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« Sherlock Holmes and the Hounds of the Basket Case: Clues on the trail of Elop, Ballmer and Nokia's Board | Main | Nokia Q2 Topline Numbers »

June 29, 2013

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nim

Now Nokia owns the whole unit it is way easier for it to sell it as a whole

(not that I expect it at this stage, at the rate Nokia has been destroying value, keeping one profitable unit as backup employer for management once the phone business is dead is just as possible)

Lauren B.

Nice to see that Sony's Bond campaign actually worked out. Must've cost a fortune. It's a good example for successful marketing. Not that the Xperia T adds that much value to the mobile phone market.. Maybe RIM should think about investing in a large campaign as soon as it can keep up with other smartphones.

Tester

@Sander van der Wal:

>> The Memo wasn't a very good idea IN HINDSIGHT either,

The memo wasn't a good idea PERIOD.
Even the dumbest idiot could see the consequences of badmouthing one's own products this badly. Yes, he was right, Symbian was in a very, very troubled position - but the first rule of business should always be to NOT TELL THE PUBLIC ABOUT IT!!! You still want to sell that stuff, no matter how crappy it is!

When the WP announcement was made it was clear to everybody with even half a brain that this was the fatal blow to Nokia's business. When I heard about it my first thought was 'Are they insane?'

As for what is wrong with Nokia now, it boils down to one thing, and one thing alone, and that is Windows Phone. Elop's idea of solving all the existing problems was to throw everything into the dumpster. So yes, as I see it, Nokia's current problems are mainly Elop's fault.

jj

So, Nokia follows Ericcson path and focuses networks and telecom services. Smartphones and maps are sold to Microsoft. I predict this will happen very soon.

vladkr

@Tomi :
"And there were also stories that a top Microsoft mobile guy was visiting Finland. Yeah, total accident of timing"

Come on Tomi... why do you think a US millionaire wouldn't spend his holidays in Espoo rather than in Bahamas, or any other Island ? You're underestimating tourism capacities of your homeland, Finland as a paradisiac destination for Summer Holidays ;)

alvi

@Sander van der Wal:

Regarding that memo: Elop must have read somewhere the expression "burn one's bridges" as there was no going back after releasing those. The one mistake he made is that you burn your bridges AFTER you, not before you.

If you need hindsight to know that this wasn't a good idea, then I suspect your chess playing skills aren't the best.

Hansu

In all fairness Elop inherited a way bigger mess than was ever let to belive and whatever his actions wrong or right you pick the side wouldn't have made much of difference in the end. As for the NSN deal I am waiting for Tomi's opinion on it and how Elop and the Board have destroyed the Last of Nokia's real assets on thing that has no future and is actually making a loss altough Nokia is claiming the other but they are and let's pretend they are not, altough they are not but whatever. The only thing that could cause some alarm is that Nkia has 300m less cash than previous quarter is that because the Lumias are not selling or have they made new investments if they were in real real real trouble the might consider dumping the phone business altogether but why would a company that is in trouble splash out 2,2 Billion USD on stake of company that they allready own

Tester

@Hansu:

>> the might consider dumping the phone business altogether

It would be smart indeed, but I don't expect it to happen.


>> but why would a company that is in trouble splash out 2,2 Billion USD on stake of company that they allready own

They owned only half of it. Siemens wanted to sell the other half, so it was a choice between buying it themselves or risk more problems in the future.

Hansu

@ Tester true it's very doubtful especially when they have gotten their act together with the current crop of Lumias compared to the previous gen phones. The one thing that is odd is that according to analysts Nokia got NSN dirt cheap from Siemens now NSN is profitable company and if Siemens wanted to sell it off cheaply then why not since it will only take 2-3 quarters for Nokia in the this current rate to get back the money from NSN on buying the other half

Sander van der Wal

@Tester

Companies who keep insisting that their products are fine, while the whole world sees that they are rubbish, are a thing of the past. Car companies now make public recalls when they find out there is a problem with their cars. Food companies make public recalls when there is a problem with their wares.

