So now we have more twists and turns in the Elop Skype admission from the Shareholders' Meeting. That original blog posting of mine from May 3, analyzing a few short news clippings from the Nokia Annual Shareholders' Meeting, sparked a lot of debate and controversy, not just here on this blog and on Twitter, but also on My Nokia blog, All About Symbian blog etc.
PART 1 - (the most serious matter, do we need to call the Truth Police?)
WAS TOMI LYING ABOUT ELOP STATEMENT
My only directly attributed quotation to Stephen Elop from that meeting about the Skype situation came from a news story by Helsingin Sanomat, the biggest newspaper of Finland, a very highly reputable major European newspaper, and of all stories about the Shareholder's Meeting on that day, it was the only one that included Elop's comments about Skype. I did not somehow invent words for Elop. What I posted, was my own translation of four short sentences by Elop, directly from that news article (in Finnish). After we received a ton of comments, among the comments was one of the regular visitors to this blog, Asko, who had been at the Shareholders' Meeting. Because there was no other reporting on what Elop had said about Skype (so far, later there would be on My Nokia Blog, but significantly after my blog), I used Asko's reporting here in on this blog, and clearly indicated this was Asko's recollection, I did not put it in quotation marks and italics as directly said by Elop, to show it was from this blog's point of view, an honest attempt to report what he seems to have said, to follow those four sentences he clearly did say.
This is the total part I wrote about Elop and Skype on May 3 with the update on May 4:
SKYPE IS CAUSING LOST SALES
The second big news that came from the Shareholders' Meeting is the issue about Skype. Elop was asked by a shareholder "Nokia seems to be having a problem with the distribution channel due to Skype" asking how will Nokia deal with this problem. Elop answered "If the operator doesn't want us, it doesn't want us. We will appeal to them with other arguments. We have more to offer to them. It is a good point to start the discussion from Skype." (source HS website. Text in Finnish, translation is mine).
UPDATE May 4 - again our reader Asko who says he was personally present at that meeting, adds that Elop had explained, that Nokia, together with Microsoft, is now attempting to convince carriers/operators to accept Skype against their wills, by marketing/pricing/sales gimmicks.
(Italics and bold are exactly as in the original blog posting). Note - the only parts in quotation marks are what Helsingin Sanomat reported, including the original question, and what Elop had answered. We do know, already from what was on my blog, that what Helsingin Sanomat had reported, was not the complete response by Elop. And obviously, our reader Asko had added valuable parts to what Elop had said. I could not in any way judge if there had been even more that Elop perhaps had said, because, as I already said, I did not attend the meeting myself, and there was no full transcript of the full response. The Helsingin Sanomat story was the only one that included the question and answer about Skype, and we can see that Elop's reply was not fully printed into the story.
After that blog posting, the story has spread a lot worldwide and it seems to have spooked Nokia. Nokia has now gone to the extraordinary step of releasing the video of the actual reply by Elop to the Skype question. They did not offer me the video or the full transcript of what Elop had said, but they went to a friendly blogsite, My Nokia Blog, and offered Jay Montano the full video of what Elop had said. Jay has kindly transcribed the exact response. This is how My Nokia Blog reports Elop's complete reply had been (on May 7), in a blog article entitled "Part 1: Transcript Nokia AGM: Stephen Elop on Skype"
Stephen Elop: So, thank you for your question about Skype. Indeed, Microsoft did buy the Skype company as part of the ecosystem that comes with Windows Phone and Windows and so forth, so that’s quite correct. The feedback from operators is they don’t like Skype, of course, because for those operators who have a traditional wire-line business, traditional telephone business, it could take away from revenues.
And, so what MSFT has done – and we’ve been part of these conversations as well with operators – is as you correctly say, if operator doesn’t want Skype installed on a Windows Phone from Nokia or any other company, then the operator can make that decision.
Now, you’re right: it can be circumvented. But of course it’s on all Android devices, it’s on iPhone devices, it’s on iPad, it’s on all of those devices. So in fact what we’re doing with the operators is turning it around into an advantage. Instead of them just complaining about Skype on Android or Skype on iPhone, with Microsoft and Nokia, we can have a conversation that says “ok there, is this Skype thing, is there a different type of partnership we can do that recognizes that voice over IP like Skype is coming no matter what, but maybe we can do something creative that generates incremental revenue for you.” Some operators are looking at bundling Lumia, Skype and their own services with higher-bandwidth allotments to actually charge the consumer more and generate more revenue for them. So by actually controlling the Skype asset, we can begin a conversation about how we can have a better Skype-based relationship, which was impossible for operators to do before. So it’s actually quite a bit more advanced than whether operators like or don’t like Skype; they actually want to engage in a conversation about what does this mean and how could we do something that we couldn’t do before. Thank you.
Thank you to Jay Montano for transcribing that. Thank you to Nokia and its PR boss, John Q Pope for releasing that video to My Nokia blog. Now we can see the full story. And first, lets see how accurately or misleadingly did my blog report on Elop's statement. I wrote that Elop was quoted as saying:
"If the operator doesn't want us, it doesn't want us. We will appeal to them with other arguments. We have more to offer to them. It is a good point to start the discussion from Skype."
This was my translation of what Helsingin Sanomat had reported. What did Elop actually say?
"...if operator doesn’t want Skype installed on a Windows Phone from Nokia or any other company, then the operator can make that decision."
And Elop said also:
So in fact what we’re doing with the operators is turning it around into an advantage.
And Elop said
we can begin a conversation about how we can have a better Skype-based relationship, which was impossible for operators to do before.
Was the Helsingin Sanomat quote attributed to Elop accurate, in that Elop did say something like that - bearing in mind, the Finnish journalist translated Elop from English to Finnish, and I have since translated it back from Finnish to English. Yes. Take the Helsingin Sanomat quotation, that is very reasonably accurate - not perfect but reasonably accurate - depiction of what Elop did say, explicitly on the point about Skype. It is not complete, in everything Elop said, but journalists are tasked to tell us the main points of news. I think that was the relevant main points of the news story. I think Helsingin Sanomat cannot be accused of putting words into Elop's mouth, he did say something very similar to what I reported here, when translated from English, to Finnish, and back to English.
