What Do We Now Know after Nokia Shareholder Meeting? - That the Future is Far Worse than we Thought (updated 2X)

I have a lot of news about Nokia to report, but I will keep this blog relatively short, only about the news relating to the Nokia Annual Shareholders' Meeting that was held in Helsinki. We learned a few items that foretell of ever worsening Nokia issues heading into the future.


TOTAL UPDATE 9 MAY
This story has completely evolved. Nokia panicked, and released the full video of the question and answer. Nokia has then tried to spin the story as something else than what Elop actually said. You the reader may want to go read the fully updated story, that has the full transcript, and the developments over the past week. 


STOP PRESS:
May 4, 2012: I just learned via the comments to this posting from regular visitor "zlutor" that on 3 May 2012, a class-action lawsuit has been filed against Nokia Corporation and Stephen Elop and other Nokia directors. The lawsuit was filed in New York City and the cause of action is based on violations of the US Securities Exchange Act. A class-action lawsuit is one where many people join who have been harmed. If anyone reading this blog has shares of Nokia bought on the New York Stock Exchange and feels they have been harmed by Nokia's actions and communications, you may be entilted to join that lawsuit and seek damages (see the link for more info). Thank you zlutor for mentioning this development in the comments.


Before I go further, let me say, Thank you Jorma Ollila for changing Nokia from a troubled multi-business conglomerate into a highly focused telecoms company under your tenure and guiding it from a minor vendor to the world's largest handset maker and the biggest company of Finland and the biggest tech company of Europe. That was an amazing run you had in the late 1990s and into the mid 2000s. Unfortunately your successor Olli-Pekka Kallasvuo did not do a good job running the company and now Elop has pretty well destroyed what was left. But Jorma, regardless of perhaps a weak ending as Chairman of Nokia, you did a great job in the early part of your career on the top. All Finns were very proud of the Nokia you brought to the world. Personally, I met you 3 times, twice at the HQ, but you will not remember me. I always felt you were an excemplary CEO when I worked for you, and after I left, that you carried on running Nokia in quintessentially Finnish class and style. Around the world, many people equated Nokia with Ollila.

And welcome Risto Siilasmaa to the position of Chairman of Nokia. You've been on the Nokia Board for a while and know the tech industry well from running F-Secure. Nokia is in very troubled waters, your guidance is desperately needed. I personally think Elop is incompetent to run the company, but that is my opinion. Regardless, Nokia now needs strong management and a clear head to evaluate what is the reality, address the real problems rapidly, and help Nokia survive and revive itself, to be back better and stronger than before. Your job as Chairman will be very important, especially after Ollila's departure where much of the image of Nokia internationally was seen as the same as Jorma Ollila.

Now lets move to the news of the day. I have three truly significant items. I will deal with them only briefly here, because they have been dealt with in the past. But we have developments. 

Addendum - we've had some very lively debate about what was said and what was not. I decided to add this clariflying comment here at the start - I was NOT present at the shareholders' meeting. I am here in Hong Kong. I wrote this article based on the reporting of Finnish press (see links) and translating from their exact story and quotations as they have used. Apart from the direct quotes, the rest of this article is my analysis of what has been said, what it means, what it proves. I think some may have been confused, thinking I was present and am now misrepresenting what had happened. I was not present. I report based on what Finnish media told us about the Annual Shareholders' Meeting and clearly, they did not report the full discussion, we have for example in the comments to this blog story, a lot more details about what was said etc.

RESELLER BOYCOTT IS NOW CONFIRMED

First, lets go to CEO Stephen Elop's statements. In response to a question from a shareholder about Nokia market share, Elop's answer was that he hoped "that sales staff in retail outlets would offer Lumia handsets to customers asking for a mobile phone." (source Yle.fi - text in Finnish, translation is mine) 

So Nokia CEO Stephen Elop thinks that Nokia market share can be improved if retail sales staff would offer Lumia handset sales. This means, obviously, that Elop knows and admits openly, that currently the handset phone retail sales staff do not offer Lumia to customers. This is explicit admission of the problem reported in the press that retail sales staff are reluctant to sell Lumia, as reported in independent press stories from Finland to France and from China to the USA. I have reported the 'retail sales boycott' on this site, and have been ridiculed for even suggesting it. Elop has previously already in conference calls relating to quarterly results, admitted that Lumia support is 'mixed' where the good news has been on the side of awards and press reviews and problems have been with retail. He has also already admitted that specifically in the UK they have problems with retail. Now we hear Elop admit openly, that it is sales staff at retail outlets who refuse to sell Lumia (and that Elop hopes he can somehow change that).

