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September 17, 2010



Great article Tomi! I agree with you, Nokia is the Toyota of the mobile industry. They offer the best and most reliable products in the industry in every segment, soon also the high-end segment with the N8, E7, X7 and the upcoming MeeGo based N9 (possibly in different form factors too) will set the bar in mobile computing. I do think it is the correct decision to not go the Android route because that will lead into a dead end. Google wants to corner the mobile market just like Microsoft cornered it with Windows, but the mobile market is not the PC market, Microsoft was able to corner the PC market with Microsoft Office, and highly complex business solutions (where Apple failed) and captured the consumer market from there. The phone industry is a whole different animal, that's why Microsoft failed twice already (windows mobile and KIN) and i don't see Android become the 'Windows' of the phone industry, because there is no need for a 'Windows' solution in the mobile space. People will never do work on a phone, no matter how advanced the technology will get. The most work people will do on a phone is read some emails, reply a few sentences back, maybe check the stock market on the go and sync the calendar with your PC. All Nokia phones are great at that already. But the phone is and will always be all about communication. So there will never be a need for the expensive business solutions that were needed in the computer industry. Phones need to be portable, that's why you can't work on them because they're small. Nokia knows this and they would be incredibly retarded trusting their future on Google, a newbie in the mobile space. All companies that are on Android now have failed in the smartphone business before and are making a second run (Motorola, SonyEricsson, HTC, Samsung, LG, Palm+). All of them lost to Nokia by the way. All developers supporting Apple will also write the same applications for Nokia phones sooner or later, they would be stupid not to, that's where they can sell more apps and the most useful apps are already on the symbian platform, who cares about all the iFart apps out there. Seriously, those 200'000 apps on the iphone are useless, i tried my hardest to find more than 20 apps out of the 200'000 that i would actually use and half of them are apps that most Nokias can already do right out of the package, like navigation, IM, twitter, facebook, skype. If Nokia hasn't caught up to Apple UI wise with this current line up, they will most likely surpass them by the time Symbian 4 comes out.

Tomi, since you have ties to Nokia, I have one request you could make to them.. please ask them to just give the user the option to select portrait qwerty on their new touch screen phone. I think its a really useful and important feature and they need to have that.

Andy Hussong JV Attraction Formula

Indeed! Nokia is the dominating brand among other mobile phones. The company has never failed to give latest and freshest phone models to the market for the satisfaction of the mobile phone consumers.


I dont think Nokia has to disinvest from NSN, rather taking it as a wholely owned unit from Siemens would be a better option. As NSN CEO Mr Surie highlights, NSN is winning where it matters, currently number one in both 4G networks and managed services. It hasnt somehow realized the synergies with Siemens, mainly due to the culture-rift between "Germans and Finns". Once Nokia takes over and Siemens is out, this problem can be sorted and internal efficiency alone can lead to profitability. Abandoning the NSN ship at this stage would be sending wrong signals to the market as it would underline the myth that Nokia is in real trouble and an American is hired to sell it off.

Tomi Ahonen

Thanks guys!

I love the comments, deep, insightful. I am in Greece today with a client (just got back to hotel after the dinner and party) so I am dead tired and can't comment now - but I will be back to comment to all of you, please keep comments coming.

Tomi Ahonen :-)

Frank Daley

You have highlighted some of the flaws in the arguments around Nokia adopting Google Android, however I believe the greater danger is that Nokia's new CEO adopts a range of Microsoft technologies and suffers the Microsoft kiss-of-death.

Microsoft cannot tolerate competition and despite numerous anti-competitive legal cases, continues to pursue a strategy based on embrace - extend - destroy.

For more than a decade it has tried to insert its products into Nokia. The big question remains as to whether or not Stephen Elop will now act in the best long-term interests of Nokia, or allow his personal relationships with Microsoft lead to a Microsoft embrace of Nokia to plant the kiss-of-death.


I still don't get it. How can anyone possibly say Nokia is successful *as a business*.

Nokia's profit was a mere $315 million in 2009, down from $9 Billion in 2007 and you wonder why the stock price went down?

On the other hand. Apple is making more of a profit off of the iPhone than the rest of the industry combined with only 3% of the world market share in phones:

So why should Apple take the pundits advice?



So what's the overall profit been in 2010 so far? Why talk about 2009?

Apple are very successful, Nokia are successful. It's pretty easy to figure out.

Mind you, since all Apple sell in handsets are premium products at a massive mark up it's not surprising they have the lion's share of the profits. Whether that position is sustainable given the increasing competition and what do they have to fall back on if it isn't are questions that need to be answered though.



