Now that the tech gods had been merciful - or as I wrote in 2013 when we heard Nokia was selling its total handset business, I posted this plea: "if the gods of technology have any sense of justice, they will let our Nokia return one day into our pockets." We have that mobile blessing for our digital sins. And now its time to look at the sins of forecasting by 'the world's most accurate forecaster in mobile'. How did I do with the Nokia saga?
So this blog is ONLY a retrospective, looking back at 6 years of Elop-bashing on this blog. The full Nokia collapse as chronicled here, but looking at my PREDICTIONS when I said it, and what happened. If you want to be part of the 'integrity' of a forecaster, this is for you. I think all forecasters should do this with all their forecasts, but hey, some are pretty ashamed of their silly Nokia and Windows forecasts haha. So yes, very long blog, 26,000 words (like 2 and half full chapters in one of my bestselling hardcover tech books) - you'll need at least 2 cups of coffee to finish it. But lets start, and note, I did NOT hate Nokia, and I did NOT think Nokia was in trouble or about to die. So we start from before there were even any GOSSIP about Nokia replacing its then-CEO Olli-Pekka Kallasvuo. When other pundits were falling in love with the iPhone and thought HTC would be the other big winner, with Blackberry and Palm also about to capture the smartphone world, and a Nokia was to their minds 'losing the game' this is how I wrote about the pending 'Smartphone Bloodbath' years, I saw starting in 2010:
JANUARY 10, 2010: I SAID NOKIA WILL REMAIN BIGGER THAN NUMBER 2 & 3 COMBINED
Apple launched its iPhone in 2007. That is not the start of the smartphone industry. Blackberry made smartphones for years before that, and Nokia literally invented the smartphone ten years prior to that point in time. Nokia was BY FAR the largest smartphone maker of 2009, when I made my forecast for 2010. The top 5 smartphone makers of 2009 were: Nokia, Blackberry (then known as RIM Research In Motion this Canadian company rebranded later to match its popular handset as Blackberry), Apple, HTC and Fujitsu. The tiny players of the Top 10 included Blackberry, Palm, SonyEricsson, Samsung and LG. Samsung was ranked number 6 globally in year 2009.
First, note that I predicted a 'smartphone bloodbath' to start in year 2010. Nobody - NOBODY said that of the sleepy smartphone sector of mobile phones of 2010. Nobody said 'bloodbath' where Top 10 brands would literally DIE (like Palm, Motorola) or quit the smartphone business (Ericsson). The Top 10 of smartphones was remarkably stable for the previous decade. In 2000 you will find Nokia, Motorola, Sony, Ericsson, Fujitsu and Samsung among the Top 10. So for 10 years VERY stable sleepy industry. Suddenly from 2010 the industry was shattered and in 5 years, A Bloodbath for 2010: the Smartphone market preview. (I had never written anything like that before, I did not regularly claim in 2007 and 2008 and 2009 that we were about to have a 'bloodbath' in smartphones).
It is yet another INCREDIBLY valuable, forward-looking and insightful blog - that nobody else, on any site or publication, whatever you paid, would say. I saw it coming. I said, the smartphone wars are about to go ballistic - and they did. The smartphone market for the next five years became THE most competitive global industry in human economic history. So THE most competitive stage of ANY industry ever in history. More competitive than personal computers or televisions or the VCR wars or cars or airplanes or the cola wars (Coke vs Pepsi) etc. The most competitive industry EVER. Nobody else said that, I did. (You're welcome).
In that incredibly insightful blog, I said the following about the Top 3. I said Nokia would grow but would bleed some market share. I said Blackberry and Apple would grow, Blackberry would end the year second and Apple third. I said Apple would need another new hot model iPhone - and Apple did deliver, it gave us the hottest-selling iPhone in history, the brand new design, first -redesign, iPhone 4. BUT even WITH this caveat - I said Apple needed a hit product that year, and Apple delivered - I said Blackberry will end up second biggest. (obviously, the Top 3 of 2010 were: Nokia, Blackberry, Apple. Yeah. BEST FORECASTER IN MOBILE. You're welcome).
I want to take a few exact quotes that I said. This is the Nokia Saga review. How did I write about Nokia smartphones BEFORE Stephen Elop joined Nokia. In fact before Elop ever came to a secret first interview for his new job. I wrote on January 8, 2010 about Nokia smartphone business for year 2010:
Who makes the "most desirable" phones when we take price into the equation? Not necessarily the single best phone for internet surfing, but rather a series of phones to suit mass market tastes? Thats Nokia, hands down. As big as number 2 and number 3 combined. Even with all that, expect Nokia not to grow market share this year in smartphones, and very likely to lose some in 2010. The competition is coming from every angle and the big leaders will likely feel the heat. Nokia has been aggressively moving downstream in price and gets some solace that its price points are difficult for smaller brands to match, but its going to be a very rough year.
Yes. You're welcome. I said Blackberry and Apple will see good years (as long as Apple has another great new phone in mid-year when it launches). But while some were thinking Nokia was somehow threatened by Apple or about to die or struggling or falling. I KNEW the numbers, I REPORTED the numbers. I said clearly that Nokia was the OVERWHELMING number 1 in the world - Nokia was bigger than number 2 and number 3 COMBINED. Nokia was TWICE as big as its NEAREST rival !!!! Never in the PC industry or the airline industry or the TV industry has one rival been TWICE as big as the nearest rival. IBM was never in personal computers twice as big as then-number-two whoever that was, HP or Dell or Compaq or Apple. Nokia in smartphones was twice as big as its NEAREST rival and Nokia was reporting consistent profits in its handset division, every single quarter of every year. The PROBLEMS at Nokia which led to the CEO being replaced - why Nokia reported only one quarter of a corporate loss - was in the NETWORKING business, which was put on the selling block when Stephen Elop was hired. Elop was not supposed to mess with the goose that lays the golden eggs (handsets) but rather, to try to find a buyer for the NETWORKING business. There was NO talk of a shift to Windows when Elop was hired. That was his own moronic idea, which he pursued secretly and without the Board's blessing until he had started discussions with Google and Microsoft (And attempted also at Blackberry) and Elop then sold that ludicrous idea to the Nokia Board.
So lets understand the context of when Elop came in. Nokia in 2009 sold 67.8 million smartphones globally (with 39% market share). This was a world record obivously and Nokia set record profits in its smartphone unit. In 2010 Nokia then grew 35.8 million new smartphone sales (growth rate of 53% !!!!). Nokia from 2009 to 2010 grew MORE than Apple even thought Apple released its most popular new iPhone model ever, the iPhone 4. Apple grew 22.4 million units but Nokia grew more, Nokia grew 35.8 million new smartphones. Very literally mathematically irrevocably true - Nokia was WINNING against Apple iPhone in 2010. Nokia GREW MORE than Apple with its MOST iconic new smartphone. The GAP between Nokia and Apple was NOT CLOSING, it was GROWING. Nokia was PULLING AWAY from Apple in 2010. Look at the numbers side-by-side:
Nokia Smartphones vs Apple iPhones Unit Sales 2009-2010
Brand . . . . 2009 . . . . .2010 . . . . . . Growth
Nokia . . . . . 67.8 M . . . .103. 6 M . . . 35.8 M
Apple . . . . . 25.1 M . . . . . 47.5 M . . . 22.4 M
Note period is January-to-December 'calendar year' not 'fiscal year' which differs for the two brands
Sources: Company Quarterly Results (corrected results for Nokia)
TomiAhonen Consulting 24 May 2016
This table may be freely shared
This is no secret. We KNOW its true, Nokia was winning in 2010. Nokia grew more than Apple. Duh. Nokia also grew more than Blackberry. Nokia started the year 2010 - year of the bloodbath - with a huge lead over its nearest rivals - and it GREW that lead during the year !!! Nokia was the second-most profitable 'smartphone' maker if pure smartphone makers like Apple and Blackberry are included in the comparison (an unfair comparison, where 80% of new phones sold in 2010 were dumbphones) and Nokia was BY FAR the most profitable 'full portfolio' handset maker. Far far FAR more profitable than Motorola or LG or Samsung or SonyEricsson or Fujitsu or Huawei or ZTE etc.
Nokia's market share was not falling because its traditional rivals were gobbling it up. The INDUSTRY was EXPANDING. When you go from a sleepy 7 global competitors to 23 global competitors in 18 months - that is where your markets SHARE is gone. And consider the context. The global smartphone market went from 40 manufacturers in 2005 to 500 manufacturers by 2011. THAT is why Nokia's market share did decline. How badly? From 39% to 35%. While Nokia grew 53% in JUST ONE YEAR and set a new Nokia record for smartphone business units sold, revenues earned and profits - and utterly dominated its rivals - growing more than its nearest rivals, this is NOT a company in trouble.
So Sammy? In that blog posting from January 2010, if you read it, you may have spotted a TRULY WILD prediction. NOBODY was talking of the Koreans back then. Nobody was. The two 'also rans' who were both smaller than the largest Japanese smartphone maker-giant Fujitsu. If pundits got past Apple's shiny iPhone, the brands they thought would be big in smartphones were the other shiny plays - HTC, Palm, Blackberry. Go to January 2010 and find ANYONE else who wrote this: "If executed perfectly Samsung would seem to appear out of nowhere" and reach the top 3 I said I expect Samsung to break into the Top 3 in 18 months. So by Summer 2011, the tiny number 6, would need to leapfrog almost everybody and become a Top 3 smartphone maker. By Q1 of 2011 Samsung was on path, it had become number 4 .Then yes, in exactly 18 months from my prediction, Samsung crashed into the Top 3 except it did even better - it became number 2. That was not thanks to Samsung's brilliant strategy (which did get them to Top 3) the Top 2 position was because of the sudden unanticlpated, stupid, self-induced total collapse of Nokia. Nobody could have anticipated that Nokia hire a madman to run its handset business literally to ruin. Without the Nokia collapse I was 100% correct on Samsung, it did hit the Top 3 even if Nokia had never collapsed. The Nokia fall gave Samsung a windfall bonus, giving it the second ranking by June 2011, instead of number 3. But do go back to January 2010. Nobody anywhere ever, on any tech site or in any handset analyst report said, number 6 'also ran' Samsung will suddenly experience a 'leapfrog' year, and in 18 months will crash into the Top 3. (You're welcome).
I understand this industry, I tell you how I see it, and I give insights on this blog. Others were loving HTC or Blackberry and everybody swooned over the iPhone. I went by the math, I was consistently reminding people - wait, Nokia in smartphones (ignoring its dumbphones giant business) is more than TWICE as big as Apple, and the gap between the two is GROWING. Nokia is breaking its own profit records in the smartphone unit. There is no definition of 'failure' that applies to Nokia in the way the smartphone bloodbath wars were happening in 2010. Yes Nokia was UNDERPERFORMING and I was often critical of their various problems like delays in new flagship launches and buggy software etc. But in a global market, Nokia was winning more than Coca Cola has ever been beating Pepsi. More than McDonalds has ever beaten Burger King. Nokia was beating Apple more than Airbus had ever beaten Boeing. More than Toyota had ever beaten General Motors. Pick your global industry, Nokia was nearly unprecedented. The last time Ford was twice as big as General Motors in cars was 80 YEARS prior. So yes, I told you more than half a YEAR before anyone learned the name of Stephen Elop as the coming CEO to Nokia, I told you Nokia was SAFELY guaranteed to remain the largest smartphone maker for the year. It would end the year twice as big as its nearest rivals. And I warned that Samsung was on a rise, the new competition was not HTC or SonyEricsson or Blackberry or Palm. So please do understand the context. This blog was not a 'Nokia hater' blog. This is a 'math lover' blog. I go by the numbers. The cold hard numbers. Numbers are my buddies.
SEPTEMBER 17, 2010 I WELCOMED ELOP: PROMISED GROWTH IN NOKIA SMARTPHONES
So lets get to the Nokia saga. For the first five months he ran Nokia, then-new CEO Stephen Elop (the worst CEO of all time in any industry) executed the previous strategy by the fired CEO, Olli-Pekka Kallasvuo. Note, this was what Nokia's legendary previous CEO and then-Chairman, Jorma Ollila had promised. He said Elop would not change the Nokia strategy, he would rather EXECUTE the current strategy but more efficiently. Because Nokia had taken in a lot of troubling bureaucratic tendencies especially with delays. Great award-winning phones that sold incredibly well - were delayed and delayed and delayed again. So Ollila wanted the new CEO to fix those 'execution' problems when Elop was hired in. And as a 'software guy' from Microsoft, Elop was expected to be good at this. He was NEVER expected to tinker with the JUGGERNAUT that was BEATING Apple iPhone like a rented mule, after all. I warmly welcomed Stephen Elop on this blog when he was announced and I wrote about the Nokia smartphone business:
The reality is that recently the iPhone market share has been declining (four quarters in a row) where Nokia's market share held steady or actually grew. The reality is that in the past 12 months, Nokia smartphones have been winning against the iPhone, not losing to it. The numbers are irrefutable, but the myth prevails that Nokia is somehow 'losing' and specifically 'losing to the iPhone'. This is a perception problem! This is a communication problem. Not a strategy problem and not an execution problem. All the new CEO needs to do, is to communicate Nokia's true performance more clearly than previous Nokia managers have done in the past. The numbers are very clear. How awesome is that for Mr Elop, he gets the media attention for being the new guy, and he has a wonderful story to tell, where he does not need to 'fix Nokia' but rather just elaborate clearly what Nokia is doing. Awesome?
Nokia profits have been declining - as one might expect in a global economic downturn where many 'gold standard' corporations of impeccable credit ratings went bankrupt. Yes, Nokia should be able to do better than it is doing, but every other big 5 handset maker has seen either quarterly losses, or severely declining profits in the past few years, including Nokia's nearest true rival - Samsung. As this is a 'partly true' issue, the new CEO needs to tackle it on two sides - address the actual profitability rigorously, but also communicate it far more clearly - that Nokia as a mass market consumer phone maker - should be compared to Samsung, LG, SonyEricsson and Motorola (and ZTE) - and compared to any of those, Nokia profits are very good. And then just make sure as CEO, that those profits will now turn into growth again, as the economy improves - and probably with some strategic decisions about focus areas.
There is the new N8. It seems by early opinions to be a long-overdue hit flagship for Nokia. Remember that Nokia's last succesful flagship - the N95 - handily outsold the iPhone globally. Nokia has the carrier relationships to turn a good phone into a big hit and the N8 seems to be very well poised to do well. It comes to a crowded market with the Samsung Galaxy now the big dog of the yard, with the iPhone 4 a very strong contender, and various other superphone wannabes, from Motorola Droids to Blackberry Torches to Lenovo LePhones out there. But Nokia has the world's best carrier partner network - if the carriers like the N8, it will become the planet's best-selling superphone, almost by default. This is all someting Stephen Elop was not in any way involved with, yet he stands to reep the rewards of the work that was done before him.
While so many idiot-pundits were proclaiming Nokia doomed ('losing to the iPhone') I was here with the math every quarter fighting against the silly myth. And very importantly, as Elop joined, I said that Nokia was poised to have several years of great growth - and increasing profits. Here is how I ended my welcoming blog
Nokia is pretty well poised to outperform its other big 5 handset maker rivals into the foreseeable future. Nokia will never generate as huge profit margins as Apple, but if Nokia's profits turn now from decline into growth - then Stephen Elop will be seen as the savior, the miracle-maker, the man who defeated the Apple iPhone challenge and saved Nokia. While that may not technically be true, it will be a far better story for the Nokia PR people to spin, than the past year of explaining why the N8 was again delayed...
The N8 ended up being a huge hit smarpthone (until Elop killed the whole Symbian and Nokia smartphone business with his silly memo, next February). Nokia did return to VERY healthy profits, its second-best performance in its total handset business, and by far the best performance in its smartphone unit. The year ended STRONG for Nokia powered by that N8 that I wrote about. (Yes, you're welcome)
During his first months Elop fired some staff. I supported those decisions on this blog. He made some product delay decisions (something Nokia had been doing) and I felt this was good, in case the product was not ready. Better to release a ready product like the N8 rather than experience a bad product launch like happened with the previous flagship, the N97. But the secret conspiracy to shift Nokia to Windows had started, and we heard later that Elop was secretive of his schemes, didn't seek the consent of the Nokia Board, was obstinate and even did openly ridiculous things for which he was reprimanded - most famously the idiotic Burning Platforms memo, the most costly management memo ever authored, which collapsed Nokia handset sales not just on smartphones but even on the dumbphones side.