Those who have been here on this blog, and on My Nokia Blog and on All About Symbian (and other sites) complaining that Tomi is lying about what Elop said - I did not attend the meeting, I never suggested my blog was the full account of what Elop said - but I reported what was at that time the longest published passage of what Elop had said, published in any media. And with hindsight, as we can compare it to the original, when I reported that Elop said
"If the operator doesn't want us, it doesn't want us. We will appeal to them with other arguments. We have more to offer to them. It is a good point to start the discussion from Skype."
And his actual words were:
"...if operator doesn’t want Skype installed on a Windows Phone from Nokia or any other company, then the operator can make that decision... So in fact what we’re doing with the operators is turning it around into an advantage.... we can begin a conversation about how we can have a better Skype-based relationship, which was impossible for operators to do before.
My blog did not put words into Elop's mouth that are in conflict with what he said. The journalist had shortened what was said, and there was something lost in translation, obviously, but the meaning of my quote, and the original quote, are reasonably similar. For anyone to suggest there was foul play here, is simply being petty. I was not attending the meeting, I reported what the biggest Finnish newspaper had written, and what it did, was the longest passage of what anyone had said about Elop's comment on Skype. And just to be SUPERBLY precise about the translation. Why don't you go and put the exact Helsingin Sanomat Finnish language into Google Translate. See was Tomi accurate or not? This is what Google Translate tells us Elop's Finnish words would mean in English:
If the operator does not want us, so it does not want to. We appeal to operators, however, contrary arguments. We have to offer them more. Skype conversation is a good starting point.
If you want to believe that Tomi is twisting Elop's words, you are beyond help. Feel free to go join a religious cult or something. That quote I used, is by any reasonable mind, a fair cross-translation of what was actually said by Stephen Elop to the Nokia shareholders. The meaning has held very well through two levels of translations. Don't blame me for reporting what Elop said.
NOW LETS DIG INTO WHAT ELOP ADMITTED
After My Nokia Blog made the transcript, but as it did not include the actual question by Nokia shareholder Mika Hasanen, we can now go and see the actual Elop video too. It is on ZD Net blog. The question was in Finnish, this translation is by Nokia (shown on the screen in the video):
I believe Nokia has a problem with product distribution. Operators do not want to sell Windows Phone smartphones, because Microsoft has acquired Skype, who offers free Internet calls. Skype calls are eating operator revenue. There may be ways to block Skype, but there will always be ways to get around it. What will you (Nokia) do to get over this problem.
Lets examine what Elop said, and what Tomi claimed Elop had said. I said on my blog that "Elop clearly admits there is a reseller problem with Skype." Did Elop admit that? Elop was asked explicitly in a question stating Nokia has a problem with distribution because "Operators do not want to sell Windows Phone smartphones, because Microsoft has acquired Skype" and to that Elop has the following 3 relevant replies: "The feedback from operators is they don’t like Skype, of course" and "as you correctly say, if operator doesn’t want Skype installed on a Windows Phone from Nokia or any other company, then the operator can make that decision" and "Instead of them just complaining about Skype".
Elop was asked explicitly if there was a reseller problem relating to Skype. Elop says "as you correctly say" - what is it that the person asking the question correctly said? That there IS a problem. The person asking the question was asking Elop to confirm. He DID. And he not only confirmed it "as you correctly say" Elop also said "feedback from operators is they don't like Skype - of course." To Elop this is not a matter of any kind of debate or discussion. It is in his own words ''of course" operators don't like Skype. And do they live by it or do they complain to Nokia? Elop tells us what the situation is now, in what he is trying to change: "instead of them just complaining about Skype".
I wrote that at the Shareholder's Meeting, Elop had "clearly admitted that there is a reseller problem relating to Skype." If Elop confirms the question "as you correctly say" and says "of course" operators don't like Skype and that they are "Just complaining about Skype" - any fair-minded person will take these comments as yes, Elop did admit that some operators/carriers do have a problem relating to Skype.
3 TIMES CONFIRMS - AND NEVER DENIES
Elop was asked explicitly about Skype. He admits three different ways that yes, the carriers do not like Skype. And Elop never denies that this problem exists. Elop gives 12 sentences in his reply about Skype. Never once does he say there is "no problem" with carriers refusing to sell Lumia because of Skype. It was explicit in the question. Compare for example to the question Elop got about how Nokia can differentiate against other Windows Phone manufacturers, and Elop went immediately to refute the premises of the question itself. He then explicitly responded against the question. But in the Skype question, instead of denying the problem existing, Elop admits saying "as you correctly say". Yes, undeniably, Elop says that the person asking the question, Mr Mika Hasanen, correctly said "Nokia seems to have problems with distribution due to Skype." These are not my words, the words of Tomi Ahonen. These are the explicit words of Stephen Elop. "As you correctly say". It is correct that Nokia has a problem with its distribution, related to Skype.
This is exactly how I summarized it. I said Elop "Clearly admits that there is a reseller problem relating to Skype." This transcript confirms beyond any doubt, it is exactly what Elop said, three different ways, in a span of only 12 sentences. This absurd criticism of Tomi Ahonen somehow inventing words that Elop never said, is bizarre. Read the exact transcript and see how many times and how many ways Elop admits Mika Hasanen was "of course" correct in stating "operators do not want to sell Windows Phone smartphones, because Microsoft has acquired Skype." Elop: "that is quite correct, the feedback from the operators is that they don't like Skype - of course."
