First Analysis of Nokia-Microsoft Alliance - Wow this is good for Microsoft

Ok. I am in shock. I was pretty sure (not completely sure, but pretty sure) that this could not happen. For the first time ever, a technology brand that was leading in the market, abandoned its platform and selected one of the smallest rivals. Even with Mr Stephen Elop's background from Microsoft, I could not see this coming. But it did. I need to get over it. And provide some value to you, my readers. Lets do the quick analysis of this partnership.

CONGRATS MICROSOFT

Lets start with the obvious. Microsoft wins massively. One of the biggest wins in history. The whole PC industry is singing in chorus that the future of the PC is mobile. Microsoft which built its massive and profitable empire on the PC, was never able to do so in mobile (their peak market share was about 12%, and they currently have 3% but that includes the about-to-be extinct Windows Mobile. Microsoft's new OS, the one Nokia will adopt, called Phone7 has only 1.5% in Q4. Nokia had 33% for the whole year; Who is the winner here?).

But the PC industry went from stand-alone apps to the internet, ie the web. And Microsoft lost in that battle too, having only a modest slice of the internet business. Now all internet giants say the internet is heading to mobile. And Microsoft is right back in that game as well, though this alliance with Nokia, leapfrogging many internet rivals to fight as one of the biggest, in the mobile internet race as well. This is nothing but massive good news at Redmond and Stephen Elop's Swiss bank account no doubt has a huge bonus coming to it, haha.. (I am kidding - Micrsoft is one of those companies who likes to sue everybody, I am kidding I am kidding!)

NO NO NO-KIA

Nokia? Like I wrote in my stunned state, this is the beginning of the end. Nokia which for a decade said: the future of mobile phone handsets would go like the PC industry, to software and services. Because of that, Nokia had built a huge competent force in its software and services side, and bought full ownership of Symbian, the world's most used smartphone OS platform - and had already a near-completed replacement OS for Symbian, called MeeGo (developed with Intel). Now they abandon all that, and take onboard a brand new OS developed by Microsoft that has a miniscule market share, miniscule development community etc. This is not - mind you - that Microsoft Windows Mobile which in the past at one point was the second most widely used OS for smartphones (in the age before the iPhone haha). No, that has been killed.

Anyway. Nokia now announces their partnership with Microsoft. They also say they will continue to support Symbian for a couple of years, and make 150 million more Symbian devices. And they will still support MeeGo as an open source OS and will release at least one MeeGo device this year.

So? Nokia will support THREE operating systems? All the costs and confusion that this creates? If it wasn't confusing enough to support two? And who in their right mind now bothers to learn to develop for Symbian's updates and newer versions? When Nokia itself is going from Symbian to Microsoft? Obviously any smart developer who wants to develop for Nokia will do so on the Microsoft OS, not Symbian. And MeeGo? What a kick in the face of Nokia's last-year partner, Intel? This is really painful news for Intel.

Nokia's Symbian developers will feel betrayed, its internal Symbian related staff demoralized. Nokia's MeeGo team will feel gutted. This is all good for the plans to turn Nokia into a software or 'internet' style company...  After doing it for a decade, the thanks they get from top management is: "thanks guys for the hard work, but actually we'll rather go buy the unknown new Microsoft version, rather than the one you've built for us for years. thank you guys." Many of the rest of Nokia staff will feel that management has gone mad and the brightest will see the writing on the wall and cautiously start to send out their CV's to the offices of Google, Apple, Samsung, RIM. (And they will ask their families, do we want to live in Canada or California or Korea?). Gosh, I thought Anssi Vanjoki departure was devastating news for Nokia when Stephen Elop came but I couldn't see this haha..

But back to three operating systems - that means more costs and confusion. If you thought that Nokia's 'execution' was a problem before - just watch it do delays like a pro this year - like someone... who should I think of, someone who really knows how to deliver software on time? hmmm.. MICROSOFT !

This is the same Microsoft that stopped having annual release numbers (years in the software version Windows 95, Windows 98 etc) because they could not release new software BY YEAR ! If you thought Nokia delays with N8 were bad, that was only delayed by a couple of quarters. Microsoft can't even commit to releases by year. But yeah, Tomi, keep cool, try to analyze this rationally, ok?

The 'partnership' with Microsoft is very dangerous on many levels. On the one hand, this is Microsoft, the company previously known as the evil empire. How did it gain that wonderful nick-name? From all sorts of dirty tricks and lawsuits. Do you remember how Microsoft got into smartphones? You're too young to remember. When Microsoft announced it was coming to smartphones, they selected UK based Sendo, as their launch customer and handset maker - then when the first Sendo handset was almost ready for launch - Microsoft pulled them from the deal, sued them silly, and went with Taiwanese HTC. The lawsuits ran for years, Sendo argued that Microsoft had stolen their ideas, not delivered on any software promises, were delayed on all schedules, and then gave Sendo's proprietary handset and market knowledge to HTC. Nice. The lawsuit was finally settled years later. But this is 'normal' for Microsoft. (For anyone planning to remain at Nokia, in all your dealings with Microsoft - do play wisely, keep all evidence, assume there will be lawsuits and you need to be prepared. You heard it here first. Microsoft loves suing people).

