokia phone, at the same price as the customer has paid. The Lumia series is not ended, nor is Nokia's partnership with Microsoft, but these will be reviewed and decisions made about them in due time. It is clear, however, that the first four Lumia smartphones did not meet the standards that Nokia customers expect, and we apologize for that.
I am taking temporary control of Nokia in the interim while we search for a successor to Mr Elop. (The Nokia share price will spike strongly at this point, this would be the best news imaginable by US based investors of Nokia). I can tell you, that it is our intention to find a suitable CEO from the carrier/operator community, as the Board feels it would be in Nokia's best interest for Nokia to be run by a CEO who understands the needs of Nokia's customers intimately.
I can announce one decision about an immediate change. The Board has been impressed with the strong customer affection with our new N9 smartphone. I have instructed Nokia's factories to rush into production the N9 and N950 smartphones that run on Nokia's MeeGo operating system, and these will be made available in large volumes within the next three weeks in all countries. I can tell you that we have several other MeeGo based smartphones in the production pipeline and new MeeGo phones will be introduced before this year is over. Related to this decision, I am announcing that Nokia returns to the migration path strategy built around the Qt developer tools environment, which will support all platforms that Nokia will carry in the future. Further statements will come shortly about these changes. I will not be taking questions, that is all. Thank you.
If Jorma Ollila made that short speech, Nokia's share price would turn from falling to climbing. If Jorma Ollila made that short speech, and followed it up with short telephone calls to 20 biggest operator group CEOs, the Nokia sales boycott is over. Jorma Ollila is trusted within the telecoms industry like no other so if he personally calls the top guys after that speech in public, they will give Nokia the benefit of the doubt. When the carriers hear that the hated Microsoft Muppet has been ejected from Espoo, and that even better, the new CEO will be hired from the carrier community, they will thank Jorma and they will promise him full support. The boycott will be over the very next day within that given carrier group and its hundreds of millions of subscribers.
There is nothing wrong with the handsets (apart from the Lumia series). There is nothing wrong with the promotion. There is nothing wrong with Nokia pricing. The problem is a global carrier revolt against Nokia and its Microsoft strategy and the CEO they no longer trust. If the boycott continues, Nokia dies. As long as the current strategy stands and Elop is in charge, the boycott continues. But the boycott can be stopped in one speech and one day of phone calls. And if Nokia launches the N9 and N950 in every market now, the smartphone unit will return to profits already during calendar Quarter 2, yes, by June 30th.
WHAT DOES TOMI KNOW?
I am the most accurate forecaster of the mobile telecoms industry. My forecasts are quoted in dozens of books and in major press like the Wall Street Journal, Financial Times, Business Week etc. So what do I know about Nokia. When Stephen Elop announced his mad Microsoft strategy on 11 February, this is how I forecasted only four days later, how Nokia would end the year 2011. This was my forecast for Q4, 2011:
TOMI FORECAST MADE FEB 15, FOR Q4 2011
Nokia Q4 2011 forecast: Smartphone units sold 17.0M, Market Share 12.0%, Nokia revenues 2.0B Euro
NOKIA ACTUAL PERFORMANCE Q4 2011
Nokia Q4 2011 actual: Smartphone units sold 19.6M, Market Share 12.6%, Nokia revenues 2.5B Euro*
* revenues from actual handset sales, the Microsoft bonus payment not counted in smartphone actual sales revenues, it is an accounting gimmick and should be reflected in corporate Nokia income, not handset sales.
Considering that Nokia all numbers were growing by the latest info available on February 15, that I was within about 20% of each of those key metrics, correctly forecasting the immense scale of the collapse, is very accurate in terms of forecasting. I also accurately forecasted in February that Nokia's smartphone unit would become unprofitable, and all of Nokia corporation would become unprofitable due to this severe decline in a traditional Nokia profit engine. You will not find anyone else who forecasted in February 2011, that Nokia's 2011 market share would end at 12.6%. There were many ridiculous forecasts promising high market shares above 20% etc. The only other remarkably accurate forecast from February 2011 was Horace Dediu whose Q4 2011 forecasted number was 21 million Nokia smartphones sold. He was widely accused of being too pessimstic about Nokia in the year 2011.
What of now, Q1 of 2012? Could anyone have foreseen that Nokia could have it now this bad? Is Elop truly a victim of unforeseen circumstances, or is it conceivable that some forecasters saw this level of plight, last year. This is my forecast for Q1 of 2012, which I gave as a detailed quarterly forecast for years 2012 and 2013, that I made on 27 July, 2011.
