Elop, Nokia, Tablets, Location Based Services and Product Line

This blog does not treat everything Stephen Elop does as Nokia CEO as inherently wrong. I have supported enthusiastically some of his early decisions when he came to Nokia. I have been critical when I see mistakes, and I have been open about when I think Elop (and/or Nokia) has made the right choices. I concluded last summer that Elop's tenure was so full of mistakes that he is unfit to run Nokia and must be fired. But even after that, I have noted whenever he has made good choices, such as reinstating some of Nokia's long-standing features and abilities on phones (like second cameras, removable batteries, microSD support, TV out etc) and on Nokia strategy when for example Elop reversed his stupid decision to go to purely numbered phone names. Now we have Ashas and Lumias and PureViews and no doubt more named phones coming up in the future.

If only Elop could start to manage Nokia intelligently, with some sense and responsibility, I could stop the occasional critical blog articles about Elop's bumbling. But once again, at MWC in Barcelona last week, Elop was up to his usual madness, promising moronic strategies for Nokia. I am referring to his interview to Tech Crunch, which you can see at this link - and there are written summaries of his major points if you don't want to watch a video interview of Nokia's CEO talking about Nokia's future.

FOUR NEW STRATEGIC BLUNDERS

So, last year Stephen Elop caused the costliest damage to any market-leading brand in any industry ever with a pair of idiotic communications from Nokia. He issued the Burning Platforms memo, so full of mistakes that he has since walked back a dozen of the major assumptions, statements and major errors in the memo - nonetheless, that memo caused billions of dollars of damage to Nokia. This was akin to the infamous Ratner Effect. And Elop compounded his memo mistake, with the crazy timing of his announcement of Microsoft as partner, when he had no smartphones to sell, and when Nokia was not even going to release smartphones on the then-current version of Microsoft's Windows Phone OS. This was similar to the devastating Osborne Effect. The collapse in Nokia retail sales added to Nokia's billions lost in revenues and profits. Highly profitable Nokia Corporation just before those two announcements went into the red by mid-year and is producing losses still today.

I was among many who called out Nokia immediately on the strategic blunder of those two communication errors. I have since called the combination by Elop of the Osborne Effect with the Ratner Effect as the costliest management blunder of all time, and it now has a name: the Elop Effect. Obviously Elop himself has admitted that the effects to Nokia were far more damaging than he had anticipated (this alone is reason he should be fired) and Nokia's 34% market share for all of 2010 - when Nokia sold more twice the number of smartphones as Apple's iPhone - is now down to 12% by Q4 when Apple is almost twice as big as Nokia. Nokia was growing unit sales, growing revenues, growing average prices and growing profits just four quarters ago, in Q4 of 2010, the first Quarter with Elop fully in charge. Since then Nokia has seen collapsing unit sales, crashing revenues, dropping average prices and Nokia has swapped growing profits for growing losses in its smartphone unit.

How will Elop fix this? He told the Tech Crunch interview that Nokia was expanding its product line in the Lumia series powered by Microsoft Windows Phone. I have been most critical of that strategy in the past, and I explained as recently as February why even with its upcoming flagship smarpthone the Lumia 900, the Nokia Lumia strategy is failing and will not save Nokia. So this was not news. I understand Elop has to 'believe' his strategy no matter how doomed it is, Elop has burned his platforms explicitly with Symbian so he cannot go back anymore. No matter how much Lumia will damage Nokia, Elop is now committed to it. And this blog is not a repeated criticism of Lumia and the doomed Microsoft strategy. I am addressing four new statements of Nokia direction that Elop made now last week in Barcelona.

Stephen Elop said that Nokia was investing in the Nokia Reader and did not reject the idea of a Nokia branded eBook reader like Amazon's Kindle. When asked about proper tablet PCs like the iPad, Elop said "This is something really interesting to us." Then when asked about the next big thing for Nokia after this camera on the 808 PureView, Elop said "A big part of our strategy going forward will be location-based services." And finally, about Nokia's product portfolio and comparing it to the single-device strategy by Apple's iPhone, Elop said "We will be a lot more pared down going into the future. Its not a single device strategy, but there will be paring down."

