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« The Engagement Marketing Primer for 2013 - E Equals M 2 C - Engagement Equals Mobile To Community - Or how to get 30% response rates with your next campaigns | Main | Picture 4 in Nokia Saga: How Badly the Promised Migration from Symbian to Windows Phone is Failing »

January 10, 2013

Comments

Firecracker

Hi Tomi did you know that the infamous droid is now also in your fridge? http://business.financialpost.com/2013/01/08/google-android-expands-to-rice-cookers-fridges-in-move-beyond-mobile-phones/
So even if Nokia did beat its greatest competitor in smart phones (Which is highly unbelievable atm) Google would still win!
@ John I have another one to add to the list!
Windows 8. Because that is the ultimate example of Microsoft fascism with the crappy metro UI that nobody wants I mean had Microdicksoft Just stuck with XP then I'm almost certain that the lumia would be an impressive success. However the problem is that nobody likes Vista,7,8 which also cripples smart phone sales.

foo

@CN "Other thing you might want to keep in mind. In August you said WP will be 1-2% in 2013. In November you said it will never pass 2%. Now you say 2-3%. Not a huge issue, but I just want you to know you are being followed."

You point correctly it is not a huge issue.

Considering that Windows Phone market share is so near the end of scale (zero), an error of 2% is acceptable.

I bet nobody in Nokia -- not even Elop -- would be as precise as Tomi. And let's not forget other "analysts" that predicted that Windows Phone would reach 20% of market share.

Tomi was spot on.

Cyan

@ E_lm_70
I guess it will be difficult to guess the outcome for end of 2013.
Up to now, the sales of Nokia were following a trend. Tomi had a model to predict that trend, and used the most pessimistic one (and was right to do so).

But sometimes, it's no longer possible to only model "trend" : a single event can change everything, abruptly.

This is typically the case when 2 parties go to war : the outcome of each one will largely depend on a short-lived heated effort, with dramatic consequences. No trend here.

Nokia doesn't "go to war", but may face a similar "shake-up" situation next year : will it remain "Nokia" ?
Could it be broken in several parts ? Will it go bankrupt ? May the current CEO face investigatation on charge of double-agenda ?

I'm curious to know Tomi point of view on this.

foo

@m "Elop and Nokia continue to pat themselves over the back for mediocre results. Having a goal of breaking even, and touting "underlying profitability" (which suggests no net profitability) is sad."

Let me see...

Nokia sold their headquarters for $222 million.

So, if you discount that (because selling your home is not the same as selling phones), it is possible that Nokia was $222 million negative?

And how are they going to repeat this trick next quarter? Perhaps selling family jewels?

Tomi T Ahonen

hi jj, vladkr, m, Bart and Tester

jj - very true. Nokia is always able to force-feed some sales due to its big scale, but where 85% of your attempts to shift from Symbian to Lumia has resulted in customers abandoning the Nokia brand altogether - and only 37% of those who own Windows Phone smartphones are willing to buy a second one to replace the current one - are truly horriffic stats. Windows is utterly doomed in smartphones

vladkr - good point, we obviously won't know yet but at least part of that puzzle is revealed when Nokia reports fully its Q4 results at the end of January

m - good points and remember also, that Elop is great as a con-man, he sounds honest and reasonable, and especially in a country like Finland where con-artists are rare and CEO's are known to be truthful, a liar can go a long way. Elop has been stretching the truth ever since he came to town, all those promises of big Lumia sales that never materialized, including currently the hype around China sales haha

vladkr - the race is not finished yet on the forecasting game. But of CAPTCHA - at least here in Asia I have never seen those types of characters. You might try using another browser, another PC. I hadn't heard of it.

Bart - yes, I've seen that and some carriers report better old Lumia sales than new. Lets hope Nokia gives split in Q4 results (but if its bad for Windows Phone 8, I am guessing Elop wants to hide that haha)

Tester - me too. But again, the smartphone market numbers, that are kind of 'most relevant' to the big Bloodbath battle, those we already have. How badly Nokia is dying of its Eloppian cancer many of us Nokia-fans are curious to know, but that is a side story to this blog... Still, we'll know more when the full results come out

Keep the discussions going, cheers!

