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« iPhone Second Quarter 2010 in Bloodbath: Market Share is Declining where All Big Rivals picking up | Main | Mid-Year point for Nokia next, in Bloodbath Update. And they DID grow smartphone market share (again) »

July 21, 2010

Comments

kevin

Tomi,
You're making things up in your response to Staska.

I'll say it again, the 3GS did not lose market share. In the quarter in which it was released (Mar-Jun 2009), Apple market share was 13.7%, and 3GS grew that to 17.1% in its first full quarter. In its last full quarter, 1Q10, iPhone share was 16.1%. Not all the numbers are in yet for 2Q10, but using Nokia's estimate of 59m total smartphones sold, and recognizing that there were 17 days of little sales and 3 days of iPhone 4 sales, iPhone share would be 14.2%. All of those numbers are still higher than 13.7%.

The N97 was released at the end of the same Mar-Jun 2009 quarter- a quarter in which Nokia had 44.6% market share. The first full quarter for N97, Nokia had 37.9% share. 2Q10, Nokia had 40.2% share. All of those numbers are less than 44.6%. These numbers tell me N97 loss market share.

It's actually even worse than that for N97. N97 was announced in Dec 2008; Nokia reported N-series good sales of 7.9m that quarter (down from 11.4m the year before when iPhone was mostly limited to US sales). The next 2 quarters of N-series sales were a bit depressed at 5m and 4.6m. After N97 release, N-series sales was 4.5m and 4.6m, after which, Nokia decided to no longer report N-series sales (which I assume means less than 4.6m). Clearly, N97 did not increase N-series sales.

Michael

This has brought tears in my eyes! We indeed live in cruel world.

Toyota realised they couldn't make Porsche so they made a Lexus. Nokia didn't even bother with Lexus...

Laskea Goldberg

I have to disagree with your conclusion that OPK has done a competent job. He and the pack of dunderheads on the GEB have done NOTHING short of waste time. They continue to rearrange the deck chairs, their own seats, while taking on water and waving off the USS Android saying that it would be giving someone else control of the future. Well, in a company where everyone can pretend to be captain I guess all will go down with the ship.

Wasn't it Anssi who steadfastly prevented the company from leaving the candybar path? Maybe its me but I thought the N76 was one of the nicest N-series devices Nokia made. As Anssi seems to be the VP most out of touch with what US consumers want I'm guessing they'll probably have him tap OPK out of the ring.

@Roger Johnson - With those powerful rose-colored glasses on and the invincible cluelessness it has imparted upon you, you'd fit right in with Nokia management. I hear they have a CEO position open. Go for it!

Laskea Goldberg

@ArbitRabbit - The product managers at Nokia become part of the big machine quickly. That means requirements come from category management, not customers.

@Michael - Nokia made Vertu. 10x the price of the mainline products rather than Porsche's 3-4x.

Phil

hello,
your data and analysis has some true parts, so congratulations, but interpretations can be different, like it seems that sun is turning around earth, but earth spins on itself. I'll send a more complete comment after, but just one question :
why a CEO would be the one who speaks and "fights" ?
If OPK would want to do it, he could, as he can do some more difficult things ! Carpet's salers who speak loud and "fight" a lot and make story telling "my carpet is the most beautiful, the Prince buy me some (what is not true, but if stupid people believe that they might buy the ugly carpets)" : it is trivial to do the same !
OPK had a lot of changes to manage, and I think that for the next phone release the communication will be better.
Of course, Nokia should better communicate. But someone else, a clever and pretty woman could do that, as her job, and with smartness and charm. And there are some women like that in Finland precisely. The CEO's job is not to do the speeches himself for a phone release, except if he wants to, precisely because he doesn't run the company himself...
By the way, it is precisely, because a lot of people make Steve Jobs' speeches that he can tell them !
You didn't tell that Apple was showing itself as a small dissenting against Microsoft etc. and now it is "spining" another way : Apple is seen as a mainstream company with rough methods...
Regards to you :-)
Phil

Tomi T Ahonen

Hi Timo, cygnus, haha, Lars, Yap, Yuri, Murali and Andreu

Timo - Yes, good point, Symbian was quite bad, but the point from OPK's management is - he didn't preside when it was created, OPK authorized the expensive 'buy out' of the Symbian partners, to enable Nokia to take it more into its own control. And you have to admit, even though the progress has been slow - Symbian has improved quite a lot compared to 2006, and signs look good for the latest release coming in the N8 for example.

cygnus - thanks

Haha - well, you are entitled to your opinion obviously. We clearly disagree. For what its worth, that 'altruistic' attitude you deride - Nokia has supported open standards at every stage, Apple has thumbed its nose at them. Which is better for the industry and the long run benefit of the company? And which gives short term gains but is not long-term sustainable. I prefer the Nokia way.

