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October 11, 2012

Comments

Klas

Timo good post, but hasn't there been surveys which shows that Windows Phone is bigger than iPhone in China?

Jack1059

You could also add a few chapters on how microsoft is doing over their 'preferred' patner by; not allowing the originally touted UI customisations nokia was promised; osborning the WP7 lumia's; scuttling the announced nokia WP tablet by announcing their own; the rumours that microsoft will build its own handsets thereby comoeting directly with their 'preferred' partner; and announcing the first flagship WP8 phone as an HTC phone rather than their 'preferred' partner. Baically getting done over by microsoft is reason enough to bin the strategy. Microsoft cleary cant be trusted with respect to nokia.

Paulo

See this one.

http://www.dilbert.com/2012-10-10/

Gamgigo

@Klas

You would find the truth here :

http://communities-dominate.blogs.com/brands/2012/05/paging-truth-police-no-windows-phone-and-nokia-lumia-are-not-outselling-iphone-in-china-utter-bs-sto.html

tired

Good analysis. But as usual, no one will listen until Nokia is 6 feet under.
The amount of heartache I felt at the murder of a beloved brand as only a consumer, I cannot begin to imagine your heartache. My condolences.
I've managed to coax a few answers from reliable sources within 2 carriers who sold the lumia series... Their stories match up to your analysis. Very high return rates of lumia phones as well as a lot of complaints from consumers not to mention the low sales numbers. What I can't figure out is how come the board doesn't see this and do something about it? At the very least some good news regarding symbian support.
If you don't mind me asking, do you think it would be possible to give a more concrete analysis of N9 sales and a possible projection on how well Nokia could be doing at this time had elop stuck to the old stratagem, but made implementation changes given the latest crap reviews and problems faced by iPhone 5 crappy maps, camera, build quality etc. as well as sgs3 battery life problems.
Thanks Tomi.

Tomi T Ahonen

Hi Klas, Jack, Paulo, Gamgigo and tired

Klas - haha very funny. Yes that was Microsoft propaganda, utterly debunked as a myth. I was among the first to point out it was mathematically impossible..

Jack - Yes, that was actually my earlier intent, as the stories kept coming of Microsoft screwing Nokia, but this interview Elop gave, where he admits Lumia not selling as he expected, and yet he'll continue his strategy, I decided I'd focus just on the strategy failure so far. There are TONS of other stories I'd want to/should write about recent revellations all from the MeeGo handset deals we now learn of at AT&T and Verizon, to the debates Elop admits were had inside Nokia where his more knowledgable colleagues wanted QWERTY variants into the Lumia series yet Elop overruled them, to obviously the Microsoft backstabbing from now celebrating HTC to making their own tablets (and soon phones as well).

Paulo - wow, that is amazing. Dilbert (ie its writer, Scott Adams) has gone just slightly into the future and yes, that could not be more appropriate. Thanks! Gotta love Dilbert

Gamigo - thanks! That was very kind of you with the link

tired - Thanks, I appreciate it, and yes, these Nokia rant postings are really painful and stressful for me to write, they are very draining emotionally and yet, Elop keeps making more of his blunders and more and more of the damage he's done keeps coming into the open, I do have to write about them.

Thanks for confirming the Lumia situation at carriers you know, its exactly the same story I keep hearing from my contacts (privately, asking to be kept anonymous).

As to the N9 and MeeGo unit potential, yes, I'd love to do that and I think I had one blog a while back that did a bit of that kind of analysis early in the Spring. But what I hope to find, from some magical source, is a confirmed number of N9 sales, shipments, in some way, somehow. That would make the analysis far more reliable, than just using my numbers I published here, because obviously, anyone could say, Tomi is biased, he invented N9 numbers just to prove his point. But yes, I would like to do that analysis and even an early draft version of this blog included the MeeGo bump - specifically because the official Nokia slides clearly stated 'MeeGo not included' haha. I wanted to count them in, but then decided that would detract from the factual part, into the hypothetical, so that is why I just wrote that the N9/MeeGo story is for another day.

Thanks guys, keep the comments coming

Tomi Ahonen :-)

qrant

In the past, Tomi suggested that Nokia should get back to the Symbian / MeeGo strategy and relaunch the N9 / N950 immediately.
Now that Symbian is outsourced and almost in "maintenance mode" and the MeeGo project has been completely abandoned, if the Nokia CEO changed today, I'm not sure the new CEO would change the strategy again.
It seems to me it's now impossible to restart the old Symbian / MeeGo strategy and I'm not convinced Android would save Nokia.
Most manufacturers are having a bit of a headache with Android, most devices have really low margins, the competition is based on who has the lowest price, there's the patent wars against Apple and Microsoft, the fragmentation issue is real because of Google's fast pace of development, most brands are struggling to compete with Samsung, there's tons of Android devices being launched everyday and I don't know if Nokia would be up to the challenge.
Nokia also has a lot of Windows Phone devices ready to launch in the coming months (810, 820, 822, 920).
I believe the new CEO would keep going forward with the Microsoft strategy instead of changing the roadmap all over again.