These are all utterly mad strategies for the market leading handset manufacturer that is the market-leadering mobile phone handset brand on five of the six inhabited continents, and intends to recover its market leader position also on the sixth (North America) where consumer and market needs differ considerably from the rest of the world (being less advanced and needing more simplistic less sophisticated handsets, and where the carriers/operators set very high demands for customization and where carriers/operators often demand that particular features and abilities are stripped from standard phones). But lets examine each of the four stated strategic missions for Nokia and why they are wrong.

eREADER IS CRAZY

Elop did not commit to producing an eReader device like the Kindle. But Elop did not deny that either. Why is the Kindle successful? It is manufactured and sold by the biggest bookseller on the planet, as a super-optimized ebook reader. What is Nokia's Reader? It is (initially Symbian based by the way) eReader software so that smartphones can be used to read ebooks. Is that smart? Yes, that is smart. Is it yet another sign that Symbian was not dead, that this came to Symbian before Windows Phone, obviously. Is it good for Nokia to expand the market for its smartphones, whether on Symbian or Windows Phone or MeeGo, to be used occasionally to read ebooks, yes. But would Nokia be smart to produce an eBook reader? It would be a moronic move. Amazon is able to sell the Kindle because we already go to Amazon to buy our books and our ebooks. The Nokia (ex Ovi) store is not known as a major bookstore. Nokia's mobile phones are sold through custom mobile phone stores, ie carrier/operator shops and specialized handset stores like Carphone Warehouse. These are not offering eBook readers. The customers are different, the services (content) is totally different, there is no synergy between Nokia's existing sales organization, and the actual physical distribution is totally different. Furthermore the market sizes are completely different. Smartphones alone sell more than all types of computers combined (including yes tablet PCs) - even if we toss in Kindle eBooks to the pile, smartphones outsell the lot. And Nokia sells basic featurephones 6 times more than Nokia branded smartphones. What Nokia needs to do, is to market its primary goods efficiently, smartphones and featurephones - and bring the smartphone unit back to profitability, not waste any R&D effort into designing a 'better eReader than the Kindle'.

TABLETS EVEN WORSE

And yes, lets be fair, Elop did not explicitly suggest he is planning an eReader. But when asked about Tablets, he said he was 'really interested' in them. Really? Nokia to try to out-Apple on the iPad? Ex-squeeze me? Now. If you are a PC maker, and you see that the future of portable computing is headed to smartphones and tablets, it makes a lot of sense for a PC maker (like Apple) to launch a tablet PC. Makes perfect sense. In fact, makes more sense to launch a tablet for any notebook/netbook maker, than to launch a smartphone, because a tablet PC is more similar in every way to laptops and netbooks, than smartphones are.

For any handset maker, to launch tablets is utter madness. Witness Motorola and RIM. Tablets are a tiny market niche compared to all portable PCs which are a part of all PCs which are a smaller market than smartphones. Smartphones are bought, used, sold, marketed in similar ways to other smartphones, but tablet PCs are bought, used, sold, marketed in totally different ways to smartphones - in similar ways to PCs. So with tablets, we don't buy them at handset stores (even though a few are typically offered). We tend to buy our tablets at PC stores. The king of the hill in tablets is Apple with about 75% market share with the iPad. The rivals who have tried to compete from the smartphone side like Blackberry, have failed miserably. The only rivals who have had some success have been like Samsung who were PC makers already and had that sales channel already.

Any Nokia branded tablet would fall into the aim of the iPad. Can it be as good, of course not. Nokia has tried for five years now to match the iPhone and while the N9 with MeeGo came close, no Nokia smartphone, not even the Lumia 900 has matched the iPhone. Why would Nokia's tablet be better than the iPad. Of course it would not be. And where are the Nokia stores to sell them? Nokia abandoned its retail flagship stores. Nokia does not have any relationship with the PC sales channel. Why on earth would it invest any R&D to try to sell a new electronic gadget where the market is tiny and utterly dominated by Apple? This is madness.