I have reported repeatedly on the worsening global reseller boycott against Nokia, which started on the Elop Effect in February of 2011. I have explained in very explicit detail, that if the reseller channel refuses to sell your product, your company dies. And I have shown that Elop as CEO has made the reseller channel problem worse throughout his tenure. I have argued that therefore, as long as Nokia continues on the Lumia strategic path, this road is a 'Certain Road to Death' - something that is very rare in business. With this certain road to death, Nokia has set a world record in destruction in its market share, falling from 29% just over a year ago, to 8% today, and will continue to fall reaching 3% by the end of this year. Nokia will not survive this kind of carnage. Everything Nokia tries, will be costly to get out of this boycott, including price cuts and sales incentives which drain profitability, yet they have been tried already and do not work. 

UPDATE 4 May 2012 - a person who left 2 comments on this blog, Asko, says he was present at the Shareholders' Meeting, and reports that Elop had spoken about the lack of country success of Lumia, saying that only in one country, Finland, was the Lumia series selling well, and in only one other country, the USA, was the Lumia series selling reasonably. His evidence of that USA performance, was citing Amazon sales rankings.

I need to point out a few critical facts about this. One, Elop admits that most countries where Lumia has launched, are performing poorly! Secondly, with Nokia headquartered in Finland, almost any phone released by Nokia will sell well there, so it is not a strong sign that Lumia might sell well in any other markets. Thirdly, the Amazon initial sales success claims (Amazon number 1 ranking) has fallen drastically. Less than one month later, Lumia had fallen to ranking number 9, and now this week, the Lumia price has been cut in half at Amazon USA, which only returned Lumia to 5th place ranking. Even if we take the Amazon ranking as accurate, even the flagship Lumia 900 is not a top-selling smartphone. One should add, that most phones are not sold in the USA through Amazon, so even any good news on Amazon correlates poorly with sales success and the real performance of Lumia in the USA is likely to be far worse.

The most alarming aspect of this news, is that while the Lumia series has been launched in over 15 48 countries already including very large vital Nokia markets such as Germany, UK, France, Italy, Russia etc, it is finding good or medium success in only 2 of them! European carriers have been quoted saying Lumia series is not competitive and needs to be completely redesigned. The only two countries that have better performance (Finland and the USA) are countries where Lumia was launched late, it is possible this level of performance is the same early momentary sales success spike witnessed in each of the European markets, which almost immediately fizzled away.

Nonetheless, regardless of which countries sell well or poorly, the explicit confirmation by Elop that there is indeed a retail sales staff reluctance to sell Lumia, is a far bigger problem than the operating system, or the app store, or the features of a given phone, or even its customer reviews, its customer satisfaction or its return rates (all of which are bad with Lumia). The reseller problem will definitely kill Nokia. And Elop is defenseless against it.

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. This admission says to me, that the carriers are truly hostile towards Nokia about the matter and this negotiation attempt is futile.

Nonetheless, 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 on this blog immediately when news broke that Microsoft had bought Skype, that this would kill all Microsoft ambitions in mobile. That the carriers will simply not allow Microsoft to power Skype, to expand the already dominant Skype to the Windows 8 Desktop, and then to spread like a cancer to smartphones and poison the three wells of carrier/operator voice calls, text messages, and videocalls.

I reported on this blog that carrier boycotts were found against Microsoft. I reported on this blog that all Microsoft smartphone sales started to fall. The market share of Microsoft in mobile fell by half in six months. I reported that carriers are increasingly hostile towards Microsoft due to Skype. We have even seen TeliaSonera of Sweden (one of world's largest telcoms groups) go public in their hostility to Skype already. And we heard Microsoft's ex boss of Windows Phone admit late last year, that during 2011 the already strained carrier relations of Microsoft got far worse, because Microsoft itself angered the carrier community. Some have tried to argue that Skype already exists, or its app is available or Skype is good for consumers. These are moot points. The carriers do not hate the individual app or the consumer using Skype. They hate Skype the business for already devastating their landline cousins' business (in almost every country one of the biggest mobile operators is also the previous PTT and thus a big fixed landline operator too) and most senior staff at mobile operators today came from the fixed landline business a decade or two ago.

The carriers/operators hate Skype with a passion, as I have explained, for many reasons, but in particular they hate the unfair competition, where Skype business is deliberately unprofitable, but its investors keep pumping money into the loss-making operation, thus bleeding the carrier business with subsidised, unfair competition. THAT is why they hate Microsoft now. Because Microsoft subsidises the free calls of Skype, while Skype continues to generate a loss, but Microsoft can easily afford it, as Microsoft calculates, this will help them win on the desktop and the internet side of their business.

Now we have Elop explicitly admitting that Skype is hurting Nokia Lumia sales. He admits there is a reseller problem due to Skype. He admits that some carriers/operators have taken the extreme step of refusing to sell Lumia, only because of Skype. I have argued this point since June. People came here to ridicule me. Now Elop admits this is true. Now it stands as fact. Indisputable.