TOMI FORECAST MADE JULY 27, FOR Q1 2012
Nokia Q1 2012 forecast: Smartphone units sold 11.0M, Market Share 7.0%, Nokia revenues 1.9B US dollars
NOKIA ACTUAL PERFORMANCE Q4 2011
Nokia Q1 2012 forecast: Smartphone units sold 11.9M, Market Share 7.0%, Nokia revenues 1.95B US Dollars*
* again the Microsoft bonus payment is excluded as it is not paid by the actual customers of Nokia.
That is as near perfection as you can hope for, in a forecast made 9 months into the future! I am within 10% on each of these metrics. I also made a 'best case' projection on how much Nokia can 'at best' migrate to Windows Phone based Lumia smartphones in this Q1, where I correctly forecasted that the Lumia sales will commence in Q4 of 2011. I said best case would be 4 million Lumia sales now. Obviously Nokia only managed half that, at 2 million. I also said in my best case scenario, that under optimal conditions, Nokia's loss-making would be resolved by excellent management by Q4, and now Nokia would report a miniscule 2.3% profit margin in smartphones and generate a 43 million dollar profit. Obviously the reality was not as rosy as my 'best case' scenario, Nokia generated massive losses, when the Microsoft bonus is removed, Nokia's smartphone handset unit generated a quarterly loss of 638 million dollars. And again, the next most accurate forecaster of Nokia Q1 2012 quarterly smartphone sales was Horace Dediu, whose Q1 forecast was 10% market share. There are others, utterly mad forecasters who suggested Nokia would have 28% market share this year.
You may freely think that Tomi is a lunatic who doesn't know what he is saying or writing. But I record all my projections and forecasts in writing in my 12 books and on this blog and in various other writing I do. I have chaired the industry's forecasting conferences since 1997. I regularly have plenty of discussion about my forecasts. They are often widely referenced so I have no way of trying to doctor them afterwards to try to make me 'look good'. I also am known for announcing in public EVERY TIME one of my forecasts has been wrong. I do that immediately as a matter of professional integrity and pride. (how many other forecasters bother to do that, or even admit they have been wrong). Please feel free to go read those forecasts and the dozens of comments in the threads. And I ask you, can you find anyone else who so accurately projected in February, Nokia's exact unit sales, market share and revenues for the end of the year 2011, and again, projected in July of last year, the exact unit sales, market share and revenues for now, Q1, 2012. I do know what I am doing. When I say Nokia current path is certain road to doom, and also that it is possible for Nokia to be saved, I truly do know what I am talking about.
That is what needs to be done. Now. If you still have some passion to understand Nokia's plight, and what it takes and where there are problems, I have one more piece of analysis after the fold here. But you need not go there if you wanted to see how to save Nokia. What comes after the fold now, is the regional implications, why and how can Nokia recover in each of the four major regions of smartphone sales ie USA, China, Europe and Rest of World regions.
FOLLOW-UP on April 24, I wrote a follow-up on why now, this path has become a Certain Road to Death for Nokia. (but this story about how to fix Nokia still continues here, after the fold if you want the regional analysis)
REGIONAL ANALYSIS OF HOW NOKIA CAN RECOVER
REGIONAL ANALYSIS OF HOW NOKIA CAN RECOVER
(This is part 2, the regional analysis. This adds another 5,000 words to this long essay)
Ok. So lets just make one clear reminder. I am not suggesting Nokia has to end Windows Phone (although I think it is inevitable and would be best done as soon as possibile). I am not suggesting Nokia returns to Symbian - only that the current Symbian level be continued in the short term, and mid-term Symbian be migrated only to low-end smartphones while MeeGo takes over from top to mid-end Nokia. When Meltemi arrives to provide low cost modern OS for Nokia, then Symbian would finally be ramped down. Even then, probably a 3 year ramp-down far more gentle to Nokia, its customers, partners and consumers, than Elop's rapid 1 year ramp-down he is now attempting.
Lets look now at the regions. The smartphone space fits currently into a pretty nice four-slice pie, of very close to same size slices. They are China, the USA, Western Europe and 'Rest of World' or RoW. Lets see what kind of issues are involved with each, as it relates to Nokia recovery prospects.
