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« Timing? Why did Stephen Elop announce Microsoft in February when first phones take a year more? | Main | The real numbers for Nokia Q1 are hidden under China sugar-coating »

June 03, 2011

Comments

John

Vikram nailed it with the usability. Marketing and usability make the device. Not whether it can stereo bluetooth voice dial while copying and pasting. If a device can do 90% of a users tasks in an easy and enjoyable way a general user will pick that device. General users are willing to sacrifice missing a few extra features for an overall pleasant experience.

As a Nokia fan I don't believe Elop is delusional. It's becoming clearer to me that many Nokia fans themselves are delusional; believing that features make the phone and that it's simple to overhaul the UI for Symbian. Nokia cannot survive by updating an historic Symbian codebase and it's clear. How long has it taken Nokia to bring the Anna update to my N8? Six to nine months? And what innovative functionality will this bring? An slighly less poor browser, a portrait QWERTY keyboard and rounded icons. There becomes a point when an OS has too much legacy code where it takes too long to develop even the simplest fixes. Elop objectively saw this and looked for alternatives. If the Nokia developers had made further progress with Meego that would have been an option but even now it still isn't ready for prime time.

The delusions at Nokia have existed long before Elop arrived. Fortunately for them I think he made some tough decisions that will turn the company around.

Tomi T Ahonen

Hi Heimo, khim, don, Omar, Blender and Peter

(and I deleted two comments by people who had not read the full blog)

Heimo - good points, and we TOTALLY agree. Nokia's problems that drove high profits into dangerously low profits in the past few years were - execution and a compelling user experience (one could say marketing, in the broad sense of the word). I totally agree. That has nothing to do with where the phones are designed, it has nothing to do with who made the operating system, how the Ovi store or Symbian or eco-system is doing - and there was no platform on fire. In fact we can see from Symbian S^3, Ovi and MeeGo by February - that Nokia's platforms were VERY strong. But Elop should have focused on execution and marketing, he decided he'd rather set his strong platforms on fire because its more fun to do the thing with Microsoft than fix Nokia's internal execution problems and marketing issues, which are more hard work...

khim - first, if you agree with Heimo then you agree Nokia's problems were in execution, not in the platform or who owns the leadership..

Then you make a bizarre statement that Japan did not innovate because it didn't happen to export something to other countries? What kind of messed-up logic is that? So. The USA did not participate in the space race, did not innovate with the first re-usable 'space plane' when NASA launched the Space Shuttle? Because by your definition, because the Shuttle was not sold to Britain and Belgium and Botswana, its not relevant in space innovation? What a bogus definition. Sorry, thats enough for your silly comment. Please come back with something sensible, I will keep your comment, I would enjoy an adult discussion with you later.

don - for all my rant, Nokia is nowhere near dead yet. It is possible that the Microsoft alliance does pay off - I doubt it, but it is possible. It is ALSO possible that he has a secret plan (think of Apple's Steve Jobs with iPod and iTunes, who expected a computer maker to try to sell consumer electronics). Nokia is not even nearly dead yet. But they are on a very bad path, as they lose profits, EVERYTHING becomes a very hard struggle, and most of current Nokia staff have not lived that life in their careers. Should ask Motorola colleagues what its like to ask for project support from your boss when the company is doing perpetual losses...

About Elop, brilliant point. I've kind of observed it, but I've not thought it through and that it should be mentioned - he does sound like he's still working for Microsoft! If he was 'serious' about being Nokia's CEO, you'd expect him to force himself to sound like one, and avoid the MS references and that which so often slips into his speeches.. Great observation and it is curious. I saw for example my former colleague and dear dear friend Lauri Kivinen who left Nokia to become CEO of Finland's national TV broadcaster YLE (think of it as the BBC of Finland) - and he was giving one of his first presentations at a conference. He made a conscious effort to avoid any kind of mobile telecoms-related stuff or anything of his rich Nokia background.. We could tell, that he's so new to TV, that he was not yet 'fluent' in the television lingo, but he clearly avoided any references to his 'Nokia' past.. That was smart, instant credibility, while yes, Elop sounds like a Microsoft Muppet on stage haha..

Omar, excellent, excellent comments, thanks! You were posting the comment right as I was adding the eco-system part to the blog (I had forgotten it, it hit me today as I was on lunch, and rushed back to the blog to add a couple of paragraphs - it is about mid-page under sub header ECO ECO ECO ECO). We agree! The eco-system is IMPORTANT in the discussion but there - more than anything else actually - the contrast is most obvious of how Nokia was on the 'better' path, and its future with MeeGo was far more 'eco-system' thinking than either Apple today, or Microsoft for Nokia in the future. Excellent points, we agree, please go read how I dealt with it in the revision.