Note that some of the carriers who refused early Lumia sales did it while those early Lumia phones did not have Skype on them! This is against Microsoft, this is not against the app or phone. Now think about Windows 8. If carriers were willing to reject the whole Lumia line because of Microsoft just owning Skype, how much more will carriers hate the Windows 8 based Nokia smartphones, which will have Skype pre-installed. And when Windows 8 itself will have full Skype functionality. The future prognosis for Lumia and Nokia Microsoft smartphones is dismal. It will be far worse than today. If Nokia ends this year with 3% market share, and then Nokia rolls out Windows 8 based smartphones next year - the Nokia market share will continue to crash. It might end at 1% by mid-year 2013. Motorola died before it hit 1%. Palm died before it hit 1%. Siemens died before it hit 1%.

Elop admits that Skype is causing carriers to reject Nokia Lumia now. It will only get worse with Windows 8. This is a Certain Road to Death. 

TABLET STRATEGY

And the last bit of disasterous news we had today, came from just before the Shareholders' Meeting, where Ollila gave his farewell interviews, and said Nokia has tablets under development and will be launching them. We have heard previously from Elop that these will be on Windows Phone.

This is sheer madness. In mobile phones, Nokia does not go head-to-head against Apple in most of Nokia's product segments, geographic markets or price points. Even so, Apple takes almost all of the profits in the handset industry. In tablets, Apple dominates the market and Nokia would go directly head-to-head with Apple. The correct strategy for Nokia is to focus on its core business, put the effort to fix what is wrong, find the profits out of handsets that it is capable of generating, using Nokia's natural strengths, such as its diversity in a portfolio, its wide distribution channel, its efficient sourcing and factories, etc. If Nokia cannot be profitable in those areas today, why would it be in tablets?

In the tablet PC market - one that is far smaller than the smartphone market, itself far smaller than the global dumbphone market - there are almost no synergies for Nokia in components, in distribution, in retail, in branding, in pricing, etc. But Nokia would have the enormous backlash and hatered of the Windows OS, and the Windows Phone rejection. Nokia would enter one of the most difficult markets, where major IT/tech players like HP, RIM and Motorola have already suffered severely.

The tablet project would be a disasterous drain on Nokia marketing and profits. It would be exactly like RIM which was profitable, but diverted its sales and marketing from its core business of smartphones, to launch a tablet, that was very difficult to market against the iPad and failed in its launch, and drained resources, plunging RIM to loss-making. That was for a company that was very profitable before it started on this foolish path. Nokia is already loss-making. This is a huge risk venture with almost no upside potential, but one that carries definitely huge additional costs to Nokia, as a further drain on profitability and enormous downside. It is yes, to Microsoft's advantage to see tablets in the Windows Phone or Windows 8 environment. It would be utterly foolish for Nokia to produce any, as it is nothing near Nokia's natural strengths or its core competences.

CONCLUSIONS

We know Elop is fully committed to the Lumia path. We now have seen that Elop himself admits there is a reseller reluctance to sell the Lumia. Apart from all other bad news that comes relating to Lumia (such as the return rates of Lumia are the highest ever recorded by any Nokia smartphones), this reseller boycott as I call it, is the single most damaging news about the current Lumia strategy. It will kill Nokia. It is a life-or-death situation. It is an existential threat to Nokia. Thus, no matter what you or the Nokia CEO or Nokia Board thought of the Lumia strategy in the past, this road is now a death-march. It will kill Nokia.

We know now that Elop admits Skype is a factor so severe, carriers have refused to accept Lumia simply due to Skype. This was not an issue when Elop selected Microsoft in February of 2011. This is a new problem that arrived to sink the Lumia strategy, last June. The current Skype problem is so severe that many carriers refuse to sell Lumia even as current Lumia models do not have Skype. The problem will get far worse with Windows 8. This means, that for all the problems Nokia has now, on the path to Microsoft Windows Phone, the problems for Nokia will get worse when Windows 8 arrives. If you think the loss-making business, collapsing market share, junk-ratings of rating agencies and crashing share prices are a problem now - they will get far worse with Windows 8. That is a fact. Elop admits Skype is such a big deal to carriers, they are already now refusing Lumia because of Skype. This, before Skype is integrated into the OS and the phones.

And we know that Nokia is set to destroy even more of its profitability on a futile adventure to try to sell tablets, even after Motorola, RIM, HP and others have seen it a total loss-making nightmare. This is something Nokia cannot afford in its weak state now. Nokia cannot afford for any of its remaining talented experienced telephone marketing and sales staff, to go learn how to sell personal computers and their markets, rivals, resellers, pricing, segmentation etc. Nokia is not a strong brand in PCs, it would be enormously costly to do the marketing launch for a tablet. The volumes of sales are far smaller than for smartphones and the competitors - Apple and Samsung - are incredibly strong. This is a fool's errand. It will make Nokia even weaker, pushing it even deeper into the red this year. This is utter madness.

WHO QUITS?

