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« Big Milestones by Some of Our Faves: Angry Birds, Layar, Guardian etc | Main | Why Nokia OS Strategy is Right for Nokia, and shift to Android or Phone 7 would be madness (now) »

February 09, 2011

Comments

kibbles

i had posted a comment on this, and in it i mentioned denial. i also touched upon, in particular, Nokia has missed the boat on.

it seems my comment has been removed. interesting.

kibbles

btw, i did of course read this blog post in its entirety. i just disagree with the message coming from the words you wrote.

guess that makes me deletion fodder. delete away! but know that you cant delete *ideas*, and thats those ideas are what people come here to discuss.

(and yet, you keep the "you're an idiot" comments. interesting.

Hamranhansenhansen

Elop is from Microsoft … it makes sense that he would have a tenuous grasp on reality. Microsoft is not a Silicon Valley company, they are an entire Europe away in Washington state, where they spend all day talking to themselves in their own language. They are divorced from market forces by illegally-obtained monopolies. They have one successful 1980's product in Microsoft Office and one successful 1990's product in Microsoft Windows. In mobiles, their platform burnt up so long ago it is cold now. Why Nokia hired Elop is beyond me. I live in Silicon Valley, but I'm from Europe, and it always gets me down when I hear "Microsoft-Microsoft-Microsoft" from Europeans. It's Wal-Mart, OK? Nobody in Silicon Valley even uses their products.

As to the meat of the memo: the trend Nokia missed is software. Software above all else. Hardware is a picture frame today, and software is the picture. Hardware is as important today as a floppy disk in the 1980's, it is just a medium for software. Apple took away Nokia's high-end phone business and half their profits with one device that had a billion times more software on it than all Nokia devices combined. 300,000 apps beats 500 phone models. Apple did this to Sony earlier in the century with iPod, then did it to high-end PC's with the Intel Mac, then to Nokia with iPhone, and is doing it to the low-end PC market right now with iPad. They ship staggering amounts of sophisticated, high-end software. The best software of today and the last 40 years, going back to the original Unix. All of those times Nokia was opening software and giving away software, they should have been making software very aggressively. They should have been hiring software engineers, buying software companies, focusing on one Nokia OS platform, transforming into a software company that ships their software on 2-3 phones, same as a 20th century software company shipped on 3.5 inch floppy, CD, and DVD.

And your check list of feature firsts is meaningless, because if we grab 100 random Nokia phone users and 100 random Apple phone users right now, we will find maybe 3 Nokia users have all those features, while 97 Apple users will have them all, and the other 3 will see them and go out immediately and buy a new iPhone and get them. Therefore, when people want those features, they think "Apple!" Apple makes new features usable, and they make existing features usable. They didn't just make a music download service, they signed up all of the music publishers, so the user could drop the CD entirely. They get past the novelty stage. They make a feature practical and then improve it to essential.

I really believe in integrated software/hardware, and that does account for over 90% of the profits in mobiles, so I really hope to see Nokia become a software company, not a disk maker for Microsoft. Whether the memo is real or not, I do think Nokia has to jump into one or the other: become a software company, or become enslaved to one. We will see what Nokia chooses.


Gareth

This article summaries everything that is wrong with Nokia / at Nokia. They just don't get it / they are in denial.

Elop sounds like the medicine they need. I just hope they are not pinning themselves on Windows Phone 7. They should do that and Android. It's their only hope.

I used to work in marketing for Apple. I helped launch the iPhone 3GS, and the iPad. We had regular review and strategy meetings.

Here's the thing, Nokia. Apple don't consider you to be a competitor.

 Tomi T Ahonen

More comments

Hi gap, JC, E, Nemus, ht, Steve, keizka and Arun

gap - that sounds VERY compelling (MS Phone 7 to get US market). If the phone market was like the PC market, that would be perfect. But its not. The phone market - especially in the US market - is utterly controlled by the carriers/operators. Specifically a premium price phone will thrive or die based on whether the carriers are willing to subsidise the phone. Look at Google's Nexus One. This was not just a smartphone, a 'superphone' and had the hottest OS of the year, Android, when the Android market was not flooded by touch screen devices yet. If the carriers had subsidised Nexus One to 99 dollars or 199 dollars, it would be a top-selling phone in America now. They said no. Google tried to sell it bypassing the carriers. Two months later they shut the store down as a failure. This was the hottest new phone brand, with the hottest phone, on the hottest OS, by one of the biggest tech brands, who is an advertising juggernaut and in its home market. And it failed totally.

