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« Picture Tells it Better - first in series of Nokia Strategy Analysis diagrams, how Nokia smartphone sales collapsed | Main | The Seven Biggest Collapses in Mobile Handset or Smartphone History - this is part 3 in the Nokia Disaster analysis series »

January 04, 2013



There is one point on which Elop "saved" money : how he fired people.

Like most European countries (actually even better than most EU countries), Finland has strong social protections ; it's quite hard/expensive to fire experienced workers.

But our Top Elop team managed to bypass this problem :
Nokia didn't fire employees, it "moved" them to another company Accenture, selling whole business units; no need for compensations.

So employees have changed employer, then they have a new work contract, and work experience reset to zero.

-> Even in Finland, it's not a problem (and costless) to fire a worker with zero experience)

This is a SCANDAL - at least as much as Nokia's dereliction, which to me, is not denounced enough (a single line in a YLE article).

It's maybe legal, but it's ugly for sure !


Given the hostility around the net towards Microsoft, we could soon start counting next how quickly Microsoft is now going to go down the drain. Windows 8 doesn't seem to be a success either, and given their blunders with Nokia, there are quite a bit of people who are annoyed towards them (and Nokia as well). With the Surface release, Microsoft apparently managed to piss of their OEMs, and some companies (like Valve) have announced their intends to start delivering Linux based games.

In a way there seems to be a repeat of Nokia coming up soon; get too big, comfortable, and fail to react on the growing market demand and make several mistakes in the execution to piss off your long term partners. I suppose Microsoft needs to learn it in a hard way why this is not any more acceptable business ethics on this decade.

Disclaimer: I do use Microsoft stuff at work every day, but given their recent business moves, I fail to see how I could support them any longer unless they do a radical change of course. Their software empire has its good sides on standardization, but then the other half of that was based on long term trust that they do not intentionally break things, and what else are Office 2010, Windows 7 and 8 than breaking that what worked before - and knowingly so?


Here's an alternate history. Maybe some Nokians can comment?

1. The CEO before Elop fails in his mission, turns to channel stuffing (which hints at a big problem in itself), and gets fired when this is discovered.

2. In the meantime, Nokia is dithering or infighting about producing the next platform. This one is about software, not hardware, which is out of the comfort zone. But they're on top of the world, why force a decision?

3. New CEO needed with new software skillset. Elop is a software exec, great. Elop arrives, reviews and is briefed about what's going on, and, for better or worse (your call), comes to the conclusion that Maemo, MeeGo or whatever the name of the week was, is not ready for production. Everyone else already has a fresh new unix-style OS, Nokia is failing to produce one. What to do?

4. Look at the alternatives. Settle with the Symbian cash cow of last generation and dwindle? Become one more Android maker? Ballmer is waving this great big shiny lure and MS has to know software, right? Decide to go with Windows Phone.

5. Due to the infighting, Nokia internally needs to be brought to heel. Write burning platform memo. Doing something so drastic points at the internal problems being huge and Elop being relatively weak. Maybe the incumbents would have smothered the efforts to switch, Innovator's Dilemma style.

So where did Elop and the board, including the titan Ollila, go so wrong? Note that their projections obviously already showed the sales crash that Elop himself reported to the press right after the burning platform. During the fall planning, this should have been a big, bright, red flag to indicate that WP-only is NOT the correct strategy.


@Thomas: The history is right, but then you have to try and put it in context:

(1) Nokia is a large company with manufacturing capacity, but at this point not much soc/baseband control, and it needs scale.

(2) WinMo is dying and WP7 is totally unproven and about to be Osborned by WP8. (Nokia knew this, surely, even if nobody else did.)

(3) Android is gaining momentum, on the carriers' deck, and has access to the otherwise 100% proprietary Google app stack, which Nokia and MS are not close to being able to copy. (And Google/any other 3rd party developer won't put in the effort to do it themselves as they do on iOS.)

(4) There is a lot of hardware expertise on Android out there.

So, basically, going with EITHER WP or Meego is a large bet that an "other" platform will come out of nowhere with no 3rd party backing and challenge Apple. This seems basically speculative, which is why about 2/3 of the risk factors from Tomi's other post basically amount to "WP might not get scale."



