Communities Dominate Brands

Apple retakes World's Biggest Computer Maker Crown after 3 decades - with power of iPhone, iPad and Touch

So its time to do the annual count of the biggest computer makers, when we include smartphones..

I was the first to do this count back in 2008 and done it since. Back then it was almost heresy to suggest that a smartphone was a 'real' computer - but since then all of the 5 biggest classic PC makers - Hewlett-Packard, Dell, Acer, Toshiba and Lenovo - all - have agreed that a smartphone is a full computer, and should be counted as one. So here we go. We did the count again last year and Nokia was on top. This year we see the return of the first rebel computer maker to shake up the classic order - Apple - return to the top. What most readers of this blog are too young to remember, that in the days of the Apple 2, that is an Apple PC way before the Macintosh PC - at one point Apple became the world's biggest computer maker by number of computers sold in the year. Then it soon lost its lead when the IBM PC and its clones came using the Microsoft DOS (and later Windows) operating system. So this moment must be particularly sweet for old-timer Apple employees and fans of the brand. Apple is back on top!

Here is the list for the full year 2010, this time I am able to give the full top 10 (last year was only able to do Top 8). So the biggest computer makers in the world, when we include classic mainframes, desktop and laptop PCs and servers, and newer smaller comptuers, the netbooks, tablet PCs like the iPad, and the smartphones (and the other pocket PCs like the iPod Touch). The number in parenthesis is last year's ranking.

1.  Apple (3). . . . . . . . . . 108.9 Million . . . . .17%
2.  Nokia (1) . . . . . . . . . .100.3 Million . . . . .16%
3.  HP (2) . . . . . . . . . . .   67.5 Million  . . . . 10%
4.  RIM (6) . . . . . . . . . . .  47.0 Million . . . . .  7%
5.  Acer (4) . . . . . . . . . . . 43.8 Million . . . . .  7%
6.  Dell (5) . . . . . . . . . . .  42.7 Million . . . . .  7%
7.  Lenovo (8) . . . . . . . . .  36.2 Million . . . . . 6%
8 . Samsung (-) . . . . . . . .  26.0 Million . . . . . 4%
9.  HTC (-) . . . . . . . . . . .   25.0 Million . . . . . 4%
10. Toshiba (7) . . . . . . . .. 22.1 Million . . . . . 3%
Rest of Computer Makers 126 Million
Total Computers Made . . . 646 Million

Thats the story. Congratulations Apple! Returning back to the top.

A few clarifications for those curious. Obviously no other source (as far as I know, so far) reports on this chart. I've done it for a couple of years now. The numbers I used were public data on the PC sales for the year, the smartphones sales for the year, and the iPad sales for Apple. For the iPod Touch, because Apple doesn't report that number separate from other iPods, I used the formula of 2/3 the size of iPhone sales, which is generally accepted and seems to conform well with other reported data. So I had 31 Million iPod Touch devices for Apple in 2010. Note that I did my best to add PC and tablet sales for Samsung (which is why its ahead of HTC) and added the smartphone sales for HP, Lenovo etc as my best estimate.

There is one 'fudge factor'. This year the race between Acer and Dell is very tight, some like IDC reported Dell ahead of Acer, while others like Gartner reported Acer ahead of Dell. So I did my best and used the average of the numbers I found. But for the others, the differences are very clear, so the rankings for all others is solid. For example the difference between number 2 Nokia and number 1 Apple was so great, that even if iPod Touch devices sold only half the levels of the iPhone, Apple would still have been on top.

And for those who argue that a smartphone is 'not a proper computer' - please don't bother to argue that point here anymore. It is no longer worth arguing, if HP, Dell, Acer, Lenovo and Toshiba - the 5 biggest PC makers - all agree that smartphones are computers. I am happy to have comments here, but those postings that try to argue that smarthpones are not computers, they will be mercilessly removed. That train has left the station and I won't bother to reply to those. If the big computer makers think so - go argue with them haha, not me here. I only report the numbers for you.

And talking of numbers, if you needed the numbers for the whole mobile industry, then 189 pages and 94 tables and charts for only 9.99 Euros is a tremendous value. All the data on the subscribers, revenues, services, traffic, handsets, features, apps, operating systems, minutes, messages, advertising etc are in the brand new TomiAhonen Almanac 2011. See here for the full table of contents and ordering info.

The 2011 Edition of TomiAhonen Almanac has been released

Ah, the joys of a new book. The TomiAhonen Almanac 2011 has been released. It has grown again from the 2010 edition, and now runs 189 pages, and has 94 tables and charts.

 


All the data has been updates from last year's edition, and all data is current as of January 1, 2011. There are new tables and charts in the apps section, handsets section, mobile advertising section etc. The full table of contents and the number of tables and charts per chapter are as follows:

TomiAhonen Almanac 2011
Table of Contents:

Chapter 1 - Intro
Chapter 2 - Size of Industry (8 tables & charts)
Chapter 3 - Customers (6 tables & charts)
Chapter 4 - Handsets (13 tables & charts)
Chapter 5 - Mobile Messaging (10 tables & charts)
Chapter 6 - Mobile Internet (8 tables & charts)
Chapter 7 - Seventh Mass Medium (7 tables & charts)
Chapter 8 - Music on Mobile (5 tables & charts)
Chapter 9 - Mobile TV and Video (4 tables & charts)
Chapter 10 - Mobile Gaming (4 tables & charts)
Chapter 11 - Mobile Social Networking (5 tables & charts)
Chapter 12 - Other Mobile Content (3 tables & charts)
Chapter 13 - Smartphone Apps (4 tables & charts)
Chapter 14 - Mobile Advertising and Marketing (5 tables & charts)
Chapter 15 - Voice Calls (2 tables & charts)
Chapter 16 - Business/Enterprise Services (1 tables & charts)
Chatper 17 - Other Mobile Data (0 tables & charts)
Chapter 18 - Network Infrastructure (1 tables & charts)
Chapter 19 - Digital Divide (3 tables & charts)
Chapter 20 - History and Milestones

TABLES SECTION
Index of Mobile Leadership (30 countries)
60 Major Countries Mobile Stats
25 Countries with Most Mobile Subscribers
25 Countries by Highest Mobile Penetration Rate
25 Countries by Highest 3G Penetration Rate
20 Biggest Mobile Operator Groups

Appendix
About the Author

As before, the price is still only 9.99 Euros and the ebook is only available from my website. The pages are formated for the small screen so you can carry all the industry statistics and facts on your smartphone in your pocket everywhere. The licence is a single-user unrestricted pdf file. If you'd like to see sample pages with many of the tables etc (currently the sample pages are still from the 2010 edition, (I will soon be updating those too) see TomiAhonen Almanac 2011.

All the Numbers, All the Facts on Mobile the Trillion-Dollar Industry. Why is Google saying: Put your Best People on Mobile?

Yes, Google (outgoing) CEO Eric Schmidt had been saying 'Mobile First' but his latest version of his 'Mobile mobile mobile' mantra, that he shares with all partners and companies interested in mobile is: "Put your best people on mobile." Why? Because Mobile today is by a wide margin, the fastest-growing giant industry on the planet. Because all major digital technologies are headed to mobile - telecoms, computers, the internet, etc - and all major media are headed to mobile - music, gaming, news, television, advertising - and even money, from coins to banking to credit cards, is headed to a phone near you. This is definitely the "industry of the decade" and we have only begun. So how big is big? Its huge. Lets review the numbers.

5.2 BILLION SUBSCRIBERS

So first the biggest number - 5.2. That is in billions with a B. There are 1.2 billion personal computers in use worldwide including desktops, laptops and tablet PCs like the iPad. There are 1.1 billion fixed landline phones. There are 1.0 billion automobiles registered and in use. There are 1.6 billion television sets, 1.7 billion credit card users, 2.0 billion internet users, 2.2 billion people with a banking account, and 3.9 billion radio receivers in use worldwide. Mobile utterly dwarfs them all - with 5.2 billion currently active, ie fully paid mobile phone subscriptions. Active mobile phone accounts. 5.2 billion. yes, 4.5 times more mobile phone subscriptions than personal computers or landline phones. 2.5x more mobile accounts than all internet users. 3 times more mobile subscribers than the total number of television sets. Mobile is huge.

The planet has 6.9 billion people alive, from babies to great grandparents. Now there is an active mobile phone subscription for 75% of them. So where are we? One way to look at it is electricity. The planet has 1.6 billion people who live beyond the reach of electricity (said CNN, 2009). So the mobile phone subscriber count is almost matching every human alive (including babies etc) who enjoys modern conveniences like electricity (5.3 billion people). Or another way? Water. We learned last year that 4.2 billion people use a toothbrush (MMA Forum Asia 2010) - so there are one billion more mobile phone accounts than the total number of users of a toothbrush. Or jobs? Motorola told us last year that there are 5 billion people who have a job on the planet - but 5.2 billion people have a mobile phone.

I am doing my 'count-down' to the point when we have 100% per-capita penetration rate of mobile phone accounts on the planet, ie one active mobile account per person alive. We'll hit that point roughly at the end of 2013. But I'm using an age-related count-down. So if we allocate all existing active mobile phone accounts by age, from the eldest to the youngest, we are now at the start of 2011, at the point, where there would be an active mobile phone account for every person alive on the planet who is over the age of 12. It is coming down at the rate of about one year of age, per quarter! In other words phones are spreading at the rate of four years of age, per year. By the end of this year we'll be at about age 8... And its everywhere. In the USA the mobile phone penetration rate is rapidly nearing the 100% rate per capita (we should pass that point this year). That may seem impressive, it is not. Europe is at 130%, many ;eading countries are already past the 150% level and the United Arab Emirates (ie Abu Dhabi, Dubai etc) became the first country to pass 200% mobile phone subscriber count. And even the poorest regions are rushing in. The continent of Africa has already passed the 50% penetration level in mobile phone subscriptions per capita.

3.7 BILLION UNIQUE MOBILE PHONE USERS

The total mobile phone subscriber count of 5.2 billion is not the same as 'unique users' of mobile phones. Over one third of all people who have a mobile phone, have two or more mobile accounts. Many have two phones, some have a phone and a laptop-PC account on a 3G data dongle, and some walk around with two phones and a data account (3 accounts). Some have one phone but switch between networks and these can easily have 4 or 5 subscriptions usually as prepaid accounts and switch networks swapping the SIM card. In some markets mobile phone handsets with dual SIM (or even triple) SIM card slots account for 20% of all phones in use.

So how many is the 'unique' user count? That is 3.7 billion people. It is already over half of the total population of the planet - and considering most of the planet lives in very poor conditions, mobile phones are by a very wide margin the most widely spread technology on the planet. Yes, 54% of all people alive on the planet have a mobile phone.

And those with more than one account? 34% of all mobile phone users will have more than one account. That is more than half of Europeans for example and nearly a quarter of Americans already. And six percent of us across the planet - 225 million people - maintain 3 or more active mobile phone accounts. This is a magical industry!

4.3 BILLION PHONES IN USE

So how many mobile phone handsets is it? The 3.7 billion unique mobile phone subscribers walk around with 4.3 billion mobile phones in their pockets. In other words, one in six of us who has a mobile phone account, have not just two accounts but walk around with two phones. No wonder the world seems to be going mad with all the new phones.

REPLACES WATCH, ALARM, MP3 PLAYER

So the pocket wonder is taking on all rivals. Its not just our phone and messaging device and our camera. It is now our preferred device to tell time - Mintel surveyed the UK population in 2010 and found that 91% had a mobile phone but only 84% was still wearing a wristwatch. In the youth segment more than one in four (28%) had abandoned the watch and only used their phone for telling time. A Purple Gossip survey of the UK population found that 75% used their phones while on the toilet. 41% of the Japanese bring the phone to the bathtub (Sega 2008). Meanwhile yes, we sleep with the phone, but a Birmingham Post study in 2008 found that 71% of the British population felt that the stand-alone alarm clock by their bedside was obsolete. A survey by Jacobs Media and Arbitron in 2010 found that we now are shifting our behavior away from stand-alone devices to mobile phones in a wide host of instances from cameras, videocams, GPS units, iPods and MP3 players and even the use of car radios is declining now as we spend more time on our phones while in the car.

But then a cheeky view to mobile. Young and Rubicam gave this advice in 2010 to all who design mobile services and apps - remember, at any one time, roughly speaking 10% of mobile phone users are drunk, 10% of mobile phone users are nearly asleep in bed, 10% of mobile phone users are watching TV, and 10% of mobile phone users are in the dark. On some Saturday nights probably the same user will be watching TV in the bedroom, in the dark, while drunk haha.. So the need is to make services easy to use..

WHAT DO WE DO WITH THE PHONE?

Nokia told us in 2010 that the average person on the planet looks at the phone now 150 times per day. That means you and I will feel the compulsion to glance at our phone every six and a half minutes of every hour we are awake! Yes, its our clock and our alarm and our calendar and our map, but what do we do on it? Lets see.

The activity that gets the most use of the mobile 'phone' is voice calls - but that is nowhere near 100% anymore! Yes, only 88% of us will originate voice calls. For all regions now, including the USA, the primary use of a mobile phone for most users is.. SMS text messaging! 82% of all mobile phone users aleady send SMS text messges. And dont' worry, there is no math error. More people use voice calls - but for most users, they now prefer SMS as the most used function on the phone. A 2010 survey by Zokem of mobile phone users in the USA and Europe found that 29% of our time is spent on phone messaging, and only 23% on voice calls. The trend is global with national regulators and industry associations reporting on the preference of text messaging ahead of voice calls from the USA to UK to New Zealand - in India they are at the point where 34% of mobile phone users will not originate voice calls (Yankee Group 2007). Which gives us the big decliner - while essentially all mobile phone accounts include free voicemail, the use of voicemail is down to 67% of all mobile phone subscribers. They all are doing what for example the Finnish Prime Minister was saying earlier in the past decade - their voicemail says don't leave me voice mail, send me an SMS text message instead.