I deliberately take USA alone, not 'North America' because Canada and Mexico have recently been far more friendly to Nokia. If there is one market where Nokia smartphones have the image of colossal failure, it is the USA. And rightly so. Before the iPhone, way before the iPhone, in the early part of the past decade, Nokia was the second biggest handset brand selling in the USA, behind only domestic rival Motorola. These were dumbphones at the time obviously. Nokia's market share was above 20% in the USA back then. That then went into terminal decline. By the time Apple's iPhone came onto the scene, Nokia's total handset market share, and its smartphone share in the USA was in the single digits. The new CEO Olli-Pekka Kallasvuo had started only some months before, and he had promised Nokia would be restored to the US market. As we know, it was just more damage year in and year out, and by the time he was ousted and current CEO Stephen Elop came in, Nokia's market share had fallen by half again and was at 3%.
While 3% is not anything to write home about, it would still have been nearly 3 million smartphones during full year 2011 and on average about 700,000 per quarter. (Compare that to the latest Q1 results we just had last week, Nokia total unit sales of all types of handsets in North America were only 600,000 units including Lumia 710 on T-Mobile USA and some Symbian and Lumia phones in Canada and Mexico, but most of those 600,000 handsets were basic dumbphones).
THE CORRECT STRATEGIC CHOICE
In most high tech, like in stealth fighter planes and nuclear-power submarines and spaceflight, the USA tends to lead the world and form half or even more of the global market. In consumer high tech like television, DVD players, laptop PCs, iPads and tablet PCs etc, the USA often counts for more than half of the early market, until the rest of the world catches up. It is very reasonable for most US based readers and even analysts to think, that the USA is also the biggest market for smartphones, that it forms the lion's share of it, and that the USA leads the smartphone market. After all, there is plenty of 'evidence' such as the iPhone and the App Store, isn't there?
Now the very simple strategic choices. If your management has the choice of being the leader in that part of the world where 94% of the mobile phone handsets are sold and used, or the part where 6% are sold and used, and you believe most analysts who now agree that in the future all 'dumbphones' will become 'smartphones' - Nokia made the right choice to own the part of the world where 94% of us live. That was the correct strategic choice, clearly. Nokia management especially under previous leadership by CEO Kallasvuo did not communicate this point well in the past, but it was clearly the right strategic choice.
If the choice is to own that part of the smartphone market today, where 75% of all smatphones are sold, or the part where 25% of smartphones are sold - again, Nokia's management made the correct choice. One year ago at the start of year 2011, Nokia's market share in the USA was about 3% of all smartphones - but in the rest of the world, that market which is 3 times bigger (and growing far faster and will become soon 10x bigger) Nokia's market share was .. 43% !!! This was the correct strategic choice! Nokia management did not communicate this point well in the past, but it was clearly the right strategic choice. It would have been an easy matter for new CEO Elop to communicate.
If the choice is to own that part of the handset market on the one continent where your 'own' native technology is not predominant but where the rival CDMA technology forms the majority of handsets, this is another compelling and costly issue to consider. In fact North America is the only continent where Nokia's native technology, GSM is not dominant, thus where Nokia would have to fight 'with a handicap'. This compares to all other five of the six inhabited continents where Nokia's native GSM based technology is predominant. This may pain some US analysts to find that Nokia doesn't 'bother to introduce' its best phones first to the US market but strategically, it is the right choice. Over 90% of the planet's mobile phones are connected to GSM based networks or their evolution path to WCDMA and beyond. Less than 8% of the planet uses CDMA and its evolution path, and the only continent where CDMA forms more than a small fraction of all users, is .. North America. This was the correct strategic choice. Nokia management did not communicate this point well in the past, but it was clearly the right strategic choice.
Then there are carriers. There are about 600 carriers/operators in the world. The US market has a couple of dozen, led by the four giants, AT&T, Verizon, Sprint-Nextel and T-Mobile USA. On no other continent, do four carriers decide practically the whole continent's fate. Nokia's relationships with these four carriers were notoriously miserable, for many long-term reasons and grudges held over many years. On the other continents (except Oceania) there are over a hundred carriers each and Nokia had mostly good relationships with all of them. While of course Nokia should try to improve its relationships with the US carriers, if the strategic choice was to keep those carriers happy with Nokia who serve 94% of the planet, or those four carriers who serve 6% of the planet, Nokia had again, the correct strategy. US analysts and Nokia fans might not love being 'dissed' but strategically it is a clear choice. China Mobile alone is as big as .. AT&T plus ... Verizon plus .. T-Mobile USA plus .. Sprint-Nextel plus.. Another AT&T plus.., another Verizon plus.. another T-Mobile USA plus.. another Sprint-Nextel - and even then China Mobile alone is bigger. Clearly, no matter what you think of AT&T's supposed 'love-affair' with the Lumia 900 now, if China Mobile is 8 times bigger than AT&T Wireless, and China Mobile is growing faster and Nokia's market share in smartphones on China Mobile was North of 77% (while less than 3% on AT&T) - the correct strategic choice is China Mobile, obviously. There is no argument on this point. China's market size is bigger in smartphones than the USA and the gap is growing, not shrinking. In two years, China will be twice as big as the USA in smartphones. Of course the correct strategic decision for Nokia was to prioritize the carriers of the rest of the world, where Nokia was mostly liked, admired and in some cases even loved, ahead of the four US carriers who hated Nokia. Nokia management did not communicate this point well in the past, but it was clearly the right strategic choice. This would have been really easy for Elop to explain to the world and seem like the strategic genius.