THIS MATTER IS CLOSED
Elop DID admit operators do not want Skype. Elop admits the problem is explicit to Microsoft being the owner of Skype. This issue has nothing to do with who installs Skype on what phone. In fact, current Lumia phones do NOT have Skype on them, but this problem is admitted by Elop to exist and to be significant. So significant that Nokia joins Microsoft in meetings to try to end this. Elop did admit some operators (I never said all) have refused to sell Lumia because of Skype. When I wrote here on May 3 after the direct quote attributed to Elop, and I added this summary of what had happened (these are my words about Elop): "Elop clearly admits that there is a reseller problem relating explicitly to Skype. He furthermore admits, the Skype issue has resulted in some carriers actually refusing to carry Lumia." I was 100% correct. Elop said that, many times over and in many ways, in those 12 sentences!
LETS DIG DEEPER INTO WHAT ALL ELOP SAID (AND MEANT)
So now it is established, beyond any reasonable doubt, that Nokia CEO himself admits - no less than three times - that Skype is a problem to operators. What else do we learn. Lets take Elop's statements individually and study them in detail
Elop said: "Indeed, Microsoft did buy the Skype company as part of the ecosystem that comes with Windows Phone and Windows." We know this obviously, it is no secret but the relevant part is the ending of the sentence. Elop points out that Skype is supposed to be part of the overall (non phone) Windows (ie PC) based ecosystem. That means a Billion desktops. That means that yes, obviously, before Microsoft, Skype alone was far less a threat to operators, than today, when Skype is now part of Microsoft's world-domination plans is clearly intended to cover the full 1 Billion desktop environment, in addition to the Windows Phone part of Microsoft's ecosystem. For whatever degree operators hated Skype as a stand-alone rival to mobile operator voice call revenues and profits, SMS text messaging revenues and profits, and the video call related revenues and profits - that all became vastly more dangerous and threatening when Microsoft bundles Skype with Windows on the desktop.
Then Elop gives a clear explanation of why operators hate Skype, when he explained why they don't like Skype: "The feedback from operators is they don’t like Skype, of course, because for those operators who have a traditional wire-line business, traditional telephone business, it could take away from revenues."
First, obviously, Elop knows and admits that the operators hate Skype not because it enables new data services like VOIP calls or instant messaging, it is because Skype threatens revenues. Secondly, that response is typical of how cleverly Elop tries to spin the story. He takes elements of the truth, ignores part of it, and tries to spin it to his advantage. From that response you would think it is 'only' those operators who have traditional wireline business who hate Skype. That is not true. First of all, traditional wireline telecoms service does not operate SMS text messaging, so the Skype instant messenger is not even a threat to that business, but is one of the most used 'OTT' services on mobile networks only. Video calling, a highly popular service on Skype, is not available in most homes through the fixed landline business, but most 3G mobile phones do videocalls. So much of Skype's real threat addresses mobile operators and does not touch the fixed landline business. Elop's answer is 'the truth but not the whole truth'. Yes, Elop admits those operators who have landline business, will feel even greater threat from Skype, but all operators, fixed or mobile, feel the threat from Skype and do not like it. Don't let Elop's response get away from the truth.
Note, Elop's first part of that answer was not explicit to operators with landline business. He clearly admits "the feedback from operatos is they don't like Skype, of course." This is not limited to those operators with landline business. Elop only goes on to explain why one part of all operators, those with landline business, would feel some pain from Skype. His reply is consistent with 'the whole truth' but is only part of the truth. If Elop was testifying in court, this would be the same as witholding evidence. Elop knows the full truth and deliberately witholds part of it. This is not the whole truth. Therefore, Elop has clearly practised his response, so he can give an honest, but incomplete answer, to try to spin the story.
ONE YEAR OF FUTILITY AGAINST CARRIER COMMUNITY UNITED
Next Elop says "And, so what Microsoft has done – and we’ve been part of these conversations as well with operators – is as you correctly say, if operator doesn’t want Skype installed on a Windows Phone from Nokia or any other company, then the operator can make that decision."
This is a very revealing passage. First, is that Microsoft has been having these conversations with operators. Its not just that Elop admits Nokia has a problem with operators due to Skype. Clearly Microsoft has that problem with all makers of smartphones using Microsoft software. Elop tells the audience, Microsoft has been having conversations with operators (and that Nokia is often part of those as well). Microsoft caused this problem one year ago. Microsoft's Windows based smartphone sales fell by half in six months after the Skype purchase. Microsoft has been feeling the heat and pain from operators from the day they announced the Skype deal. And one year later, there are ongoing discussions with no breakthrough? Even not, with Nokia's smartphone future at stake. While Microsoft caused this problem to its 'strategic partner' Nokia under expensive difficult transition, Microsoft has not been able to resolve the issue in one year. In one year.
Secondly clearly many opertors do select not to offer Microsoft based smartphones. Thirdly, Nokia has been sitting in conversations with Nokia's operator customers, where the owner of highly hated Skype - Microsoft - has been brought into those conversations. So whatever level of Nokia customer relationship existed with carriers, prior to May of 2011, no matter how good or bad the carrier relationship had been, either with Symbian, or headed to MeeGo, or after a carrier may have liked the initial discussions about Nokia with Microsoft using Windows Phone. After May of 2011, that all changed, and Nokia needed to bring the hated Microsoft - new owner of the most hated Skype - into the discussions with the operators. This means any previously positive Nokia customer relationships have now become far more hostile and contentious. We hear more about it as Elop explains further.
As Elop explains: "Now, you’re right: it can be circumvented. But of course it’s on all Android devices, it’s on iPhone devices, it’s on iPad, it’s on all of those devices. So in fact what we’re doing with the operators is turning it around into an advantage. Instead of them just complaining about Skype on Android or Skype on iPhone, with Microsoft and Nokia, we can have a conversation..."
That Skype exists on some other smartphone platforms (but not nearly all, Android and iPhone added together account for about 30% of the installed base of smartphones in use worldwide today) is an irrelevant point to the fact, that Elop has admitted operators hate Skype and hate Nokia Lumia because of the Microsoft Skype connection.