Tomi Ahonen :-)

CN

@foo

All figures announced today are non-IFRS figures. That tells the operative results without positive or negative one-time costs or gains.

You need to wait until Jan 24 until you see the actual net profit/loss analysis.

foo

@P.Bokkelman "Tomi was 75% OFF with his Lumia predictions. Even I was closer (12%). He still tries to praise himself."

Someone commented that obsolete Lumia 800/900 phones are being sold for 150 euros in Europe... that may have helped Nokia to inflate the Lumia figures, while they loose money.

And how did they make a break-even? Selling their HQ, patents... that would give Nokia $250 million dollars to burn in the next quarter.

If this is true, it's not a real break-even. They are still loosing money.

foo

@CN - thanks for the clarification!

khim

@Tomi: I bet nobody in Nokia -- not even Elop -- would be as precise as Tomi.

No. They will be significantly more precise from that point on. I've worked for the company which had ~3% of market at some point and ~20% or market at another point.

When we had ~20% everyone was able to predict the results pretty precisely. At ~3% estimates and predictions had no relation to reality whatsoever.

Why? Cross-checking. When you go below certain threshold you can not cross-check results with competitors.

Think about it: mistake of 1M more or less will affect Samsung's result by about 2%. Not a big deal: if you make a mistake of 2% per quarter error for two-year prediction is about 15%. Pretty good. But the same mistake for Nokia now means 15% per quarter which means 300% error in two years!

Also random factors: it's hard to imagine that some large customer will buy 1% of Samsung's smartphone production (that's over 500'000 smartphones!), but for Nokia 1% is just about 70'000 smartphones - and there are quite a few companies which can buy similar quantities. This introduces additional noise.

But internally all that data is still available!

When you go below certain threshold people (even extremely knowledgeable people like Tomi!) lose the ability to accurately predict your fate till you grow back (if that'll ever happen).

That's why there are discussion only about Top10 (or Top5, or Top20): not only minnows are less interesting, it's almost impossible to predict how they'll grow or shrink!

tm

Hi Tomi,

this is offtopic so feel free to delete after reading, but could you please start removing the post from John Waclawsky (and Duke I believe is same person). It's getting really annoying to read the comments with his 2 sentences all caps in every single post he does and in general feels much more trolling/spamming and most of the time it has nothing to do with anything regarding the topic at hand.

Duke in 'Second picture in the Nokia Destruction Saga' comments e.g.

Pedling

I think we are in for a negative surprise when we will see the profits for there Smartphone Devices.

The Average price for a Lumia 800 in Denmark in Q4/12 was about 240€(with Taxes), The Launch was price 530€ (with Taxes in Q4/11)...

This week Aldi supermarket in Belgium has the Lumia 800 for 189€
(I don't know how the Aldi supermarkets are in other countries, besides Denmark, but if you haven't tried buying stuff in an East European supermarket during the cold war period, then you will get a feeling of how it was at that time)

The Average price for a Lumia 900 in Q4/12 was 330€ (with Taxes), Launch Price 530€ in June 2012 (with Taxes).

The average price for a Samsung Galaxy S2 in Q4/12 was 330€, Launch Price 530€ in June 2011.

So Nokia has alot of Discount going on, that I foresee will reflect the there result on the 24 januar 2013...

CN

@Pedling

Well, we saw the profits already. Or at least I did. What more do you expect than what Nokia announced today?

Tester

The question is, what is genuine profit and what is just clearance of obsolete stock?

The numbers clearly show that WP7 doesn't sell well. So this quarter we have a modest increase and we also see profits. So I wouldn't count out the possibility that they just got rid of their old phones by heavily discounting them. Of course most costs associated with these phones was in past quarters so now they miraculously show up as profit.

