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June 14, 2012

Comments

Ex-Nokia employee

As an ex-Nokia employee, I am very sad to see this downward spiral. I left Nokia one year ago when it was clear to me that the things are bad, but I didn't think that Nokia is going to commit suicide and that's exactly what happens to the company now.

Earendil Star

@ Olaf, are you kidding? Did you go and see the graph posted by nnine?
http://www.yugatech.com/mobile/recent-smartphone-shipments-show-gainers-losers/
What are you talking about? Your claims are totally baseless and almost offensive.
Please stop repeating false tidbits prepared by MS' marketing department, OK?
Tens of thousands of people are suffering just because someone in Redmond is trying to ruthlessly promote a crappy OS to people who do not want to buy it. Do you get it?

On a different note, and as I said previously, the hype on Nokia being a takeover target was just that: hype.
Nokia is firmly in MS' hands and no longer on the market. Only what is of no use to MS (or already licensed to MS) will be sold.
The rest is just spreading false news to speculate on the share price by insiders. Possibly people with knowledge of the situation wanting to get rid of their stock before it cratered (strangely these rumors emerged one week ago... often coincidences are... not coincidences at all!) Yeah, regulators should do something about this, but apparently they are no longer interested in what their duty should be. So don't hope they will do anything about it. Unless some class action really gets traction in the US. But I doubt it.

As for the Nokia board, in calling THT Elop, I see only two alternative explanations.
The first was that they were really convinced that teaming with MS they would -yes- have sold their soul, but that things would have turned to the benefit of both in the medium term. In this scenario, they just showed no pride nor courage plus total failure in understanding: a) their new partner; b) their own market. In this case, their previous errors with OPK and AV were just slight oversights compared to the catastrophe that ensued.
Unfortunately, a second scenario looks much more plausible: they were forced or bribed to go the MS way.
The reason why the first scenario lacks credibility is that it is totally unbelievable that JO was so incompetent not to understand the implications of the terms forced by MS in its agreement with Nokia. Furthermore, the board would have already fired THT Elop after realising the damage being made. Would not have been unprecedented (for much, much less: just look at HP...). So, no, scenario n. 1 is not credible.
I just hope some whistleblower will one day leak the truth. It could be a fantastic plot for a criminal movie.

Joki

"Yes. Nokia's strong profits in its smartphone unit - Q4 of 2010 Nokia smartphone unit profits were 510 million Euros or 637 million US dollars in the quarter. Multiply that four times and Nokia's smartphone unit was producing profits at an annualized level of 2.5 Billion dollars just before the Burning Platforms memo."

This I find a bit misleading.

It must be noted that Nokia allways does better in their christmas quarter (as does all mobile manufacturers) so looking at growth from Q3 to Q4 is misleading. Multiplying Q4 x 4 to calculate whole year profit makes little sense to me.

More importantly, you should also consider that Research in Motion presented a stunning quarter ending December 16th 2010, with y/y earnings growth of 60%. Significantly better than the previous quarters. Using the same calculations for RIMM we could say they would have made $4B in profit in 2011 (multiplying the christmas quarter profit four times).

The truth is that it has gone downhill as much with RIMM as with Nokia since february 2011. Both stocks are down about 80%.

Rob Merhar

I bought a nokia. It was a N6 or N8, can't remember which, but the first one had to go back, due to freezing, touchscreen isues, and the replacement was horrible as well, unusable. So that was another problem. My new smartphone has a capacitive screen, not that resistive garbage they used.

SiliconValley

Sorry to see you guys in this situation.

This is a very common approach that Microsoft takes with companies.

Embrace, extend, extinguish.

Nokia never stood a chance.

jjj

You are wrong about the Burning platform memo causing the damage,it wasn't something that reached most consumers.What broke Nokia's back was the way the transition to WP7 was announced. That was when Symbian was confirmed as dead and Elop told us that Nokia will put all its eggs in one bascket many months before Nokia had an actual WP7 phone. Knowing that Symbian is dead is much worse than being told it is no good (we all knew that anyway but many still had hope that it will get better).
What was done is incredibly idiotic or ... intentional.
Elop is a disaster and the board has to share the blame,they had to OK certain decisions.

eah

The company is irrelevant now, a decline I would guess is, for speed and depth, unmatched in corporate history (excepting cases where fraud existed, e.g. Enron). Everyone still employed by Nokia ought to be looking for another job. The inevitable is coming sooner than they think.

Ville Kerälä

Yes it will come much sooner... Liquidity exhaustion ETA 20/8/2012.... run.....RUN !!