Then Elop gives yet another confirmation of operators hating Skype by talking of "turning it around into an advantage". If you are trying to turn something 'into an advantage' means that it currently is a disadvantage. Obviously. And in the full response, we see that after a year of trying to do that, Microsoft and Nokia have zero successes, not one case where an operator has accepted this offer of the Frankenstein's Monster who is trying to promise not to destroy its master. Whatever the state of those negotiations, with Microsoft and with or without Nokia, the problem continues. If it is being attempted to turn into an advantage means it currently is a disadvantage. What is this now, the fourth time Elop admits to the problem?
Then the part about "Instead of them just complaining about Skype on Android or Skype on iPhone, with Microsoft and Nokia, we can have a conversation..." So, again Elop admits explicitly that operators are complaining about Skype. Yes, Nokia now tries to have a conversation. That has so far gone nowhere. But Elop admits operators complaining - one year after the fact, still complaining about Skype. This is now, what the fifth independent confirmation by Elop that operators don't like Skype.
BIGGEST BULLY AND ITS LITTLE BULLYING PARTNER
The next part is explicit acknowledgement by Elop of how rudely, arrogantly and abusively both Microsoft and now Nokia, are approaching the operators about the Skype situation. Read what Elop tells us about those conversations that Microsoft is having with operators, and where often Nokia is participating. This is how Microsoft and Nokia bully their operator-customers in the 'conversation' "Ok there, is this Skype thing, is there a different type of partnership we can do that recognizes that voice over IP like Skype is coming no matter what, but maybe we can do something creative that generates incremental revenue for you."
First. Nokia and Microsoft tell operators, Skype is here, take it or leave it. Read what they say: "Skype is coming no matter what, but maybe we can do something creative." This is no negotiation. This is a threat. Elop tells the Nokia shareholders, that even as Nokia faces a global sales boycott and angry resellers, and that Nokia's strategic partner has caused a reseller revolt due to its purchase of Skype, both Nokia and Microsoft come together to the carriers/operators, and threaten them promising "Skype is coming no matter what."
No wonder operators now hate Nokia too. I would walk out of such a meeting (and I am pretty sure, Nokia sales people have seen that happen countless times). Why have so many senior Nokia sales people quit 'for personal reasons' after the Skype purchase by Microsoft and the operators have told them what they think.
This is exactly what Microsoft - and Steve Ballmer - are known for, in how they have been dealing with any of their developers, resellers and even governments that have sued Microsoft. Microsoft is known as the Evil Empire for good reason. Their natural instinct is to threaten and bully. And Elop admits to the Nokia shareholders, that even as Nokia has seen a global carrier revolt now for a year, Microsoft still uses these bullying tactics against Nokia's customers. The smart move by Nokia, if Elop was looking after Nokia shareholder interests, would be in every one of those negotiations, to promise the carriers/operators, that as Nokia supports currently 3 separate operating systems, Nokia can of course provide smartphones running on MeeGo or on Symbian, which do not come from Microsoft, and thus the Skype problem is circumvented. That would be 'negotiation'. What Nokia now does with Microsoft is only a theat. "Skype is coming no matter what." Elop's exact words. If the operators feared Skype before Microsoft bought it, now Elop has told them that Skype is an integral part of the PC Windows world - adding another one billion users, and will be an integral part of Windows Phone - and now, operators must deal with Microsoft as a global giant rival in voice calls, text messages and videocalls - because Microsoft and Nokia CEO even promise in public "Skype will come no matter what."
WHO WANTS TO BE SLAVE TO MICROSOFT
Then comes the clear indication of Microsoft's vision of the end-game. Total Microsoft world domination, with operators/carriers as slaves to Microsoft, as much puppets of the Microsoft Ballmer dictatorship, as Stephen Elop is currently the Microsoft Muppet. Look what Elop next tells the Nokia shareholders: "Some operators are looking at bundling Lumia, Skype and their own services with higher-bandwidth allotments to actually charge the consumer more and generate more revenue for them. So by actually controlling the Skype asset, we can begin a conversation about how we can have a better Skype-based relationship, which was impossible for operators to do before."
One. Elop tries to spin their desperate attempts to push Skype down the throats of operators/carriers with what amounts to cash bribes and one year later, out of 600 operators/carriers in the world, not one has even taken this to any kind of pilot project. Total rejection so far, but Nokia wants to continue this discussion. Elop tries to spin it that operators might want to do this (some operators - not even all or most - are 'looking' at bundling Skype with their packages). Now look at the second part of that passage: "by actually controlling the Skype asset, we can begin a conversation about how we can have a better Skype-based relationship, which was impossible for operators to do before."
First, who controls the Skype asset? That is not Nokia and that is not the operator, that is Microsoft. So once again, Elop is confusing whose CEO he is. He is suggesting 'we' control Skype as in Nokia, when it is Microsoft and only Microsoft who control Skype the asset. Secondly look at the middle part "we can have a better Skype-based relationship". So Nokia's vision is that the smartphone ecosystem world, where Microsoft Windows based software is the basis, will be a "Skype-based relationship" and one that Microsoft can be "actually controlling the Skype asset.". Nokia threatens its carrier partners that Skype is inevitable, and that Skype based world is one where the operator-relationship is based on Skype, and the one controlling Skype is Microsoft. What a horrible world view. Elop tells Nokia shareholders that Nokia's CEO is part of discussion to threaten the global carriers to join a slave army subject to Microsoft's whims. No wonder after a year of these negotiations, not one carrier/operators has even agreed in princple to try it. This is a certain recipe for death by the carrier community! Even if Elop was dumb enough to sign Nokia's future to being a slave of Microsoft, the 600 CEOs of the big telecoms operators are not that dumb.