Lars - thanks! and we obviously agree. Its funny yes that the criticism is coming from those sides of the industry who really don't understand mobile, and are thinking of the mobile phone (and smartphone) as the pocket PC. If that was the metaphor that wins the world, the world's bestselling smartphones today would be Palm, HP and the Apple Newton haha. No, the pocket PC was tried and failed, it didn't work until we had the phone metaphor and today phones based smartphones outsell standa-alone PDAs (which still exist) by 30 to 1 haha..

Yap - your comments are very relevant and they totally apply to this situation, thank you. Yes, like I have said time and again, ever since Apple joined the mobile phone industry, they ran away with the reputation of best phone to use, by far, and they lead that with a long lead over all others. Sadly for Nokia, it was Nokia's domain until Apple came along (Nokia phones used to be the world's best phones for users, before the iPhone, when compared to Motorola, SonyEricsson, LG etc..). I totally agree with you that Apple makes the best devices in any category, when considered from the users' perspective.

Now, while the Mac has been the best PC to use, it has also helped Microsoft change from the horrible DOS operating system (you really had to take a computer course to learn to use DOS) to Windows. And it took Microsoft 6 years of heavy work to create ever newer versions of Windows, copying the Mac, until in 1990 Microsoft finally had Windows 3.0 which was the first reasonably 'good' OS, that also became a big global hit (and essentially defeated the Mac overnight). You don't have to be 'as good as Apple' as long as you are 'good enough' that most users don't care about the minor differenes.

So in smartphones - in 2007 when the iPhone launched, it was 'night and day' difference to any existing smartphones. Apple was BY FAR the most friendly to users. Now its 3 years later, and many Android phones are considered nearly as good. Some analysts said the Palm OS on the Palm Pre was as good as the iPhone and now the rumors around Nokia's N8 is that this is the first time Nokia has 'solved' the problem of the friendly user interface when using a touch screen. I am not saying Apple will not lead - in fact I am convinced Apple will forever hold that lead in having the most user-friendly smartphone - but the rivals are now narrowing the gap, to the point where most soon will not care.

Yuri - I see your point, but to me the Navteq acquisition was not a major step by Nokia, and I do not see it as a major competitive advantage. Some yes, sports and outdoors types of uses maybe but not a big key to Nokia's future success or failure.

murali - thanks, yes me too. The US press obsesses about the US companies, and often don't give the rest of the world a fair shake. But also, as you say, Nokia has recently stumbled quite a lot. Its not easy in this space (just yesterday LG reported big growth in phone sales, to 30 million phones sold in the quarter, yet their profitable phone business has sunk once again into making losses. Its a VERY rough space to provide desirable phones at profitable price points, in this very bloody competition for mobile phones.) So yes, there are ups and downs for any company. Nokia has had a bit of a down, but considering that even in the worst economic times of our lifetimes, where most rivals produced losses, Nokia managed to make profits - even if only modest - and managed to hold onto its dumbphone market share - while growing its smartphone market share. If this is Nokia struggling, I'd like to see Nokia how it does when it is firing on all cylinders, haha..

Andreu - thanks! And yes, those are definitely there among their biggest sins recently. But also, that these are matters they are attempting to correct..

Thank you all for writing

Tomi Ahonen :-)

DL

Where's the exec summary of this article?!

:-) Dominik

cycnus

Hi all,

I believe what OPK did for Nokia is already the best strategy beyond what apple/RIM/andriod/microsoft could do in mobile industry.

First of all, Symbian were own by psion. Nokia bought all symbian share and open sourced it. Why? To make symbian the de facto standard. Not only that, nokia also bought QT from Trooltech. Then nokia corporate with Intel to do the Meego. All of this happened while OPK in charge.

Why any of these mattered (symbian/meego)? Because nokia want that Symbian and also Meego to be used by all the mobile industry and beyond.

And what this have to do with QT?
Let say making an apps, either for apple or Blackberry, or nokia would cost about the same +/- 15%. With QT, the developer can develop for Symbian+Maemo+Linux in 1 code. Reducing the cost of development by ??300%??