Dan Morel

A counter argument would be to compare RIM. RIM had no "platform burning" memo.

If you compare 2010 earnings, they were also fantastic with lots of analysts predicting the future looked bright!

But now, they are similarly headed for disaster. Mismgmt?

Or did both Nokia & RIM miss the market changing tidal wave?

In Nokia's case they missed both the high-end of the market (iPhone,Android) as well as the low-end market - getting CRUSHED by Chinese manufacturers on dumb phones in India, Indonesia, etc.

JJ

*** This is a very common approach that Microsoft takes with companies. Embrace, extend, extinguish. ***

Wow, that's really dumb. That's a strategy they've used on their competitors. Nokia is not their competitor, Einstein. They are the only manufacturer who actually seems to want to use Winblows phone.

SiliconValley

@JJ
**Wow, that's really dumb.**

There's an informative comment. Thanks for participating. Isn't it time for your nap?
OK, Enough of that.

How long have you been following Microsoft?
I've been using their stuff since MS-DOS times.

**That's a strategy they've used on their competitors.**

Not true. Microsoft partners with companies, forces them to change their operations and then assimilates what parts they want and vomits the rest into the trash.

**Nokia is not their competitor, Einstein.**

Oh really? You make assumptions about there being a difference between a competitor and a partner. They are all just grist for Microsoft's mill. Nothing more, nothing less.

**They are the only manufacturer who actually seems to want to use Winblows phone.**

You really think that without a former Microsoft executive in charge that any reasonably competent technical review would have made the recommendation to use that platform?
Not done.
Bloated BOM requirements(RAM, Flash, CPU).
No existing installations to compare to.
A history of delivering bad software.

This was a hit job, pure and simple.
Nokia has 11000 patents, primarily related to the mobile phone technology.
I'll bet that within a year, Microsoft buys them and starts patent trolling Apple and Google.

MarcoAustria

With the burning memo Nokias downturn started. A month after it this article was written on March 15, 2011(!) and with what's happening at Nokia I have to wonder how much truth is in it.
Excerpt from (http://semiaccurate.com/2011/03/15/microsoft-gutted-nokia-and-runs-off-with-ip/):

“Unless MS places a person at a competitor to essentially bring that other company in to the MS fold there is a very public war. [...] With Elop going to Nokia, a high level defection to a direct competitor, one that is pushing Linux hard no less, you would have expected fireworks. The reaction from Redmond was shocking in it’s silence. [...] The silence was truly deafening.

This can mean only one thing, Elop was sent to Nokia by Ballmer.
[...]
This is the long way of saying that Microsoft is making a phone chip. There are two things that point to that fact, the first is MS’s taking an ARM architecture license. This is not the normal core license, this is a very specific type of license that very few companies have
[...]
By taking this type of license, MS is saying in no uncertain terms that they are going to enter the phone hardware market
[...]
The second reason that MS phone hardware is inevitable is that the author personally knows at least two people working on the project.
[...]
Elop is doing exactly what he was sent to do, secure the crown jewels at Nokia for MS to plunder, nullify internal resistance, spin to the dumb sheep in the press, provide Wall Street with palatable numbers, and keep Nokia alive long enough for MS to get their hardware out.
[...]
MS could not buy the company, so they destroyed it from within with the blessing of the board. Ironically, it was cheaper that way. Nokia is dead, MS has no more chance than they did a year ago, and the only losers are the loyal employees of a once great company and it’s stockholders. The only thing left to do at this point is to watch it unfold.”

khim

@Dan Morel: A counter argument would be to compare RIM.

Absolutely. It's much harder to do, but it CAN be done. BlackBerry does not have anything except smartphones thus we'll need to compare Nokia's smartphone unit with BlackBerry, but yes, it'll be fair.

Similarities: trajectory before 2011.

Differences:

Replacement transitional platforms:
Nokia - was ready last year.
Blackberry - still is not ready.

Profits:
Nokia - negative since last year.
BlackBerry - negative for a single quarter.