Not because of a bad OS or bad app store or bad user interface or bad design. Because the carriers boycotted Google's Nexus One (while subsidising rival phones). Nokia was once subsidised by the US carriers. That stopped in the middle of the past decade for a long list of reasons. Today all carriers in the USA boycott Nokia. Not because of a bad phone or OS or app store etc, because it is 'Nokia' - they are taking revenge for many battles that Nokia has had with the US carriers and they decided they'll give the business to the Koreans rather than Nokia..

With that, if Nokia now goes in with Phone 7, it offers nothing that the carriers want - they want Nokia to grovel and beg and plead and apologize until it hurts. Bringing in Steve Ballmer to 'convince' US carriers to play with Nokia will only infuriate them further. The only way Nokia gets back, is by not acting arrogantly, but apologizing and grovelling and begging, until they relent some day. At that point, it will matter not one iota what OS is on the phone, it will be the subsidy that determines is Nokia going to sell about as well as they do in Australia, UK, Canada, Mexico, New Zealand, Singapore, Ireland, Hong Kong, Philippines etc - countries that are very similar to the US in being English-speaking or else being neighbors of the USA (Mexico).. There is nothing unique about US consumers that would make them hate Nokia phones when the rest of the planet loves Nokia (in general, obviously recenlty Nokia love has not been that strong as in past years haha, I have written extensively what is wrong with Nokia on this blog)

JC - thanks. Actually the more I think about it, I believe it is 'mis-quoted' from what he originally said or wrote, an 'inaccurate' or incomplete record of what he said. Like the Apple market share, if someone 'omitted' accidentially or on purpose, the phrase 'in the US market' - the meaning totally changes. Yes, Apple has about 61% of the premium phone market in the US market! That would be totally true. Someone else, perhaps accidentially writing in a hurry or perhaps deliberately to make some point, removes that phrase and my alarm bells ring, wait a moment, no Nokia CEO would say this haha..

E - ok. Lets go to your points. your point a - LONG before there were ebooks, the first successful paid app on any mobile ecosystem was what? Games! Like on iPhones, like on Android, like on the world's first app store - NTT DoCoMo, and like on Nokia's own predecessor to Ovi, N-Gage's app store launched four years before the Apple iPhone App store. Nokia DID see this trend and was years ahead of it. They didn't make a good handset haha, but they had this trend and made all the right moves, including recruiting a big game developer community for N-Gage too.

b - ecosystem for payments? Did you know Nokia Money is in use in India for example? It is LIVE, has been for years now. There is your ecosystem and its again, years AHEAD of the others.

c - N-gage wrong again. After Nokia ended N-Gage it shifted their games to the Symbian app environment (that became Ovi later). I downloaded many games onto my N82 for example that were n-Gage games. They did this, exactly what you wanted, in their ecosystem and they did it years ago.

d - Ovi is a rebranding of Nokia's previous app environments. Nokia had tens of thousands of developers in October 2000 when I was quoted about it when I was still employed by Nokia. They were YEARS (almost a decade haha) ahead of this.

2 - it does sound very much like what a CEO would say, especially in a crisis and Nokia is indeed in a crisis, a huge one, and his points are all valid. Its the details which are so BLATANTLY false, that I cannot see him actually using those phrases. I think its either an accidential or deliberate alteration of what he said, maybe something has been edited out, or something changed later 'for emphasis' haha. Like the Canalys silly stat. No Nokia CEO would say that knowing from internal numbers that the other 3 analysts will not confirm it, and Nokia would look utterly silly spreading a false market share - that shows they've 'LOST' their lead haha, when it hasn't happened. But someone else, who saw the memo, and perhaps wanted to 'juice it up' when sending it to a journalist, may have added it, who is not seeing the internal numbers, and as this Canalys story got over 400 press mentions, it seemed very real and accurate. As it happens, I know these numbers by heart, I see immediately that it was a huge error...

haha then on your second list of actions - ouch, yes, that sounds very much like a new CEO on a mission to prove to the world in his first big position, that he can turn an ailing giant into a lean mean fighing machine haha, by painful cuts yes. Very likely we'll see lots of those things you list.

