Nokia Q2 Results are out. 15 years after inventing the smartphone in 1996 with the iconoic but outrageously expensive Nokia 9000 Communicator, and selling more smartphones than any rival every single quarter since then, we have now seen a moment in history: The king has been toppled. And that was done by who else, Apple and the iconic iPhone.
Imagine going back in time, and witnessing the success of the first mass-produced automobile, the Ford Model T. Ford did not invent the car, that was Daimler-Benz (ie Mercedes Benz). But while Daimler-Benz started with the world lead, it was the Ford Model T which made the car affordable for mass markets. Or take Apple the PC maker. It was once the world's biggest computer maker by volume of desktop computers. Then along came Charlie Chaplin in an IBM advertisement for the IBM PC, which ran away with the PC market (and propelled Microsoft to become the biggest software company). Those are iconic moments in industrial and technology history, are studied in MBA classes worldwide.
Now we are witnessing that kind of historical moment in technology, and this transition will be studied in MBA case studies in business schools for this whole century. Mobile phones are the most widely spread technology on the planet (3x bigger than TVs, 4x bigger than PCs, 5x bigger than cars, etc). And Nokia is the biggest phone brand, and all phone makers and major analysts agree, that the future of mobile phones is smartphones. So remember this July of 2011. This is truly a big moment and we are witnessing history.
Q2 RESULTS CATASTROPHIC FOR NOKIA
We have the Q2 Results from Nokia. As so many expected, the results are brutal. Nokia's new CEO Stephen Elop's bizarre timing of his (very misguided) Microsoft strategy have devastated Nokia smartphone sales. As Nokia faces global reseller boycott of what now are perceived as obsolete Symbian phones, the sales of Nokia Symbian smartphones have collapsed. With it so have revenues, average sales prices and profits also all crashed in world-record-setting style. What a way to go, Stephen Elop! You will be famous - or should we say more accurately, infamous.
Nokia just reported their total sales of smartphones for Q2 was 16.7 Million smartphones. That gives Nokia a preliminary market share in smartphones of 15% (was 24% in Q1 only three months ago!)
The unit sales of smartphones are down 31% from just 3 months ago in Q1 when Nokia still sold 24.2 Million smartphones.
I also want to mention that Stephen Elop says in the Q2 results document that the 'challenges' were 'greater' than he had expected. ??? So. Anyone studying technology business at university will learn of the 'Obsorne Effect' of what happens to your existing products if you announce a superceding product. The current product sales will collapse. This is not rocket science and only an incompetent fool would have been taken by surprise by the crash of Nokia's smartphones after February 11. Now we have a good comment on Twitter from Nick Doulas @nickdoulas who said 'Osborne Effect to be forgotten in history, replaced by Elop Effect: much larger failure by comparison." Excellent, funny and also, sadly, completely true. Oh, and this delusional Stephen Elop now dares to suggest that in Q3 Nokia will generate about a zero profit from the handsets unit? What? After we remove the one-time payment of IPR royalties from Apple, Nokia handsets unit actually generated one BILLION dollars of a loss in Q2. That is his 'starting point' now. And what does Elop do in early July? He CUT the prices of Nokia smartphones. That pushes Nokia deeper into the red. One Billion dollars of losses is not enough for Elop. He wants to establish his mark. He wants to be sure, his world record will never be bested. He wants to go down in history as the most incompetent CEO ever.
DESTRUCTION OF PROFITS
The smartphone unit which made over 500 million Euros (over 700 million dollars) of profits per quarter as recently as six months ago, has now crashed and reports an operating loss! And please understand, this is not the bottom. The situation is going to be far worse in Q3, Q4 and Q1. Nokia has already in early July responded to the global market collapse by cutting prices across the board, as much as 15% from its top phones. If your smartphone division is making a loss - and you then cut your prices by 15% - you are ADDING to your losses MASSIVELY. While this blog is not a finacial analysis blog, we should point out that this new Microsoft strategy and Nokia's catastrophic performance has been so strongly punished by Wall Street, that Nokia's share price earlier this week hit a 14 year low (and while I am no forecaster of share prices, haha, I think the continuing flow of bad news about Nokia smartphone market shares, average sales prices, revenues and profits/losses, will hurt the share price severely in the weeks, months and quarters to come).