What else do we do? 71% of mobile phone subscribers will use the camera on the phone (note, only 77% of all phones in use are cameraphones!) 53% of us will listen to music on the phone (including use of ringtones and use of FM radio). Half of us have received advertising on the phone. 40% of us now send MMS picture messages. One third of us have used search on the phone and just over one in four, 26% have voted on TV shows via SMS. But of the hot story of the 'apps' - only 15% of the mobile phone subscribers have downloaded an app to the phone.

SMS HAS 4.2 BILLION USERS

So the huge number here is SMS obviously. Yes, 4.2 billion people are already active users of SMS text messaging. Don't listen to any of those fools who suggest SMS is going away. There is nothing in the digital world coming close to what SMS is today. Look at its size. SMS text messaging has more than twice the number of users as all users of the internet. Nearly four times more people send SMS text messages than have a PC of any kind. While email can also be accessed at internet cafes and at work - with 1.4 billion unique users of email worldwide, including residential consumer users and business/work email accounts - SMS is 3 times bigger than email already.

Do you think Facebook is 'important' and 'popular' - well, SMS is only ... seven ... yes seven (!) times bigger than Facebook. You like Twitter? SMS is 21 times bigger than Twitter! And is SMS 'slowing down'? No. The world's most widely used data application grew users by 17% in just one year! Did the traffic grow? You betcha! Try 24% in just one year! And what of SMS revenues you ask? Well, SMS hit revenue levels of 120 Billion dollars in 2010, which is a growth rate of 6% from the level in 2009. Do not for one moment think SMS will go away any time soon.

SMS is the only technology that reaches the pockets of 61% of the planet. SMS user base is literally bigger than the total number of radio receivers in use globally, three times as big as the number of television sets and almost four times as big as the total installed base of all personal computers in use (and not all of those are connected to the internet, mind you).

SMS delivers news and alerts - 1.2 billion people pay to receive news on their mobile phones - most do so via SMS text messaging. Note this number is more than all who pay for cable TV (ie who have access to 24 hour cable news services). The number who pay to receive news on their phones is nearly 3 times bigger than the total paid circulation of all daily newspapers worldwide. Yes.

And SMS does money! SMS has cannibalized coins and Estonia and Sweden are among the countries that are now decommissioning coins from some industries like parking, public transportation etc. In Kenya more than half of all banking accounts are SMS banking accounts, and 25% of the total Kenyan economy transits SMS based mobile payments. SMS does just about anything you could imagine from delivering answers to questions on AQA and ChaCha to reminding about medical appointments to teaching basic literacy skills.

MMS HAS 2.1 BILLION USERS

And if you were stunned by the continued success of SMS, think about MMS. A year ago MMS passed the total global number of users of the internet, and today is the second most used data application on the planet. Yes, 2.1 billion people - an even 40% of all mobile phone subscribers are active users of MMS multimedia messaging. This revolution is strongly driven by Asia, as IDC told us last year that Asia became the first region where MMS revenues now exceed SMS revenues. Globally, MMS delivered 34 billion dollars of revenues last year (a growth rate of 17% in just one year). MMS is being embraced by advertising and media empires the world over. For example in the USA, the ABC television network hit TV show Pretty Little Liars invited viewers of the TV show to register for a weekly 'secret'. They then sent previews of the next episode - via MMS - and achieved a massive 12% of the total viewing audience to sign up to the service. But that is nothing compared to Asia. In China 40% of the total readership of daily newspapers now also subscriber to twice-daily MMS news alerts of what is coming in tomorrow's newspaper.

But lets go back to MMS revenues. 34 billion dollars. Lets put that into a context that media people can understand. MMS globally is now bigger than the worldwide videogaming industry, bigger than the global cinema box office revenues, and twice the size of the music industry revenues on the planet. And you thought nobody sends those silly picture messages, eh? MMS is growing at a faster rate than SMS did when counted from the commercial launch. If you thought SMS was huge, wait what MMS will be like a few years from now!

GENERATES 1.2 TRILLION DOLLARS

The mobile telecoms industry passed the 1 Trillion dollar revenue level two years ago, becoming the fastest-growing giant industry on the planet, in the process. Mobile is twice as big as the fixed landline telecoms industry, twice as big as the global computer industry, four times as big as the global internet related business and three times as big as worldwide advertising. There are only a handful of these truly giant industries on the planet - travel is not that big, neither is television, neither is pharmaceuticals etc. Automobiles, thats another trillion-dollar industry. Garments (our clothing) and food. Construction. Armaments (weapons, ie our wars) and banking. And mobile. Truly giant industries worldwide. And mobile is by far the fastest-growing one of those.

So how did we did we do last year? The industry hit the number of 1.18 Trillion dollars (1,180 billion dollars) in value. It reflected a growth rate of 9% from the year before, far faster than the world economy grew and of the giant industries, mobile grew by far the fastest. How does that split by the major sectors? Ever more of the industry is now in the services side. Our handset obsession only delivered 165 billion dollars (14% of the industry revenues) and the lion's share, 78% was in the 'services' side, mostly earned by the mobile operators/carriers. The remaining 90 billion was split between the network infrastructure sales and the various accessories we like to buy for our phones, from bluetooth earpieces to replacement batteries, memory cards and those cases that become so popular last summer to solve Apple's 'antennagate' problem.

MOBILE VOICE 627 BILLION, DATA 301 BILLION

Lets dig into those mobile 'service' revenues some more. Overall, the services side of mobile is nearing the Trillion-dollar milestone itself, hitting 928 billion dollars in value in 2010. We will probably arrive at the big T this year. But lets dig into what formed so much of the income. Voice calls are the biggest part of the service revenues, 627 billion dollars' worth in 2010. Thats still exactly two thirds of the total service income of the industry. Messaging comes in second biggest, at 172 billion dollars, and all non-messaging data forms the remaining 129 billion. For the combined, 'non voice' service revenue of mobile data, we passed a milestone mobile data is now worth 301 billion dollars.

Yes, mobile phone data revenues alone are now bigger than the total 'internet' industry on the personal computers, including all internet content revenues, all internet advertising revenues, and even all the subscription fees, broadband and dial-up. Where do we spend all that? We watch television and video content on the phones, and we vote on TV shows. We download music including ringing tones, and subscribe to music services including ringback tones. We play games from Tetris to Angry Birds. We use social networking services, buy virtual goods, and send flirting gifts to our friends and lovers.

MOBILE ADVERTISING 8.8 BILLION DOLLARS

So what of mobile advertising? Most of the income of the internet content is based on advertising revenues,. Roughly half of television and print media income is advertising. What of mobile? Half of us have received ads on our phones, 2.6 billion people last year, and with Admob style of banner ad explosion, the amount of ads served has grown exponentially. The revenues in mobile advertising almost doubled from 2008 to 2009, and again grew by 85% in the past year, hitting a value of 8.8 billion dollars for 2010. Most of that revenue was made with ads on SMS, MMS and banners but more advanced mobile ad formats are also growing strongly, led by search and video.

The more interesting metric to consider is the proportion of mobile advertising out of all mobile data service revenues. Advertising generated only 3% of the mobile data revenues! So 97% of our content and services consumed on mobile, were paid by the customers. This is a very healthy and robust industry!

APPS WORTH 9 BILLION DOLLARS BUT WAIT, ITS NOT WHAT YOU THINK

So then we have the highly hyped 'apps' for mostly smartphones. That market sector is now worth 9 billion dollars, up 50% from last year when it was wroth 6 billion. But before you start to celebrate, please remember, most of this is not 'app store' type of apps for consumers of smartphones. 6 billion dollars of the app store income was from 'enterprise' and corporate ie business apps, not sold to consumers, but delivered by the big IT integration companies to connect fleets of thousands of Blackberries to the corporate CRM and email systems.

The consumer 'app store' type of smartphone application market did indeed grow very strongly last year, and reached a value of 3 billion dollars in value. But that reflects only 1% of all mobile data revenues, so while it is very nice growth rates, indeed, then still today, MMS alone is 11 times bigger and trusty old SMS is 40 times bigger than the total worldwide consumer app store opportunity.

MOBILE INTERNET IS ALREADY BIGGER

And then lets look at the mobile web. We passed the point back in 2009 when more than half of all internet users worldwide used a mobile phone to access the web. The gap is now growing. But its not a black-and-white matter. Most who use internet-based content and services do so using both a PC and a mobile phone. So we actually have to count three numbers.

400 million people access the internet only using a personal computer. Out of all 2.0 billion internet users, that is 20%. 975 million people use both technologies, a personal computer and a mobile phone to access web content, which is 49%. And already 625 million people are exclusively using only a mobile phone to access internet content. It is important to point out, that very often in the Emerging World countries, the primary mobile internet standard used is WAP, the simplified mobile-optimized browsing and service environment. And that while we often think of mobile internet use on an iPhone or similar smartphone on a 3G network connection, nearly half of the use of the 'real' HTML based internet even in the Western countries, is still from featurephones, not smartphones.

SOLD 1.38 BILLION NEW HANDSETS

Last year saw the mobile industry return to growth in handset sales, from the brief slump during the economic crisis. A total of 1.38 billion new mobile phone handsets were sold last year. To put it in context, the world has 1.2 billion personal computers in use of any kind. And almost every phone sold last year had a browser and color screen which in a very simplified sense, could be said to be a poor person's computer, or intenet device.

298 million of the new phones, 22% were smartphones. 490 million (36%) of the phones sold had a premium input method, with either a QWERTY input or a touch-screen input or a hybrid of the two. 77% of all new phones sold were cameraphones, and 46% of all new phones had a camera resolution of 1 megapixels or better. One in ten phones sold had a camera resolution of 5 megapixels or better.

FEEL FREE TO USE

The above is all free to use. Where not expressly listing some other source, all the data is from the brand new edition of my Almanac, so please list source: TomiAhonen Almanac 2011. You may use any info here in any way you want without asking for further permissions. I would be delighted if you also link to this blog if you do something on a blog or in a web article.

MORE INFO

So there you have it. And perhaps its worth coming back to the thoughts from Google at the start of the article. We at this blog follow the mobile industry in all its forms from smartphone statistics to industry metrics like this blog. If you are a CEO of a major corporation or advising one, there is a special CEO guide to mobile for you, that I wrote last month. If you personally would like to explore mobile as a career option or considering its impact to your team or department or project, I have written a thorough guide to that too, which was my New Year's blog. Those articles may help explain why Google CEO now says, put your best people on mobile. This is the best economic opportunity of our lifetimes and you have found the place where you can always find the latest information.

STILL MORE INFO

That the big picture. As is our custom on this blog with the big annual numbers blog posting of the year, we also offer you a freebie goodie. I have the brand new 2 page pdf document of all the most important numbers and stats for you, as the 'Tomi Ahonen Cheat Sheet 2011'. It is unrestricted 2 page pdf and you don't have to sign for any mailing lists or any further harassment to get it. I do need you to send me an email so I can send it to you via return email, so please send me an email to tomi at tomiahonen dot com and in your email header, please write 'Cheat Sheet'.

THE ALMANAC IS NOW OUT AS WELL

And some of the readers have been waiting for the brand new TomiAhonen Almanac 2011. It is now released. The Almanac runs 186 pages and compared to last year's edition it has 8 new charts and tables, with a total of 91 tables, graphs and charts with all the data you could hope for. It is in convenient ebook format for the small screen, so you can carry the Almanac 2011 on your smartphone and have all the industry numbers at your fingertips. The Almanac costs only 9.99 Euros and is available for immediate download. For more information including sample pages and charts, see TomiAhonen Almanac 2011.

Noki-Soft Windfall - who wins most when Micro-Kia hand away lucrative smartphone empire bigger than Blackberry, bigger than iPhone

The Smartphone Market Bonanza - Who Takes Most of Nokia's Cake in 2011

EXECUTIVE SUMMARY

Even more than being an 11x bestselling author of mobile telecoms and a consultant and ex-Nokia executive, I am more than anything else, an industry analyst for the mobile industry and one of its leading statisticians and forecasters. I am known for deep and insightful statistical analysis articles of the industry and its market such as this final review of all the stats and major players in the year 2010 in smartphones. So I have done a thorough analysis of all rivals who stand to gain from the loss of market share, that Nokia's sudden Microsoft partnership announcement will create.

I have counted the total market size that Nokia will gift to its rivals to be worth 50 million smartphone handsets in 2011, with an average sales price of 292 US dollars, for an aggregate value of this windfall gift being worth 14.6 Billion dollars. If it was a company, it would sell more smartphones than Apple, it would make revenues almost as much as RIM and it would be as big as HTC and Samsung smartphone units combined. The sales of those Nokia smartphones, if it was one company, would not just have been the second-biggest smartphone maker last year, but the sales would almost break this 'virtual company' into the Global Fortune 500 in size. It is such a huge 'gift' that Nokia is now bequeathing to its rivals.

I have analysed the markets by regional market shares, by market segments, and by average prices. Based on that, I find that the big winners of the Nokia Microsoft Windfall will be RIM, Samsung, Apple and HTC in that order. I have projected their market share gains in the windfall 'ceteris paribus' ie 'other things remaining the same' which obviously won't actually happen this year. The smartphone market is particularly fluid this year facing dynamic changes. But it is a starting point.

I also give specific advice to all the major players, on where to focus to capture the most of their own slice in this race. The biggest upside is with Apple (iPhone Nano, iPhone QWERTY) with RIM and Samsung also having strong upside potential for maximizing their Nokia windfall gains.

UPDATE - I have created a graphical image of the change with a preliminary market share picture of Q4 of this year 2011. This is not my formal projection for the year (because many other factors have to be considered). It is only the effect of allocating the Nokia windfall to the rival competitors. But this projection illustrates clearly what is the effect of this gift to the industry:

 


(you may freely use the graph if you want, as well as quote from anything in this blog article..)