Elop ... comes to the conclusion that Maemo, MeeGo or whatever the name of the week was, is not ready for production.

Your theory fails right there. MeeGo was ready for production. In fact they were able to ship it long before the first Lumia. Behold the Nokia N9!


Thomas, what's wrong with Nokia being one more Android maker? It's better to have a small share of a huge pie than a huge share of a tiny pie. Nokia probably captured 75% of the WP market now. Yet it is still losing money and dying. What if Nokia has just 5% of the Android market? It would be selling many times more phones than it is doing now. Get it?



Competition with Android is not as easy as it is with WP.

The ASP for Android phones is just too low for someone like Nokia. There will be $50 Android phones this year. Nokia would be having very hard time trying to compete against Samsung in high end. When was the last quarter Nokia had a significant market share of high end phones? That is, something like over 30% from phones sold for over $300? With the $300 I mean the price Nokia is getting from a phone. Not the price a consumer is paying for it.

The problem is that selling the WP for consumers is not easy.



That 'cannot compete against Samsung' argument is not valid. Remember, when Nokia abandoned Symbian for Windows Phone it still had more than twice the marketshare of Samsung. It would have been a completely different situation for entering the market than now.

Many people have said, and I agree, that Lumia would sell like crazy if it ran on Android instead of WP. From a technical standpoint these are great phones. They only have one major problem: They run on an unpopular operating system.


I don't like this destruction! I mean Ballmer was hired by Apple to destroy MSFT and Elop is hired by MSFT to destroy Nokia when is all this destruction going to end?



I didn't say it was not possible for Nokia to compete against Samsung. I said it would have been hard.

In early 2011 Nokia no longer had a big market share in expensive phones. It would have been hard to sell expensive Android phones like Android. Not impossible, but hard.

If Nokia decided to make Android phones in 2011, when would they have been able to sell those? At the same time they had those first Lumia phone? One month earlier?

How successful would Nokia have been with Android phones and why? This is one analysis we have not seen yet.



>>If Nokia decided to make Android phones in 2011, when would they have been able to sell those? At the same time they had those first Lumia phone? One month earlier?

Let's just hypothesize a bit.
Yes, I think the phones would have been ready at the same time as the Windows Phones.
There would just have been one tiny difference: A switch to Android wouldn't have caused half the disruption of existing hardware sales as the WP switch did. It would have appeared as a logical evolution from previous offerings, not a total change of course. Yes, sure, Symbian would still have lost marketshare in 2011, that was inevitable, but let's not forget: People like Android - people do not like Windows Phone. The negative buzz surrounding Nokia would have been considerably less and therefore the damage of switching the operating system.

The switch to Windows sent one incredibly damaging signal to customers, i.e. they wouldn't need to bother with Nokia anymore if they wanted a decent new smartphone. This meant that instead of waiting a few months until Nokia could deliver something more modern they jumped ship immediately and bought a competitor's Android phone.



While it's true that Android was more familiar, there would not have been a migration path from Symbian to Android. Qt for Android was not ready and running native code on Android is not very smart.

What would have happened if everything happened just like it did, but Nokia was selling Android phones? What would have happened? How many Android phones was Nokia going to sell in Q4 2012? I've not seen any estimations about that.



But user will feel more at home with android
Symbian and android were bro (at UI/UX)
both offer the same level of multitask
both offer the same level of homescreen/widget
both offer the easy access of filesystem through USB (no zune/itunes)
both offer the //same// level of openness



Look and feel doesn't make it same. For companies, it should be compatible with the legacy applications. WP is not, Android is not and even MeeGo is not compatible with most corporate legacy applications. Very few of Symbian's applications at the early 2011 were made with Qt. For corporations there was, for most of the time, really no real migration path for those applications they already had.

The iPhone is really admired phone. It doesn't look like Symbian, it doesn't feel like Symbian and it doesn't multitask like it. It's very good phone with extremely high ASP. The model it offers can't possibly be flawed because people want to have it.


