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« How Do You Know If Your Strategy Has Failed - The Nokia Form 20-F Submitted to the NY Stock Exchange - Elop, your two-year experiment has failed and so have you | Main | Second picture in the Nokia Destruction Saga - Greatest individual Management Mistake Ever Made - Nokia vs Competition in one picture »

January 03, 2013

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TimoT

Nokia is a Finnish version of General Motors during last decade. The board is utterly clueless country club, the upper management is just a yes-sir club under CEO and the workers are totally out of the loop. They do not have any influence on decisions no matter how ridiculous those are.

Only after Obama administration bailed out GM and kicked out the upper management, the American car workers and engineers at the floor level started to really have influence. Now the company is slowly healing.

American style quarter year management is a total failure in the long run in most cases. Especially if the board is filled with outsiders from the rich elite, earning their daily bread totally elsewhere.

WTF a representative from Norwegian Statoil, other one from Finnish paper mill company and even one from the cosmetic company L'oreal are doing in the Nokia board?!

Wayne Borean


@TimoT,

Wrong. While General Motors had problems, they were well known of in the industry ten years before the bankruptcy filing.

Totally different situation.

FYI, I used to work in the industrial truck market, and dealt with Ford, GM, Toyota, Nissan, Mitsubishi, and all the other car companies that supplied engines for industrial trucks.

Wayne

m

Is there a reference for what exactly Elop promised? It seems to me that he was careful not to say anything legally binding. He had the list of risks, and he knew he was killing Nokia's home-grown competitors to WP. So he would have promised very little but spun it into something that only *sounds* good. There was a lawsuit against Nokia for making false promises, but it was dropped with no compensation paid. It would be interesting to see the actual evidence... I suspect Elop said very little, just like he does each quarterly report when there's nothing but more bad news, yet he makes it sound like Nokia is happy as a pig in shit.

Sander van der Wal

Nokia management mentioned in the Form that Nokia was losing in key markets. This would include Europe. To properly evaluate the reasons for Nokia's change in strategy one needs to look at the same figures as Nokia management did.

As an example, lets assume that in a market where iPhone and/or Android phones were introduced, Nokia smartphone sales collapsed. This is not an unreasonable assumption to make, but to be validated one must show that it has been actually happening and that can only be done by looking at the figures for individual markets, by comparing absolute sales figures, and relateive market shares.

It is after all very easy to hide a decline in a key market where devices are sold at high prices by increasing sales in a different market wherethe same devices are sold at much lower price points.

The Kantar data that was shown in this blog is after all hinting in that direction, with Nokia sales data for 2010 in the single digit market shares, a year before the Memo.

luis

I used to work for Nokia, but things started to went bad before Elop joined the company, Symbian just wasnt there, OPK & Anssi also weren't taking the right decisions. Remember that N97 fiasco?, the mindless acquisitions like loudeye or enpocket? All the mistakes in the US market?
Now, what I never understood was why did Nokia did a bet on an old time executive who came from and old time company like microsoft? Its nokia's board fault I guess, Elop is just doing what he knows, and its not much..

elm70

@luis

The difference between OPK & Anssi vs Elop .. is that old management was weak vs new management is criminal

Elop is a criminal CEO that still works for the good of Microsoft and the 15% shareholders of Nokia whom have control, which are the Americans funds (dodge, capital, ...)

A CEO that destroy a company for the good of another company, even if supported on the background by the 'biggest' shareholders .... is still a criminal

I don't get why Tomi insist on blaming only Elop, Jorma who kept for years on his arms Elop is also a criminal. Jorma can be point as total incompetent like Elop, since this mad Windows Phone strategy got his blassing.

Why Tomi not a single critics over Jorma ? The man who rebuild Nokia for then destroy it again?

Tchuss

E_lm_70

Ps: If Nokia N97 was a fiasco ... what are the Lumias?

RyanZA

http://www.lowyat.net/2013/01/03/2998/the-nokia-n9-is-this-the-worlds-most-underrated-smartphone/

khim

Why are we still discussing these disasters? N9 was great phone back in it's day, but by now it's too late: Elop made absolutely sure Nokia has no "plan B".