The projected market share changes are as follows:

Brand . . . . . . . . . . . Q4 2010 . . . . . . . . Q4 2011
Nokia . . . . . . . . . . . 28% . . . . . . . . . . . 12%
Apple . . . . . . . . . . . 16% . . . . . . . . . . . 19%
RIM . . . . . . . . . . . . 14% . . . . . . . . . . .  18%
Samsung . . . . . . . . 11% . . . . . . . . . . .  14%
HTC . . . . . . . . . . . . 10% . . . . . . . . . . . 12%
SonyEricsson   . . . .   5% . . . . . . . . . . .   6%
Motorola . . . . . . . . .   5% . . . . . . . . . . .   5%
Others  . . . . . . . . .  11% . . . . . . . . . . .  13%

Please understand, the above change is ONLY related to the Nokia Microsoft announcement and how its 'windfall' market share gift would be allocated to the major rivals. It is not my forecast for the year 2011, I will return with that a bit later when I do my full forecast for the year factoring in all the other news we have from SonyEricsson's Playstation phone to HP's re-entry to smartphones to Apple's iPhone Nano etc.

If you want to know why the above market shares were so drastically changed, the following blog of about 7,500 words will go into considerable detail into the finer points of the markets, average prices, customer segments and competitors as they make their dash to grab as much of Nokia's abandoned market share as they can.

IS PART THREE OF NOKISOFT MICROKIA ANALYSIS

This is the last of my three-part series examining the Nokia Microsoft partnership. In part 1, I looked at the past, how the decision was made and when. In part 2 yesterday, I started to look forward, and did a deep analysis of the market potential for the Nokia Microsoft partnership in 2011 and 2012. It is not pretty. Now in this, part 3, I will examine the rest of the competitors. There is clearly going to be a Nokia Bonanza bonus of market share to be grabbed. Who is well poised to take much of it and where and how and why.

First, on the size. What are we looking at? I explained in my blog yesterday that even in the most optimistic scenario for Nokia, its market share in smartphones will crash from 28% at the start of the year, to 12% by the end of this year, when it finally may find some recovery when the first Microsoft Phone 7 based smartphones might appear for sale.

For the full year, I am cautiously modelling a decline from 28% market share to 18%. So about 10% or market share points are 'up for grabs' for the full year. How big is that? Well, it depends on the size of the smartphone market, but last year the industry grew by 71% and reached 298 million smartphones sold. This year I am projecting the smartphone market to grow strongly, but not quite that fast, at 67% and reach roughly 500 million smartphones in total shipments.

So we have 10% of 500 million which is roughly what Nokia is now gifting to the industry as the 'Microsoft Windfall' prize. How much is that - yes, 50 million smartphones. That is more than the total Apple iPhone sales last year! That is more than all Blackberries ie all of RIM last year. It is as big as all smartphones sold globally by HTC and Samsung.. combined! It is bigger as all smartphones made by Motorola and all smartphones made by SonyEricsson - not just added together, but that total still doubled! That is how much is at stake. This is a huge gift to the market, which Nokia is simply giving away, not fighting for it anymore. Its a second Christmas and Santa Claus from Finland makes a new trip to give away more gifts. It is candy that is being given to the competitors, up for grabs. Who moves first, who is fastest, gets the most of this true 'windfall' gain that has never happened before in the industry. The number of smartphones that Nokia now gives away to its competitors - is so big - it would have been the second-biggest smartphone maker last year. This is not big, it is huge.

ALMOST EXACTLY A RIM IN SIZE AND VALUE

Lets then measure how big this gift is in value. I used the price pyramid in the TomiAhonen Phone Book 2010 to do a model of how Nokia's current portfolio was selling in Q4 of 2010, to tell us what is the split of Nokia's current smartphone offering. The math works out that currently (Q4 level, before the Microsoft announcement) Nokia's smartphones formed this kind of split (remember, the prices here are 'unsubsidised' prices ie SIM-free prices ie prices which are not bundled to a 2 year contract):

Nokia high price smartphones (price over 450 dollars) - 2%
Nokia mid-price smartphones (price between 250 - 449 dollars) - 16%
Nokia low-cost smartphones (price between 100 - 249 dollars) - 81%

This split of Nokia smartphones gives us an average sales price for Nokia at Q4 of 210 dollars or 156 Euros (ie 210 US dollars) matching exactly what Nokia had in their Q4 quarterly report. Then I modelled the growth in sales, and calculated what kind of sales would the windfall gift of Nokia to its competitors be. They would mostly be at the top-end of Nokia's customers 'obviously' and for the 50 million smartphone buyers that are now being gifted to rivals, I model the mix to be:

High price smartphones (price over 450 dollars) - 7% - ie 3.5 Million units
Mid-price smartphones (price between 250 - 449 dollars) - 55% - ie 27.5 Million units
Low-cost smartphones (price between 100 - 249 dollars) - 38% - ie 19 Million units
Total 50 million smartphones, with an average sales price of 292 dollars
Total value of those 50 million smartphones = 14.6 Billion dollars

After this transfer of Nokia's best customers to its competitors, the Nokia average sales price will settle at roughly 116 Euros (157 USD) at the end of the year. That is consistent with the projection I made yesterday of Nokia's market share and ASP development path for this year 2011. Note also. that Horace Dediu at Asymco blog has made his projection of how Nokia market share will fall (his was done before mine) and his numbers are almost the same for 2011 (but his forecast continues to 2012 where it gets far worse). So if you are not sure about my numbers, there is now at least one other analyst who has a very similar view. For the full year 2011, the Nokia smartphone ASP would end up at an average of 131 Euros (176 dollars).

So we are giving away essentially a smartphone maker giant, which sells somewhat more smartphones than Apple, and makes revenues slightly less than RIM (and was profitable). When we add the revenues together, these smartphone sales at these prices would create a new company with 14.6 Billion dollars of annual sales! That size is nearly big enough to qualify for the Global Fortune 500 - this is a huge huge windfall that is now awaiting the industry rivals to devour.

Also understand, this prize will not go to one rival, this market will be split up, obviously. But to understand, this is nearly unprecedented, as far as I know. This kind of windfall will help CEOs make superb market gains, exceed targets, hit huge bonuses this year - for those rivals who are well prepared and poised who can benefit from this opportunity. It won't happen again in smartphones (ever) and it will only happen now in this wonderful year 2011 the year of Nokisoft Microkia for some - not all - of the rivals. And the very hungry, fast-moving rival can capture far more than their fair share of the prize.

Imagine Christmas at some school and imagine Santa Claus coming to visit. Then imagine at the end of the visit, he pours a big pile of candy into a bowl and the kids can take how much they want - it would be a classic contest of grab, the biggest and most aggressive kids would get far more than is 'fair' and there would be kids crying and the teacher would have to step in to try to stop the grabbing. That is kind of what I see now, we have a rush to devour the abandoned Nokia smarthones loyal customer base. Lets see who gets most of the goodies.

COULD BE BIGGER STILL

At 14.6 Billion dollars, this is a huge prize in play. Please understand the scale of this sudden prize. The Apple iPhone App Store generated about 1.5 Billion dollars of app sales of its what, 300,000 apps last year. Yes, the IT industry is hot about apps, but this is ten times bigger now. And whoever takes these customers is well poised to keep them for years, decades even, on future replacement sales and upgrades. This is the hottest opportunity in mobile for this year.

And as I said, my model was the best-case scenario - there may be more smartphones actually that Nokia will abandon this year in sales haha.. The prize could be considerably bigger than this, by the time the carnage is done and the final count is made. And I am assuming Microsoft Nokia will have on offer competitive phones for sale to the consumers by Q1 of 2012. If they are delayed, this prize will keep on giving until Nokisoft Microkia get their act together. Nokia management will be under enormous pressure this year.

So yes, no matter how much you like or hate the Microsoft phone idea for Nokia, it is pretty clear that this year Nokia is awarding for whoever has the guts to just take them - nearly 15 Billion dollars worth of smartphone customers - and the loyalty that goes with them as well. No doubt many of those will end up with iPhones and Blackberries and Samsungs and HTCs but lets examine more carefully, what can we see from the early market picture and from Nokia's smartphone sales footprint and customer base. Who is particularly well poised to benefit.

THE WOUNDED GIANT

First - please lets remember, Nokia is not about to die. Even after this wholesale distribution of Nokia's premium customers, it will end up by far the biggest overall handset maker (but will make much more basic dumbphones than smartphones this year). And it will end up selling nearly 100 million smartphones again in 2011. Last year they sold 100.3. This year with the optimistic scenario, I have Nokia selling 92.3 million smartphones for the full year. That may still end the year with Nokia the biggest smartphone maker for one more year - although it is very - extremely - likely that by year-end, for the fourth quarter, Nokia smartphone sales will be passed by Apple iPhone, Blackberry and Samsung. Maybe even HTC if they are swift this year. For current number 2, Apple, to pass Nokia (at this level of 92.3 million), Apple would need to double in size. But that is well within the realm of possibility, Apple grew by 89% last year, from 2009 to 2010. With just some early and rapid strategic moves, Apple can well grab the title of the world's biggest smartphone maker for 2011 - and re-grab some of the lost lustre that Google's Android took from them last year.

Also, just to be clear, it will be inevitable that Android will be the biggest operating system this year, that may now happen even in Q1, passing Symbian and latest by Q2. And for random readers - that Canalys report from a few weeks ago was premature, its numbers did not add up and rival analyst houses have confirmed Android was not yet bigger than Symbian - but now after Nokia's Microsoft announcement, it is a foregone conclusion, and only a matter of weeks that Android will pass Symbian.

WINDFALL

I want to make one specific point about 'windfall' gains. These are gains that could not be anticipated, totally unplanned and 'bonus' gains. The smartphone market grew 72% last year, and I expect it to grow 67% more this year. There are huge gains 'organically' for all major players in smartphones now - just because they are in this industry at this time. Apple, RIM, Samsung, HTC, Motorola etc will all gain automatically this year, simply for being in the right place at the right time, selling smartphones now when it is the hottest consumer gadget globally. The industry will sell 500 million new smartphones this year alone, growing from almost 300 million last year. Every major smartphone maker will have a banner year this year in any case, because like they say, a rising tide raises all boats.

That is not windfall. That could be predicted. That is what RIM and Apple and Samsung and Motorola and HTC management have planned for - how can they do 'better' than the average for the industry - how can they gain market share in these great times of huge growth. They plan their factory production runs, and distribution contracts and price levels etc based on those plans. This is what Donald Rumsfeld would have called the 'known unknowns'

The windfall is something else. The definition of windfall gain is an unanticipated gain such as a fruit falling from a tree because of the wind, and blowing it to the road, where you pick it up. You didn't go climb into the tree to get it (on someone else's property) but it was just an 'accident' that the wind blew that apple off the tree, and onto your path. It is a windfall gain. For example lottery wins are so unlikely, they are seen as windfall gains. So this is a windfall but as far as I know, it is perhaps the most valuable windfall of any industry ever, and the most valuable single windfall 'gifted' by one industry player to its rivals. So we need to be clear about this blog. We are not talking about the normal competitive environment here (I will do that separately later, for the whole world market of smarpthones).

From Friday 11 February, when Nokia CEO announced his Microsoft deal, the rest of the industry now faces a genuine windfall gain, something totally unanticipated, what was not fore-seeable, utterly 'unplannable'. But windfall gains are sudden gains. It is the 'unknown unknowns' in the words of Rumsfeld. Nobody could have predicted that Nokia's total smartphone juggernaut would collapse this year and gift 50 million smartphone customers to its rivals, for no charge. Lets map out the opportunty and see who is poised to grab most of it.

US MARKET

First, lets start with the US market. There is really nothing to gain there. So here Nokia as a smartphone brand, for what it may have had left, just vanishes but their total smartphone sales were maybe 1 million devices for the full year, so nothing to share. The same is true of Japan and of South Korea. Nokia is not there, so those brands strong in those domestic markets will have nothing to feast upon from the Nokia Bonanza. So Santa Claus did not come to give goodies to Motorola or Palm/HP (USA) or Sharp or Fujitsu or Kyocera (Japan) or Pantech (South Korea). We have to find Nokia customers from the rest of the five inhabited continents, and in Asia, from the rest of Asia apart from Japan and Korea.

E-SERIES

So lets go to the E-Series, Nokia's enterprise and business phones. I said yesterday that this market segment will be obliterated and become a wasteland for the Nokia brand. It is particularly heartbreaking, as it is very slow to generate sales in the enterprise sector, and once you do gain a road in, you tend to be very stable there. So the hard work usually in this segment pays dividends for many years, decades even afterwards, because of how corporate IT departments make their decisions.

So a brief explanation. This is because any enterprise 'business phone' users who buy thousands of handsets per year, will also be doing deep business system integration. So the company intranets and email systems and customer relationship databases etc will be integrated onto one or two smartphone platforms. Nokia had followed Blackberry and built a whole business unit around the E-Series, and done a huge sales and IT integration effort globally (succeeding quite well in all other markets except the USA obviously and Japan and Korea) and roughly speaking divided the rest of the world in half, with Blackberry. Remember this is large corporate accounts who buy thousands of phones per year. And they will not be buying iPhones. iPhones may be used by the marketing department but the sales representatives and middle managers and field engineers etc, they will have Blackberries or E-Series. The TNS survey of US large corporations found that 81% of them had Blackberries. That kind of customers and penetration levels.

Now that is all gone. The IT departments know that Symbian is dead for them, and they will transition as soon as possible, away from Symbian/Nokia to a currently live IT platform that is reliable and robust and one which already has the necessary business corporate solutions for whatever industry they are in, like banking or insurance or manufacturing or whatever. It is fair to say, the E-Series handset sales of Symbian based smartphones collapsed totally on Friday 11th of February. Now the customers with signed deals are angrily calling up their Nokia sales reps, cancelling contracts and Nokia won't be able to make any meaninful new sales. The remaining E-Series handsets will be rapidly shifted from employee phones to consumer ("youth") phones and pushed into the retail channel. So we have a big market of enterprise phones to be distributed.

