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« Apple 20.3M iPhones in Q2. WOW. Throws gauntlet to Nokia and Samsung: stakes claim at biggest smartphone maker status | Main | Mid-year Update to Nokia Smartphone Forecast to 2011, with View to 2012 and new Microsoft based phones »

July 21, 2011

Comments

Sam Clark

History is made by those that make bold decisions. I remember Apples share price was rock bottom, and the a copy of Macformat dropped through the door with a photo of the first Bondi-Blu iMac on the cover. It took stones to make that kind of product shift, especially when facing destruction.

The old Nokia board would have led Nokia into the Abyss. History may remember Elop as Nokia's executioner, but it takes high risk, decisive action to transform business's. While Elop wont be sleeping well tonight, in the long term I think he'll be vindicated for making sweeping changes where before there had only been in-action. Business is risk, and those that risk the most have the most to gain.

GJW

Great analysis, Tomi, telling it like it is and not taking prioners.
After reading this I have one multi billion bucks question is: what is your assessment, will Nokia go on like this until the very end or will they do what they should have done on 11 February 2011 at 17:00 sharp: kick out @selop?

peter

Jonathan, Symbian is toasted by Elop, that's why individual investors, nokia employees and nokia consumers want to fire Elop.

Wolfram

Hey, Nokia was infected by ignorance and megalomania already in 2005/2006 and in this time the company forgot their customers entirely. In these days Nokia was lead by Finns!
Then the Finns ignored not only the customers but also the developers (remember the silly Nokia signed program) and the competitors.
Then Apple came and Nokia (still the "old" Finns) was not able to find an adequate answer for more than 2 years. Yes, the plattform started burning, and the fire was initially set by ignorant Nokia senior management.

BUT then a US boy was elected (by the US investors???) as CEO, a person who had no understanding at all of the speed in mobile market. Elop only wanted to make the investors happy by telling them a nice story (buring plattform, Symbian is rubish, blah blah) but he also ignored the customers. So the customers leave the "dead" Nokia brand now immediately. So he put even more fire on the Nokia plattform.

And now?

Very difficult, but on thing is clear: Bringing old Finns back is not the solution and firing Elop is not fixing the NOKIA problems at all.
The entire company needs a "re-invention" by a very charismatic person. Such a person is diffcult to find (as the election of Elop has shown)
Nokia must speed up, forget their arrogance against teh customers and developers, serve their customers with humble, work hard, make clever descisions (make MeeGo devices?) and then may be, the have a little chance to come back...

peter

Jonathan, after iphone 4 launched, antenna problems showed up, can you imagine Steve Jobs came out and tell the whole world: IPhone 4 is the burning platform, it has antenna problem, and glass is easy to be shattered, we will release IPhone 5 which will be much better.

if he did so, iPhone 4 would have no sale. that's exactly what this criminal Nokia CEO Steven Elop has done to Nokia.

No excuse and No escape !

peter

this criminal Nokia CEO Steven Elop just announced Nokia N9 will be a regional phone. Can you imagine Apple/BlackBerry CEO annouce their hit model is a regional phone ? pure vicious crime.

Poifan

This clearly isn't a surprise to anyone as Nokia's stock is trading slightly up today. I don't see how this can repudiate the WP7 strategy when the WP7 part hasn't even been executed yet. Until Mango is released and Nokia produces a phone, I don't see how one can claim success or failure at this point. There's plenty of reason to think it can fail, but I'd hate for you to be the person sitting at my deathbed deciding to pull the plug.

A couple of other points. I don't think there are 400,000 active Qt developers, the Nokia dev community is primarily full of Symbian C++ and Java devs, Qt is still very new. There are only tens of Qt apps in the Ovi store, there are +25,000 apps in the Windows Phone Market. In comparison to Symbian, yes WP7 is a resource hog, but it certainly isn't in comparison to Android or Meego whose Linux kernel's have a ways to go in terms low power optimization. And as far as Skype causing a Carrier boycott, you still haven't given any proof of this. The only thing I've seen is that in the U.S. Verizon actively advertises and bundles Skype on their Android phones, seems far from hatred of Skype.

khim

It's funny how hard it is to see the large picture even if it's very clear.

"Who else, Apple and the iconic iPhone" ?