WE ARE WITNESSING WORLD RECORD DESTRUCTION OF A BRAND
The real comparison of Nokia's crazy shift in smartphone strategy cannot be done to the previous Quarter, ie Q1 of 2011, because the market collapse started in the middle of that quarter. The comparison of Nokia's current malaise has to be compared to the last full healthy quarter before that fateful announcement of February 11, so we have to go to Q4 of 2010 for comparisons. What was life like before Stephen Elop started to destroy the brand most widely spread on the planet (more people use a Nokia phone than drink a Coca Cola, than wear Levis's jeans, than tell time on a Timex watch, than wear Nike running shoes, than smoke Marlboro cigarettes, or write with a Bic pen).
In Q4 of 2010, Nokia sold 28.3 million smartphones and had 29% market share. The average sales price of Nokia smartphones was 156 Euros or about 210 US dollars. We have since learned with Nokia's new financial reporting also about the smartphone division profitability, so in Q4 Nokia smartphones made a profit of 548 million Euros (715 million US dollars) which gave a profitabilty of 12.5% for its smartphones unit. Obviously this is nothing like as spectacular profitability as Apple does with the iPhone, but Apple is not Nokia's primary competitor, and of Nokia's main competitors (who sell globally both smartphones and simpler 'dumbphones') - LG, SonyEricsson and Motorola have all been struggling to do any kind of profits. Only Samsung of Nokia's main rivals is consistently profitable in its handsets unit. And up to now, never has Nokia reported a loss in its handset unit.
Also understand how Nokia was doing at the time. The 'conventional wisdom' mostly led by US based analysts who tend to view the global market from what they see in the US domestic market - where yes, Nokia had failed years earlier and was a bit-player - suggests that Nokia was 'in decline' before Stephen Elop announced his Microsoft Strategy and that Nokia was doomed without it. That sounds great but does not correspond with the facts. I deal with the facts here, not myths. The fact is - go ahead and check the numbers - Nokia grew unit sales of smartphones from Q3 to Q4 in 2010. Yes, Nokia's 'obsolete' Symbian was growing, not declining. It was the world's bestselling smartphone OS well ahead of Android until Elop assassinated Symbian in February. Symbian had half a dozen manufacturers still supporting it including several Top 10 sized Japanese smartphone makers.
To understand how bizarre the Microsoft Windows Phone 7 decision is - all handsets makers who made Windows Phone 7 handsets - were outsold by those Symbian makers who are NOT NOKIA ! Yes, the 'other' Symbian makers ALONE outsold all Microsoft Windows Phone manufacturers. But yes, where was I? Nokia? How much did customers love or hate Nokia's Symbian smartphones in Q4? They loved Nokia so much, that the average sales price grew by 15% from Q3 - a Nokia record jump in ASP in one quarter AND the total revenues of Nokia smartphones grew 22% from the previous quarter. This is not a platform on fire, unless by 'on fire' you mean - it was hot and growing and generating profits.
How much profit? We didn't have the numbers back then because Nokia did not break out its smartphone profitability until now. But now we can see, that In Q4 the Nokia smartphones unit generated 548 million euros of profits - and yes, the profits grew from Q3 by a massive 64% !!! Yes. Nokia's Symbian phones were so much 'on fire' that they grew unit sales, they grew revenues, they grew average sales prices and they grew profits. They grew profits 64% from the previous quarter! This is the 'goose that lays the golden eggs' which was truly and thoroughly killed by Stephen Elop on 11 February 2011. Now the smartphone unit generates a loss of 146 million Euros.