The TomiAhonen Phone Book 2010 tells us that about 20% of all smartphones in use are in the business/corporate space (this translates to about 60 million new handsets sold in total in 2010). Of employee phones, the market share of Nokia E-Series is about 35% globally.  So this prize alone has a potential of 21 million devices. I think its fair to say, it won't vanish quite overnight (some will be willing to remain with Nokia, going to Microsoft), but lets say about 80% of it is now gone this year, so we have 17 million handsets to pick up. Here the argument for Blackberry is overwhelmingly strong, their only problem is knocking on enough doors right now in February 2011. I'd say 75% of that market of 17 million enterprise-customer smartphones will go to RIM without any problem. Thats about 13 million new Blackberry unit sales and also 13 million new enterprise subscriber customer accounts. What RIM needs to do, is to hire every salesguy they can get their hands on this week and try to get them to start on the job before February is done.

Of the rest, I think its fair to say Apple will take quite a lot because of the strong appeal the brand has, so those IT managers who have been saying 'no, our strategy is only Symbian phones' will suddenly feel the dam has broken. But again, I don't see enterprises rushing to buy thousands of iPhones costing 600 dollars each so their employees can play Angry Birds at the office haha.. But lets say Apple gets a bonus 2 million here, and the rest is sprinkled among all other brands rather uniformly. HP with Palm could have been a major beneficiary, but their organization is not in place to capitalize on this (especially not, outside of the USA today)

CONSUMERS

Then we have consumer smartphones, so about 33 million of those Nokia customers to spread to rivals. Where are they? We have the info in the TomiAhonen Phone Book 2010 again. The two big markets of Nokia branded smartphones regionally are Western Europe and Asia Developing (ie China, India, Indonesia etc). These two regions account for half of Nokia's total smartphone sales. The majority of Nokia's remaining 'spoils' (after E-Series) will go to those smartphone brands which can capture these two markets.

China is the strongest single country-market of the smartphone markets of those, but China is a special case, they had their big gift-giving season just days before Stephen Elop's big Microsoft announcement, so the big smartphone sales in China have already happened for the year. China will not be nearly as important for the remaining last ten and a half months, as it was for the first six weeks of this year.

EUROPE

But lets start with Europe. In Western Europe Apple is the big rival, RIM a distant and Samsung a newcomer. In many European markets the phones are sold without subsidy (like in Italy, Belgium etc) and even with subsidy, the customer is usually very well aware of the real price of the handset. So the iPhone 4's current price of 600 US dollars without contract is a steep price for most of Nokia current customers except perhaps N8 type of buyers. What Apple desperately now needs is that rumored iPhone Nano, to maximize its take of this lucrative pie that Nokia is serving to the competitors this year.

Blackberry's market share included obviously enterprise customers so we need to be careful not to double-count, but RIM will definitely take some of this market. Samsung is very strongly growing and has a big porftolio of desirable phones - and many past Nokia owners have been very happily converted to Samsung users. Also remember Samsung is already bigger in Europe than Nokia, in the dumbphones price segment, so essentially all carriers/operators and mobile phone sales outlets have Samsungs in their portfolio. Europe is also SonyEricsson's best market, so they can capture some added sales here.

If we say that of all 50 million smartphones to divide, about 17 million are in Western Europe - and of those, lets say 7 million were enterprise/business phones, it leaves us with about 10 million to split. I'd say that Apple takes about half. Give another million each for RIM, Samsung and SonyEricsson and the rest split with the remaining brands.

ASIA DEVELOPING

In Asia Developing we have another about 14 million Nokia smartphone customers to split up. Lets take 4 million out for E-Series and then we have 10 million to share in the consumer space. Here the rivals are RIM as the strongest, with Apple, Samsung and HTC also in the game. Note that obviously part of Blackberry's strength is in the enterprise space, but RIM is definitely far more a consumer brand in this region. Motorola would be for China but outside of China they aren't big enough. So I'd say give each of RIM, Apple, HTC and Samsung 2 million in the consumer space. The remaining two million would be left for the rest which includes the rapidly growing low-cost smartphones at ZTE, Huawei, G'Five etc.

REST OF WORLD

Then we have Africa, Latin America, Middle East, Eastern Europe, and Advanced Countries of Asia-Pacific. Here we have a market of roughly 19 million Nokia smartphones to split. There are about 4 million enterprise phones, so we'd have 15 million consumers left to divide. These markets are strong for Samsung, Apple, RIM and HTC, so if we give each 3 million, we then have 3 million left over.

Now I have allocated 19 million for RIM, 12 million for Apple, 6 million for Samsung, 5 for HTC, and 1 million for SonyEricsson. Then we'd have 7 million left in the 'pool' which I'd just allocate by the 'normal' market shares of all smartphones outside of USA, Japan and South Korea (and without Nokia) - so I'd give Apple and RIM another 2 million each, and HTC and Samsung one more million. The last million is spread between all other brands like ZTE and LG and Motorola and HP etc.

A VIEW BY REGIONAL MARKET SHARES

Thus, the 'market potential' of the spoils would go to:

Nokia Smartphone Windfall when Split by Regional Market Shares

RIM 21 million
Apple 14 million
Samsung 7 million
HTC 6 million
SonyEricsson 1 million
thers 1 million

Recognize how big these additions are for the four big brands. For RIM its nearly half of what they sold last year. For Apple its a third. And for Samsung and HTC the bonus is about a quarter of what they sold last year. These are huge jumps - that will be a bonus - a 'windfall' gain - over what they would have normally gained in the market share battles this year.

So for example the Apple Verizon CDMA iPhone will provide gain in the US market, which is not reflected in the above. The above 14 million is just 'candy' that Nokia's new CEO Stephen Elop is handing out to the rivals. At least these four big handset makers should send a nice gift basket for the Elop family for Christmas as thanks.

IT WILL BE NOT EXACTLY THAT

Now, this is obviously NOT how I would split those numbers. First, the number will not be exactly 50 million. As I said, my analysis yesterday was a 'best case' scenario. Probably Nokia suffers more than that, so the prize can be bigger.

Secondly, the regional market shares of 2010 reflected the market situation back then - for the full year. Therefore, it under-counts the late surges - especially the Android rise, so the major Android brands - HTC, Samsung, LG, Motorola and SonyEricsson - are under-counted in the above! The Android phones should do significantly better - probably twice as well, maybe more - for splitting this windfall. That will have to come from the shares of RIM and Apple. This is a zero-sum game, for me to win, you have to lose. There are only 50 million in the pot, and if Android actually takes more, it means some have to have less.

A further, very important point - this is a price issue. While we are mostly splitting Nokia's 'premium' priced smartphones, they are still far less expensive, on average, than top iPhones or Samsung Galaxies or SonyEricsson Xperias etc. The more any competitor now will push low-cost smartphones, the more they can hope to 'steal' some of the candy from their rivals. For example Samsung's bada based low-cost smartphones - should do far better at the bottom end of the Nokia market shares to be divided. I would expect Samsung specifically to do far better than the model above suggests.

So note - Samsung sold 5 million bada phones in the first half year they were on the market last year. Their target for 1H of 2011 is 10 million units. In my model in the above, I already find 7 million Samsung phones. While that includes both Galaxy and bada class phones, I would think it will be real easy for Samsung to reach its aggressive 10 million target for bada in this first half, and if I was a sales manager at Samsung, I'd raise that target now to something like 15 million haha.. And then hire the extra sales staff to go get those sales now.

Meanwhile Apple - Apple cannot get to that potential. Remember my original Nokia model with the average prices. Apple has a 'potential' to grab 14 million Nokia smartphone customers this year but only 3.5 million of those would have bought a Nokia smartphone as expensive as the iPhone 4 (ie costing 600 dollars without subsidy). So Apple desperately needs its iPhone Nano, now! For every month Apple now delays announcing its iPhone Nano, it abandons a million windfall pick-ups of Nokia customers. So if for example, the Nano iPhone was released at the end of June, and sold globally only in say July - then Apple would only pick up about 6 million of the Nano price customers and the 3.5 million iPhone 4 (or iPhone 5) price customers - ie Apple could achieve 9.5 milllion of the windfall. Not the full 14 million. So the potential in the chart, shows the upside according to my model, based on the existing market shares, which reflect existing carrier relationships and sales organization and manufacturing capacity etc. These all have to be in place, to capitalize on the windfall. This is a 'one-off' gain, and only those major smartphone makers who have the ability, can capture their share (or more).

ANOTHER VIEW - BY AVERAGE PRICE

There is another way to look at the spoils. Lets look at the prices. We had the model built from the TomiAhonen Phone Book 2010 showing what is up for grabs, lets bring that here. This is the total 'prize' of the 50 million smartphone customers and what price phones they were willing to buy from Nokia, prior to Friday the 11th of February announcement:

High price smartphones (price over 450 dollars) - 7% - ie 3.5 Million units
Mid-price smartphones (price between 250 - 449 dollars) - 55% - ie 27.5 Million units
Low-cost smartphones (price between 100 - 249 dollars) - 38% - ie 19 Million units
Total 50 million smartphones, with an average sales price of 292 dollars
Total value of those 50 million smartphones = 14.6 Billion dollars

Who competes in those ranges?

High-priced smartphones at over 450 dollars, this is the superphone category, its the Apple iPhone 4, its the Samsung Galaxy S, its the premium SonyEricsson Xperia, its the Blackberry Bold and similar top phones. Sharp's aspirations come in this price range too. There are only 3.5 million here to split and every player comes to the party, even LG with its 3D display phones is in play. I think its fair to say, Apple cannot take all of this. Even for having the most desirable phones - they are not on all networks and the competition from the rivals is ever stronger. If we say half goes to Apple and half goes to the rest, we'd get almost 2 million to Apple from here. And less than half a million each for the big rival brands.

The mid-price smartphone space of smartphones in the 250 dollar to 449 dollar range, this is mainstream Android and most Blackberries. So this is all big global brands HTC, Samsung, LG, SonyEricsson, Motorola and RIM, except for Apple (until it releases its rumored iPhone Nano, which would probably hit this price point). Because Motorola is so strongly focused on the USA, lets give them only a small slice, but lets divide the rest evenly among the other five. So each could win 5 million here. Lets say Moto gets one million.

The low cost smartphone space is mainly Samsung's bada and the very low cost smartphones on Android like Lenovo's LePhone and most of the smartphones from ZTE, Huawei, etc. Samsung is very strong here because of their massive global reach, lets say 10 million goes to Sammy and the three named Chinese brands get 2 million each.

 With this model, we get the following split of the windfall:

Nokia Smartphone Windfall when Split by Price
Samsung 15.5 million
RIM 5.5 million
HTC 5.5 million
SonyEricsson 5.5 million
LG 5.5 million
ZTE 2 million
Huawei 2 million
Lenovo 2 million
Apple (without a Nano model) 2 million

Motorola 1 million
rest about 4 million

I think these two models are both valid, and both incomplete. But lets do an average of the two models, to give us my 'likely' scenario. So I just calculated the average of those two models and I get this split of the Nokia smartphones windfall for 2011:

A THIRD VIEW - THE TOMI AHONEN PROJECTION

Likely Split of Nokia Windfall in 2011:

RIM 13 million (26%)
Samsung 11 million (22%)
Apple 8 million (16%)
HTC 6 million (12%)
SonyEricsson 3 million (6%)
LG 3 million (6%)
Chinese low-cost makers like ZTE, Huawei, Lenovo etc 3 million total (6%)
Rest of smartphone makers 3 million (6%)
Total 50 million smartphones

The four big winners are also the four biggest smartphone makers after Nokia - ie RIM, Samsung, Apple and HTC - but not in quite the same order. The maker who seems to get 'the lion's share' in this grab of all the candy, is Samsung due to its low-cost phones. And this hybrid model essentially assumes the iPhone Nano at mid-year (June launch) even with that, the performer who takes the least of the Nokia spoils is Apple, due to obviously its high price strategy. If Apple ever thought it might experiment with an April price cut in half, of its 'about to be replaced' model ie the iPhone 4 - this would be the year to try that, haha, to boost Apple's take in the Nokia sweepstakes.

Now, some players can greatly influence their own performance with the windfall. Lets go to specifics by brand

RIM

Blackberry is set to have a far better year than anyone could have anticipated. Not just growing unit sales, but getting many many more corporate account customers, just when it seemed that market had stagnated and settled. This will be the year to be a RIM corporate salesguy, they will all hit their bonuses and more. What RIM needs is an urgent immediate call to arms. The battle is not on US shores. Send most of the US corporate sales force on a half-year commission to go hit corporate clients of Nokia in Europe, Asia, Latin America, Australia, even Africa. The VP of Sales needs to tell his sales managers to ask every current job candidate for sales and sales support "can you start this week" and for anyone who says "yes" - stop the interviewing and testing process - hire them all, now. Then do an internal call for volunteers to join the sales force for a six month expedition abroad - to support sales in Latin America, Europe, Asia etc - and make this the biggest priority at Waterloo. This kind of gift comes once in a lifetime, if you're lucky (for a CEO, or even for Co-CEO's haha) and you have to make it count. Nothing else matters at RIM now, except taking all those E-Series clients who are not going to be 'competitively' tested for by rival smartphone makers. They are RIM's to take, if they only have the time to get to them. Hurry! This is your year.

While there, also obviously push the Blackberries to the consumer segments in the youth markets. Do heavy youth marketing push now in all markets where Blackberry is starting to get traction among the youth, easiest to see at university campuses. Wherever Blackberry is now the hit phone at campuses, do the full 'youth Blackberry' blitz in marketing. RIM, you need to spend in sales promotion and sales support now. Not R&D, not in app stores not in the ecosystem. Yes, they are all important, but theoretically you can add 50% more to RIM's size if you play this card perfectly. And they will be RIM loyal users for life, if you do this right and get them on Blackberry messenger (or corporate accounts on the business side).

APPLE

Apple you need that iPhone Nano now. It is not 'needed' in the US market - where it will help, but this year of the Windfall, the Nano is needed abroad. If you had been planning to launch it on AT&T and Verizon first in June and like August for the rest of the world - please trust me on this, reverse that. Do the biggest potential Apple markets first - China, Russia, Brazil, Indonesia, India - where an unsubsidised 600 dollar iPhone is struggling. There are millions of Nokia customers who will jump at the iPhone Nano this year. Take them. You can launch the Nano in America in August, it will be fine. Do Europe and the big markets first.