Gosh. Be real. 2011-Q2 will be viewed as embarrassment in the telecom industry. The single quarter when Elop's idiotic decisions allowed an "outsider" to briefly take the crown.

Apple? Apple will not be perceived as winner. It's one thing to take the crown in the heated battle, it's another to take it when the former champion gone mad and you got the title "by default". Remember Anatoly Karpov? He was always perceived as "not really a champion" because he never beaten the previous champion (Robert Fischer). This is the best Apple can expect - and that if it'll do great in the future. If it'll actually lose market share (quite real possibility) then the perception will be even worse.

It's true that 2010-2012 battle in the smartphones market will be studied for years - but the exact perception is not known right now. The history is written by winners - and we don't yet know who they will be (Samsung is a contender... but just a contender at this time). We only know who "the great loser" is...

Silverchief

The workforce will bring them down further. They are old, static and scared of competition. Having known people who worked there, the management were convinced the N97 was an iPhone killer due it's features. Yup, they didn't understand the customer and UX. They still don't and have 10year veterans not making decisions in director and VP level positions who don't know what competition is.
Your company is as good as your workforce, and Nokia's workforce is soo far behind Apple and Google's it's not even a fair contest.
MeeGo was the savior, with Intel...but not any more.

Marc Nathan

As always, Tomi, I wish you could get rid of your Elop fixation. There is a lot of value in your analysis that is detracted by that.
@SamClark - I am a strong believer in the risk Vs. return. Nokia has taken many risks in the past, including creating the smartphone segment and opening up a mobile phone platform for developers - 15 YEARS BACK, when it was laughed at.
The challenge is that Elop's Microsoft decision was the safer of the choices, not the riskier one. Most of the existing management is still around - again a safer choice. Let's hope there are some other risks he has taken on that we are not aware of.
Agree with @Jonathan, @sami, @harry in singapore. Elop is not entirely to blame. The rot started earlier. I have my doubts that the current path that Elop has set out will be successful, but only time will tell. And by then, I am sure he will change tack again, so it is going to be difficult to conclude conclusively.

It is difficult to see what the alternatives are. Elop has a lot of positives going for him, including being a great communicator, which is important to rally the company and investors. Too late to reinstate Symbian. Even too late for Meego - I understand best of the Meego people have left the company. I agree with Tomi that WP is unlikely to be the saviour - top line, maybe. Bottom line - tough !
There is talk about bringing Qt into the S40, effectively creating a real low price smartphone segment. Will this create a new segment that Nokia can dominate or just stretch the existing segment lower, destroying margins in there ? I will be watching to find out. But the larger concern I have with that approach is that a companý that has, by its own admission (ditching Symbian and Meego for a 3rd party) , weakness in smartphone software development seems to be bent on trying to do it again. And that too with no visible change in the people who should execute that.

Jonathan

@peter

Symbian was toasted by Android and iOS long before Elop joined Nokia. Transition to something else was needed, after no preferential treatment from Google, they really had just a choice between Maemo/Meego or Windows. The *board* went for Windows.

As you have seen, in reality the "antenna problems" do not matter to tens of millions of users. It was FUD, the response Apple took was unusual, but worked.

Christian Maurice

Nokia was in bad shape before Elop coming but saying Elop is not responsible of the bad transition is completely delusional. The problem is not the choice of Windows Phone 7. It is the timing of the announcement and the Osborne effect. Now the Nokia marketshare is diving. Speaking of Elop like a great communicator when he launch a bomb (burning memo) and destroy the Symbian sales is weird. The execution of the transition between Symbian and WP7 is catastrophic...

peter

Jonathan, your argument is baseless. nokia n8 sales growed quater by quater till this criminal elop announces it was a burning platform. its sales collapsed immediately. 24M to 16M within 3 months. no execuse for it except a crime behaviour from inside.

elmo

Elop is stupid, the Nokia board are all stupid ...
They decide to go for a clear plain wrong strategy ... and all are stupid to don't see it.

Fact is that what is happening, the collapse of Nokia, is what the Nokia mayor share holders (the American Funds) did want for Nokia

The mobile phone business is not fully in Americans hands.