How well did its partnership with HTC go? HTC is the company that manufactured more than half of all smartphones on the Windows Mobile OS with more than a dozen other handset makers doing far less than half. HTC was so disgusted by Microsoft by the end, that they announced loudly they were switching to Android the moment that became available - to the point, HTC said they would not even use the next (which turned out to be last) version of Windows Mobile. Thats Microsoft partership for you. Motorola, another early Windows Mobile client, was so fed up with Microsoft's games, they said no Phone 7 smartphones ever! Moto said they only do Android.  Danger? The iconic maker of the Sidekick youth phones was bought by Microsoft amid big promises. Where are they now? Two phone models were produced - and sold for six weeks. Thats it. That was 'Microsoft keeping its promise' They refused even to offer the Kin phones in Europe where there were operators signed up for the new edition of the Sidekicks. This is how the evil empire likes to play, they play dirty. Samsung, LG, SonyEricsson and HTC give lip-service to Microsoft, all putting most of their effort to Android where they have a friendly OS provider (as in 'do no evil' haha).

Lets be real here. Microsoft can be a tough partner to work with, and do expect that each Phone 7 OS version will come with delays and bugs. If you thought your recent Nokia smartphones were not as reliable as they were in the past - that will get far worse, when Nokia uses the chronically buggy Microsoft OS platform and tries to integrate between the two. But thats just my view, haha. Who knows maybe in this new decade, Microsoft will turn into a pussycat?

END OF THE DREAM OF NOKIA THE SOFTWARE COMPANY

Ok. The good news is that Nokia can stop pretending to be a software company. They can focus on being an efficient box-mover, like say... Dell. Thats the ticket. Microsoft made all the big profits on personal computer operating systems and office suite software used by Dell computers, Dell made the thin profits moving boxes, where Moore's Law made each newer edition of the box ever slimmer in profits. Sure, this was a bold move by Nokia, but I'd say a boneheaded one.

Does Nokia gain a superior OS out of Microsoft? No. Phone 7 won't even be able to run all the features that current Nokia premium phones have. So right from the start, this means moving Nokia abilities down a notch.

But competitive advantage? Differentiation. Well, who else is committed to Phone 7? Lets see - Samsung, LG and SonyEricsson. So whatever Microsoft is developing, Nokia cannot even have any significant advantage - on its premium phones - that Samsung, LG and SonyEricsson don't know about. They gain all the delays of Microsoft while gaining also the eyes and ears of most of their biggest competitors to see all the development. When before, on both Symbian and MeeGo Nokia would have had their development to themselves. Yeah, moronic move.

Now the really silly part is to bleed all that profit in those three OS platforms. I will not be the first to say this, nor the last, but Nokia needs to kill off its OS platforms more quickly than that. Its now a journey into futility. Nobody believes in Nokia OS platforms anymore, they are the walking dead. Why develop them? Why maintain them? They now are only a drain. And those colleagues at Symbian and MeeGo units - shift away as soon as you can, you will soon be as modern as those who know how to program in Pascal, Fortran and Cobol haha. (like me, I'm that old, seriously, my last programming language was the original C, not even C+ haha).

Which brings me to Microsoft again. Can you see the parallels? This is like Microsoft who owned DOS (that was overwhelmingly bigger than the Mac OS), and was about to switch to Windows (which would be equally much bigger than Mac OS years later) - and six months before Windows was to launch - and 90% of its development was complete - suddenly abandon it, and go with Macitosh OS instead.. I said on this blog a few days ago, that a change away from MeeGo and Symbian would be a decision by a psycopath, and I said it in jest because I could not see it happening. I am certain this move by Nokia will be seen as one of the classic biggest blunders in technology history (for Nokia) and definitely one of the all-time greatest heists and triumphs by Microsoft.

So, all Nokia R&D and product development guys need to be retrained for Microsoft abilities, tools and methods. This is not learning new, this is unlearning the past, and re-learning the same but by the vocabulary, methodology etc of another company. That is a huge internal training effort, huge, for what? Will definitely be costly, and there will be very many times a Nokia contact, internal or external, will now see as the automated reply 'I am not available now, I am in training' haha.. Yeah, Nokia is moving to internet speed exactly how? This means the whole organization is mummified for at least what, 18 months? All processes will now be made slower and in the end, will they be any faster when they have to often consult with their Microsoft partners on issues (rather than internal Nokia colleagues). Yeah.. Look up Sony and Ericsson, how long it took for those two partners to understand each other. Or check Alcatel and Lucent. And this can very well end  belly-up, see Daimler and Chrysler. It will not make Nokia a more responsive and modern company. At least not for the next 18 months, maybe longer. And the end result won't be something faster it was today. Not with this partnership. If slow-moving Nokia had partnered with fast-moving Google, at least its conceivable Nokia could learn to be faster, more nimble. But for notoriously slow-moving Nokia to join with notoriously slow-moving Microsoft, means that the tortoise is learning how to speed up, from the snail!