But what of competition! If the strategic choice is to go fight for the one continent where there are 8-count-them-8 domestic or local/regional rival handset makers, and 6-count-them-6 domestic OS platforms for smartphones, where nobody currently owns more than a third of the market; or the rest of the world where your OS and app store dominate with over 70% installed base and over 50% new sales - this is the correct strategic choice again. The most competitive market, where you have least profits, is (was) the North American market. A year ago literally in addition to dozens of foreign handset makers, there were 8 domestic handset manufacturer brands - Apple, Dell, Google, Hewlett-Packard, Microsoft, Motorola, Palm, RIM - and there were 6 domestic smartphone OS providers - Android, Blackberry, iOS, Palm WebOS, Windows Mobile, Windows Phone. Only a complete fool would abandon the rest of the world where Nokia's Symbian, together with many international handset partner vendors like Panasonic, Fujitsu, Sharp etc, held half of the market, and forego that sheer market dominance, for a tiny gain in the sliver of a share, that you could achieve as the 'foreigner' brand in the US domestic market. That is a fool's errand.
And there is language. English language is the native language for only the North American continent and Oceania. On the other four inhabited continents where 93% of the planet's population lives, there are some countries yes, where English is also the native language. But most of the people on those four continents speak languages other than English. Chinese, various Indian languages, Arabic, Spanish and Portuguese (including Brazil), Russian, and a myriad of African languages. The iPhone can support a couple of the most common Western languages. Android supports now a couple of dozen languages. Symbian and Ovi - support over 100 languages! If your platforms is already built to provide support in languages covering about 90% of the planet, and for most of those languages your rivals have nothing to offer, then Nokia made the right choice prioritizing smartphone sales - and handset design and Ovi store support and carrier billing and resale channel support - to those countries, rather than the US market. This was clearly the strategically correct choice. Nokia management did not communicate this point well in the past, but it was clearly the right strategic choice. This would have been really easy for Elop to explain to the world and Nokia would have gained tons of brownie points of helping the rest of the world bridge the digital divide with this strategic emphasis on Africa, Latin America, Asia, Eastern Europe etc. It would be a story most in the media would love to tell, helping sell Nokia's credentials as a benevolent world dominant tech provider, not one only obsessed about the congested US domestic market that is near saturation.
So with that, first, the obvious. It WAS the correct choice for Nokia to prioritize its handset design (dual SIM, removable battery, NFC, microSD support, TV-out, uncrippled Bluetooth, WiFi hotspot, full USB, etc) and marketing, pricing, sales support to the world outside of the USA, rather than to prioritize the US market. This was the obvious Nokia strategy all through the reign of Ollila as CEO and Kallasvuo as CEO. It was the correct strategy. Elop made a colossal mistake having the Lumia series designed to be optimized for the US market, as they now are clearly failing in the European and Asian markets, and are utterly unsuited for the rest of the world markets in the Emerging World to the degree that two of the biggest Chinese carriers refuse Lumias as does Nokia's traditional Japanese carrier-partner, NTT DoCoMo, the most advanced carrier/operator on the planet serving the most demanding customers in the most mature mobile environment, literally years ahead of the US market.
Before the Elop Effect, Nokia did modest sales in North America at 2.6 million total handsets. Nokia does not report its breakdown of how many smartphones vs dumbphones it sold, but Kantar Worldpanel reports new sales in September 2010 Nokia's market share of US smartphones was 5.4% or about 1 million units. So out of the total 'smartphone migration' of Nokia branded handsets in the USA, Nokia had achieved 38% which was roughly in line with its global number and well ahead of the global handset industry migration to smartphones which at the time in September 2010 was only about 28%.