Blender - great points and especially yes about S^4. What a shame!

Peter - wow, I didn't know that! THANKS! I have to add it to the story and also tweet about it. THANK YOU!

Thank you all for the comments and please keep them coming

Tomi Ahonen :-)

Christian

You write that the bestselling phone brands in the USA are not American. That's correct.
But if you agree with the statement that "the game has changed from a battle of devices to a war of ecosystems" then you can clearly see who own and lead those ecosystems, Apple and Google. And those are American companies.
Those two companies are leading the platform game, and have the leadership on what it is coming in the mobile space, with services and software.

Louis

I read through this and don't really buy the story.

(1) Who is the leader is easy to see: look at who has followers. This is clearly Apple and Google, whose platforms all the app companies you reel off are working on. Not who had some checklist feature nobody could figure out how to use in 20xx.

(2) You neglect the Apple innovation in business model: prying (some) control away from the operators and having a direct relationship with the customer. If Nokia tanked in the US because of bad operator relationships, that means its business model had a huge hole: needing to please operators. Inability to sell another way basically dooms it in the tablet market.

(3) Does anybody take the MeeGo story seriously any more?

Magnus

Tomi, you might want to check this link out before tweeting about Peter's link:

http://www.appleinsider.com/articles/11/04/19/android_fans_accuse_apple_of_copying_samsung_first/

It gives a bit more background, and paints a different picture.

/M

sams0n1te

Your writing is definitely done with passion and there really depth in these pieces. On the other hand more than once I agree with your observation on effect and dissagree with cause.

After q1/2010 earnings report Kalle Isokallio, former nokia exec, said: As I see it the iPhone has great browser but is lousy phone, but nokia has excelent phones but their browser is lacking. In my opion it is far easier to develop better browser than it is to develop great phone. Observation is so precise and conclusion is so flawed. He is observing the change in one sentence and somehow able to miss the whole point. Although Isokallio actually was not part of the growth in any meaningful way, I think he but to words what some Nokia execs were feeling. Probably even you Tommi thought this way. And somehow I think these writings in essence are summarised in Isokallios sentence.

I do think that Elop is right in his major points. Leadership and management is what failed in nokia, not the engineering stuff. The seeds to destruction was laid to groud in the first battle of the mobile phones. Ericsson, siemens and etc were struck down by greating new phone after other. They were not different from each other but they were announced so frequently that no other company colud follow. Like in all great tragedies the glorious win had the seeds of destruction buried within. Nokia was building phones not platform. It was ok that the reply button was in totally different places in two phones althought they were announced at the same time.

At the highest points of success the power was taken from engineering stuff and given to financial people and lawyers. So N95 was the last phone were nokia but all their knowledge to single flagship model. After that started branding, segmentation and organization restructuring. Models were made with no sense at all. Many models but none of them had reasonable combination of features. N series had decent mediaplayer but lousy email. E-series had decent email but lacking in multimedia. Some had good camera but slow data etc. They branded and segmented for different user groups. To whom i am not sure.

Sometimes it felt that models were announced to keep financial analytics happy.

And to give them more happiness CDMA development was stopped. There were the view that US markets has no meaning. That was just plain idiotic. And this is something Tommi you often fail to recognice. Like or not US is the largest economy. There is no way that any service or device can succeed without US market. If you ignore us, they will develop somenthing. And because nokia left the vacuum was greated, And in that vacuum android found nice place to grow and in the future it would have destroyed the house of cards that was Nokia, without change.

Tragically there was a warning for nokia in form of Motorola Razr. But was something learned from that little bump. No. Nada.

Like you Tommi, nokia kept looking iphone like a toy. Not understanding the depth of change. They kept showing their chart, we have all these features. Have had these years. But it was not the same. It might be just perception, it might not be fair or right. But the fact is that nokia has been if not dropping then at least slowing in the business that is exploding. You keep refering Ovi store to andoid or iOS, but believe me it is not the same.

It is easy to try to prove that one is right. But election has been made. It would be nice to see if you could try predict and analyse how this chage could be turned to victory. It might be against what you believe but these are the cards right noe.It is Finnish heritage to cry like wolf to loss and then turn his back to past and create new from what you got.

Nuno Pereira

Ok, don't really know how i made it to the end, but i did it. Even if the blogpost didn't help me get more info on telco's, atleast my English is a bit better. :D

Now, regarding the blog:

I honestly think you're missing "the big picture" here..