JANUARY 31, 2011 - WARNED NOT TO GO TO WINDOWS PHONE
We now know that Nokia announced its suicidal new strategy on that fateful day Day 11, Month 2, of year 2011, so Feb 11, 2011. That is the day of infamy for Finnish tech industry. The date when Nokia announced its own suicide. But for years and months prior to that date, I was on this blog, posting occasional updates to the Nokia strategy view, and on January 31, twelve days before that fatal moment, I was AGAIN on the blog, writing that Nokia did not need a 'new strategy' and god forbid, it did not need a new operating system, and it would be truly idiotic to suddenly switch and go with Windows OS for smartphones (which at the time was called Windows Phone 7). Windows had ONLY produced misery and losses to anyone who had tried it before. It was BY FAR the worst option. But this is what I wrote:
Many are begging Nokia to abandon Symbian and join Android or Windows Phone 7. No! Nokia has the best strategy of any major handset maker. They are not executing it perfectly but they have the best strategy. Remember, Nokia's primary rival is not Apple or RIM or HTC, it is Samsung.
Apple, RIM and HTC are tiny in handset makers who only make smartphones compared to these two giants. Apple sold 47 million phones last year. Nokia sells 47 million phones every 6 weeks.. Nokia and Samsung are the equivalents of Toyota and Ford in cars, Apple, RIM and HTC are the equivalents of Porsche and BMW in cars. Toyota and Ford make family cars, city cars, taxis, off-road vehicles, pick-up trucks, vans AND sports cars and luxury cars. Porsche makes essentially only sports and sporty cars (iPhone), BMW makes mostly sporty and luxury cars (RIM, HTC). So we cannot compare the vehicle strategy of Toyota to Porsche, we need to compare it to that of Ford (and GM and Renault-Nissan, and Volkswagen Group). And in phones, among big phone makers, Nokia's smartphone strategy is the best in the business.
(the bolding was in the original). So yes, mere twelve days before Nokia announced its death, I was still defending the WINNING strategy here. Nokia had just posted its best quarterly result ever. The N8 was setting sales records. Nokia's latest edition of its own Symbian OS was now considered 'good enough' in touch screens (the first time that happened, right for Christmas 2010, the Symbian S^3 edition) and Nokia was about to launch the brand new MeeGo OS, a Linux based, open-source OS developed with Intel, to power touch-screen premium smartphones. An OS that had a dozen manufacturers lined up to support it. An OS which was a cousin of Android (and could run some Android apps natively). And most of all, an OS which had a MIGRATION path so current Symbian app developers could migrate their apps into MeeGo and eventually run on Nokia's new superphones. The first MeeGo device came out in 2011 and won all kinds of awards and is to this date the only flagship consistently ranked better than its contemporary iPhone, while MeeGo is the only OS ever launched in smartphones to be ranked as good as - or in some reviews even better than - Apple's iPhone iOS operating system. THAT was Nokia's strategy in January 2011. Only a delusional idiot would change this. The champion crushing its tiny rivals, who has just launched its best-selling phone ever, and is about to launch the best OS this side of an iPhone by ANY OS maker. Only a total monkey from Canada could decide at this point - to throw all that away, and go with Windows. Windows Phone 7 was not the biggest OS back then. It wasn't the second best-selling. Not third, not fourth, not even fifth-bestselling OS platform. Windows Phone 7 was literally only the 7th bestselling OS. Once MIcrosoft was ranked number 2 in smartphone OS platforms with 12% market share. When this partnership was announced with Nokia, Windows (on all its platforms, combined) had only 5% of smartphones. Nokia alone had 35% the year just ended and Symbian had 40% because Symbian also was sold on several other handset makers. Who is the idiot who changes a GROWING business where you have the world's largest platform at 40% and swap it for a number 7 ranked OS who has 5%. Only an idiot would do that. Only an Elop would do that.
FEBRUARY 9, 2011 - IF NOKIA CEO ACTUALLY WROTE THAT BURNING PLATFORMS MEMO: HE IS DELUSIONAL PSYCOPATH
Yes, the Burning Platforms memo. Most destructive management memo ever written. Caused instant collapse of Nokia business. Only a madman would write such a memo. It was not even honest in its 'brutal assessment' of Nokia. It was full of blatant lies even a schoolboy can check. So many lies and falsehoods, its author himself, Stephen Elop walked back a dozen of the most brazen lies in that memo over the next four months. We found out that Elop was actually reprimanded by the Board for that disastrous document. I did my full analysis of the memo and how utterly destructive it would be, if it turns out it was authored by the CEO. All we need here, is my short summary of the idiotic document from my blog on that day:
Worst case, it is proven to be real, he really believes all that, and Nokia is led by a delusional psycopath who willingly suspends reality. Imagine if Microsoft had thrown in the towel when it had the world's biggest PC operating system! Imagine if Blueray had stopped fighting for the market when it was leading. This is silly.
Nokia's new CEO turned out to be a serial arsonist who set fires to all of Nokia's profitable businesses and killed off all areas where Nokia had built a lead on Apple and Google. He was truly a delusional psycopath. When I wrote that on February 9, 2011, I did not believe it to be true. I just warned, that if that memo would turn out to be ACTUALLY written by Elop (and in the next days we found out he DID write it) then he would have to be a delusional psycopath. Delusional in its dictionary and medical defintion: mental illness where the patient substitutes a fake reality instead of the observed actual real world. Delusion. And psycopath, to run his company like a madman, consistently and constantly overrulilng all who are actual experts.
The first five months of Stephen Elop's time had seen strong growth in smartphone sales, high growth in revenues, a reversal in the downward direction of the Average Sales Price, yes Nokia was able to charge higher prices (so the demand had to be very strong). Nokia set its record for profits in the smartphone unit. Nokia profits towered over its full-portfolio rivals and were even more than all other smartphone-only makers than Apple. And being bigger than Apple, growing more than Apple, and reporting growing profits second only to Apple. That is what 'victory' smells like. That is what only a delusional madman would kill off. After Elop changed the strategy, Nokia's total handset business collapsed. Nokia's smartphone business collapsed. Nokia average prices fell. Nokia revenues collapsed. Nokia profits instantly vanished, and the smartphone unit - which had NEVER reported a loss up to that time, went into permanent losses and has never reported even one quarter of a profit since. Nokia lost literally 9 out of ever 10 customers it had just had. Its market share collapsed in literally world-record speed. Even after that, a third of all Lumia smartphones shipped from Nokia under the new Windows operating system had never been activated.
On February 9 I also wrote a second blog where I explained why Nokia was in a different race than Apple and must be measured by a different metric. Nokia's rivals were Samsung, Motorola, SonyEricsson, LG, Huawei etc, not the tiny smartphone-specialists like HTC, Blackberry and Apple. What Nokia HAD to achieve was a TRANSITION from its MASSIVE dumbphone business to the new smartphone business. Nokia was not behind. Nokia invented the smartphone. Nokia also did consumer-oriented smartphone before Apple, Nokia did an app store before Apple, Nokia did 3G before Apple, Nokia did large screens before Apple, Nokia did NFC and mobile payments before Apple. In every way Nokia was AHEAD of Apple and Nokia was growing more in smartphones than Apple and while nobody is as profitable as Apple (in ANY industry) Nokia was second-most-profitable handset maker. The race was not against Apple. The race was against SAMSUNG. Both Sammy and Nokia had a HUGE dumbphone client base (like Motorola, LG etc) who needed to be MIGRATED to smartphones. THAT was the race. Who could do that - successfully - and - profitably. HERE is where the REAL test of Nokia management was felt. I wrote clearly to explain what was at stake:
The true measure of "is Nokia succeeding or not", is only one measure. Can Nokia achieve a better market share in smartphones than in dumbphones. If so, that means Nokia is successfully migrating customers from dumbphones to smartphones. When you are the huge dominant player in your industry, this is the only thing that matters (assuming, obviously, that you do this profitably). The only way Nokia will be remembered at the end of this decade, is either Nokia was able to hold onto its market leadership in the transition to smartphones or else, that Nokia lost its lead in that transition. Like Motorola lost its lead (to Nokia) in the previous transition in phones, from analog 1G phones to digital 2G phones.
If it occurs, that Nokia's market share in smartphones is worse than in dumbphones, that means, that Nokia is actively losing customers when it migrates from dumbphones to smartphones. If that happens, then it is a true sign that Nokia is in trouble. What is this metric reporting? It is reporting again for Q4, like every single quarter of every single year since the first smarphone, that once again, Nokia's market share in smartphones is better than in dumbphones (and every single quarter, Nokia's handset unit has been profitable while managing this transition).
This is the ultimate metric, and as long as Nokia manages this ultimate trick, it is succeeding. It is irrelevant what you or I may think of Nokia's latest phone, or its user interface, or its app store selection or its operating system or its loyalty or customer satisfaction or whatever you want. If Nokia is able to gain market share, as it migrates from lower-cost dumbphones to higher cost smartphones - then that is the ultimate proof, that Nokia is executing a successful smartphone strategy, and it would be madness to change it.
I do not mean that Nokia is perfect. I do not mean that Nokia hasn't made big errors. I do not mean that Symbian is perfect or Ovi. I do not mean that Nokia's phones are perfect. Nokia has made many errors. But those are not in its Symbian strategy, and its migration to MeeGo via Qt, and they are not in the strategy with Ovi. Nokia's problems are elsewhere. To change the operating system now, would mess with a successful formula, would cause crisis inside Nokia and far more with Nokia partners and developers, and would serve to kill the best strategy of any legacy dumbphone maker migrating to smartphones. Yes, Nokia can do better and yes, Nokia has to do better, but changing to Android or Windows Phone 7 now, would be a catastrophic failure in strategy.
So yes. I wrote just before Elop announced his shift in his strategy to Windows, that 'to change the operating system now, would cause a crisis inside Nokia, and would kill the best strategy. Changing to Windows would be a catastrophic failure in strategy'. Obviously it also turned out to be so (you're welcome). And haha, sell your shares in Telstra. The idiot new CEO of Telstra has just hired this same moron Stephen Elop as his new strategy guy!! (its true).
Up to January 2011, we saw a fake Stephen Elop pretending to be a normal sensible rational CEO. He was just biding his time and preparing for Doomsday. Then he released his memo and then, came the fateful day of Nokia's suicide announcement:
FEBRUARY 11, 2011 - WINDOWS STRATEGY ANNOUNCED - NOKIA COMMITS SUICIDE
While the Burning Platforms memo was the worst management memo ever (it caused what is known in MBA schools as a 'Ratner Effect' so idiotic management communciation, that it will destroy the total company), it was not Elop's worst strategy mistake. That was the Windows choice. It came days later. This mimicks the most famous tech industry corporate suicide (called the 'Osborne Effect' by the way Osborne computer company died, and another management blunder never tried since until our Elop). So what did I think of Windows and Microsoft partnership announced by Elop on 11 February 2011? I wrote "I am certain this move by Nokia will be seen as one of the classic biggest blunders in technology history." (You're welcome).
Many idiots applauded this partnership. Many tech companies promised the partnership would build into a wonderful flower, getting 25% market share, to be bigger than Apple's iPhone. I said no. Its the end of Nokia. I wrote literally on that day "this is the beginning of the end" for Nokia. That day. Beginning of the end. It was when the suicide started. The patient had drunk the poison and it was now only a matter of time before Nokia would be sold. Who else said that on February 11, 2011? Nobody (you're welcome).
In that blog, on Feb 11, 2011, when Samsung was ranked 4th largest smartphone maker in the world and everybody was so excited about Apple's iPhone and were talking of Blackberry and HTC and SonyEricsson and Palm and Blackberry - I said - on that day - Samsung now becomes the biggest handset maker. I said on the day Nokia announced its Windows partnership, that Samsung will now take the global crown from Nokia. NOBODY ELSE said this in February 2011. I said it on February 11, 2011. It occurred in the fourth quarter of the year and not once since then has Samsung been overtaken. I told you on this blog, before anyone else, who will become the new biggest handset maker. When Nokia falls, who will take its place. And that it was not number 2 (Blackberry) or number 3 (Apple iPhone). It was tiny Samsung only one QUARTER the size of Nokia in smartphones, that now would rapidly grow to become biggest by year-end. (You're welcome).
This blog has never said it possible for Motorola to pass Nokia (some said it would) or HTC or Apple or Blackberry. I had never BEFORE said that Sammy was going to get past Nokia. Not even in my bloodbath preview blog when I predicted Samsung would get into the Top 3. I have never SINCE said anyone threatens Samsung while others have thrown utterly silly ideas that Apple iPhone or hahahahaha Xiaomi might dethrone Samsung. But WHEN that only one change-over of the top happened, I told you who it is, when it will happen (and who it is not). I was totally correct and in February 2011, nobody else said this anywhere. Samsung-who?
In that same blog I predicted that Windows smartphone OS will end up between 3% and 5% at the end of the year. The just-ended year had Microsoft with 5% market share (down from its peak of 12%). EVERY other analyst predicted growth for Microsoft Windows. I said decline or at best, flat market share. Where did Windows end in 2011? At 3% (you’re welcome).
I also predicted that Windows OS will not be able to support early innovations in 2011 or 2012 like Augmented Reality (true); that Windows OS will not support low-cost smartphones where the growth was and where most Nokia customers were (true). The damage to Nokia sales will be worse than for example similar problems in the PC market because the handset replacement cycle is so fast (true) and that the retail channel will not want to sell obsolete Nokia phones (true). I said many app developers will not come to the Windows OS because its too small (true).
In 2010 Nokia’s Ovi app store had become the world’s second-most used app store behind only Apple’s iOS (a status currently held by Android). It has the most developers in 2010, yes more than Apple (but Symbian was a slow difficult complex OS to develop for, so it took much more effort to create apps for Symbian than iOS). Nokia had developer tools called Qt. Qt could be used to develop apps not just for Nokia’s Symbian but also Nokia’s MeeGo and older Maemo; Nokia’s Qt could be used to develop apps for Blackberry and Android and soon also iOS. The only OS for which Qt could not be used - was this new tiny Windows platform. How stupid is that for Nokia to select?
The Ovi store and Symbian apps were built with the carrier community, offered dozens of languages and alphabet support; Ovi store had carrier billing (you don’t need a credit card, just click to buy and it will be deducted from your phone bill). Most customers in the Emerging World do not have credit cards. Windows Phone 7 did not even support the Chinese language when Lumia launched. And Nokia had a migration path, to take consumers and apps from Symbian to MeeGo. That migration path did not exist into Windows. In fact, Microsoft were being such dicks about migration, they refused to let current users of the older Microsoft Windows Mobile apps migrate to the newer Microsoft Windows Phone 7 ecosystem. That is how anti-apps and anti-consumers and anti-developers the new system was. As I wrote on this blog:
The ecosystem goes from a potential 'Win-win-win' situation to the ultimate 'lose-lose-lose-lose-lose' and let me add 'lose-lose-lose' system. Less handsets, with increasingly less high-end capabilities, used on ever less-capable networks and lower speed connections, by ever less-affluent (and even illiterate) users, accessing ever more old and obsolete apps, of ever less updated and modern apps, generating ever less revenues, offering ever less advertising and virtul property alternate revenue streams.. This is the most toxic 'ecosystem' conceivable. Its like a dead sea, where the salt content just keeps growing until nothing can live in it. Not an eco-system, a toxi-system.
I further forecasted that the BUSINESS for Nokia as a company will be damaged so badly, that by Q4 of 2011, Nokia will have lost one quarter of its total size (ie revenues). I said this in February. What was the reality? Nokia revenues Q4 2010 vs Q4 2011 were not quite that bad (the networking business was growing) and actually down only 21%. The handset division (including smart and dumbphones) was down far more than what I forecasted - they crashed 30% in 12 months. (you're welcome)
I forecasted the smartphone unit would be plunged into loss-making (true, it never recoveted) and that the overall Nokia corporation would start to report losses (also happened). This after Nokia had weathered the global economic crisis with flying colors, not one quarter of a loss in its handset business, and at the end of 2010, had seen strong growing healthy and increasingly-profitable business. Nobody else said in February 2011, that Nokia is about to go to deep losses. I did. (You’re welcome).
Now of the upcoming Nokia branded Windows OS smartphones (eventually branded Lumia) - I said on that same day 15 February, that Nokia’s first proper, self-designed and self-manufactured flagship on the new Windows OS won’t come until alter in 2012 (true). I said the first two phones that may come out right at the end of the year won’t be proper Nokias they would be clones made in China at some sweatshop who have nothing to do with Nokia, just having the Nokia brand slapped onto some generic Windows slab smartphone (as it happened). And these phones would suffer greatly from all sorts of production problems (exactly as it happened). I warned that the early Windows smartphones sold by Nokia will bring so much disappointment, that Nokia will run losses in its smartphone unit through the SUMMER of 2012 !!!! (I said this in Feb 2011). I gave all the reasons why (and it all became true). At that point I then saw some light at the end of the tunnel, and I wrote that from the summer of 2012, “Then Nokisoft and Microkia will be back into the game, and seriously can start to fight for the ecosystem battle - using the awesome execution and speed of the tortoise that is Nokia, combined with the astonishing execution and speed of the snail that is Microsoft.”