So yes, its a widely repeated myth that somehow Symbian was killing Nokia and Symbian didn't have life in it and customers were abandoning Symbian etc. All utter rubbish. You read the facts and see, Symbian was a powerful, world-leading operating system, totally updated and modern by its S^3 version that was on for example the N8 smartphone. Yes, Nokia was developing Symbian's replacement, called MeeGo, but Nokia had years of lifespan left in Symbian, where Symbian is particularly well suited for modest power, modest CPU and modest memory requirements of low-cost smartphones.
Understand how enormous Nokia was just six months ago. As a smartphone maker when measured by units sold, Nokia was bigger than Apple and Samsung added together (its likely Samsung has also passed Nokia in size, as Nomura has already calculated. We will not know Samsung Q2 results until 29 July). Nokia was the run-away market leader smartphone maker in all continents but one (North America). In China (world's biggest mobile phone market) Nokia was reported to have 72% market share in smartphones in 2010; in India (The world's second biggest market) over 60%. Now we learn that Nokia's market in smartphones in China has collapsed to 22% and similar in India. European major markets have seen Nokia smartphone sales collapse anywhere from around half lost to as much as three quarters lost in just a matter of five months.
So now, with Q2 results, compared to the time before Stephen Elop's ill-timed announcement of its Microsoft alliance ie Q4 results, we know how bad the damage has been. And because the announcement was on 11 February, we know that the crash in market share, average prices, revenues and profits has happened in under 5 months. With Stephen Elop at the helm, we have seen Nokia destroy half of its total market in smartphones.
Lets understand how significant this is. This is not like the carnage that caused the death of Motorola (and the company to be split) or the destruction of Palm (that caused it to be sold to HP) or similar disasters in mobile telecoms. This is truly the world record for market share capitulation not just in mobile or tech; it is brand destruction world record - in any industry, ever. Toyota's damage with the brakes in its cars, BP's oil spill, British Airways worst quarters fighting with labor disputes; etc have not slashed market share by half in only five months. Nokia and CEO Stephen Elop will go down in history as the notorious and misguided names that destroyed the best-known brand on the planet. This is management stupidity in the scale of Coca Cola's 1985 launch of New Coke.
THIS IS ONLY BEGINNING OF THE NIGHTMARE
We can now update the first projections to how badly Nokia will bleed market share to the end of 2011 when the first Microsoft Windows Phone 7 based Nokia smartphones will start to ship. That level is definite to hit single digits but I will return shortly with that full analysis. It is FAR WORSE than anyone had projected so far, and Nokia cannot recover to its pre-February 2011 levels, not even half-way with Microsoft, because of the severe problems with the Microsoft partnership. So please understand what I am saying - some analysts have bravely and optimistically projected Microsoft and Nokia to get something like 20% market share in 2012. That is utterly impossible now. That is a fantasy. The facts now show that Nokia will never recover its smartphones using Microsoft OS, to that kind of levels.
I was one of first analysts to project that the Microsoft announcement would cause a collapse of Nokia sales, and that Nokia smartphone sales this year would hit a level of 17 million sales per quarter, and the average sales prices of smartphones to 116 Euros. My blog was called by many colleagues as "too pessimistic". Now we have the first meaningful facts ie Q2 results. And Nokia is nearing those numbers already. I felt that level would be seen by Q4 of this year, not Q2. Thus I was being too optimistic! The situation is far worse than even I could have guessed. But now we can make a revision and more accurate projection for the rest of the year and into next year. I have just updated my projection with the new number for 2011 Q3 and Q4. Spoiler alert: Nokia's market share will crash to 7% by Christmas.
MICROSOFT IS COMPLETE ILLUSION AND WILL NOT PAN OUT
(Quick comment about Microsoft and why what once looked like a good strategy for Nokia is now a recipe for a disaster. It starts from the design of Microsoft WP7 operating system which is typically Microsoft-ish 'resource hog' so it requires more powerful chips, much more memory onboard the phone, etc. So Nokia is now making losses in its smartphone unit, using Nokia's own well-known, well-fine-tuned manufacturing and design processes, using its own software. Then when it shifts to Microsoft, the costs and manufacturing and design of new Microsoft phones is far more costly to Nokia than it was with Symbian phones. And with Symbian and MeeGo, Nokia did not have to pay a royalty. With Microsoft Nokia has to pay a royalty for every phone. Thus we have far greater costs to Nokia smartphones on the new OS.)