Apparently it was critical for Microsoft not to transition Symbian users to Windows Phone but to kill all these competitors. Symbian (under right management) had quite a few years left, MeeGo was ready much earlier then Windows Phone (if we'll consider WP8 as the "real Windows Phone"), Microsoft was almost out of time.

Now... mission accomplished: WP8 is out there, Symbian and Bada are basically dead, BB10, Sailfish OS, and Tizen are not ready yet - and in any case Nokia is not ready to use them and will never be ready. Elop did what he could for Microsoft, there are only few finishing touches left (sale of patents and Navteq, etc).

What happens with Nokia is no longer important in big picture. WP8 may survive or die with Samsung and HTC, but Nokia will die - one way or another.

Why spend so much effort for this zombie now?

Luis

@E_lm_70
I agree with you, Jorma has a lot of responsibility in the way Nokia has been handled. He named OPK (a finance guy) and Elop, and kept Anssi alive with all of his Symbian ego.

Why Tomi does not criticize Jorma? I guess because Jorma was the one that converted Nokia in a Mobile powerhouse, and Tomi was part of that generation of Nokians, Finnish people who were on the top of their careers when Nokia was #1, all thanks to the change of scope that Jorma did when he was CEO.

The issue is that all of those people got old(with Symbian), and Finland lost its technological edge vs California when the internet converged with the mobile industry; Apple & Google appeared, and now Android owns more that 70% Smartphone M/S while Apple owns 60% of the Global Mobile profits.

Nokia also lost speed, and Samsung appeared. Then Nokia went for Elop and Microsoft, but Microsoft has lost its edge & coolness too, no one in California cares about Microsoft anymore.

N97 was a big fiasco, because it was Nokia's definitive answer to the iPhone, and it was embarrassing, a quite expensive embarrassment. Lumia is just a product with a non-popular OS.

Tester

@khim:

I'm sorry but that's nonsense. Microsoft would have needed the Symbian users desperately. Don't forget that WP7 was already on life support at the end of 2010.

I'm sure they never really expected a 1:1 transition but even just 30% would have given them a comfortable market share to build on.

Now they got nothing. In terms of Mobile they are almost a non-entity. They are essentially a joke that lost its humor.

To me the whole disaster looks like business models based on flawed assumptions, like overvaluing the Nokia brand and forgetting that Microsoft's reputation is not the best.

So, please tell me, what did Microsoft gain? The answer is 'nothing at all'. They were able to keep Windows Phone on artificial life support for a while longer, sank a shitload of money into their mobile business and are still stuck with low one-digit marketshares. The business volume they destroyed went elsewhere.

And no patent fees and IP they might get would compensate for all that investment - ever!


Of course, none of this would have ever happened if the pre-Elop leaders had done their job properly.

m

@khim Well put, I agree. Tomi treats Elop as a retarded failure, but he should be seen as a criminal mastermind. I had thought that perhaps even MS might be disappointed in Elop, having destroyed Symbian and Meego before MS was ready to scavenge the market share, but I think you're right: Destroying competitors quickly was more important than waiting for WP to be competitive, because by the time WP was ready it would have been too late, and the competitors would be too strong.

@Tester, it's not nonsense. It's true that MS/Elop must have hoped for a greater share of the destroyed Symbian market, but their number one goal is to destroy the competition, even if it doesn't gain them immediate market share. It's the same thing that happened with Xbox. Their business model is to destroy or weaken the competition, and stay in the game long enough to make money. Yes, they seem to have nothing now, but if they can keep their farce of a "third ecosystem" alive, and keep others out, they can sit on it for years if they have to until they can build something profitable out of it. But they can't do that if they have living competitors.

Tomi T Ahonen

To all in the thread

About Nokia Board and Nokia problems. There were big problems with Nokia, that built over the years. I have been very vocal about those here on this blog, critical of Nokia long before Elop had walked into his first job interview for CEO. And Nokia had been slow or inept in attempting to fix those problems, in particular during Olli-Pekka Kallasvuo's tenure and the poster child of that disaster is the N97, a smartphone that Anssi Vanjoki later would apologize for.

Nokia had tons of problems. Execution problems. Problems in its timing, delivery promises, early run phones, production problems and bugs.

