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« Mo Mobile mAdness - Ecosystem-Elop Sells Nokia Mobile Ad Unit (??? - True!) | Main | No Straight Lines: an open access participatory book »

February 10, 2012

Comments

Janne

Tomi, I thank you again for an interesting read.

One aspect of the memo I think you glossed over, though, is this:

"Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead."

I have read your full blog, and the part where you offer the understandable Qt solution (which certainly was the crown jewel of the previous Nokia strategy), but the question I pose is this: What if Symbian really was beyond recovery technically speaking? I'm not speaking of app-development as clearly Qt was an answer to that (as well as for Symbian's UI layer in general), but about the underpinnings and the whole development structure of it - and the future of it. Ollila and Elop called it "having become fragile" at last year's general meeting if I recall correctly. Looking at the slow development pace of Symbian, the disproportionate need of staff and R&D funding compared to people like Apple just to keep Symbian on its very slow march forward, the whole EPOC history behind it, the whole diversified development structure of it that clearly wasn't producing top results... What if Symbian wasn't going to be an answer going forward? I think you missed this argument.

I think the perspective on what Nokia needed to do changes dramatically, if one assumes Symbian was just too far gone to be salvaged for the next stages of smartphone evolution (i.e. dual, quad cores, console-gaming level GPUs, LTE and the like) - especially at a pace that would be sustainable so that Nokia could have kept Symbian's abilities in sync with whatever technology came available in future generations - and not keep falling behind technologically. We certainly know from public leaks Nokia was working on taking Symbian to these new technologies, but the speed of progress was and is painfully slow - just think how long it took Nokia, before Elop, to get Symbian^3 and the N8 out. And even then, the quality of the experience left a lot to be desired.

If one assumes Symbian was not viable, or that keeping it up with the times (techologically speaking) would be very, very difficult going forward, the options left for Nokia seem far more limited. MeeGo would have had to be the solution and that was even smaller than Windows Phone which at least has the Windows 8 roadmap and ecosystem ahead. I think the management came to this conclusion and felt dramatic change was necessary. I do think they miscommunicated it, though, effectively killing Symbian far before the successor was ready for sale. They should have communicated it differently - perhaps the best would have been to quietly develop the Windows Phones (even with leaks) on the side and do the Feb11 dance at Nokia World 2011 with a Lumia launch.

Of course, all this assuming Symbian was not viable any more. Perhaps you could research and blog about that some time.

karlim

(3/4) And Elop/MSFT connection was so obvious, speculation about TH Elop started within hours after announcement. Do you think it was ignored and not scrutinized at the board and senior management team levels? And any conflict of interest possibility dismissed? By majority of Nokia board and management team. Do you imagine the liability this would expose them to in shareholder lawsuits if they fail to prove that they were diligent?

Nobody is saying that Nokia did well this year. I don't even insist that going Windows Phone was the right decision. Right now, especially after Amazon Kindle and Samsug’s success, Android certainly looks very attractive.

But that is simply my own 20:20 hindside, armchair analyst smartassesness.

A year ago - everyone who turned Android earliesh, looked golden. 12 months later it seems that only Samsung is thriving on Android, and some Chinese like Huawei and ZTE. Well, HTC still makes some money, but their sales are already crashing, margins dropping and who knows how long they’ll keep the profits. All the rest in Android ecosystem, especially high profile former Nokia competitors like Motorola and Sony Ericsson, are losing money. With lower revenues then Nokia had from dumbhones this Q while still making tidy profits.

So for now - I don't know. And anybody who says he knows, he is simply guessing, and may get a lucky guess this time, or not. But until we see the full extent of current Nokia strategy, there is no way to know. Check Tomi’s numbers/forecasts over the last year to actual Nokia results, and see how many times he was right. Without correcting some stuff before or after he made a prediction...

karlim

(4/4) I also fully agree that the crash in Symbian sales this year was way worse then anyone at Nokia and even Elop projected. There's no denying it. But I still disagree with reasons for that. You think it was deliberate sabotage by Elop and his "Burning platforms" memo. I think it was more of a natural progression of trends that started in 2010, way before Elop showed up at Nokia.