Their internal contacts will now need external Microsoft contacts (most of whom are in the USA, time zone hassles etc). All good stuff that will help in profitability exactly how?

BUT IT OPENS US MARKET

Will this help sell in the USA? No. The mobile phone handset business is not like the PC business. Having Microsoft as the operating system will not sell any more handsets in America than Symbian, because the bottleneck was not the operating system, it was Nokia's poisoned carrier relationships in America. What Nokia needs to do, is restore good relationships with the carriers. Then it doesn't matter which OS the phone has. To prove my point - Google's Nexus One, on the amazing Android OS which at the start of last year was the hottest thing going - and defeated both Apple and RIM - and at the time the Nexus One was a highly rated 'iPhone killer' but suddenly, US carriers decided not to subsidise the Nexus One, and Google killed the phone in 2 months. It was not the desirable OS, it was carrier relationship.

Exhibit 2 - Microsoft's own phones, its first ever, the Kin phones. They were to release on US carriers, suddenly the carriers didn't give the subsidies that the Kin phones needed, it died so fast that Kin was killed in 6 weeks - the fastest death in mobile phone history. It was not the desirable OS - not even Microsoft branded OS that could win in US market - the Kin phones died using MS software, because of the carrier relationship. Look at this! If Microsoft cannot get its OWN branded phones to sell using MS operating system - don't delude yourself that Microsoft can somehow make the unpopular Nokia phones wanted by the US carriers!

Need more? Exhibit 3 - Palm. The last Palm-branded phone, using WebOS, was greeted as the best phone on the market by many analysts, as good as, some said better, than the iPhone. It didn't get carrier deals on the four networks - Palm died. Again, not the OS that decided, it was carrier relationship.

Having a great OS - whether Android, or Microsoft, or Palm - was no guarantee of US success. It is completely up to the carrier relationship - and nothing else (in the USA). The handset business is not like the PC business. Premium smartphone handsets in the USA are sold with subsidy, and unless Nokia gets subsidies from the carriers, the OS is irrelevant. And the OS itself, is irrelevant to getting the subsidy, else Nexus One and Kin would have been runaway sales hits by now, in the USA.

But who am I to advise Nokia haha.. Like I wrote before, they don't listen to me haha.

So, Stephen Elop becomes Steve Ballmer's whipping boy? Pretty interesting. And I was thinking we were seeing the opportunity for a new Steve Jobs to step on the stage today. How wrong I was haha..

What does this mean to Nokia's internal problems? What problems does this fix? Nokia's problems were in execution - so say most analysts, not just me - and now they introduce a THIRD - THIRD operating system. Will this help or hurt Nokia. Hmmm.... Samsung recently found that supporting many operating systems was costly, they cut down. SonyEricsson found recently that supporting many operating systems was costly, they cut down. Motorola found recently that supporting many operating systems was costly, they cut down. Nokia bravely goes the other way. Last year they supported one OS, this year they will support three. This will not help Nokia profitability.

So Nokia abandons its own OS platforms. This is 'smart', I am sure. Not that in the PC world it was the OS provider who made most profits and the box-movers made the slim profits. Hmmm.. So Apple? They jealously guard their right to make the OS? So RIM feels their competitive edge comes from making their own hardware, their own OS and having their own software, solving the end-to-end. Hmmm Google? They not only like making the OS in Android, they also want to make handsets, so badly, they have launched Nexus phones - TWICE. And the world's biggest computer maker, HP, which is twice as big as Nokia in global sales revenue - and have been a tiny smartphone maker for a decade - recently decided they want to own their own OS, and bought Palm and now have just announced their first new Palm WebOS based smartphones. You'd think HP had seen enough of the pain of being a slave of Microsoft, to want to do this. So much that they outbid HTC who wanted Palm too.

Oh yeah, of the five biggest smartphone makers, Nokia is now the only one who doesn't make its own OS anymore (yes yes, I know they still will support Symbian and MeeGo but they have effectively announced their termination today).

INDUSTRY CHANGED TODAY

Winners? Microsoft is by far the biggest winner out of this. This is massive for them. They were a side-show. Now Steve Ballmer has his weapon to stay on center stage. Microsoft is instantly a major story in smartphones, in app store ecosystems, and in the mobile internet.

Samsung. They now become the biggest handset maker who controls its own destiny with their OS bada. I am upgrading bada's trajectory and expect them to remain bigger than Microsoft - because Nokia obviously will split their handsets to 3 operating systems, so while Microsoft grows strongly, it won't match bada's trajectory (as Nokia's low-cost phones, where most of Nokia's smartphone volume is, are on Symbian).

