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« The Ten Million Dollar Man - Stephen Elop Costs Nokia 10 Million Dollars More of Lost Profit - Every Day He Remains as CEO of Nokia | Main | LG Q2 Results: Smartphone sales 5.4M edges past SonyEricsson for 6th biggest »

July 27, 2011



@Baron95, of course, it is 211 that cause sales deeply collapsed.

Chinese distributors/resellers simply refused to order all nokia phones. Thats why htc/samsung/apple all have a sudden surge in Chinese market.

211 to nokia is absolutely 911 to us.

Elop is simply the terrorist that has caused nokia $100B loss and $10M loss each day as Tomi calculated.

Elop has to be tried/fired/put into jail without bail out.


Baron95 becomes simply a virus on your board. He is a short seller or more correctly naked short seller.

Best way to handle naked short seller is to announce exit from NY stock market which will force Baron95 and his boss to cover what they ever sold but never owned shares.

Quick fix of nokia financial status is:
1. Fire Elop
2. Exit NY stock Market

Your will see NOK share shoots to the moon immediately.


Apps do NOT equal an ecosystem. Apps were the story of 2009/2010, that battle is done. Ecosytems consist of services and content: music, movies, maps, games, books, calendars, contact management, search, etc. Ecosystems span devices: phones, computers, tablets, and set top boxes. Ecosystems are sticky, once you join an ecosystem, it's difficult to switch to devices that are not compatible with that ecosystem. You could build the world's greatest smartphone, but if it cannot connect to a meaningful set of services it will go nowhere (see Palm, and soon RIM and Meego).


400K developers to produce 50K apps? Does not sound like a vibrant developer community to me...


"Nokia's Symbian developer community is massive. 400,000 strong. It is by far the biggest developer community of any mobile platform"
--> This sentence, hmm I have to say that you were daydreaming too much Tomi.

@Peter: Did you find a good lawyer to sue Elop? First, sue Baron95 first. You can ask Tomi for some helps ;-)


Baron95 is so far off the mark it's not even funny.

Nokia's story BEFORE Elop is CLASSIC story of market disruption.

Innovator's Dilemma lists LOTS of examples, but I'll use the most striking one: hydraulic excavators. It's striking because the whole story tool FIFTY years! FIFTY! And yet "knowledgeable" companies with "early understanding" and "perfect strategy" were defeated (most of them went defunct).

The story started in 1950th. First hydraulic excavators were tiny machines incapable of lifting more then ¼ cubic yards per scoop. And they had reach of just six feet. These devices were totally unsuitable as replacements for conventional excavators (general contractors demanded 2½ cubic yards per scoop and even piping contractors wanted at least 1 cubic yard per scoop). Thus when "the most enlightened" leading producer (Bucyrus-Erie) "seen writing on the wall" and tried to produce hydraulic excavator... it was unable to do that: it's Hydrohoe was hybrid model because hydraulic was just not capable enough to produce anything suitable for it's customers! They tried to improve it for years - to no avail. And of course said hybrid not all that successful: it was Frankenstein which combined problems of both sides. But since it was just a side venture designed to cover one single niche it was not all that important, right?

Newcomers (like Caterpillar) never even tried to introduce models as advanced as Hydrohoe! They produced tiny models and sold them to NEW customers. And they improved them. Eventually they reached the stage when hydraulic was able to replace cables in most (but not yet all) places - but it took over FIFTY years.

Have Bucyrus managed to introduce successful hydraulic model? Well, yes, it did. Eventually. Yet there are no "happy end" in this story: it took years and eventually Caterpillar bought Bucyrus.

Situation with smartphones are similar: iPhone and current Android phones are built around touchscreed and are in fact small "internet tablets". The category NOKIA INVENTED back in 2005. Yet Nokia "always knew" it's bad idea to try to push internet tablet as a phone: poor battery life, no physical keys to quickly dial numbers, etc. Thus Apple opened new "superphones" category in 2007 with iPhone, while Nokia continued to polish their internet tablets.