And be sneaky about it. Once the Nano is announced, the phone market will be kind of 'paralyzed' - so even if it stalls some iPhone 4 sales, try to announce the Nano model as soon as you dare, in April, even March if you can. That will make some re-consider who might buy a rival smartphone now. You could not have selected a better year to do the Nano than now, with this Nokia windfall. But every month we now wait, is a million windfall sales - bonus sales - wasted - and worse - gone to rivals. Try to get the Nano out by June, announced by April, and you will be taking a great slice out of the potential, and with a bit of luck, you will celebrate the end of 2011 as the world's biggest smartphone maker - and also - then - beating Nokia - you will also be the world's biggest computer maker once again. Wouldn't that make Mr Jobs smile once again? The true come-back kids, eh?

Hey, there are rumors now about a QWERTY based iPhone. I know I know I know that this goes against all that is Apple iPhone, but come on - QWERTY based smartphones sold more than twice the number of total iPhones last year, why not also play in that market. Make it a premium iPhone - more expensive - more profitable! If you had a slider-QWERTY on the iPhone, that would be the ultimate 'must have' smartphone for whom? For the youth segment! The only consumer segment where you know, your internal customer studies tell you time and again, thats the only consumer segment where you are beaten by RIM (and Nokia E-Series even haha). Do the math, do the analysis, swallow your pride, this is THE year to launch the QWERTY iPhone - and suddenly you put a dent into that 'only for RIM' slice in the above! With a QWERTY iPhone you will grab more than what I project in the above - out of this Nokia Windfall, but you also - obviously - will be able to compete in the 'normal' market share battles of this year, against RIM.

SAMSUNG

See what I wrote about RIM and sales staff. You guys know this. This is THE year of Samsung. You get far more than your fair share of the above Nokia windfall, and you know you can do it. What you need now is sales staff and sales support. Hire every body you can find to sell sell sell. Make Samsung the brand everybody sees everywhere, in the Nokia footprint. Steal that candy, it is yours. Move faster than the rivals, 'balli-balli' and push your factories, especially bada Wave phones. Don't let the 10 million be the bottleneck this first half of 2011, you have to sell much much more than that. 15 million bada phones at least in the first half. You are best poised to eat the low-cost slice of Nokia's windfall. But do it the right way - keep pushing the Galaxy series, make Samsung the new aspirational phone, so all those who can't afford a Galaxy this year, will buy the bada Wave phones hoping to upgrade to a cool Galaxy next time.

Then keep pushing that bada ecosystem story - don't let Microsoft get away with talking about it being a race between three ecosystems. Get your Korean developer community - and Korean games - onto bada and push push push. Bring in Chinese and Japanese apps and games to the bada system and steal that slice of the 'mindshare'. You are on a rapid growth trajectory, far far faster than Microsoft's Phone 7 - but few will know this, so you need to beat that drum also very loudly. Make it appealing for disgruntled Symbian and Microsoft developers to jump to bada (as the second choice after Android, or third choice after Android and iOS).

But the main focus for Samsung is to make the most astonishing growth year of any smartphone maker ever. The trajectory was right going into this year, now with the Nokia windfall and especially the large low-cost customer base that is on offer, this is Samsung bada's market to lose. Don't be defeated in this battle.

HTC

The time is to push lowest-cost Android HTC devices to the market as you can. The fight at the top will be tough with ever more high-end Android devices flooding the market. Yes, that is where you make your profits, but this is a year of a 'land-grab' in market share, and unfortunately Samsung is going to pass you in size due to their low-cost smartphones. You need to come down fast, especially hit the price points well below the anticipated Apple iPhone Nano. You can do it, you are fast and nimble, and you are very comfortable doing many handsets for many markets. Now push. You need to expand your porftolio a lot into the lower edge of the price spectrum.

Because you are going to fight with more 'new' phone models than existing sales, and your strategy in capturing Nokia customers will be more successful in the second half of 2011 than right now - then I'd say, study the recent popular Nokia phone models and designs - and clone them. Do the lowest cost N97 clone you can, but do it 'right' and on Android obviously. Do the super-camera N8 clone, but without the silly wide-angle lens, but similar form factor and size - and do it at far lower cost (Moore's Law says you should be able to do that easily for about 250 dollars by ther summer) and again, on Android. So aim to steal those Nokia customers who really wanted their Nokia device, but can't now bother with Symbian anymore. So for example the E7 - if Nokia won't do a proper 'Communicator' anymore, haha, why not take those customers to HTC. Your strategy is not to try to sell HTC phones now to Nokia current customers, it is to rush a couple of Nokia clones and take Nokia customers with phones they'd love. Talk to Nokia current customers to see exactly what it was that made them love the phone and do some clones. You'll get many very satisfied customers out of this strategy. You are fast enough to make it happen this year, most of your rivals are not fast enough.

HP

You were so poised with the right products and right launches in the right time but in the wrong place. Palm's last major footprints were in the Americas mostly and what HP can take advantage of, tend to be there. So you have almost nothing to gain from the Nokia windfall, some crumbs at best. But you'll have a great year in smartphones this year anyway. I'd say forget about Nokia windfall, go for a big splash in the US market which most of the big boys will now tend to be neglecting.

MOTOROLA

Moto is mostly focusing on the North American market with a presence also in Latin America and China. Not much in the windfall for Motorola. Some gains yes, but modest, and there isn't that much that Moto could do to try to capitalize on the slim pickings that are left on the table.

LG

LG was a bit too late to the party and now again, faces a portfolio which is exciting, but a bit late. LG will have a good year and strong growth, but it won't be able to capitalize much on the Nokia windfall. It will be one of the smaller of the Android players to gain, because much of LG's market is in countries where Nokia was not a force (USA, South Korea etc) and LG's product portfolio is still modest in Android and focusing on the higher end devices.

SE

SonyEricsson is in a similar boat to LG with mostly higher-end products in its Xperia range, but in Europe SonyEricsson is traditionally strong, and it ise seen by Nokia owner as being 'similar' and thus 'familiar'. I think especially in Europe, SonyEricsson will be able to make some stronger gains than at first glance, but SonyEricsson won't be able to fully capitalize on this windfall.

SHARP

Sharp seems not to be born under lucky stars. Sharp is aiming for anotehr big come-back this year and has already launched the first Android phone with 3D screen and the world's second phone with pico projector etc. But these are high-end premium smartphones. They will help Sharp get some visibility and some sales, but the Nokia windfall is in the low price end. Sadly, Sharp was the manufacturer of Microsoft's Kin phones for the youth, which could have been a huge hit this year as Nokia abandons its youth market of QWERTY phones. But Sharp seems to be unlucky in its timings. Still, use the opportunity to showcase your tech leadership and aim for that high performance niche that once was the top phones of Nokia N-Series, at least there aren't many who are claiming that end.

CHINESE BRANDS

The ZTE, Huawei, G'Five, Lenovo etc Chinese brands that sell tons of ultra-low cost dumbphones and some featurephones and recently have gotten into smartphones - you have a huge prize waiting in the market of low-cost Nokia smartphone customers you can fight for. On Android you have a compelling story against Nokia's remaining Symbian market. Go aggressively beyond China and India and Indonesia, to Russia, Brazil, Africa, the Middle East and Eastern Europe. Make some cool phones quickly in similar form factors to some of Nokia's recent smartphones (E7 etc) and push push push. Spread your sales force wide and take as much of this market as you can. This is the time to do bulk deals and its not the year to waste weeks and months arguing the finer details of some contract and price. This is a year of a land-grab in smartphones and you can grow strongly in market precence now, which also boosts your bottom line selling higher price (basic) smartphones than low cost dumbphones.

PS AS MONDAY-MORNING QUARTERBACK

So, it seems Nokia gave away its N-Series and E-Series customers, abandoned high-end Symbian development (while awaiting Microsoft Phone 7 devices) and abandoned the MeeGo path for N-Series. This, while only holding onto ultra-low-cost smartphones selling for 157 dollars on average, running Symbian.

Just humor me with this thought. What if Nokia Board had instead sold the Nokia premium smartphones unit - as a licenced (Nokia-owned) Symbian handset maker, and with contractual obligation to migrate to MeeGo rather than say Android. And the Nokia N-Series and E-Series staff and sales organization and production and design and marketing would have gone in that split. Would Nokia have gotten good value from this "sale" - to someone who is hungry to get into smartphones, has money, is not in it for 'real' yet like say HP or Lenovo or Asus for example - or perhaps someone else, who is a small player with big hopes globally - like Sharp or Fujitsu - or perhaps someone who wanted their own OS but lost out on the Palm sweepstakes - especially HTC. As a 'fire sale' they might not get full value for the Symbian-based Nokia premium phones unit, but at least they would have gained billions in the deal - rather than losing billions in the stock market carnage that followed Stephen Elop's Microsoft announcement - which in effect clearly had the same end-result, Nokia's N-Series and E-Series unit(s) are kaput.

I know its 'easy' to say this in hind-sight, and also, trying to sell Nokia's 'crown jewels' would have been incredibly unpopular no matter how we now view it, but maybe a leveraged buy-out by the management of the N-Series and E-Series units? To a management team of Nokia senior execs led by Anssi Vanjoki and supported by some of Nokia owners and bankers - some of whom must have had some uncertainty about the Microsoft deal. At least Nokia would have gotten something out of this change, and not just handed these customers to rivals.

Ah, that is looking back again. Sorry. I will try to focus on the future now. Nokia is a new animal, we need to understand it, in its new environment as a box-mover and slave to Microsoft's whims. But for the market, the big winners are RIM, Samsung, Apple and HTC. SonyEricsson and LG are also going to make good gains, as are ZTE and Huawei.

MORE INFO - for those who want the inside info on all regional markets, average prices, market shares etc, please consider the TomiAhonen Phone Book 2010 that came out a month ago, that has 98 charts and tables of all the data about the handset industry you could hope for. At only 9.99 Euros it is a bargain. It is only available in eBook format and only from this site, see more at TomiAhonen Phone Book 2010.

When Things Get Even Worse Than You Thought - 1st Preview of Potential for Nokia Microsoft Partnership, short term 2011 and 2012

Yesterday I did my last look at the past, about how the decision was made by Nokia to terminate its smartphone OS platforms etc. That is all water under the bridge. There is no going back. Time to look into the future. And while my instant reaction on Twitter may have been a bit hasty and negative about Nokia-Microsoft partnership for smartphones, I have now done my first full, comprehensive analysis of its near term potential. And I am sorry to tell you, I was too optimistic over the weekend. It is far worse. I will go through every relevant part and analyze it. So lets look at 2011 and beyond, for Nokisoft Microkia

Even Nokia's CEO says this will be a difficult year of adjusting to the new world, for Nokia. I have tried to think what all will be impacted and how. This is a VERY long article, detailed, mostly of the Nokia side to the equation. I will examine dumbphones and smartphones and networks. I will examine customers, sales reps, app stores, operating systems, the developers and the ecosystem. I will examine costs, revenues, average sales prices and profits. And market shares. And I will give a view into 2011 and 2012 for the Microkia Nokisoft partnership. It cannot be a short analysis, the issues are so complex. It also cannot be superficial. So be warned. This blog article is one of the longest I've written, it runs well in excess of 10,000 words. And I know not all will want to read through it all. So let me give you the top-line view here. This is how I see the Nokia smartphone market shares, average sales prices and revenues develop in this year 2011.

Quarter . . . Market Share . . . Unit Sales . . . .  ASP . . . . . Total Revenues of Smartphones
Q1 2011 . . 28% . . . . . . . . . .  29 M . . . . . . . . 146 Euro . . 4.3B Euro
Q2 2011 . . 21% . . . . . . . . . .  25 M . . . . . . . . 136 Euro . . 3.3B Euro
Q3 2011 . . 16% . . . . . . . . . .  21 M . . . . . . . . 126 Euro . . 2.6B Euro
Q4 2011. .  12% . . . . . . . . . .  17 M . . . . . . . . 116 Euro . . 2.0B Euro

The last quarter before Stephen Elop announed his Microsoft partership, Nokia had 28% market share in smartphones and smartphones had a average sales price of 156 Euros (about 210 US dollars) and Nokia generated 4.4 Billion Euros of revenues in its smartphone unit - which is the most profitable part of Nokia's three big divisions.

The market share is certain to decline drastically. The unit sales will decline. The Average sales prices will decline probably more than what I have modelled in the above. (please read the full blog to understand how I arrived at these numbers - and please understand, this is based on a real case model - using Microsoft's performance in the past - and this is the 'best case' scenario!). The total revenues of the smartphone unit will shrink to less than half what they were. In the process, Nokia's smartphone unit will go from generating profits, to generating losses by the summer, and all of Nokia will be cast into making losses before the end of the year.

There is no silver lining to this partnership for this year. Microsoft will not gain a strong healthy profitable partner with one third of the smartphone market. The best-case scenario has Nokia limping in badly wounded, with barely more than one tenth of the market and disloyal customers, a wrecked ecosystem and bleeding from all the battles, making losses and unable to capitalize on Microsoft's supposedly excellent OS. Even then, Microsoft will be better off, as this wounded Nokia is far stronger than what Microsoft has managed on its own devices in the past. So its all pain for Nokia, all gain for Microsoft.

In the blog I explain what happens to premium smartphones, enterprise phones, cheap dumbphones, etc etc etc. If you want to know why I believe the above is the 'best case' scenario, please read my full blog - but go get a cup of coffee first. This will take some time to get through (honestly, the story runs over 10,000 words - more than a standard chapter in one of my books). And for those who don't care for the details, I hope to come back tomorrrow with the 'competitor analysis' of this partnership - who gains and how much. You may be surprised..