I end with three quitters. Why did Colin Giles leave? Colin had 20 years of sales experience at Nokia. He personally delivered 77% market share for Nokia smartphones in the world's largest smartphone market, China. Colin had been promoted to run regional Nokia sales, but when Elop fired the China sales head, Elop sent Colin back to China to try to fix the China sales collapse. So this is the guy, who had so platinum-level credentials and reputation, he had 77% market share in the biggest smartphone market. Note, Apple never had that big a share of the US smartphone market, neither did Blackberry, ever. That is how good he is. And did he succeed? No. China so steadfastly refuses to sell Nokia now, Nokia's market in China has collapsed. And Colin? He departs Nokia 'for personal reasons'. You don't leave Nokia after 20 years if you believe Lumia is about to be a success, and you are the head of sales, and you would earn yachts and private islands and corporate jets - types of annual sales bonuses if the Lumia sales were to be successful. Colin resigned two weeks ago. The news about Lumia future prospects is devastatingly bad, globally, from Nokia's internal perspective as seen by Nokia's top Lumia salesdude.

Is that an anomaly? Microsoft's Marketing Chief for Windows Phone was Gavin Kim, was headhunted from Samsung. He is a 12 year mobile and IT veteran, he's only been 5 months at Microsoft. If he believed that there was any chance in hell that Windows Phone might succeed, he would stay glued to Microsoft, to collect fat bonuses to ride the success now, at the big growth stage of Windows Phone, as Nokia comes onboard and supposedly 'the third ecosystem' would start to grow dramatically. He resigned 'for personal reasons'. This guy jumped away from arguably the hottest ride in mobile, Samsung, to join the Windows Phone team. If there was any chance whatsoever, of Windows Phone succeeding, he would stay at Microsoft to see it through, to prove to the world he, the bright marketing man, made the right choice. Instead he quits. This is independent confirmation that Windows Phone is doomed, when examining from the Microsoft side as witnessed by Microsoft's top Windows Mobile marketing guy.

What of LG? LG was a long term Windows Mobile partner. So much so, that LG signed a 'strategic partnership' with Microsoft. Then it was a launch customer with Windows Phone. LG has been providing WIndows Phone based smartphones for nearly two years now. And what did they do? LG announced they will discontinue their Windows Phone smartphone lineup, and do Android instead. Is Windows Phone destined to be the success Steve Ballmer and Stephen Elop keep promising, or is one of their biggest handset vendors knowing something Ballmer and Elop won't tell us. They invested heavily into the development of Windows Phone smartphones. The development cycle of handsets is 18 months. This is an enormously costly change for LG and one that no handset maker takes lightly. Why does LG announce this end of Windows Phone now? Because they have heard from their clients - the same carriers and retailers that Elop admits are boycotting Nokia Lumia - that Windows Phone is a dead end, and LG has now said in public, this path is a dead end, they will not continue on it. I said Windows Phone is a Certain Road to Death. Nokia's top Lumia salesguy resigned, seeing the sign. Microsoft's top Windows Phone marketing guy resigned, seeing the sign. Now LG the handset maker quit the road, seeing the sign, that Windows Mobile is a certain road to ruin.

Nokia. You are on a Certain Road to Death. Anyone reading this blog, these signs were seen last year. I warned about them. I am the most accurate forecaster of the industry, I forecasted that when Nokia's market share was 29%, it would collapse to 12% by end of last year and Nokia would be plunged from profits to loss-making. That was unprecedented not just in handsets or telecoms, it is literally a world record in management failure. I have since forecasted that this year Nokia will fall from 8% now to 3% by year end. That takes the worst management failure and compounds the damage. And now we hear that Nokia's retail problem is so well known, the CEO admits it in public. The Skype problem is so severe, carriers/operators refuse Nokia as a customer because Nokia's partner Microsoft owns Skype. And Nokia's plans now include wasteful launch of tablets that will not help Nokia recover but drain desperately needed resources. Now the prognosis for the year ahead, 2013 is so bad, Nokia will hit 1% by mid-year 2013. Is this the road you want Nokia to be on? Its not the one I want. At some point, the new Nokia Chairman Risto Siilasmaa has to wake up and take notice. The evidence is overwhelming. This Lumia Microsoft and Tablet strategy will kill Nokia. Elop must be fired and the Microsoft path must be ended. Now.

So - 1. Whatever you thought of the Microsoft strategy for Nokia, now that CEO Elop admits that there is indeed a retail sales boycott against explicitly the Lumia series and its so bad, that in most Nokia countries already Lumia sales are bad, which means Nokia cannot recover. This is a road to certain death. 2. Whatever Nokia manages to do with the early Lumia series, the situation will become significantly worse, when Windows 8 comes, due to the acknowledged boycott against Skype and the hostility of the carriers about Skype. And 3. Whatever profit or loss Nokia can now do, while it only sells dumbphones and smartphones (and networks) will get worse for profitability of Nokia, when Nokia makes a costly launch attempt to sell tablets. The future is doomed. It is getting worse. And it is getting worse still. What am I missing? The sales boss of Lumia knew. The marketing boss of Windows Phone knew. One of the handset makers has already stepped off this dead train. What am I missing?