RIM did the opposite from what Nokia has been doing. RIM not in good shape either.

And then there's an element that is missing from the discussion: everybody here is assumimg that Nokia was capable of making any kind of phone they wanted, in any amount they wanted. There is no such thing as lack of components, or lack of production lines. Production lines would be able to make the most sophisticated smartphone as well as the simplest of feature phones with similar ease. Suppliers would be able to switch their production lines at one moments notice from producing components for feature phones to components for smartphones, without any extra cost at all.

Unfortunately, in the real world, that is impossible. Your capacity for producing a certain kind of phone is limited, and it is hellishly expensive to add more capacity. Your suppliers are not able to switch at a moments notice either.

You have to plan years in advance for the capacity and the components, having long term contracts with suppliers in place. If your planning for the future is wrong, then you end up with lots of phones nobody wants to buy, and not enough phones of the kind people are willing to buy.

So there's another reason why there were so little N9's, Nokia was not able to make them. They had planned for a few million and that they could make no more. All their suppliers were busy selling components to the competition, Samsung. Who had planned to enter the smartphome market in a big way and had contracts getting all the components they needed for that in abundance.

Tester

@Sander van der Wal:

>>Companies who keep insisting that their products are fine, while the whole world sees that they are rubbish, are a thing of the past.

Nonsense. There's still a major difference between an outdated and a defective product. Companies still sell outdated stuff and won't admit to it. Many companies even sell crap without admitting to it. As long as the brand name is strong there will be people who would buy it.
By developing a successor OS Nokia already admitted that Symbian might have reached the end of the line, but it wasn't loaded with negative implications.

By throwing away Symbian, along with MeeGo, Nokia basically admitted that they are incompetent. It was their home-developed products after all.

Back in 2011, despite declining sales, Symbian was still selling. In this context it's not relevant that most Symbian customers were rather clueless and missed recent development. But you still do not hammer into their heads to better steer clear of Nokia's product. That not only affected the old product - by the time the message has sunk in, it also affected their new WP phones as well. So instead of just fighting against the resistance against WP, they also had to fight against the negative image they gained in the public. By the time the first Lumia's came out, Nokia's brand had already taken a massive amount of damage. Utterly stupid, if you ask me.

In any case, phasing out Symbian was inevitable, but phasing it out while abandoning everyone invested into that system - and not having a replacement ready - was clearly not.


>> RIM did the opposite from what Nokia has been doing. RIM not in good shape either.

No, but they are in bad shape not because they did the opposite of Nokia but because they couldn't deliver a good replacement product in time. They had to sit out years with their outdated system. And if you compare Blackberry's numbers with Nokia's there's a major difference: Blackberry gradually eroded. It didn't crash immediately. So, had Nokia done it like Blackberry, with MeeGo set up as the successor, yes, they would have lost market share in the first half of 2011 - but it would all have been combined with a positive message:
"Yes, we know that Symbian is old. That's why we are preparing a successor. But look, we designed a development ecosystem that allows you to target both with the same code"
Such a message might have reassured many people that their phones won't become obsolete in no time.

As it went the message was more like
"Yes, we know that Symbian is bad. It got no future so we are switching to something completely different. If you want to develop software for Symbian, fine, but don't expect it to live on in the future."

Such a message is devastating to both developers and customers. To developers because it clearly tells them that it's pointless to invest work here and to customers because they know that their phone will fall more and more behind, as time goes on.

Kevin

Just a heads-up, those emergency Nokia Board meetings are not about firing Elop at all! You know what comes out as a result, Nokia owns NSN fully! Remember you've kept saying Nokia is trying to sell its NSN shares, is this fact a heavy blow to your mind?

winter

To all those crowing about Tomi getting the NSN deal wrong. There is a difference between predicting changes in a market of hundreds of millions of consumers, and predicting the actions of a few (desperate?) individuals.

The fact that you do not see this difference shows us that you really have not understood what this is all about. Or maybe, you do not want to understand it.