Nokia did NOT have a problem in its smartphone OS choice. You can see from the picture here (and I'll soon post more even more appropriate pictures) that Nokia was growing stronly before the Elop Effect, and Nokia's smartphone sales utterly collapsed after the Elop Effect. Elop was clearly announced, when he was hired, to fix Nokia's 'execution' problems. He was not hired to change Nokia's smartphone OS - but because we know, that Nokia did in fact engage in secret negotiations during the Autumn of 2010, right after Elop started as CEO, to join either Android or Windows (RIM said no to joining Blackberry) - we know Elop had indeed held those discussions. That would have been at the permission of the Board and it must have been discussed as a possibility when Elop was being interviewed for the CEO job.

What Elop did not like when he came onboard Nokia, was that Symbian was recovering, the S^3 update to Symbian was a huge global hit immediately after Elop took over, and worse, MeeGo was proving to be a world-winner, indeed - an iPhone beater, the only OS out there that has ever gotten such praise. If Elop could not have 'his' choice of which OS to move to, Elop would be forever in the shadow of Ollila and Kallasvuo, and his career would be marred by decisions and operating systems selected and built before he came in. And Elop would depend on the experts and long-term Nokia senior execs who knew Symbian and MeeGo and their intricacies. Elop wanted to be in total control and was determined to wipe out both Symbian and MeeGo. It is clear from all of his early executive decisions in 2010 and early 2011, and the several high-profile executive resignings-in-protest that Elop was on a mission to wipe out MeeGo and Symbian.

If Elop was given a permission to consider a change of operating systems, and he clearly attempted to negotiate with all 3 possible candidates (Android, Windows, Blackberry) - it was not decided by the Board that Nokia would have to go to Windows, only that a change in OS was definitely a decision that the new CEO could consider, and bring to the Board. But because Nokia had its own new OS under development - MeeGo - and as Elop was forced to produce two handsets on MeeGo and sell one of those (the N9) - we know Nokia's Board in 2010 when hiring Elop did not give him permission to destroy and abandon Nokia's smartphone future, but only to make an 'honest' study of the alternatives and bring the Board a recommendation.

We know it was Windows. We can see from Elop's sheer hostility towards Symbian and MeeGo that not at any point has Elop considered doing what is best for Nokia, but he has consistently done what is best for Microsoft.

If Elop's original promise of roughly 1-to-1 conversion of Symbian to Windows Phone could have happened, even at half that, 2-to-1 and Nokia today would have 14% market share in smartphones and with Elop's rapid haste to rush new Windows based Lumia phones, he could today have just-about completed his transition and we'd see about 90% of more of Nokia's smartphones running Windows today. Nokia would be selling about 100 million smartphones for the year, the scale would safely be big enough to keep Nokia's smarpthones unit profitable and Nokia today would be the third biggest smartphone maker - and Windows the third ecosystem.

That WAS plausible as a plan, in February 2011. I told you at this blog, many of you have been long enough here as readers to remember, the Nokia dream died in June 2011, when Microsoft bought Skype. Since then all carriers have said privately to all handset makers that a Windows Phone based smartphone is a non-starter. Why has Motorola, LG, SonyEricsson and Dell already pulled out of Windows Phone in 2011, and Huawei and ZTE not releasing any Windows Phone 8 based smartphones, and both HTC and Samsung have severely shrunk their Windows production? Because no carriers want them. To carriers, supporting Microsoft ie the owner of Skype is tantamount to drinking poison. They are not that stupid.

Windows Phone is a dead end, and the longer Elop forces Nokia to walk on that road, the further damage is done to Nokia (or more precisely, its Lumia unit - as you can see, the Asha featurephones unit is doing just fine, and Symbian is doing far better than the 'burning platform' should be 22 months after its death notice).

So - what I meant to say, haha, is that Elop looked at a sick Nokia, noticed it had a heart attack, and decided the solution was to amputate its brain. The Board was tricked into believing this would help. The real problems at Nokia have not been resolved but many new problems now have been created by this 'solution'

Tomi Ahonen :-)

vladkr

@Luis : I have to disagree with you about the Meego part.

Meego was killed in the egg, so of course it didn't attract trains full of developers as iOS or Android did; however, even now the OS is still alive, and new apps are developed.