(Then we have Microsoft's own admission that the operating system is failing in the markets - Steve Ballmer Microsoft CEO said that Windows Phone market share which was tiny in 2010, is now ... tiny. Far worse is the average sales price. Don't expect fancy high-end expensive 'iPhone killer' smartphones from Nokia, like the sexy N9. The average sales prices on Windows Phone will be slashed - thats not what I say, that is what Microsoft says - that smartphones on WP7 next year - will only earn half - half - of what modern smartphones are sold for - so Nokia costs go up, the complexity goes up, the customer experience - delays in using the phone - go down; and the price that Nokia can expect from those new phones go down - to half their current level. If you thought Nokia profits were bad recently - they will be FAR WORSE with Microsoft based smartphones.)
(This Microsoft alliance sounded great to some analysts looking at it in February. By now that we know much more of it, and all facts say this is suicidal move by Nokia and is not sustainable and will be abandoned just like HTC did with Microsoft, and LG did, and Motorola did. And add on top of that misery, now we learn in late May/early June, that the carriers have revolted against Microsoft in a reseller boycott after Microsoft bought Skype - carriers hate Skype - and then add the point that Microsoft's other handset makers are now deserting the platform and shifting their production to ever more Android. The Microsoft strategy is utter folly by Nokia, but I will do a more thorough analysis of that option shortly on this blog. Stay tuned).
(Incidentially - when the analysis is done thoroughly, it is clear that the Microsoft option is certain death to Nokia. There is no chance for that to now rescue Nokia. Thus every penny spent on any Microsoft evolution is totally wasted. And because Nokia has to transition away from Microsoft as soon as possible, this is going to be enormously painful. Nokia desperately needs to distance itself from Microsoft now. But Microsoft needs Nokia desperately to remain relevant in mobile. While Elop has said there were no talks of Microsoft buying Nokia, if Nokia moved away from the WP7 operating system, Microsoft could panic and rush in to buy Nokia, especially now that Nokia's parts are worth much more than the share price. Now consider Stephen Elop and his loyalties? What a challenging conflict of interest is it, to abandon Microsoft or to drive Nokia into the ownership of Microsoft? Elop has to be fired right now, because he will not look at Nokia's best interests)
WHAT COULD SAVE NOKIA? MEEGO
So what to look for. If Nokia fires its incompetent CEO Stephen Elop and hires some smart CEO from the carrier/mobile operator community, that would be a good start. Then if Nokia abandons the moronic Microsoft strategy, that would be a strong signal. Symbian has now been damaged so badly by Elop that it cannot recover but Nokia has a real chance, if it goes full speed with MeeGo, its home-grown OS. The MeeGo based Nokia N9 smartphone is shortly starting to sell. It is the best-received Nokia smartphone ever, utterly loved by the early reviewers. But idiot Stephen Elop refuses to let the N9 be sold in most markets where Nokia is now bleeding - like the UK, Germany, France, Spain etc - and major international markets like, haha, can you believe it, Elop refuses to release the N9 in India for example!.
And what is even worse, there is a SECOND already fully designed Nokia premium smartphone running the amazing MeeGo OS, called N950. And Elop refuses to release that phone to any markets, and it is only given to some developers. How mad is that? The reviewers who hate Nokia and love Apple, are now comparing the N9 and MeeGo to Apple's iPhone, commonly called the jesusphone based on my blog from 2007, and now those analysts are calling the N9 and MeeGo as the god-phone.