Also, this USA obsession with discrediting the messenger when you do not like the message is much less effective outside the USA.

AndThisWillBeToo

@winter
People here are just picking Tomi on the fact he said VERY clearly that:
1) Elop tries to sell NSN, not buy it.
2) Board meeting cannot be because of NSN due to 1).
So Tomi Ahonen who (by his own words) "knows Nokia very deeply" and is AFAWK going to write full analysis on Elop and his bad intentions could not figure out this even though all the writing was on the wall and people in Twitter were telling him it's about NSN strategy.
I'm sure his analysis on Elop and Elop's motives will be historical what comes to having all the facts straight.

...and that is why people here pick on Tomi.

Tester

@AndThisWillBeToo:

>> 1) Elop tries to sell NSN, not buy it.

The thing isn't over yet. Elop himself said right after the deal that he still hasn't ruled out selling NSN.
But in order to do something with it he had to get the other half first. Imagine someone else had bought it, someone with an ill will towards Nokia. That could really have created problems.

As for the design award, yes, everybody agrees that the design is great, just not the software that comes with it. Awards don't help in that matter. Most people still make their primary decision on other factors than design.
How else would you explain that Samsung's Galaxy 4 sold so much better than the HTC One? Yes, of course! If you look closely there's some factors concerning the HTC One that lower its attractiveness considerably (like non-replaceable battery, no SD card slot.) Who cares if it's the best designed Android phone out there if its usefulness is compromised? I'd rather buy something less well designed but better features - and I'm not alone.

AndThisWillBeToo

@Tester
"Blackberry gradually eroded. It didn't crash immediately"
Que Pasa?
RIM (like Nokia) increased its sales throughout 2010 and had its all time sales high Q1 2011.
From there it went down, then back up to Q4 2010 figures by Q4 2011. Is that gradual eroding?

Please keep in mind that RIM was (according to Tomi's own numbers) SECOND LARGEST SMARTPHONE MANUFACTURER IN 2010! Back to same sales at end of 2011 and now behind Nokia.

So Blackberry did not crash? Riiiiiiiight...

Tester

>> Of course the award tells N9 is a cool device

As I understood it the N9 was also praised for its great user interface (a.k.a. software.) Lumia was always those ugly tiles nobody likes.

>>So Blackberry did not crash? Riiiiiiiight...

No, that wasn't a crash. A crash would mean sudden and abrupt change of market share. Blackberry had one last boost with BB7, but after that disappointed they gradually lost share each quarter.

Blackberry's performance is characteristic for a company having to depend on an outdated product for too long because they can't get the successor ready. Remember, Nokia started from roughly 2-3x the market share BB had and now they are on almost equal ground.

Louis

@Sander: "RIM did the opposite from what Nokia has been doing. RIM not in good shape either."

I am not so sure. The only kind of successful transitions of this type I can think of are by Apple, which went from 68k to PPC to Intel and also from OS9 to OSX to iOS.

Somehow the main thing Apple is good at is pitching the new thing as: (a) a seamless upgrade; (b) keeping something uniquely Apple about it.

I don't really think BB10 qualifies, and neither did Meego. Instead of building, in a timely way, off of the existing user base, they are basically late copies of the iPhone concept. Since there is no real continuity with them (or WP for Nokia), there is also no reason for the existing user base to migrate instead of switching.

Spawn

@AndThisWillBeToo

http://stats.areppim.com/stats/stats_mobiosxtime.htm

Compare Symbian with RIM. Open questions left?

> So Nokia was not over twice the size of its nearest rival, even though Tomi says that.

Look agan wt the link above. Feb 2011, RIM 14.52, Nokia 30.66, more then twice as much. Open questions left?

> But in brief, Nokia used twice the time to lose twice the sales.

Wrong, see link above again. Please give your sources in future.

tm

@Spawn, Your link gives Symbian 31.48% share in March 2012. Are you sure it's very reliable information? Or maybe it's collected from web usage, meaning that it's not the sales stats?