Why Nokia was unable to invent anything like iPhone? They had all the ingredients. Well, sure, but... they NEEDED a model with long battery life, easy texting, etc. And they perceived that it'll be possible to create something like this in about 10 years. There are no evidence that they were behind THAT schedule. And this is tragedy of disruptive changes. Incumbents CAN NOT invent anything to fight disruptors. Not because they have less imagination or because their engineers are second class. But they work on different (albeit adjacent) market! They can not introduce 1GHz phone in the beginning of 2010. Battery life will be so obviously bad that their supplier (Texas Instruments) does not even have anything like that in their roadmap for that year! And their engineers scoff at the very idea! And their customers don't want to buy these "energy vampires"!

That's WHY Nokia had "trouble with execution". They tried to solve DIFFERENT PROBLEM. NOONE was able to solve it in 2010. Apple, Google, HTC and others just decided not to care - easy for newcomers, while Motorola and Samsung just accepted that people wanted "something strange" (Samsung continued to develop traditional smartphones using Bada because not everyone want these "energy vampires").

That's what makes it management problem: this problem had no engineering solution. If you want to offer competitive "superphone" which is good "smartphone" as well, then the answer (and thus is CORRECT answer) is: we need to wait few more years. This is NOT the answer you want if you want to sell a competitive product, but this is THE ONLY answer you can get from your engineers. And if it's the only answer you have then you need to keep existing market for as long as possible (this is what OPK did).

This partially explain why this all hoopla with MeeGo happened: if "we need to wait few more years" then surely we have the ability to form a new alliance, etc. Nope: you DON'T have such luxury. The main battle happens today, right now, you can not postpone it. By the time you'll have good "superphone" which is good smartphone as well the outcome of the battle is already decided. And this is EXACTLY what happened: N9 is good first shot (will probably need few more iterations to make it real good), but it's late, oh so very late. But it's late NOT because Nokia's engineers are stupid or don't have these "Silicon Valley ingredients". It's late because it was not possible to do something like Nokia wanted before. Note: what Nokia WANTED, not what it NEEDED.

Nokia, like Tomi just can not forget all the dumb phones conversions, 3rd world and so on - and they continue to try to produce phone which will cover ALL the bases... instead of grabbing market share with imperfect "energy vampires" like HTC or Samsung are doing.

Now, enter Elop. Instead of trying to stage "smooth transition"... which leads to nowhere he stages the revolution. Well, it's good strategy but you must make sure fallout from said revolution will not kill your obsolete platform till it's ready to be replaced! This is hard, this required a lot of tapdancing from the CEO. And THIS is where Elop failed spectacularly. This is what turned slow market loss to free-fall and is killing Nokia.



Yes, we would like to hear your answer regarding Baron95's comment:
"Nothing in your analysis explains why Samsung, Motorola, LG, SE abandoned Symbian (and didn't join Nokia on Meego), choosing instead to go emerging American OSes (WP and Android)".

Please provide us your objective (high) mind...

Tomi T Ahonen

Wow. So many comments. Thanks!

I love the intelligent discussion we have here with so many, including many of our regular readers. I will return, as always, with directed comments to all. I am running quite behind on responses still due to several recent blogs that got big comment streams, but I will. And please keep the discussion going. I am doing the next part to this saga shortly (am trying to edit it down right now). I think you'll enjoy that too haha..

Thanks, keep the comments coming

Tomi Ahonen :-)

Sander van der Wal

Tomi, how on earth can you say that Nokia has the best developer ecosystem? I am not going over the technical mistakes you made on Symbian, done that already.

Before Apple had even announced the iPhone, let alone introduced the SDK and the App Store, the native app market on all mobile platforms was in shambles.

Piracy was rampant, and it was very easy for pirates to upload cracked versions of Symbian apps to Nokia's own download site, Mosh. If you mentioned that to Nokia, you had to fill in all kinds of paperwork to prove that the app was really yours. And at the same time that app was Symbian Signed, which meant that the identity of the copyright holder was embedded in the app, even the cracked one. Developers called that idiocy "Killing all Innovators". See, money quote from that article:
So just as Nokia was seeing its base lured by the sexier and more lucrative promises of the Apple application store*, it was hosting a huge repository of S60 warez - sending a clear message to its community that it needed anonymous freetards more than it needed loyal developers. Nice one!


Good one Sander. Over all Nokia has dreadful reputation (well earned) with regard to dealing with clients. And Apple very good - which is total bollocks. They are excellent in USA but in rest of the world (with single exceptions in Western Europe) they are treating people like crap.