Finally Elop finishes with the passage: "So it’s actually quite a bit more advanced than whether operators like or don’t like Skype; they actually want to engage in a conversation about what does this mean and how could we do something that we couldn’t do before." Here Elop tries to spin the story again. Even in his closing, Elop reminds the shareholders that operators don't like Skype, but that in Elop's view, there is more to this matter from Nokia's view, than just the fact, that operators "don't like Skype". This is now what, the 6th separate time in 12 sentences, that Elop admits carriers/operators in the world don't like Skype. It can't be more clear. And Elop claims that operators "want to engage in a conversation about what does this mean" - I don't doubt that. The operators must have been flabbergastered when this happened a year ago. I think today that is no longer true, the operators know precisely what this means. Elop has stated already in public that he is indeed of the view, that Skype is inevitable, the carriers have to submit to a relationship formed around Skype, the whole Windows ecosystem will be making Microsoft the master of that world and the operators have to take what Dictator Ballmer insists. Yeah. I think we can see where this is going.
As to Elop's ending that the operators want to discuss "how could we do something that we couldn't do before" would be for example, operators telling Nokia: lets eliminate Microsoft from this mess and use Nokia's own MeeGo instead. It is winning in all side-by-side comparisons as the better OS and MeeGo's owners, Nokia and Intel, are not owners of Skype, but operators such as China Mobile are part of the MeeGo alliance. Yes, this I can totally believe the operators are telling Nokia. They want to engage Nokia in a conversation of doing "something that we couldn't do before" as long as it gets rid of Skype and especially gets rid of the ultimate threat to operator voice revenues on fixed AND mobile networks, gets rid of operator SMS text message revenues only on mobile networks,and gets rid of consumer videocalls only on mobile networks.
IN THE END, WHAT DID ELOP ADMIT?
He was asked explicitly about is there "a problem with product distribution" because the "Operators do not want to sell Windows Phone" and that was thus due to not, that Skype was pre-installed on some smartphones, but because of the fact, that "because Microsoft has acquired Skype". To this point, not once, not twice, not three or even five times - in twelve sentences, Nokia CEO admits directly or indirectly, six separate times that the operators hate Skype. They have complained about it for a year and it is so well known as a problem, the whole industry knows it, that Elop uses the words "of course." This is not a matter of the slightest bit of uncertainty or unclarity. I thought in my original posting here on this blog after the Nokia shareholders' meeting, that Elop had once admitted that Skype is a problem with carriers. If I was wrong in anything reporting on this blog, was not that Elop admitted carriers are reluctant to sell Lumia because of Microsoft and Skype - but that Elop went out of his way, to explain in six different ways, that yes there is a continuing global problem with all operators about the Skype issue. That operators do hate Microsoft, but that Nokia joins in those discussions, not on the side of the operators - giving for example a Nokia alternative without Skype - but rather Nokia's CEO taking the side of the hated Microsoft and the distrusted Ballmer.
Six times he admitted there is a problem with distribution, that operators do notwant to sell Windows Phone based Nokia smarpthones and this is due to not that they might have Skype on some smartphones, but it is due explicitly because Microsoft now owns Skype. Yes. Six times Elop talks about how real that problem is. And separate from those six explicit or implied admissions, Elop further states three times that the question itself was correctly posed saying "thats quite correct" and "as you correctly say" and "you're right". Not once in twelve sentences did Elop say "there is no problem with distribution channel refusing to sell Lumia" nor did Elop say the problem is not due to Microsoft now being the deep-pocketed owner of the much-hated Skype.
AXIS OF EVIL
Instead Elop revealed that the discussions ongoing with carriers/operators today worldwide are centered around threats by Microsoft that Skype is inevitable, and while today operators have no inherent business relationship with Microsoft to share their core business, voice calls and text messages - where 85% of their revenues and 95% of their profits are made - now Microsoft thinks it can bully itself into the situation, to make Skype central to the relationship and force operators to be 'controlled' by Microsoft.
Here Nokia's position, which in the past was known for being operator-friendly and looking at open platforms, sharing and co-creation, now is joining with Microsoft's bullying and sitting in those same meetings taking Microsoft's side. And while Nokia has two other smartphone platforms currently in production, when operators ask for solutions, Nokia refuses to even put MeeGo or Symbian on the table, saying 'its Skype, take it or leave it.' That Skype is going to be part of the ecosystem on any Windows based solution.
No wonder operators globally, uniformly united, all reject this Axis of Evil.
NOKIA EVEN SPINS THE QUESTION POSED
I want to point out a further minor detail. Nokia has now on Tuesday taken an even more extreme step to try to control the story, by releasing a video of what Nokia CEO said. It includes the voice recording of the exact question as asked by Nokia shareholder Mika Hasanen (in Finnish) and translated onto the screen. Elop's reply is on video and in English.
So, the translated text as shown in the video is as follows (see screen shot of Nokia video taken on 9 May 2012).
(screen shot of official released Nokia video of Elop reply to Skype question at Shareholders' Meeting, retrieved on 9 May)
There is a clear difference in meaning - and severity of the issue for any company in discussing 'revenue' or 'profit'. The Finnish question clearly talks about "tulosta" which is a form of the Finnish word for "tulos". Tulos has many meanings in Finnish including result but in financial terms, business terms, there is only one meaning, it is not "revenue" it is "profit". Thus the Nokia officially released video of the Skype matter, starts with clear translation error that distorts and dimishes the question as asked by Nokia shareholder. The question did not pose the situation that "Skype calls are eating operator revenues" (which would be - and is - bad) but was "Skype calls are eating operator profits" (which is far worse). Thus the actual point was far more severe for operator financial performance and actual economic health - profits. And Nokia illustrates how much it is trying to spin this story, by again changing the clear dictionary defintion of 'tulosta' (ie a form of the basic Finnish word 'tulos') which in accounting and business terminology means 'profit' not 'revenue'.