When bada becomes the second biggest OS (Android will now rocket to number 1 within weeks haha), it will be when it passes Symbian. I'd say that happens in 2012. Microsoft-Nokia will be playing catch-up to bada. This is very big news at Samsung.

Then Google. They know that Google can run rings around Microsoft in development speed and they have the army of giant handset makers to overpower the Macrobureaucracy now known as Microkia. The Android market share will be bigger than all Nokia OS's and all Microsoft OS's combined before the end of the year.

The Android community will cheer and celebrate. They will so overpower the industry, they will celebrate every statistic and lead, and watch how Microsoft lingers in single digits and eventually climbs to low double-digits.

Apple wins too. Nokia always had the potential to strike back. The N97 coulda been an iPhone killer and the N8 and E7 all exhibited potential they might have been big. With MeeGo and advanced handsets, could have made an iPhone killer, look at the N900 and Maemo. It showed so much promise. I think Apple are so cocky and confident, they really weren't losing any sleep ever about Nokia, but their strategy guy would always keep an eye on them and some of their smart guys knew, if Nokia ever really put their mind to it, they coulda crushed the iPhone. Now they can sleep more easily. They know that for the premium price segment, Apple is unassailable and they know Microsoft delays and hassles well - just look at Microsoft's music player (I forget what its called, Zune?) vs the iPod. Apple see this as great, as this partnership weakens Nokia as a credible Apple rival - Apple can concentrate even more on beating Google. And with the iPhone Nano, Apple can now start to target becoming the biggest smartphone manufacturer in the world (they already are building a lead ahead of RIM..). Last year it was pretty hopeless to suggest super-high-cost Apple iPhone could pass Nokia which sells 100 million smartphones per year. Now, if Nokia is crippled and vulnerable on all fronts in smartphones - suddenly Apple can plausibly catch and pass Nokia. Wow. This changes the whole picture.

Motorola - are happy they are on Android if Nokia is stuck with Microsoft. The new year is starting very well for Motorola.

LG will consider making their own OS like bada, might actually try to woo Intel into 'MeeGo part 2'

SonyEricsson is happy they are on both, they can keep an eye on Microsoft while doing most of their good phones like the PSP phone on Android

HTC is laughing but also considering seriously if they can afford to start their own OS. And since they know Microsoft the best, they are blessing the day they switched to Android.

HP could not have picked a better time to return to mobile with WebOS - there will be plenty of Symbian and MeeGo developers who are looking for opportunities. That HP announcement could not have been timed better. HP should call Intel and say they shoulda stayed with US companies and woo them.


Intel is gutted. Sorry you guys! Now go and forget about Nokia, talk to Foxconn and HTC and Sharp and other manufacturers and release your own smartphone - using MeeGo and show it can be done, haha! You have been royally scr*wed, don't worry, now you have no obligations to Nokia and you can create your own smartphones. Look at the bright side!

NTT DoCoMo had been signalling a greater interest in Android and iPhone, they will probably start to migrate to Android based phones soon, this will cut Symbian sales even more. I would be surprised if there are any Symbian handsets sold in Japan next year.

Sharp has already been going Android, this accelerates that transition (from Symbian)

And Fujitsu will do the same, I am guessing to Android rather than Phone 7, but we'll see.

RIM is also cheering. They know the Blackberry beat the pants off Microsoft in the past in business-oriented enterprise phones. But Nokia E-Series was far more tough as a rival than MS, and just last year, Nokia's QWERTY handsets outsold Blackberries for the first time. RIM loves this partnerhip. This severely weakens Nokia, now is the time for RIM to really pounce on the youth/consumer market as the only really credible youth QWERTY phones, get the gaming and social networking etc stuff to your app store as fast as you can!

In sum. A brilliant long-term superb move by Microsoft. After a decade of disaster in mobile, they are right in it, and now can finally capitalize on the mobile future.

For Nokia, massive disaster, wrong on so many levels. Most of all, they have failed the confidence of their supporters, especially the developers who were promised there was a future to Symbian and a migration path to MeeGo via Qt. No. That was no migration path, that was like the Talking Heads song, a Road to Nowhere. This also immediately sets the fear in the minds of all Nokia employees who see that all promises of Nokia have no credibility. The smart ones are looking for exit strategies. This helps Nokia exactly how? Nokia was always known as a poorly paying employer who treated its staff exceptionally well. So they relied on employee loyalty. This stabs them in the back so hard, Nokia cannot be trusted to stay loyal even to its own products and promises. To go and buy in Microsoft. As Nokia staff exodus starts with the best minds, it means costly replacements - now? In this environment for smartphones? When the growth is 71% per year? When competent staff is nowhere to be found? And Nokia has to recruit to replace staff? This helps profitability? This helps competence? All new recruits in basic induction training? The contacts that you had no longer work.. All this means - more delays! Nokia will become ever more like Microsoft in bureaucracy, and more like Dell in profitability. Good move!