I even agree that Feb.11th was a miscommunication error as far as Symbian is concerned. The End of Life impression that announcement created was way too strong. And Elop backtracked, tried to repair the damage 2 days later during Nokia press event in Barcelona.

But I again disagree on the amount of damage the announcement/memo did. You see that as the sole or at least the main reason for current Symbian state. I see it only doing a minor damage at most, with the rest of the decline being the result of natural market dynamics.

According to Tomi, Nokia had 39% smartphone marketshare at the end of June 2010. By the end of the year, they lost 11% of that and got to 28%. With no Elop’s fault in that. And with Symbian 3 shipping for half of that time. Now simply subtract that 11 point market share loss for the next 6 months and the next. You get to 6%. While Nokia now has 12-13%.

Tomi described those trends in his Jan. 27th post “Undesirable at any price” and then offered his view what Nokia should do. None of which Nokia followed. And Nokia still has at least twice more market share then trends at the beginning of 2011 showed. Elops “Burning Platform”, etc;or not

Well, that is part of the reasons that no matter how hard I look, I can find no evidence of a foul play in Feb 11th/Burning Platforms. I have no idea whether Nokia’s decsion to go WP was right or wrong. I only believe that it was made in good faith. And we’ll see results later, in Q4./Q1. And Elop’s head will roll if the decision was wrong

Per

It must be unique to one CEO saw (explaining how bad the services it produces) the company's own products

n900lover

I agree with others, the memo and all the conduct afterwards wasn't mistake, it's the only reason why wp wasn't proclaimed dead and forgotten a long time ago. Imagine he did proceed with developing wp in secret and allowed the symbiand->meego transition to continue unabated, by this time the transition would be in high gear and if he tried to claim third "ecosystem" with the n9 knockoff he would be simply laughed out of the door, waiting even longer for the apollo till the end of year would be out of the question, because wp8 strategy would be already scrapped and half of ms executives fired.

And I'm thinking it was all more or less calculated move, because no doubt they saw the symbian surge, the wp debacle was starting to be clear and on the first sight it was obvious n9 really had the potential to be winner. Killing symbian/meego and publicly betting all on ms was the only way to keep wp barely alive.

Contrast it with his dealing with the supposed meltemi os for dumbphones, it's publicly ignored to the point I actually doubt it's real strategy (and for microsoftied nokia meltemi never made sense anyway).

parastar

karlim: I was about to say, well assuming that everything was right with their analysis, how they miscalculated the potential of Symbian Belle, and Meego e.g. N9, and their QT plans? All they wanted at that time was a solid performance and push the strategy was there and was correct, their ecosystem was there, why they have to go the long way then?

Anyway I think n900lover gave the answer, thank you.

Matti

Tomi I think its time to let go. There's nothing left of the Nokia you once worked for.

OPK’s hubris and bureaucracy destroyed most of it. Elop then blundered what was left. Meego is dead, Symbian is deservedly dead and (commercial use of) Qt is dying quickly. It would take too long to turn the ship yet again. Nokia is doomed to being a low profit margin OEM manufacturer for Microsoft. Hence the killing of manufacturing in Europe. Now Nokia is just a logo on OEM hardware. The future is sold off and it’s simply too late to do anything about it. So, just let go and use your energy on something else.

Nokia ei ole enää osoittamasi vimman arvoinen.

Earendil Star

A bit off topic, but I see that people are saying:

"Meego was even smaller than WP. Then, why shift to Meego?"

First of all, Meego had not even been released at the time, so, necessarily, its market share was zero. Yet, the issue is that if Meego / Maemo had been wholeheartedly embraced by Nokia, a TRANSITION PATH was already in place to bring former Symbian users, developers, apps, etc. to Meego. Meego should have correctly been perceived as a "Symbian NT", and taken Symbian's place and dominance.

