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« When No means No? What part of No do Nokia and Microsoft not understand? US Consumers Reject Lumia at 96% Rate says Latest Survey (Corrected) | Main | Nokia Q1 Results, very quick comments (and Update) »

April 16, 2013

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Tomi T Ahonen

Stoli89

Thank you for your comment. I removed it for my long-standing policy on this blog, saying if any comment would require me to write 'if you read the blog completely' - those comments will always be immediately deleted as total waste of my readers' time.

You made some good points. But you also ignored the fact, that I have ALREADY discussed on this blog and shown a picture - and referenced explicitly in very beginning of this blog article - that within the handset industry, Nokia has already set the world record collapse of sales. You cannot accuse me of not doing 'fair comps' if that is right at the top of the article. Why don't you re-read the article, acknowledge that fact, and then make whatever points you might still find relevant after that?

Tomi Ahonen :-)

Tencent

Hi Tomi so you would recommend that I sold my Nokia Shares to M$ (even though I do not own any Nokia shares now or ever)but I just have one question are all finns some poon jobs or what? since you haven't bought all the outstanding shares of the company that used to contribute around 33% of your GDP and then demand Elops + the board of directors EXIT...

Jac

As an ex-Nokia fan (love the T9 phones, best even up to today) I have to say that Tomi's points are very convincing.

I would welcome others who disagree however, to provide opposing views (backed by facts, or course). Perhaps start by dealing with the elephant in the room - is there are good reason to release the "Burning Platform" memo at all?

John Phamlore

There is actually a good analogy to Nokia that is not mentioned in the list of corporate collapses: Sun Microsystems.

It turns out Nokia and Sun have a very important common element: Both had relied on Texas Instruments as a fab partner only to have TI decide to not compete for the next generation of fabs leaving both Nokia and Sun stranded.

Kalle

It's hard to see Nokia recover from this position. Company is still bleeding money which is not bolstering its position in the market. Creative people have mostly left the company, it has no way of attracting any new talent.

It's easy to lul yourself into a fantasy, lie down and wait that a fair knight will come and rescue you because of your beauty.

I'll coin it "Snow White"-strategy. Nokia ceased to be active player in the market and started waiting for innovation to come from Redmond. Elop most likely is inclined to believe in this fantasy. Unfortunately no matter how pretty you are there are no princes in business, only witches and goblins.

Even if WP suddenly reversed it's fortunes it's not in Microsofts interest to rescue Nokia. Nokia was supposed to be a stepping stone for Microsoft to re-enter the mobile phone business. Unfortunately Nokia managed to screw it up royally. Nokia could have entered the market from relative position of strength, but as Tommi has pointed out they took a fools gamble and killed the goose that laid the golden eggs.

Best thing for Nokia would be to find some profitable parts of the company, try to break them out and try to salvage what little bit of value is still left in it. Perhaps a small WP7 company could be one spin off.

It was a nice run, but unfortunately the old idiom proved to be true. Biggest danger to any company is it's own management.

I sold my shares of Nokia the day I read the burning platforms memo, because I also made exactly the same conclusion that Tommi did. If your CEO tells people that your baked goods are shit don't expect business in your bakery.

John Phamlore

If rumors are to be believed, the collapse in sales of Nintendo gaming consoles may be rivaling soon the collapse of Nokia's handset sales.

MarcoAustria

I believe you should include that Elop also badmouthed MeeGo/N9. The N9 was announced and shortly thereafter Elop said it wouldn't be continued. So before the phone was on the market the CEO did another Osborne and Ratner.

Reference:
"Nokia will not return to MeeGo even if N9 turns out to be a hit, says Stephen Elop "
http://blog.gsmarena.com/nokia-will-not-return-to-meego-even-if-n9-turns-out-to-be-a-hit-says-stephen-elop/

There is another evidence that Elop actively sabotaged/badmouthed MeeGo. A senior software engineer from Nokia made this public. Elop told lies about it and this is surely what he told the Board too.
http://www.trustedreviews.com/news/meego-engineer-calls-out-nokia-ceo
or the original Blog
http://felipec.wordpress.com/2011/06/21/my-disagreement-with-elop-on-meego/

John Phamlore

Have not previous articles shown there is a sales cliff that in particular handset makers seem prone to experience? Companies such as Motorola have had tremendous rises and then falls of handset market share.

The smartphone handset market is hardly roses for anyone making the entire handset at the moment other than Apple, Samsung, and apparently a rising Sony. Observe all three bring a lot more to the table than just handsets. Samsung and Sony have stupendously sized electronics divisions and stupendous spending on research and development to match. That to me is the difference between Samsung and Sony versus the ailing HTC, and observe HTC has a new top tier smartphone that is getting rave reviews.

foo

I think you should replace the first paragraphs with a simple definition:

"What was the worst marketing decision made by a CEO, ever?"

Marketing involves PRODUCT, PLACE, PRICE, and PROMOTION.

Countability issues, like Enron and Worldcom and Lehman Brothers is not marketing. Mergers and acquisitions is not marketing. Internal processes is not marketing.

Public perception is marketing.

Reseller boicot leads to problems with placement and promotion, which is marketing.