IOW: Nokia had viable strategy and executed it decently while BlackBerry was (and is) in deep trouble. Yet Nokia Smartphone unit is dead while BlackBerry still has decent chances.

tony

Thanks for the very insightful, sobering and, ultimately, sombre commentary. I really benefited from your article, Tomi! (Sorry but just gotta add this though, because i am a tad OCD, but you need to use the apostrophe on certain words e.g. let's)

Ex-12yrnokian

As a former 12 yr. Nokian, who left in Q4 of 2011, I can say clearly that Mr. Elop is an IDIOT! I sat through his big acceptance tour speeches when he was hired and knew we were all doomed. The guy just likes to hear himself talk. The only thing going through my mind at the time was, "This is the best the Board of Directors of the number one mobile company in world can come up with? What a joke! A lame ass former Mr. Softy Exec.? We are screwed! A half ass software guy, whose big claim to moblie phone fame is putting flash on DOCOMO phones, is going to run a multinational group that derives is profits from manufacturing, sales and marketing? Not Bloody likely." I could not believe the burning platform memo. Intentionally leaked in my opinion. We all watched as 10's of thousands got laid off and sites closed while the market share, share price, credit ratings continued to drop while Elop and the Leadership Team rewarded themselves with muli-million euro compensation packages. A leadership team in my opinion that is just as incompetent as it's CEO. The internal spin at Nokia while I was still there was all a bunch of smoke and mirrors to keep us working until you quit or they just fired you, unbelievable! While I hate to see a company founded in 1865 that has done so many great things and enriched so many lives go down in flames, Nokia deserves it. If the fins still want Nokia they have one chance. Fire Elop and the entire leadership team today! Get rid of Mr. Softy, hire back the people who knew what the hell they we're doing before Elop ran them off and get back to work! Take back your software position make kickass hardware and do what Nokia did better than anyone else in the world for almost a decade and a half.

Frank MacGill

Pardon me. Did you not notice? The full Nokia board appointed Mr. Elop. Don't talk to me. Talk to them.

Para bellum

Siilasmaa is an eunuch who does not know anything about telco.

BOD is a bunch of ball-less sheeps who follow the order.

Lets gather a 1000-head strong mob and lets go to Elops house in Helsinki Katajanokka to drag the criminal out and bring him in the front of justice of the people! Lets also smash his apartment to pieces!!

It is time to take the justice in our hands!!!!

Angry mob can smash the police and security guards that can be summoned at the place!

Elop, your time has come! You will be judged and punished by the citizens of the state of Finland for your crimes!!

Mike Cane

You have made a compelling case with solid evidence that clearly contradicts the prevailing perception of Nokia. Good work.

As for this:

>>>Nokia's best-loved handset ever, the N9 which runs on MeeGo

Yes. That phone looked so good that I was actually looking forward to buying it over an iPhone! Then Elop went and pulled the plug in what had to have been the biggest tech blunder ever. THAT is the device he should have bet the company on. It was right there to compete with Apple and really dent Android too. A gorgeous piece of hardware and software. What a shame.

Jonas

Hi, quite an article I have to say. What I'd really like to see Is a comparison between what is happening To Nokia now and what happend to Motorola and Ericsson when Nokia stormed the field with the 2110 model (I hope my memory serves me right). Because I see a bit of history repeating itself here. With the 2110 model Nokia came in as an underdog and redefined the market with all the right moves and a pretty high fab factor,much like the Iphone has done now. They also fairly quickly moved to a dominant market position outing both Motorola and Ericsson who were very slow to adapt to the tech that consumers suddenly demanded. So we all know that Ericsson and Motorola never bounced back. Now I think Nokia is trying to adapt, in a way, at great cost. And I sure hope that history will not repeat itself and that Nokia is able reinvent itself.

Foluso

Elop focused on devices being as functional as the iPhone or Android but forgot that some of these smartphones aren't well accepted in emerging markets where you don't have strong internet connections or constant electricity to always charge the "ever-dying android batteries". Elop focused on what device is powerful not what devices are needed.

As far as I'm concerned, Nokia gave what was needed in a lot of emerging markets through its Symbian smartphones. Maps were extremely useful, good email client...not good enough browser but was complimented by browser apps like Opera Mini, Bolt and UC browser.. which were fast and consumed less data. Ovi music should've been worked on for local content (local artistes) and Nokia would've encouraged developers with the Qt tools to develop apps for the Nokia Store.

The "stupid" thing Elop has done was to completely write off symbian...which was selling the most among all the smartphones. If he needed to transit to better OS, he should have continued with the symbian line, add Meego as well as Windows Phone. Nokia would've been unbeatable, building phones on different platforms- S40, Symbian, Meego, Windows Phone. Then Nokia could've seen the market movement and increase or reduce the sales of the phones...then you would've allowed Symbian die a natural death...that is if it wasn't being accepted anymore.

What Elop did was to murder symbian, he murdered symbian and its developers... murdered its workforce...murdered it's desirous customers...and finally is murdering Nokia. Mr. Stephen Elop should learn that not everybody wants a phone as powerful as the iPhone or Android... some just need phones with important functionalities...whose got time spending hours to search through 600,000+ apps?

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