If Nokia had used its full power behind the N9 (and N950) as it did in Q4 2010 with the N8, Maemo / Meego would already be a MULTIPLE of WP in the marketplace. That would have simply derived from Nokia's carrier relations and ability to distribute worldwide, as it did with the N8. And it would have had all the factories ready to produce enough smartphones to meet demand, without needing to resort to external manufacturers (Compal) to build "alien" (WP compatible) phones. Everything in Nokia was geared up to that objective.
Of course, in this scenario, the REAL burning platform, i.e. WP, would not have received ANY boost from Nokia, and would now be completely off the radar. Just imagine: where would WP be now, if even with Nokia's help it is still losing market share? Please mind that most of the current WP propaganda -while waiting for WP8 to be released who knows when- is based practically exclusively on Lumias.

Symbian was to become the low/mid range Nokia OS, and was ok for that, as Belle is proving (and as Carla and Donna should demonstrate even more, if they are ever released). By the way, this was achieved by people externalised to Accenture, so most likely less active than if they had stayed. Eventually, of course, Symbian would have been phased out, just as MS transitioned from Windows 95 to NT and Apple from previous OSs to Mac OS X (always preserving compatibility). And Maemo / Meego would have taken its place.

Everybody knew that Symbian had to be changed, so the fact that it was "beyond recovery" was ininfluential.
By the way, this system "beyond recovery" still manages to beat WP hands down worldwide...
Just think what could have been if THT Elop had not said that Nokia's current & planned systems were POS in the infamous "burning platform" memo. And without the subsequent announcement that Symbian and Maemo / Meego were dead.

So, with THT Elop, WP came, and the rest is history. Why the board made such a decision is unknown and I think it is a waste of time to try and understand why they did so, because they will never tell, so any hypothesis will have to be based on pure conjectures. We will most likely never know, unless and investigation is made.

The only thing we know for certain is about the actions being made by THT Elop, and I am starting to believe, as some commenters already pointed out, that the decision by THT Elop, in February, to clearly state that Symbian / Meego were dead was no accident, even if the first WP was still months away from being delivered. THT Elop never cared about Nokia. His aim was and is to foster WP. If Nokia had continued its path with Maemo / Meego, the WP strategy would have seemed totally absurd by Q4 2011. He had to act fast and he did.

Yet, regarding Nokia's past options, it is important to realize the following.
In the OPK/AV scenario (or any non WP alternative), Nokia would have retained its ecosystem and most likely its profits and prime position.
In the current THT Elop scenario, Nokia has become a mere OEM (= low margin operation), tied to a single OS provider (which, being the only one, is therefore able to dictate what to do), has lost its ecosystem, and most likely will be sold as a lean smartphone unit (plus goodies like Navteq, carrier relations, brand, patents, etc.) to MS, while non strategic things (to MS), if any are left (since THT Elop is already getting rid of them) will be sold to third parties.

A further good warning to any other company thinking to make a "strategic alliance" with MS in the future. Good night and Good luck!

Tomi T Ahonen

Wow, everybody!

What a nice discussion here over the weekend. I have a lot to read.. I will start with replies to you, but notice we have so many comments here it may be a while until I get to your comment. Please do keep the discussions going, it is very good deep discussion about the Memo and Nokia's strategy

Tomi Ahonen :-)

Sander van der Wal

@karlim

It seems reasonable that Green left because he was out of a job. Being brought in to manage development of Nokia's smartphone OS'es, with these os'es being replaced with winmob, there was nothing to manage.

Further, the idea to put Qt in top of WInphone 7 is a way to signal to the market that Nokia was taking its obligations to partners seriously. Having made a promise a number of times for three years in a row about Qt being the next platform, an then defaulting on that promise, makes you appear very unrelable indeed. And that signal was seen by the entiere ecosystem, not just the developers. So, Nokia's retail partners did not felt obliged as much as they could be to keep pushing Nokia phones. Remember that is is now about Apps, Apps and Apps to sell phones.

cycnus

@Baron95

It's really nice to see that you now change your voice/tune to reflect the real you.