PS - if you are a first-time visitor here to the Communities Dominate blog, and are honestly interested in how Nokia might be saved, I of course have written that blog too. Its a long blog, because Nokia's problems are deep, and started before Elop came along. But the good news is, that Nokia can be saved. The bad news is, this opportunity is diminishing by the day. But if you want to see, now recognizing there IS a reseller boycott, this is how it can be done, now, even in early May of 2012: Nokia can still be saved.


THIS STORY HAS A COMPLETE UPDATE on May 9. Please read the update, it includes now the full transcript of the Skype controversy.

(I have far more bad news about Nokia, Lumia, Windows Phone etc, coming but I wanted to get these out now after the Shareholders' Meeting) 

Comments

[Eurofan]

@TheOneThatGotAway: Thank you, thank you, thank you. I have been looking around and reading everything I can find on Nokia and you have managed in a modest block of text to encapsulate all the essential points of fact about Nokia I have been looking for. You obviously know what you are talking about. I love coming to Tomi's Communities Blog because Tomi obviously cares about Nokia and there is much to learn from his postings and the comments he attracts. But you, TheOneThatGotAway, have really added quite a bit just with one comment. Please post again sometime and know that however much you write you will have very avid and appreciative readers who are trying to figure out how a once dominant and promising company came to this.

Every word you wrote is so valuable. But in particular I appreciated:

"Nokia was formed by extremely fast organic growth recruiting at different locations to support business with competence. This caused a fragmented organization in terms of geography. Elop has 'site focus' which is theoretically understandable - but in practice you need to move people far distances in order to retain competences. If you have a hard time moving people from Oulu or Salo to Helsinki, how do you expect them to move to Beijing ? Elop is a change manager with poor cultural insight and a CFO box thinking leadership style, shuffling the org like it was SW modules. Virtually all competent Nokians with ambitions are just looking for an escape. Nokia org is a shadow of its former self and ability to invent and to make wide a portfolio is gone. Most former Nokia sourcing execs are gone along with the setup for true economy in scale and logistics."

Every word has the ring of truth and every concept is so well communicated. Whoever you are, it is a tragedy you are not on YLE explaining this to Finnish Nokia stockholders. I read that the Finnish stockholders represented at the annual meeting yesterday represented 40% of Nokia shares. There could be a revolt if Finnish media would get over their head in the sand view of Nokia, that anyone against the Elop/Microsoft plan for Nokia is out of touch with the modern world, is a reactionary or worse. In fact, it is Elop and his crew who are out of touch with reality and Old Nokia was far more in touch with its customers' interests and ambitions than this bunch from Seattle. There is such a craven attitude in Finnish higher circles that Microsoft is big and powerful and so Nokia has made a powerful and safe alliance. In the USA we know better. Nokia has made an alliance with a very dangerous and clumsy entity which is as likely to crush Nokia rolling over in bed as it is to make love to Nokia and give it children.

[TheOneThatGotAway]

@ Teppo
Get some help, you seem to need it.

You are right in one thing though, Elop is surrounded not only by incompetent employees but also incompetent operators and now shareholders ;-)
He is doing his best effort to severely reduce this epidemic incompetence in the company - he is executing like there is no tomorrow :-)

Personally i have tried to use all my Nokia shares to wipe my behind - thinking it was a truly financially based executive decision minding the price of toilet paper - though subsequently i understanding what Elop meant about sitting on a burning platform - maybe this is what you mean about being a burntout engineer.....

All those burntout headless chickens....

[Eurofan]

@TheOneThatGotAway: I can not help reposting your appreciation of Nokia's strategic position, too:

"If Nokia is to survive it has to do so from a blue ocean strategy and not the red ocean with-arms-chopped-of-strategy that Elop has chosen. Why team up with a defensive, controling and reluctant giant like Microsoft, when you need agility and speed of execution to support the challenger position you are in ? One can argue that when the decision was made to partner with Microsoft, Nokia came in with the definite leadership position and that could act as the base for transformation. Now this is invalid and you play the challenger game from a position resembling Zero in terms of market share. This calls for a strategy change - as this is not coming from Elop, the board has to act and install a CEO capable of taking leadership in the new situation."

Your full post should be quoted in every discussion of Nokia in Finnish media. Thank you again for visiting this alphabetic ant farm. We are too often going in circles, here, in the comments section of Tomi's Blog. Your post has blown the roof off and I can smell the fresh air. I look forward to your next post.

[Tomi T Ahonen]

CN I removed your comment - obviously - because you know the rules here and we don't accept postings that waste the time of the readers. You clearly did not read the full blog. I CLEARLY stated in the blog that Finland DOES have a sales boycott, and explicitly that it has been reported.

READ the blog, CN, then re-post your point(s) but don't claim I ignore the Finnish sales boycott when I explicitly say it in the blog!