Apple sold 20,731,000 iPhones FY 2009. They have already sold 25,877,000 in FY 2010 and there is still one quarter left. There is no reason to believe they won't sell at least 35 million this year. So it looks like they will sell at least 35% more this year with the same profit margins. That's not even counting the estimated 25 million iPod Touches and probably 8 million iPads all running the same OS and same apps. Meaning an iPhone owning parent will buy their kids a compatible iPod Touch and may buy an iPad. So which phone do you think these kids are going to want when they get ready to get one? There is no real profit at the bottom end and just like with computers, Apple can afford to ignore the low end and still be more successful.

Apple is doing the same to the phone industry as it has done to the computer industry. It's not hurting the competition by taking away volume, it's hurting the competition by taking away the most profitable customers. The rest of the market is fighting over leftovers as far as profit is concerned.

Tomi, blamed the economy for Nokia's woes but Apple has been part of the same economy and has seen greater profits and sales from the iPhone each year. Just like Dell learned in the computer industry, the way to success is not by selling profitless commodity items with no value add.

While Nokia is bottom feeding, Apple introduced a more expensive mobile product -- the iPad -- and created another $10 - $15 billion annual revenue stream out of thin air.


Mr. Elop shall address one issue only: execution. Nokia has the right vision and strategy. When Mr. Vanjoki at a conference in 1999 told the audience that people would have used cellphones with eyes and not just with ears, everybody was laughing at him... he was actually right!
In the last years Nokia lost some focus but mainly missed execution. List of Nokia's bad examples is much longer than Apple's and RIM's lists, here lies the difference.
As soon as Nokia will be back with better design devices (nothing really impressive came after N95), with a good set of easy-to-use integrated features&services and with a good apps store developers support, they will be shining again! Piecesa are there they just need to execute!



What s strategy could Nokia possibly have against it's competitors, Apple is the integration, UI, and marketing expert, and Android manufacturers can match any hardware design that Nokia can come up with and are not saddled with developing their own OS or ecosystem (as poor as the ecosystem is compared to Apple). RIM has the corporate sector and MS will take the leftovers. Yes, I know the standard retort is that I'm being "U.S. centric" and ignoring the developing world. But if Nokia cares about profit, these are the companies that Nokia has to beat.

Notice, I'm not concerned about the dumb lowend no-profit phones. Nokia's problem is not competing for market share. Nokia needs to be compete for "profit share". So what if they sell a billion phones and can't make any money doing it?


Tomi, what you think about Nokia's 2010 smartphone models (keyboards) mess? some... only SOME logic, if 123 C5 were C3 and C3 C5, there were nice: 3-serie is 123 and 5-serie is small-QWERTY. the same mess with 6 and 7-series, like nokia can't decide, which one could be full-touchscreen and other big-QWERTY. earlier times was more clear, what is e6x, e7x, e8x or e9x


Agree on the overall strategy, but the bad choices made in execution continue to astound me. Autofocus cameras are standard in for smartphones nowadays, and then Nokia releases all Symbian^3 phones but the N8 with EDoF cameras. Especially for the E7, not being able to photograph documents is going to be a deal breaker for a lot of people. For me the only model worth considering now is the N8, which has the huge drawback that I can't replace the battery.
But in the end, after some testing of one of the current top-of-the-line Android smartphones, I still would like to use a Symbian phone, since Android is not really mature regarding a lot of aspects of everyday use, and all the other OSes are not really an option anyway for various reasons. Still hoping the N8 will turn out to be a great phone!
(various reasons against other OSes:
iphone - itunes mandatory, control-fascism of Apple
RIM - different focus from what I need
WinMO - dead
WinPhone7 - no multitasking, no customization
MeeGo - not out yet
Maemo - dead
Bada - get serious!)


Nokia strategy in the high end devices space (profit share space to use yr words) is almost the same as Apple one (few differences of course such as Operators approach) They actually started few years before iPhone came to market and they have all the pieces they need to make it happen
They just have to execute better than what they did recently, few examples: less devices but more iconic ones, clearer marketing and communication messages, better user experience and less fragmented services offer. In one word better execution!

ps having its own OS should be a plus, once it works fine. let's se with Symbian3 and 4 before meego comes


Nokia's problem is two-fold: Software strategy execution is way too slow, and US-mindshare spearheaded by (amateurish) tech-blog sites is poor. The latter is also a big Marketing challenge.

As you write in your blog, with S^3 and soon S^4 the worst of the SW problems could be over. And if Meego / N9 turns out to be a winner, US tech blogs might change their tune and make Nokia more "cool" than they are today.