Nokia Autopsy on MeeGo - One last look back, Before we look forward on the New Nokia

I think this blog needs to be written. I think many things are now more clear. We must acknowledge that MeeGo did not die Friday 11th of February (when I wrote my stunned first review of the new alliance), or the week before with the burning platforms memo. If anything Stephen Elop had been pouring gasoline to the platform fires all last year, making sure there would be no MeeGo. Make no mistake - when Elop was hired in September - that is when MeeGo was killed - and that decision was made by the Nokia Board. But it is not that simple.

Stephen Elop hiring was not about killing MeeGo. It was about a Nokia in severe crisis, its then-current CEO, Olli-Pekka Kallasvuo (OPK) effectively already fired. Nokia was on the same trajectory as previous giant rivals Motorola and SonyEricsson (and also LG) and Palm in pure smartphones - Nokias profits had vanished - and look, Motorola lost 9 out of 10 customers in recovering - and even then it sold part of its assets and split into two. Palm was sold to HP. Nokia Board knew that the trajectory Nokia was on, in the summer of 2010, was a certain road to death. That the Board could not obviously accept.

THREE CHOICES

I do not know any of this, I am making guesses from the public record what we have seen since. We do know Stephen Elop was announced on September 10, 2010. We started to hear rumors that Nokia was hunting for a new CEO in July. I said on this blog at the time that I didn't think it was that bad, but I could see that it was likely that the Board would fire OPK. This was before we found out that OPK had been boosting market share artificially at the cost of profits to the company in a price war it was destined not to win. So the rumor mill was probably quite right around July the process was well under way, and by early September, the Board made its choice and named Stephen Elop to be the new CEO.

This was an ungent and absolutely necessary choice for Nokia. Their current CEO was no longer welcome to run the company and in these very troubled and turbulent times, the company needed a new CEO. And a new CEO, with a new vision for the company. What the Board would not accept, was for a classic Finnish long-term Nokia guy to come and say, I'll do exactly what we've been doing in the past. That, to the Board in the summer of 2010 - was not sustainable. There had to be drastic changes.

The problem is - what kind of changes? I would guess - I do not know - that there was a professional headhunter company brought in - with a mandate to find the candidate from the outside who would be of high calibre to run a Nokia-sized company - but one with North American credentials (to appease the US shareholders - remember the shareholders were in revolt at this time last summer). I would also think, from working with headhunters from time to time - that they did their work diligently, and found two competent North America -based candidates as finalists (one of whom was Stephen Elop obviously) and that the Board probably considered as a third finalist, the best candidate from inside the company - and its fair to guess this was Anssi Vanjoki - who in all fairness should have gone through the same process with the headhunters ie psychological tests etc. 

At least there must have been two - you don't bring the Board a choice of 'take it or leave it' - but I think the intelligent choice is two solid outsiders who have run big organizations before, both from North America - and one Nokia insider. What can we figure out? Nokia was in crisis. Cuts had to be made. No candidate for CEO could walk into the Boardroom and say, "I'll save this company, turn it from making losses to making profits - using magic - and nobody is fired, nobody is hurt, no divisions or units will be cut, and no products or ares will be eliminated." That is not competent analysis of where Nokia was in the summer of 2010.

What can we guess from Anssi Vanjoki - he very probably promised he'd keep MeeGo and Symbian, and their complex strategy and organization with Qt and Ovi and all the software related staff that this requires. And then Anssi must have said he'd cut something else. We don't know what. But look at Stephen Elop, right when he started, he fired 1,800 people and he's now firing what, thousands. So he had a 'mandate' to make deep cuts that ran 5,000 people at least (maybe many more). This was all discussed in the final negotiations with the Board in deciding on the new CEO - and in approving his plan for rescuing Nokia.

Make no mistake about it, if Anssi had walked into the Board Room and said, "We need no cuts" - he would not have been taken seriously. He had to cut somewhere, we don't know what he said.

But I think its more relevant to consider 'the third guy', Mr X (or Mrs X haha). Look what all was draining Nokia in 2010. The NokiaSiemens Networking unit was a drain on profits making losses most recent quarters. This is a third of Nokia's revenues and a lot of staff - and Nokia has been making these networking industry acquisitions (or attempts at them) not just Siemens networking, but Nortel and now Motorola's networking unit. This is clearly a dear and loved element of Nokia's 'core' competence that the Board seems to love. But at least one of the three rivals must have suggested killing off NSN (and also cutting Nokia' size down by a third in the process. Leaner, and more profitable, but yes, much smaller).

Another obvious candidate is the basic phones unit. It would be a fair analysis to say, that the future of all mobile phone handsets was smartphones - and the basic phones were going to be commoditized within a few years, and their profit margin is far less than that of smartphones - why not sell the dumbphones unit for example to the Chinese. Do this, and keep Nokia's smartphones alive. But this would cut another third of Nokia's total revenues (like removing NSN).

What of the operating systems. I could see Mr X suggesting that Symbian was failing and MeeGo was dead-on-arrival - that the obvious solution is to kill both - and go immediately to Android. We saw this suggestion all through last year, it would seem very likely that one of the three candidates - and obviously not Anssi - would suggest this. Elop in that was was the lesser of two evils perhaps.

But there are more issues than that. What of Nokia's headquarters. If one or two of the candidates suggested moving Nokia HQ to America - we do not know what Anssi said, but remember, Anssi was the Finn and any North American CEO would have been more welcome to US investors - Anssi may have suggested as one solution for hiring another Finn to run Nokia - to move the HQ to the US.

DEATH OF MEEGO

The Board was not making a choice in September of whether to kill or not to kill MeeGo. They had a far bigger choice to make, and that was the commercial viability of Nokia, which had recently been run badly - one might say ruined - by OPK's management. The Board had to select a CEO. At one extreme they had Anssi Vanjoki, a guy who very likely would have done the 'least dramatic' changes to the company. As a long-term Nokian, he would have tried to minimize layoffs and tried to keep most of what is core to Nokia. he would have had some dramatic solutions and painful cuts yes, but I'd be pretty sure his idea of how much to cut, was probably the smallest of the three. However, he might have eliminated a whole unit of Nokia like NSN or basic phones and very possibly moved the HQ to the USA.

Then there is Mr X who was most likely a 'more extreme' candidate than Stephen Elop, who probably said, lets kill Symbian and MeeGo immediately, and ALSO make some other cuts - eliminate the expensive handset design in Finland, move all the production from Finland to China etc - maybe even suggesting to subcontract much of Nokia's smartphone business like Apple does to Foxconn. We don't know, but its pretty sure to assume, considering honestly - how 'mild' Stephen Elop's remedies have been so far - for a company as much in distress as Nokia was last summer - and considering what kind of solutions many suggest for Nokia - that Stephen Elop was indeed the 'milder' of the two outsiders. More drastic than Anssi, but not the extreme choice.

I do not know, I am guessing, but I am pretty sure that one of the tree CEO's would have eliminated NSN (and that was not Elop). One of the three would have moved the HQ out of Finland (and that was not Elop). An obvious solution if abandoning MeeGo would be to also kill off Symbian (which Elop did not do). And very likely a candidate would suggest killing off the low cost handset business, and perhaps even to move out of Finland most of the design work in handsets (neither of which Elop has done).

HIRING A CEO

Then there are all the other things that come to a hiring decision. How is the personal relationship between the candidate and the Chairman (Jorma Ollila). What kind of compensation package is involved. What kind of management style issues are involved. How is that person's reputation in the industry and especially talking to investors (a vital element in the summer of 2010 with the Nokia shareholder revolt). How good are relationships with industry giants. Certainly, the investors would not be happy to see Anssi Vanjoki as the choice, as he'd be seen as yet another Finn. The decision would not be made on 'either the Finnish guy or the Canadian guy' but rather, these all are factors that would be considered as a package.

The board saw probably three very highly qualified candidates - who had three very differing views on how to save the company. No matter how the Board felt about any one issue (networks, basic phones, smartphones, Symbian, MeeGo, Finnish/American, number of people to be fired, subcontracting phones, factories in Finland, HQ move to America etc) - they made their choice most of all, on who seemed to be the most competent CEO. Remember, the Board was faced with replacing what they felt was an incompetent CEO when Nokia was bleeding. And they knew Nokia needed a big change. And there was no time to tell the headhunters - none of these are good, take another 3 months, find us another two candidates..

Considering what all Stephen Elop has done, and especially what all he has not done - he is actually quite a mild pussycat in terms of an outsider North American CEO to come to fix Nokia. In all honesty, the only unit he's killed is MeeGo. He's made staff cuts in two stages and they've been relatively modest. This is not without pain - but no such change would be. The point we have to understand, the Board in September, did not decide only on MeeGo. They knew, if they took the Canadian Microsoft guy, they would sign the end of MeeGo - but we do not know what were the other choices that the other two candidates were suggesting Nokia would have to take - but we do know this - those two candidates proposed worse choices (to the Board's view of Nokia) than what Stephen Elop did.

Nokia was facing a crisis in the summer of 2010 - and painful cuts had to be made. MeeGo is a casualty of that painful choice. So please do not think that MeeGo died last week with the burning platforms memo - no, the platform fires were fuelled by Stephen Elop all last Autumn - one of his first acts as new CEO was to move MeeGo launch to 2011. Remember, MeeGo was almost ready - it had shipped in final beta to developers in July. This means in Nokia terms, it is within a few months of production. Nokia had been promising a MeeGo device by end of 2011 and that was as we now know, the recently killed N9-00. MeeGo and N9-00 were both killed by Stephen Elop - but their death sentence was signed off by the Board in September, when they decided to take Stephen Elop as the new CEO. Do not blame him now for those decisions, the decision to end MeeGo was part of the plan that Elop gave to the Board before he was signed. The Board knew what it was getting in September 2010.

WHY MICROSOFT

We do know now, that there were negotiations with Microsoft already in November, and that Nokia had told the Finnish government of a new round of layoffs now before this announcement this past Friday. Steve Ballmer was booked well in advance to be by Stephen Elop's side at the Nokia day. These issues did not emerge overnight. But lets now examine the Microsoft choice. And before we go further, its quite possible that Elop said to the Board something like "I am not wedded to Microsoft. Let me bring two proposals to the Board, one from Google Android, the other from Microsoft - and you can decided and I will abide by your decision." That would have been a reasonably safe bet for Elop, first, in that Google didn't have much to gain from adding Nokia to its family - as Google saw in the Autumn of 2010 that its Android trajectory would within less than a year pass Symbian anyway, and Nokia could not shift immediately from Symbian to Google, so Google would not really gain that much. They would see Nokia as more 'desperate' and Google knew that Nokia needed Google far more than Google needed Nokia. Plus Google knew that if Nokia would come in, Nokia would ask for special treatment as the biggest and that would upset a dozen Android makers who just recently got rid of Nokia in the Symbian split-up. Elop could fairly expect, that Google's effort to 'woo' Nokia, would be half-hearted and lukewarm.

Meanwhile Microsoft needed Nokia as its army of Windows Mobile handset providers had dwindled with the shift to Phone 7 and the smartphone world was running away from Microsoft. Microsoft could very easily promise Nokia 'best customer status' and all kinds of concessions. Microsoft could cross-license some Nokia software (Navteq maps for example, something Google didn't need with Google maps) to sweeten the deal. And in the final analysis, if the two offers were very close - Nokia Board would then go with the company where 'we' (as in Nokia) had the 'inside guy' (as in 'our' CEO, Elop) who knew the 'terrain' ie knew Microsoft better than anyone might know Google.

But thats speculation. Here is how, if I was Stephen Elop, and had to sell the Microsoft deal to Nokia, here is how I would have played it. I would have told a short story:

THE THREE LITTLE PIGS

I'd tell the story of three companies in the PC industry: IBM, Hewlett-Packard and Microsoft. How at one point both IBM and HP used the Microsoft operating system. IBM was the giant at the time, similar to Nokia today. And then, at one point IBM decided, it wanted to create its own OS for its PC. It broke with Microsoft, developed its own OS, tried to find a market for it, didn't have the apps, and found it incredibly expensive, made its IBM personal computers more expensive and hurt its bottom line. Over time, IBM had to come back to Microsoft and eventually sold its whole PC unit to Lenovo and quit the PC business altogether. Meanwhile, Hewlett-Pacard did what it does best, it made high quality personal computers, never dabbled with operating systems, and grew soon to be bigger than IBM and today towers over its rivals and are twice as big as Microsoft. HP became the biggest company in the IT industry by revenues (and twice the size of Nokia). Meanwhile Microsoft stuck to making great software to anyone who wanted it.

Story sounds very nice and is based on the truth. The obvious - obvious - question that the Nokia Board would then put to Stephen Elop - is the question yelling to be asked - what of Apple? And Stephen Elop would have his prepared reply - yes, Apple survives - but it struggled all along in making personal computers - and by mid 1990s it became unprofitable as a PC maker and would eventually have to align its Macitosh OS - to accept Microsoft's software! Ie Apple had to become Microsoft-compatible itself. Its all about the apps and Microsoft's big platform had all the apps, that is what wins in operating systems. Apple came back on the strength of the iPod - music is apps - and iPhone - more apps - and iPad - eve more apps. And Apple defeated giants along the way, like Sony in music players and - he would tgen apologize - and is defeating Nokia in smartphones as we speak (and the iPad was the roaring success of the tech stories obviously in July and August when these discussions were ongoing).

And then deliver the killer line he had been waiting to express - the only company to defeat Apple is Microsoft. We know how to do it, we did it overwhelmingly in the PC operating systems, the Mac was first, but Windows came and we made Windows 1.0 and 2.0 and 3.0 and eventually we won - why, because Apple's core competence is desirable technology, but Microsoft's core competence is software. Apple is very good at software, but Microsoft is the master at it. We know operating systems and their application environment, we win that war. If you, Nokia want to beat Apple, you do what you do best - make the best phones ever, and let us do the software part of operating systems - the part that is draining Nokia now and killing profitability and causing all the delays to such great phones as the N8...

He would probably in very mild terms say, that Nokia tried to battle Apple once, with Symbian - and lost. And Nokia tried a second time - with Maemo - and lost. Then to say, the definition of madness is to try the same thing and expect to win. That if Nokia had deep pockets of profitability, it could indeed go on with these attempts and perhaps some day, Nokia might win, but Nokia did not have the luxury of time. It was time to end the pretense of being as good at the software, and concentrate on the hardware side of the business - both in handsets and in networks.