Tomi :-)

[J.T.]

TheOneThatGotAway = Tomi (The similar use of smileys)

Just FYI

[TheOneThatGotAway]

Nope I am not Tomi, but I am flattered, there could be other reasons than the smileys why Tomi and I might share some 'mental space'......

[watsGoingOn]

What happened to Nokia, even LG is making much better smartphones than Nokia. This is ridiculous, Engineers and employees at Nokia what are they doing, how are they feeling? I guess they were smart, or all smart ppl left!

[Asko]

More on shareholder meeting.

Elop refused to give numbers for N9 sales when asked compared to Lumia but Elop told the shareholders that you cannot compare Lumia and N9 sales numbers because N9 was released only on very small and selected markets without advertisements. He said something that Lumia's sales have exceeded N9 because Lumia's sale have started much faster than N9. I was left unclear as to what he really meant by that.

Elop was asked twice if Nokia has Plan B. On both times he said that they will adapt to the market when needed. For me it sounded like that there isn't plan B or that plan A must work and will be made work no matter what. It sounded bad. It might be that I'm overreading into it. Maybe Elop has learned not to do Elop Effect again :)

Elop said that he cannot tell specifics but there are multiple new products coming this year, first ones will come in Q2. He didn't say but I'm predicting based on Nomura's information that Q2 product announcement will be about Meltemi as a successor for S40, but we will see on June. You could tell that Nokia's management is betting everything on the new products coming out this year.

For question about cheap Android smartphones eating Nokia's feature phone sales Elop said Nokia will counter that with Lumia 610. It is specially designed for that. He said Microsoft and Nokia have done huge job to slim down Windows Phone to fit on Lumia 610.

Small shareholders were unhappy that Steven Elop was on the board, because they thought that the board should supervise CEO Elop and cannot do it properly if Elop is on the board. Small shareholders also thought that Nokia is grossly overpaying the board for their work.

Bruce Brown, Mårten Mickos and Elizabeth Nelson were selected as new members for the board. There was short video presentation of all of them. Bruce Brown was advertising P&G and its products for almost the whole part of his introduction to the Nokia's shareholders. He was very like Donald Trump. Not very promising.

Mårten Mickos and Elizabeth Nelson told mostly what they had done. Mickos was little bit stiff but I think his resume is more in direction what Nokia needs. Nelson was inspiring but I couldn't tell if she will be good or bad selection for the board.

Elop was asked about employees and their mood at Nokia. He told based on regular polls inside Nokia that employees' mood was getting better than for long time. It is good if that is happening but my contacts tell little different story. Maybe the situation has improved in some parts of Nokia but not for the whole Nokia.

Elop also told that the reason for burning platform memo was to wake up the whole Nokia. Nokia had already Windows Phone project going on in the silent mode. It had to be kept as small project so it wouldn't leak out. Then a couple of Nokia's customers (probably carriers) were rejecting some Symbian products. That caused Nokia to press panic button. So to speed up and widen the Lumia portfolio it became necessary to get much more employees to Lumia project and much sooner than planned. So the memo and publication of the new strategy on February 2011. That was what Elop told and it is possible that is true but I'm not sure that is necessarily the whole truth.

[TheOneThatGotAway]

@Eurofan
I'll do a more elaborate in a couple of days. A little squezed on time today and tomorrow.
I wouldn't do good on YLE as I am not a Finn.

[zlutor]

@Asko: "Elop refused to give numbers for N9 sales when asked compared to Lumia but Elop told the shareholders that you cannot compare Lumia and N9 sales numbers because N9 was released only on very small and selected markets without advertisements. He said something that Lumia's sales have exceeded N9 because Lumia's sale have started much faster than N9"

HAHAHA! I would be really surprise if it was true. As being in love with Lumias Elop would proudly tell the numbers if N9 were outsold by WP phones. Am I too naive? :-)

Small market such as Brazil, Russia and China? Of course, it was hell overpriced for the average consumers there but that is an other story... :-(

But let's assume he is right and Lumias really oversold N9 - but the difference can not be too huge...
Maybe it is a good reason why they should revise the strategy and start selling N9 in en Western Europe and India - at least until WP8 devices , the "saviors" come...

Quite 'funny' that always the next WP release will be the savior, it will contains all the necessary/missing features. And when it comes out, the next planned release stpes into this role again.

First the WP7, then WP7.5 and now WP8... :-(

[NoNameRequired]

"Engineers and employees at Nokia what are they doing, how are they feeling?"

Polishing their CVs and sending them out to anyone who is hiring? That would be my guess. I've been in that position before, and it is not a pleasant place to be. Productivity plummets as critical people disappear and the rest spend their time web surfing and looking at job applications.

The other day I got a call from a recruiter working on behalf of Nokia, Qt division. And if they are calling me, they are pretty desperate.