Collected from Tomi's blogs:
Q4 2010: Nokia 29% RIM 14%
Q1 2011: Nokia 24% RIM 14%
Q2 2011: Nokia 15% RIM 12%
Q3 2011: Nokia 14% RIM 9%

tm

Q4 2011: Nokia 12.6% RIM 9.1%
Q1 2012: Nokia 8.2% RIM 7.6%
Q2 2012: Nokia 6.7% RIM 5.1%
Q3 2012: Nokia 3.7% RIM 4.3%
Q4 2012: Nokia 3.0% RIM 3.2%
Q1 2013: Nokia 2.9% RIM 2.8%

So Nokia's decline started about from twice the RIM in Q4 2010. Deep dive in Q1 and Q2, but after that both has been sinking (or crashing? :) ) pretty much hand in hand.

Stoli89

Nokia's recent acquisition of 49% NSN is excellent news at the announced price (0.2 x sales). Ericson is valued at 0.9 x sales, so NSN was purchased at a tremendous discount, giving good value to Nokia shareholders.

Of course, this will deplete Nokia cash reserves in the quarter the transaction is booked, though fully consolidated cashflow from NSN remains accretive.

It does beg the question, is Nokia management confident enough in its cash flow going forward to have made this acquisition possible? Seems so.

AndThisWillBeToo

@spawn&tm
"gives Symbian 31.48% share in March 2012. Are you sure it's very reliable information?"

It's probably NTT DoCoMo selling over 23% of global smartphone sales, LOL!
That is why I took my unit sales numbers from this very same blog (Tomi's quarterly results).

n9user

@Luis: I cannot agree 100% with you that MeeGo is a late copy of iOS concept. Maybe in some areas because both are touchscreen oriented and in this respect some feature are similar. But the whole MeeGO UI experience is unique. Use MeeGo for a week and then you will find difficult to use Android. Even iOS. I used and I'm still using both iOS and MeeGo and also Android. From these 3 OSs and based only in OS user experience, in this moment I will choose MeeGo. If Symbian was assumed to be not very user frendly, MeeGo is the opposite. You have everything in just 3 screens. It is easy to wake up the screen, to switch on/off internet, see what's running, what's happening and so on. MeeGo indeed is something unpolished and now outdated but better than anything else in the market regarding the user experience. Some OSs are still copying features of MeeGo user experience - Windows Phone, iOS 7, BB 10, Sailfish. Please take all these as my opinion.

Louis

@n9user: The point isn't whether Meego had unique strengths. Let's just stipulate that it did. I am sure BB10 does too.

The point is that the dreamed-of unification of Symbian and Meego development was never really done, and how it was going to work doesn't seem to have been clearly explained. So, even if we assume that the failed Intel partnership was going to work out, the Meego strategy had a built-in problem: it was a radical departure from Symbian with no smooth path for users. Meego might be really nice, but it was requiring you to ditch all the stuff you had and liked on Symbian, and it didn't even have WhatsApp (which I think you can't really sell a smartphone without in Europe, and Symbian did have). Every single Nokia user was going to try Android or iPhone before going to Meego, and a bunch would leave. This is what's happening to BB10. It's not really that much closer to existing BB than iPhone or Android, so that is where the users are ending up.

Contrast this to the OS9 -> OSX or PPC -> Intel transitions from Apple. On the very first day, nearly all the old stuff users had would work. There were migration tools for users and developers, etc. Without this, the platform probably would have tanked instead of grown. Why? There was already a radical departure from OS9 or PPC with a hard upgrade path: Windows. Steve Jobs was basically smarter than to ask all his (few remaining, at the time for OSX) users to go try out Windows before deciding on OSX.

In too many of these discussions, it quickly turns to questions about whether the sub-scale ecosystems are "better" or not, in some arbitrary metric. But what they aren't is "different" enough to win against the similar but much better supported iOS and Android on their own. The way to grow one would have been like OSX: as an extension that moved a bunch of already happy users from one platform to another.

Neither Nokia or BB seems to have been able to do that, and without their user bases, don't seem to have a good position going forward.

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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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