So, I think what OPK did were making a foundation for a GOOD/STRONG OS, and it's a good long term strategy. And for this OPK deserve to be given a medal of Honor. For his bravery to make a long term strategy that will make nokia survive for another decade.

If he were short slighted, and do the android, than, I would think he were not worth being the greatest mobile phone company leader. Because only a person without a great vision do a shortcut.

Dach

Premiums to the Thai people much like Nokia.

Tomi T Ahonen

(on replies from July 22 and 23)

Hi Ged, Mark, klkl, JFH, A and Leebase

Ged - very good points about the myth of convergence! On N900 vs E90, had same experience (testing N900) and didn't like it either. Too flimsy, not robust for daily use, at least seemed like it. My E90 is still doing heroic duty today haha, but need to replace it soon. I understand why you now use the iPhone and there are many of my friends and colleagues, who knew me only as an ex-Nokia guy, and they apologize to me when they show me they abandoned some N-Series or E-series phone and went iPhone - which to me is no damage, I used to work for an authorized Mac/Apple reseller long before I worked for Nokia, so there is a lot of Apple loyalty within me. I am happy for them haha...

But back to your points. Very good points there that Nokia lost a lot of early adopter customers with very poor PC support both with Windows and the Mac.

Mark - thanks

klkl - I think you have missed my main points. I never said that the only thing is having more features. I clearly state in the article, for example, that the OS for a smartphone is a critical competitive advantage - but that in my view, Nokia has a better long-term viable strategy - having a family of devices and manufacturers supporting it (a dozen makers for the Symbian, 20 for MeeGo) - than what Apple does with its proprietary system only supported by one manufacturer. And that since OPK took over, he has presided over the 'right' strategy for a company who controls the biggest smartphone OS on the planet - to turn it into fully open source, to make it touch-screen friendly, and to give the developers a growth path beyond the old version to a brand new Linux based open source OS. That is the best smartphone OS strategy out there. I was not arguing anywhere in the blog that Nokia's smartphone strategy is counting features..

But on the feature comparison - that is not what I was doing, that is what Steve Jobs has been doing with the iPhone 3G, the 3GS and the 4. Not me, it was him. I only repeat the 15 updates that Apple itself - in its press releases for its newest iPhones has highlighted.

lastly on 'ditching the small screen in a heartbeat' - that is fine. Note that the world's first 3 inch screen, the first 3 inch color screen, the first 3.5 inch touch screen outside of Japan and the world's first 4 inch screen were were all on a Nokia phone. You probably didn't see those phones, so I am guessing you are an American visitor. But Nokia knew people like large screens and have been putting ever bigger screens onto their phones long before the iPhone and have again today several bigger screens than the iPhone.. including the magnificent 4 inch screen on my E90 Communicator - twice the resolution of the first 3 iPhone models (but not as sharp, as the new Retina Display in the iPhone 4, the first phone 3 years later, with a better resolution than Nokia's E90)

JFH - Thank you for taking the trouble to copy all that! I hope I have all your points here. First, USA missed SMS until Obama campaign. That is actually factually true. Up until 2007, far less than half of Americans were active users of SMS. It reached national attention beyond the teenagers, only when Obama did the amazing stunt of announcing his VP choice Joe Biden, via SMS, rather than via press release. During 2008, American SMS use passed the 50% mark, and is at 64% of all subscribers today (the world average is 78%). I think it is very clear, factually true, that before 2008, most Americans didn't know what SMS was, and who did, mostly thought it was a youth thing. Today the majority of Americans are users of SMS...

On the 'ENTER APPLE' part - I don't see what is his gripe. Sorry. On his point of 'Profits' he claims I don't know HTC made a profit. Yes I do, but HTC was making losses last year and for several years, similar to Palm. I think I am clear about it, that I was looking at recent history in my posting. Currently (riding the Android wave) HTC is one of the most profitable smartphone makers. I know that and I celebrate it on this blog often.

