I told my readers last year, that Stephen Elop's new Nokia Microsoft strategy with Windows Phone has only one chance to get it right. This was because I accurately predicted that the market share will fall from Nokia's 29% market dominating position using Symbian OS, to the 12% it was at year end 2011 when the first Lumia smartphones started shipping.
ELOP NOW SAYS BURNING PLATFORM MEMO HURT NOKIA SMARTPHONE SALES IN 2011
Note that the decline needed not be that intense, Nokia could have held to a far more gradual decline in Symbian sales if it were not for the misguided Elop Effect by the CEO. The Burning Platforms memo (half of the Elop Effect) was a self-inflicted wound similar to the Osborne Effect (the other half of the Elop Effect was calling his own product bad, which was the other colossal mistake by Elop at the same time, repeating the Ratner Effect. I call these two combined the Elop Effect, the most damaging CEO communication of any Fortune 500 sized corporation in the history of business).
Elop himself has now said, when answering a question at the Nokia Annual Shareholders' Meeting in Helsinki a week ago, according to My Nokia Blog who were present to hear him answer this question, NMB writes: "On Symbian and the Burning Platform memo. Asked about did he think it hurt Symbian, Elop said he believes it did hurt Symbian." MNB then reports more on what Elop had said - that Elop had said Nokia Symbian sales were "undeniably on a downward trajectory".
Note that Elop now admits that his Burning Platforms memo did hurt Nokia smartphone sales last year. But he tries to defend his decision as good for Nokia overall, nonetheless. What else would we expect from this CEO who has no credibility in the mobile industry. Elop said Symbian sales were "undeniably on a downward trajectory". And that sounds very reasonable, if we look at the long-term trend, yes Symbian had been falling under previous management of Olli-Pekka Kallasvuo. Now lets look at at the facts and expose the EXPLICIT LIES that Elop will use to try to argue his bizarre management positions. Here from Nokia official Quarterly Results:
NOKIA OFFICIAL RESULTS BEFORE AND AFTER BURNING PLATFORMS MEMO
Quarter 3 2010 Symbian based Nokia smartphone sales: 26.5 M units and 3.6 B Euros revenues;
Nokia smartphone Average Sales Price 136 Euros, profits in smarpthone unit 335 M Euros
(last quarter before Elop was in charge)
Quarter 4 2010 Symbian based Nokia smarpthone sales: 28.3 M units and 4.4 B Euros revenues;
Nokia smartphone Average Sales Price 155 Euros, profits in smarpthone unit 548 M Euros
(first quarter Elop in charge, last quarter before Burning Platforms memo)
Burning Platforms memo released February 9, half-way into Q1
Quarter 1 2011 Symbian based Nokia smarpthone sales: 24.2 M units and 3.5 B Euros revenues;
Nokia smartphone Average Sales Price 146 Euros, profits in smarpthone unit 218 M Euros
(quarter where half was before 'Burning Platforms' memo and half after it)
Quarter 2 2011: Symbian based Nokia smarpthone sales: 16.7 M units and 2.4 B Euros revenues;
Nokia smartphone Average Sales Price 142 Euros, first time ever loss in smarpthone unit -147 M Euros
(first full quarter after Burning Platforms memo)
Elop once again uses partial facts to hide the truth and to mislead his audience. Yes, before Elop took over, Nokia Symbian based smartphones had seen declines in unit sales, in revenues, in average prices and profits. But after Elop took over in the first full quarter he was in charge, not one, not two, not even three, but all four of those metrics shot up - Nokia Symbian based smartphone sales grew unit sales, and grew revenues, and grew average sales prices, and grew profits. This was the last quarter before his Burning Platforms memo! So at the VERY LEAST it is untrue when Elop says Nokia Symbian sales were "undeniably on a downward trajectory" - at the very least they had experienced a strong uptick in 2010, thus there is no undeniable downward trajectory - but more likely, Nokia had turned the corner and were in recovery when Elop issued his ridiculous memo and destroyed this comeback.
I have said Elop is the most destructive CEO ever in corporate governance and the numbers bear it out - he caused enormous damage to Nokia and now Elop himself admits that yes, the Burning Platforms memo did damage Nokia smartphone sales. Elop tries to defend himself claiming Symbian sales were in decline - when Nokia official Quarterly Results data show the opposite - but he still tries to defend the indefensible. Nonetheless, he has now admitted 'the Memo' - what I call the costiest management memo of all time - did cause damage to Nokia Symbian smartphone sales. It is more than a year since I called him out on that memo. He now admits yes, it was damaging, while he still tries to argue it was not a mistake. You look at the official Nokia numbers there in the above, and you make the call. Was Nokia Symbian smartphone sales on an 'undeniable' downward trajectory if unit sales, and revenues, and average prices and profits all turned from decline and started to grow again?