I finished my prognostication for Nokia on 15 February, 2011, four days after the Microsoft Windows strategy was announced, with this view to the next 22 months. Aiming for end of 2012, I wrote “by the end of 2012, hopefully Nokia is back to profitability. If that company still exists at that time.” How prophetic and sad. Only 9 months more and Nokia would sell its handset business to Microsoft. ‘If that company still exists at that time.’ I did not believe it when I was typing those words but I knew I had to say it. I saw it was a distinct possibility Nokia the handset maker might not survive this massive crisis caused by its delusional psycopath CEO.
FEBRUARY 16, 2015 - THE WINDFALL WILL GO TO SAMSUNG
So five days from when then-CEO Stephen Elop forced Nokia to drink his poison that would kill the company’s phone business, and as most of the world was still singing happy songs about Microsoft and Nokia the giants about to win over the tech world, I wrote my competitor analysis part of the story. The winner would not be Apple’s iPhone. I said very clearly that Apple would pick up random little bits but the winner was going to be Nokia’s truest nearest rival, Samsung. Look at the market shares of the three brands just before this disaster and up to year 2013 when Nokia was down to 3%. This is how it went:
SMARTPHONE MARKET SHARES NOKIA, APPLE, SAMSUNG FROM 2010 TO 2013
Brand . . . . . Share 2010 . . . Share 2013
Nokia . . . . . 35% . . . . . . . . . 3%
Apple . . . . . 16% . . . . . . . . 16%
Samsung . . . 8% . . . . . . . . 32%
Sources: Company data, industry data, TomiAhonen Consulting 26 May 2016
This table may be freely shared
So with HINDSIGHT now in 2016 it is easy to see, no, Apple was not touched by Nokia’s collapse. There was almost no overlap between Apple’s mostly North American iPhone smartphone user base, and Nokia’s mostly rest-of-world full-portfolio smartphone user base. But Samsung was offering an almost identical smartphone portofolio in all of Nokia’s markets and was able to catch most of what Nokia abandoned when it shifted to Windows. Apple was totally flat, from 16% to 16% while the world’s largest smartphone manufacturer collapsed. In three years, Apple was unable to pick up even one point of market share. But Samsung? They were ‘Korean’ about it. They were fast and nimble, moved really rapidly to pick up as much as possible. While they didn’t get it all, they took about 8 of the 10 Nokia customers that were abandoned and catapulted from fourth ranking smartphone maker of 2010 to top ranked by the end of 2011 and went from 8% market share in 2010 to 32% market share by 2013. An amazing and indeed record-setting rise. Did anyone tell you this? Five days after Nokia announced its mad Microsoftian misadventure, I was on this blog, on 16 February 2011, giving my forecast of how the Nokia customer give-away would go. I said
This is THE year of Samsung. You get far more than your fair share of the above Nokia windfall, and you know you can do it. What you need now is sales staff and sales support. Hire every body you can find to sell sell sell. Make Samsung the brand everybody sees everywhere, in the Nokia footprint. Steal that candy, it is yours. Move faster than the rivals, 'balli-balli' and push your factories.
You are best poised to eat the low-cost slice of Nokia's windfall. But do it the right way - keep pushing the Galaxy series, make Samsung the new aspirational phone, so all those who can't afford a Galaxy this year, will buy the bada Wave phones hoping to upgrade to a cool Galaxy next time.
I said also that Blackberry, Apple and HTC would get good wins out of Nokia’s fall. Apple did see a temporary rise in its share but then it subsided as Samsung got fully into gear. Blackberry took its eyes off the ball of smartphones and had its own management brain-fart just months after Nokia’s collapse with their obsession of going for the tablet wars (idiots) which ruined their chances. But before anyone had MEASURED any Nokia fall yet (that was two months away) from the next quarterly results that had the first huge warning bells, at this point NOBODY said Samsung would be the big winner out of the Nokia fall. Nobody.
Samsung is definitely the new gorilla of smartphones, and while its still a baby gorilla this year, just watch them play with this market and take it with ease. No matter what the others do, this will be Samsung's year. They were already the fastest-growing maker, with by far the biggest footprint on the dumbpohnes side to add to that, and now, are the maker most perfectly poised to capitalize on the Nokia windfall. So Samsung should be able to capture the biggest slice of Nokia's 50 million smartphone customer give-away. And bearing in mind, that Samsung had already targeted this year for enormous growth - they had their sales and manufacturing all set up for massive growth - they are also best positioned to take more than their fair share.
I said Samsung was safe to take 17% of the market for the year and could do better. Samsung ended the year with 20%. NOBODY else said in March of 2011, that Samsung would become the largest smartphone maker and nobody said they’d be in that kind of level of smartphone sales. (You’re welcome).
Of Nokia, I wrote year 2011 was the year Nokia had to ‘wait for the cavalry to arrive’ as it now was selling doomed Symbian smartphones and had to await the first Windows Phone based smartphones. I wrote that Motorola the former giant was not going to be able to capitalize on Nokia’s fall because recently Moto had retreated from a global footprint and now was mostly selling in markets where Nokia had nothing to give, especially North America (Motorola went from 5% to 4% in that year 2011). I said HTC will have a good year and capture market share. HTC went from 8% to 9%. The one brand I got wrong was Blackberry but that was its management’s own fault for not capitalizing on the moment their largest rival globally in smartphones decided to collapse, instead of focusing on stealing Nokia’s market, Blackberry inexplicably delayed its new phones and went for the tablet market instead. So Blackberry stumbled right after Nokia in the same year. But SonyEricsson, I said they’d have a pick-up also as Nokia fell, and that happened too. SonyEricsson went from 3% in 2010 to 5% in 2011.
There is no better analysis of how Nokia customers will be distrbuted than my blog from March 2011, even as that blog warned of Samsung’s rapid rise, it still didn’t get the full scale of exactly how strongly Sammy would do. Yes, I was wrong, didn’t get Samsung’s scale, and missed the call on Blackberry - but both of those were further monitored on the blog in coming months; and nobody - litereally nobody else - made a forecast on even those two brands, half as good as mine. And the relevant point. I said Nokia annual market share 2011 would be 13% to 16% (when it was 35% the year before) and Nokia ended at 15.9%. Nobody else said Nokia would fall this badly this year. It would keep getting worse as the year progressed and as I previously already forecasted, by Q4 Nokia would be down to 12% market share (was 12.4%). I concluded my Nokia part of the Electric Boogaloo preview writing: “All of 2011 will be a bloodletting for Nokia and the full-year numbers will be artificially inflated counting long-lost customers from early in the year. The thing to watch for Nokia is when the first Microsoft phones will ship.” And we would soon see, those first Lumia smartphones turned out to be even worse than we could imagine, only making Nokia’s fall even more doomed.
APRIL 25, 2011 - NOKIA COLLAPSE IS IN WORLD RECORD TERRITORY
We got the first quarterly results of Nokia after the suicide announcement in February. The April 25 financial report was ringing all sorts of alarm bells. The networking business had taken a hit and was now unprofitable. The dumbphones business was seeing sales erosion. And the smartphone business was going over a cliff, into free-fall. Nokia was already falling faster than Motorola in its worst times of collapse. This is how I wrote about Nokia smartphone business and how bad it was already now in April of 2011:
Even when Motorola did its massive market share harakiri suicide from the peak of the Razr hysteria, Moto only lost 6% to 8% of its customer base per quarter. That was our world record for destroying your own customer base in mobile phone handsets, Motorola devastated 3 out of every 4 existing customers in a four year period between 2006 and 2010. Nokia is not doing twice as bad as Motorola in its worst quarters, Nokia is right now doing about 4 times as badly, as Motorola in its darkest hours.
So I warned you when only HALF of one quarter of Nokia results were out, following the suicide announcement of February 2011, that this was now a world record in tech collapses. That Nokia rate of fall was four times as bad as Motorola at its worst. I warned in the blog that Nokia was going to be inevitably reporting a loss in the smartphone unit in the next quarter and the whole company was going to be unprofitable also this year (both came true). (You’re welcome)
MAY 13, 2015 - THE SUBLIME AND RIDICULOUS PYRAMID FANTASIES
Many analyst houses made incredibly rosy forecasts and predictions for Windows Phone OS with Nokia partnership. I did not take them on, because they seemed to be made in good faith, based at least on solid base numbers in reality up to the current moment (ie solid numbers for year 2010 for example) and then with REASONABLE assumptions into the future. One analyst house is the silliest and most immature unprofessional idiots who should never sell another report again. Their idiot forecaster/analyst Stella Bokum wrote a report for Pyramid Research which promised in 2011, that Windows would get 11% market share in smartphones in 2011 (reality was 3%) and that would rocket up to 35% by 2015 (reality in 2015 was 2%). What made idiot Stella Bokum and criminal liers Pyramid Research total con artists was that they BASED their forecast on FALSE numbers out of 2010. So I told you so on this blog, on May 13, 2011, when I titled my blog that day as “Pyramid Research are Unprofessional and Incompetent - do not buy any of their work in mobile! - this after mindless Microsoft Phone 7 forecast to 2015”
I was correct. Pyramid were idiots to publish that report. Many have speculated - including in the comments to my blog - that this so-called report was actually purchased by the dirty tricks squad of Microsoft (or Elop’s new similar professional liars club at Nokia) and it was just paid propaganda. Pyramid should go out of business for such shady work and still to this day we await their ‘mea culpa’ on that ridiculous forecast. They should have rescinded it already in January 2012, when their IDIOTIC projection FOR THAT YEAR 2011 was so much wrong, they said 11% when reality was 3% for Windows Phone OS. They are idiots and should go bankrupt, stop feeding lies to this industry.
JUNE 6, 2011 - LUMIA WILL BE DOOMED BECAUSE OF FAULTY DESIGN; ELOP MUST BE FIRED
Nokia was losing every battle but waiting for the cavalry to arrive at the last moment for Christmas, to rescue what would be left of Nokia. Everything Nokia was and had, was now literally hanging on one thread, that the first Lumia smartphones would be a big hit and would rescue Nokia from death. Then on 6 June I wrote that the first Lumia smartphones on Windows Phone would not be a market success, even though we had not yet seen any prototypes or any specs. I wrote it based on what Stephen Elop told us in a TV interview. Based on his replies, I wrote on the blog, in not just bold, but in red letters:
Please stop and think. EVERY improvement to the iconic original iPhone. EVERY improvement that is so significant, that ‘minimalist’ perfectionist Apple’s Steve Jobs has approved to be changed on the iPhone since, every single change, was already discovered, tested, deployed – and commercially launched in successful Nokia phone products – before the first iPhone of 2007.
This is not trial-and error design. This is not hit-and-miss experimentation. Come on, it’s an unbeaten winning streak! Nokia’s designers have correctly anticipated EVERY one of the very selective improvements that Apple has accepted to its iPhone. And LAUNCHED THEM BEFORE APPLE! Come on? What am I missing here? Nobody can accuse the iPhone of being a ‘Swiss Army Knife’ of feature overload. But when it comes to the must-have most important features that Apple approves to its hardware – or software – Nokia and Symbian have had EVERY one of them prior to the 2007 model (except for the original touch screen multi-touch, which obviously was not Apple’s invention and Nokia has since done).
From that evidence, for Elop to say, Apple has leapfrogged Nokia by two years, is true delusion. He has been presented with all the evidence and he refuses to accept it. He instead substitutes a fantasy he has concocted.
And please, don’t say that is ancient history. Today, Nokia has not stopped innovating. It is continuing to launch tons and tons of features, abilities and services that Apple does not yet offer. Like HD TV output, like full USB connectivity including thumb drivers and USB sticks plugged directly to the E7, etc.
Based on what Elop just said to CNBC on live TV, I concluded that Elop had benched the best smartphone design team in history - the team with an unbeaten win streak, which had produced smartphones so popular, Nokia was still, even after its worst-ever quarter, the world’s largest smartphone maker. And instead, Elop went to some American designers attempting to create an iPhon-a-clone. I wrote:
So now, we go to the CNBC interview. Read what Elop said in the end of the paragraph: “Our very first Windows Phone products are being designed and put together here, in California, with the US market very much in mind.” This is the way Elop creates the single most important phone for Nokia’s survival. Remember, the US market is only 7% of all mobile phone subscribers. If Nokia wins in America but loses the rest of the world, Nokia goes bankrupt. The USA is too small. Nokia cannot design a USA phone and hope to win the world. Nokia’s main flagship first Microsoft based smartphone has to be a hit in Australia, in Singapore, in Britain, in Spain, in Brazil, in China, in Russia, in Italy, in Mexico, in India, in Egypt, in Poland, in Indonesia, etc. And now, they do need a hit, a world-winner phone. Where is that to be designed? Not where Nokia has over a dozen years of design excellence and market leadership in premium phone design – Finland – no, in California, where there is mainly a legacy of some of the worlds’ most rapidly failed phone designs. Hmmm…. This does not sound good.
And what did I say in that blog. June 2011. I said we now have seen signs that Elop will be fired as CEO. Two years later he was fired. I was literally the first in the world to say it, that he was not fit to run Nokia. He had not been in office even for 12 months at that time and Nokia had not yet reported one quarterly loss. I said he has to go. Here is how I forecasted the fate of the new (not-yet-named) Lumia smartphones and warned of Elop’s fate:
But for the CEO of Nokia to say, Nokia has fallen behind the USA, it is patently false. For Nokia’s CEO to say Nokia is two years behind Apple. That is patently false. The opposite is true. If Nokia CEO says the world leadership is in Japan and Nokia should adopt more Japanese ideas, that would be in line with the truth. But to suggest, that the world’s most successful smartphone maker should abandon its rich heritage and knowhow, built from Finland and Asia, and go to laggard-market USA, and learn from the inventors of the Kin and Nexus One and Palm and Motorola – that is a recipe for failure. I am afraid an Apple envy project would be a perpetual drain on resources and result in Nokia’s version of Microsoft’ Zune, at best. Rival the Microsoft Kin disaster at worst.
Microsoft’s Zune lasted a few years before it was shut down. Microsoft’s Kin lasted 6 weeks before it was shut down. I predicted these (not-yet-named) Lumia smartphones were headed to the same fate. The Lumia unit lasted barely more than two years under Microsoft control. Quite a radical forecasts from 2011, eh? Three years before Microsoft would even take over the handset business from Nokia. I looked at Elop’s statements and said, this meant the same end as Zune and Kin. This project could not emerge successful out of the Windows Phone adventure. I said so in June 2011. And then yes, I said Elop will not survive.
We know now, that Stephen Elop has expressed the ‘USA leadership’ myth for many months and continues to live by it. That is unfortunate. We now learned that Nokia’s CEO has taken his delusion, and started to make strategic decisions based on that fantasy. That is a dangerous sign. I think now we have started to count the days that Stephen Elop can remain in his job as Nokia’s CEO. When the CEO of one of the world’s largest corporations deliberately suspends reality and makes decisions on his own version of wishful thinking, that is the sign of the end is coming.
And Elop was fired two years after I wrote that blog. He was delusional and a madman who went against his instructions from the Board, who kept secrets from the Board who was a rogue arsonist setting profitable Nokia businesses on fire and embarking on silly adventures that destroyed healthy parts of Nokia. He would become in the next two years, literally the worst CEO in corporate history of any company of any industry of all time. The worst CEO ever. Nobody else said in June 2011, that this guy is so bad, Nokia should fire him. I did.
JUNE 6, 2011 - APPLE HAS PASSED NOKIA TO TAKE OVER BRIEFLY AS BIGGEST SMARTPHONE MAKER
Then on June 6, 2011, I did my usual ‘deep analysis’ of the Nokia numbers including some deep math on the regional sales splits and totals for average sales prices and Nokia handset portfolio (back then that was kind of fun, nobody today reports their total handset business as thoroughly as Nokia used to; and it gave incredible insights into regional markets too because across all phones, Nokia sold about 4 in 10 handsets worldwide). I discovered the actual significance of the China sales level for Nokia Q1 results that had just been reported a bit over a month ago. The reality of Nokia smartphone collapse was worse than thought, and it meant that as of ‘now’ when I was reporting it, Q2 of 2011, Apple was just then - in JUNE - passing Nokia to take over as the largest smartphone maker in the world (temporarily, Samsung would do that for the full year of course). Nokia’s collapse was happening EVEN FASTER than I had predicted, and I was the most pessimistic of any analyst in tech. Q2 results for the industry were not even due for another month, in July. I was literally the first to report that hey, lets celebrate, Apple’s iPhone has captured the largest smartphone manufacturer crown from Nokia. I reported that before either Apple or Nokia would give their results - based on the deep analysis of where the Nokia collapse WAS seen in Q1 and how much of it was hidden by China. I told you here, on this blog, literally first in the world - that Apple was now the largest smartphone maker in the world, for Q2 of 2011, when Q2 itself was not even yet completed. It was eventually confirmed on July 29, when Nokia, Apple and Samsung Q2 data were all out, that Apple iPhone had indeed become the bestselling smartphone in Q2 around the world. But you heard it first here on this blog nearly two months before that bombshell hit the world news. (You’re welcome).