But he then says the part that gets me 'HTC is growing market share and margins at the same time, Wall Street is in love with that shit'. I AGREE and here is MY GRIPE. Nokia went through very tough times as did all of its 'real' rivals in the economic downturn - but the whole company reported only one loss-making quarter last year, due to bad performance of the networks unit. And it has made a profit with handsets every quarter. And most quarters, again this last quarter, Nokia grew profits and grew market share - thats EXACTLY what Wall Street should be 'in love with that shit'.. Meanwhile Apple, their darling AGAIN lost market share while making a profit. What is wrong with the picture. Nokia is sinking, Apple is flying. Nokia grows market share and grows profits, is punished. Apple loses market share, grows profits and is rewarded. Here is my personal disconnect... :-)

Haha on Symbian he makes good points, he agrees with me and he also thinks companies should be more socially responsible - like Nokia - but that Wall Street hates that haha..

I agree with him, that Wall Street looks forward and will reward the promises of the future, not the performnce of the past. But that comes back to my blog, that this is a perception issue PR nightmare that Nokia now faces, what it didn't face before Apple joined. Like the guy said, before Wall Street was very bullish on Nokia, but now that Apple is around, Nokia isn't bullish enough, apparently..

Om Palm he and I agree, on Android we totally disagree (you read my reasoning in the above, I don't have to repeat it). I think anyone who suggests Android to Nokia is truly clueless on how total, utter, devastating two-year catastrophic mess it would create for Nokia, while abandoning control, while abandoning the ability to create competitive advantages, and giving all rivals every chance to copy all Nokia benefits (using the same Android platform). Ludicrous idea. If Symbian was failing severely, back in 4th place or something, then yes, maybe, but not when Symbian is as big as Android and RIM combined? Three times the size of iPhone? Total utter rubbish point. Nokia has the best OS strategy for smartphones in the world, their problem is not the OS strategy, it has been execution (recently).

On the Samsung smartphone with Pico projector, it is the Samsung Galaxy Beam. It is a Galaxy phone - I was not wrong haha.. We agree on how the US market should be handled (thanks haha) I hope I covered all the points adequately.. Thanks!

A - You did not read my full blog, or you are using selective arguments. I have clearly said that the iPhone changed the market for mobile phones, totally. And that is what could be expected of Apple, and that is a change Nokia has been adjusting to. But that there was a SECOND change, that was not obvious to Nokia (but one, that I predicted on this blog in May of 2007, a month before the original iPhone launched) that the marketing of mobile phones would change totally. I never said Apple's success is only due to its marketing - that was clearly never said in the blog - I clearly said that Apple's primary benefit is that UI which I called intuitive. I THEN said, that ANOTHER change, that hurt Nokia, was how Apple changed the game for how PR and marketing happened for the handset makers.

Leebase - 'Wall Street doesn't care about marketing' haha, yeah. Why is it that all big corporations arrange press events to publicize their results? They don't want to admit that they are influenced by the PR spin of the corporations, but of course the WAY communciation is made, is as important as WHAT is said. That is elementary communciations theory. Sorry. Style matters.

But on the accusation that Nokia should have 'done an Apple' on the smartphones, gone full steam for the 2% market to beat Apple at the iPhone, at all costs, and if not, the CEO should be fired? That is ludicrous. Nokia's factories - the world's biggest phone factory in Beijing China for example - are owned and controlled by Nokia, not like Apple who subcontracts iPhones to Foxconn the suicide-inducing sweatshop. What should Nokia now do? Dump the big phone factories in a fire sale and make a huge loss selling those to whom? Samsung? LG? Lenovo? And then go hire a subcontractor to make N-series? And what of Nokia's sales channel to nearly 600 mobile operators/carriers, which for many of them have dedicated sales staff? Fire all those very professional sales people to have the small team that Apple has to sell to its small cadre of carriers, with one phone per year? Your argument is LUDICROUS, Leebase. Its exactly the same as saying Ford should stop selling cars for mass markets, abandon all those, and sell only Ferraris or Rolls Royces.. Come on, a luxury maker has totally different production, design, sales channel - and Nokia's competitive advantage is its world-leading sourcing, manufacturing and distribution. What a silly statement from you Leebase, usually you make much more sensible comments..

Thank you everybody, more replies coming soon

Tomi Ahonen :-)

Symbian Development

Perhaps Carl-Henrik Svanberg is interested to move from BP to Nokia, especially considering the controversy surrounding the oil giant. His experience with Ericsson would be valuable to them.

Regards..

Veijo Esso

It is not only OPK's fault, it is also board of directors for not having vision and the corporation for not finding ways to answer challenge before it hits you hard. Nokia is slow ship with too much incompetent mid-management. I hope that Meego and QT will make some difference, but the more there is success, the more there are managers flocking around making the next big thing impossible. I hope but I'm not holding my breath. iPhone will be the high end competitor but what about Android, will it eat the S60 away?