I do think this makes the year more interesting. We can watch Nokia struggle and its more interesting than watching a giant recover its strength and dominate. But as a former Nokia employee, and more than that, as a Finn - this makes me weep inside. Oh, PS, expect Nokia to switch their HQ to California soon, right next to Microsoft's campus, so that Stephen Elop can be at Steve Ballmer's beck and call as needed..

UPDATE - OMG, how could I have missed this? Vi Mimir who is on Twitter as @sleipne - almost immediately responded to my tweet saying that as a European, is in shock, as Nokia has just gone from an open source OS to a closed OS. This is really really bad for the industry.

UPDATE Feb 14 - I have now written my final chapter in the MeeGo saga, the autopsy to what happened to kill Nokia's next generation smartphone operating system. It was not killed in February 11 by Stephen Elop. No, the end of MeeGo was approved by the Nokia Board when they decided to hire Stephen Elop in September 2010. Read the full story here: Nokia Autopsy on MeeGo

UPDATE Feb 15 - I have now completed my follow-up blog, the look forward for Nokia and Microsoft. My first analysis is I believe the first published story to project market shares, Average Sales Prices, Nokia revenues etc for the year 2011. Read the full blog here When Things Get Even Worse Than You Thought.

UPDATE Feb 16 - I have now added the competitor analysis, who gains the most out of the 50 million smartphone and 14.6 Billion dollar windfall, that Nokia kindly bequaths to its rivals this year. See Noki-Soft Windfall.

PS for those who need stats and facts on the phone industry, remember I released the TomiAhonen Phone book, 171 pages, 98 charts and tables on all the market shares, regional prices, dumbphones, smartphones, operating systems etc. Cost only 9.99 Euros, available only here TomiAhonen Phone Book.

Comments

[agoedde]

Agree completely. Disastrous move for Nokia, huge win for Microsoft.
Just one correction:
Nokia will not be supporting three OSes, as MeeGo has effectively been killed off today (they just didn't want to word it that clearly - it's a research project now).
Also, I would count Symbian as only half an OS from now on, as all of the people who were working on feature updates etc. can be moved to other projects. Symbian will only see maintenance work from now on.

[Eaglewing]

Nokia stock down 10%

If this move was really pushed by American investors, then it seems that the market at large disagrees with them. Nokia investors have just lost $4Billion in a single day! Congratulations!

[Vikram]

Tomi I always enjoy reading you analysis but I have to disagree.

Nokia makes great hardware and are the only ones who have the ability to match Apple there but the fact of the matter is that Nokia's software is third-rate compared to Apple and Google and even WP7. The fact that is that Meego is no where near prime-time and on a level that is comparable with iOS and Android and Elop realized that he would have to wait for 12-18 months to get to a comparable level from a customer experience and developer/ecosystem equivalent in terms of usabilty and desirability for a developer.

Nokia sells a lot of phones but the software or the platform they have is not the reason why. They sell phones in spite of that, not because of it. That is what people need to understand. The only place where Nokia brings something that is market-leading/world-class in terms of software and user experience is in mapping. That's it.

Regardless of the bulletpoints that you note where Nokia has maps, an App store etc... the fact of the matter is that the whole platform/ecosystem was way behind as compared to Apple and Android and more importantly - awful relatively from a customer point of view. I travel and spend a lot of time in North America and Asia - I own all the phones and using Nokia phones now is such a backward experience compared to iPhones or Android. I do acknowledge that they make very good hardware but people no longer buy phones simply because of hardware.

Regardless of how many phones Nokia sells now, the graph was pointing downhill in a steep manner to the point that even you was shocked when you saw the results from the last two quarters.

The fact of the matter is that Meego was NEVER going to be ready on time. You speak of execution as the rational for Nokia's problems but that is something that was not going to be able to be changed fast enough for Nokia to survive. Elop in the last few months learned about this problem and made a decision and made the best of a list of bad choices.

The fact that Nokia spends much more on R&D than Apple and still can't get out a modern OS in time should tell you plenty about the problems that plague Nokia and what Elop faced.

As for Samsung - yes they are doing well but it is in no way because of bada! bada is a simple OS. Samsung is doing well because they copy other people's styles and they own the manufacturing so they can be cheap. You can expect Samsung to drop bada as most feature phones become smartphones and they will move everything to Android. This will happen.

Elop did what he could for short-term survival on a sinking ship. The fact that he isn't totally abandoning Meego is a good thing. Also Symbian is going to be put to pasture where it belongs.

[Gouge]

I think that MS and it's associated clout in the US probably had major influence over the investment community or even due to the level of Nokia stock MS, or the executives of Microsoft held to assist in appointing their chosen CEO. It'll be interesting to see what the MS share price does when the Dow opens.