Additionally, Nokia could do a lot in the U.S. The next flagship smart phone should be over-spec'd, i.e. a dual core CPU or one that runs at 2 or 3 Ghz (overclock it and replace if it really burns through), a display with markedly higher resolution than what is necessary (and reasonable) on a smart phone (1920x1080 anyone?), the N8 camera and what have you. Packaged in a great design (hire Porsche Design or Ferrari to style it if necessary). Two or three killer specs, the rest solid upper class. This would be a very high priced device to show off. Manufacture in relatively small numbers, provide some kind of specialized customer service around it, and state that this device is so special and great that only a few will be willing to afford it, and only real tech lovers will be able to appreciate its virtues (price point above $1,000, so more than 50% more expensive than the iPhone). Then follow with some reasonable spec'd devices, actually usable, solidly manufactured and sell them at the iPhone / Droid / Galaxy level. If Nokia can get one, two or three of the US carriers to sell their line of phones, then they can give everyone else a run for the money.

Do this for the U.S. and non-U.S. high end markets, and continue to sell loads of affordable good quality phones to the masses.


I've got to say this doesn't really sound very unbiased. You put Nokia on a pedestal too often.

The overall message I get from this is that Nokia was first to a whole bunch of stuff - that sadly no one cares about or gives them credit for because Apple and others now do it better. Do we have to play a violin for Nokia because everyone has forgot that they made touch screen phones/app stores first? Consumers don't care who did it first, they care who does it best.

And I think that was one of the things fundamentally wrong with Nokia, this idea that because you were first so you can sit back and rest of past achievements. I worked at Nokia just like you, I know the company intimately, the only difference is that I was there more recently, it was amazing at how many people scoffed at the iPhone, saying it didn't have this or that feature. Then a year later panic set in as departments were rushing to combat/copy Apple.

"Nokia's touch screen interface will not need to be 'better' than the iPhone - nor even 'as good as' the iPhone, as long as Nokia's touch screen interface is 'good enough'."

Oh dear. This is not how you do this. Good enough is never enough.

"Nokia was the first company to say a smartphone was a computer (something ridiculed by the 'real' PC makers at the time, and only very recently the PC makers - all 6 of the 6 biggest PC makers in fact - have all found it to be true, that a modern smartphone is indeed a 'real' computer, only a tiny and pocket-sized one)."

I use to work for a agency that worked for Nokia and we got sent a memo stating from now on we were no longer allowed to call Nokia phones phones 'mobiles or smartphones' but 'multimedia computers', the trouble is with that strategy was the phones on the market at the time (2004) were god awful at being anything more than a mobile phone, with complaints over slowdowns,crashes and usability.

"Apple does it thumbing its nose at industry standards and quarrels with major players like its long-standing feud with Adobe Flash. That is a way to produce exceptional devices and services - for the luxury crowd, ie for a tight niche market - but it is not the way to win the world. You cannot win the world that way."

Personally I think Flash is becoming less and less relevant in mobile, especially when Flash video is now quickly moving to HTML5. Think about how many mobile optimised sites use Flash anyway? If they do then you can serve the correct site based on the capabilities of the phone. Of course the iPhone can't view full Flash sites but I really don't think it matters and part of a purchase decision for the mass market.

"Who invented the cheap consumer smartphone? Not Apple. It was Nokia again. Nokia already sells basic non-touch screen smartphones at 100 dollars (price without subsidy, ie without contract, where the iPhone without contract costs 600 dollars) and is pushing the price point of cheapest touch screen smartphones to that level too - already offering its cheapest touch screen smartphone at nearly 100 Euros. No matter what the Apple loyalists think of the iPhone, it will never be a mass market phone. Apple is a classic premium luxury niche maker, who can hope to have 3% of the market - like it has with the Macintosh PC, after 26 years of fighting those battles with its 'revolutionary' PC."

Strange statement you're making here.

Just because Apple doesn't sell cheap handsets does that somehow make them inferior? What company would you rather be the CEO of the company making one of the most desirable handsets ever made ... or the CEO of the company making everyone spare handset when they lose the one they actually like the most?

And I'm going to mention it again cos I know you love it, that 3% of the market is making Apple more money than the massive percentage Nokia has so what really is the message/learnings here?

"They are not as good as (when considering the touch screen only) as the iPhone is - but who is, honestly, this is comparing a Ferrari to a Toyota for goodness sake "

When you buy a top-end Nokia I think it's fair to compare it to a iPhone don't you?

"The touch screen phone was not invented by Apple, Nokia had its first touch screen phone out years before the iPhone."
"Or having a phone that is compatible with industry standards (the original iPhone didn't even support MMS and even the current iPhone 4 doesn't support the industry standard 3G video calling, etc)"

The iPhone still sold millions and millions regardless. Again, learnings here.

"We heard earlier this year that the UK youth's number one desired phone is not the iPhone, its the Blackberry. "

This is more to do with Blackberry Messenger. But yeah it's a no brainer that a QWERTY iPhone would be great, but then everyone knows that.