Nokia had a huge a huge and loyal user base in developing countries like India and China. Many of them would buy a phone just because it is a Nokia. There is no question that they will buy Nokia Android phones. Android is an upgrade to Symbian and it can be made in all price segments from budget to high end.

So what happened in India is that many loyal Nokia users bought Lumia and were bitterly disappointed. The OS is a downgrade from Symbian and missing many key features they were used to like bluetooth file transfer and mass storage. They have no use for file transfers using expensive data via SkyDrive. Lumia phones were unreliable and buggy unlike the Nokia quality they were used to.

In China Nokia's market share went over a cliff. If I remember correctly about 70% down in 1 year. Attempts to push WP on the China market failed miserably.

WP are expensive due to hardware specs and unsuitable for developing countries because it needs a PC with online data and 3G for the phone. The OS is a downgrade compared to Symbian. Instead of leveraging its brand name in developing countries Nokia is actively destroying its market there while gaining little in developed countries.

John Phamlore

The lesson that should be learned from the Nokia debacle but I am afraid is not being learned is that if one wants to be part of the future, one has to pay for creating the future.

Nokia's fate as I have detailed previously was sealed in 2008, well before Elop joined the company. Observe that in 2008 according to:

"In October 2008 Texas Instruments announced that they would stop investing in smartphones’ baseband modems and that they were looking for someone to purchase the wireless department ... For Nokia this meant the end of the TI OMAP path for MeeGo, because the company had decided to buy the smartphone chipsets, that is the application processor and the baseband modem from the same vendor."

Okay, no Texas Instruments, what about ST-Ericsson to supply baseband chipsets? After all, supposedly the Jolla / Sailfish project will use their chips:’s-sailfish-os/

By the way just as I have been saying, everyone is regarding China as the last hope of carving a niche:

Observe the TD-SCDMA capabilities. Only few Western companies are all that optimistic they can hit the jackpot in China, for according to the Wikipedia article:

"On December 20, 2012, Ericsson announced that they will not buy the remaining 50% stake that STMicroelectronics held. The future for the company therefore remains uncertain."

Nokia did not invest in the right wireless future backing WiMAX instead of LTE, a move I have argued was the true breaking point with the telecoms, for WiMAX was incredibly marketed as disintermediating the carriers leaving them as dumb pipes. Nokia could not have possibly picked a more dangerous and politically connected set of enemies than the United States major telecoms. And this at a time when Nokia knew their 15 year cross-licensing agreement with Qualcomm was about to expire.

When every other company trying to stay in the mobile business such as Intel and Nvidia were buying baseband chipset businesses or developing them such as Samsung and Huawei at tremendous cost, Nokia was dumping theirs before Elop came on board. Though an incredible series of blunders, by 2010 Nokia had left itself both without the internal capability to develop their own LTE baseband chipsets and without suitable partners as an alternative to those of their mortal rivals, Qualcomm.

There's a reason Nokia was a burning platform before Elop took over.

John Phamlore

If someone wants to see a scary example of people not learning from history, do a Google search for terms such as Intel, TV, content, partners, Nokia. One finds a never-ending series of stories over the past decade that repeat over and over again, only different. Of course the stories end is never close to what was speculated earlier, such as the latest:

Let me summarize, Intel, without actually working with incumbents, instead proposes direct to consumer solutions that consumers never requested, angering the incumbents to fight Intel's solutions to the death, killing these solutions. We have seen the same story from WiMAX and other Intel-backed mobile technology angering the telecoms to Intel's unwanted solutions angering the content providers. What lunatic company would want to ally with a partner such as Intel who is busy collecting such powerful enemies?

Unfortunately that company was Nokia in the 2000s, repeatedly allying itself with Intel in one harebrained scheme after another, until Nokia made more enemies that it could handle including the major telecoms it needed to survive as a business. And why would Nokia ally itself with Intel, a company whose chips Nokia could not actually use in its mobile devices until possibly now? Because Nokia wanted to back an OS written by a Finn Linus Torvalds, who went to work for an Intel competitor Transmeta.

The crazy thinking in Finland was occurring way before Elop took over at Nokia.