Today latest Q1 results tell us that Nokia current North American market total handset sales are 600,000 units, up 100,000 from Q4. In the middle of last year, Elop ended Symbian sales to North America, so essentially all of the 500,000 unit sales of handsets in Q4 for Nokia North America were dumbphones. Now with the 'magnificient' launch of T-Mobile, the total unit sales have climbed a pitiful 100,000 units. That might be all Lumia. Its even possible that some of the remaining half million dumbphones were converted to Lumia. But as T-Mobile is the smallest handset maker, there is no way more than 200,000 total Lumia 710 sales on T-Mobile in Q1 of 2012.
Yet the 'obsolete' Symbian based Nokia smartphones managed to massively outsell Palm and almost match Windows Mobile sales in the USA, before the Elop Effect. And that 1 million total Symbian sales has now been 'converted' by Elop to what, if I am very generous, 200,000 Lumia sales in Q1. This is total failure.
Why is that? First, remember Windows and Microsoft. Microsoft's head of Windows Phone admits that Microsoft's carrier relationships were bad before Windows Phone launched, and they were made far worse by Microsoft itself during 2011 (I say this is primarily caused by the strategic boycott against Skype). Microsoft's peak US market share for Windows Mobile was above 20%. It was down to 4.9% according to Kantar by March of 2011 (This includes both Windows Mobile and Windows Phone). It has fallen further since.
Windows based smartphones used to be made by Motorola, Samsung and LG - the three bestselling dumbphone brands of the US market with near identical market shares. These are much beloved and trusted phone brands in the US market. All three Motorola, Samsung and LG offer Android based smartphones today for the US market and all are doing very well in that market, so its not like they don't know how to make successful smartphones. Yet Windows based smartphones see a continuous erosion of market share, clear market rejection in fact. Motorola was so disgusted by Windows performance, it decided never to launch Windows Phone (and was sued by Microsoft for that decision).
HTC and Samsung have both expressed concerns and doubts many times about the competitiveness of Windows based smartphones and clearly prioritize other platforms like Android and bada. LG went one further, they shifted away from their 'strategic' platform Windows Mobile to Android, rather than Windows Phone. That is how your best soldiers in your army perform.
What maniac thinking suggests if your best handset makers, who are both bestselling among dumbphones for a decade, and among smartphones today, in the US domestic market, when using the Windows platform - are failing - why would the failing Nokia do any better? Nokia brings nothing of value to Microsoft in the US market that it hadn't already had far more in Motorola, Samsung, LG and HTC before. Do not delude yourself, Nokia cannot resurrect Microsoft to anything like the 20% market share it once had. Maybe Nokia can come back to the levels of 1 million smartphone sales, maybe. That would be 3% market share per quarter, at best. And that means the lackluster early performance of sales has to be improved a lot in the North American market.
There is some reporting that the Lumia series is already the bestselling Windows Phone brand in North America. If 200,000 Lumia 710 sales is your 'best' brand, and HTC and Samsung and LG and others sell less than that each, it means that even in its best market,. the Windows Phone ecosystem is far from 'the third ecosystem'. It means Windows Phone is dying.
HOW TO DO USA
So what would I do? I would send a small army of top Manhattan lawyers to make Ballmer an offer he can't refuse. Either we have a public fight, by which Nokia pisses on everything Microsoft ever attempted in mobile, with Nokia's new CEO who came from the carrier community and with their support, plus the support of the other handset makers and regulators and all who ever felt wronged by Microsoft - and while there would be no guarantee Nokia would 'win' in the courtroom - this would be messy and loud and visible and damage Microsoft's every move in mobile. That is the stick. Then the carrot:
Or else, Microsoft agree to alter the terms of the Windows Phone contract, and Nokia would sell Lumia to Microsoft and also license the Nokia brand to Microsoft for the US domestic market for the next 3 years, with a non-compete clause also for those 3 years. And then argue about how much of the already-paid 500 million Microsoft dollars Nokia might pay back. Microsoft cannot now take the news that Nokia finds Windows Phone a total wreck and disaster and 'abandons it' so Ballmer would rather have Nokia nominally support Windows Phone while he readies Windows 8. And if Nokia decides to abandon Lumia, Microsoft would want to buy it.
What is our damage? Just before the Elop Effect, on a quarterly basis, Nokia sold 28 million smartphones globally. Only 1 million of those were sold in the North American market. Losing this 'opportunity' would not be costly to Nokia, it is a very competitive and costly market to compete in. Nokia has no natural strengths there and the Windows experiment is a total flop. So if Nokia wants a come-back the right way to go, is the rest of the world, where 27 out of those 28 million smartphones were sold. So lets move to China:
CROUCHING TIGER, HIDDEN DRAGON
So then China. The world's largest population, the world's largest economy, the world's largest telecoms market, the world's largest handset market and the world's largest smarpthone market. A market where Blackberry doesn't register and Apple is a bit-player. A market where Nokia used to rule with - in 2010 - 77% market share in smartphones according to Canalys. A market where Ovi store is by far the biggest app store, where Chinese language is fully supported and Symbian has a massive army of developers. And China, where the world's largest carrier, China Mobile, alone accounting for 12% of the total global mobile industry paying subscriber base! One in eight people on the planet with a phone, are connected to China Mobile. Nokia's strategic partner!