Tchuss

e_lm_70

peter

look at this scenario, nokia n8 is fighting against apple iphone4. while iphone4 sales grow a bit faster than n8 sales but it suffers from antenna probelm, glass shatter probelm, n8 sales continued growing too. Jobs had to come out to persuade consumers to buy iphone4.
then suddenly, nokia ceo Elop came out, n8 is a buring platform, don't buy it.

what do you call this behavior except pure crime ? I owned n8, it is a nice device, excellent camera, gps it meets my needs, but I have to replace it with an iphone 4, b/c nokia ceo told the whole world, what's in my hand is crap.

this similar scenario happens among billione nokia exisitng and prospective consumers.

it is consumers who made the choice where to go, not any ceo. this arrogant stupid canadian has to go away. no execuse. i am going to sue him as investor and consumer. class action is coming in from both investors and consumers.

The_Guest_Who

This is a textbook case of the "Osborne Effect"...

Elop announces the shift to WP7, insinuates that Symbian is EOL'd (those charts for R&D spending and future handset OS-mix that are floating around the web have Symbian flatlined in a year's time), and downgrades MeeGo to a one-off experiment (giving the finger to Intel at the same time!)... and this is the beginning of that result. The key problem is NOT having a WP7 model ready-to-go at the announcement. As Tomi has already covered earlier, this was an INCREDIBLY stupid move... as a potential buyer, would you spend good money on a product that the company's own CEO implied was crap, and would be discontinued in a year's time?
As for the N9 and MeeGo... there were a number of tech blogs that said the N9 (or N950) was ready to launch in January - but Elop killed it, saying "it wasn't good enough". Roll to February, and he announces the WP7 shift, with no hardware *at all*... fast forward to July, the N9 gets a low-key announcement, and the tech press goes nuts over it - and its dev counterpart, the N950, looks *a lot* like the spy photos of the canceled N9 from January! Before we all get too excited about MeeGo, Elop "reminds" us of the WP7 strategy, by leaking the Sea Ray prototype ("no pictures, please... even though we're taping this, and it'll be distributed world-wide throughout the company... don't leak this to the press, wink wink, nod nod!!"). Sea Ray, of course, won't ship until late Q3 at the earliest... given Nokia's recent performance, I'm guessing late Q4 or Q1 '12!

Nokia spent the better part of 2010 rallying developers around the QT strategy - develop for multiple platforms on the same toolkit (Symbian, Maemo/MeeGo, Desktop... even Android!). It was sound; developers were getting on board and saw the benefits of "write once, deploy everywhere"... then Elop kicks them in the crotch by changing the focus to MS tools, like Silverlight. Now it's "write once, deploy on Windows - Full Stop". All that investment you made in switching your team's tools from Avkon/C++ to QT - go flush it down the toilet, 'cause it won't work on our *NEW* phones! As a developer, why wouldn't you be upset? At least Apple gave their devs some migration path from OS9 to OSX, and then again with PowerPC to x86 - Elop is telling these devs to literally *start over*.

So... the Osborne Effect... "Our new Model 2 is going to be soooo much better than our Model 1 - even though we haven't built Model 2 yet..."

"Hey, wait... why aren't you buying Model 1 anymore?"

peter

The_Guest_Who, even microsft is switching from silverlight to html5 in Windows Phone 8. I am serious software developer knowing much more details than crap elop. silverlight is a pain to develop than html-based jsp/asp.net. I don't think nokia can port its maps to mango by the end of this year. another big thing is siverlight needs much high end hardware to run,it consumes much more power from battery even for displaying simple test/image with minor animation.

the only way to save nokia is symbian and meego plus its own services which has already been cut by this criminal elop.

Omar Moya (@miusuario)

@Jonathan Nokia has been losing market share before Elop, that's why he was hired. His marriage with Microsoft and killing everything Nokia had (Symbian, Meego and Employees engagement) is what he added. He (for sure) didn't kill Nokia's market by himself, but stupidly speed up the process while there is no substitution, betting for the most unsuccessful OS. Unsuccessful not because of bad UI, unsuccessful because there is no differentiation and has no grip with the Phone manufacturers, hence, no grip with developers. While on a tree, you don't cut the branch you're sitting on.