[CN]

@Tomi

You removed my previous comment. I hope this is not a standard operating procedure in here - you simply misunderstood me and then claim I haven't read the blog. Wrong, I did read it, number of times.

I never claimed you ignore something, but I simply asked you what would Nokia/Lumia/WP be WITHOUT a sales boycott when Operators are again reporting fairly good sales in April in Finland.

I did challenge the value of your reference, if MTV3 and Ilta-Sanomat are sources to come to a conclusion of a sales boycott. C'mon, MTV3 and IS...? My personal experiences don't agree with that "study".

My bottom line is that YOU brought Finland into discussions with the "sales boycott study". Now you write Finland is not so important: "Secondly, with Nokia headquartered in Finland, almost any phone released by Nokia will sell well there, so it is not a strong sign that Lumia might sell well in any other markets." So, how should I read Finland's role? Good reference if you find signs of sales boycott, irrelevant if volumes are high?

Next is Amazon. You requested not to use it. Then you use it yourself. Giving examples that people are likely to remember (Lumia is # 5, Lumia is # 5,...). And ignoring other details (AT&T list vs. All-Op's list, delivery troubles admitted, serious shortage with cyan, white version not out yet,...) that might generate more neutral view. Tell people all the facts and let them decide, that would be fair - and neutral.

Well, don't use Amazon then, I do agree it may not give the right picture. Use Canaccord (Canaccord Genuity has confirmed the Nokia Lumia 900 was the best selling smartphone on AT&T after the iPhone).

I'm not saying things look good for Nokia/Lumia/WP. I'm saying they are not necessarily as bad as what many may think.

[Daniel]

Hi Tomi,

did anyone on the shareholders meeting ask about the sales figures of the great N9 ?
Or is it still top secret, so noboby could see N9 is outselling the Lumia-crap.

Greetz for Germany
Daniel

(although N9 has an ELOP-ban for Germany , I got one !)

[zlutor]

@Pekka: "Lumia 900 confirmed to be second behind iPhone at AT&T " - it can be true. The real problem it is FAR-FAR behind (at least nowadays). maybe it will be better but currently the whole WP story is a disaster - at least from financial point of view...

As Elop mentioned the whole Lumia line almost failed worldwide (except Finland and the USA, see above) - I would be surprised if either L900 or L610 would change it significantly.

In this case 2012 will be a financial nightmare for Nokia - meanwhile Samsung will collect tons of cash with e.g. SGIII. In the Autumn, when WP8 is supposed to come to save Nokia, they will steal the momentum from Nokia and present some good WP8 devices, too.

Whatever hyper-super devices Nokia will come up with they will attract only one segment of the market while Samsung will capitalize on Android AND on WP8 as well...

No to mention the consequences of erosion of the brand in high end segment has immediate influence on low(er) segments as well...

[Patrick]

@Asko

"Elop refused to give numbers for N9 sales when asked compared to Lumia but Elop told the shareholders that you cannot compare Lumia and N9 sales numbers because N9 was released only on very small and selected markets without advertisements. He said something that Lumia's sales have exceeded N9 because Lumia's sale have started much faster than N9. I was left unclear as to what he really meant by that."

So on ONE side we have a product that was sold on a very small and selected markets without advertisements. On the other side we have a product (Lumia) which had extensive PR and, according to the CEO, had sold far better than the N9.

And in the middle we have the CEO that refuse to share the numbers despite that the same CEO says the Lumia massively outsold the N9.

Is this some kind of joke? Is this the recipe for success that the Nokia board believes will add more/any trust?

If they were afraid that people would misinterpret the numbers, fine, I can understand that. But then you take the time and explain the numbers and why the picture looks like it does, you don't avoid the god damn subject because then it looks like you have something to hide.

Christ, this is ridiculous and I totally understand why those investors are filing a lawsuit.

[Tomi T Ahonen]

Just a comment to all who are in the thread, you might like this

I just had a bizarre instance on Twitter. A Nokia HQ marketing dude, James Etheridge (twittering as @JEatNokia ) posted a couple of Tweets suggesting I was inaccurate about what Elop said. I asked him to come to the blog, to read the quotations and he came back to Twitter, took some of MY text, without the quotation marks and italics which you see, and accused me of claiming those as Elop's words. I then challenged him for some Twitter duelling but he ran away (chicken-chicken haha).. Anyway, it seems the Nokia HQ has kind of woken up haha.. Maybe it was the lawsuit reference that finally shook Mr Elop from his complacency.

First time ever, that anyone official from Nokia has reacted to any Elop related Tweet or blog or press interview or public presentation, and I've spoken about him for over 19 months, and been critical of him for at least 15 months, and been calling for him to be fired for 11 months. Today was first time Nokia marketing decided to react haha.. Might have been a mistake :-)

So while I see who visits the blog obviously, I can't say. Now at least there was an official Nokia reaction, so we know at least this article has been read at Nokia HQ haha...

Thought you guys might like to know that.