Starting with Elop aiming to the American market, or American dev's, or American designers:
-Nokia needs an Ecosystem. Android is crowded, iOS is "blocked", and the only left is Windows. So, Elop made the right move, Microsoft. (even i now can see that Meego/Symbian combo won't go anywhere in the next couple of years. I love Maemo, hate Meego [for now], and Symbian will always be symbian for me, but Meego/Symbian is, IMO, a 2016 or later event.)

-Nokia needs to captivate dev's: You can point towards Rovio as much as you want, or you can mention Shazam.. The thruth is that Angry Birds or Shazam or any other "quality" developer has its best products on iOS and Android, but almost never in Symbian, but even if they do have them in Symbian (that's why i've chosen Shazam and Rovio), they a)suck; b)are incomplete or c)get updated too late. Symbian was never the priority.
Also, if you look at the USA, you'll see that every startup has an app on Android and iOS (mostly), and ocasionally on BB/etc, but never on Symbian.
Another example of how bad is this part of "Nokia's Ecosystem" is that even those working with Nokia simply ignore Symbian... Reminds me of Poynt (http://twitter.com/#!/Poynt), untill yesterday their twitter profile stated availability for every platform except Nokia, but the app is there since 21st March. If it was iOS, the updat would be immediate). Curiously, they're participating on the "Calling all innovators" contest, from Nokia...

-American Designers: This is where it gets weird for me.. Isn't it possible that Elop is only trying to sell his fish with this statement? Trying to convince everyone it will be an All American Phone? Trying to bump the thrust on this move towards Microsoft? It makes no sense to me, but maybe makes sense to him (or someone better informed).. Anyway, i don't belieave (or don't want to) we'll see a Nokia phone designed in the USA..

So, considering what's being said by Elop, he's been very consistent with his words, and he belieaves (or appears to) in his speech, and his vision (Eccosystem) makes sense to me... (even if it only means we'll never have to get back to lowsy PCSuit/OviSuite).. lol


And btw, don't ever say that SMART cars are cheap (or a cheap solution)... Those are overpriced cars in every way. For the price of a basic SMART, one can buy a *real* cheap car that has double the equipment and 4x safety. (Talking Renault here, but could be any French brand). Also, by cheap one assumes maintenance custs, and you should know that SMART's maintenance/repair is priced at the same level as VW or worse..

Anyway, thank's for the blogpost (and no thank's for being so long :p)!

sw

The innovation in mobile here in the US is more about software than hardware.

-S

Almonas

Would it be possible, that Nokia is currently working on several different phones, each one tailor-made for every significant market by the different teams (in USA, Europe, Asia etc)? This would put Elops words into perspective. Nokia is certainly big enough to afford this.

I think it is currently simply impossible to design a mobile phone which would be an universal hit all
over the world. The markets and consumer preferences are just too different. Something considered great innovation in one part of the world could be seen just as strange irrelevant curiosity in another. So, the manufacturers need to differentiate between different markets.

But I am afraid, the WP is not the easiest platform in this regard. With its strictly limited selection of chassis and UI...

Asko

It is interesting that Elop is saying Nokia's Windows Phone will be designed in California for US customers because that is not true. Last week Nokia told that the first Windows Phones are designed and manufactured by Comptal Communications from Taiwan.

I suspect this is because it will take at least two years for Nokia to do its own Windows Phone as it has always taken for Nokia to design and manufacture a new phone. And now Nokia also has challenge that all its suppliers will also change because Windows Phone and Symbian uses different chipsets and components. And more so if the design team is also totally new. There really isn't anything that Nokia can be reuse from the old phones, components, designs, softwares, and processes.

JC

Tomi,

I think you're losing your grip...

In order to "prove" your point that the US isn't the center of the smartphone world, you say:

In smartphones, the bestselling smartphone is Apple’s iPhone (of the USA). Number 2 is Samsung (South Korea). Number 3 is HTC (of Taiwan). Number 4 is RIM ie Blackberry (of Canada).

What you neglect to mention, and what's vitally important, is that Samsung and HTC are building smartphones with Android, which is provided by Google.

An American (NA) company. The same as RIM, for that matter.

chrismaurice

I agree with you Stephen Elop is Delusional. He said "Samsung and HTC need to sell many Windows Phone 7 handset", it is not what the Nokia CEO must say. He is not Microsoft CEO. And Samsung will be very happy to push Android further, Nokia difficulty is so good for them. Giving the navteq technology to Microsoft is another stupid movement. Praising Skype for Windows Phone is another PR nightmare. He said Nokia is the most carrier friendly handset maker and he spoke of Skype like a great asset.

