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« Reading the Tealeaves: My Outline of Stephen Elop Strategy Presentation - REVISED | Main | To Nokia colleagues being laid off or fearing for job survival - here a little bit of advice »

February 11, 2011

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.

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