Nemus - yes, that also squares with the strange 'silence' from all sources at Nokia. Nobody anywhere has a scan or image of the original memo, nobody anywhere who has seen it has come forward under his/her own name. But there are several unconfirmed 'verifications' by the press.. Could be a clever PR ploy by the new kid on the block, eager to prove he is a master of the PR game (something Nokia has struggled with massively)

ht - good points and we mostly agree. On the US market option, please read what I wrote in the above..

Steve - and how exactly? Its a day already and over 450 press stories, and all major 24 hour news have covered it and nobody has one named Nokia exec who admits to it. Only unnamed sources. So its likely that is not true. Now, my calling around? Could I possibly confirm a non-story. No. Nobody (except Elop himself haha) could possibly say definitely that there is none, they could at best say, they haven't seen one, meaning I shoudl chase every name I have haha..

keizka - haha thanks

Arun - yeah, but no named contacts there either. Seen same at BBC, at FT, at SF Chronicle etc etc etc. Nobody has a name. It therefore is still not confirmed either way. Would not be the first time that the media has been duped - in particular where this originated all from ONE blog site. VERY suspicious.

Thank you all

Tomi Ahonen :-)

foljs

"""What trend is it that Nokia has supposedly missed. MISSED?"""

Em, all of the above "trends" can be regarded as missed by Nokia.

In none of those had Nokia any success.

Merely "doing it" doesn't count.

mark

*wipes tear* my god. it's been so long since I have seen someone actually analyze something on a blog.

reminds me of what the internet used to be, before everyone decided pageviews were more important than the truth.

Reuben

Excellent analysis Tomi, regardless of whether the memo is genuine or not.

Will you be attending MWC this year?

Sami

I read and re-read your blog entry.

Judging from your detailed analysis of Elop's alleged statements, I think Elop hit the nail on the head.

The bullet-by-bullet focused over-analysis by solid, experienced managers like you is exactly what got Nokia into the mess it is in. Perception matters, a lot. The same hubris that got it in the carrier-hell it is here in US, the same exasparated tone that doesn't match the words where you say to agree with the message. That is exactly why he is right. What has been clear from the outside - the fiefdoms, bureaucracy, indifference, lack of cohesive vision - must now be struck down from the top, with heavy price to the society in my home country.

I knew a few people at Nokia in my day, and there was no shortage of ego and arrogance among them. I remained a big fan of the product though starting from Cityman 900 and ending with the 8890, last one I was truly proud to own. After that I had one or two but slowly got sick of the lack of polish and care. Some beautiful pieces of hardware but lost in a sea of intentional mediocrity, all lacking clean cohesive user experience. I'm now posting this from an iPhone 4, a fully realized integrated product experience feature-counting Nokia still doesn't seem to get.

The one trend Nokia totally, utterly missed is that people care about the total experience. And dabbling with something with one product or another doesn't mean catching, riding or defining a trend.

Horace Dediu has written a lot of salient analysis on this. Everyone would be well served to read him on Asymco.

Friday is certainly going to be interesting and there will be a lot of resumes being updated in the coming weeks. I wish Nokia can pull it off, for my country. Even if the headquarters ends up here in Silicon Valley like some of the crazier rumors suggest.

KVA

Elop has provided a Microsoft-centric view of the competition. MS has, at least for the past 2 years or so, focussed only on beating iPhone. It is only lately that they have started focussing on beating Android as well. But MS has traditionally ignored the existence of Nokia, Samsung, Motorola, and Elop is just carrying this view forward. Hence this cannot be used to classify this memo as a fake.

that guy

I think Europeans are what's wrong with Nokia. Too much pride and arrogance in a market where perception is everything. I, for one, don't care whether the memo is real or not. I think it's spot on, from a consumer perspective point of view.

If Nokia is satisfied selling $50USD phones in third world countries (emerging markets, lol?) then they have the right strategy, but if they're aiming to build a brand that is representative of their respect egos then they have a long way to go.