JUNE 6, 2011 - CALLED APPLE BIGGEST SMARTPHONE MAKER
I didn’t just ‘hide’ that discovery inside a long blog article. I made it a whole separate blog entry. I was literally the first to call it, Apple had overtaken Nokia in the smartphone wars and (temporarily) became the largest smartphone maker. I called it on 6 June 2011. The numbers didn’t come out until July to confirm that fact. (You’re welcome).
JUNE 7, 2011 - WINDOWS SMARTPHONE OS ITSELF IS NOW DEAD - DUE TO SKYPE
On June 7, 2011, half a YEAR before the first Lumia smartphones would start to ship, I pronounced the Windows OS for smartphones to be dead. It had just died but nobody else saw it yet. Eventually all major analysts who specialize in mobile (not generalist tech or PC or internet pundits or wall street wankers) have come to agree. It was the Skype purchase which caused the retail boycott that hit Microsoft Windows smartphone as an OS and killed it. When I first wrote about it, many were laughing at it and saying consumers love Skype. Yeah, consumers indeed do love Skype, but consumers are not the retail channel. Nokia was totally dependent on its retail channel - its precious carrier relationships - to win in the handset wars. When the retail boycott started, Nokia started to die. And when the carriers noticed, what, Microsoft has just bought Skype - the one entity that the carriers hate the most - the only one entity in the world, that existed year 2011, that was an EXISTENTIAL threat to the carrier community - Skype - that meant an instant - parallel - boycott against all Windows based smartphones. Note - Nokia had not even LAUNCHED its first Windows based smartphones yet (to be called Lumia). Nokia did not even INSTALL Skype onto its first Lumia smartphones when they came. And Nokia’s then-current Symbian smartphones did not come with Skype pre-installed at this time. There was the first sales boycott against Nokia brand already - due to the Burning Platforms memo and the Osborning and Ratnering of Nokia’s handsets by CEO Stephen Elop. But now, for the upcoming replacement OS platform that Nokia had not yet launched - Windows - that was ‘dead on arrival’. In June the carrier community globally set Microsoft Windows smartphones on a global sales boycott that lasts to this day.
All other major handset brands ALL OF THEM got the message immediately. SonyEricsson, Motorola, Dell, LG and with a little delay, also HTC and Samsung - all quit making Windows smartphones - because of the sales boycott by the carriers. Not because their BRAND had lost sales. They shifted to Android. All of them quit Windows almost immediately after this sales boycott against Windows started in June 2011. By Spring of 2012, Nokia CEO Stephen Elop ADMITTED there was a global sales boycott against all Windows smartphones, when he was asked about it at the Nokia Shareholder meeting.
Up to May of 2011 there was a theoretical chance that Microsoft and Windows might succeed in smartphones. Once the carriers put Windows into a sales boycott, that ended. No smartphone maker from July 2011 onwards has been able to sell one Windows smartphone at a profit. Not one. The sales collapsed and Nokia at its PEAK was able to push 3.5% of the world’s smartphones to run on Windows. Of those - one in three which did ship out of a Nokia factory, was never actually activated. So the real maximum success Windows had after massive Nokia and massive Microsoft pushed it in every way, was an effective sales success of 2%. That was because there is such strong love of Nokia brand. Once Nokia left the deal and Microsoft bought the business and extinguished the Nokia brand, well, now the share is 0.7% of smartphones and Microsoft is ending the Lumia business. I was the man who first reported this business had DIED. It died in the summer of 2011. I wrote that Windows smartphones were dead, on 7 June (You’re welcome). I told you the REASON why, which was argued for nearly a year onward until Nokia’s CEO himself admitted, yes there is a sales boycott because of Skype (You’re welcome). As I wrote, the carriers will not drink that poison. This is how I wrote on 7 June, 2011:
And if there is something carriers hate more than Apple’s iPhone App Store or virtual SIM cards or dual SIM cards, or ‘American’ designs for phones, the thing carriers/operators hate the most, is Skype. They hate Skype with a vengeance. Why? Because the carriers witnessed how easily Skype destroyed their fixed-landline telecoms cousins, and where Skype might not take all traffic, it devastated the revenues and profits of that robust industry. All existing Nokia senior managers know, that to offer Skype for carriers is tantamount to offering them a drink labeled as poison. And what is our clever little darling Stephen Elop now promising the world? That Microsoft’s new WP7 smartphones will include Skype. His Muppet Master, Steve Ballmer is proudly crowing about how Microsoft will use Skype to build its eco-system.
Again, please don't misunderstand me. You and I may want to have Skype on our phones. It may come some day. But trust me, the carriers will not be letting the biggest phone maker flood their market with Skype phones replacing the carriers' cash cow - voice calls. Won't happen. The players who will eventually bring Skype in, will be the smallest of the disruptors, not unlike how Blackberry sneaked beneath the radar to bring Blackberry instant messenger to challenge SMS today. The carrier will not allow Nokia and Microsoft to do this. Not with the brand they hate the most, Skype. Its like building an eco-system for plants, and bringing it out to space, and setting it out of the spaceship. Into the vacuum where there is no life. Steve Ballmer has killed Microsoft WP7’s chances as a smartphone OS, with this Skype malarkey.
If you want the ultimate proof that your phone will not ever be supported by carriers, put on unrestricted Skype on it. The Grand Genius Stephen Elop is jumping from one CEO failure to yet another, and compounding the problem every time. So first he shoots himself in the foot. Did that hurt? Yes? Sorry. Let me get a bigger gun and shoot again. Pain? Sure. Thats good. Now let me get a bazooka to really shoot myself in the foot.
The MARKET for Nokia was now dead. This is June of 2011. The market for Nokia is dead. Not dead from outside sourcs. The market was killed by Nokia’s CEO. This is how I wrote:
Stephen Elop has caused the cardiac arrest which now grips Nokia. The distributors have put Nokia smartphones on a boycott. Stephen Elop has not learned from that. He has not reacted with haste, attempting to save Nokia. He is now thinking like a Microsoft Muppet, what is best for Microsoft. In that process, Stephen Elop has seen a patient whose heart has stopped, and rather than try to revive it, he has now started to strangle that dying patient. Stephen Elop is killing Nokia. He is angering his distributor chain with every move he makes.
He is incompetent to run a company in a period of change, if he is unable to change to changing conditions. He is unfit to run Nokia whose business depends totally on carrier support. His strategy has seen wholesale rejection by the channel, they now have Nokia in boycott. Not just Nokia smartphones, Nokia dumbphones are struggling. What little Nokia can sell, is sold with massive discounts. I know a dead parrot when I see one, and I am looking at one right now. That parrot is definitely deceased. It has passed on. This parrot is no more. He has ceased to be. Its gone to meet its maker. He's a stiff! Bereft of life, it rests in peace. .. this is an ex-parrot. (substitute 'career as CEO' for Parrot if you consider Elop's chances now).
JUNE 9, 2011 - NOKIA WILL BE SPLIT AND SOLD
Then still, before we had the first disaster-quarterly result of Nokia corporate losses under Elop, we are more than a month before that date - I proclaimed that Nokia will not survive intact. It will be split and parts will be sold. I told you this on 9 June 2011. The decision was announced two years later when two thirds of Nokia’s business was sold to Microsoft. (You’re welcome).
JUNE 13, 2011 - NOKIA WILL NOT MATCH SYMBIAN LEVEL WITH WINDOWS
Then on June 13, I did an overall Smartphone Bloodbath Year 2: Electric Boogaloo review and update, and in it I wrote for the first time that Nokia’s Windows smartphones will not even find even sales level of Symbian (a promise made by Elop to Nokia investors when he introduced the Windows strategy - all industry analyst numbers were roughly based on that promise, that in time a 1-to-1 transition would happen from Symbian to Windows. Some analysts felt Nokia and Microsoft might do a bit better or a bit worse but that was the assumption - and as the market was strongly growing, even if Nokia matched 1-to-1 transition - that would mean a big loss in market share). Suddenly we had so much of the new picture known, that in June I could foretell that no, there will be no 1-to-1 transition. Nokia will not match with Windows (aka Lumia) what it had just been able to do with ‘obsolete’ Symbian. This is how I wrote:
This is your Arabic Spring, Stephen Elop, the channel has spoken and like Europe and Nato came to support the Libyan revolution, the Shareholders of Nokia have now joined the chorus by slashing the Nokia share price. Like the 60 Libyan army generals who fled to Italy, your best and brightest are already deserting your ship. You do have to go, Elop, like Libya's Muammar Ghaddafi. And what is worst of all, after Elop torpedoed Nokia's Symbian, and assassinated the evolution path to MeeGo, now Nokia is set on a path to Microsoft Windows Phone 7, where another reseller boycott has been started.. The Microsoft WP7 option is actually even worse for Nokia than sticking with Symbian!
JULY 5, 2011 - ELOP KILLS MEEGO AND N9
Then a bit before Nokia’s quarterly results were due, Nokia released its long-delayed new OS and awesome latest flagship, not running Windows, but running on Nokia’s proprietary, brand new OS, developed together with Intel, called MeeGo. It was Linux based, open-source OS with several dozen manufacturers committed to the platform - and several devices already shipping mostly tablets and netbooks; the first MeeGo device released to the market was a Fujitsu netbook sold in Singapore already in February. MeeGo was in some ways a cousin to Android and many Android apps could run natively on MeeGo. The most exciting thing about MeeGo was that its early reviews suggested it was as good as - or even better - than Apple’s iOS powering the iPhone. No other OS was rated that good, not any release of Palm or Windows or Android or bada or Blackberry OS. And Elop had cancelled the first Nokia MeeGo handset already (because he is an idiot) so this was the second one Nokia had designed, but finally shown to the world. The world fell in love with the N9, it was the most praised and highest-rated Nokia handset in Nokia history. Its most amazing killer phone, ever. A truly potential iPhone-killer. A phone that would go onto win all sorts of awards including the Oscars of tech design the D&AD award in London, beating the brand new Apple iPad 2. Who beats Apple at design? That is what was at stake with the N9 and MeeGo. Nokia was sitting on its biggest hit ever. This is what I wrote about how Elop handled his success:
So, Nokia had its biggest buzz and positive press reaction to the MeeGo powered N9 smartphone that Nokia had seen for years. It was a massive positive story for Nokia. Even the stock market loved the story and Nokia's share price got a jump. MeeGo was slick and sexy, the N9 was a hot phone with excellent specs. Any CEO who loves his company would celebrate and cherish the moment and do his best to promote and prolong that success. But not Stephen Elop. No. What did he do. He immediately moved to quash any possible good will that the N9 and MeeGo were generating. He first 'revealed' the first look of a Microsoft Windows Phone 7 based phone - which looked to most analysts identical to the N9 except for one mysterious button. And he did it in a most clumsy way telling a packed audience "don't show these pictures" while at least two news outlets were videotaping his presentation. The stock market rewarded Stephen Elop's new Microsoft Phone 7 based Nokia phone preview with a share market decline. He stole all the thunder and bizarrely for a CEO, he actually stiffled a stock market rally. What is wrong with this guy Elop? Who does he work for? He certainly doesn't seem to be working for Nokia.
If thats not enough to help kill Nokia N9 and MeeGo, Elop went in public to say that "even if the N9 and MeeGo were a success, there will be no more MeeGo devices". What? Even if this totally new Nokia product is a market success, the CEO will kill it. Thats a very special kind of love, isn't that. Its not euthanasia, which one might argue, Stephen Elop was doing for Symbian. (Euthanasia is a mercy killing of someone who is already dying). No, its pure murder what Elop is now committing to MeeGo.
And to be absolutely sure, that MeeGo has zero chance of even a 'fair fight' - Nokia has since kindly announced to us which markets will get MeeGo. The N9 will not be launched in.. the UK, Germany, France, Italy, Spain and the Netherlands (and several other major Nokia markets). Thats the 'big six' Western European markers where most of European smartphones are sold! Not a one of them gets to play with MeeGo, none of them get to buy the N9 ! This is Nokia's way of killing Me softly with Microsoft, killing Me softly, with Microsoft, killing Me softly, thats Elop! And by weird coincidence, have a guess what are the six European countries that will be the launch markets for the new Microsoft WP7 phones? Yes, the UK, Germany, France, ITaly, Spain and the Netherlands! Is Elop really this afraid of MeeGo? He has to sterilize Western Europe against MeeGo, keep it pure, so its not 'polluted' by the better OS that Nokia's own designers created, so that Europe would be willing to buy Microsoft's OS. Who is Elop working for? This is not in Nokia's interest, this is a CEO who is working for the best interests of a rival corporation! Elop is not looking after Nokia's best interests, he is looking after Microsoft's best interests.
I of course again called for Elop to be fired. But if you want to see how thoroughly Elop destroyed Nokia. If your company launched a new gadget seen as good as - or gosh better - than Apple, would you not be celebrating it everywhere and promising to sell it in every market and to give future editions of that device? What is wrong with Elop? He said even if the N9 was a huge hit, there will be no more MeeGo devices to follow after it. He was RATNERING the N9 and MeeGo. He was on a mission to destroy every single chance Nokia had of its handset business possibly surviving.
JULY 21, 2011 - ELOP MOST INCOMPETENT CEO EVER; WORLD RECORD COLLAPSE; MICROSOFT WILL BUY NOKIA
So the quarterly results came in on July 21 of 2011, and Nokia did report losses in its smartphone biz as I promised, and a massive fall in total sales. But since the first quarter results, Elop had been on a series of more self-destructive actions which guaranteed that the smartphone business would go DEEPER into the red and would remain unprofitable to the end of the year at least. Those added mistakes, voluntary errors committed by Elop, like the bad-mouthing of N9 and MeeGo, and the voluntary embracing of Skype to further anger the carrier community - those are the reason why I wrote, Elop is the most incompetent CEO ever. When Elop was removed from the post of CEO of Nokia in 2013, many management experts agreed, Elop is the worst CEO of all time. I told you so in July 21, 2011 (you’re welcome). And of how big was the disaster:
Lets understand how significant this is. This is not like the carnage that caused the death of Motorola (and the company to be split) or the destruction of Palm (that caused it to be sold to HP) or similar disasters in mobile telecoms. This is truly the world record for market share capitulation not just in mobile or tech; it is brand destruction world record - in any industry, ever. Toyota's damage with the brakes in its cars, BP's oil spill, British Airways worst quarters fighting with labor disputes; etc have not slashed market share by half in only five months. Nokia and CEO Stephen Elop will go down in history as the notorious and misguided names that destroyed the best-known brand on the planet. This is management stupidity in the scale of Coca Cola's 1985 launch of New Coke.
That was the ‘situation report’ of July 2011. What of the prognosis going forward. I said then that the future was so dire, Nokia with Microsoft could not ever get to double-digits. The Nokia Windows partnership would never recover to even half of what Nokia had when the Microsoft partnership was announced only five MONTHS prior. I said in summer of 2011, before the first Lumia phones were sold, that there was NO LIFE coming on Windows for Nokia. I wrote:
This Microsoft alliance sounded great to some analysts looking at it in February. By now that we know much more of it, and all facts say this is suicidal move by Nokia and is not sustainable and will be abandoned just like HTC did with Microsoft, and LG did, and Motorola did. And add on top of that misery, now we learn in late May/early June, that the carriers have revolted against Microsoft in a reseller boycott after Microsoft bought Skype - carriers hate Skype - and then add the point that Microsoft's other handset makers are now deserting the platform and shifting their production to ever more Android. The Microsoft strategy is utter folly by Nokia.
And yes, July of 2011, I was the first analyst to say, it will be Microsoft who will be buying Nokia’s handset business, simply because the other handset makers are abandoning Windows and Microsoft cannot have Nokia also going to Android, which it inevitably has to do. This is how I put it in July of 2011:
It is clear that the Microsoft option is certain death to Nokia. There is no chance for that to now rescue Nokia. Thus every penny spent on any Microsoft evolution is totally wasted. And because Nokia has to transition away from Microsoft as soon as possible, this is going to be enormously painful. Nokia desperately needs to distance itself from Microsoft now. But Microsoft needs Nokia desperately to remain relevant in mobile. While Elop has said there were no talks of Microsoft buying Nokia, if Nokia moved away from the WP7 operating system, Microsoft could panic and rush in to buy Nokia, especially now that Nokia's parts are worth much more than the share price. Now consider Stephen Elop and his loyalties? What a challenging conflict of interest is it, to abandon Microsoft or to drive Nokia into the ownership of Microsoft? Elop has to be fired right now, because he will not look at Nokia's best interests.
Yes, you’re welcome. The Nokia handset business sale to Microsoft was announced just after two years from this blog posting. Elop was a figurehead by the time the negotiations started in secret and Elop was not allowed to attend those discussions.