 

The right strategy, is to take the N9 and N950, running MeeGo, the most desirable most highly praised Nokia smartphones ever, on Nokia's best OS platform ever, that already are in production, and immediately expand their availability to every Nokia market. Remember the German magazine who loved the N9 and MeeGo so much, it instructed its readers to drive to Switzerland or Austria to get their hands on an N9 (rather than buy the disappointing Lumia handsets sold in Germany at the time). Or see how the Guardian reported on how disgusted it was with the Lumia 800, that it was returning the handset. Nokia problems are not that it cannot make a desirable product. Nokia problems are that the CEO pushes an undesirable product on its customers and refuses to give the desirable product. That is why Nokia is making a loss in its smartphone unit. As we calculated here, even with no Nokia marketing support and selling only in far-away bizarro markets, the N9 on MeeGo was outselling all Nokia Lumia smartphones in Q4 - the launch quarter for both platforms - and how much was MeeGo outselling Lumia? By 3 to 1. What idiot CEO talks about launching a costly tablet PC while he has a hit smartphone in his pocket and refuses to sell that?

LOCATION, REALLY?

And then what comes after the 808 PureView superphone? Elop said a big part of Nokia's strategy was going to be location-based services. What? AGAIN he is committing the same error he did time and again last year. Elop has fired all competence inside Nokia who had the legacy knowledge. He is now listening to Microsoft and West Coast based experts who may be good about the PC based legacy internet and know about things like steam engines and the fax and carrier pidgeons, rather than the Finland-based mobile experts who invented much of the mobile internet. The location-based market opportunity is not only an utter failure. It is only - get this - the worst-performing part of the mobile industry ever. The. Worst. Performing. Part. In this industry's history. Nokia knew this. Elop probably fired all the staff who know this. In the past decade, when the mobile industry grew customers by 500% and grew revenues by 250% - most mobile service concepts grew from zero to several billions of dollars in value. Location-based services? Gartner measured that only 2% of the planet's mobile subscribers were using any kind of location-based services ten years later. Abi Research found the total value of location-based services at a measily 560 million dollars globally in 2010. This is THE. WORST. PEFORMING. PART. In mobile. And here Elop wants to focus?

Mark my words, Nokia will fail miserably with this. Nokia's successes will come from other areas, not from location-based services. And Elop will have to eat those words too, like he did with so many from last year. This is sheer madness. Only a complete ignoramus would commit the company on this futile journey, wasting millions in that pursuit. Elop is once again acting like the ostrich. The facts are staring him in the face, he simply hides his head in the sand and refuses to see the truth. He is substituting his own imaginary world, in place of the truth. This is textbook delusion. It would not be so bad, if Nokia was a filthy-rich hugely profitable company, that it could indulge its CEO in some silliness, but Nokia cannot afford this. Nokia has to focus on areas where the industry is strongest (cameras, music, gaming, social networking, advertising, mobile money), not where it is weakest (location-based). Note - Nokia HAD strong initiatives in cameras, music, gaming, social networking, advertising and mobile money. If Elop had bothered to do what he was hired to do - help Nokia execute better - he'd have big successes out of those. But thats too much 'work' for Elop. He would rather throw all of Nokia's efforts away in the areas where it has invested in - and often has established a lead - and rather pursue some silliness. Oh, I remember, the Windows Phone cannot support the supercamera of the 808 PureView. Windows Phone doesn't support NFC that is needed on mobile money, etc etc etc.. So Elop is making decisions that are to Microsoft's best interest, even where it is damaging to Nokia's best interest. Whose CEO was he, again?

PARING DOWN PRODUCT LINE

And the last bit of madness is probably the most costly and permanent damage to Nokia profits. I wrote in January 2011, just before Elop announced his Burning Platforms memo and the Microsoft strategy, what was wrong with Nokia and how to fix it. Part of that blog are things Elop has now, with a lot of reluctance done - such as fixing mistakes in handset design philosphy (annoying existing customers and recognizing the needs of Nokia markets globally, like removable batteries, microSD support, close-up camera focus, etc). In that blog I argued vehemently that Nokia needed to re-establish its lead in camera (something Elop now did with the 808 PureView). And another point I made adamantly was that Nokia cannot pursue Apple towards a limited product offering. Ford and Toyota do not look at the highly desirable (and profitable) Porsche 911 and suddenly decide to go 'paring down' its product portfolio and focus only on a few sportscars. The exact opposite is happening in every leading and highly profitable company in every industry (except Apple with the iPhone, where Apple has clearly been leaving profit on the table, a frightening thought considering Apple is the most valuable company already on the planet). Porsche does not 'pare down' its products. It is still expanding. We have seen the launch of Porsche cars into SUVs and the formerly 2 door sports coupe maker now also makes the 4 door sporty Panamera. Aston Martin, you don't get more exclusive supercars than that. And Aston what have you done for me lately? They have gone from making V-12 supercars to also cheaper (still super-expensive) V-8 powered sportscars and have expanded to a 4-door model. I could go on.