Apple and iPhone has been all about incremental growth with reasonable time frame before obsolescence (~2-3 years). Nokia has been always a pressing the reset button between phone models. When a model has been out of the door, it is forgotten. There might have been some support updates, but there is no way to update your phone to newer release the same way as Window, Ubuntu or iPhone. That is like a computers - something consumer friendly. So your only option was to buy a new phone and in the switch you usually had to say byebye to the few expensive, hard to find, programs you bought.

US technology press makes the news to the rest of the world. If they sell wagonloads of iPhones in US and Nokia's phone is not even on sale, there is no Nokia phone. Nokia penetration in US market has been minimal for long time. Design was hindered Nokia dysfunctional management and operator relations. Nokians wanted to do what they wanted, operators wanted thing by their way - a deadlock. The customer rarely know what they want or really need and in this case neither the seller knew any better. Then response to the iPhone by many Nokians: "It does not even have MMS". Who cares, MMS is a niche application. Mobile TV is another. I rather email good quality photo or upload to web and share a link and dvd-rip or podcast which I can play on demand. The future will be that the operators will be data pipes, even if they do not want it. Usually closed service offered by single operator has been a kiss of death.

In first stage iPhone was all about design and usability - do little but do it well. Have operators drooling over the idea - take it or leave it - it is going to be a hit so we'll find then somebody else who want it as is. Apple was in the sweet position to bend the rules the existing industry player were tied by. In second stage iPhone has been all about apps - easy to make, good way to distribute, excellent price point to buy. USABILITY. Same time it was reaching technical parity on other parts. Instead of fragmented app stores they made one united and visible - that is a achievement which has paid off.

When Nokia has tried to make comeback, it makes what it has been doing for a long while. Push out by deadline, usually something unfinished - shit that is. And Nokia has had quality problem for long time, for example, PC suite anybody? For sure everybody knew N97 was garbage, but they were used to consumers eating it with spoon like nice little children. Calculated risk so to speak; sell now and make money or fix and start selling later. But now there was something to compare with; iPhone which has only functionality which works well.. N97.. just kill me..

For last, that stone-aged Symbian, the flagship. Horrors, I did some Symbian coding in beginning of '00s and let me tell you, it was not a pleasure. I was wondering that it shouldn't be so hard, for sure there could be some other better way. The amount of self-learned non-professional Symbian hobbyist developers is close to 0. No wonder the offering of apps has been weak and market tiny.

HH

Sorry Tomi,
but you don't have an idea you're talking about in a lot of the stuff. I was working in Nokia strategy system at the time of the iPhone launch, so here's a perspective.

You have a completely wrong attitude & angle in your text: countering Apple threat is not about PR!

You fundamentally say "Apple is a marketing company and their technology is fundamentally weak/N95 had it already"

This is complete misstatement. Apple is marketing company too, but the core of their excellence is understanding ease of use. This is NOT spin, this is real valuable excellence.

Do you know anything about the MIPS, GPU speeds, fps in iPhone? Well I can tell you they were and are much higher that Nokia has at its disposal. They have true HW superiority for a limited feature set. Apple's genius was to select those limited features that they wanted to implement well and they implemented them so well that user found and finds pleasure in using them. There's something right, something natural about the way they work. Easy example is that FPS is so high (60) that the objects look almost real objects, not digital, tearing graphics. Or that they decided to implement video calling only when they could be sure that the framerate is 30fps and experience very natural. This creates a key part of stickiness.

You said also:
"Those cool things you liked about the iPhone? GPS? 3G? WiFi? App Store? 5 megapixel cameraphone? Touch Screen? Games? HD video recording? Video calls?...invented in Japan"

Yes, and Nokia implemented those too. But here's the catch. WHO CARES if these were implemented as features? Have you ever used Nokia video calls (Try in Finland,should work)? They're fcking disaster. Awful quality. Nobody ever uses them.

App Store? Oh, the S60 Download! program. Give me a break. Nobody ever used it, even hardcore Finnish Nokia fanboys. Games? Ngage :) need I say more about how many used that one, nicknamed 'Elephant'? WiFi? Have you tried settting it up on say N95? It asks you every damn time what network to use when you start browser that nobody used it in real life.

The admirable genius of Apple product planning & management seems to be that they select only features they can make so easy that people use them. I'm doing my best to push this thinking to my team.