"almost all upgrades to the iPhone were actually 'bug fixes' to try to make the iOS as good as Symbian"

Woah woah woah, are you honestly suggesting that the iOS Symbian was/is better than the iOS? Even in 2007 it wasn't. Jesus. By the time the 3G came out evven the people in Nokia didn't believe that. What does that tell you?

"And I should mention the App Stores. While all the silly hype globally in mobile is about apps - I have been repeating and repeating and repeating, that it is a trivial "

Apps are now becoming part of peoples purchase decision. Not trivial if it is selling phones. You only need to take a look at Nokias marketing material to see how important this is for them too.

"You want paid downloads to mobile? Try Tetris. Sold 100 million copies to mobile phones and counting."

Yeah could that maybe be because it was available to hundreds of handsets?? Come on it's not a fair comparison to angry birds!!!!


Can we stop comparing phones to cars?! There's a vast difference in the way consumers approach buying devices that cost $200 vs $600 and one's that cost $20,000 vs $60,000. Cost as a percentage of income is a HUGE factor. Bad metaphors create bad ideas, don't use them.

Matthew Artero

Thanks Tomi for all your hard work of analyzing and writing this up. It seems some of the comments of this latest post have forgotten your explanation of the importance of winning the platform war and how to win a platform war.

When the developers migrate to the platforms with the larger market share, all of a sudden those devices using platforms with smaller market shares will be forced to do their own app development which will cut into their profits.

One thing I know happens when people/we work with intense focus, and analysis work requires focusing on some small details, is that it can become easy to not see the forest from the tree.

I see that Nokia’s problem is definitely more than a communication problem. I see that shareholders are absolutely right to say that Nokia missed the boat and demand higher profits, but of course not at the expense of losing the platform war.

Nokia has failed to do what we see other global brands doing in other industries. Food giants have their cheep food brands as well as their expensive food brands. Car makers like Honda and Toyota have launched their more expensive Acura and Lexus brands.

Toyota has also launched its inexpensive Scion brand which protects the name of Toyota from being associated with the word “cheap”.

So the way I see it, share holders are upset with Nokia for not doing what is already considered to be standard practice when faced with the situation that Nokia is faced with.

The bottom line for shareholders is that Androids and iPhones are selling in enough numbers that they want Nokia to be taking a piece of that action. As long as those numbers are there they will always complain and Nokia cannot communicate those complaints away.

Surely there were people at Nokia that believed in this approach, evidenced by the enormous amounts of money Nokia used to spend on research, including grants to other organizations. But now that money is tight, the amount spent on research is not as much as it used to be. With less money into research the reliance on winning through market share has become heavier than it use to be. More of Nokia’s eggs are going into one basket.

In other posts you have told us about the different products and services that mobile has cannibalized. Cameras, email, landlines, PDAs, and so on. By that logic, there is no reason for phones to not also cannibalize the keyboard. In fact I say it must cannibalize the keyboard. I say it is inevitable. Therefore getting together with me and my invention would be a great advancement for Nokia and would help silence Nokia’s critics. Or if another manufacturer does it first, critics will say “another boat that Nokia has missed”.

What’s to stop Android and the iPhone from eventually selling cheaper phones? I think it is a legitimate concern of shareholders. It seems that Nokia's success in the platform war hinges on others not entering the lower markets. This is not something Nokia can control. We learn from Sun Tzu to never rely on predicting or trying to control the enemy.

Matthew Artero

In his first public address as incoming CEO of Nokia, Elop sounded a lot like this blog as he pointed out Nokia’s strengths saying that Nokia has the ability to take advantage of today’s opportunities.

I’m sure outgoing CEO Kallasvuo holds the same view. But of course the problem is shareholders don’t just want a company to be in position to take advantage of the new opportunities, they want it to succeed at taking advantage of the new opportunities.

An interesting thing about Elop’s speech and the reports from analysts and news agencies is that they are all saying the same thing, Nokia has the resources, talent, and skill to do it, but nobody is saying what “it” is.

Elop says he will be listening and learning. Therefore he must believe the answer already exists in the minds of others who are going to tell him what they think Nokia should do.

That leaves me wondering. What are the various products the other voices are saying Nokia should come out with, and what are their reasons for suggesting it?

Steve Woodgate

Hi Tomi

Toyota do make a supercar
Let's hope this augurs well for Nokia smartphone efforts.


Henry Sinn

“All Symbian needs, is to be good enough”…

“Microsoft released a 'Macintosh clone' that was good enough”

MS office on Windows was “Good enough”…
MS office on Apple was more than “Good enough” – saved Apple

Phones are replacing [soon will] our PC’s
The Nokia offerings are [arguably] the closest to what a PC “is” with such aspects as the ability to store files, attached peripherals and truly do more than one thing at once..

MS office on Nokia will add to that mix and it will be more than “Good enough”….

The rest will be history.

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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