Unlike Microsoft Windows Phone, the MeeGo OS was designed to take advantage of Nokia's competences and components and designs. Thus a MeeGo smartphone by Nokia can take advantage fully of Nokia's competences rather than be crippled like early phones with Microsoft. The MeeGo OS is fully supportive of Nokia's current 400,000 strong app developer community via Nokia's development tools Qt, something Microsoft is not. MeeGo phones are capable of high-end devices at high prices (something Microsoft says WP7 is not capable of). MeeGo production costs would be less for Nokia, and made in Nokia's own factories (The first Microsoft phones will be made in Taiwan by subcontractors! Imagine the lunacy of that CEO decision, when Nokia's own factories are running at half-capacity, he goes and hires an outside factory to make the Microsoft phones. What will that do to Nokia brand value when we hear of suicides at sweat shops, while Nokia's own smartphone factories are idle). And on and on and on.
If the early reviewers are even partly correct, Nokia is sitting on the biggest hit they have ever had. The N9 and MeeGo (and N950) could be to Nokia what the iPhone was to Apple or what the Razr was to Motorola. IF there ever was a time when the N9 was needed - it is now as Nokia profits have vanished. And what a HUGE profit engine would the N9 and N950 be to a market starved for competitive Nokia premium phones! The first Microsoft phone won't ship until the end of the year! But the N9 and the N950 could ship now! Yesm now. In Q3. Both of them! And Nokia has smartphone factories on idle. But the clueless Nokia CEO, Stephen Elop (aka the Micrsoft Muppet) - refuses to release the N9 in most of Nokia's biggest and strongest markets, and only offer the N9 in very limited release in 29 countries, many of which are small countries like New Zealand, Singapore and Norway. And he is not even allowing the N950 to be sold. And get this - this from the CEO of Nokia - he told Finland's biggest newspaper, Helsingin Sanomat - that even if the N9 with MeeGo was a huge hit, Nokia will not make more phones on MeeGo. Who is he working for? This from the Nokia CEO?
If the CEO of a company has a hit product and restricts its sales - he is actively destroying shareholder value - it is not only 'cause' to fire him without compensation, it is breach of duty and the shareholders should sue Stephen Elop. Any Nokia Board Members who don't voice a call of no confidence for the CEO are suspect to collusion with the traitor and must also be fired and sued. (but I will return with the full scoop on the MeeGo and N9 and N950 later, including some financial modelling on what their impact could be to profits if launched broadly)
ALL HAIL APPLE
So, Nokia invented the smartphone. It had held the global lead in smartphone sales for 15 years. That has been a nice long run. It didn't have to end this rapidly - and certainly Stephen Elop will go down in history as the notorious saboteur CEO who destroyed his own brand and market - but there is a particular poetic justice in who is the new boss.
Apple was once the biggest PC maker. Then came IBM who took it. Apple saw its market erode was on the brink of bankruptcy making losses in the middle of the 1990s. By that time a Finnish phone maker decided to merge the pocket computer and cellphone and invented the smartphone. Then during the 2000s decade the PC makers all agreed that modern smartphones were indeed computers. With Steve Jobs at the helm, Apple joined the smartphone races very late in 2007 with the radical, iconic and all-altering iPhone and its iOS, app store and ecosystem; and in only four short years Apple displaced Nokia as the bigger smartphone maker (we cannot say for certainty if Apple is only bigger than Nokia, or if Apple is biggest smartphone maker - because Samsung might report bigger results as well). Nonetheless, it must be a good feeling over at Apple that their smartphone strategy succeeded in only 4 years to topple the global giant smartphone maker, Nokia.
And now when we add together Apple's Mac shipments, and iPad shipments, and iPhone and iPod Touch shipments - Apple actually sells more 'computers' than any other computer maker including HP, Lenovo, Dell, Acer, Toshiba (and in smartphones Nokia, RIM/Blackberry, HTC, Samsung, etc). So the king is dead, long live the king! Congratulations Apple. The jesusphone did truly change everything in mobile. Only four years to topple the giant. Wow. We were witness to history.