Mika Peltokorpi

"They didn't give a split of how many of the new Lumia 920 running Windows Phone 8, and how many of the older obsolete Lumia series, hopefully we will have that split in the official Q4 results". Apple does not do it either on iPhones, so why Nokia should bother? Most likely 90% of iPhones sales is from legacy (or as you put it: obsolete) iPhones and this has been clear tactics from Apple. It would be hard to sell to US analysts that iPhone 3GS is part of smartphone marketshare. The US does not count latest Symbian as smartphones, so why they would iPhone 3 gen? (In general the both device categories are considered as smartphones, but quite an often esp. US analysts disregard Symbian in this respect).

And Lumia sales has around 4x YoY making WP probably the fastest growing smartphone platform in history. In this phase iPhone had very similar growth numbers YoY after 12 months since market entry. WP is actually most likely outperforming iPhone at least by 1,5x for the first five quarters (if Nokia has not increased it's market share in the WP ecosystem) And this happens when WP component constraints are wildly speculated.
http://en.wikipedia.org/wiki/Mobile_operating_system

There is, of course some negatives also, but these were major positives you failed IMHO to mention.

You seem to have quite a high smartphone market volume estimate for 4Q (+87% YoY) amid global recession, though at least Nokia and Samsung have given positive warning for 4Q already.

khim

Just noticed this sentence: "What of Windows Phone? Nokia has been shipping about 75% of all Windows Phone smartphones recently and there is no reason to think this would have changed for Q4."

Don't you talk ALL THE TIME about the reason for why this change MUST happen? Previously Nokia pushed all these hundreds of millions of Symbian users to Windows Phone (all these talks about "9 out of 10 lost in transtition", etc). But now we have Nokia after TWO years of rapid decline in the industry where handsets are exchanged in 18 months in average! This means that as time goes on Nokia has smaller and smaller army or loyal customers to punish! SIGNIFICANLY SMALLER (it basically shrinks 15-20% every quarter). Which means that it's advantage over other manufacturers goes down (it's still an "advantage" because former Nokia users must pick Windows Phone or go to someone else while with Samsung or HTC they have a choice of Windows Phone or Android).

And that, in turn, means that percentage of Windows Phones sold by Nokia should come down, too! It's hard to predict if Nokia will be at 65% or 50% in Q4 (Tomi is master of numbers, not me), but we should not expect the same 75% as in Q3, that's for sure!

Which means that Windows Phone is in smaller trouble then what Tomi is painting, but Nokia is in EVEN BIGGER trouble!

Tomi T Ahonen

Hi elm, Emmanuel, foo, Firecracker and Cyan

elm - thanks! Yeah, it was even more difficult, as there was no precedent in ANY industry to try this forecast. As we have now witnessed a world record collapse, there was literally no place for any of us forecasters to go to find some model of what might happen and how. Any such previous models, Motorola, Palm, etc would have given far too rosy a picture for Nokia forecasts in 2011 or earlier 2012.

As to 2013, I think the sales will 'stabilize' as the last remaining Symbians are expelled. And there are so few left now, that it won't matter. Then Nokia will have some natural organic growth as the industry grows, so for this year my immediate gut check number is that Nokia now stabilizes into the scale of 6.5 million to 7.5 million for at least the next 3 quarters (Q1, Q2, Q3) and then perhaps slight growth into Q4. The resulting sales means Nokia still falls from the current annual level of 35 million to nearer 25M-30M and the market share falls from 3% now to 2% for 2013. That will be by Q2 almost all Lumias. I'll do a better forecast when we have all data in from the full market, after we have the full Q4 analysis done, but it won't be better or worse than 2%, it won't be as bad as 1%, it won't get to be as good as 3% for the full year. Nokia for the future, is what we now see, as the transition from Symbian to Lumia is nearly complete. This is what Elop delivered on his one-to-one transition. Ten-into-one was the actual result...