At the end of the day as is common in the tech sector a bigger fish swallows the smaller one, digests it taking the good bits and poops the rest out the back door to be obscure. MS wins whether Nokia survives or not. Terrible terrible decision.

[Gardon Lee]

Is it a well planned and well executed infiltration of Nokia by Microsoft provided how everything happened sequentially ?

[Gouge]

Also interesting is that MS can manage to control companies without actually buying them, familiar situation me thinks:-

http://mashable.com/2010/08/24/bing-powers-yahoo-search/

[Scoo]

Mind-boggling to say the least.

I may be prejucided as a Finn but this sounds like the equivalent of Australia abandoning the Allies in favour of the Axis on August 5 1945... Perhaps Mr. Elop had been provided with some Microsoft-developed mind control devices when he was hired by Nokia.

[Gouge]

Wait until the Dow opens and watch share ticker for Nokia as I suspect there will be large short positions taken out by US hedge funds eg. Paulson and Co.

What was interesting was a recent change to Nokia was passed by board to allow it to buy back it's own share. In itself not a ridiculous option but in light of what has happened if it reduces it's shares in circulation it makes the possiblel eventual purchase by Microsoft a more likely option a year or two down the line DYOR.

Also why did they not continue for 6 months and launch a meego device and update Symbian^3 and see the next two quarters sales when clearly it was all geared up to do that, even if not working they could have switched then and at the same time prepare the way to hit the ground running with a device that could run any of the new high end OS's and then courted the option then. The reason I suspect is that the appointment of Mr Elop and the events to date were all planned. Discussions with Google are merely smoke and mirrors to avoid to much suspicion of collusion.

[Tomi T Ahonen]

thank you everybody, I am swamped obviously, and while this is very interesting to me, to me the most important thing today is to help those friends and colleagues who are in shock, those Nokia colleagues who are finding out their career is killed and need to find new jobs.

It is my policy to reply to absolutely everyone on the blog. I will definitely come back here and reply to each of you individually, do not worry. I just am not doing that today, so it'll be next week. I will focus my main effort today to help my friends and colleagues on their day of need.

Please do keep the discussion going, I am enjoying reading the comments, and so do the thousands of daily visitors to this blog who also will be reading your comments. The discussion is very intelligent - please keep it up. I will return later with my replies to all of you.

Tomi Ahonen :-)

[Been There]

Having worked for six years (2000-2006) very close to the actual Nokia R&D, I'd like to say the only thing that would have been more surprising would have been a joint venture with McDonald's.

And I'm saying this from the corporate culture perspective.

I don't think it was as much a technology rather than a micromanagement / time sheet / overall B.S. management attitude, that killed off innovation and loyalty within Nokia people. The same people who eventually develop products. The same products that either end up being great sales successes or not.

Some time during 2005 it was becoming inevitable, that people who could be as comfortable selling refrigerators became more and more involved in middle management. And that's where it counts. That's where you either keep people happy & hummin' with innovations day to day, or make them feel like complete morons for having to put up with such corporate culture.

I have yet to see a workplace that would have benefited from all the recent management and corporate control religions so popular these days. They *always* and without exception have a negative impact on productive minds. And that comes with a price tag; just see Nokia as one prime example of that path.

Hence, I think it's wildly irrelevant at this point whether they team up with Microsoft or with whatever:
THE GAME WAS LOST BACK THEN WHEN SMALL MINDS ENTERED THE COMPANY.

[Jeroen Wijnands]

Best analysis I've read all day but missing a few points.

1. Carrier relations are important but there's a world outside the US. Europe is a strong smartphone market. Nokia is still strong in the cheap series40 devices for the emerging markets as well.

2. User experience. I agree Microsoft has not yet excelled in that field on mobile device but when I compare Nokia's S60v05 offerings and the generation just after that with just about anything made by HTC then HTC gives the impression of being light years ahead.

3. Nokia is not and has not for some years taken it's users seriously. Firmware updates are cumbersome and badly handled up to the point were fans change their handset type IDs to get it sooner. The OVI market and most OVI applications seem to be designed for people with the intellectual capacity and digital know-how of an African dictator.
I laughed myself silly when Tomtom's share prices dropped when Nokia started "giving" away Ovi maps. Apparantly many stock dealers had never used the worst navigation application ever released.

[richo]

Finally Nokia phones will have a decent OS. Sucks to be a Symbian developer, but there is far more MS developers anyway... Good move in the long run by both

[Hantu13]

This is clearly a difficult time for Nokia employees and their friends and family.

Just a quite note about some finance stuff:

-Nokia's drop in share price has more to do with disappointment that MSFT didn't attempt to buy the firm outright (they probably tried). The run up in Nokia's shares before this was an attempt to capture the premium that MSFT would have paid. These investors are now selling off. The results of this strategy will not be seen till 2012.