Elop has admitted that the question posed did express a real problem, very validly, Elop says in his reply three separate times that the question, its facts as stated were correct: "so that's quite correct" and "as you correctly say" and "you're right". On the very explicit question part relating to operator business reasoning (where the question was posed as one of profit) Elop answers "as you correctly say". Yes. Elop knows and acknowledges the questioner was correct to say Skype eats operator profits. Elop's answer only deals with one part of Skype which threatens the revenues from voice calls for some operators with landline business. He ignores the whole issue about SMS text messaging being the most proftable part of mobile operator business and voice calls the second most profitable part, together contributing over 95% of total operator profit for mobile operators - and Skype is the biggest threat on the planet for both of those.
WHO HAD THIS STORY?
The Nokia Annual Shareholders' Meeting had a question, posed by a shareholder, that caused a long 12 sentence reply. It dealt with the retail channel boycott, and dealt with Nokia's strategic partner Microsoft. It dealt with threat and damage to Nokia's direct customers, the carriers/operators. Where was this story reported? We can see from the video and read from the transcript, this was a long, considered reply of a problem so severe the CEO admits it is damaging Nokia smartphone sales. We had dozens of news sources and tech bloggers reporting live from the event. Only Helsingin Sanomat, the biggest Finnish newspaper picked up on this story. Where was everybody else? I studied all feeds I could find from the event, and found this one of the two biggest most significant stories coming out of the three hour meeting (the other being the other carrier boycott of all Nokia phones, not just Skype and Microsoft based Windows smartphones, but we knew that story from before and Elop had admitted it many times before, and Nokia has not in any way tried to deny the general carrier boycott of Nokia overall exists and damages Nokia today, ever since the Elop Effect of February 2011. My third big news from that day was just prior to the Meeting, when outgoing Chairman Ollila confirmed Nokia's mad strategy to launch tablets now in this financial crisis and amidsts global reseller boycotts).
First, thank you to Nokia concerned shareholder Mika Hasanen who is clearly enlightened about the real world of carrier relations, for asking that pointed question about Skype. At least we do have Nokia CEO now on record. If it was not for Mika, this issue might still be muddled.
Secondly, thank you to Helsingin Sanomat for noticing the story and reporting on it. If it were not for that case, nobody else talked about Skype after the Meeting. Bizarre. For such a huge story, only HS picked it up initially. Were the other Finnish journalists and tech bloggers asleep? But this was a 'scoop' by HS. Congratulations!
Thirdly, was I right to report it on my blog? The Helsingin Sanomat story was in Finnish. I think I provided a good service for my readers and followers, to translate that story from the Finnish version to English, and to provide this story in English. It was then picked up by several English-language news and business sources such as Business Insider. Since that story broke, now the Nokia and Microsoft Skype problem has been reported, and independently verified in various sources such as Finland's biggest business newspaper Kauppalehti which ran the Skype admission as a cover story yesterday.
Fourthly, was the reaction by My Nokia Blog and All About Symbian and other Nokia-apologists accurate and fair? They jumped on my blog claiming I distorted the story. They were at the meeting, I was not. They had heard the full story, not that Elop said once that yes, Skype is hurting Nokia sales with carriers. He said it explicitly three times, implied it three more times, and furthermore said three times that the question was completely correct in its premise. Yes. Operators are suppressing Nokia Lumia sales, due to a global reseller boycott by carriers, against Microsoft and all Windows based smartphones by any brand. I said that was what Elop had said, based on the short quote that Helsingin Sanomat quoted in Finnish. I was 100% correct in my translation. Helsingin Sanomat was 100% correct in its summary of what Elop had said about Skype hurting Lumia sales. That Helsingin Sanomat did not go into detail about what Elop is telling shareholders how he is desperately trying to resolve the matter - because clearly the professional Helsingin Sanomat journalist saw through that marketing bullshit, there was no 'news' in the 'talks' that Nokia is continuing to have with clearly hostile operators, the journalist did the right thing not reporting on this spin by Elop. The news was, that Nokia CEO admitted that Skype hurts Nokia Lumia sales. Not the Skype on smartphones, that has existed for many years. The fact that Nokia's partner Microsoft bought Skype and now gives deep pockets for hated Skype to be a thorn in the side of the carrier community.
I can understand if a tech blogger friendly to Nokia wants to point out that Elop is working to try to resolve the issue. That is fine, if they want to believe in bedtime stories that have no correlation with reality, such as Santa Claus and the Easter Bunny and the Tooth Fairy and Stephen Elop. I do think, the tech bloggers should have acknowledged that for whatever gripes Tomi Ahonen has with Stephen Elop's Microsoft strategy, when Tomi reported on Communities Dominate blog that Nokia admits Skype problems with carriers - that was in fact 100% true, it happened at the Nokia Annual Shareholders' Meeting and the Communities Dominate blog was 100% accurate in reporting it in English (translated from the original HS story in Finnish)
Fifthly and finally, Nokia's reaction. I was stunned to find that a Nokia PR person, James Etheridge appeared on Twitter suddenly to demand that I change my blog. James claimed I was untruthful about Elop. When I demanded from James to indicated which passage attributed to Elop was inaccurate, he disappeared but sent in his boss, Douglas Dawson who joined in to attack me on Twitter - and Doug demanded an apology from me. I repeated asking the question, what passage attributed to Elop was inaccurate on my blog, and he could not show any. But this bizarre incident was noticed by Finnish IT paper, Tietoviikko who gave it the headline (in Finnish): "Strange Twitter play: Nokia demanding an apology from a past executive." And last but not least, after I had agreed to a truce with Nokia PR people, after they were unable to show any statement here that was not accurate of what Elop had said, we have Douglas's boss, John Pope, the Director of Communications at Nokia sent me a Tweet on Tuesday, informing me that Nokia had released the full video and text to My Nokia Blog, and asking me to "Would you correct yours" adding the hashtag #factsvsfiction. Well, here John Pope Director of Communications Nokia, is your update to the story. Did you really want this mess? How much worse is it what your boss said on 3 May, than what I reported originally? I was completely correct, 100% correct, your two subordinates were not able to show one word by Elop that was not correctly quoted. But now, we have this whole mess, where Elop actually said tons more damaging stuff about Skype, about Microsoft and about Nokia's utter inability to resolve the matter, even one year later.