A TALE OF TWO STEVES
I want to mention also the two Steve's. When Apple was making losses, they brought back Steve Jobs, who rescued the company, turned into a powerhouse which now makes astronomical profits. Then we have Stephen Elop, who came to Nokia when it was making the biggest profits among the traditional handset makers (excluding those who are pure smartphone-makers like Apple, RIM and HTC). So Elop took profit-making juggernaut Nokia - and he destroyed it so it now makes massive losses, while slashing prices to make even more losses (and refuses to release profit-making MeeGo phones). So yes, Steve Jobs is the hero of all technologists. Stephen Elop is the evil opposite of Jobs. Where Jobs turns loss-makers into profit-powerhouses, Elop takes profitable giants and guts them. Hey. Am I the only one who is stunned that while Stephen Elop's Microsoft strategy clearly killed Symbian sales, why are dumbphone sales so badly down? Simple answer if you know anything about brands. When the CEO torpedos his own premium brand Nokia smartphones - that hurts ALL Nokia branded phone sales. Yes, Stephen Elop, you Microsoft Muppet. You must be fired and sued and barred from any executive position in any publically traded company. You are a disgrace! Your name will be synonymous with total corporate destruction from the inside - and by the CEO. Shame!
There will be several update blogs to these Q2 numbers. First up, you may want to see how the most accurate forecaster of Nokia performance now updates projections for Q3 and Q4. Yes, it won't be pretty. I will also return with projections for Nokia-Microsoft alliance smartphone market performance in 2012-2013; with the explanation why Microsoft is now a dead end for Nokia; and why Stephen Elop must be fired now. But read the Nokia market projection first.
Hi Everybody
I will return with individual comments. I wanted to mention, I now have done part 2 in this analysis, the projection for Microsoft smartphone sales in years 2012 and 2013. I think you will find the analysis illuminating
Tomi Ahonen :-)
Posted by: Tomi T Ahonen | July 25, 2011 at 07:20 AM
(Second set of replies, am still on 21 July)
Hi Boris, harry, The, KPO, Michael, peter, cygnus, TPTBH and Jonathan
Boris - very true, and like I said in the blog, athat is equal to about 1B US dollars worth of real operational loss before we count in the one-time royalty payment
harry - you say you want to give Elop time. That is what I also felt in February. But after the reseller boycott started, that is when everything changed. Nokia WILL NOT SURVIVE. Look at the catastrophic collapse of its sales and profits. No company ever has seen this total collapse of sales. Now there is no time left to let Elop explore some new strategy. He has to be fired now and the Microsoft alliance dissolved. Please harry go read my blog with the projections of how badly Microsoft will sell in 2012 and 2013. Nokia WILL NOT SURVIVE this.
You talk about the ecosystem being the key. But again, Nokia had the best - or arguably second-best ecosystem in December 2010 before Elop started to burn those platforms in February. 130 carrier deals for carrier-billing. That takes YEARS to achieve! Nobody else comes close. That is what Microsoft DESPERATELY wants from Nokia. Look at the langauge support. 400,000 developers! The second-bestelling app store in Ovi. The only OS with a migration path from legacy OS to next gen OS (Symbian via Qt to MeeGo). Elop HAD the best ecoystem by far, he killed it.
The - we don't know that yet. I will be first to celebrate Samsung if they pass Apple but it will be close.
KPO - no, Elop knew what he was doing, he wanted only Microsoft and never gave Android any chance (nor MeeGo nor Symbian S^3). He came in as the hatchett man to kill both Symbian and MeeGo and take Nokia to Microsoft. To what degree the Nokia Board has been in agreement with this, and to what degree he may have fooled the Board, we may never know. All of his actions are consistent with ensuring MS and killing all options
Michael - thanks, you are entitled to your opinion haha..
peter - yes, that is true, fire Elop and go MeeGo full steam (and get short-term revival for Symbian ie break the reseller boycott) is the only way to save Nokia.