-One company that has been more abused by the investment community than Nokia is Microsoft. Make no mistake- investors in Microsoft are not happy and Ballmer is a besieged CEO. The idea that he have any leverage over investors and analysts is laughable.

I'm not sure how this will all play out. In my mind, the "ideal" strategy for Nokia would have been for it to own it's own modern OS and development environment. However, this ship has already sailed. MeeGo has yet to see the light of day, and Elop clearly didn't believe that Nokia could execute on this- his judgement about software life cycle management is probably one of the reasons the board hired him. I have no reason to think his judgement isn't accurate. Symbian clearly isn't the platform of the future.

Given that the "best" alternative was clearly not working, the other possibilities were very limited. Basically - Android or WP7. Joining Android is a race to razor thin margins...

Now that Nokia has decided to bet the house on WP7, will other WP licensees continue to use it? I think it quite likely that most of them slowly start killing off their WP7 phones and focus exclusively on Android.

The clear winners in this are consumers..

[Fitz]

Tomi have you seen Mr Elop's tweet "Today Nokia Dives Forward"? By that i think he means "Today Nokia plunges headfirst into the fiery, bottomless abyss known as FAILURE." I'm neither Finnish or developer but i feel DEEPLY betrayed and INSULTED by this "merger". After TEN years of loyalty to Nokia AND symbian (at least 3 of those yrs i spent defending Symbian and being ridiculed for using it) not only are they abandoning the platform, BUT, trying to force WP7 down our throats in the future????? Not only has Mr Elop spat in my face but did so with a smile on his face reassuring me that it wasn't spit but just a slight drizzle. As long as he's in charge Nokia will never see a dime of my money!!!

[Yuri]

I can say only that I am utterly sorry to agree completely with Tomi about Nokia.
Nokia abandoning Qt means that Nokia is dead, gone, berried under the utter distrust of the developer community.

Most likely it will be purchased by Microsoft next year. Will that help Microsoft? Absolutely not! If the current MS partners were cool to WP7, now they'll be ice cold. This means that there won't be any worthwhile WP7 devices this year, probably next year too.

Microsoft will purchase the sinking Nokia to save their precious partnership, which will put an end to all their other partnerships, but until they manage to get control of Nokia it will delay things even further. Two years from now Microsoft will have no believable smartphone strategy and their tablet offers will linger in the shadow of integrated smartphone-tablet-TV offers from the competitors. And this will sink Microsoft eventually.

Lets not forget the retribution that will come from Europe for having one of its best companies destroyed by MS. The press will lash and bash, the governments will push non-Microsoft programs and people will avoid their products.

RIP Nokia, RIP Microsoft

All you had to do was announce Qt support for WP7 and keep Nokia's software ecosystem independent and thriving.

[Bartek]

It is clearly a sequel to "Inception" - Samsung have actually hired James Cobb (aka Leonardo Di Caprio) to plant an idea in Nokia's American investors that they will only triple the value of their investment in Nokia if the Finnish company cracks the US market together with Microsoft. And so they forced Jorma Ollila (see Gouge's post above) to hire Elop. He is also obviously programmed by Cobb's team to push Microsoft alliance (there's a subplot when he is miraculously saved by a large, balding guy called Steve from a "burning platform"). Come 11 February, everything clicks: Nokia's stock plummets 10%, MeeGo and Symbian are scrapped, months of uncertainty and restructuring take Nokia down even deeper. Brilliant idea, perfect execution.

[d]

Thisis ne of the most biased, badly written articles IO haveever read....Are you still in college? Quality of depth and neutrality is appaullung.

[kevin]

Tomi,
If Nokia has an inside track on WP7 because they'll be contributing NAVTEQ and Ovi, etc., wouldn't the other WP7 licensees be less likely to put their A-team on WP7-based phones, and instead give more attention and expertise to their Android-based (where it's a more level playing field) or their own OS-based (like Bada) phones?

[Phil Linttell]

When you announce a platform shift, it tends to have an immediate effect on developers and platform supporters. When Nokia began to pursue Maemo/Meego, they did their best to quell dissent amongst the developer by placing the Qt strategy in the forefront. Those of us who've been around the "write once, run anywhere" mantra a few times know that this always more complicated than it is presented, still unifying a tool-set and standardizing APIs you can go a long way to reducing the cost of development for multiple platforms. And it made sense in one way.... the key to a platform is it's developer base. I believe Symbian OS is still the most advanced of all the mobile platforms - but that U.S. bloggers can't distinguish between a U.I. and the O.S. The best strategy for Nokia would have been to focus on the UI aspects of Symbian, while charting a roadmap that integrated Symbian API's and technologies with Maemo/Meego, while providing a unified tool-chain and API set.

The aim for Symbian was to build a "standard" mobile platform that could benefit from cooperative development and adapt technology from the market - not just apps, but at the OS level. At the time Symbian was created, Linux wasn't a viable contender for mobile. If you were re-forming Symbian at any point in the last 5 or more years you'd adopt a Linux base in order to be able to benefit from community development and skill-sets.