I can tell you that this precise point was completely missed inside Nokia: in R&D , in product marketing. Certainly OPK didn't get it or Kai Oistamo until later. Focus was on multiple 'HW configurations' for S60, it was said that S40 touch will never be necessary (guess what was launched yesterday), slogans like 'Nokia will become internet company' instead of focusing in a limited set of activities done really really well. If that had been done, we would't be in this mess and Kai or Peter Ropke (R&D head) or others might still have their jobs.

I'm sorry to say this -- and please excuse me for my directness-- but you represent the kind of feature-tick-mark-in-the-box-but-dont-give-a-sh*t-how-consumer-experiences-it culture that got Nokia in this mess and we'll do very well without.

Finally, i want to address the points you make about US market, which I claim to know quite well. The market has changed very much in last 3 years with iPhone from a silly laggard dumbphone market to world's most vibrant mobile internet & smarpthone market. That is today's most important market, because whatever you create there is likely to work elsewhere, but not the other way around.

The most important change of rules that iPhone brought is that if you have something very very compelling that differentiates a carrier, you can sell it without carrier requirements. Hear me? All of the old reasons 'why Nokia failed in NA' just went down the toilet? *flushhh*, you hear that?

The US market is now about pure innovation. If you bring something very compelling to an operator, the likelihood is you'll be saved from a lot of tough operator requirements. You still need to get the spec & price right, though.

Nokia just needs to find that innovation and execute it.

kevin

@HH: I think you nailed it with great passion on several points - ease-of-use, limited but well-done (with well-fitted hardware & software) feature sets, and the new US market, including going around carriers/operators.

Many including Tomi, acknowledge Apple's ease-of-use and aesthetics, but yet discount it as just another feature, when in reality, it is a meta-feature that cuts across all features, making all those features pleasurable to use.

Why use a second-rate, less accurate, less responsive, less intuitive system when for $0 to 200 more, you can get the best? (For now, Android and other mobile OSes still trail, and in the case of Android and Win Phone 7, it's not clear if separately developed hardware and software will ever be well-fitted.)

We'll see in the coming months how much ease-of-use is worth to the next several tiers of consumers. For iPod, almost all consumers were willing to pay the premium. Back in the 90s and early this decade, Windows PC users were unwilling to pay thousands and later hundreds more for Mac, but now that the difference is $100-500, the Mac has outgrown the PC market for 20 out of 21 quarters.

HH

@Kevin: exactly right. The fact that iPhone drives so much net adds for AT&T has enabled them the $300-$400 subsidies, and has consequently killed all also-ran smartphones above $99 price point (for foreign readers, that's the shelf price of second-newest iPhone with 2year contract). Simply put, if you offer a smarpthone above $99, it has to offer more than iPhone 3GS.

That's the challenge to overcome. As long as Android and others are lagging iPhone in experience, there's no reason why Apple couldn't take more than 20%-30% of the smartmarket (after that, you'd have to make people change from Verizon & TMO en masse, and that's unlikely to happen if you have Vzw/TMO family plans).

Jay

Ley ho mah, Mr. Ahonen. I am writing this from the viewpoint of a Nokia shareholder. I bought the stock at $19 in the summer of 2006. At that time there was a lot of hype coming out of Nokia management about GPS navigation, music, games, ovi, and smartphones – and Nokia was making the acquisitions to walk their talk. OPK talked about transitioning the company away from just hardware to a more software (Apple) like company. Wall Street bought the hype too because by November of 2007 the stock had risen to $42. During that time some Nokia management said they were not afraid of Apple because there was plenty of market pie for everyone. One analyst, during a conference call back in early 2007, asked about Nokia's timetable for developing a competitor to the first iphone. “Oh”, said OPK, ”you can't hurry R&D”. Ha, I thought to myself – this leader has some wisdom. A few months later, during another conference call, analysts again pointed to the iphone and wanted management's reaction. OPK infamously said he was “paranoid” about the iphone. I should have seen the storm clouds at that time.
Fast forward to today. A few weeks ago the stock was trading at $8. That means the stock is worth just 19% of it's high value just 3 years ago – it has lost 81% of it's value. By any measure, that is devastating. Here are some questions that I hope readers can answer.