cygnus - thanks. thanks. thanks. Cheers :-)
TPTBH - we may well see that soon
Jonathan - I appreciate what you say. Much of what you write, I would have agred to, when analyzing Nokia last summer or up to the results of Q3 of 2010. But Jonathan, the evidence - the FACTS - are crystal-clear. Nokia's Symbian was DEFINITELY back, loved by consumers, sold in massive numbers - grew Nokia profit MARGIN by 22% and grew Nokia PROFIT by ... 68% !!!!!! Got the biggest jump in Nokia ASP ever - 15% - which reversed the usual decline of 7% in ASP. This is EVIDENCE that Symbian was a winner. And that happened in Q4 of 2010, with the new OS version called S^3 - which was BTW supervised by Anssi Vanjoki - and it was Elop - and only Elop - on Feb 11 that killed Symbian's revival. What you write, Jonathan is the old story, it is not reflective of the FACTS as emerged about Q4. Please Jonathan, deal with reality here with us, ok, not fantasy and myths.
Ok, thats part 2 of the replies, I'll return with more soon
Tomi Ahonen :-)
Posted by: Tomi T Ahonen | July 25, 2011 at 02:10 PM
Tomi look at the time Symbian Anna is taking to come to consumers of N8/E7. They are unable to deliver it in time. Complete fail. If this continues Belle won't come before June 2012.
Posted by: SWAP | July 25, 2011 at 09:03 PM
Tomi, I think you have become too much emotionally involved to be objective in all this Nokia matter.
The damage to Nokia happened a long time before Elop.
The Finish strategy and working culture worked in the past, but was not up to the new wave the mobile world has been going through the last years.
Nokia was a scattered environment with a lot brilliant ideas, but no coherence. It has been like that as long as I know Nokia, and despite that they were working very hard on the ecosystem, it still was the case.
They never got their ecosystem right.
Apple did exactly the opposite.
I'm also a European like you and I feel for the Finnish people in this, but the fact is that Nokia did not adapt fast enough to the extremely fast moving mobile market.
Before someone dies, it is typical that the person first seems to have a good period for one or more days what gives the family hope again. And then death seems to strike unsuspectingly.
That was happening to Nokia in my opinion : they were already dying for a long time, but they had a last good period.
What Elop did was putting the trodes on the nearly dead body to try to revive it with an electric shock. His fault is maybe that he put the trodes there a little bit too soon.
But nevertheless, in my opinion, by shifting to Windows Phone 7 with a very promising ecosystem, he did the right thing.
If it is enough for Nokia to survive has to be seen but Symbian and Meego were the most sure way to Nokia's death.
Posted by: Patrick | July 26, 2011 at 07:15 AM
In any given price segment, the differences in performance between iPhone, Android, WP7, Symbian, Meego are insignificant to an average consumer. These differences may be more evident to a minority of technical people but hardly matters in terms of sales. Remember iPhone did not care for the opinion of the technocrati, it marketed straight to the average consumer.
The success for any platform going forward will boil down to marketing and promotion to an average consumer. Verizon in US successfully propelled Android to match iPhone in sales with a $200M marketing budget. This was done by Verizon to compete against iPhone when iphone was only available exclusively at one carrier i.e. AT&T. Once Android caught momemtum in US, it got momemtum in Europe and than the rest of the world.
Microsoft is planning a $500M marketing campaign for its new Windows Mango based phone. Combine this with a $120M marketing campaign to be launched by Nokia for WP7. Once it catches the eyes of the average consumer, any resistance (if it exist) to WP7 from Carriers will evaporate.
Marketing muscle is needed to carve out a space that is currently divided between iPhone and Android. The lack of traction to HP's WebOS and RIM's Blackberry is due to the absence of marketing muscle. Both of these do not have any Skype related carrier issue.
This needed marketing push for success cannot be provided by Nokia alone for Meego or Symbian but by Microsoft and Nokia combine for WP7. In fact Meego and Symbian will benefit from uplifting of Nokia brand in North America and Europe from this marketing blitz by Microsoft-Nokia for WP7.