ONLY ONE CHANCE TO RECOVER
Well, back to the 101 list. I said when Elop announced his Microsoft strategy, that this was not the smartest thing in my view, but it was the CEO's new strategy and he had the right to make that call. I then said, it was a a risky strategy, but that it might work (world's largest handset maker ends software development, rather partners with world's largest software company). I said it was high risk, but it might work. I then warned, Nokia will have only one chance to get it right. We would see in the Lumia series if CEO Stephen Elop could use this one-time opportunity into a chance to recover now devastatingly collapsing Symbian sales. The Lumia series had one chance to be just right.
At the very least, it had to be very acceptable to existing Nokia users. Why? Because Nokia used to be the biggest selling smartphone maker, so of those customers who walked into a handset store in 2011 or early 2012, the handset or smarpthone brand they most likely were still using, was a Nokia. The customer in 2011 and 2012 would in more cases than any other brand, walk in holding a Nokia phone they would want to replace. Thus, the Lumia line most of all, had to satisfy existing Nokia smartphone (and dumbphone) owners. Secondly, it was an opportunity to steal customers from rival platforms, so it should be in some ways competitive with some of the rivals, if not all of them, ie iPhones, Blackberries, Androids, etc. The Windows Mobile installed base globally was too tiny to care about, for Nokia if they switched their existing 29% market share in Symbian for the Microsoft 3% Windows Mobile Mobile global market share, that would be obvious suicide, losing literally 9 out of every 10 customers they had previously held.
So Nokia had one chance to get it right, because already in February at the Burning Platforms memo, it was obvious to all intelligent watchers of this industry, that Nokia smarpthone sales on Symbian were about to collapse. I was not the only one saying so, it was all over the industry, and now even Elop admits it with hind sight that yes, his memo did explicitly cause bigger decline in Symbian sales than otherwise he feels it would have had. I maintain, the evidence proves Symbian had recovered and was growing strongly when Elop killed the growth and turned into a decline. But regardless, Elop admits his memo made a bad thing worse. He admits his memo hurt Symbian sales. No matter what proportion of Symbian decline you attribute to the Memo, even Elop admits part of the decline was due to it. And no - Tomi is not saying Nokia should go back or that Symbian was perfect. It was not. Symbian was on the way out before Elop was hired and I agreed with that strategy. The replacement should have been MeeGo, not Windows, in my mind.
So in February 2011, any intelligent expert in the mobile industry could see that Nokia's dominating market share position was suddenly torpedoed by the CEO. It started an immediate global collapse ending at 12% at the end of the year. Note, that for explicitly Nokia Symbian market share, that was even worse, collapsing from 29% just before the memo, when Nokia was bigger in smarpthones than Apple and Samsung combined, to just 11% if we only count Symbian sales, what the Memo specifically damaged, as Elop admits. The other Nokia smartphone sales in Q4 were N9 sales powered by Nokia's own new Linux based open-source OS called MeeGo at about 1.75 million units sold and the 600,000 Nokia Windows Phone smarpthone sales (if you remember, Nokia's January 2011 statement of 'over 1 million' Lumia sales was to the end of January, not end of December where Q4 ended). (And yes, you read that correctly: Nokia's N9 using MeeGo outsold all Lumia smarpthones in the same quarter they were released, by 3 to 1).
ELOP SET WORLD RECORD IN MANAGEMENT FAILURE
So the Symbian sales were set to crash. From 29% market share to 11% in less than a year. This is a world record in any industry in any technology or platform for what was at the start of the year the world market share leader. Elop was not just the worst CEO in the smartphone industry or in telecoms. He set the world record for management failure across all industries. Yes, he is the worst CEO ever seen in human history. Its not just me calling Elop incompetent. For example CNBC has now added Elop to their list of worst CEOs currently in office. No industry has ever seen such a sudden and total collapse of the market leader. And now Elop admits his memo contributed to this world record collapse which pushed Nokia's powerful smartphone unit that generated over 40% of Nokia Corporation's total profits into loss-making instantly in the very next quarter. Loss-making that the smartphone unit since has not recovered from, by the way.
If your company is foreseen to experience a world-record collapse now, in this upcoming year, and your 'rescue product' will be coming at the end of the year, it is a one-time shot only to save your company. Nokia's early Lumia smartphones had to be competitive immediately. The whole company's future was resting on the shoulders of this new superstar series of Lumia phones, powered by Windows Phone software.