1)It is often said that he who gets there first wins. Apple got there first. People who have their data on iPhones won't go through the hassle of porting all that info over to a new Nokia phone unless that new phone is light years ahead and worth the cost/benefit ratio. It's not like being able to recover from lost market share as with the Razr. Does Nokia have such a phone in the pipeline? More importantly, can Nokia ever regain lost ground?
2)I've heard that Nokia's annual R&D budget is 6.5 billion, whereas that of Apple is 1.5. How is it possible that it has taken over 3 years to develop the N8? And if Nokia phones were so far ahead of iphones on technical specs why could this not be monetized?
3)If you know that Wall Street is a cruel mistress, and you know that US analysts are not sophisticated, and you know that 38% of the shareholders are American, then why was insufficient attention paid to this issue? To say that OPK did fine against dumbphone manufacturers does not address the key strategic issue, which was how to compete against smartphone manufacturers. Where is his ability to address high priority issue?
4)If you know that middle management is slow, then why does OPK tolerate this? Nokia has a global management image of “The gang that could not shoot straight”. This underscores OPK's lack of leadership ability. Is he not in command of his ship?
5)If you agree that people see their mobile phone as a fashion accessory, and that's just human behaviour, then why has Nokia not taken more advantage of this insight? (Apple got there first)
6)I don't buy the Porsche/Toyota analogy. Mobile phones are not cars – or perhaps with the correct RFD I could be convinced). What's to stop Apple from building on the traction they have gained and lowering the prices of their phones to gain market share?
7)Why have there been so many execution problems with Nokia products (not just the N97) such as Ovi rollout, Ngames, comes with music, dual sim phones in India?
8)Is it not true that not just Wall Street is upset with OPK, but that European fund managers, including Scandinavian managers, are also calling for his dismissal?
9)The stock is so low that the boards are filled with speculation that Nokia could be a take over candidate. Is this at all possible? Seems like a case of operation successful, but the patient died.

OPK is paid 8 million euros annually to solve problems, not to tell me that Nokia lost money because of “a competitive environment” or because of a “painful transition”. Here's my view.

He does not know how to get a good return on investment from his R&D budget.
He does not know how to demand performance from middle managers.
He does not know how to address analysts questions during conference calls. In fact, he does not communicate clearly at all (try listening to him during a conference call).
He did not keep his promise to address declining market share in the US.
He does not test key products – the N97.
He does not know how to go eyeball-to-eyeball with Wall Street.
He has been CEO while the stock lost 81% of its value.

I think life is fair. I think it's the Nokia hype that got Nokia in trouble, not the Apple hype.

Kristoffer Lawson

I think you're completely missing the point with the iPhone. Sure, Apple has a great marketing engine, but a marketing engine is nothing without a good product. Yes, the iPhone lacked or lacks things Symbian had, as features, for years. But that is where you are ignoring the problem: the features were there, but the usability was awful. Most people never ended up using most of them, simply because they were so hidden, flakey and difficult to operate. Apple has added features one at a time, with each one being relatively polished.

The second thing is that Apple has acted like a software company. Features are actually added with updates to old phones and supported phones for a long way down the road. At the same time they have fewer devices. The phones basically act as channels for their software integration. At the same time Nokia has umpteen different devices with different software and features. I can't even remember the name of most of them.

Finally Apple, and obviously Google, act as Internet-aware companies. For years I couldn't understand why Nokia would have Internet capabilities on their phones, yet not use them for anything (like syncing or good emailing). Even the very first iPhone had a killer web browser and an emailer which actually was reasonably pleasurable to use.

If you don't address these facts you are actually missing the whole reason why everyone started looking at the iPhone and why it changed the foundations of the mobile business. It is not just a story of super marketing.

Desmond

I think the writer is missing a crucial point if Nokia is not successful in the high end they will loose the market eventually. It is always easier to scale the business from high to low but not the other way round.

wireless dude

Seems to be written by a nokia apologist. Fact is Nokia was/is a arrogant company, and they are getting screwed for it. ridiculous to blame the US or the rest of the world for nokia's problems.

As a ex-nokia employee, I can see it was downhill all the from the late ninety's. the only thing nokia got right was the switch from Analog to Digital (i.e. GSM/TDMA). After that they were about as innovative as microsoft. sure you can spin this all the way you went but that is the truth.

My own 2 cents are, nokia was paying far too much attention to manufacturing, and not enough to R&D and really thinking what the customers wanted. This would have been fine in a mature industry, but not in mobile phones where the technology was evolving on a really fast basis.

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