China Mobile was gutted with the Elop Effect. China Mobile had been promised developer partner status by Intel and Nokia, the only carrier with that status, on MeeGo. Meanwhile, China Mobile does not carry the iPhone and wasn't accepting the Blackberry. They stated their current smartphone OS platform was Symbian and the future would be MeeGo. Much because of China Mobile's strong commitment to MeeGo, domestic Chinese handset makers like ZTE and Huawei had committed to MeeGo as well as for example Japanese Panasonic who wanted to 'invade' China and China Mobile's massive smartphone market.
Nokia's true global rival is not Apple (they are as much Nokia's main rival as Porche is the main rival to Toyota in cars). It is of course Samsung (like Ford is to Toyota). And how was Sammy doing in China before the Elop Effect? Samsung was third in smartphone sales in China according to Canalys with a market share of....... 4.1% !!!!!! In the world's biggest smartphone market, the one growing the fastest, Nokia was only 19 times bigger than its most dangerous rival !!!!!!
Since the Elop Effect the single most devastating market reaction has been that of China. Just before the Elop Effect, Nokia sold 22 million handsets in China per quarter, and about a third of those were smartphones. The market generated 1.7 Billion Euros per quarter (2.2 Billion US dollars). The unit sales have collapsed by 60% - while the Chinese market has grown by over 70% in the same period. Nokia smartphone proportion and Nokia average prices are now in the dirt, Nokia revenues have crashed to one third, at only 577 million Euros per quarter from China (750 million US dollars).
No wonder Elop freaked out and sent Colin Giles, the miracle man, who had built that 77% market share in China, back to China to try to fix it. And it tell us everyting, that Colin is so disgusted by the total sheer refusal of that powerful market to accept anything he can offer, that he is leaving Nokia after 20 years 'for personal reasons'. Colin was totally trusted before Elop, he could do anything with China. Now he is the man they refuse to take anything. Not because the Chinese don't trust Mr Giles, it is because the Chinese are smart and think long term. They know Elop is in charge and they will not put up with that nonsense. China is dead for Nokia.
The Chinese had their gift-giving season right now, this past Q1, the Chinese New Years celebrations (the Chinese do not give gifts for Christmas in December like most Western countries do, their gift-giving season is the week-long Chinese New Year celebrations in late January or early February as per the lunar calendar). Last year, just literally days before the Elop Effect, Nokia China unit sales in Q1 grew 9% from Q4 and revenues grew 13%. The average sales price and profits grew strongly, led by the E7 and N8 flagship phones (running Symbian). That is the context. That is 'normal' for China and for Nokia. Now, consider this year. Nokia unit sales from Q4 to Q1 in China fell 37% !!!!! the revenues fell 43% !!!! the average sales prices fell through the floor and obviously Nokia China is generating massive losses. This even though Nokia's best China friend and buddy was dispatched to China to fix the relationships and there only are three carriers in China. How hard can it be?
China alone is suffocating Nokia. The Board must know this. They must have heard loud and clear, the scream of a million consumers who refused all Nokia. I told you of the disgrace - even Nokia flagship stores have been selling smartphones from rival brands !!!!!!!!!
The strongest handset brand in all of China is now being massacred because of Elop. Chinese carriers do not care, they think money, they think long term, they want their promised Symbian-Ovi-MeeGo-Qt based ecosystem and they will get it, or they will build of course a rival without Nokia - now, who would be a good candidate for that I wonder? Samsung! Yes, Tizen with Intel and the existing bada developer community and all their cool games and Asian-oriented apps etc. Tizen is perfectly suited to replace MeeGo and the longer Nokia waits, the more China Mobile and all of the Chinese market will be committed to Tizen at the expense of MeeGo, Symbian, Ovi and Qt.
For China Mobile the key is TD-SCDMA and of course China Mobile special relationship. So Nokia HAS to resurrect the full MeeGo path, even if China Mobile now will not give it exclusive status, and would only run it parallel with Samsung's Tizen. Nokia has the world's largest app store consumer market in China in the Chinese language, already doing downloads at the world's third highest rate globally behind only iPhone App Store and Android. But Google has all sorts of hassles and legal obstacles in China and Apple is not trusted either. Nokia can come back but it has to hurry.