Emmanuel - I see Eldar on Twitter, my Russian is so rusty, I tend not to read him in Russian, I wait until some of his blogs are translated into English, so I haven't noticed that he'd gone silent on the blog? Maybe he moved to another blog site?

foo - hey, I meant to write already earlier, I love those pictures, please keep them coming. I have to post about them separately and do you happen to have any place where they are in one place? I'd love to send readers to you. Please everybody, click on the links foo has been providing on the pictures, they are far better than mine

Firecracker - yeah haha, thats what we all want, eh?

Cyan - great point, which is why I really studied that part back in my MBA studies, and worked very deeply with Nokia's econometric modelling team (that was part of my Consulting Department) to build tools and methodologies to specifically anticipate shifts in the trend. Anyone can plot a straight line, that does not require intelligence. But to anticipate the change in the curve, when a growth rate turns into decline, or a decline suddenly reverses back into growth, that is the most challenging part for forecasters. I did of course ace those courses back in the day, and my team back in the Nokia days probably felt the boss was too 'hands on' in their work from time to time but I really did want to learn and help develop very accurate tools - my insights here now, all stem from the work done by Hannu Tarkkanen and all the mathematicians, statisticians, forecasters and modellers at Nokia's econometric modelling staff. So yeah - if you've been following my forecasts over the years, I have both been promising such transition points when they came (usually the most accurate to predict that) and have rejected 'consensus views' of the ending of some trends that some of my colleagues have suggested like the 'saturation myth' that I exposed to the forecasting community back in the day haha..

Keep the discussion going, will return with more comments soon

Tomi Ahonen :-)

Simon

Can you get information on returns? In California, consumers have the right to return a cellphone within 30 days and cancel the contract. Are there any numbers on how many cellphones are returned by manufacturer?

Tester

@all the WP proponents:

Please answer one, only one simple question:

Why is it always 'the coming year' that Windows Phone will take off? Where's the data? Any indicators? I for sure can't find any.

I heard this 2 years ago. I heard this one year ago. I hear this now. And the only explanation I get is 'It's Microsoft, they'll make it succeed'.

The strange thing is, when I ask people about this matter, they all clearly say they wouldn't voluntarily buy a Microsoft product if there is an alternative. They mock Metro as the most stupid interface ever devised. Most already have Android phones, a few an iPhone. I don't know anybody who owns or plans to own a Windows phone.

So why is such an unpouplar system destined to succeed? They only sell stuff due to insane amounts of marketing and sponsoring pumped into the system.

So, aside from the fanboys, who should buy it unless duped into it by false advertising?

Tomi T Ahonen

Hi foo, CN, khim, tm and Pedling

foo - lets see what the full Q4 results tell us

CN - thanks for the clarification

khim - totally true, the big boys are 'reasonably' easy to analyze and estimate but the tiny players - and if Nokia falls out of the Top 10 smartphones, it is as irrelevant as Motorola has become - they are nearly impossible to estimate accurately by outsiders, unless they serve a very specific market for that analyst to see, like a purely national player, like in China, if that analyst then also is in China and has access to that info.

tm - I hear you, but John makes good points and he has a valid point, totally accurate, the evidence is clear that (most) don't want a Windows Phone. That John perhaps puts it .. strongly .. in his commentary is no reason to remove his comments. I don't mind views from given angles, nothing wrong with that - like for example Baron95's often strong views, as long as you stick to the topic at hand and don't break our normal rules here. So no, I won't delete John's comments

Pedling - yes, we'll see when the Q4 results are out

Thanks, keep the discussion going, I'll return with more soon

Tomi Ahonen :-)

Pedling

@Baron95

"Elop's strategy to compete again low cost Android (which are used primarily as feature phones) is spot on with Asha"

Yeah, after the failure of the Lumia 610,that was to expensive for the developing countries, bringing a $200 phone to a $100 market and without Bluetooth file sharing, which are very important.

http://www.neowin.net/news/nokia-plans-to-make-even-cheaper-windows-phone-devices

Haven't seen the cheaper WP model yet?

Thats why Asha... But I don't hope thats Elop's Cash cow?

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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