An engineer will be tempted to think that he or she can design a perfect device. A marketer knows there is no such thing and that we humans have differing needs and wants, often even irrational needs and wants. The more you, the manufacturer, can support the variety of customers, the more you can make a profit selling a gadget to a segment of the market where there is no rival. That is exactly what Nokia did with the 808 PureView or what Samsung did with the Galaxy Beam (the smartphone with the pico-projector). Elop contradicts himself later when he says in the interview that Nokia needs to offer "different things for different people in different markets". That is NOT one size fits all. That is not Henry Ford's 'any color as long as its black' (NB he actually never said that).

 

Nokia is uniquely positioned to flood the market with the most broad product portfolio possible, in every form factor and color and feature set and price point. Nokia can use this competitive advantage to drive its competitors into loss-making! Nokia can win this way. But already before Elop, under Kallasvuo, Nokia moved away from this position - the one where Nokia holds a competitive advantage against all rivals. Now its Samsung which offers the broadest portfolio and who grew market share in 2011 and who lost? Who made a profit in handsets and who made a loss? Samsung has taken Nokia's winning strategy and now is gaining in size and growing profits. Elop has taken the losing strategy - so damaging that Nokia factories are now idling and some are being sold.

Look at the Lumia range. It now has 4 handsets. Not one QWERTY amongst the four. Always before when Nokia released flagships, one of the top phones had a QWERTY version - as 30% of smartphone buyers will not even consider a smartphone that doesn't offer a QWERTY option (according to Motorola). When Nokia released the N8, it offered the sister model E7 with QWERTY slider. When Nokia released the N9, it had the sister model N950 with QWERTY. But Elop prefers to anger existing Nokia customers and drive them to rivals. Even 'failing' RIM sold an increasing number of Blackberries in Q4 - powered by QWERTY. Where is the legacy of the E-Series? This is madness by Nokia, to even talk about 'paring down' the handset range.

The needs of teenagers are different from adults. Business/enterprise customers have differing needs from consumers. The needs of handset users in markets where they do not use the English language (or even the English alphabet) are different. The needs of handsets are different in markets where 3G has not launched yet. The needs are different in markets where most users do not have all-you-can-eat data plans. The needs are different in markets where there is no regular supply of electricity. Etc etc etc. Nokia was able to become the world's biggest handset maker - and the world's biggest smartphone maker - by offering the widest range of handsets through the largest delivery channel, being on most networks of any handset brand. That advantage was voluntarily abandoned by Kallasvuo before Elop took over. Now Elop looks at how Nokia is struggling and rather than use winning strategies, he decides to further pare down his portfolio. This is madness again.

IN SUM

I do not want to make this blog a regular series of hating Elop. But when he does something blatantly stupid, I have to call him out on it. And he is doing it again. Elop is actively destroying the company we used to love. We saw what Nokia is capable if Elop steps aside. The magnificent N9 on MeeGo. The exiled N950 also on MeeGo. Any sane CEO whose smartphone division is generating a loss, would immediately launch those two smartphones to every market. And the 808 PureView on that 'obsolete' Burning Platforms Symbian - so full of super-high tech that Windows Phone cannot even support. Yes, Nokia can come back, and could come roaring back, if the CEO stepped aside and just let Nokia be Nokia.

But Elop rather talks of eReaders and Tablet PCs. These are to the advantage of Microsoft but would be suicidal for Nokia. He talks of Location-Based services being now the next focus area for Nokia where for example Google says its number 2 priority is mobile money. Nokia already not only has Nokia Money but differing from Google, Nokia has already launched Nokia Money commercially in several countries starting with the second biggest mobile market of them all, India. What is wrong with Elop? And now continuing this madness about further paring down the Nokia product line. He is incompetent to run Nokia and is not acting in Nokia's best interest. Elop must be fired now.