First of all, I live in Asia. South East Asia (SEA) except Singapore, unlike Europe/USA were a lot of lagging behind in the technology adoption.

If you go to regular (90%) government school, or regular (70%) medium-sized business, the situation is like this:

1. Less than 20% of the student have computer at home.
2. Of those who had computer, might share it with their brother/sister/parents.
3. But 90% of that student have handphone.
4. and around 40%-50% have smartphone.

How do they transfer data between friend??? Bluetooth!!!! Infra-red, PC-LESS.

The situation is roughly the same for medium sized business, although they now each have computer at their desk, this guy already experience the freedom of Symbian and can't go back into zune/itunes land. Most of this guy save their company data/presentation/etc IN THEIR PHONE. and android is the natural migration path REGARDLESS is NOT platform compatible. android is more NATURAL MIGRATION PATH compared to iOS & WP....

Furthermore only around 0.1%-0.3% of these people (mid-class) have credit card. (correct me if I'm wrong) I remember reading that Indonesia only have 3 million credit card for 250 million. So iOS with their Credit Card only iTunes membership is hard to swallow.

When you present them with iOS and WP, they might say "wowww", "cooooll", etc. But when they were given android and wp and iOS platform, most of them will prefer android.

I don't know if the European, African, Middle East person also feel this, but this is what happened in SEA.

and btw,
Meego is also cool, and were also considered the natural progression from symbian.
unfortunately, some lunatic kill it, because he afraid that his favourite OS will lose against it.
(PS: I have N9, and already sold it, and now using the Nexus phone).


>> I don't know if the European, African, Middle East person also feel this, but this is what happened in SEA.

I can't speak for all of Europe, of course, but here in Germany a credit card is not really that useful. The most popular cash free payment method here uses a different kind of card, controlled directly by the banks and is (not surprisingly) a lot cheaper for its users. As a result many stores do not even accept credit cards. Essentially, for store-shopping it's a completely redundant item. So the most popular use for credit cards was online shopping where now PayPal is a much more convenient alternative. I haven't used my credit card in over a year, except for booking some hotels online

I don't know how much all this plays into it but it's probably not a coincidence that the iPhone market share is relatively low here.

Nevertheless, Microsoft made a product that looks like it's tailored to the US market, completely forgetting that much of what they are offering may be an obstacle elsewhere. They slavishly copied all the negatives from Apple but then added several more on top of that.

Tomasz R

@John Phamlore - there's a difference between hardware and OS choice. Contemporary proprietary operating systems are used in bad manners by their makers as a tool giving them control over market. Operating systems are technically able to play that role, as they technically control hardware and resource allocation for applications, as well as basic security policies for users. In old days it were administrators on large computers, or users on PCs that controlled operating systems, telling them how to control hardware and applications. Nowadays it looks like the makers of modern proprietary operating systems are control freaks who use these technical capabilities to control the market. For example for Windows Phone 8 Microsoft:

1) Prevents installing applications if it doesn't come from their store.
2) Grants itself a right to reject any application from this store, so in fact it's a right to reject applicationf from running on the platform altogether.
3) Grants itself a right to remotely delete applications from users phones.
4) Prevents any screen resolutions outside of accepted list - 1280x768 max. resolutions allowed.


The general way to avoid being controlled by control-freaks is to use open source operating systems. Thus the idea to use ether open source Tizen, or semi-open Android or having your own operating system is much better than a proprietary OS like Windows.

Hardware on the other side is just a supplier-choice issue. A company may be less profitable if it buys from Quallcom rather than from others, but it won't result in a huge set of restrictions that proprietary operating systems bring.

John Phamlore

It's astonishing the damage that Elop did to Nokia especially considering Elop must have used a time machine to inflict this damage before Elop was hired in September of 2010.

This is where Nokia used to be:

"For years Nokia has been relying on Texas Instruments to produce its custom 2G/2.5G/3G chipsets. Nokia was designing the core chipset and letting Texas Instruments finish the integration and physically produce the chips: Nokia has been mastering the whole hardware IP of its phones, and has not been relying on generic chipsets for the vast majority of its production, with all the margins this implies."