Is this argument over? I don't know. I stand by my words. You can go see Elop's full video reply and listen to his yourself. Elop admits clearly, many times, yes, carriers hate Skype, and now they hate Microsoft, because of Skype. The astonishing part, in the second half of that video, is how intensely rude Nokia and Microsoft are now, bullying arrogantly the carrier community threatening them that Skype will be there, no matter what. And worse - threatening the future is one where Microsoft controls the Skype based communication environment, where perhaps - perhaps if they play nicely, some carriers might get some pennies of shared revenues from Microsoft. Perhaps.
WHO TOLD YOU - FIRST?
Now that the matter is clearly resolved. Yes. I was 100% correct on this blog to report on May 3 that Elop has admitted Skype is hurting Nokia Lumia sales. Now lets go back to history. Who told you first? Back in May of 2011, there were no Lumia smartphones. While Elop announced his Microsoft based Windows strategy on February 11, 2011, Nokia had no Microsoft based phones to sell. So when Microsoft bought Skype in May, that damaged Microsoft's reputation with existing Windows Mobile and Windows Phone based smartphone sales ie those by Samsung, HTC, LG etc.
Where did you read about that first? I reported here on my next update to the "bloodbath" series of blogs, which was on June 7, 2011, when I wrote that Skype was the "ultimate death-nail" to Microsoft:
"The thing carriers/operators hate the most, is Skype. They hate Skype with a vengeance. Why? Because the carriers witnessed how easily Skype destroyed their fixed-landline telecoms cousins, and where Skype might not take all traffic, it devastated the revenues and profits of that robust industry."
Who told you this in June of 2011, that Skype would devastate Microsofts already dwindling market share in smartphones? I wrote "To offer Skype for carriers is tantamount to offering them a drink labeled as poison" and I warned specifically how badly Microsoft was handling the situation, bullying the carrier community when I wrote on 7 June: "Steve Ballmer is proudly crowing about how Microsoft will use Skype to build its eco-system." I wrote further that "the carriers will not let Skype replace the carriers' cash cow - voice calls. Won't happen." I added: "The carriers will not allow Nokia and Microsoft to do this. Not with the brand they hate the most, Skype." In that blog, I called it "poisoning the well".
Was this blog of value to my readers? Did I understand correctly the attitude of the carrier community and their hostility towards Skype. And did I correctly foresee the results of what this would do to Microsoft Windows based smartphone sales (which collapsed after June, falling by half in six months) and how Nokia would be damaged by Skype - so much so, that CEO Elop admits it multiple times and with the statement "of course" to the Shareholder's Meeting almost exactly a year later.
At the time I received a lot of hostile comments and many Nokia and Microsoft fanboy sites ridiculed me. I did not budge. I kept reporting what I learned from my contacts and my own analysis and reported stories from the industry.
BOYCOTT AGAINST MICROSOFT
Then as I warned operators/carriers will not have this from Microsoft, I did not suggest there would be an actual boycott. But I warned carriers won't let it happen. I did not have to wait long to see the carrier reaction. On June 10, just three days after my blog I posted the next blog about this issue as we heard first evidence of a study of retail stores in the USA, reported in the San Francisco Chronicle and other press, that US handset stores had pulled Microsoft based smartphones from their shelves and refused to sell the smartphones. Who told you about this? Was this newsworthy? Was this truly a major development for the world's largest software maker who wants to establish a 'third ecosystem' for mobile?
I didn't have to wait long for more news. A second, independent survey of US retail reported out of Boston was in the news by June 24 and I reported that then on my blog of cousre. Who told you? Who told you eleven MONTHS ago, that Microsoft's mobile mission was imploding. That Nokia's fantasy of a Microsoft comeback was backfiring. What of all those smartphone bloggers and Nokia tech sites who try to tell you of the news. Did they tell you this story? It was happening, the world was reacting to Microsoft buying Skype. I was on the story here on the CDB blog. Did you read about it on your fave smartphone blog? Not many covered the story back then. Now Nokia CEO admits they are losing carriers and all operators hate Microsoft because of Skype. Did this blog bring you value last summer?
ELOP MAKES MATTERS WORSE
And I have reported on how much Elop is damaging carrier relationships by his own actions. I have repeatedly pointed out that Elop himself is making the wrong choices. So I want to go back to June 2. This is exactly what Elop said about Microsoft and Skype. Now that you have read from the above, that Elop admits now, a year later, that carriers still hate Skype, look what the moron said on June 2, about Microsoft: "You will have heard of the acquisition of Skype ten days ago. Clearly that will be part of the Microsoft Phone ecosystem. The acquisition of Skype by Microsoft is a great way to bring all pieces together."
That was a year ago! Now in May of 2012, Elop is still threatening operators that Skype will come no matter what, and Skype will be central to the business relationship and Microsoft will control the whole system. Now today, you the fair-minded reader, can see that Elop himself has admitted operators still hate Skype, still refuse to support Lumia and still fear Microsoft. What kind of confidence did that statement one year ago, say about where Nokia's new CEO stood in the industry. He did not stand with the operators. He moved Nokia to side with Microsoft. The Evil Empire had become the Axis of Evil on June 2, 2011.
That is why I wrote on June 24: "When Microsoft bought Skype, that sealed the fate of any Microsoft-powered smartphones. Suddenly all Microsoft phones disappeared from stores." I added explicitly about Elop taking Microsoft's side in this issue to be "Wrong move, Chester". I continued: "That is why Stephen Elop will not survive as CEO of Nokia. He has now heard from all the major carriers, that after statements like that, there will be no happy ending to the Microsoft-Nokia saga with Elop in charge. Even if the carriers/operators fell in love with Nokia-Microsoft-Skype phones, they will not support them, simply because of Elop's ridiculously arrogant and abrasive statements. He who embraces my enemy - becomes my enemy. You want to quote Sun Tzu, Stephen Elop? You should have learned to study the terrain before you move. To understand your position, where you are at strength and where at weakness. And not to launch an attack against superior numbers. One Nokia will not ever survive, even with a Microsoft by its 'side' (See Sendo, Motorola, Nortel etc above) - if it faces 600 carriers/mobile operators of the world, united, against Nokia. Stephen Elop did the cardinal sin, he actually said his Nokia phones would indeed have that poisonous 'ecosystem' run by Microsoft, that included Skype."