I think this type of discussion was had between Elop and the Board about Microsoft. And he's have plenty of evidence, showing that Microsoft is not afraid to ditch the old Windows Mobile OS, knowing it is not viable against Apple and Google - which is the cheaper and faster way to respond than what Nokia was trying with two operating systems, Symbian and MeeGo, and a clumsy Qt based 'migration path' for them. No, Microsoft is in it to win it, and then show some beta version samples of Phone 7 (which started to ship a few months later, so he would have easily had access to a late version of it).

He didn't need to prove to the Board that Phone 7 was better than MeeGo. He didn't need to prove to the Board that Microsoft was better than Google. All he needed to prove to the Board, that partnering with Microsoft - would solve the enormous drain on profits that the Nokia software strategy had become, and give a compelling story that Nokia would retain a competitive OS in Microsoft - and one, that could if history would repeat, actually one day defeat Apple - something that most Nokia insiders would never say of the MeeGo project haha.. So his solution would need to convince the Board, that Nokia could continue as a great smartphone maker, with a world-class OS partner.

And Microsoft was one of really only two viable alternate operating systems, it was going to be down to either Google Android or Microsoft Phone 7. That was very clear in all rumors and what the tech bloggers and analysts and investors seemed to be desiring. Nokia's Board would be well excused for believing, that if they dump Symbian and MeeGo for Microsoft's OS, they would be rewarded by Wall Street, that this would be seen as a good move. That the Nokia stock price would shoot up dramatically (while it seems the opposite happened, at least in the short run..). But we have to be honest, before Friday the 11th, the guess at most sites was that the investors would welcome a move for Nokia away from Symbian and MeeGo to 'either' of Android or Phone 7. That was a fair assumption to put into the equation when the Board was deciding in the summer of 2010.

ALSO SOMEONE WILL HAVE PAINTED A TIME-LINE

And definitely one of the CEO candidates must have made the obvious time-related observation, however true or untrue it might be - that Nokia's profitability has been in decline almost exactly in synch, with the proportion its handset unit has migrated phones from dumbphones to smartphones! Think about it - the Symbian purchase, the slow painful bureaucratic Symbian development issues, the ever increasing delays - look at N8 - the delays had been growing progressively worse at Nokia the more it went from doing a couple of smartphones to becoming a smartphone company. Meanwhile its biggest rivals, RIM and Apple both report high profitability - with making competing smartphones! Nokia's Board definitely knew, that for Nokia, making software and the battle for the OS wars, was far more costly - draining precious profits - than for its rivals who seemed to know how to do it. Part of that was the huge baggage that Symbian brought, obivously, a decade of legacy software and what Nokia bought was the amalgamation of the wishes of a dozen rivals, many of whom were not even in the phones business anymore but whose early requirements and requests still lingered in some Symbian software code. We know fully well it was a bloated system and could not be as competitive as the newest operating systems like that from Apple or Google (and quite arguably, the new one from Microsoft).

The pattern here is obvious. The more Nokia would shift from featurephones to smartphones the profit margin would shrink. Whether that is a true 'causal relation' is pretty irrelevant at this point - the argument would have been made, that Nokia is 'not equipped to win' in a pure smartphones-war, its software baggage and strategy and staff costs and methods are not suited to do software competitively. Not that Nokia could 'not do software' but just that it was horribly slow and costly at doing it. I am sure that message was highlighted last summer when we saw how quickly Google was doing ever newer, and ever better versions of its own OS, Android. Nokia Board would feel gutted about it, but they could see the numbers - Nokia was not competitive in the software side of the battle.

Again, readers, this is all pure conjecture. I have not one bit of evidence that the above happened - but I think it is very likely to have happened. Clearly the Board approved the death of MeeGo when Elop was hired. Elop delayed the pending MeeGo launch from October 2010 to sometime in 2011, which was announced in public on October 22, but was probably internally communicated to the stunned MeeGo team on October 5. That was the day MeeGo's project leader, Ari Jaaksi suddenly resigned 'for personal reasons'. Elop also killed the N9-00 Meego handset project which was first reported in January to have been killed. MeeGo is now being turned from a mass market operational OS project, to a 'hobby' project where Nokia will bring one handset to it (expect it to be a mild and simple version of N9-00) sometime towards the end of the year, just to fulfill its obligation.

This was not done as response to 'burning platforms' haha. It Stephen Elop did indeed discover a fire on the oil rig platform that is Nokia, he was not looking to shut the fire, it was Stephen Elop's own actions that poured gasoline to those burning flames - he wanted MeeGo out of the way - imagine the outrage, if MeeGo had been released on schedule in October 2010, the first handset released for the best Q4 Christmas sales period, and as this would have been significantly newer a phone, ie a better handset than the N8 - and on the better software, it could have easily outsold Microsoft's Phone 7 haha.. that would have been a horrible PR nightmare, why kill the new 'great'' MeeGo OS and replace it with Microsoft's 'worse' Phone 7 OS. That would have created huge outcries. But Stephen Elop knew what he needed to do, and to bring in Microsoft, he had to kill off MeeGo right away, so we never saw what it could do.

And again, don't blame Elop for this - he had a plan to save Nokia, he offered that plan to the Board, and all three plans by the three CEO candidates had painful cuts. This was to the Board the least painful option. At least Elop would commit to Symbian for two more years, etc..

COURAGEOUS PLAN

Now, the crazy part is of course Microsoft and its reputation recently, especially in adventures in mobile. I mentioned in my blog posting on Friday, that Nokia may regret this, if history is any guide, look at Microsoft relationships with handset maker partners, Sendo, HTC and Motorola. There is far more to recently Microsoft 'partnerships' that tend to end up very badly for the 'company other than Microsoft' and Microsoft is quite happy to abandon its 'strategic' partners at the drop of the hat, and send in the army of attorneys to mop up the damage. They are far far more profitable than Nokia (I believe, Microsoft has been far more profitable than Nokia 'ever' was) and they can afford their army of lawyers. Asymco ie Horace Dediu wrote an eye-opening blog last week that chronicled the history of recent Microsoft adventures in partnerships. Lets hope for the sake of Nokia, that history will not repeat itself, but go read his account of history, it is frightening for this partnership.

Consider here are a few of Microsoft's partnerships in telecoms in the past decade and how Horace summrizes them. In 2000 Ericsson ("culminated in losses and Ericsson going to Android"). 2001 Sendo ("after litigating with Microsoft went bankrupt"). Motorola 2003 ("launched series of phones using Microsoft, hit the rocks in profitability, and now relies exclusively on Android"). Palm in 2005 ("shipped a few MS phones, and an acquition later is now part of HP, making its own OS"), Nortel 2006 ("Nortel declared bankruptcy two years later"). LG 2009 ("made a few Microsoft devices, but abandoned the platform, moved to Android losing all their profits"). There are no sunny stories of Microsoft alliances in mobile. And please go read his article, there is much more, read at Asymco.

One might add the experiences with Microsoft on the PC side, that Apple has had, IBM has had and quite recently HP has had. Quite often partneships with Microsoft end in tears, and lots of court battles. As the fictional character Sir Humphrey advises the Prime Minister, in the classic BBC TV series, Yes Prime Minister (and Yes Minister) - this is a 'courageous plan' - which he means - it is disasterous. You are fool-hardy to believe this illusion that Microsoft offers as a supposed partnership. And especially after reading Asymco's blog, I am even more worried. As they say, the definition of madness is to do the same thing, and expect a different result.

IRONIC TRADE

So let me summarize the end of MeeGo this way. Bear in mind, Nokia needed to replace OPK, and it had to do so fast, and MeeGo was at best one of perhaps a dozen items on the table. With Stephen Elop's selection, MeeGo's fate was sealed. It died on that day when that CEO contract was signed. But consider this. MeeGo was within weeks of launch. This is like Sony when it had Playstation 1 as the most popular home videogaming console, and was only weeks from launching Playstation 2, it would suddenly abandon the project, and sign up with the smallest rival in videogames. Yes. when this decision was made, in September - and still today when it was formally announced on February 11, Nokia owned the world's most used smartphone OS platform and was almost twice as big as its nearest smartphone manufacturer (Apple). Nokia was weeks from launching its next OS ie MeeGo, for which Nokia had already built a functioning migration path through Qt. All this, while Nokia's Ovi store was now the second-most-used app store.

That all Nokia abandoned for not the second biggest OS platform (Google Android). Not the third biggest (Apple iOS). Not the fourth biggest (RIM Blackberry), Not the fifth biggest (Samsung bada), not even the sixth biggest selling smartphone OS platfform (Microsoft's Windows Mobile which is being terminated) but Nokia abandoned the world's most popular smarthone OS platform and its migration path, for the seventh-best-selling smartphone OS platform (Microsoft's new Phone 7) which had 1.5% market share in the fourth quarter of 2010 - vs 31% for Nokia's Symbian platform (including Japanese manufacturers also using Symbian), and 28% for Nokia itself. Nokia abandoned its giant platform and picked one of the smallest in the world. Mind you, Phone 7 is not the smallest - Palm webOS of HP did the worst in Q4 of 2010 haha.

AGAINST TREND

The one part that 'gets me' is that this is a classic strategy blunder where the industry is on a clear trend from one to another, and we find a major company who rejects the new, and clings onto the past. All major analysts agree that the phones business is being commoditized. The industry tries to move 'up' in the value chain to software, services and apps. Look at Apple, it first launched what the industry defines as a featurephone in the iPhone 2G in 2007, then added apps and the App Store for iPhone 3GS in 2008, and its first true smartphone. Apple adds smartphone functionality and apps. Nokia is taking the opposite step. Look at RIM, makes its own OS is building its app store. Look at Samsung, it understands the shift from basic phones to smartphones just like Nokia, and what does Samsung do? While it offers Android and other OS based smartphones, it launched its own OS in bada and an app environment for that.

And best of all, HP. They were in smartphones for a decade. They were selling smartphones in small numbers. But they felt they wanted Palm - the OS - so they could make a bigger entry into smartphones. I think this is the most poignant lesson of them all - the world's biggest IT and tech company, as big as Microsoft and Nokia added together, HP who had for 30 years made Microsoft-compatible PCs (also as Compaq) - feels that for the next generation of computers - pocket computers - smartphones - they feel they need to make the OS. This is the lesson from HP. But Nokia is the only one who goes the other way.

The industry is moving from handsets to software - even Microsoft's short-lived phone handset adventure proves this - they tried with Kin phones, and felt its far better to be in the software business.

So Nokia invented this direction (invented the smartphone) and pioneered it for more than a decade and now when victory is in sight - as the most successful smartphone maker ever, the first to sell 100 million smartphones per year - they abandon this path for what? To go 'back' to making just handsets. That is a regressive move, against the trend. Its like Boeing looking at jet engines, making the most successful jet airplane of all time, the Boeing 747, and then decide, no, lets go back to propeller planes.. Look at AT&T and British Telecom, they both made this mistake in the telecoms business - they owned two platforms, the old fixed landline business and the new mobile business - both sold their mobile arms and came to deeply regret that. Same for Vodafone, a pure mobile operator, when it announced a shift in strategy to fixed telecoms a few years back - another retrograde change - and what happened? Their profits got hurt badly.

I do think that this will go down as a classic blunder, where a giant make the wrong strategic move, and it pains me, that Nokia had it so well in its grasp. But we must move on. This was the record for the history, what I think happened to kill MeeGo. Now we have a new Nokia, we must move on.

IN SUM

First, we cannot blame Elop for this. He did not kill MeeGo in February 2011. He was one of the finalists for CEO, who had to propose a plan to solve Nokia's severe crisis. That involved painful cuts no matter how you looked at it. The Board approved a plan in September, where one part meant MeeGo was dead. Elop didn't kill MeeGo now. It died last September and the Board approved that plan where MeeGo would go.

Secondly, this can work. Nokia had severe problems yes, but after replacing its CEO, Nokia has been on the mend, to some degree. This is not the same Nokia we knew and loved but it is a Nokia as a handset maker and network infrastructure provider - and one that seems to be well on the way back to profits. The part that died in Nokia was the vision of the company as a software company, and its ambitions with smartphone operating systems. Symbian will live on for perhaps 5 quarters or 6 (to filfill the 150 million device promise Elop made) but it is now the walking dead. Nokia is no longer in the business of smartphone software. But they can still make awesome phones for us and now stick to making phones that are great.

Some will greet this as good news as Nokia can 'stick to its knitting' ie do what it does best. Nonetheless, this decision will inevitably move Nokia into the box-mover category. Nokia has already abandoned most of the high-ground to the iPhone and Samsung Galaxy and other premium phones. Its N8 (and E7) showed enormous promise of recapturing some of that, they are now no longer in the game. Nokia's MeeGo based N9-00 could have been a real iPhone-killer, we will never know. Nokia becamse the first of the big smartphone makers to 'throw in the towel' and shift away from its own OS to only producing 'clone' products alongside other makers. What is worse - for the next 12 months at least, likely next 18 months - we won't see a 'superphone' from Nokia on Microsoft either, so Nokia are now surrendering much of what remains of any lead, in the migration from Symbian and MeeGo to Microsoft. But that is another blog article, looking forward from this point.

We enter a brave new world. The King is Dead, Long Live the King. Symbian has ruled the roost for a decade. It made Nokia the world's biggest computer manufacturer a little over a year ago. Now a new CEO comes in, and helps guide Nokia to a new direction. Maybe this will be cloud computing, who knows. Maybe Nokia will be the most efficient pure box-mover in handsets, on slimmer profits but as a reliable device maker, like Dell was for many years in in the PC world. Certainly Microsoft which had been a peripheral bit-player comes back now with a vengeance. But the saga of Nokia's long ambition of being a 'software' company and an 'internet company' and its vision of building its ecosystem with Symbian, MeeGo, Qt and Ovi - that had its funeral on Friday the 11th of February. That was only the formal notificiation of its death - Nokia's smartphone path ended the day Stephen Elop was selected as the next CEO. Lets see if Mr Elop can redeem himself and give Nokia a bright future on his vision. We have to give him at least another year to map out his vision and steer Nokia to new waters. We will be following here on this blog. Stay tuned.