Not necessarily "official" apps (there are also a lot of .deb files). And have a look at Meego/Maemo communities, you'll see that Meego had a a great potential... a potential that was voluntarily limited, as witness all the commented codes in configuration files of the OS for example.

And, can you please be more precise about the "Finnish people doing zero work" ?

Luis

@duke Agree, Microsoft is also decadent, I remember being in San Francisco in a music venue, going into the men's room and watching "No Microsoft Culture" stickers all over the place..it was an eye opener..the youth, the future of tech are simply not into Microsoft anymore..They are like U2, a great band that is simply not doing anything new these days just putting out records that sound the same than the previous two..

vladkr

@Luis :

Meego has Facebook, it has twitter, it has even GTalk, VKontakte and Angry Birds... so the (relative) apps problem is only due to lack of promotion for the OS.

And to think that dying Silicon Valley is still the centre of the world is a big mistake, as the centre of gravity is clearly in the other side of the Pacific now

Tomi T Ahonen

Luis - I had to delete your comment on the basic rules here on this blog. You may disagree with me, but you have to illustrate you DID read the blog. You cannot come here, look at that diagram, and then post a blog claiming Nokia smartphone sales on Symbian were falling before Elop. The fact is, they were growing. You have to deal with reality on this blog. I deleted your comment(s). You had some good points, if you stick to the facts, or you have any evidence why these Nokia official Quarterly Results based numbers are somehow wrong - ie you have 'better' stats for us to share - with your sources, then please do.

Tomi Ahonen :-)

Tester

>> so the (relative) apps problem is only due to lack of promotion for the OS.


Wouldn't you rather say it's due to having no marketshare whatsoever?

Only geeks would be willing to develop for such a platform but honestly from a purely economic standpoint it's a waste of time to me, it doesn't matter what it can and what it can't do.

cycnus

@duke

the forbes and readwrite is a nice article
thank you for that article

elm70

@Tomi

I'm surprise you believe in the 'story' that Elop was exploring Android and BB together with WP ... this is 100% a lie

Elop from CES 2011 announcing the new strategy , told us that Nokia engineers was sent to Microsoft since November 2010
As well, Elop was and is still nobody, he got a CEO position since the 15% power shareholders had already a plan with Microsoft.
The mission was to stop Nokia symbian and remove MeeGo thread ... the outcome was known already: mobile os will be fully in US (big return for the 15% owners) ... and Microsoft got a vital 2nd chance

Jorma was in a position that he did know very what was happening, so he is a criminal like Elop

Nokia,could have been what is Apple now, Finland could be much richer now .. but the money power of american funds decided that this should not happen

Amazing no criminal investigation has been open in Finland

Amazing that you, Tomi, can write openly that Elop is a criminal, and Elop does not try to bring you to a court for clean his name ... simply because for a criminal is better to avoid to call in a judge ...

Tchuss

E_lm_70

Ps: yes OPK was a weak manager, Nokia had executions problem, but no doubts Symbian ang MeeGo strategy was correct .. Symbian could have fight and win middle segment, with Meego challinging Android and iPhone on the premium market ... without Elop Microsoft Windows Phone would have been already dead now

Pps: Skype is an interesting story ... clearly for Microsoft Skype is more important then Windows Phone ... clearly Ballmer is 100% incompetent

Interested to know

@duke
I have to agree, the Forbes article is a refreshingly honest take on Microsoft. The author completely saw through all of the smoke and mirrors BS that Microsoft (and now Nokia) use to hide reality.

Tester

@Ninvestor:

I'd agree with most you say, except this bit:

>> Nokia could not EVER compete against iPhone and Galaxy/google with ... Meego.

I think giving it the right push at the right time with up to date hardware, they would have stood a chance.

Had they not prematurely destroyed Symbian their marketshare would still have been sufficient to have some power and convert their users if their new offering had been any good.

No, the N9 wasn't it. It was too little, too late, already running on outdated specs at the time of release - but most of it was due to lack of interest in pursuing this path seriously.


>> Tell us Tomi. What were Symbian Sales in the USA? In Japan? In the UK? In Germany? Weren't they declining already or had already collapsed in 2010?

I don't have any sales numbers ready but I had a quick look at statcounter's Mobile OS stats for some countries.