He do a Gerald Ratner with the memo and give us some osbourne effect after with the timing of the annoucement. One of the dumbest move a CEO have ever done in history. Killing the milk cow with no replacement for a long time...

http://www.reuters.com/article/2011/06/01/us-nokia-idUSTRE7504XV20110601

"In a sign of worse to come, mobile operators in Europe told Reuters that Nokia's new Symbian phones -- a stopgap until the end of the year -- were of little interest."

"Operators are not going to be prepared to subsidize handsets where they don't see demand," said Milanesi.

"A spokeswoman for Telekom Austria, which is offering the E7 in all the countries in which it operates but not the X7, said: "In general, Nokia handsets in the ultra-low cost area are still interesting devices for our customers, but in the smartphone space we can ignore them for the moment."

He burns the platform and comeback from a single digit market will be difficult and he had no experience in the telco and maybe he don't know where big failure leads in this industry:

http://www.asymco.com/2011/06/02/does-the-phone-market-forgive-failure/

Many handet maker give up in mobile market... I hope Nokia will not be the next one... And he only said 2011 will be difficult but 2012 will be very difficult with many segment of the market not filled by Symbian phone before the complete transition.

Derek Kerton

Tomi,

I agree with Elop much more than you.

I could only make it through about 1/4 of this, not because it is long, but because it is so wrong.

America "doesn't dominate the smartphone space" the same way Microsoft didn't dominate the PC space. Yeah. It was all those Asian PC hardware makers that dominated the PC space, which explains why they made all the money and MSFT languished, right? You seem to define leadership as "making the hardware", but you should have learned that is wrong by 2011, preferably 1995.

If being the commoditized hardware vendor is the way to "dominate" in your lexicon, I'd rather be the insignificant OS maker. The fact that manufacturing takes place in Asia versus the US is not about the mobile phone industry, but about manufacturing and the prices of key inputs. It is about Comparative Advantage, and general Economics, not about winning the smartphone market.

While the Asians continue to make the hardware, did you not notice that Qualcomm, TI, Nvidia, Google, Apple, MSFT, HP, etc. are still designing and owning a larger and larger share of the IP? There is delusion taking place here, of that you are correct.

If being the first with an innovation (say touch screen) is more important that being first to integrate it in a product in a significant and delightful way, then yeah, Nokia remains a world leader and Symbian is awesome. If UX matters at all...well, then the opposite.

You wrote about how Google failed with the Nexus One. Really, you must have completely misunderstood the market impact of the N1. It had two roles. #1 was to start Direct-to-Consumer sales of mobile phones as a larger trend, and it failed. Role #2 was to push all the other hardware providers (and the carriers that subsidize phones) to raise the level of hardware of Android phones to a level that could compete with iPhone. Mission Accomplished, big time. You have the delusional ability to say Google failed? Out of nowhere, have they not carved out an impressive sustainable revenue opportunity in the mobile space? I'm sure you've seen the OS shipment numbers, so I won't even go there.

I'm in California, and I'm loving being at the center of it all, for a change. It was tough going here in the mobile industry at the turn of the century. Japan and Korea were forging ahead, Nokia was pumping out great hardware, and we were here debating whether color screens made sense for the domestic market. Well, today, the nexus has shifted. Lose *your* delusion and come to terms with it. I welcome any EU or other innovation that would shift the focus elsewhere, but it'll never shift back if you keep your head in the sand like this.

Derek Kerton.

chrismaurice

Windows Phone 7 is not the problem. The timing of the announcement and the strategy of transition is not good at all.Nokia will be the fourth or fifth handset maker in Q4 2011. From the Reuteurs article about ZTE:

"A spokeswoman for Deutsche Telekom in Germany said its T-Mobile unit would be launching the X7 in four weeks' time, but not the E6.

Like T-Mobile in the UK, she welcomed the advent of Android-based smartphones from Chinese vendors such as ZTE, which makes phones for operators to put their own brand on, as well as ZTE-branded phones.

"The challenge we see with Nokia is that the Symbian phones are quite expensive," she said. "ZTE has an advantage as they offer smartphones that are less pricey.

Next year before the end of the transition, I bet on ZTE for taking the place of Nokia into the Top 5 of handset maker...

Jim Karras

I have to agree, that it's not about the features on a smartphone per se, or who had them 'first'.

Smartphones moved on from being all about hardware, to being about the perfect marriage of software and hardware, with an emphasis on the software.

It brings to mind a saying: having the biggest bazooka doesn't matter if you can't find the trigger.