Get that? Nokia used to own the "whole hardware IP of its phones" and had resulting margins to show for it. Then Nokia by betting on the wrong horse of WiMAX proceeded to lose both its reliable fab partners and its wireless modem business. Observe that in July 2010 the geniuses running Nokia, not Elop, sold their wireless modem business to Renesas:

Note that article mentions:

"UK-based Icera has been widely tipped to gain significant market share because its software defined modem technology is very advanced, and many larger contenders do not yet have an LTE modem strategy in place."

Whatever happened to Icera? Oh wait, it was acquired by Nvidia:

The companies that had serious strategies for staying in the mobile business bought or developed instead of sold wireless modem assets, particularly those involving LTE, such as Intel purchasing Infineon, Samsung and Huawei developing their own LTE chipsets, etc.

Nokia before Elop got there had already cashed out of the business. Nokia before Elop got there had no alternative but to offer its unconditional surrender to Qualcomm and accept whatever terms Qualcomm demanded.

Tomasz R

@John Phamlore - Windows Phone 8 hardware requirement explicitly require "Qualcomm Snapdragon S4 dual-core processor". Full capitulation to Quallcom via giving up control of Nokia's products to Microsoft!

I I've stated - using other's proprietary operating systems is the biggest mistake by far, as it makes you loose control and give up deciding power to the proprietary operating system maker. Hardware decisions importance pale in comparison to that. Especially considering that the screen is the most expansive part of BOM :-) Quallcom itself produces very good hardware, so if Nokia capitulated to it having a good operating system the resulting cooperation might produce great results.

And btw. talking about partnership with Intel. Intel has the most advanced semiconductor manufacturing facilities utilizing 22nm process with 3D transistors. These 22 nm fabs stay 50% idle right now.

Yet Intel still produces it's chips for mobile devices in older 32 nm technology! And these are Atoms - by far the worst core Intel had ever designed. How come Nokia in partnership with Intel haven't teached Intel about the proper priorities in the modern world, told them that the mobile is the future etc., and convinced them to produce chips for Nokia in the most advanced fabs i the world?


@ ukd

> Qt for Android was not ready

It was ready. From february 2011:

Also remind you this was the work done by one guy in a little over a year. Android is Linux, Qt does well on Linux and Nokia had an incredible huge talent pool of Qt devs that time. Most of them are on Linux!

Also lot of the work done on Necessitas would not have been needed. Ministro? Not needed if Qt ships as default. QtCreator integration? Use MeeGo/Maemo (ssh exists on Android too). Mobility/hw integration? Its Nokia's hardware.

Tomasz R

Concerning Microsoft dictatorship and control-freakery - consider it's SkyDrive service. This is a cloud based file service, that constantly invigilates (reads and analyzses) it's users files, with both pattern-recognizing programs and by feeding the results to human employees. They search mainly for nudity, porn violence etc. If such stuff is found user can loose his account including his files.

Why would anyone make deals with a company with such controlling, dictatorship tendencies? Censoring files, censoring applications, remotely deleting applications, telling what hardware has to be used etc.?


I've read this article and all this writing, and I have something to say for those of you who were doubt of Tomi's 'theory'.

Tomi say
"Especially if 'smartphones' are the stated future of YOUR company main business. It doesn't matter at all whether you are company Blue or company Green or company Red, if you set company record growth and set company record profits in this smartphone business which is the future of your company industry, then you are SUCCEEDING. DO NOT STOP THIS SUCCESS."

Do you feel strange why Elop have TO KILL SYMBIAN PREMATURELY? Why don't he announce on Feb 11th that SYMBIAN IS OUR PAST AND FUTURE, BUT IT WOULD BE IN THE MID-LOW. WP WILL BE IN HIGH-MID.... (NOT KILLING SYMBIAN, BUT SEND IT TO LOWER LEVEL). If he did say that, the symbian sales would not see sudden death. Or in other word, WHY DO HE NEED TO KILL SYMBIAN ASAP? IS THE SUCCESS OF SYMBIAN WILL HURT HIS (REAL) BOSS WP STRATEGY?


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