It doesn't matter how innovative Nokia is/was in the past, and how they were market makers or ahead of the curve. It's been stated multiple times in the comments already, but quite simply put; arriving before a trend is actually worse than missing it entirely. They could have been the first to capitalize on the trend if only they had better execution or strategy.

MeeGo. Abandon it. Unless you really think Nokia dev teams are going to deliver higher quality software than real dev teams (at Microsoft/Google) you need to cut your losses. Leverage and partner with a real production house, know your role and make the hardware, it's not a bad life.

Hamranhansenhansen has nailed it. Completely and utterly understands the market and the direction things are going. Given that all hardware right now is built more or less equal, the community/software/culture are the ONLY variables in the mix. Nokia doesn't have the culture, community or software because they're a manufacturer, not a software house.

Ultimately, in my opinion, unless Nokia makes a strong move partnering with a software firm, they're finished.

 Tomi T Ahonen

More replies

Hi Jay, Murat, Ajit, keizka, cooli, Andrew, Bob

Jay - re BBC memo, see my previous comments. We still don't have a named person, only unnamed sources. That sounds fishy to me. It could be true, it is certainly not proven to be true.

Murat - see above

Ajit - see above

keizka - thanks, exactly!

cooli - haha! I missed that :-)

Andrew - and I missed that too. Yeah, they talk Euro at Nokia HQ, religiously. The 300 dollar comment seems very much like a different person talking, to the real Elop which no doubt is much of the memo, very similar to several other of his statements. But the 300 dollar Apple iPhone comment is a glaringly disconnected piece, like another person inserted something haha..

Bob - good points. And bear in mind, only one third of Nokia's income is from smartphones, another third is dumbphones and the final third is networking equipment. Google and Apple do not factor in any way in two thirds of Nokia's business. But yes, for all who may think I'm now delusional - remember I have said for years now, that ALL phones will become smartphones before this decade is done. So the trend is to smartphones haha..

Thank you all,

Tomi Ahonen :-)

 Tomi T Ahonen

More replies

Hi Jay, Murat, Ajit, keizka, cooli, Andrew, Bob

Jay - re BBC memo, see my previous comments. We still don't have a named person, only unnamed sources. That sounds fishy to me. It could be true, it is certainly not proven to be true.

Murat - see above

Ajit - see above

keizka - thanks, exactly!

cooli - haha! I missed that :-)

Andrew - and I missed that too. Yeah, they talk Euro at Nokia HQ, religiously. The 300 dollar comment seems very much like a different person talking, to the real Elop which no doubt is much of the memo, very similar to several other of his statements. But the 300 dollar Apple iPhone comment is a glaringly disconnected piece, like another person inserted something haha..

Bob - good points. And bear in mind, only one third of Nokia's income is from smartphones, another third is dumbphones and the final third is networking equipment. Google and Apple do not factor in any way in two thirds of Nokia's business. But yes, for all who may think I'm now delusional - remember I have said for years now, that ALL phones will become smartphones before this decade is done. So the trend is to smartphones haha..

Thank you all,

Tomi Ahonen :-)

Matti V.

Tomi, read the comment posted by: E.Casais | February 09, 2011 at 11:21 AM. I sincerely hope that you, a number of our country fellows, and Nokia religion fanatics out there will awake up for the reality and understand what is going on at Nokia. This memo is 100% genuine and Elop is absolutely right. He is no entrepreneur, he does not love Nokia but he loves to make its shareholders happy. Simple: if you want to make your shareholders happy, make them lots of money. AND go ahead and do whatever you can to increase the bottom line. Yes, bottom line means Profits. The last results were worrying. I am sure you reviewed and compared these results with, for example, Apple. Good that you did, so I don't have to brief you on that. At this stage, Nokia has no option but to reduce dramatically costs. I bet with you that this action will affect employees and business divisions which don't have a place in the company' strategy. After the company is shaped up (by removing the rust and burning oil engines), you will see the troops coming together again and focusing on a single mission: Connecting People! You are a smart guy and you will understand what I mean by stating this. It is not the end of Nokia, it is a new beginning for Nokia.

Simo

"BBC memo, see my previous comments. We still don't have a named person, only unnamed sources."

I assume you know how reliable media, like BBC works. They teach this in every Finnish primary school, so you should know it.

Media confirms their news from at least two sources before publishing it. The protection of sources is accorded to journalists under the laws of UK (and Finland, too).