Houman

Just finished reading the whole 12000 words and I just can say that it can be true. However, I also think that you are so optimistic Tomi. I believe Elop is not DELUSIONAL. He is a a Trojan Horse appointed by Microsoft to destroy Nokia's market share and prepare it for the acquisition. He would have choice to introduce Nokia's Windows Phone smartphone after preparing the first phone and until then Nokia had the opportunity to sell its Symbian and MeeGo phones. I cannot believe how Nokia expect customers to buy its current products while the FIRST person in the company believes they are far behind the competitors'phones!
He is definitely a Trojan Horse nothing else.

TT

In order for a phone brand to be successful and relevant it needs to have the buzz and the mindshare within the critical mass, which requires a great product but also a constant activity in tech blogs and mainstream media (which gets its tech content from these blogs).

It also needs a healthy app marketplace with a variety of developers supporting your system.

Now:
where in the world are most of the developers: in US West Coast
where in the world are most of the relevant tech media: in US West Coast
where in the world are lot of venture capital companies that make the above two possible: in US West Coast

So, in order to be relevant in today's phone world you absolutely need to be relevant in US West Coast and in that sense Elop's thinking is correct. Just because Angry Birds was developed in Finland doesn't yet Finland a mover in the app developing world make.

Nokia did a lot of innovation and was able to sell phones until someone else did the same better.
Japan did a lot of innovation and yet the population is crazy after Apple's products.

LG, Samsung etc sell tons of phones but with US West Coast developed OS, making them the companies who only puts the plastic around it (in fact, a route, which Nokia seems to be taking now as well).

The argument of who invented this and that doesn't matter if the company is unable to utilise them so that people know about them and want them. Whether US is the leader in mobile doesn't matter. What matters is that they are able to provide the ecosystem that can make a mobile company successful worldwide.

Nick

I think the term delusional is a bit harsh, still though I cannot understand the real Elop's agenda, at the moment it seems that he is trying to pull Nokia behind MS, and I cannot see why this is good for Nokia. I am pretty sure Nokia has a strong innovation/patent portfolio, but that does not mean much if you cannot materialise and deliver those ideas to people. Over that past few years IMHO Nokia failed to deliver both in terms of h/w and s/w, and this combination is bad.

Nokia's h/w is not cutting edge, (640x360 resolution, insist on resistive screens, low contrast display, slower CPU, no GPU, small memory) are limiting factors to run a flawlessly UX today. Materials, reliability, design, other features are still top.

Similarly in OS they got confused and fragmented their OS S^3, S^4, Meamo5 MeaGo. Was it almost there but not quite yet? was it that difficult to fix it?

I do think their Qt approach to support both platforms Symbian/MeeGo was the right one with very good potential. Their OVI eco system I think it was getting momentum and winning. Nokia Maps was also a winning card that is working brilliantly and could had been easily integrated in many applications. Understandable such features are not always welcomed from carriers and Nokia had difficulty not only in US but also in Europe I think.

Anyway, it seems that none of those could be worth fixing or good enough for Elop and he decided to abandon it, still does not make sense to me.


nalle_puh

Whoops, posted comment to wrong article... this is where I wanted it to go :)

1. Note that Elop said this in the US, which makes it clear it wants to please US ears. Here is your phone, designed by you, for you, running your OS. That doesn't mean it's meant for the world OR that Nokia gave up on the world. Flattery will go a long way, even if you don't really mean it.

2. Google is doing the same, selling Android as 'American' and motor of US innovation. You can see in the comments that people don't care who actually made the devices. This is also a vulnerability, as those manufacturers can cut off Android at the legs if suddenly a competing platform offers them better profits, just as they did with Symbian (yes, plenty of today's big Android manufacturers used to be in the Symbian camp, and something similar almost killed Moto - how quickly people forget). The US benefiting from Android is correlational, in fact Android, even by Google's own admission, is around breakeven or slightly in the plus. ALL the money and revenue is happening at the carriers and manufacturers. They might not be earning much, but Android spun them up, and helped them build supply chains and volume. Note that those things come handy REGARDLESS of your plaform.

3. You are missing the Qt piece of the puzzle. The desktop business is sold but Nokia shows no intention giving up on it in the mobile segment, on the contrary, you could see on the MeeGo summit that it's more alive than ever, Qt5 and QtQuick delivering a level of performance and candy in an _OS independent manner_. I don't think they just 'forgot' to sell it or ramp it down. Speculations welcome.

Azazello

Epic post with tremendous factual/historical backing, but:
The very choice by Nokia's leadership to bring in a U.S. software engineer—and not a hardware guy—(tacitly) fits with Elop's "delusional" claim: it is the integrating software and user experience ("designed in California" as in iOS and Android) and not the introduction of various features or specs that matter. So it is irrelevant who builds the hardware and where (South Korea or Japan or Taiwan). I would even venture that by bringing him on board was in anticipation to form a partnership with Microsoft.

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