JULY 25, 2011 - NOKIA TO FALL TO 6% IN NEXT 15 MONTHS
In Q2 of 2011, when I was writing that blog, Nokia stood at 16% market share but was awaiting new Lumia Windows smartphones to launch for Christmas. Most analyst houses were promising Nokia with Windows to get to over 20% market share by around 2013 or 2014. I had said 2011 will fall to 12% but initially I thought the Lumia Windows smartphones would then see a recovery. Now I knew better. As we’d seen the first signs of the design principles of the first Lumia smartphones (designed to please US customers, not global customers) and the carrier boycott against Skype and all Windows smartphones, I had downgraded my outlook for Nokia. I said in late July that Nokia would actually see a FALL of smartphone sales in 2012, when the new Windows smartphones were coming to the market. That the ‘new’ Windows Lumia smartphones would sell WORSE than the ‘obsolete’ Symbian Nokia smartphones they were to replace. That turned out to be true, obviously but again, NOBODY else suggested this in July of 2011. I said that Nokia smartphone sales would hit a bottom level of 6% by Q3 of 2012, after which a ‘slow painful recovery’ could start. From 6% and from Q3 of 2012. That the corporate misery would continue for at least the next 15 months.
Nobody else forecasted single digits for Nokia in 2012. NOBODY else forecasted single digits when Nokia sold Windows smartphones. I said it will get so bad, Nokia will be down to 6% by Q3 of 2012. I was wrong. It was worse than that. Nokia was down to 6.9% by Q2 of 2012 and down to 3.6% by Q3 of 2012. I was hopeful of a recovery to start, slowly and painfully from Q4 of 2012. Slow and painful it was but not a recovery. Nokia continued down the drain even past my point of worst despair as Nokia plunged down to 3.0% markets share by Q4 of 2012. So yes, I was the most pessimistic forecaster for Nokia, and even I could not see how bad it would get. But nobody else saw it even that bad, to be in single digits. This blog was again, by far, the most accurate of Nokia forecasts, by a country mile (you’re welcome). It should make you concerned, however, if the truth was so obvious already in July of 2011, why were some ‘experts’ and ‘analysts’ selling you promises that Nokia and Microsoft would climb to 20% or more in market share. That would seem like gross incompetence in light of all the evidence we had by then. This blog? Never wavered and always was the most accurate, only even I could not imagine how determined Elop would be in destroying the company he was hired to run. Still, every single round, this blog was the most accurate forecaster about Nokia and Microsoft, including yes in July 2011 saying Microsoft Windows OS will never get double digit market share. Never. Nokia would never recover to even double digit market share when the collapse would be over sometime around end of 2012 - while at this time when I wrote that, Nokia still had 16% market share of smartphones.
JULY 28 2011 - FIVE YEARS FROM NOW NOKIA AT 3%
Then we had more and more of details of Nokia blunders and I made my first look five years into the future. From 2011 that is now, 2016. I said Nokia and Microsoft cannot get to more than 3% in 2016. Nokia fell to 3% by 2013 and the business sold to Microsoft was down to 2% last year and will be well below 1% this year. Nobody else said under 5% for long term for Nokia and Microsoft Windows, back in the summer of 2011. I did. (You’re welcome)
In that blog on July 28, 2011, only weeks after Nokia gave its first profit warning, I said that based on all the latest info, we were not headed to a zero-profit Q3 as I originally thought. The news was so much worse, that Nokia was going to actually produce a loss also in its third quarter, which obviously then did happen as I predicted (you’re welcome).
AUGUST 2, 2011 - NOKIA NUMBERING BRANDING FIASCO; CHINA RISING: HUAWEI AND ZTE
Then on August 2, in a Smartphone Bloodbath Year 2 Electric Boogaloo update, I mentioned that Huawei and ZTE were about to crash into the Top 10 and unseat two other Asian brands, Japanese veteran smartphone makers Sharp and Fujitsu (as it shortly also happened). Huawei kept growing and today is the third largest smartphone maker globally. Who talked about Huawei or ZTE back in the summer of 2011 when everybody loved HTC and Palm and Blackberry as the promising future behind the iPhone. (yeah, you’re welcome).
But on Nokia’s side, another self-induced total marketing fiasco arranged by delusional psycopath Stephen Elop. He went against all marketing logic - and against the marketing wizzard Keith Pardy (ex Coca Cola) who was brought in to help with Nokia branding. One of Pardy’s first decisions was to expand the NAMING with Nokia phones, so we had things like Xpress Music line of musicphones, not just semi-cryptic N95 or E7 style number and letter combinations. But what did microbrain Elop do in August? He felt his marketing people were not busy enough trying to explain Windows migration and death of MeeGo and refusal to sell award-winning N9 and various deaths of Nokia’s key projects like Nokia Money in India; Elop wanted them now to communicate a totally useless and counter-productive change in naming, to pure numbers. I was immediately against this madness, reminding that this is exactly opposite of what Keith Pardy had just preached only months prior:
And yes. We on this blog celebrated when Nokia's new Chief Marketing Officer, Keith Pardy, came from Coca Cola, a genuine consumer marketing brand, and one of his first decisions was to change the cryptic Nokia naming scheme and introduce real names for Nokia phones. Unfortunately, Keith is no longer with the company. And now the engineers have taken over the asylum. If a 'name' has too many of them complex alphabeticalisms, then yes, a pure numbers-oriented naming scheme fits nicely with them engineering brains. Smart move Sherlock, going EXACTLY the opposite way of what the top consumer brand marketing guy told you to do. And is it just me, Stephen Elop is destroying everything he can find of Nokia heritage of any kind. So the N8 and N9 were flagship phones. No more. Next expect a 903 or an 872 or whatever number they come up with. I'm sure it makes sense in the first dozen phones but three years later, are you really going to remember and fondly recall your Nokia 781, or wait, was it the 872, or the 767 or the 794. And all this while Rome burns, eh? I am reminded of the phrase rearranging deck chairs while the Titanic sinks.
Well, its one way to be sure the Nokia PR people cannot even accidentially be promoting Nokia's hottest phone, the N9 (or its highly desirable cousin, the N950) but rather to further underline how obsolete they are, they even have the old-fashioned Nokia names. Stephen Elop is certainly an evil genius, he'd make a Bond villain proud for his psycopathical obsession with destroying Nokia.
It did not take long for Elop to then reverse totally on that, and he would allow names to return such as Asha featurephones, Pureview cameraphones etc. But for a while yes, idiot Elop actually insisted even letters be banished, that it was just going to be pure numbers. That didn’t last six months as everybody in marketing ridiculed Elop for this lunacy. By November Nokia was back into names. But I pointed it out first, right as he made that moronic decision in August, that it was indeed moronic.
AUGUST 11, 2011 - COINED TERM ELOP EFFECT
So we had the market share update of the smartphone wars on 11 August, 2011, and in that blog posting I gave my most brutal assessment of Nokia’s performance the past quarter, of any smartphone brand ever, with a grade of F- (F Minus) and wrote that they deserved an even worse grade but no worse grade exists. Then I explained what is the Elop Effect:
Nokia is a disgrace to the industry, while the industry is in hypegrowth stage. This is far worse mismanagement than Siemens or Motorola or Palm (or Microsoft Kin). Nokia's free-fall means that by the end of Q3 they will have fallen behind HTC and RIM, and by Q4 will be passed by LG and SonyEricsson (maybe even Motorola and Huawei). Going from undisputed number 1 with 29% of the market to number 8 with 7% of the market, in a matter of 12 months, that is self-inflicted corporate suicide. When other manufacturers complain of shortages, Nokia factories are idling and Nokia suppliers cry of lack of demand from their biggest client. (And to add insult to injury, Nokia is not even using its idle smarpthone factories to manufacture their new Microsoft-based smartphones - because of the components etc, the factories are not capable of making the Microsoft-based phones, so the first Nokia branded smartphones are actually made by Compal of Taiwan, can you imagine! That you own the biggest, most efficient mobile phone factories in the world, then you force them to be idle, and you pay third parties to make your phones in sweatshops to far lower levels of quality than expected of Nokia branded phones. What madness is this?). I am not the only tech writer who has now suggested Nokia may disappear as an independent company over the next months to come. That is how badly Nokia is now being mismanaged. Oh, and if you thought a CEO doing an Osborne Effect was a sign of incompetence, have you heard of the Ratner Effect? Thats when you call your own products crap (and then are surprised that consumers stop buying, if the CEO says it of own products, that is instantly believed). Now we have a new standard, called Elop Effect, which is combining the damage of the Osborne Effect with the carnage of the Ratner Effect, and we get the Elop Effect.
But the numbers don't lie. If you go from big profits to big losses, if you go from growing unit sales to decline, if you go from being as big as your two biggest rivals combined, to smaller than either of them, if lose half your world-leading market share in a matter of six months - that is the worst performance of any company in the tech space ever. Ever. The worst performance EVER. I am sorry I can only award Nokia a grade of F-. They deserve much worse.
AUGUST 15, 2011 - VALUED NOKIA SALE AT 6-8 BILLION DOLLARS
So as some other analysts were joining me in saying Nokia will probably be sold or split into parts and parts sold, I did an evaluation of Nokia’s handset business. I said I was no evaluation expert in mergers and acquisitions but we could use the recent Motorola purchase as a basis, and just on the patents portfolio part, I valued the final Nokia handset business sale to be worth something in the ballpark of between 6 and 8 Billion dollars (Microsoft paid 7.2 Billion dollars in the end for the handset business when the deal was announced in 2013 and completed in 2014). Again, not a bad call. Nobody else published a valuation of Nokia. I also on that blog talked about all possible buyers of Nokia and what they’d want to keep. It included Hon Hai/Foxconn in addition to of course Microsoft and even the hypothetical ‘management buyout’ option which would be similar to what became of HMD. If you look at what Microsoft took and didn’t take in 2014, and what now was sold either by Microsoft or by Nokia to FIH and to HMD, they are very consistent with that blog, with only Symbian/MeeGo of course now substituted for Android. But yeah. Who else explained that Hon Hai/Foxconn would want Nokia’s factories AND its retail, but not take its R&D or engineering... That blog was five YEARS ago. (Yeah, you’re welcome)
AUGUST 17 2011 - ELOP WILL RUN MICROSOFT’S NOKIA DIVISION AFTER TAKE-OVER AND ELOP IN RUNNING TO BE NEXT MICROSOFT CEO
So as other analysts were starting to ponder about Nokia’s survival and some openly now saying the Windows path was poisoned beyond repair, I was again ahead of the curve. On August 17 I did a deep analysis of why Microsoft needed Nokia and would not let it be sold to anyone else. In it I explained also how Elop was positioning himself to not only remain in control of the Nokia handset business, once it was sold to Microsoft, but that Elop was now angling to become the successor to Steve Ballmer as Microsoft’s new CEO whenever Ballmer would eventually step down. I wrote:
So Elop knows, if Microsoft buys Nokia, Elop gets to keep his toy (Nokia), he will end up owning the future of Microsoft and unless he messes up - and in Microsoft's eyes so far he has not done anything wrong - he is the front-runner to replace Steve Ballmer as Microsoft's next CEO.
And Elop also knows, any other buyer to Nokia now, and Elop is fired instantly, withouth mercy. While no doubt he'll have his old job back at Microsoft, he is now so heavily tainted goods, the rest of his life he will be known for the Elop Effect that destroyed Nokia. No matter what heroics he might achieve in his later career, he will be hounded by that reputation as the man who made the biggest management blunder of any career. His name will be synonymous with total executive disaster. So even if he were to have a comfy job, his life of expecting to be the next Bill Gates or Steve Jobs in the media spotlight will be extinguished. And as Microsoft would lose its mobile path, Elop would also be stuck in a company whose best days were behind it, and he'd have no chance of succeeding Ballmer as CEO.
So what does this mean? Elop is very biased. If any potential suitor were to approach Nokia trying to acquire it quietly, Elop will instantly inform Ballmer and make sure that Microsoft jumps in immediately, and then we'll have an open bidding war.
Microsoft doesn't want the bloated Nokia as it exists now. They preferred that Elop sell off NokiaSiemens Networks (one half of Nokia's employees and a third of its revenue). And ideally, also to sell off the dumbphones handset unit. And fire off tons of unnecessary Symbian etc programmers (as Elop has been doing). Meanwhile Ballmer is a businessman. He doesn't want to pay more for Nokia than necessary. So the continuous dive of Nokia share price this spring has been good news for Ballmer, thinking he can soon buy Nokia at a big discount.
SEPTEMBER 28, 2011 - OPEN WAR WITH CARRIER COMMUNITY
Then in the mission to burn down Nokia, Stephen Elop went to the ‘next level’. As the launch of Lumia smartphones was coming near and many carriers were not eager to help Nokia sell the smartphone OS by the same company that owned Skype - Windows - Microsoft - there was strong push-back by the carrier community. Telefonica said it would not be stocking the early Lumia smartphones (Telefonica is one of the 5 largest carrier groups in the world, based out of Spain they have a vast empire in Europe and Latin America). What did microbrain Elop do? Started to feud with his sales channel and tried to bully them into taking Lumia. That did not go well. But who told you in September of 2011 that Nokia was losing its carrier support? I did. I wrote:
The carriers can see that Nokia, when led by Elop, and allied with Microsoft is by far the most belligerent, arrogant, bullying, unreliable, lawsuit-prone, untrustworthy of ANY handset maker out there. So will they want to support Nokia and Microsoft. Of course not. When they see Elop trying to bully them - and one of the most cooperation-friendly veteran carrier/operator groups, O2 - they will gang up against Nokia. Just like they did against Apple about the virtual SIM card issue. But how will this revenge be served? Like the Klingons say (or like the Sicilians say) revenge is a dish best served cold. The carriers will now line up to promise to sell and promote the new Nokia Windows Phone smarpthones. They will take the marketing dollars from Microsoft and from Nokia. Then when the time comes, ooops, they have a campaign already in progress. The iPhone 5 was selling too well, the Galaxy S2 whatever was in super-demand. The HTC is simply selling better, etc. The Nokia phones will soon find themselves in the back shelves or out of stock.
And if I know my carriers friends, haha, some - maybe many - will 'suddenly' decide, this is too much, and say forget it, to Nokia and Microsoft dollars, and simply decide not to promote those phones at all. And if so, like the revenge served cold, they'll do it very close to the launch date, at the very last moment, to mess up Nokia and Microsoft as badly as possible.
Bullying NEVER works with the carriers. This is sheer lunacy by Elop. But I think this is a bigger story now, I need to write a separate blog about it, and the carrier/operator ethos and what is acceptable and what is not. Elop simply went to the wrong schools. He studied the Rumsfeldian school of collaboration, with the advanced studies of Cheney'an style of backstabbing and conniving (and utter denial in face of facts)
NOVEMBER 2, 2011 - LUMIA FIRST PHONES ARE DISASTER, MARKET SHARE TO FALL FURTHER
I said originally that the ‘cavalry’ was to arrive at the end of the year, 2011, and the recovery can start essentially from Q1 2012 to slow Nokia’s decline around Q3 of 2012 to bring a climb-back from Q4 of 2012. That meant the FIRST Lumia smartphones had to be ‘typically’ good Nokia flagships. Not the dog that was the first Lumia, the Lumia 800. Before it started to sell, when it was launched, and we had the specs and prices, I wrote that this was a clear failure, it will not match what ‘should have been’ and it will cause further fall in Nokia market share - below what I had expected before. That is indeed what happened. Nokia market share from Q4 of 2011 (12.4%) fell to 8.1% in Q1 of 2012 and to 6.7% by Q2 of 2012 - essentially the main period where the Lumia 800 had its role as the flagship of the series. I said very clearly that this was a disappointment and that Nokia’s perforamance in early 2012 would be even worse than I had predicted - as it turned out (you’re welcome). Many others thought the Lumia 800 (and its sister phone 710) were great smartphones and would sell well. I knew they were not. Here is how I wrote in November 2011:
The first Lumia phone could have been a world-contender. In fact, it SHOULD have been. If Elop was in any way competent, it truly WOULD have been. You and I know, if Anssi Vanjoki was in charge and this was the make-or-break phone for Nokia, we would be celebrating the coolest phone ever made (think how excited we were with the N9 all while Elop tried to kill the enthusiasm). At the very least, Elop should have made it a true clone of the N9 with NFC and 3.9 inch screen and forward-facing camera etc. But no. This is a lame phone. The next Lumia is far too far in the future. Nokia will suffer more market share loss in Q4 and into Q1. The losses generated by the smartphone unit will continue.
DECEMBER 15, 2011 - ELOP FEUDING WITH OWN SALES FORCE
Then even more Eloppian madness. He was scapegoating his sales staff, firing some and letting others leave, replacing the best sales force of phones on the planet, with bullies from Microsoft. A long blog about retail relationships and carrier relations, where I ended on these words about Nokia’s own sales and their lunatic CEO:
The decision to switch away from Symbian and MeeGo to Microsoft was a choice by Elop, and he could select the timing of when to do it. He knew what he was doing. He planned it. Any graduate of business school knows, if you decide to inflict such severe damage to your company - that in your official Nokia results you warn that the transition-related problems will last for two years - then you minimize all other changes. You act as the epitome of stability for those two years, you do not rock the boat. You do not cause additional pain and stress to the company, its employees, its suppliers and partners, its sales channel and customers, and its end-users. You don't make any other changes unless absolutely necessary!