Symbian went from 17.19% to 8.62% from Dec 2009 to Dec 2010 in Germany,
from 10.59% to 6.82% in France, from 12.48% to 4.54% in the UK.

Ok, I know we have to consider overall market growth as well, but these kinds of declines in use do certainly not suggest a healthy system.
I'd say without Elop Symbian would still be there today, slowly fading into obscurity, just like it currently happens with the old Blackberry OS.

rich

So how long has elop got before the board vote him out?

Tomi T Ahonen

To Tester

You asked me explicitly. First, just so you know, you are truly borderline from that comment being deleted. The graph CLEARLY shows NOKIA smartphone sales GROWING. IF you want to argue it wasn't, you have to at least acknowledge you read the blog and why you find it relevant to quote other non-related stats (Statcounter) on non-related metrics (Symbian) on non-related subsets (individual countries) without at least acknowledging the big picture as fact - or that you have countering facts.

If it were to be true, that Nokia sales in Germany, Japan, UK and USA did fall, but correspondingly grew in China, France, Italy and Mexico - and the growth was greater than this decline, your point is already moot. The graph in the above is based on Nokia quarterly data. If you feel that is not trustworthy, tell us what is better data.

But I know you are here often, I will give you the benefit of the doubt, that you are simply curious why this 'discrepancy' on the data you found.

First, Symbian in 2009 was not equal to Nokia. Today Symbian = 100% Nokia. But in 2009, Symbian included handsets made by Fujitsu, LG, Panasonic, Samsung, Sharp, SonyEricsson, Toshiba, and many more. Many of those were shifting away from Symbian during 2009 and 2010, especially LG, Samsung and SonyEricsson, the biggest of this group. That is why Symbian sales fell, while Nokia smartphone sales grew. Don't confuse Symbian of 2009 being Nokia. It was much more. Nokia smartphone sales grew as you see in that graph, it is directly from Nokia Quarterly results, there is no better measure of the numbers.

Statcounter measures web page views. In 2009 the iPhone was hitting significant market presense (launched 2007 in USA, 2008 most of Europe, 2009 in Japan). Statcounter cannot tell difference between iPod Touch and iPhone, nor difference of WiFi or cellular access. Very much of iPhone/iOS traffic in this time was used by WiFi or 'all-you-can-eat' data plans, so iPhone users had FAR higher data usage, per device, than most other smartphones. In 2009 and most of 2010, Nokia had very few usable touch screens or large-screen non-touch screen smartphones in its portfolio and had a FAR lower usage level, per device. So the growth - as you can see in Statcounter - of iPhone use is FAR in excess of Apple's actual market share. With iPhone over-counted, it means others are under-counted. Statcounter is a good measure for short-term trends WITHIN one brand, but NOT a good measure to compare different platforms against each other.

I have some random metrics from some countries but they are not consistently reported and not enough to be representative to show any trends. But if Nokia total smartphone sales grew 53% in 2010 and grew more than the iPhone or Samsung - then Nokia was OUTPERFORMING its rivals in 2010. In some markets it may have been down in some quarter, and up in another. The big picture is in that diagram I drew.

If your contention is that Symbian was headed to a slow death decline like Blackberry today - then that argument is 100% against the facts - in the global smartphone market, Nokia's gap to its rivals was growing in 2010, not shrinking. Nokia was pulling away from Apple's iPhone and Samsung, not them catching up (up to the Elop Effect, obviously).

Tomi Ahonen :-)

Louis

Ironically, since Tomi thinks that Skype killed WP, apparently WP8 can't even run it properly:

http://www.theverge.com/2013/1/2/3829072/skype-people-hub-windows-phone-8-integration-disabled

Personally, I think this gives more credence to the "it's just not that good" theory of things. Skype works great on the iPhone. And probably there isn't even FB Messenger for WP8 at all

http://www.theverge.com/2013/1/3/3832250/facebook-messenger-voip-calling

Tomi T Ahonen

Second comment to Tester

MY BAD !! I am VERY Sorry. I meant to delete Ninvestor's comment (and did) but accidentially deleted your reply to him/her. I am VERY sorry, I didn't mean to delete that comment, it was fine. If you want to repost it, feel free (but as Ninvestor's silly comment is gone, you may not want to)

Sorry, its a bit late in the night, my time....

Tomi :-)

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