Be a man and admit it: You were wrong!

Billy

Subtle xenophobia in your post.... Haters gotta hate!

Leejjon

I tried to find out on how to make JavaMe applications on Symbian but the more I look into it the more I see people saying Symbian is dead/dying.

This hoax doesn't really helps to motivate people to develop for Symbian either. It's like a huge group of people is trying to make it look dead. And Nokia isn't doing much effort on denying that this is true.

Don McLean

I find it interesting that lots of commenters see Nokia' problem is in the (wrong) platform strategy. While some others (whom I'd rather agree with) pointing out that it's poor execution and bureaucracy / corporate games.

Another point is that surrendering to (lets say) WP7 for North American market is not enough for Nokia. Because huge part of Nokia problem at this market is operators, and operators won't suddenly "forget" Nokia just because they (lets say) jumped on another bandwagon.

Ajit Jaokar

Hi Tomi
Here are my thoughts (cross posted from OpenGardens) original source including links at http://www.opengardensblog.futuretext.com/archives/2011/02/nokias-problems-and-inq-facebook-phone-on-android.html

In response to the Nokia memo, I am glad that finally reality seems to have dawned at Nokia .

While Tomi Ahonen and others have launched a passionate denial/ contradiction of the ideas in the memo, the reality is very simple ..

I do not mind if the memo is genuine, a blog, a rumour or a combination thereof.

The point is: The memo (if you can call it that ..) does encapsulate the problem .. which is

a) Lack of ecosystem management and dominance.


Google orchestrates the Android ecosystem.

Apple owns the iPhone ecosystem.

Nokia sells very large number of devices but it is no longer enough to JUST sell a large number of devices

What ecosystem does Nokia manage/dominate?

If not, can it be called a market leader?

b) The rate of change

c) Taking emerging markets for granted

So, related to above, the questions then become:

a) Can Nokia develop and dominate an ecosystem? and / or leverage existing ecosystems

b) Forget iPhone, consider Samsung which has (so far) managed the rate of change much better. Someone called it a ‘fast follower’. No matter what we call Samsung, they are managing to leverage mindshare

c) Refusal to acknowlegde the new manufacturers in India and China and hoping that these markets will be loyal for ever i.e. ignoring spice mobilility micromax, Olive telecom and others.

Now consider that today INQ announced the facebook phone .. on ADROID

lets read the back story behind this ..and the irony of a facebook phone on Google’s Android .. then think of the rate of change ..

I remember going to a Nokia booth at MWC last year and a woman showing me an idea of new Nokia services.

It was a ‘green’ service for travellers(reducing carbon footprint). As someone who travels extensively and a heavy user of mobile devices, in theory, I am an ideal target user of the service

But to get it, I had to get a Nokia id and a nokia phone.

I told her that there are OTHER ways to get that service and I added that as a traveller the most imp site for me is time and date but she rattled on on a pre scripted manner about how great this new green service was if ONLY I switched to Nokia ..

That’s basically completely missing the point(that I, as a customer have an option and that the reducing carbon footprint service can be obtained from many different ways)

And in my view, apps are a long tail service .. and most customers are now defining what they want in a much more granular way

Now this bring us to facebook phone ..

when I talked of mobile web 2.0 I often said that it should be called ‘web mobile 2.0′ i.e. web drives the agenda

Thats why facebook phone is more important.

Its the service which customers want ..

So, finally glad that someone(at the top) in Nokia has woken up to a new reality that the dynamics of the market itself have changed completely! and old style strategies and approaches will not work

In April 2008, I posted a blog based on a talk called The ASUS effect : Mobile innovation triggered by open source, long tail devices and a shift in the device value chain

That has been highly prophetic .. although I framed it in context of Linux and not android .. the principles are the same ..

Open source introduces a MUCH higher rate of change .. that explains Android success and Facebook phone on Android .. and on the other hand we have the iPhone

Think about it: A young person(a traditional Nokia demographic) goes to a phone shop

They have two choices – a Nokia phone OR a Facebook Android phone

Which will they choose?

Will it matter that its an Android phone? Its the same analogy with me at the MWC Nokia booth ..

In any case, lets wait and see what happens now ..

flex

bright brillant post. well done.

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