And for whatever problems, real or imagined, Nokia may have had in its handset hardware, its operating systems and software, and its ecosystem - Nokia's sales were true heroes. They achieved growth with inferior products and services when Elop took over. These were the best asset that Nokia had. If Elop caused the self-inflicted wound with his Elop Effect, then the worst possible thing he can do, is to compound that error - by firing some of his best sales people (or letting them leave) and related sales organizations.
I wrote before that the Elop Effect is like finding your friend has a heart attack, you start to strangle him, and then to be sure, you take your shotgun and also shoot the friend in the face (like Vice President Dick Cheney). What Elop is now doing with his sales force, is seeing a doctor rushing in to try to help your friend, and you then pour gasoline over the doctor and set him on fire...
Please pay attention to Stephen Elop and the Nokia saga. We are witnessing the world record in incompetence in managing a Global Fortune 500 sized company. He is single-handedly destroying the company and we have a front-row seat. This story will be reported in future MBA textbooks as the ultimate folly in running a tech company and I promise you, future students of business will be so incredulous about all the silliness, many will initially not believe the case study is true, some of the madness is so ludicrous that some students will think there are typos in the textbook.
DECEMBER 21, 2011 - ELOP DEMOLISHING REVENUES SIZE OF ORACLE, PROFITS SIZE OF GOOGLE
As the numbers kept coming in, I was calculating the Elop Effect and how damaging it was. By December 2011, in just 9 months, Elop had wiped out market share the size of Blackberry (remember, a year prior Blackberry was the second largest smartphone maker); revenues the size of Oracle or McDonalds; and profits of the size of Google. That was our 27 Billion dollar man. Elop was destroying 75 million dollars of revenues EVERY DAY he remained as CEO. A trained monkey could not destroy Nokia as fast as Elop was doing. And of course I was leading the call to have Elop fired.
DECEMBER 23, 2011 - FIRST LUMIA SALES SO WEAK, NOKIA WILL NOT RELEASE THEIR NUMBER
And yeah, then came the cavalry, or what little of it appeared. Lumia did indeed start to sell, in a couple of markets in modest numbers. The preliminary market data was brutal. So I predicted on 23 December that Nokia’s Lumia sales were so bad, Elop will not reveal the number in the Q4 results of Nokia out in late January (and he didn’t). (you’re welcome).
REVIEW OF MAIN FORECASTS I GAVE ABOUT NOKIA-MICROSOFT DURING 2011
I said Nokia’s smartphone business would collapse
And that the dumbphone business would suffer
And that Nokia corporation as a while would be damaged
I said Nokia smartphone market share would hit 12% in 2011, fall further down to 6% by late 2012 and drop even below that in 2013
I warned Nokia smartphone business would become unprofitable
And then total Nokia corporation would also report losses
I said Windows smartphone OS market share would not ever climb to double digits
I later said it won’t return even to the 5% level it had in 2010
I warned of the stupidity of messing with Nokia naming/numbering/branding
I pointed the exact date and reason when Windows smartphone OS died in the market (Skype)
I said Windows partners would desert the platform
I warned Lumia smartphones could not sustain a 1-to-1 transition from Symbian smartphones
And I said Lumia first sales would be so bad, Nokia would not even release their number
I said Elop would be fired from post of CEO of Nokia
I later said Nokia would eventually have to abandon Windows to go to Android
I said Nokia will not survive as a handset maker after this strategy change
I said Nokia would be split into its parts
And that Microsoft would have to buy the smartphone business from Nokia
I calculated the value of the Nokia sale to be between 6 and 8 Billion US dollars
I forecasted Elop would be given the Nokia business to run when he was back at Microsoft
And that Elop would be in consideration to replace Steve Ballmer as CEO
I said that it was possible Hon Hai/Foxconn might (eventually) buy the dumbphone business
And that the smartphone side of Nokia could be (eventually) sold to a Nokia management buyout team
I said this move by Nokia would be seen as an epic strategic failure
And I said Elop would be associated with unprecedented corporate suicide
Finally, I predicted this would be the biggest failure by any global Fortune 500 sized company leading its own industry
All of this came true. In almost every case, I was literally the world’s first person to make those forecasts and predictions. In most of those cases, there were contemporary ‘expert’ forecasts and commentary suggesting the opposite result, ie that whatever was the latest step, that it would be good for Nokia/Microsoft. I never made opposite forecasts on these issues suggesting it would be good, before I said it was bad. And I did not make similar pessimistic views of other rivals; indeed I accurately forecasted Samsung’s surprisingly fast rise to the top which nobody else saw; as well as Huawei’s emergence as a big new smartphone rival globally again which went under the radar of all other ‘experts’.
TOMI IN 2012
Then lets take specific refinements and details that I added to the above, in the next years. I will not go to every detail and specific. But lets start right at the start of the year.
JANUARY 2, 2012 - FOUR OPTIONS FOR NOKIA FUTURE
I said the year for Nokia would be an ‘Elop watch’ awaiting when the new CEO would be fired. I thought Nokia Board was smart enough to fire him during 2012. They waited until 2013. But this is how I summarized the future options for Nokia:
One of four things will happen - Elop will be fired, or Nokia's smartphones unit will be sold, or all of Nokia will be sold and likely be split up into parts (which might leave the Nokia brand alive as a small entity but not run by Elop) or Nokia will be bought up by Microsoft (and Elop would run Nokia as a handset division of Microsoft).
Not a bad call. Timing was off, this didn’t happen until 2013 (and that is mostly the fault of the Nokia Board who should have moved FAR faster as the evidence was overwhelming) but yes. Did option 3 happen? Nokia after the sale of the handset business was far smaller (mainly Networks) and Elop no longer its boss. Also obviously the handset business was sold specifically to Microsoft and Elop went to run its handset division for a year before he was fired there.
In that blog I also predicted the first Lumia smartphones will face exceptionally large return rates, with disappointed buyers (as it then also happened). As to the Nokia sale, I said in January 2012, that if and when Nokia’s smartphone business was sold, then the Nokia brand would also disappear from the smartphone market (as also happened after Microsoft took over the business). And then I warned this about whether Microsoft is better served by a loss-making independent Nokia, or Microsoft buying the Nokia unit and taking over the handset business. I wrote this on January 2, 2012:
Incidentially, if Microsoft buys Nokia, that will be a repeat of when Microsoft bought Danger and launched Kin. It will not turn out well, the carriers will punish Microsoft and that version of Lumia will die even faster, than if Lumia is produced by an 'independent' Nokia run by Elop.
That is what happened from 2014 to 2016 when Microsoft took over the handset business. It is EXACTLY what eventually happened. From 2012 to 2014 under Nokia, the Lumia and Windows OS brand stood a steady 3% market share. After Microsoft took over it went from 3% in 2014 to 2% last year to under 1% now.
MARCH 8, 2012 - MORE ELOP MADNESS: TABLETS, LOCATION SERVICES
So then as Nokia was collapsing, Elop came with more CEO madness just over a year after his idiotic memo (oh, by this time in 2012, Elop had admitted that yes, his memo did damage Nokia handset sales; we found out later he also was reprimanded by the Board for that memo, which is why Elop retracted a dozen of its more blatant lies). But when you thought a handset maker struggling to manage a transition to a new platform would not need more distractions, Elop gave us two. He promised Nokia would launch tablets. Tablets? Yes, tablets. He clearly was infected by that Microsoft disease of iEnvy. Anything that Apple does, Microsoft has to also do, no matter how much it hurts them, like Kin phones, Zune musicplayers and haha, Nokia-Lumia smartphones. So in 2012 Elop said: tablets! We now know tablets were a boneheaded idea by 2012 - see Blackberry. And many pundits LOVED this idea. Not me. I wrote:
For any handset maker, to launch tablets is utter madness. Witness Motorola and RIM. Tablets are a tiny market niche compared to all portable PCs which are a part of all PCs which are a smaller market than smartphones. Smartphones are bought, used, sold, marketed in similar ways to other smartphones, but tablet PCs are bought, used, sold, marketed in totally different ways to smartphones - in similar ways to PCs. So with tablets, we don't buy them at handset stores (even though a few are typically offered). We tend to buy our tablets at PC stores. The king of the hill in tablets is Apple with about 75% market share with the iPad. The rivals who have tried to compete from the smartphone side like Blackberry, have failed miserably. The only rivals who have had some success have been like Samsung who were PC makers already and had that sales channel already.
Any Nokia branded tablet would fall into the aim of the iPad. Can it be as good, of course not. Nokia has tried for five years now to match the iPhone and while the N9 with MeeGo came close, no Nokia smartphone, not even the Lumia 900 has matched the iPhone. Why would Nokia's tablet be better than the iPad. Of course it would not be. And where are the Nokia stores to sell them? Nokia abandoned its retail flagship stores. Nokia does not have any relationship with the PC sales channel. Why on earth would it invest any R&D to try to sell a new electronic gadget where the market is tiny and utterly dominated by Apple? This is madness.
The right strategy, is to take the N9 and N950, running MeeGo, the most desirable most highly praised Nokia smartphones ever, on Nokia's best OS platform ever, that already are in production, and immediately expand their availability to every Nokia market. Remember the German magazine who loved the N9 and MeeGo so much, it instructed its readers to drive to Switzerland or Austria to get their hands on an N9 (rather than buy the disappointing Lumia handsets sold in Germany at the time). Or see how the Guardian reported on how disgusted it was with the Lumia 800, that it was returning the handset. Nokia problems are not that it cannot make a desirable product. Nokia problems are that the CEO pushes an undesirable product on its customers and refuses to give the desirable product. That is why Nokia is making a loss in its smartphone unit. As we calculated here, even with no Nokia marketing support and selling only in far-away bizarro markets, the N9 on MeeGo was outselling all Nokia Lumia smartphones in Q4 - the launch quarter for both platforms - and how much was MeeGo outselling Lumia? By 3 to 1. What idiot CEO talks about launching a costly tablet PC while he has a hit smartphone in his pocket and refuses to sell that?
Yeah. Luckily the Nokia Board blocked Elop from that idiotic idea. Eventually a phablet did come on Lumia series and even after that, after Nokia sold its handsets biz to Microsoft, it released a modest-run tablet-only non-smartphone Nokia on Android. Were they massive hits that gave Nokia the tablet world? No. A moron’s idea. Yet Mr Moron did not relent on the two highly beloved MeeGo devices, N9 and N950 and allow them to be sold in major markets. He teased us with tablets but refused to let the most desirable Nokia smartphones ever made, to be sold in most major markets. That is how rotten he was as a CEO. (You’re welcome). But wait, there was more.
Then Location-based services. So Nokia - which had JUST ended its run as a software company, to focus on HARDWARE only - partnering with Microsoft. Nokia had already ended its mobile money project, sold its mobile advertising arm, and cancelled most of its media etc projects. Then idiot ELOP, when Nokia was bleeding, bleeding badly, reporting losses in all units - suddely suggests more waste, of the LEAST successful aspect of mobile that we’ve ever measured. The. Worst. Sector. Of. Mobile. Location-based services. Where nobody had ever made any money. Where Nokia itself lost a fortune in its mapping acquistion. Elop promised location-based service focus (idiot). This is how I put it
Mark my words, Nokia will fail miserably with this. Nokia's successes will come from other areas, not from location-based services. And Elop will have to eat those words too, like he did with so many from last year. This is sheer madness. Only a complete ignoramus would commit the company on this futile journey, wasting millions in that pursuit. Elop is once again acting like the ostrich. The facts are staring him in the face, he simply hides his head in the sand and refuses to see the truth. He is substituting his own imaginary world, in place of the truth. This is textbook delusion. It would not be so bad, if Nokia was a filthy-rich hugely profitable company, that it could indulge its CEO in some silliness, but Nokia cannot afford this. Nokia has to focus on areas where the industry is strongest (cameras, music, gaming, social networking, advertising, mobile money), not where it is weakest (location-based). Note - Nokia HAD strong initiatives in cameras, music, gaming, social networking, advertising and mobile money. If Elop had bothered to do what he was hired to do - help Nokia execute better - he'd have big successes out of those.
And what happened? Nokia sold its ‘Here’ mapping services finally in August of 2015 to Audi, BMW and Daimler, for 3 Billion dollars. Nokia had originally bought the Navteq unit for 8 Billion. Was it a wise thing to waste Nokia resources on this utterly futile and ultimately massively loss-making venture - where ALL available data said it is hopeless? Yeah (you’re welcome).
On March 8, 2012, Elop also announced another death-nail to any possibility of a Nokia revival. After several rounds of layoffs and shutting of factories, Nokia now was cutting its product line. That is a NICHE player strategy (Apple) which Apple ITSELF was moving away from already at that time (today Apple has already 3 separate products it releases per year) and Samsung pursued aggressively an EXPANDING product line at this time, as it had become the world’s largest handset maker and largest smartphone maker. But Elop? Cutting the portfolio. And worse - then standardizing on Lumia clone form factors. Some people do like that, but not everybody. Elop was shutting doors that used to be open for Nokia. Its not that those doors were shut in his face, he was VOLUNTARILY closing them. And I ridiculed him on the blog about it, saying this will further hurt Nokia sales (as it did). (You’re welcome).
MARCH 20, 2012 - DOWNGRADED NOKIA 2012 Q4 FORECAST TO 6%
So then on March 20, 2012, we had enough early feedback about how badly the early Lumia smartphones were failing in the market. I said my original ‘Nokia will bottom out at 6% and start to climb after Q3 of 2012’ forecast was based on the assumption that Nokia would be ‘sensible’ with its first Lumia smartphones. The whole future of the company depended on those first Windows OS smartphones being hit phones, doing at least as well as past Nokia launches. But I warned several times from December to February, that Nokia was not even able to sustain a 1-to-1 transition from Symbian to Lumia. Now, in March 20, 2012, while still many expert analysts were promising 20% market share eventually for Windows and Nokia Lumia a few years down the line, I was on record with the worst forecast published (8% for end of 2012 and 5% for 2013). And now, on March 20, I made my first heartbreaking downgrade of that. I said no, there will not be a recovery moment in 2012. The disaster will continue and Nokia will be down to 6% by Q4 of 2012. I said this before Q1 numbers were even seen and literally no public numbers were out on Lumia (because Elop was afraid to reveal the Q4 numbers from 2011). How bad was it? Nokia by Q4 of that year did not do 6% of the smartphone market - my forecast literally the most pessimistic published by anyone by March of 2012. Remember Nokia was at 12.4% in the just-ended Q4. No, Nokia did not manage 6%. It ended the year 2012 at 3%. BUT WHO TOLD YOU it is worse than anyone projected, already looking at the first Lumia product line and early strategies? Yeah. I missed that forecast by 50% - yet I was BY FAR the most accurate forecaster, when the next most accurate forecaster missed it by 70%... (yes, you’re welcome).
MARCH 28, 2012 - DOWNGRADED WINDOWS OS 2012 Q4 MARKET SHARE TO 6%
And then in my Smartphone Bloodbath Year 3, Digital Jamboree blog, I added the Widows Phone OS impact to the downgraded Nokia and Lumia forecast. I did an estimate of the mix of OS platforms sold by Nokia and projected Windows would be down to 6% for Q4, again the lowest forecast by any published expert in mobile at that time in March of 2014 - and again, I was off by 50% because Windows ended the year with 3% but again, I was by far the most accurate forecaster - and most importantly, I warned the industry that the Windows vision was not coming true. (You’re welcome).
APRIL 11, 2012 - DOWNGRADED NOKIA LUMIA TO 4% MARKET SHARE Q4
Then Nokia gave its next profit warning and I sounded the end-of-the-world alarm bells. I said Nokia will fall to 4% by year-end. We had not even had Nokia’s Q1 numbers yet. the last numbers we had for the Q4 quarter said Nokia held 12.4% market share. Most pundits promised Nokia and Windows to have 12% market share by end of 2012 or better. I had already been the most pessimistic saying 8% and then lowering that to 6%. Now I said no, it is that bad, Nokia will fall to 4% (and so will Windows Phone). Reality was.. 3%. (Yes, you’re welcome).