Tomi Ahonen :-)

[zlutor]

@Patrik: I fully agree with you...

The shareholder who asked that question should not let Elop escape with this answer. This is total BS... :-(
Elop artificially cleaned the road for Lumias in WE and the result is - disappointing, at least.

For ~300 euros N9 could have been sold like hot cakes there.

Elop should learn from von Clausewitz or general Moeltke: "No campaign plan survives first contact with the enemy"...

[CN]

@Patrick and Tomi

Patrick is showing a good example how words are twisted and wrong information starts to travel around the world. So, Tomi, something you may have now experienced now with Nokia HQ, with the Twitter messages?

Pekka writes: " He said something that Lumia's sales have exceeded N9..."

And Patrick turns this into: "...according to the CEO, [Lumia] had sold far better than the N9..."

And Patrick continues: "...the same CEO says the Lumia massively outsold the N9..."

Patrick, wake up! ;-)

I think we all should be responsible what we communicate.

[Patrick]

@CN

As I clearly was not there I did address this to @Asko and it's quite clear that my quote and text are based on what Asko wrote.

But let me do a little clean-up on my side:

"Elop [according to a unverified post on a blog] refused to give numbers for N9 sales when asked compared to Lumia." - There. Everyone feel better now?

You can ignore everything that I wrote in my previous post because if that comment alone is correct (and if it is not then please correct me and for the heck of it, provide the sales numbers) the same question(s) still remain.

And I write that as a Nokia supporter who bought my first Nokia handset at the age of 16 and today, at the age of 34, types this with a N8 next to my laptop.

[zlutor]

@Tomi: wow, what a 'chat' is going on the Twitter!
2 on 1... :-)

[CN]

@Patrick

Sincere apologies if I made you furious by asking accuracy with statements. It's just that the negative sentiment around Nokia and whatever related to Nokia is in my opinion enough without making things look worse as what they are.

When you were 16, I had worked for Nokia already few years. :-) Don't drive conclusions if I still do...

Friends? ;-)

[Tomi T Ahonen]

Update on the Twitterfight haha..

James and I had a virtual handshake and agreed to disagree. Was good fun (for a while another Nokia HQ person joined in even). But I recognize they are under heavy pressure under very hard times and are just hardworking corporate stiffs with a very rough job right now. I think I give Nokia enough of a headache just blogging here (and Tweeting) without picking fights with their mark comms people too. So my cheers to all the Nokia HQ people, I am with you, I just disagree with this strategy (and your boss, but you knew that). I don't disagree with the rest of you and I hope Nokia can be saved and be stronger and better once again...

To James Etheridge, the beers are on me when we meet up somewhere in the world some day. Cheers!

Tomi Ahonen :-)

[vladkr]

Hi,

At last we get some information about this meeting. Unfortunately I bought my stocks in Europe, so, I'll wait and see.

I think Skype's days are counted now, as it will be less and less useful; some carrier in Europe - at least in France and Russia - make offers (unlimited international calls, low prices on roaming) that make Skype almost useless.

In another hand, some other places have such a bad 3G network that Skype is almost unusable, even with voice only (that's the case in Canada). Other carrier can just filter or charge internet calls. In any cases, using Skype will make less and less sense.

Tablets : Apple and Amazon's force in tablets is the huge amount of media available for it, so a potential customer knows that (s)he can watch his/her favourite TV-shows, movies, magazines, etc. Of course there is Zune, but it's much poorer.

Another problem I see is that it's quite risky to launch the tablet at the same time as the OS. People did trust iPad because it was just an upgrade of an iPhone/iPod, with a much bigger screen.

So a lot of applications were already available, and the OS was well known and trusted. What about WP8? First it will have to be bug-free (what didn't happen with the Lumia 900), and a huge work will have to be done for its reputation.

Many companies all over the world don't want Windows 8 because of the reputation, I can even say that most companies/ministries I know stick to Windows XP and will move to Seven only when they will be forced by MS to do so.

The only thing that can save Nokia's tablets is Office... but what if Samsung, Asus, HTC release their own WP8 tablet?

The only positive point of this meeting is that Nokia's head tend to lie less... but do they have choice?

Nokia is technological Soviet-Union; it used to be powerful, it has propaganda, but it inevitably will fail since nothing changes at the top of it.

[Patrick]

@CN No hard feelings from my side, life is too short but never too short for new friendships ;)

[Tomi T Ahonen]

To all in this thread,

While I've been playing on Twitter, haha, thank you EVERY BODY for the contributions and additions, especially all who wrote about the actual things said at the Shareholders' Meeting. Those of us who are Finns, can read the Yle and HS stuff and whatever short blurbs were on Kauppalehti etc, but the non-Finnish speakers can't get those. These lengthy postings with what was said - even haha, with a bit of disagreement on exact wording - has been very useful especially for our international readers. Really. I thank you guys!

And I love the discussion and debate, keep it going! I'll return later with some comments

Tomi Ahonen :-)