But this reputation is so good that even people in Eastern Europe are choosing Apple because they think they will be treated like kings because 'it says so' on US blogs.

It's all about perception folks.


There are quite a few comments here criticizing Tomi's post, arguing about "ecosystems", market share, etc. However, not a *single* one of those critical comments nor the harshest Nokia/Symbian critic here even begins to touch on one of the most disturbing facts, namely why Elop is seemingly so set on killing the N9 despite all the rave reviews; that fact alone is quite revealing and should make everyone stop and think before posting.

Tomi T Ahonen

Ok lets do some comments

Hi ARJ, gzost, peter, Matt, Bob, james, John and Paul

ARJ - thanks. I should have mentioned yes, was designed for netbooks

gzost - come on, the battle of ecosystems is not about what the consumer thinks. That is the battle of marketing, loyalty, churn. Ecosystems live and die often totally without the audience even knowing. A virus doesn't ask for our acceptance as it spreads. That is utterly a bogus argument to count what the consumer thinks, if the measure is viability of an ecosystem. What the ecosystem DOES (which includes the downloads of those consumers and their payments etc) is what matters. And by that measure, 2.5 Billion downloads per year, Nokia is doing a millinon miles better than say, Windows haha

On your second point, yes, the better the store is, the easier it is for the customer. And Apple again at this like so many user facing things, is the master. And then the others copy Apple and shrink the gap between them. So the others learn from Apple and make their better. Ovi was horrid at the start, and was closing the gap to Apple by Q4 of last year (until Elop started to kill it this year). But nonetheless, Ovi has just like Apple, an independent Nokia store. Apple does NOT have, what Ovi has, carrier billing. So, on one score we can compare. On the other score its total victory to Nokia. To me on that score Nokia is again the better ecosystem as it has more choice on this matter.

Matt - no analogy is perfect. For example Toyota is not twice as big as its nearest rivals and didn't invent the car, etc etc etc. And yes, Porsche is too small if we compare the market shares, where BMW is far closer to Apple's market share, but the price differential between Nokia and Apple is much more like that of Toyota to Porsche than Toyota to BMW. The variety of models offered the analogy is much more Toyota vs Porsche than Toyota vs BMW (BMW has far more relatively matching models to Toyota, diesel engines, four-door sedans, station wagons, other vehicles that are not cars ie BMW motorcycles, and on and on and on. But no, the analogy is not perfect. And the loyalty level of Porsche owners is far greater than that of BMW, bordering on the fanaticism of a Ferrari owner (but again, Ferrari is so tiny luxury supercar category, that its not a fair comparison). I have tried to find the best analogy, where both car makers would be most like Nokia and Apple, and I could also use VW for Nokia (Audi division is N-Series, and against Porsche, VW now has Lamborghini which could be like MeeGo) and I could use BMW or Ferrari for Apple, but I think Porsche is the closest but it is not a perfect analogy.

on the point of MeeGo adapted by other makers. That is a VERY costly decision to support more than one OS. It makes sense for handset makers to REDUCE the number of OS's they support, even more as the industry starts to consolidate and the price wars get more intense. I don't see LG supporting 3 operating systems etc. But also see the 18 month issue in the above. Any handset maker who now likes what they see with Nokia in MeeGo would take more than a year to get hte phone to the market. So don't expect them to appear this autumn haha..

Bob - interesting views but I think you're missing a bit of the picture maybe. WP7 as a 'defensive move' so Nokia can focus on low end phones? That is just not sensible for the company, a change in OS platforms is total turmoil in all departments of the company. Look at LG right now, plunged from profits to loss-makign when they switched to Windows Mobile and then doubling the costs of climbing out of that to go Android now, and still haven't emerged back to profits. Its a massive platform shift which costs Billions to the handset maker. No, that isn't why Nokia did the move.