BUILT TO DISAPPOINT
The eagerly awaited Lumia appeared for the Autumn of 2011. And while it got positive reviews for its outwardly design factors - these were stolen from the N9 so in reality, those were all positive feedback to the N9 and MeeGo team but still - the early reviews were mixed. And then came the user trials and the news started to get worse and worse. By the time we had a couple of Lumia models, the Lumia 800, the Lumia 710 selling and the Lumia 900 was announced, I wrote my opinion on whether Nokia had found its saviour in this Lumia series with Windows Phone. I concluded the series was badly mis-designed and was built to disappoint existing Nokia owners, and totally uncompetitive against main rivals from Apple, Samsung, HTC etc. You may want to read my review of The Real 13 Reasons Why Nokia Lumia Will Fail Not Just in USA but Across the Planet.
That is why Nokia existing owners, if they buy a Nokia Lumia, will soon be severely disappointed. Some will be returning the Lumia - it has been reported to have the biggest return rates of any smartphone in Nokia history. The reviews of Lumia in use are often brutal as the Guardian review said they are returning their Lumia 800 as unfit to live with. Meanwhile the German review by Der Stern of the Nokia rival N9 was so glowing, they told their readers to travel to another country to buy the N9 like Switzerland and Austria, it is that much better than what Nokia sold in Germany (Nokia sold the Lumia series but refused to sell the N9). In fact in the UK, the N9 won the year's best design award by the 'Design Oscars' of the D&AD beating out the iPad 2 and the Lumia 800, while the N9 itself is not even sold in the UK !!! Now we hear that in Russia the exlusive Nokia handset dealership network is ending its Nokia affiliation and switching to sell exlusively .. Samsung brand handsets.
The unprecedented return rates of Lumia result in its second hand retail prices collapsing. The retail channel refuses to sell Lumia. Even when asked by existing Nokia users to be shown a new Nokia Lumia phone, in stores where Lumia signs are prominently promoting the new smarpthones, independent undercover tests by the press have revealed a clear pattern of reluctance to even show Lumia handsets. Retail staff from Finland to France, for USA to China have been caught by the press as refusing to offer Lumia when asked. Again, Nokia knows this. Even Elop has admitted the Lumia series has mixed results, and that they have problems explicitly with retail and that for example in the UK, retailers are not offering Lumia to Elop's satisfaction. This inspite of the enormous marketing push such as giving away free Xbox 360 game consoles to buyers of the Lumia or now, they offer fantastic expensive earphones by Monster (the Purity HD headset) as the sales gimmick and yet the UK retail support according to Elop is bad. And I told you what happens when retail store staff see high return rates? Their sales instinct will of course immediately stop offering those devices with high return rates. Of course. And Elop clearly admitted this problem continues today, when asked about it at the Shareholders' Meeting as I reported on this blog last week. Why does it matter? It matters because if you are totally dependent on the retail channel, as Nokia is - then it is a certain road to death, if you face a sales boycott in the retail channel. A certain road to death.
LIST OF FAULTS IN LUMIA AND WINDOWS PHONE
Why are sales people the world over refusing to sell Lumia? Why are Nokia customers returning Lumia at alarming rates globally. Why are European carriers/operators, traditionally Nokia's strongest market where it faces no entrenched domestic rival makers like it sees in North America and Asia - even in Europe, the operators/carriers are saying Lumia is not fit to sell to their customers. Here in Hong Kong two months ago, Lumia was in all the stores. Now the stores have withdrawn all the promotions and Lumia is nowhere to be found. And news from Russia is even more devastating, the 44 exclusive Nokia stores are about to switch to selling exclusively Samsung. Is this retail sales collapse of the Nokia brand in one of its strongest markets, or what?
When I wrote my list of 13 faults in Nokia Lumia, many came here of course to ridicule me. Others found great merit in that article. And the comments section is full of further faults in the Lumia line. I had thought of trying to collect into one place all the issues that were badly designed in the Lumia, to see in one place, but never got around to that. This is not a Nokia blog or handset blog. I have many other issues I want to cover. But we got the tip from a reader that there is a good listing of the 101 Reasons Not To Buy Windows Phone 7.5 on the My-Symbian forum. It is informative, and at times hilarious and at times sad. In some cases individual Windows Phone manufacturers have created some work-arounds to fix a given problem, but these all apply rather uniformly to the Nokia Lumia line in Windows Phone. The list is magnificient and informative, please go read the full list.