Since it's too late to reintroduce and promote the N9 because the device is more than one year old and was already being developed before for a long time, I would really like to know what Tomi would do right now to save the company if he was put in charge today!

Despite my love for Harmattan and the N9 I'm not sure what I would do now...

EmmanuelM

I went into one of the largest shopping center in Paris recently and visited mobile phones boutiques and mobile phone area in large stores...

A total disaster for Nokia : there is in average not more than 3 or 4 Nokia phone models for sale per shop (compared to 10 / 15 models for Samsung)

The phones are :

- A dumb phone
- An Asha 300 phone
- The Lumia 610
- A Lumia 800 or Lumia 900 (taking the dust)

And that's it !!

vvaz

Super interesting article:

http://taskumuro.com/artikkelit/the-story-of-nokia-meego

Maybe too little about last year of MeeGo but still good read.

@tizen

I think Samsung keeps Tizen as an emergency for time when relationship with Google will go sour. According to some rumours they keep it working on their Galaxy line hardware but releasing it now would only hurt their bottom line. So why bother?

QtFan

Tomi, what do you think of Ballmer's open letter? http://www.microsoft.com/investor/reports/ar12/shareholder-letter/index.html
It seems this time MS is really going in to HW business. MS will probably be dropping all the Nokia "favoritism", and focus on it's on devices.

This is one of the worst back-stab from MS.

John Waclawsky

The root problem is simple. Occam's Razor stuff: NO ONE WANTS A WINDOWS PHONE (except those people working for Microsoft or doing astroturfing for them).

HCE


@Tomi

Sometimes I wonder why you keep harping on the "Symbian was winning" line when there is so little data to support it. Let's use your own data.

In Q2 2010, unit sales and revenues went up a bit, profits and profitability dropped. In Q3, everything rose compared to Q2 but profits and profitability were at Q1 levels or lower. So far, nothing about this suggests a winning strategy. Through the first three quarters of 2010, what we see is Nokia more or less holding steady. That's OK in a market that is shrinking or experiencing moderate growth but it does not look too good in a market that is growing like crazy. Now let us look at Q4. We see, for the first time in 2010 that they achieved strong growth in all four of your metrics. OK - so they had one great quarter. I do not see how you can conclude anything about the success or failure of Nokia's strategy based on one quarter - particularly since it was the Christmas quarter where sales are typically higher and what's more, the N8 was launched in that quarter.

Taking a longer term view of Nokia's results, we see little evidence that their strategy was working particularly. Once more using numbers from your website, I have the following market share figures

2009:
Nokia 39%
Apple 15%
Android 4%

2010
Nokia 34%
Apple 16%
Android 23%

Q4 2010
Nokia 28%
Apple 16%
Android 30%

Between 2009 and 2010, Nokia dropped 5 points of market share and in spite of their successes in Q4 2010, their market share dropped even further. Clearly Symbian was not winning. The disproportionately large jump in Q4 2010 was probably due to the combination of a major new phone launch plus the usual Christmas quarter boost.

I also don't think you can blame the 2011 fall in Nokia sales on Elop alone. 2011 was the year that Android sales exploded. The OS/ecosystem got good enough and Android OEMs released phones at every price point. That would certainly account for part of the decline.

Not that I consider Elop blameless in all of this - far from it. I have, to a large extent come around to you view that Elop has been a disaster for Nokia. I agree with many of your other reasons.

I also think that there is a huge strategic blunder made by Elop that you have not touched on at all. One of the main reasons that the Elop and his defenders gave for moving to Windows Phone is that Nokia's next gen platform was not ready and would not be ready for quite some time. The "MeeGo" that the N9 shipped with was not really Meego but rather Maemo 6 with a MeeGo-like interface. Hence the need to switch to Microsoft's next gen platform which would be ready by the end of 2011. The only problem with that was that Windows Phone 7 was **not** Microsoft's next gen platform at all. WP7 is basically warmed-over Windows Mobile - a Windows CE kernel with a Silverlight interface thrown on top. Microsoft's real next gen platform - WP8 - will finally launch at the end of this year. Everthing about WP8 (barring the name and the UI look and feel) is different from WP7. The kernel is different (WP8 is based on the NT kernel), the APIs are different, applications are not cross-compatible, and WP7 phones cannot be upgraded.

It might even have been OK to move to Microsoft's platform if it were truly ready by the end of 2011. However, abandoning your strategy to move to Microsoft's stop-gap platform is unconscionable. There's no way in hell Elop would not have known most of this. He was, after all, a top executive at Microsoft before the Nokia job. Pursuing this strategy in spite of knowing this would make him criminally incompetent.

There is one thing, however, that I agree with leebase on: Nokia is stuck with this strategy, for better or worse. There's no going back to MeeGo and the Android space is too competitive with hardly anyone making money.

- HCE

Martin von Willebrand

With the current sales of Lumia line, Nokia would be far better off, if it produced Android phones while searching for a better strategy. Focusing on Lumia only seems to mean very heavy losses, whereas Android manufacturers are making profit or small losses. Nokia has skills in design, and that would help equally on the Android-side. Granted Android is not great for a manufacturer - unless you can hit Samsung - but still better than Lumia only.