Posted by: Bob Shaw | August 02, 2011 at 03:26 PM
@ Bob Shaw: Well said, Bob. Thank God and the gods that in America value is insignificant to an average consumer. I am not trying to be smart or cynical. I agree with you. Cadillac sold well the Cimmeron for two or three [by three years the joke was so widespread the game was up] in the 80's which was a gold painted grill and cheap leather seats dolled up Chevy compact with more than 10 times the Chevy's inherent markup. Cimmeron never did catch on in Europe or elsewhere, but those were the days when the rest of the world was deprived of the charisma of our "black" magical President and the charms of international syndication of MTV's Jersey Shore. I think if we could get Mr. Barry Obama to use Nokia's new WP7.5 like he used to publicly use RIM's products or get Snookie to publicly be seen to be updating her twitter profile on the streets of Hoboken using a new Nokia WP7.5, we could make enough profits in the North American market in the next three years to get our bond rating back into the low A's and get Nokia thinking again of their future 3 years from now, to quote between the lines from E.S.'s latest report from the "Front."
Again, Marketing muscle is needed to carve out a space that is currently divided between iPhone and Android. America invented the concept of marketing and the language of economic space. America remains the greatest field of opportunity for these dark sciences, among many others. Since Nokia is a world brand and its Finnish Civil Service like corporate overhead expenses can only be maintained with a top line supported by Mr. Ahonen's [much derided] concern with world market share for all hand held devices of whatsoever capability [the inherent synergistic value of which I agree completely with mr. Ahonen, being more of a Toyota man than a Porsche man, though my real sympathies obviously lie with the splendid mix of both models: VW], and since those low A's won't come without some New York level bottom line performance, I must say, mr. Shaw, from your mouth to God's ears and to the minions of the gods.
Off to my tire dealer. My winter rated Nokians are going to have to last me longer than I planned, so I'm going to have to start rotating them in the Summer too: I hear Elop plans to repurchase and fold all old Nokia spinoffs back into a super new future spinoff entity, NavtekGroup, which will be sold to China. In order to disguise the absurdity that is the inherent value of that colossal waste of money that Nokia threw into mapping during the heyday of pre-iOS and pre-Android OS Nokia corporate profits, great leader Elop plans to use the proceeds from this sale to bump up Nokia's consulting budget so he can finally rid the world of smugness and reintroduce proper deference to those colossases of modern Executive Compensation for idiots with Bachelor's Degrees, such as himself. At least the avitar of his kind.. i'm getting sleepy form talking out loud alone in my car on the highway drafting behind mobile wifi hot spots such as the tricked out Escalade in front of me with Texas plates and kid's soccer stickers on the back in front of me. My n80i is good for blind work but I've shut off paying for the cell signal thanks to internet telephony and the widespread availability of wifi in my life. Why pay the average $100/month ATT&T gets with its subsidized iPhones, locked in for two years, or the 75$/month ATT$T would require from me to renew my dormant minimal voice and limited data account? But I digress..
Posted by: Eurofan | August 02, 2011 at 05:17 PM
Thank you very much for all these fantastic resources.
ENTB
Posted by: Stock News | August 05, 2011 at 10:10 AM
I recently came across your blog and have been reading along. I thought I would leave my first comment.
Posted by: Michael | August 05, 2011 at 12:03 PM
that's exactly what this criminal Nokia CEO Steven Elop has done to Nokia.
Posted by: Cheap Beats By Dre | August 08, 2011 at 07:51 AM
I read your post. it was amazing.Your thought process is wonderful.
ENTB
Posted by: Stocks to Buy | August 08, 2011 at 11:46 AM
targets, at least one year to € 100 million, the fully the capacity of developing countries, industrialized
Posted by: beats by dre store | August 22, 2011 at 03:22 AM
as someone from actual Nokia shareholders pointed out, you dont sue/fire ceo if you don't like what he is doing. you just sell your share and buy some in the other company.
Posted by: makc | September 04, 2011 at 02:05 AM
really? Not even announcing you gonna abandon your most important product without a ready product to substitute? That is full blame on Elop. Nokia was profittable on Q1. Why isn't it now?
Posted by: Electronic Cigarettes | September 10, 2011 at 10:17 AM
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