So let me take two sets of 10 items. First, my personal top 10 most annoying failures from that list, across all device owners. And I''m not going to list the ovbvious faults that you might see in the store or on a comparison of features side-by-side in some tech magazine or website. We know these problems already such as no micro-SD support or no Bluetooth file transfer or no multitasking (ie apps crash in background) and no Java support and no Flash player support etc. These are pretty widely reported but consider these real usability headaches you find out, after you bought your Lumia and try to use it
TOP 10 FAULTS IN WINDOWS PHONE TO ANNOY ALL USERS BUT NOT WIDELY KNOWN
7. Need Zune to transfer files. Zune will only transfer photos, videos & music. All other files need to email/upload to yourself.
8. Your contact details are automatically uploaded to cloud service whether you like it or not.
13. No VPN support for this “corporate enterprise” phone.
39. Cannot close music player, can only pause. Music player on lockscreen will stay until you reboot.
59. No call recording or app to do it.
DUMB AND DUMBER
77. Wi-fi disconnects when screen sleeps. Too bad if you are in the middle of a download.
78. If you receive a text message when talking on the phone an audio alert will blast your ear at the full volume set. All other phones will give a soft beep.
84. Phone will wake up and display sms content on lockscreen when locked – a privacy violation.
85. Phone can be rebooted without unlocking to bypass security lock.
FEATURES EVEN DUMB PHONES HAVE BUT WP7.5 DOESN’T
96. No silent option (no vibrate and no ring).
Thats a pretty nasty set of 10 huge surprises for any user who expects a modern smartphone from Nokia or Samsung or HTC or whever made your Windows Phone 7.5 based device. Now lets turn to specifically existing Nokia owners, who have existing Symbian phones. What else will the Nokia Lumia series do, to specifically annoy long-term Nokia owners. How badly is this Windows Phone system designed. How much will it annoy the existing loyal Nokia customer base? Lets take my Top 10 fave list:
TOP 10 FAULTS IN WINDOWS PHONE TO ANNOY NOKIA USERS BUT NOT WIDELY KNOWN
20. Alarm clock cannot work when phone is turned off. All Nokia Symbian and Meego phones can do this.
(Tomi comment - a massive annoyance the first time this happens. Your Nokia phone causes you to miss work or an important meeting or date or whatever.)
21. The idle screen is completely blank and cannot display time or notifications.
(Tomi comment - all Nokia phones have understood the power of using the phone as a clock/watch for more than a decade now. A huge regressive step back and big disappointment for all Nokia users. How many times per day do you turn to look at your phone for the time? Dozens of times for the average user - per day. So this new Lumia series disappoints average users dozens of times every single day)
26. Cannot use Bluetooth keyboard.
(Tomi comment - just a year ago Nokia was selling its own branded Bluetooth portable keyboard. I was very critical of why that was discontinued, and argued profit could not have been a motive, that device was so useful for some users of top-end Nokia smarpthones, it would sell at almost any price, so Nokia could guarantee it was profitable. Now we know why. Elop killed the Bluetooth keyboard, because the OS he selected did not support BT keyboards...)
44. Cannot save draft sms messages.
(Tomi comment - Nokia has always supported this, the world's first SMS was sent on a Nokia phone and Nokia has always been excemplary in SMS text messaging functionality. This is the very basics of user friendliness, now user un-friendliness)
51. Calendar scheduler has no weekly view and monthly view is non-zoomable.
65. FM radio doesn’t work on speaker.
(Nokia introduced FM radios to its handsets and have had this feature for nearly a decade. It may not be relevant to you, most of my readers, but remember, most of Nokia's phones are sold in the Emerging World where for many, their first ever FM radio the person owned - was the one that came on their Nokia phone. Those FM radios are used very often with the speaker playing the radio broadcast such as for example farm and factory workers who can't use earphones for getting the wires caught in the work)
DUMB AND DUMBER
81. Phone cannot be charged when off.
(Tomi comment - duh! This is madness)
FEATURES EVEN DUMB PHONES HAVE BUT WP7.5 DOESN’T
88. Cannot save new contacts from call history.
97. Cannot send/receive contact as a csv file.
98. Cannot backup sms to PC.
(Tomi comment - all these three are staples of Nokia usability and yes, even dumb phones do these things pretty universally now, certainly all Nokia dumbphones have done for years)
GO READ THE FULL LIST OF 101 FAULTS
The list was complied by My-Symbian user SamKB and it is hilarious, informative and also sad. Go read the full list. 101 Reasons Not To Buy a Windows Phone 7.5 smartphone.