I will be writing two further pieces about the Microsoft-Nokia alliance, first looking forward to the two companies in the next blog story (probably tomorrow) and one final blog article with a detailed analysis of what this means to the rest of the mobile industry, ie the competition. Where something big also happened on Friday - we have the formal return of Hewlett-Packard to the smartphone races, with some phones on the Palm webOS platform. The world of smartphones shook quite dramatically on Friday. One giant steps aside, another steps into the ring. We'll do the analysis of all that in a second posting shortly on this blog.

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 the numbers and analysis of the smartphones and dumbphones markets, regional market shares, average sales prices, feature sets etc - please see my TomiAhonen Phone Book 2010 that was released in December with all the very latest stats and details in 98 tables and charts.

My attempt at humor - the Microsoft Song (sung to Abba's Waterloo)

Hi all

This is my attempt at a bit of fun for the weekend. Some at Nokia are rather stunned at this Microsoft alliance. So for those, a little song you may sing with friends over beers tonight in the bars:

Microsoft
(to the tune of 'Waterloo' by Abba)

My, my, To Microsoft Nokia did surrender
Oh yeah, and phones have met their destiny in quite a similar way
The marketing book on the shelf
Was always repeating itself

Microsoft - I was defeated, you won the war
Microsoft - Promise to use you for ever more
Microsoft - Couldn't reboot if I wanted to
Microsoft - Knowing my fate is to be with you
Microsoft - Finally changing my OS too

My, my, I tried to hold you back but you were smaller
Oh yeah, and now it seems my Symbian is giving up the fight
But how could I have any hope
My boss is a guy named Elop

Microsoft - you got the OS, you're in the core
Microsoft - Phones are now delayed to Quarter 4
Microsoft - Crashes are just what we love in you
Microsoft - Customer service and kindness too
Microsoft - Finally eating the doggie-doo

So how could I ever refuse
I feel like I win when I lose

Microsoft - Couldn't escape if I wanted to
Microsoft - Share prices crash when I am with you
Microsoft - Finally facing my Waterloo

RIM-RIM-RIM-RIM Waterloo
Sending my CV to Waterloo

Oh, no? Waterloo!
Cold-as-in-Canada Waterloo


Feel free to use at will

Original humor by Tomi T Ahonen/HatRat. Opinions are those of author. No microsofts or nokias were killed in the making of this joke.

To Nokia colleagues being laid off or fearing for job survival - here a little bit of advice

Hi Nokia colleagues, past colleagues and new ones who came after I left in 2001.

I have just heard that Elop's 'strategy' includes layoffs. I am VERY sorry for you. But please do not despair. You have stong competence in mobile, a very difficult complex industry. You have experience in the biggest company of that industry. Mobile is a Trillion dollar industry (1,000 Billion, or one million million) - you WILL find a new job. Do NOT despair. Just take a deep breath, and calm down, and focus.

The first thing you have to do, is update your CV now, and contact every single contact you ever had, and start the search for your next job. Do not despair. You will find a better job, and it will not take that long. The mobile industry is in hypergrowth, so there are plenty of jobs, including very advanced jobs. It is not as bad, as the recent economic recession was. If ever there was a time to lose a Nokia job, this is about the best time for it to happen haha, you have no idea how much the rest of the world values your talents. Do not despair.

I have friends finding good CV assistance sites, I will shortly post here. I also have friends looking for good job-interviewing sites, and will post those also.

Please remember, if you are going to interview for a job outside of Finnish companies, your Finnish job-hunting skills are not right. You have to adjust your CV to be far more 'international' (and by that, it means it has to be more 'marketing' ie more 'aggressive' and show more 'achievements' etc). I will get you help on that here, don't worry. As a rough guide, make sure your CV first page is not your educational achievements etc, you post all work in 'reverse chronological' order ie newest job first - and at least one paragraph per job. So you have to think of what all great achievements you've done in your current job. You can put easily one paragraph per about a year or two at Nokia, so if you've spent 6 years at Nokia, you should have 4-5 paragraphs about your time there etc.

Here are some companies that I know are growing, and will greatly value your skills. RIM ie Blackberry - thats based in Waterloo outside of Toronto in Canada. Samsung based in Seoul South Korea. Apple, California, Google, Cisco California. Also there are good smaller companies so they wont' hire tons of people but you could find a really good job if you have the right mix - so companies like Layar the Augmented Reality people of Netherlands or Flirtomatic of the UK or Fjord which also has a Helsinki office, or Artificial Life here from Hong Kong. I will also be looking for good companies and post more for you.

Obviously if you're in Finland, hit the Finnish companies like Elisa, Sombero, Book It, Sulake, Rovio, Kontra, all who have anything to do with our industry.. I remember when I still lived there, that Ericsson also had big offices in Finland but am not sure if they still do, if yes, contact them too! Also remember companies that are growing their interest in mobile like YLE and Sanoma etc..

UPDATE - here first sites. Help with CV (offer free reviews of CV's) http://cvcl.co.uk/tweets

Help with interviewing (thank you @kulturvulturz) : http://www.quintcareers.com/interview_question_database/

Guys, I am with you! You will do fine. You'll find a good job, don't worry. I will return here with more.

And please also anyone of my readers outside of Nokia, who has ideas, post for my friends and colleagues. These Nokia employees tend to be very highly trained, very competent, hard working people of exceptionally good work ethics and have learned to work in collaborative environments and all are perfectly fluent in English. If you are looking to expand your mobilista staff, please consider hiring these Nokia people now..

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.

Reading the Tealeaves: My Outline of Stephen Elop Strategy Presentation - REVISED

And yes, today is Nokiaday, its the biggest single presentation or speech in Nokia's recent history. When the first non-Finnish CEO makes his first strategy keynote and shows how Nokia will recover. Here is my thinking of what we'll see, and how it may happen. I honestly do not know, never met the man, and have no insigts from my friends at Nokia who have been very tight-lipped about it all haha.

UPDATE - Nokia has just announced they are going with Microsoft and use Windows based operating system with their smartphones. See Nokia official press release here:

The rest of this blog posting is now meaningless. I think this is a disasterous decision for Nokia, and a brillaint win for Microsoft (congratulations!). Nokia has now sold its future, and is destined to the role of box-mover in slim margin business like Dell in personal computers giving Microsoft the huge reach it wanted to replicate its massively profitable OS strategy it did in PCs but had been unable to do in mobile phones. The obvious winner is Samsung, they now inherit the title of biggest handset maker who also makes their own OS (congrats to Samsung, they must be cheering loudly) and the rest of this blog is now pointless.

There are two possibilities. It is possible he announces that Nokia is dropping one or both of its operating systems Symbian and/or MeeGo and goes with Microsoft Phone 7 or Google Android. This to me, would be a massive strategic mistake, abandoning a huge advantage over most rivals, and relegating Nokia to a future of a 'box-mover'. I cannot honestly see a 'software guy' like Stephen Elop, making such a decision as he knows how vital Microsoft's own OS, Windows (and previously DOS) was in the profits of the PC industry vs the traditional PC giants like Dell, HP (and Compaq), Lenovo (ex IBM) - and obviously that Apple had held onto its Mac OS and always was able to differentiate and be a 'thorn' in the side of Microsoft.

So, I am not expecting him to announce that Nokia smartphones would abandon Symbian and/or MeeGo and switch to Phone 7 and/or Android. But I've been wrong so many times and I honestly don't know.

But its not going to be lukewarm. He is going to do one, or the other. He either throws away the Symbian/MeeGo path and jumps into bed with one outside smartphone OS maker - to immediate cheers of US investors and utter shock to most developers and partners in the current ecosystem - or else he states categorically that Nokia is committed to Symbian/MeeGo and this is why..

So I recognize this is by no means certain, but I do expect he will be telling us Nokia is with Symbian and MeeGo. And this is how I think he will be doing it.

First - this is his 'Steve Jobs moment'. He has the whole world of telecoms and much of the IT industry watching this presentation. He is THE story of today. It is is first such chance and he has the chance to make a huge splash, a truly memorable presentation - remember how amazing was Steve Jobs on stage when he first unveiled the iPhone? The oohs and aahs from the audience? And months of astonishment from the press. He is at that kind of opportunity now. But also, he has to deliver. This cannot be a standard traditional Nokia presentation which bores the pants off most who are listening haha.

He has been CEO for half a year. He has known this is the big presentation of the year. He's know that for six months. Do you think he has prepared for it? What of gadgets, toys, radical announcements? Those would all be timed for this February.

Here is what I expect:

First, he has to acknowledge that Nokia has been having trouble in the past, and that it will make several obvious changes about focusing on customers, loyalty, satisfaction, and stop with the penny-pinching on some of the nonsense.

Then he will have at least one handset to astonish the room. It will be lovely, awesome, cool, sexy, the kind we all want - now. And I am guessing, he has learned enough of the pains of delays, that the phone will be near to launch, rather than promiseware. he should have a prototype in his hand. Ideally this should be the launch phone for MeeGo.

Then he will talk of the 'great success' of Symbian. How big it is, that it is still used in the most advanced country in mobile, Japan, that its newest version S^3 sold 5 million in its first quarter - thats more than iPhone did in its first quarter, or RIM or Android or bada. And compared to Microsoft's new Phone 7 launched the same quarter - Nokia's Symbian S^3 outsold Phone 7 by more than 3 to 1. Then show a bit of how great S^3 is now, and promise how rapidly S^3 will be migrated to all current Symbian devices this Spring.

Then explain that Symbian is Nokia's low-cost and mid-range smartphone platform - where all the growth is - and then show MeeGo as the top end software.

For MeeGo, he has been very quiet. I think this is deliberate, so most would kind of 'forget' about it, and not pay attention to it. So now he can announce MeeGo almost as 'new' and show it is a powerful ecosystem - the OS itself is developed in partnership with Intel - and then he needs to showcase the vast range of big brands who are committed to MeeGo and show the first devices that are just now shipping (not from Nokia yet, these are like some TV set or something).

He should have at least one handset maker to announce into the MeeGo partnership. In a perfect world it should be one of the bigger brands like LG or SonyEricsson or RIM as a long-shot but some handset maker in addition to Nokia.

Then take out his prototype MeeGo handset and illustrate some of the cool things about MeeGo why it is that much more advanced than the field today, why it is 'obviously' Nokia's platform of the future.

And then announce a RANGE of MeeGo devices that will hit the stores this year. At least 3, maybe 5 models. And at least one to ship this Spring, ideally the first model to ship by end of Q1, ie in March. This could be a rebirth of the N9, which seems to have been killed, but that might have been mis-direction.

In that part of the presentation, he has to talk about Qt, explain why Nokia loves its developers, and has this one tool that allows develop-once, publish many times, to developers. Tell that with Qt they can now develop for Symbian and MeeGo - and add at least one, preferrably several other platforms! Ie develop using Qt tools and publish on Android and bada and whatever...

Have some testimonials and stats that it takes X hours to develop on Symbian, Y hours on iPhone, X hours on Andorid, but only W hours to develop using Qt, that kind of comparison. Suddenly all who develop, want to learn more about Qt.

Then take the war to the platforms, talk about how many developers Nokia already has, and count all Symbian developers and MeeGo and Qt developers. Then switch to Ovi

Talk about Ovi and give the latest number, could be something like 5.5 million downloads per day which would be 2 Billion downloads per year. Show the growth rate, how much more this is than 6 months ago, and 12 months ago. Don't mention the rivals, let the journalists find out. But release the REVENUE number, of how much Nokia developers have now earned via Ovi. Then mention they get carrier billing on x number of carriers/networks (should be something like 120 carriers by now) and say this is only on Ovi, and talk about other Ovi strengths like its international footprint, language versions, the typical Nokia local story.

Then talk about Nokia and the world - show how Nokia helps in Africa, the bicycle pedal-powered phone rechargers, the nice ultra-low cost phones for those markets, and mention Nokia's Greenpeace ratings, the feel-good stuff.

Then switch gears for the end. Show something radical for Nokia - a tablet would be the thing that all analysts would love. Make it an 8 inch device so its slightly smaller than Apple, but slightly bigger than Samsung haha.. This could run..even Microsoft Windows 7 haha, why not. Its not a phone. But it should have some of those things we all wanted on the iPad but didn't get. Make it the instantly desirable tablet.

And end on a bang. A stunning US industry love-fest. Announce his deal that AT&T is the launch customer for the E7 in America, which will ship on March 1, at 199 dollars subsidised, and they are starting to take pre-orders Monday, here are the specs... (and show off all the coolest things like the HD video recording camera, the 4 inch screen the QWERTY slider, etc etc etc). Then mention what other Nokia phones will also be carried. (obviously if not AT&T, then T-Mobile or Sprint or whoever, but one of the big 4, and am guessing not Verizon which now is focusing on the iPhone).

If he wants to be cheeky, he could show off an N8 for AT&T and say it is also available in white haha..

After his presentation, the audience has to have restored belief, that Symbian is back. Then to believe, that MeeGo is the best OS, and it makes sense why Nokia is sticking to it, but also, that the MeeGo ecosystem is wide and deep. Then that there is a really compelilng development tool Qt that supports not just both Nokia OS platforms, but also rival OS platforms. Then that Ovi is becoming a huge success. And that Nokia is back in phones, shipping cool phones now, and awesome phones shortly. And for US audiences, that he has a big carrier deal to get back in America.

It would not say Nokia is shifting to Android or Phone 7, but it would (should) be well received by US investors, that Nokia's strategy was right all along, and now Stephen Elop has a wonderful compelling vision for Nokia's future. A viable future where Nokia can differentiate and innovate. That is what I expect haha.. Lets see in a few hours.

PS for those who don't believe the MeeGo or Symbian strategy is viable, please read my analysis of Nokia's smartphone platform strategy here.