So, it's now NOT WP is better for nokia or symbian is suck.... but NOW you were saying: YES, MS sabotage Symbian, that's how the world work, and you can't do anything because MS is a big bully and you (baron95) like that...

Per

I don't think Microsoft liked that Nokia focused on QT. QT is a very big threat against Microsoft because it can target so many different platforms creating apps.
Windows is strong because it's software base, not because it is a superior OS.

Maybe it isn't that important for Microsoft that Nokia is going to sell a lot of WP phones (of course it is good if they sell a lot), but the most important feat may be that QT gets weaker.

Earendil Star

Baron, I am pleased to see that you have finally joined the lines of the "conspiracy theorists"!
Although, as I have already said, I see no conspiracy: what we are talking about is in plain sight.

You finally see the truth and depict Nokia as MS's captive OEM.

While celebrating this event, let me add just a couple of comments though:

1) WP is nowhere near becoming the "third ecosystem", at least not yet. RIM, Bada, Symbian, etc. are still much stronger.
This may reflect your personal hope, but it is still NOT the case. Might become true one day, but it is not so now.

2) Yes, Motorola will most likely be acquired by Google, if all necessary authorisations are given.
Yet, Moto was done and was wilfully prepared to be sold, Google had nothing to do in its demise and -most importantly- they actually BOUGHT it.
On the contrary, Nokia was still n.1 and profitable when MS struck, it has not been bought by anybody (yet), and -yes- MS is having an active role in the demise of the company. A total free lunch for MS (including goodies like Navteq, patents, stores, technology, know how, carrier relations, etc.), therefore the understandable awe by khim (and myself) to the ability MS has on these occasions (however -it must be said- in the total absence of anyone controlling that things are conducted fairly and legally). On my side, I would have never been as vocal against MS if it had openly and simply acquired Nokia at its fair price from start.

3) The important issue for those who cared about Nokia (which you clearly don't) is that -pre THT Elop- Nokia still had the chance to nurture its own independent ecosystem. This is crucial because future profits will mainly derive from the ecosystem, not from being an OEM, let alone if you are a captive one.
And this is not wishful thinking, because Nokia was the incumbent possessing the FIRST ECOSYSTEM well into 4Q 2010. With all the right pieces in place: path to a new OS, store, maps, apps, devs, you name it. Maybe it would not have remained n.1, but at worst n.3, you bet!

After THT Elop came, though, this possibility was totally annihilated.
As you correctly state, Nokia is hoplessly becoming MS's captive OEM. For free.

elm70

Test message

Why my previous 2 messages have been deleted ?

elm70

@karlim

I did made a long reply yesterday, but unluckily it got lost or deleted.

In short. You say that the "American Funds" theory is wrong, since not enough board member did resign or made noise after Elop memo and new strategy.

That's prove nothing. Nokia board member are presented by the shareholder, and voted at the Nokia shareholder meetings, and since American Funds are controlling with they stock ownership dominance since years, the members of the board have been chosen by the same people that chose Elop on September 2010. The other nokia shareholders are so fragmented that maximum can place 1 or 2 board member inside Nokia.

elm70

Thinking that Elop alone did decide the new strategy is very naive, thinking that this decision was made few days before the new strategy presentation is an absurd ... Elop told with Ballmer at the new strategy presentation that Nokia was bring engineer for know-how transfer between Nokia & Microsoft, since November 2010 ... just few weeks after Elop was CEO of Nokia.

Anyhow ... there is almost no doubt that Elop is a criminal, and with his "criminal friends" did made Nokia a slave of Microsoft. But bring these people on court need courage and demonstrate their dirty job is going to be difficult. Only possible way is to prove that they made money shoring Nokia on the market, I expect Jorma must have done huge investment betting against Nokia, this for compensate the big money that he was going to lose with his Nokia ownership ... else, the American Funds must have directly-indirectly send some black money to him.