I wrote that on 24 June. Was I correct? Was that significantly foresighted one year ago, about how badly Microsoft will fail in smartphones, and how severely Lumia will disappoint when Nokia launches it. And I explained clearly how Microsoft was proceeding the totally wrong way on this path arrogantly bullying and angering the carrier community. I wrote: "Ballmer doesn't enjoy winning nearly as much as he enjoys crushing his victims. So he added the ultimate salt into the wound. Skype. The carriers/mobile operators hate Skype more than anything else on the planet. There will never be carrier-supported (for example subsidised) smartphones that run Microsoft, even if those phones have Skype crippled - the carriers hate Skype and will not trust Microsoft (they have long memories, they remember Microsoft and Sendo, Microsoft and Ericsson, Microsoft and Nortel, Microsoft and Palm, Microsoft and Motorola, Microsoft and LG.. need I go on? There is a reason its called the Evil Empire)."
Since then Ballmer has admitted Microsoft Windows Phone sales are disappointing. He has stopped giving the breakdown between obsolete Windows Mobile sales compared to newer Windows Phone sales (and independent analysis such as from the US market still in Q4 of 2011, said Windows Phone sales had fallen so badly, older Windows Mobile still outsold them by a wide margin). Microsoft's top Windows Phone guy was demoted. Microsoft's departed Windows Phone guy admitted that Microsoft had bad carrier relationships when Windows Phone was launched, but during 2011, Microsoft itself made matters worse. This is obviously due to the purchase of Skype and Microsoft's arrogant attitude ever since.
After Lumia was launched, Nokia has admitted time and again, that carriers are not fully supporting Lumia sales. Independent surveys of in-store sales staff preferences, from Finland to France, from China to USA, have verified, that Nokia retail sales is indeed reluctant to sell Lumia. Part is that the phones are designed to disappoint existing Nokia owners, while not being competitive with modern rivals from Apple and Samsung. Part of the problem is the biggest return rates by Nokia consumers ever seen by Nokia smartphones as we heard from Russia for example. And part of the problem is the previously existing carrier boycott against all Nokia handsets, Symbian, MeeGo and Windows based smartphones, as well as basic 'featurephones' as Elop admitted in the Annual Shareholder Meeting. But the biggest part why Lumia sales are severely disappointing, is the carrier revolt against Microsoft and Windows. It is destroying Nokia Lumia sales today, when Windows Phone does not even include Skype as pre-installed. Imagine how much worse this problem becomes towards the end of this year, when Windows 8 comes to Nokia Lumia phones - and Windows 8 has Skype integrated!
Nokia's top USA sales guy left a long term successful Nokia sales job 'for personal reasons' after this Skype boycott emerged. Nokia's top China sales guy left 'for personal reasons' this Spring. Microsoft's top Windows Phone global marketing head just left 'for personal reasons' this Spring. Motorola, one of Microsoft's longest-standing partners with Windows Mobile had already grown fed up with Microsoft bullying tactics, and decided not to launch Windows Phone smartphones (this was before Google bought Motorola). Sony another long-term Windows partner through SonyEricsson, said it doesn't see any reason to bring Windows Phone smarpthones to the market now. LG, one of the three bestselling Windows Phone manufacturers currently, has decided its not worth continuing on Windows Phone. Samsung, the biggest Windows Phone maker, is developing not one, but two rival smartphone operating systems to replace Windows Phone - bada and Tizen. HTC, the oldest Windows partner for Microsoft is lukewarm at best, and severely disappointed in Windows Phone sales. What am I not seeing?
Windows Phone might have become the 'third ecosystem'. Some analyst houses last year this time promised 20% market shares for Windows Phone. Now Windows Phone has 2% market share globally, even when we add Nokia Lumia sales to the mix. At one point Microsoft had 12% of the global smartphone market. At the start of last year, Nokia had 29% of the worldwide smartphone market, being bigger than Apple iPhone and all Samsung smarpthones, combined. Today Nokia has fallen to 8% and will be 3% by end of this year.
The Windows Phone vision was a nice fairy-tale in early 2011. Maybe the world's largest handset maker, when joining the world's largest software maker, could create the 'third ecosystem'. But when Microsoft bought Skype, that house of cards fell apart. Now the two have turned from an Evil Empire and Gentle Giant, to the Axis of Evil. There will never be a third ecosystem in mobile around Windows Phone. I told you last June that it was the Skype purchase which sunk Microsoft's ambitions in mobile. And I warned that if Nokia put all its eggs in that Windows basket, Nokia would be doomed as well. One year ago the mirage of a Nokia recovery through Microsoft was shattered. Today the more rapidly Nokia's management accept the inevitable, this is a certain road to ruin - the better for what remains of Nokia. And yes, I have to say this here now elven months later when even Nokia CEO admits the catastrophy he is facing of a global reseller boycott of his announced strategy - I told you so.
Now the Nokia CEO openly admits to the facts. A year later, Nokia's CEO arrives at the same prognosis I gave you a year ago. Did this blog serve you any value? Oh, and Nokia PR people? Isn't it about time YOU issued ME and this blog a public apology?
FOLLOW UP 10 May 2012 - There are many questions among the comments about confusion relating to Skype and other OTT providers. Why would Skype be different from iMessage or BBM etc. And that Skype is already available on many smartphones etc. I have written a blog explaining OTT providers now, entilted: Understanding OTT: Why carriers dislike BBM, hate iMessage and fear Skype.