MAY 1, 2012 - NOKIA MARKET SHARE AGAIN DOWNGRADED NOW TO 3% FOR Q4 OF 2012
And then we saw finally the Nokia numbers for Q1. We had even more info about how much the retail channel was boycotting Windows smartphones and how much Lumia was hated and had huge return rates and how many carriers were not taking even the modest Lumia portfolio (but clearly were taking Symbian smartphones such as the brand-new 808 Pureview with its magnificent 41mp camera and HD video recording, with HDMI output). I gave my final and once-again downgraded forecast for Nokia smartphones to Q4 of 2012. I now said it was going to be 3%. I had seen one quarter of sales of Nokia for the January-March quarter which included finally the first reported Lumia numbers. And I said wait. Even 4% is too high. This corpse will not do more than 3% by the fourth quarter (remember, Nokia’s market share that Q1 of 2012 was still 8.1% and Nokia was rapidly rolling out a whole portfolio of Lumia devices from the new flagships to the lower-end Lumias). And yes. Obviously, 3% is exactly where Nokia ended the year, in Q4 its market share was not just 3%, it was.. 3.0%. That is again, perfection. And NOBODY else said in May that Nokia was gonna go down to 3% by Christmas when just a year ago, Nokia had a third of the total smartphone market. That would be literally losing 9 out of 10 customers you had. But incredible as it sounded, I predicted that on May 1, 2012, and that is exactly what Nokia ended the year with. Exactly 3.0% (You’re welcome).
MAY 18, 2012 - MICROSOFT HAS LOST THE MOBILE AGE IN COMPUTERS
So then on May 18, I did an occasional look into the far-smaller computer side of tech (mobile is 3 times larger as an industry). I took a review of Microsoft’s long dominance that started with its DOS operating system for the IBM Personal Computer which Microsoft then sold to ‘clone’ makers and then evolved to Windows and took the vast majority of the PC industry profits once it held a near-monopoly on the desktop and the newer laptop style computers. Microsoft had been on track to also do well in smartphones (Windows smartphone OS peaked at 12% and momentarily second place) but by May 18, I was ready to call it, Microsoft had now officially failed in smartphones where Google Android had won, and where even number two OS, Apple’s iOS utterly towered over Microsoft’s failing Windows OS. Back in 2012 many tech writers still sold promises of an ‘ecosystem’ around Windows. I said it was dead. I said so on May 18, 2012. Android had won and Microsoft Windows had lost the PC wars as they entered the smartphone age. Note - this was written as the tech idiots were still falling for the standard Microsoft lie - the next version will fix it. Back then it was the silly promise of a Windows 8 miracle version to fix all the things that were wrong with Windows on smartphones (hahaha). So yea, today all tech analysts agree, Microsoft fucked it up in smartphones and lost that war to Android, which means Google will control computing of the next decades, and Microsoft was played out of the game. Who said it first? (You’re welcome).
MAY 23, 2012 - LUMIA WAS NOT OUTSELLING iPHONE IN CHINA
Then there were all the lies by the Microsoft and Nokia propaganda machine. Like the sudden wild story that Lumia and Windows Phone were outselling Apple’s iPhone in China (no they weren’t). And I told you so (you’re welcome).
JUNE 7, 2012 - NO WINDOWS WILL NOT PASS iOS BY 2016
Haha more utterly silly forecasts. I don’t deal with those that are plausible, but IDC’s June 2012 forecast was bizarre - after all the utter despair that came out of Nokia and Microsoft. They still dared project that by 2016 Windows Phone OS would pass iOS. Good luck with that forecast IDC. You still have seven months left of this year to pray for that miracle but as Windows Phone was at 0.7% market share in Q1 of 2016 and Apple was at 15.3%, and as Microsoft now has sold its handset business and is firing 1,800 remaining Lumia staff, I think its a safe bet to say, 2016 ends with IDC having yet another silly forecast in its past. Yes as recently as June 7, 2012, after four quarters of collapsing Nokia smartphone sales, three quarters of losses in the smartphone unit and two quarters of disastrous Lumia Windows smartphone sales - IDC promised Windows would pass the iPhone to become second-bestselling smartphone OS by this year 2016. Ain’t happenin, dudes. And who told you right on that date, June 7, and why? (Yeah. You’re welcome)
JUNE 8, 2012 - VIEW OF NOKIA SALE TO MICROSOFT
By 2012 there were plenty of rumors that Nokia might be sold and several buyers were mentioned in the financial press starting with Samsung and ending with of course Microsoft. I did a speculative blog discussing various possible buyers. On Microsoft, I wrote that Microsoft could not afford for the Lumia business to end, so even if Nokia was bought by someone else, Microsoft could probably pick the Lumia Windows smartphone part - very unprofitable business - for a song, whoever bought the other parts of Nokia. But of course I also discussed the idea of Microsoft buying Nokia outright. I ended that part of the analysis with this:
If Microsoft buys Nokia, they would of course sell the NSN unit and the low cost handsets. They would escallate the end of Symbian and MeeGo projects. The Lumia unit would become a division of Microsoft with Elop in charge. The Nokia brand would be sold, being totally unnecessary in the Microsoft world. The carrier hostility towards Microsoft would only grow over time, the Lumia sales would linger in very tiny market shares (think Palm, not Blackberry) kept artificially alive by Microsoft for a couple of years, after which the unit would go the way of the Kin and Zune.
So note, that obviously suggested a total buyout of Nokia corporation, as it ended, Nokia only sold the handset business (about two thirds of its total business before the Eloppian destruction started) so the networking business and mapping stayed at Nokia. But haha, did Microsoft want to get rid of the dumbphones business and Nokia brand itself (sold it now to Hon Hai/Foxconn). Did Microsoft put Elop in charge of the handsets business when it was a division at Microsoft. Did the resulting Lumia sales collapse further under Microsoft ownership to be in line with 2012 level Palm (under 2%) rather than 2012 level Blackberry (5%) level yeah. Essentially a perfect picture of how the Nokia deal worked out. (You’re welcome).
JUNE 14, 2012 - CALCULATED FINAL COST OF BURNING PLATFORMS MEMO
So yeah, did the math for you. Did anyone else bother to calculate how costly the Burning Platforms memo actually was? It caused an instant collapse of Nokia handset business, not just smartphones but also dumbphones. It ended up wiping out 13 Billion dollars of annual revenues (permanently, unrecoverable) and demolishing 4 Billion dollars of annual profits (permanently, unrecoverable). I did the full math for you, and then summarized the carnage like this:
So how big is the damage? Sit down before you read this. The last 12 months, the first four full quarters after the Burning Platforms memo, Elop admits he caused damage to Nokia smartphone sales. How bad? The actual total loss of what Nokia should have done, and now has managed is.. 3.17 Billion Euros (4.0 Billion US dollars). He destroyed 4 BILLION dollars of PROFITS in the first year after his Burning Platforms memo. It shouldn't be called Burning Platforms, it was the Burning Profits memo. Four BILLION dollars!!! Profits!!!
4 Billion dollars of profits in year 2011 would have ranked you 130th biggest company in the Global Fortune 500 by profits!!! Four Billion. Four Billion-with-a-B??? Lets put this in context a bit. In the past 12 months, Elop's mismanagement burned profits that were more than the total profits earned by say.. Nissan Motors globally, or Home Depot, or China Life Insurance, or Boeing, or Deutsche Bank, or UPS or Walt Disney..
JUNE 27, 2012 - FORECAST FOR 2013 NOKIA SMARTPHONES: 3%
And then my revised forecast for year 2013. My then-current - and world’s most pessimistic forecast for Nokia smartphones for year 2013 said Nokia would be down to 5% for 2013. That was from before Lumia smartphones were sold. Now that we had half a year of early Lumia sales, I could see far more clearly how bad it would be. Year 2012 was a disaster. Microsoft muppet army was selling the lies of ‘Windows 8 will fix it all’ (together with other lies like the British youth are tired of the iPhone and in China Lumia and Windows Phone are outselling the iPhone). I ignored the silly lies and hype, I went with the math, and I downgraded my 2013 forecast. I said in June of 2012 that 2013 will end with 3% for Nokia smartphones. Full year. Actual? Nokia did 3.1% for 2013. (yes, you’re welcome). NOBODY else said it would be this bad. I told you EXACTLY how bad it would be - EVEN WITH that brand new Windows 8 miracle operating system.
AUGUST 21, 2012 - LOCALYTICS ISSUE BOGUS WINDOWS STATISTIC
Then we had more of the mobile industry charlatans. Now it was Localytics. When all other analysts had Windows Phone OS selling under 5 million total units as the current Q2 level of sales, Localytics made huge headlines how their math found 8 million. Of course they were wrong, probably were paid to say that my the Microsoft Mafia. Who told you that story was ludicrous and their math was bizarre to say the least? (You’re welcome).
AUGUST 22, 2012 - WINDOWS OS TO DECLINE TO 1% IN COMING YEARS
Then we had the feuding now as Steve Ballmer of Microsoft and Stephen Elop of Nokia were breaking up their ‘bromance’. Microsoft was threatening to launch its own smartphones (Surface) and Nokia was threatening to do tablets and cheap Linux smartphones and even might run Android alongside Windows. And then Ballmer said there was going to be no migration path from the Windows 7.5 OS that early Nokia Lumia smartphones were using - to the new Windows 8 OS (what an asshole!). So of course Nokia sales fell even further and Nokia’s smartphone unit went into a stage where it reported a 49% loss on every Lumia phone it managed to sell. And as Nokia was now the only Top 10 smartphone maker left doing Windows (yes all others had bailed by now and were doing Android) it meant Windows OS was CERTAIN to die as well, on the smartphones. I saw a near future level of 1% if things went normal for Microsoft’s way of doing business. Here is how I wrote it:
Lets not just now pretend that there is some rosy future to the Windows Phone 8 in mobile smartphones. It no doubt will sell well on the PC side, but as I said, it will happen as eary as 2014, that Android will pass Windows as the planet's most used computer OS, when counting PCs, tablets and smartphones, combined. Yes, Microsoft's reign comes to an end in less than two years from now. Windows 8 will no doubt be a big success but Windows Phone 8? Maybe hit a couple of percentage points if Microsoft is lucky. 1% if things go 'as usual' for Microsoft in mobile. And 1% is the level where even Palm quit this industry.. This Nokia gambit was Ballmer's last best hope and it was ruined, not by Ballmer, his grand plan was ruined by 'his boy' Stephen Elop, the Microsoft Muppet, the most incompetent CEO of all time
And yes, Windows OS hit 1.1% in Q4 of 2015. Its now below 1% and falling fast. That was yes, the level where Palm quit and it was the level (dropping below 1%) when even Microsoft admitted, this is a dead duck, and it sold the remains as we discovered two weeks ago. But who told you in 2012 that Windows OS - with its wonderful new Windows 8 coming - would drop to 1% market share and that then the Nokia Lumia windows unit would be shut down? Yeah. (You’re welcome)
TOMI IN YEAR 2013
MARCH 19, 2013 - NOKIA SALE IS INEVITABLE
When I did my fourth annual edition of the bloodbath previews: Smartphone Bloodbath Year Four: Smartphones Galore - I spent most of the Nokia part just speculating on how and what parts of Nokia would be sold. It was then inevitable, I was not the only one speculating it and rumors were about of several buyers. We found out later that already in February Nokia had been meeting with Microsoft seriously about the sale (with Elop no more in real power and not attending those meetings). The sale was announced half a year later.
On the smartphone chances, I said Nokia’s upside was 3%, the business downside was 1%. From that point on, Nokia annual share never was above 3.1% and the quarterly market share never went above 3.5%. It was down to 1.1% by Q4 of 2015 (and 0.7% now on the latest numbers). I don’t think there is any other analyst who said definititively in January 2013 that Nokia Lumia Windows smartphones could never climb above 3%. There were still many who were promising 15% market share miracles. But yeah. Nokia to be sold ‘inevitable’ (You’re welcome). Nokia and Windows never to exceed 3% (you’re welcome).
AUGUST 27, 2013 - ELOP WILL NOT BE NEXT CEO OF MICROSOFT
Then Steve Ballmer was forced to quit from CEO post at Microsoft. Elop was immediately in the speculation as his replacement. I said Microsoft are way too smart to hire an idiot like Elop. He obviously was not picked. But many seriously suggested this, the worst CEO ever, would be a good pick. I was not alone saying thats sheer madness. Obviously Bill Gates is a smart guy and saw through the nonsense and didn’t ever consider Elop seriously.
SEPTEMBER 3, 2013 - NOKIA SOLD TO MICROSOFT: WILL FAIL
On September 3, 2013 I received the news that Nokia was selling the handset business to Microsoft, while I was in transit on an airport and just briefly had a moment online. I wrote a short summary and gave my one-line judgement: “With Elop in chrage of that unit at Microsoft, expect the damage to continue and this unit to be a failure at Microsoft in the long run.” Yes. It didn’t even take that much of the ‘long run’. Less than two years and 8 months from this point, after several rounds of layoffs, continous mounting losses, firing of Elop; the Microsoft Nokia project was formally ended with the sale of the last parts and layoffs of the 1,800 last remaining Lumia staff. So yeah ‘expect the damage to continue and this unit to be a failure’ was pretty much 100% on the money haha as a quick opinion (You’re welcome).
SEPTEMBER 3, 2013 - MICROSOFT WILL FAIL WITH NOKIA
And then I wrote my deep, thorough analysis of this purchase and ex-partnership and said it will fail. I explained all the myths, I showed all the facts and then I said, comparing Microsoft’s purchase of handset maker Nokia, to its previously failed purchase of handset maker Kin:
We've seen this movie. We saw the highlights version in Kin. Now we see the TV full-season drama version of the same disaster, but in greater size. This purchase by Microsoft will never turn successful. But it will further anger Microsoft's PC and tablet partners. And obviously scare away what remained of smartphone makers. It will perennially draw profits into the futile attempt to make a success of the dead Nokia remains.
SEPTEMBER 4, 2013 - MAYBE NOKIA MAY RETURN
And then I wrote my thank you love-letter to Nokia, my former employer, a long-time consulting client of mine, a proud Finnish tech institution and my favorite tech brand of all time. I ended that sentimental journey two years and 8 months ago with these words:
Our lives were comprehensively changed from those of our parents' generation due to mobile phones. For most of us, that first phone was a Nokia phone. For many of us, our most favored phones over the years have all been Nokia branded. More than any other tech brand, Nokia has brought digital connectivity and bridged the digital divide on the planet. Connecting People. One Nokia phone at a time. And we loved you for it. We will miss you Nokia as a consumer brand. Please fare well as the networks provider and if the gods of technology have any sense of justice, they will let our Nokia return one day to again live with us, in our pockets ...and in our hearts.
That day is now coming. I wrote that in sad melancholic and hopelessly romantic mood back in 2013, not seriously believing in such a fairy-tale ending. Now we do have the return of the real Nokia. On Android, on Nokia-designed, phones with Nokia patented tech, by Nokia engineers, built in Nokia factories. The companies who now will run that business are FIH and HMD. They acquire a large part of what remained of ‘original Nokia’ handsets including that staff (most who were fired by Microsoft were specifically Lumia people around Windows Phone). And the ‘real’ Nokia, old Nokia is still involved as a patents parent and minority stake owner, with licencing income from this new deal. This is ‘real’ Nokia, on Android, as so many of us wished for back when we saw the Lumia and disastrous Windows Phone with its infamous 101 faults. So even when I write something as pure sentimental drivel, I seem to be hitting the prediction haha, thats how much I can’t miss with Nokia. Who else said the day after the day Microsoft bought Nokia, that not just will Microsoft fail, but inspite of that, Nokia will still return..
TOMI IN 2014
JANUARY 4, 2014 - NOW MATTER OF TIME FOR MICROSOFT TO SHUT IT DOWN
Then in 2014 we get some ever-more-ominous items about Microsoft’s pending end to the Nokia saga. I started the year with my fifth annual preview of the Smartphone Bloodbath Year Five: Who is Left Alive. I wrote that Microsoft will end the Nokia Lumia Windows Phone smartphone nonsense and will fire Elop but it was a question of time. It depended on how long they were willing to throw good money after bad. I wrote
But during 2014 no matter what miracles Microsoft were able to achieve with its new Lumia (Nokia) unit, much of 2014 will be just adjustments and corrections and this is not a year of Microsoft/Nokia comeback. Microsoft-Nokia will be fighting just to remain relevant and in the Top 10 throughout this year. If you want to see the glass as half-full, then maybe in year 2015 we can hope for a comeback. If you want to see the glass as half-empty, we are now counting time till Microsoft shuts the lights out from the futile purchase of the Nokia handset assets. Although with Microsoft’s deep pockets. that will take years still.
As I’d already previously said this unit will never get past 3% market share, my prediction stood and turned out true. As to Elop, he was fired just a year after he came back to Microsoft.
FEBRUARY 4, 2014 - NEW MICROSOFT CEO WILL GIVE SECOND GUY A YEAR OR TWO
So on February 4 we learned the name of the new CEO of Microsoft and I wrote a blog about him and Microsoft’s future and in it of course a long bit about the pending doom of the freshly-acquired Nokia handset business. I said Satya Nadella will let Elop play around with Nokia for a year. Then fire/remove Elop; then give SOMEONE ELSE a second chance to make the Nokia thing work out. And after that is dead, it will be shut down. The second guy to have 1-2 years. This is how I put it:
The new CEO will probably give Elop a chance at the helm of the Nokia he brings to Microsoft. It will continue to be a disaster and the new CEO very likely sees the history and will fire Elop - no do the Microsoftian amputation by giving Elop a non-job with no staff like say SVP of Mobile Strategy - and then post Elop into some far-away office like Ouagadougou or Antananarivo. But the CEO will give the Nokia unit another boss no doubt a very capable one who will spend another year or two in hell trying to turn the doomed operation around. How much beyond 2016 can Microsoft linger in useless state as a nobody of mobile will primarily depend on how long the profits from desktop Windows and Office Suite sustain the luxuries of loss-making divisions.