The answer cannot be any words spoken by the traitor Elop. It has to be someone in China seen as clearly superior to Elop, it has to be the Chairman, Ollila. Before he resigns his post, he has to fire Elop and go to China to apologize and beg the Chinese executives to give Nokia a second chance. The Chinese are well invested in this venture, they can see the monetary benefits and would far rather prefer to work in partnership with a tech company from a small non-threatening European country like Finland, than that from the USA. And as Nokia has invested long-term into China and has supported the TD-SCDMA domestic Chinese standard for a long time already, as long as Nokia commits to rushing TD-SCDMA versions of MeeGo based superphones like the N9 and N950, and top Symbian phones like the 808 PureView, that would go a long way to restore the relationship. But China says clearly that Elop has to be fired.
The comprehensive carrier boycott by China Mobile alone is killling one eighth of the global handset market for Nokia. The China Mobile smartphone market alone will be worth about a total Apple iPhone global market this year, roughly speaking. Nokia would have had the lion's share of that, had there been no Elop Effect. But even now, if they beg and plead, Nokia may get a quarter of that, or a third, back. That would be a massive change, and yes, its mostly up to one carrier /operators and its CEO. If you are an American, think 'eight times the size of AT&T' where Apple has had about half of AT&T's smartphone market - Nokia had more than three quarters of China Mobile's market. Can you understand why China Mobile is pissed off? They will never forgive Elop and they will never go back to Nokia, unless Nokia recants everything silly about Elop and including the hated Microsoft.
In Western Europe, the die has been cast for a while now. Apple has made strong inroads in some markets like France and Britain. Blackberry is strong in some markets and Android is all over the place. Nokia's Symbian used to rule half of Europe, it was down to about 40% before the Elop Effect and the trajectory was down. Still, for new sales, before the Elop Effect, Nokia was the biggest for Europe and by installed based, utterly dominated the Western European continent. Europe will become more like North America in that there are affluent buyers and the market would be split among several major platforms and manufacturers. For Europe, Nokia has traditionally held the very strong advantage, that its handsets were designed by Europeans, for Europeans. The US handsets are often seen as clumsy or stupid or at best suited to be 'second phones'. Classic US handset brands like Palm and Motorola have underperformed in Europe but many Asian brands like Samsung, LG and HTC have done quite well. Those who like to cheer the iPhone - here is the cold shower, the original iPhone 2G from 2007, the so-called Jesusphone that was supposedly the most astonishing phone in the US market ever seen was a sales flop in Europe until its crude mistakes were fixed with the iPhone 3G model a year later in 2008 and to show how far behind the USA is, even that phone did not succeed in Asia, until Apple fixed even more basic features and needs, and it was not until the iPhone 3GS that was a success in Asia.
We see now that the Lumia series, designed by American college-boys for literally quite ignorant American consumers, is a sales flop in Europe. Far more advanced smartphones are designed by Nokia's European designers intended for the discerning European and Asian markets like the N9 and 808 Pureview. The European markets need some honestly from Nokia. Nokia has to publically apologize about the Lumia as a clear failure and promise more advanced phones, especially on the MeeGo platform. I feel that Western Europe cannot recover to anywhere the levels Nokia used to have just over a year ago, the damage by the Elop Effect has been so severe, and the handset offering right now is not strong enough to match the various price points and customer needs. I would runs the N9, the N950
and the 808 PureView rapidly to the market, sell in every European country, and then try to buy some time, perhaps with price cuts, on older Nokia handsets like the E7 and N8, still quite competitive within their categories, to buy time, and try to get new phones out by Christmas or so. The European market nonetheless, even if the sales boycott is lifted, will not recover to 40% or even 30% shares for Nokia. Not now, after the carnage by Elop. Maybe 25%, but that would be healthy nonetheless and could be stabilized, if the carriers stop the sales boycott.
Europe, like North America, is a relatively stable market of slow growth, where more than half of all phones already sold are smartphones, so even the migration from dumbphones to smartphones does not yield major growth anymore. But the big, huge growth in fact, is in the RoW, the Rest of World. That is Africa, India, Russia, Brazil, Indonesia, Pakistan, Egypt, Nigeria, Mexico, etc etc etc. The RoW. The part of Nokia's market that has been least damaged.