Product quality and price is pure marketing.

So... I suggest replacing all the explanation with this simple definition:

"What was the worst marketing decision made by a CEO, ever?"

foo

When we compare Elop's blunder with past marketing catastrophes (ex: New Coke), what do we learn?

-- YOU DON'T KILL YOUR CORE PRODUCT LINE BEFORE YOU HAVE A WELL STABLISHED REPLACEMENT.

That's the lesson.

Elop killed, by words and acts, all the alternatives to Windows Phone before he had anything else to show.

Which brings me to the second lesson:

-- YOU MUST HAVE A PLAN B

Elop failed here too. As an executive put it: "Plan B is that plan A must work". It didn't.

I'm sure there are other lessons to be learned. Ideas?

Dipankar

@Sander van der Wal: I dont think it's Tomi's pet theory. Just look up Nokia quarterly earnings releases, and see for yourself that in 2010 Nokia revenues & profits were rising. Both fell after Feb 11. I have a quick graph of quarterly revenues from Q3 2010 to Q3 2013 here

http://dipankarmitra.blogspot.in/2012/12/end-of-year-look-at-nokia.html

The board hired Elop to fix execution (which, as a ex-employee I confess was quite screwed up), not to play with strategy.

incognito

@Dipankar "The board hired Elop to fix execution (which, as a ex-employee I confess was quite screwed up), not to play with strategy."

Well, you have to agree that Elop executed Nokia quite expertly. One head shot after another. A proper terminator would be all green with envy watching this Muppet work.

zlutor

@Tomi: "Nokia shareholders, if the Board doesn't fire Elop for this gross mismanagement, then the Board is in collusion with Elop and the Board must be fired too. Get ready for the Annual shareholders' meeting."

What can they do there? Unite and revolt? :-)
Is there any chance of it?

daz

>> "Nokia Board. Its your move. Get rid of him before the Annual shareholder's meeting."

You can't count on the board to make a change, they have already elected for status Quo, keeping things as they are, see "Proposal by the Corporate Governance and Nomination Committee for Composition of the Board of Directors"
http://www.nokia.com/global/about-nokia/governance/agm/annual-general-meeting/

It's up to shareholders now to vote for a change, or continue with the madness.

btw, The Annual General Meeting (AGM) of Nokia Corporation will be held on Tuesday, May 7, 2013 at 2.00 p.m. at Helsinki Exhibition and Convention Centre.

vladkr

Tomi :

You still consider Elop's actions as incompetence, but what if it's not ?

We all know Elop ruined any company he used to rule, or where he used to have a decisional position (Boston Chicken, Macromedia, Juniper , and even at Microsoft, he wasn't brilliant), but despite his "hunt-bag", not only he still gets wealthier and wealthier, but he still gets high responsibilities positions.

How is it possible ? How can a sane (group of) person(s) hire someone who failed anything he attempted ? There certainly is a good reason.

Now, look at Nokia's stock value these last two years ; it's a real roller-coaster, and it's easy to imagine that someone who could predict it's value could make a lot of money.

2.5 months ago, I made a demonstration of how much one could earn on this game, here's a copy :

--->
If one buys Nokia shares just after Elop Osbourns Lumia 710/800/900 at 1.32 Euro each, the (s)he can sell them when Nokia announces a new Pureview Device (Lumia 920), when the share reaches 2.7 Euros but before Nokia informs the 920 will be released only 3 months later, in some countries (1.92 Euros - buy) and then sell again when Nokia announces Q4 results are not as bad as expected.

So, if one invested 132,000 Euros in July (100,000 shares), (s)he doubled the pot in the end of August : 270,000 euros (that's 138KEuros earned in 1.5 month, doing nothing).

If the same person invested again these 270KEuros in the beginning of September - 1.82Euros/share, (s)he would have bought 148,352 shares, which in mid January (not that bad Q4 press release) were valued at 3.5 Euros = a total of 519,230 Euros.

So in less than 6 months, a trader who invested 132,000 Euros earned 387,230 Euros, doing absolutely nothing.

Imagine that people like Elop and friends can invest 10x, 100x these values (through ghost-companies), you can imagine easily how much they could earn in just 6 months with this little game.

--->

All this is even more easily made as Nokia is considered now as junk.

Of course, all this is quite difficult to prove, but don't you think it's a possible pattern, what would explain Elop's behaviours ?

Pekka Perkeles

Funny,

Motorola went down and never recovered, although still barely alive, no matter of OS they use.

Nokia went down, but it's still alive, no matter what OS they use.

HTC seems to go down, no matter what OS they use.

Sony, well, we'll see.

Blackberry, well, we'll see.

LG, well, we'll see.

Then about Operating Systems.

Symbian, just dead.

Bada, just dead. Never saw any ecosystem, but I may be wrong.

Maemo, same thing.

So how about Skype, one of the "claimed" reasons for Nokia's downfall. Will it now go away? Well, why would it?