Yeah. Elop fired summer of 2015 (one year and some weeks). New guy had just under a year to prove, there is totally no salvage possible. When he reported to Nadella - this truly is a dead duck, Nadella did the smart thing: Sell what we can, shut the rest. Less than 12 months was all the new guy had the unit before it was over. (You’re welcome.) So little did I care about any chances at Microsoft, to this day I haven’t bothered to learn the name of whichever VP was running that dead unit there that did the Lumia smartphones etc.
FEBRUARY 6, 2014 - NOW ITS CANALYS WITH BOGUS WINDOWS SMARTPHONE STATS
And then wearing my ‘stats police’ hat, I took on the next idiots bought by the Microsoft Mafia: Canalys. They came out with a wild claim that Windows Phone was growing faster than Android haha. I pointed out that Windows Phone OS was actually COLLAPSING sales and Android had taken over the world, and put Canalys idiots to shame. But again, how many pundits and experts and analysts fell for that bullshit (You’re welcome).
FEBRUARY 25, 2014 - NOKIA ANDROID BASED X SERIES SMARTPHONES
Then Nokia did rush its rumored Android based smartphones to the market, just to tease Microsoft (I bet that was because of some last-minute haggling by Microsoft, trying to change the deal they had). And while 3 X Series Android OS smartphones were launched, only one was sold in any meaningful numbers before Microsoft took over the business. What did I think of this move by Nokia. I wrote: “The overall mess that this Nokia X creates to Microsoft is a nightmare that will be seen with the lens of history as a colossal mistake that Microsoft should have seen to kill immediately or actually, should have prevented from happening in the first place.” Yes, it was killed immediately after Microsoft took over the Nokia handset business. I think it was 5 weeks and dead.
JULY 18, 2014 - MICROSOFT MASSIVE LAYOFFS AT NOKIA UNIT
Then the bleeding just continued. I had warned before that this business would never return to profits. When the bad news broke on July 18, that 12,500 of the staff that came over in the Nokia sale, were now being fired, only three months later, I did warn, that even this was not the end. More layoffs were coming and the unit itself would eventually be shut. (sadly yes, told you so).
JULY 31, 2014 - THE RIGHT MOVE BY MICROSOFT WOULD HAVE BEEN
PS - what might come from ‘Retro Nokia’ next year. I don’t expect first 3 smartphones to fit this pattern but perhaps end-of-year 2017 might see this, or else Spring 2018. But I wrote the blog in 2014 to Microsoft, that if they really wanted the Lumia unit to show some profit, even WITH Windows as the OS, then do the one thing all senior management at Nokia had pleaded Elop to do, but he overruled them. It was actually something similar to what Microsoft itself was doing with Surface. This is the blog if you want to see what I hope we will see from ‘Retro Nokia’ in the next say 18-24 months. The ‘dream’ Nokia flagship: If Microsoft Could Do Just One Thing Right With Lumia / Nokia / Windows Smartphones. I won’t give you a spoiler but considering how darned right I’ve been all along, that MIGHT show one surprising Nokia phone we’ll see soon.
DECEMBER 5, 2014 - NOKIA ANDROID TABLET SIGNALS NOKIA RETURN
Then on the Nokia side of the sale. On December 5, 2014, we had first clear sign that Nokia is eager to return. They announced their tablet. The deal with Microsoft gave MS an exclusivity period where Nokia could not sell phones, but it could sell other gadgets. A tablet was close enough to a phone to help keep some hungry Nokia fans reminded that the real Nokia has not vanished. Very tellingly, while Microsoft itself sold Surface tablets running Windows and Nokia had been working on a Lumia tablet and phablet, the first post-Microsoft-deal Nokia device didn’t run on Windows. It ran on its most hated rival, Android. Yes, Nokia was determined to tell us, they will be back and it will be on Android. Here is how I put it:
Will the N1 Tablet sell in enough numbers to show any relevance to Nokia's business? No, of course not. It will be the squeak of a mouse in the noise of a thunderstorm, but it is Nokia's first salvo. It does signal first of all, that Nokia wants to return. Secondly, it signals the total break from Windows. If any device by Finland's 'real' Nokia made sense to do on Windows, more than a smartphone, that would be a tablet. That Nokia now clearly spits in the eye of its 'partner' Microsoft, and does the tablet on Android is clear signal, Nokia is finished with Windows. For good. Forever.
Haha yeah. Never sold any relevant numbers but it did help keep Nokia in the minds of analysts and developers, and signalled clearly that Windows is over, it will be Android when Nokia returns. Good move Nokia (and yeah, you’re welcome).
DECEMBER 29, 2014 - ONE THIRD OF LUMIA WAS NEVER ACTIVATED
Then just a reminder, a bizarre number that came out of Microsoft’s own admissions. One third of all Lumia Windows Phone smartphones that was shipped out of the factories, had never even been activated. The REAL market share of Lumia and Windows was actually 2% not 3%. WOW. If you ever wanted a death-nail to a project, that was it. I wrote:
So now we know. Nokia shipped its 50 millionth Lumia smartphone to its retail channel in the first week of March 2014. Since then Nokia/Microsoft has shipped another 26 million more Lumia smartphones running Windows Phone. But they didn't achieve 50 million activations of Lumia until after the third week of November 2014. Thats pathetic. Lumia is the most disasterous smartphone series of all time. It is a dead phone shipping. Even those who receive it as a gift or as a freebie are apparently not bothered to activate it. Yes, even if we allow for large inventory buildup, an unprecedented 26 million smartphones running that hated Windows OS, yes a massive 30% of the Lumia branded devices have never been activated. What happened to them? Most probably were just thrown away by the retail channel as unsellable junk.
TOMI IN 2015
JANUARY 2, 2015 - COUNTDOWN TO END AND SPECULATION ON NOKIA RETURN
Then again my annual preview of the smartphone bloodbath. I wrote in my Microsoft (ex-Nokia) section about the exact time frame of how to count the end date for the Lumia unit at Microsoft. I said it is from one to two years from when Elop is fired. Here is how I wrote it:
What kind of time-frame? Expect Elop to be removed roughly 1 year from when he started as the returning Microsoft employee ie around April-ish. And then the new guy has to get at least a year from when Elop is removed. But not more than 2 years from that point. If Elop is removed in January 2015, expect earliest Microsoft to shut down the Lumia unit to be around January 2017 meaning it could even happen December 2016. But this unit is not viable and I would not expect it to survive under Microsoft ownership longer than say December 2017. And before that, even this year, Microsoft might sell its handset business to someone else, just to get rid of the mess. The new owner will immediately remove Elop from running the unit haha.
That is almost exact by the day. Elop was fired slightly after one year from returning to Microsoft. The new guy had just under 1 year before the business was ended. And yes, most of the mess was sold onwards to the two parties FIH and HMD. And then in that preview blog in January of 2015, I wrote the first analysis of Nokia returning. I finished that part with
If Nokia does this carefully but deliberately. So not like say the mess Samsung did with Tizen. But methodically and with dedication, we could see real Nokia returning to market shares that would be just inside the Top 10 so around 3% market share as a target say four quarters from the launch quarter of the smartphone return. And probably half of that business would come cannibalizing Microsoft’s Lumia return sales so it would depress Windows Phone OS market share into perhaps 2% range (and push even more losses to Microsoft’s handset business).We know Nokia is returning to smartphones, this year will be one more of rumors than phones but they are coming back. And it will be on Android. But there is one possibility even more wild. You want a true wild card scenario?
And YES. I did then write my Hollywood script version ending to the Nokia-Microsoft-Elop-Windows-Saga. How ‘should’ it end. I actually wrote it as the last entry with the header ‘Hollywood Ending’. I said Microsoft knows it can’t make this work, they want to get rid of it, it will be costly to shut it down. Why not sell it. The unit is horribly wrecked, massive loss-making turkey, nobody in their right mind would want to buy it. But if Nokia already wants to return to mobile, buy this way back in. Take the remaining staff, get all the rights and shift to Android. I even priced it for January 2015 to be worth 1 Billion dollars (when they still had 2.5% market share. The deal actually was for a quarter of a Billion dollars now, when the share was down to 0.7% so almost exactly one quarter of what I suggested). This is part of how I justified it from a BUSINESS point of view, not the emotional angle or ‘fairness’ side:
Here’s the thing. Nokia is a rare company that is a MASTER at turning around loss-making tech companies of any cultural background and making them profitable again. Yes. Nokia knows how to revive the dead. Look at Siemens telecoms. Look at Motorola’s networking business. These were corpses that Nokia revived to profits. What it would do with the Nokia handset remains from Microsoft would not be, however, an alien business culture. They would be fallen angles returned to the heaven they once knew. The old Nokia would be back. All of the Eloppian Windows cancer would be gone. Only the old guard would return. To the mothership. To the loving arms of the Nokia networking side, ready to nurture them back to health. To many old colleagues. And most of all, to the old ‘Nokia way’ of doing things again. When decisions were made on the merits and facts and sensibly, not by a delusional madman who will fire you for speaking the truth. If Nokia was able to fix the dead Siemens and the dead Motorola networking businesses, yes they can even more easily revive the temporarily paralyzed ex-Nokia handset business. All they need to do, is let it breathe again and it will recover to health. The Nokia handset unit just before Elop instituted his Burning Platforms madness, had just generated a Nokia record profit quarter! They do know how to excell, if the CEO doesn’t overrule his staff.
(yeah. January 2015 I wrote that scenario. I not only priced perfectly the initial sale price of Nokia to Microsoft, I also priced - with the timing element - the correct return price. You’re welcome indeed). I did point out it was highly unlikely to happen but it was plausible. I finished my Hollywood Ending scenario with:
I said it was the Hollywood ending scenario and it is unlikely to happen. I am not forecasting Microsoft would sell its Nokia handset business back to Nokia but stranger things have happened. This is a plausible scenario and clearly Microsoft doesn’t want to keep all it bought from Nokia and Nokia does want to return to handsets. The new Microsoft CEO can see the handset business is beyond recovery. Ballmer would never have sold what he bought. The new Nokia CEO wants to be back in handsets and he would of course not want anything to do with Elop and Windows and Lumia. This situation could happen
FEBRUARY 9, 2015 - MORE LAYOFFS AT MICROSOFT
The layoffs continued and again I warned to expect more, that the end was near.
APRIL 24, 2015 - WINDOWS 10 WILL NOT SAVE LUMIA EITHER
Then we had the next misery reported by Microsoft’s new Lumia unit, market share down to 2.3% and more losses reported. And now the promise was that Windows 10 will fix it. Of course it won’t. But some fell for that old lie from the Microbrains. And I wrote:
Windows 10 will not rescue Lumia. The Nokia N1 tablet on Android is already damaging Lumia - in particular in China - and the moment Nokia announces its first Android smartphone, that is the final nail into the coffin of the smartphone dream at Microsoft. Nadella should shut down this loss-making disaster (or sell it to anyone for whatever price he can get). Oh, and fire that moron Elop.
APRIL 24, 2015 - ONE SOURCE SAID NOKIA WILL RETURN; OTHER DENIED
And then we had duelling Nokia stories. From China we heard yes, Nokia will return to Android, while a US based Microsoft/ex-Nokia office said no, thats not true. I said the China story was the truth (as it turned out to be, you’re welcome) and then this is how I forecasted Nokia’s return first 36 months. Check this out:
And yeah. Am willing to call it right now before we know ANYTHING official about what or how, Nokia will give us more than one smartphone model, it will grow fast. in the first year Nokia passes Blackberry. In the second year it passes Lumia (if that still exists). By the third year Nokia RETURNS TO THE TOP 10. And every quarter of those first 12 quarters, 36 months, Nokia smartphone business will report a healthy profit.4% markets share is where LG and ZTE are today, or where Lenovo would be without its Motorola acquisition and obviously that is well bigger than Sony Xpera today. This is the minimum level I promise you Nokia will do 'with its hands tied behind its back' and blindfolded haha.
So WELCOME BACK NOKIA. We have missed you and we will cherish you and support you. Now please make sure we fall in love with your first re-entry smartphones in ways like we loved the N93 and N95 and E90 Communicator and N8 and E7 and N9 and 808 Pureview etc.
Four percent market share in three years for a Nokia on Android, while Microsoft still continues fighting with Lumia. So that could be taken as the ‘lower end’ of the scale for today, haha, as Microsoft ends its pretense and Nokia can return with full sole presence of the brand and retail distribution.
JUNE 17, 2015 - ELOP FIRED, I GAVE LUMIA UNIT 12-24 MONTHS TILL END
So yeah. New guy, less than 24 months. Here is how I wrote it after my celebrations that Elop was fired:
This is a VERY clear sign of the writing on the wall. And sadly for any ex-Nokia employees, expect more layoffs to come in the aftermath of this announcement and the 'consolidation' within that new business unit. I think the ex-Nokia handset unit has no more than 24 months ahead of this point, and may be shut down far faster than that. Clearly Nadella knows how to read mathematics and the math about Elop's business was brutal.
It was 11 months from that date that the Lumia unit end was formally announced, partly as a sale of last ex-Nokia parts, some of Lumia was absorbed into Surface, and 1,800 Lumia Windows Phone staff still fired. But yeah. I said it. 24 months or less. It was less.
JULY 9, 2015 - MORE LAYOFFS AT MICROSOFT AND WRITE-OFF OF THE TOTAL HANDSET BUSINESS|
Then Nadella was preparing the ex-Nokia handset unit for its sale. First part, on the books it was listed as worth 8 Billion dollars. You can’t sell that for under 1 Billion without creating a huge accounting loss, unless you first ‘write off’ the investment. Say it has no value. Then you can sell it for any price. The writing was on the wall. Plus more layoffs, another 7,800 ex-Nokians were again fired and I warned, more layoffs were still coming. And that the whole unit was going to be shut down soon. (you’re welcome).
Incidentally, that forecast from the summer last year, had a tidbit looking into the Windows roadmap (Windows 11), I speculated that: “And Windows Phone side of Windows 10, I would not count on much R&D ivolvement on this dead path. The next Windows version (I would suggest it might be called Windows 11) will no longer bother to support handsets, only tablets and PCs..” Its obviously a forecast that has not yet been proven to be true or not, but obviously its insane to try to produce a smartphone OS that also runs on the desktop. If Apple doesn’t think this can work and keeps a separate OS for the Mac and the iPhone, then sooner or later the microbrains at MS will notice that is indeed so.
JULY 11, 2015 - WHAT IF MICROSOFT SOLD NOKIA BACK TO NOKIA
My big blog about the resale of Nokia back to Nokia was a summer boredom blog, but we had occasionally speculated about that now with many of my colleagues over a random beer, whisky or coffee, and I wanted to put my thoughts on paper, the big picture, properly. Turned out darned good and yeah, by now I valued the Nokia deal at half a Billion dollars (ended up one quarter of a billion ie half of that, but 9 months later when Microsoft had lost yet half of its remaining market share). Again, not many were peddling this idea but I was on it now quite seriously. To me this deal always made sense from a business executive point of view. Nadella didn’t want handsets, Nokia wanted to return. And why not. The price was now totally reasonable for either, after the investment had been written off by Microsoft. (you’re welcome)
JANUARY 15, 2016 - WINDOWS 10 IS ALSO FAILING ON SMARTPHONES
Then the evidence the pattern for Windows 10 was no different from Windows 8 no different from Windows 7 now different from... yeah. Dead. (you’re welcome).
Ok, thats about all of the forecasts and projections I made about Nokia smartphones and its Windows disaster. EVERY step was chronicled contemporaneously on this blog. Not one step was missed. I always said what I thought of the latest move - I never changed my mind, if something was seen as stupid, I said so, or if (rarely) something was wise, I said so too. I also called the moves on the rivals. Nobody was HALF as good as me, relating to Nokia and NOBODY called the fall anywhere near what I did on this blog. On many of the foreasts I was dead-on, while the NEXT MOST ACCURATE ‘expert’ was off by 100% or even 300% or more. So yeah. It was a rough painful ride, now its over. And here is the full record of what I said and what actually happened. And remember, on this blog - no advertising, ever. No sign-ups, no paywalls, no registrations or fees. Yes, I am an arrogant son-of-a-bitch with an obnoxious way of writing my blog, but I have been TOTALLY correct with NO mistakes about this saga - where NOBODY else was even ‘mostly correct’ contemporaneously when they wrote about this debacle. You’re welcome.
Now, for those who want to see the future, by the eyes of the most accurate forecaster in the mobile industry, consider TomiAhonen Mobile Forecast to 2018, came out last year.