Then on MeeGo - I would like to hope, deep in my heart, that what you wrote is true and somehow secretly Nokia is actually planning full speed MeeGo and the WP7 thing is more of a 'ruse'. That again, is not in any way consistent with the facts. Nokia has been firing MeeGo staff, re-allocating them elsewhere, cutting MeeGo projects, killing the migration path. This all would be utterly foolish if they had any intention to do MeeGo. And Elop saying there will never be another MeeGo device, even if N9 is a 'huge succes' - that would be utterly foolish to say if he didn't mean it - because it sure as hell frightens away any developer interest, and kills the ecosystem. No. If Elop stays, MeeGo is gone. What possible reason is there to not sell the N9 in every good Nokia market like all the big European markets (which now refuse to sell Symbian). What possible reason... Elop just hates MeeGo (because it threatens WP7 and is honestly, better in every way for Nokia)

peter - I agree, and I hope some real action is soon taken. Elop is acting in ways that are so obviously against Nokia's interests, there has to be some investigations and he should be put on notice..

and on 'it is in the pipeline' - hear-hear!

james - cheers!

John - hmmm.. I don't get that really, but am not so close to the WiMax community and its efforts. I don't get at all that there is any kind of general animosity towards Intel in the global carrier community (there was against Qualcomm for a long time partly because they tried to get into the carrier business and were heavily punished for it). But there might be in the US, I hadn't picked up on it.

Paul - good points, but note, if 'network effect and first mover advantage' are at play, then again Symbian RULES over both iPhone and Android. The installed base is massively bigger (network effect) and haha, first mover. Symbian and Nokia did EVERYTHING first haha..

But yes, you make a great point, Apple also adjusted and that further no doubt contributed to Nokia's troubles. But remember, Nokia's main smartphone market was mid-market, not premium. So the iPhone hit for example SonyEricsson far harder than it did Nokia (SE far more expensive average prices than Nokia) etc.

Thank you all, keep the discussions going, I'll return with more

Tomi Ahonen :-)


Tomi, in the interest of dispelling another myth: Android is not "free" to device makers. Yes, Google doesn't charge for it, but patent holders do. Google does not indemnify its customers. So Android device makers (and also Google) are now facing a large number of patent lawsuits, and many have already signed licensing agreements with Microsoft for a rumoured $5 to $15 per device (and soon other patent holders).
Compare this with Microsoft who charges e.g. $15 software license per device, but that includes protection with Microsoft's huge patent portfolio, so device makers don't incur significant other licensing costs.

This aside, now to my main point.

Agree with you that Nokia had the right strategy on paper, but you underestimate the execution flaws.
Why was MeeGo so late? Nokia didn't realize its importance for years and infighting from the much more powerful Symbian led to constant changes of direction, bringing in Intel at a bad time, etc.
Bloated and inefficient Nokia is true and explains delays in Symbian phones, as you correctly assert, but the "execution flaws" with MeeGo go much deeper: here I agree with earlier commenters that this is a clear example of disruption (in the definition of Christensen), where Nokia just didn't understand that Apple competes with their high-end (N series) in a novel way, and hence didn't react adequately for years, and most importantly, was blind to the enormous speed of change.

Even in China and India, people will aspire to the top end products, so to migrate the mass market, you need low cost smartphones (which Nokia has) to sell to the masses, and the most desirable smartphones (which Nokia doesn't have) to sell to the super rich and help marketing the low cost smartphones to the masses.
(I don't care much about cars, but I don't think that your analogies hold here, since cars are not transitioning from middle class to luxury cars - these are static market segments, so the dynamics of phone markets is nowhere given for Toyota/Volkswagen vs. Porsche).

And don't forget that China and India's rich segment is small as part of total population, but large in absolute numbers. Just look at Apple's latest sales figures - biggest iPhone revenue growth contribution comes from China.


@alex, you got it right.

Top end phone can be used as effect advertisement even if it is not a hit product.

Nokia withdraw from Japan and USA is a total failure in execution and marketing. now it spills over to China and India.

The Riches set the trend and the Poors follow the trend.

Ignoring the top end competition, your brand name and cool factors decline very fast.


What will happen when Apple take out their cheap phone? Revolution again on another front. Is it safe for Nokia to just sit in the jungle with big piece of meat, but without teeth to protect it. I think that dumb phone market will have its own revolution and the battle is to be bloody - poor Nokia.
Android phones become cheeper and cheeper. Check out ZTE price list. The only stopper right now is the power consumation. The first that resolve this problem will receive the big cut of the mass phone market.


>>"Moto left Microsoft , and has become slave to Google's Android. Android is now free. It may always be free, with Google's 'Do No Evil' philosphy, but who knows. Motorola has no options. Motorola is not in any way in control of its future."

Damn, it's so funny to read after that crazy deal between Google and Motorola


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