Google's approach with Android.... while a linux kernel at heart, the underlying technology is not as versatile as Maemo/Symbian, and the developer environment is essentially a pre-compiled java environment. There are many technical and business (owning to the Oracle acquisition of Sun) reasons why this isn't ideal. oogle's interest is not in the full spectrum of mobile device form factors and uses (as was Nokia/Symbian's), it's in advertising. They'd be perfectly happy if the entire world used homogeneous glass slates as mobile phones. Their community process is more closed than Symbian's EVER was.

Nokia's announcement today effectively signals to developers that Meego and Symbian OS are both dead-ends. Announcing that your primary platform is shifting tells developers to shift their energies to the new market leader. Yes, Nokia will milk Symbian OS for a while, but the developers and the loyalists know what it means... and abandon immediately. The key beneficiaries of this Nokia/Microsoft relationship are Apple and Google. I don't agree that Microsoft is the main winner.

And, industry insiders know what it means to try and integrate to diverse cultures (and technologies) from ardent competitors such as Nokia and Microsoft. Many joined Nokia to "fight" Microsoft, and those people will begin looking elsewhere. The cultures of MS and Nok are too far apart for these companies to integrate..... and they've already announced that the blood on the carpet will be Nokians.

Nokia has the most advanced ecosystem of the traditional phone manufacturers.... and was the furthest along in terms of transitioning to a software+services model. There was reason to be optimistic as a Nokia follower. Ovi may survive as a brand, but there will be a question as to the future of each and every Ovi service. To "merge" Ovi and MS services will take years, dragged down with every step by cultural differences between the firms. I'm not optimistic about the result.

I believe this announcement will have a devastating impact on Nokia smartphone sales. The death of a platform happens much faster than people think. The reasons why, and warning signs, are well described in this posting by Michael Mace. I encourage you all to read it:

http://mobileopportunity.blogspot.com/2010/10/whats-really-wrong-with-blackberry-and.html

Those who follow Nokia and have understood the company's mobile strategy (thus far), and what the company is trying to do will have the same reaction: this is the *wrong* move for Nokia. It goes against Nokia's emerging markets strategies. It goes against the concept of supporting a wide range of form-factors for mobile and different uses. It goes the strategy of developing branded services which can increase Nokia's margins and set them apart from just being a device manufacturer. Nokia is giving up their control of the platform, and joining a Microsoft services ecosystem (where Microsoft gains the benefit of the higher margins). Nokia is killing their technology and talent and putting themselves on a path to becoming an ODM. An analyst who understand this will see it as a huge win for MS and a huge loss in valuation for Nokia. Let's hope they punish Nokia for it.

I wish I could be optimistic and say that this will put Nokia in control of Microsoft's mobile "strategy." But that won't happen. I see one of two possible outcomes:
1) eventual loss of Nokia valuation and acquisition by MS.
2) this partnership won't work, and it will set BOTH companies back in
time against the competition.

My own (faint) hope is that Nokia developers and loyalists move quickly and loudly to competing platforms/ecosystems and that Nokia board and shareholders realize they have made a grave error, and oust Elop. Okay. Wishful thinking. Evenif that were to happen, the damage done at Nokia would take a long time
to recover from.

For those losing their jobs over the next weeks at Nokia, and who believed they were trying to achieve something noble, I feel truly sorry.

I'm sure Nokia will try to find some reassuring words for developers and present some hope that the Qt strategy will survive and that they should weather the storm. My own advice would be "move now".... invest elsewhere. If the storm calms and Nokia/MS are still controlling a significant chunk of the smartphone market, then move back in a few years.

[KFlyer]

When all the recent press was emerging, I thought that Nokia was becoming great at marketing and that Elop was building hype ahead of unveiling the first MeeGo device. Needless to say, I was truly shocked. I do not see this move doing anything good for Nokia. Nokia was executing a nice strstegy - although it was late to deliver, the strategy could have made Nokia powerful. Years of efforts, wasted overnight. What would an Asian customer whop goes to a shop to buy a usual Symbian think ? What happens to S40 ? Four OSes ? I was a very vocal fan-boy of Nokia - even when the likes of Ricky and Micky left the Nokia blogging community, I remained loyal. And I didn't even post any leaks, because I was so loyal. But no more. And I don't know anyone else who is staying. The truth is that MeeGo will be likely scrapped and Symbian will only be used till the first Nokia Windows Phone is available. Nokia could well end up being a Microsoft proxy. OPK may only have had a degree in Law, but so far today, I have not seen anyone who did not describe Mr. Elop in a word starting with T and ending with N - wheteher it is the truth or not. Good luck to him !
Sad to see the only real smart-phone OS on earth fading away.
I wish I had the money to start a smartphone OEM with the laid-off talent and OPK, Anssi an top spots.

P.S:Nothing personal against anyone.