REST OF WORLD
By this crude division into four segments in this blog article, the RoW includes some very affluent markets like Australia, Singapore, UAE, etc, and all of the Emerging World except for China including some of the poorest parts of the world like Somalia, Afghanistan and Bolivia. By consumers this massive region counts for 70% of the people on the planet, about 60% of the mobile phone accounts and handsets in use, but still today, only about a quarter of the smartphone market. This part of the global market will dwarf not just the USA and Europe by the end of the decade, it will be bigger than USA, Europe and China, combined by 2020. And luckily for Nokia, most of this market loves Nokia above not just any other handset brand, above any other brand, period. Yes, Nokia is more valued as a brand than Mercedes Benz or Coca Cola or Rolex or Rolls Royce.
When Deloitte said that this year 2012 we will see 300 million smartphones sold that have an end-user price of under 100 dollars (that is, the price without contract, remember the iPhone 4S has a real unsubsidised price that we all pay, of about 650 dollars as does the Samsung Galaxy S2 etc). Most of those under 100 dollar smartphones will be very basic QWERTY based smartphones or relatively small screen perhaps 2.8 inch screen size touch screen phones, with modest cameras perhaps 1 to 2 megapixels etc.
In this part of the world, Nokia's rival is not Apple. The iPhone does not register in most of this market (yes, in Australia and Singapore definitely but they are a trivial slice of this RoW market. Not even in the rich Gulf region Arab states, where Blackberries are the rival to Nokia, and in most of the poorer nations in this region like Nigeria for example, nobody dreams of an iPhone). So Nokia does not 'need' to try to do an iPhone clone like the N8, N9 or Lumia 900. Most of the customers here love the QWERTY form factors such as Blackberries and past Nokia Communicators. The slider QWERTY form factors are very popular here, like the E7 and the N950 would be a big hit here.
Talking about the Emerging World part of RoW, this market cannot be served with the Lumia series. The cheapest Lumia will run 250 dollars without subsidy/contract. That is totally beyond the reach of customers who often earn a dollar a day. But they want to have the best phone. It is their status symbol. They can't afford a car, not even the most run-down used Renault or Nissan. They might not have electricity in their home. But they want to have something of luxury, and they often make it their phone. And then comes the second-hand market! In the Emerging World, phones are sold, like we sell cars when they are used. The new phone is carefully cared, kept in a case, and protected, so it retains maximum value when sold. That means, that there is considerable residual value in the smartphone when sold. That is partly why a poor person can afford a modest-priced smartphone, because he or she had an older phone before, that is sold a second hand, when the new phone is bought.
What do these customers want? The battery has to be user-replacable. The electrical grid is unreliable or does not even extend to the homes. The bluetooth has to include sharing of files. The handset has to include microSD support, etc etc etc. Some kind of cloud-based storing is a ridiculous concept for this market today, where most don't have access to the internet, and mobile phone based internet is not 'all you can eat' data plans, every byte will be counted and charged.
Symbian was built as a phone first, and advanced functions later. It is excellent on basic phone functions like messaging, cameraphone etc. Symbian runs on phones of modest CPU power, modest memory etc. Symbian is excellently suited for the Emerging World market, most of the RoW market. Here all Nokia needs, is for the carriers to lift their boycott, and Nokia will immediately soar to at least 60% market share and easily even more. I am not suggesting Nokia return to Symbian globally, I mean it is a dying platform for Europe, it has arleady died in North America. But in China, because of the carriers, language support, apps store etc, Symbian is immediately viable now, and can act as the bridging platform to MeeGo via Qt. But in the Emerging World, Symbian has a long life still, until replaced by Nokia's next low-cost OS called Meltemi.
MeeGo and Windows Phone cannot help solve the RoW, especially not most of it in the Emerging World. For that, the only asset Nokia has, is Symbian and for that, Nokia has to keep producing new, cheap, very well made, robust, user-friendly smartphones that suit the market particularly well, including NFC and dual SIM and in-built FM radio etc.
Those are the regional considerations of how to resurrect Nokia. Nokia can be saved. The longer madman Elop is allowed to ruin this company, the worse it will be. But still today, in April 2012, Nokia can be saved. But it starts with firing Elop and rejecting the doomed Windows Phone path to Lumia smartphones. Nokia needs to convince carriers to lift the sales boycott and to do that, Nokia needs to resurrect the migration path from Symbian to MeeGo with Ovi and Qt, and in the future also Meltemi. And to hire a new CEO from a carrier. It can be done, but time is running out.
FOLLOW-UP on April 24, I wrote a follow-up on why now, this path has become a Certain Road to Death for Nokia. so with that analysis and some more numbers, its clear that the time has run out.. :-)