Finally, I want to remember that at the day that the new strategy has been announced by Elop and Ballmer, Nokia lost 30% on the market, that means thousand of investors and analysts in the world, clearly seen the new strategy not a good one for the future profit of Nokia. In a normal company controlled by normal share holders the CEO would have been fired in no time ... but in the case of Nokia this did not happen.

Tchuss

e_lm_70

DS

Yea, right Baron, let US/Silicon Vally take care of making the profits, Asians (Nokia under Elops plans will become not much but a sticker on Asian manufacting) to do the manufacturing and leave Europeans to buy the stuff.
A new, great world of mobile.

vladkr

addendum to my comment, on the first page :
Few stores in my city in Canada stopped to sell Lumias after one week; not enough demand... however X7 are still offered.

Is it supposed to be a success ?

Any idea on how selling patents to Mosaid (old friends from McMaster university) and share revenues with Mosaid and Microsoft will benefit to Nokia ?

Tomi T Ahonen

Ok lets start with replies

Hi Sander, Julian, TomiFan, ej and elm

Sander - good point but note, I used Elop's definition of ecosystem which is far wider than just apps. As you know, I have warned apps developers that consumer-oriented smartphone apps is a lousy way to try to make a living (but not impossible, witness Angry Birds haha). What sets Ovi apart from Apple is that Ovi runs across the planet so in many countries and languages especially emerging world, its the only option

Julian - thanks!

TomiFan - ok, I hear you. The N950 might not be perfect - but it still was being manufactured and delivered to users, and there are some who love it - inspite of the deficiencies you indicate. First, if Elop wanted - the N950 would be as complete as the N9. Secondly, the N950 was out well before the Lumia handsets and it seems the Windows Phone and Lumia package is more incomplete. But I am not a programmer (anymore). I for myself, would be willing to pay good money of my own, to have an N950 (but not a pure touch screen phone like the N9 or any of the first Lumias)

ej - thanks!

elm - good points as usual. About the conspiracy vs Elop solo.. First, obviously yes, Microsoft gains out of this, so if Elop is in his mind seeing a better future for the solid partnership between MS and Nokia, he can justify what he is doing, insipite of the carnage along the way. But Ollila and the Board - I do think they were sold a lot of bullsh*t with the original Microsoft deal - remember how many times Elop said in public he was surprised how bad the damage was or how unpredictable Nokia had become etc. So I am pretty sure, Elop had sold a better vision for the Board than what they got. Elop is a great salesguy and makes excellent presentations.

Thank you all

Tomi Ahonen :-)

Tomi T Ahonen

Second set from Feb 10

Hi Dan, vantsujoshi, Timo and vladkr

Dan - I was VERY clear that Nokia's problems started before Elop. But the problems were made MUCH worse with this memo. Or are you here to suggest this memo helped Nokia in any way?

vantsuyoshi - thanks for the Indonesia perspective. Indonesia is obviously the 4th most populous nation and Nokia had a massive market share in its smartphones, rivalled by Blackberry. That all collapsed with this memo.

Timo - excellent point - actually, I will of course have that analysis coming when we get to do the end-of-year numbers for the smarpthone races 2011. I am waiting for Gartner to give its final count and then we can start to do the math.

vladkr - thanks! I really appreciate that! And yes, the damage started with this memo, but since then Elop has done truly unbelievably bad actions as CEO to make the damage worse, starting right 2 days later on 11 Feb with the crazy timing of the Microsoft announcement, etc. I am actually working on a blog to chronicle the major mis-steps by Elop but you can imagine, writing one of these is very painful for me and takes forever and leaves me very upset at the end, so I really don't want to write about Nokia troubles every day haha..

Your analogy is perfect - Elop pretended to be the fireman with water to put out the fire that he said Nokia had. But instead, he poured gasoline on the fire to make it far worse. And he has done that consistently in the past 12 months. Thank you so much for your observations from the Canadian angle!

Everybody, please keep the comments coming, I am learning again very much from the excellent discussion here

Tomi Ahonen :-)

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