Pekka Perkeles

Still some words about Motorola and HTC as well as Blackberry. While these manufacturers were never biggest - thus cannot be biggest losers - I would like to see how their downfall proportionally compares what Nokia "achieved". :-)

Well, I guess HTC was biggest Android manufacturer in U.S. some years ago, so that could be interesting comparison as well. How come it collapsed so badly? Did they also have Skype in their handsets?

foo

"We all know Elop ruined any company he used to rule, or where he used to have a decisional position (Boston Chicken, Macromedia, Juniper , and even at Microsoft, he wasn't brilliant), but despite his "hunt-bag", not only he still gets wealthier and wealthier, but he still gets high responsibilities positions."

This information certainly deserves a chapter in the book "Elop Effect"!!!

khim

Tomi already did comparison between Nokia and other seven collapses in Mobile:

http://communities-dominate.blogs.com/brands/2013/01/the-seven-biggest-collapses-in-mobile-handset-or-smartphone-history-this-is-part-3-in-the-nokia-disa.html

Elop won with a sizable margin. Palm achieved something close (but still far enough away to not be a contender) but second place belongs to WinMo which makes it so strange to pick it's descendant for a Symbian replacement.

bjarneh

Pekka Perkeles> Well, I guess HTC was biggest Android manufacturer in U.S. some years ago, so that could be interesting comparison as well. How come it collapsed so badly?

HTC never released updates for their phones, I still have an HTC Android phone with Android 1.6, and they did not stick with their original and beloved 'Desire' concept. I.e. their attempt to diversify made the Desire-brand worthless. Desire-HD ran out of battery when you sent 1 SMS, the Desire Z had a keyboard slide-out which was barely attached to the device..

HTC reviews in Norway are super-positive lately at least, maybe they can turn the boat around..

tz

One thing which is very obvious but is missed is that you are NOT buying a computer but a PHONE. I have an iPod Touch (I don't use) and a Samsung Galaxy player (which I do), but have a dumb phone (plus hotspot) because it does that so much better than anything else I've seen so far.

Blackberry is gaining share, but the Z10 and Q10 are PHONES that happen to run apps.

Android and iOS manage since they aren't bad and have enough momentum and are improving.

Windows? Without (real) choice on the desktop, it is acceptable. Phoney Windows might work well with Xbox, Your social network, and Zune stuff, but XYZ is not a PHONE.

That is what Nokia had - their handhelds were, well, phones. They worked well at SMS and voice. Very well. They weren't a media player with a bolt-on cell device.

Elop changed all that. Windows phones may work with the fancy tiles, but do they help answer calls? send or receive SMS?

Our host has pointed out the view from the carriers - but I don't know what Microsoft or Elop was thinking.

Palm was a pocket computer, PDA. It wasn't a phone but it was just unobtrusive enough.

It isn't the neat, glitzy features that ultimately sell a phone. It is that it works as a phone - cell phone.

And iOS and Android were behind Nokia with Symbian and Meego so it was an opportunity. Which was blown.

In other places, I've noted Google Reader's demise leaves a vaccum, but there will be no Bing Reader. Fools.

B a r o n 9 5

Interesting how Elop was easily reelected by the shareholders to continue to be the CEO and lead the company.

How can it be?

Do the shareholders know something that Tomi doesn't? Does the board know something that Tomi doesn't?

It is quite amazing, huh? The worst CEO in history gets strong support from the board and from shareholders. And gets continuously positive comments from the press.

Go figure.

AndThisWillBeToo

@Tomi
Now the leader of Microsoft’s Windows Phone division, Terry Myerson admits that operators boycott Windows Phone
"Myerson noted that Windows Phone had to think more as a global competitor, because it had stronger momentum in markets where carriers were not subsidizing the phones"
So if market has strong operator influence, WP does not stand a chance and he admits it.
http://allthingsd.com/20130416/windows-phone-head-myerson-android-still-kind-of-a-mess/

symbolset

Stephen Elop isn't the first Microsoft exec to be sent out to scuttle a mobile company. That honor would perhaps belong to Marc Brown, who was put to the board of Sendo with an invested partnership. Sendo was partnered to death in the early days of Windows Mobile. An interesting term of the devil's deal Sendo signed is that if Sendo failed, Microsoft got to own Sendo's IP. Shocker: the software was too late and Sendo failed.
Marc was and still is a Microsoft executive where he is "Managing Director, Corporate Development, Global Head of M&A and Strategic Investments- Microsoft Corp." according to his LinkedIn. Much like OS/2 2.0, back in the day when Microsoft contracted to assist in its delivery. This is not a new thing, and how any serious business professional gets surprised by it is not surprising but sad. This story has played out so many times that it is becoming trite. How do you come to be in control of a multibillion dollar mobile company and not know this simple history of the trade?

More in these places:
http://en.wikipedia.org/wiki/OS/2
http://www.theregister.co.uk/2003/01/06/microsofts_masterplan_to_screw_phone/

Winter

@Baron95
"Do the shareholders know something that Tomi doesn't?"

Yes, the leverage between their Nokia and MS shares they own. Ie, how much their MS share increase in worth when their Nokia shares tank.

We have been assured that the amount is positive and substantial.

http://www.nokia.com/global/about-nokia/investors/stock-information/shareholder-geo-mix/shareholder-geo-mix/

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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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