I think it is just stupid to ride just one horse, when you should have several and ride most on the one which does best. Microsoft is not running one horse, it has several OEMs. Samsung has several. Google has plenty of mobile manufacturers. HTC has several and so on...

So start Android, continue with WP8 with investment proportional to benefit, look around what's out there.

CN

The three pillars of Nokia strategy:
Feature Phones
Symbian
Windows Phone

If you ask Nokia, they say:
Feature Phones
Smart Devices
Navigation and Location
Patents
NSN

Feature phones market share went up in Q2. Volumes up as well.

Smart Devices struggle big time, no question about it. Was it part of Reuters forecast published on Thursday where they said that in 2014, Nokia will ship 56 Million Lumia devices. They seem to believe in this.

Navigation and Location. 9 out of 10 cars (where navigating system included) with Navteq. Nokia Maps definitely one of the top ranks.

Patents. Anti-Nokia guys say it's nothing. Many others strongly disagree. Example: Just this week Siilasmaa said Nokia/NSN holds 50% of essential LTE patents. (No need to debate on who say what's essential - I know this story quite well).

NSN. On track to become more independent?

RobDK

What is the chance that Nokia is legally bound by agreements with Microshaft to NOT produce smartphones with other OS'es other than Windows Phone?! They were allowed to wind down Symbian and release a couple of Meego products already in the pipeline, but nothing else, and certainly not Android. Would not put it past MS...

Lasko

Who cares about 2014 forecasts?

Compared to the inital size Nokias cash reserve is almost burnt through, with a massive, massive minus at the end of each quarter. If there isn't a miracle happening Nokia will be out of cash within the next 6 to 9 months.

Even if Naviagation and Location, Patents and NSN skyrocket they will nowhere near even to massive, massive minus the smartphone business is generating.

People ...

RobDK

I must say this port by Tomi is spot on! Especially the graphics showing the eating away of revenue mix and consequent collapse. It really makes the point!

My only question, is the mix shown as relative percentage? Or is it in absolute Euros/dollars? And how does absolute growth over time factor in, especially since Apple and Samsung were growing +100% per annum at this time?

Vincent Mariani

@Tomi

In 2000, you said "Service creation and marketing will be key to 3G".
So, what we can say about Nokia Service ? Ovi has never been competitive against Apple, Google or even Microsoft one.

Now about their marketing ? In France, we are stuck with Apple & Samsung ads, sometimes Sony ones. In one year I have never seen a TV ads for Nokia. I've only seen their phone in American series. Unfortunately, since these series came in France at least one year after their original release, I have seen an N8 device two weeks ago, a E71 one, and yesterday a cyan phone which may be a Lumia 800.
More over, Nokia never communicate as a smartphone leader (casual consumers think Apple invented smartphones, not Nokia). So when we're thinking to buy a smartphone, that's to say a phone which can surf on Internet, the first brand you have in mind is Google (because Internet = Google) and so Android.

In my opininon, these two points are clearly important in Nokia distaster. Not the choice to switch to another OS. Why? Because few consumers knew that Nokia used Symbian before. Infact the switch should have been done early in 2011 to be useful, not at the end, when everybody have already bought an iPhone or Galaxy SII. In that condition, they could only sale to people waiting for Nokia device.
This year, the same issue may appear again, since Nokia 920 will be shipped two months after iPhone5.

Next, we must talk about carrier boycott. This one isn't linked to Windows Phone switch. In France, this boycott appeared in 2009/2010. Why? I have some ideas, first because Nokia users doesn't use a lot of data. Today I continue to have a 500Mb phone plan and live very well with it. On the other way, some of my colleagues use between 1 & 2Gb for the same use that mine (email, address book, navigation, social network, few apps & games). Next because, Nokia lifespan are often longer than other phones (how fragile is an iphone glass?) and carriers prefer that consumers change their phone often so they continue to pay an expensive plan.

Another boycott is forgotten in your presentation: Dev boycott. Developers and geeks on internet was often Google platform users (in my company, every engineer has a gmail inbox). So they were more interested into making applications for Android than Symbian. More apps on Android, so more consumers interested by these devices.

EmmanuelM

May be Jolla Will be to Nokia what Next had been to Apple... ? Let s hope..

Naikon

Stephen Elop is doing well. All his pillars are staying strong.

1. Wipe out Symbian (check)
2. Kill MeeGo (almost done, damn you Jolla!)
3. Give Windows Phone a big push (well, define "big", but it was a push, definitely.
bonus: Microsoft have got Maps for free!

So, he is doing well. You can wonder, - "where is Nokia?"
No-Kia,... Stephen Elop was asked once, why is he sounds like he is working for Microsoft, he is talking about Windows Phone all the time. He simply answered, - "I don't speak Finnish".

Don't you see? He doesn't care about No-kia. And he even get payed fat salary and huge bonus. And when he is finished there, he will get even more.

Tomi, I don't understand what you're talking about. Don't you see that? Stephen Elop is doing well, but Nokia is a kind of out of his scope.

The comments to this entry are closed.

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