@Tomi, thanks for the analysis. I start to believe that Meego won't be enough for recovering Nokia. Even if I regret to say it, I think moving all forces to Meego, is a drastic shift (again) and would kill further Nokia's image. My take is that Symbian Anna and Belle, should be developed further (Claudia, Connie?). Already Anna, seems to be a good evolution to Symbian, and Nokia should keep developing it, having in sight the Meego Harmattan build that is being used for the N9 and N950. I know everyone thinks Symbian is dead, however I still see potential for low-cost Smartphone platform. On top, let's take into consideration that Google is facing several trials on Android's infringement of patents. This may open an opportunity for a healthier market, where Android's fragmentation limits google, while Apple may not be seen as innovative as it was in 2007.

teklemon

Good article, but I honestly feel the criticism to Mr Elop can not be entirely justified.

- Nokia should have adapted a multi-platform strategy. Windows for high end smartphones and Meego and Symbian for mid to low end. Atleast for the foreseeable future.

- Android would have been a better strategy. But dont blame Mr Elop..think about NAVTEQ and Ovi that would have been abandoned in that case. The better bargain was with MSFT. Elop did the sensible thing.

- Announcement on Feb 2011. If you remember, at that point in time the pressure was so much that Nokia had to respond..somehow. With a new phone (with a completely revamped OS, even if Symbian) or had to give a clear future strategy. Nokia for whatever reasons were/are slow to churn out phones (compare with Samsung/HTC and even Moto for that case) and this was the only announcement that could have saved some trust in the company. Well, it was not really made seeing consumers, but the investors. The Osbourne effect , I am sure, had been analyzed, but Nokia did its best to mitigate it by announcing that it would support Symbian for the foreseeable future, and that it had plans for multitude of Symbian models and major Symbian updates were on the way etc etc...But I agree, no one seems to have cared.

- Killing Meego was the right thing. It was so risky to build a new echosystem on that. Was there a plan to make apps portable across Symbian and Meego? Write once use anywhere kind of model? Sell Meego apps on Ovi? Might be in plans, dont think it would have been possible soon.

- Marketing. As righlty identified by Mr Elop, Nokia now has to market its product/platform aggressively. It has to make its brand more relevant to the market and especially the youth. Look at blackberry. Such a boring set of phones, still the youth loves RIM due to BBM. Why cant Nokia start such a service? make browsing free on Nokia? Why not change the old looking Nokia block logo? Why not stop calling the Nokia model some cryptic numbers like 1011, N950 and name them as Sea Ray, Blue Streak etc etc? I hardly see any Nokia ads, but see plenty of Samsung/LG and even Apple ads. Nokia has to make some noice, change its looks. It is perceived as an old brand, not one that is hip. And often the perception changes just by the right marketing, with minimum modifications to the actual product!

- Mr Elop might have focussed too much on US market, and might have neglected markets like India where Google has a No Evil status and MSFT has the Evil tag. Nokia has to market carefully. The Nokia Windows phone has to sell everywhere in the world, not just in US or Europe.

- According to me, the way out for Nokia now is to fasten up the release of first Windows phone. Its already late. Now release as many Windows phone as possible in as may markets as possible. I am sure there will be enthusiasm, there will be uptake. But Nokia has to respond fast!!!!!!!

- As it goes "Nobody has ever got fired for choosing Micorsoft". I dont think Mr Elop will be a failure. Nokia will come back, but slowly. Microsoft will take care of it, its more their need than Nokia's (well, in a way). I am optimistic. Windows will settle in 3 years as the second biggest OS player in the smart phone market after Android. And Nokia will be among the top 2.

Thanks for the post Tomi!

peter

teklemon, you are so funny so commenting on releasing more windows phones. consumers won't buy any windows phone no matter is made by samung/htc/lg or nokia. it is a falure phone for 8 years. it is consumers who make the desicion which device to buy. look at what balmer just said wp7 sales is small as previous one. you obviously have no clue with business.

if only there is no smart phones on the martket, then you can release as many wp7.5 as you can to grab all market share. the situation is consumers have a bunch of choice and they do not like windows phone. that's it. look at how many views on nokia n9 than sea ray on youtube. that's millions vs thousands. thats 1000 times difference. this ceo yet still announced n9 is a regional phone, that's not called funny,stupid,idiot, that's called crime, pure crime.

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