Comments

[imhods]

Windows 8 tablets will be failure. Win8 Desktop version is a mess. Unifying all different form-factor/purpose devices under one UI scheme is idiotic. Another fiasco waiting to happen. Maybe we will see the last of MS after the debacle. Btw, MS is a bureaucratic monster no better than Nokia, if you know anything about MS.

[Henry Sinn]

My punt is "a few months" before there's blood on the street. Elop's blood.
Something has to break - soon..
How mad is mad?

Shareholders:
How long do you give him?

Tomi:
How long do you give him?

[Vikram]

Blackberry was also growing like crazy until the point that it wasn't and is about to hit freefall like Nokia. Meego was never a competitive OS and Nokia would have fallen just as fast.

Does anybody sincerely think that Nokia was going to keep their market lead with their terrible OS's if Elop wasn't around. The Nokia freefall was about to happen which is why the Nokia Board approved everything Elop did. MeeGo and Symbian are not competitve OS's in any sense to iOS or Android.

As for tablets, the reason why Nokia is looking at Tablets is because there is an integrated ecosystem that they need to compete with in iOS. If you buy an iPad, you are more likely to buy an iPhone with iCloud, compatible apps etc... which hits Nokia - and others - directly in their core market in smartphones. Tablets are a more defensive move because of the market size - as you rightly point out Tomi - but they are necessary.

[Tomi T Ahonen]

Hi all, lets do this in two parts, as Baron ran a whole litany of nonsense

Baron - ok, once again. I appreciate your opinions, you are entitled to them but you know I deal with facts. And where we have facts, opinions are pretty pointless. So just quickly - Elop clearly outlined his future plans ie strategy forward. Tablets have FAILED for EVERY pure handset maker. Only PC makers have managed to make success out of tablets. Some coincidence perhaps? But would be suicidal for Nokia to divert valuable R&D resources to tablets now, when their vital smartphone unit is bleeding. As to what might happen, anything might happen. I am warning tablets and eReaders are suicidal move by Nokia, will go exactly like Moto and RIM - if not worse.

That tablets sold in electronics stores and department stores, is irrelevant to Nokia sales - because MOST Nokia handset sales is via carrier stores - and you know this Baron. Why this silly point? QWERTY - facts again. Go visit India and China, tons of QWERTY phones. I deal with facts.

Why Nokia is failing now is ONLY one reason. Because Elop shifted away from moderately successful - but IMPROVING strategy on Symbian and MeeGo. Nokia was GROWING unit sales, GROWING revenues, GROWING average sales prices and most importantly GROWING profits until Elop announced his mad switch away from that, now since Feb of 2011, Nokia declining unit sales, declining revenues, declining average sales prices and increasing LOSSES. Everything that was (moderately) good (but becoming better) has turned to disaster. Nokia's share price grew 11% in the first 5 months Elop was in charge executing that old strategy, they have fallen 55% since he changed the strategy. The facts - Baron I deal with facts - are that it was Elop's comprehensive change to Nokia strategy that caused this damage. I said so last year in February. Why don't you go Baron and read Nokia's 20-F statement.

I do totally agree with you that Nokia used to have a slow-moving culture. It did not ruin Nokia but it did mean Nokia was slow to capitalize on many opportunities. That was what I wrote here a year ago that Nokia had to fix. That was what Elop was hired to fix.

Ford? I list several car companies and you list one. You can't generalize from one example if I list several. Give me some more. Most car makers are going in the opposite direction and you know it Baron.

I really am hesitant to bother to reply to your childish comments Baron if you don't at least attempt to stick to facts. Now I'll move to the others who commented

Tomi Ahonen :-)

[Tomi T Ahonen]

Hi imhods, Henry and Vikram

imhods - I hear you, but I am not so quick to say Win8 tablets would be a failure overall. A good PC maker/laptop maker like say HP or Toshiba or Acer or Lenovo could well do good tablets too. They all are enviously looking at Apple's massive profits and want some of that.

I agree Microsoft is notoriously bureaucratic. But they also are in the game for hte long run and I am far more confident they will continue to dominate the legacy PC side of the ICT industry, unfortunately that is the diminishing portion of the industry. As Apple is now talking of the 'post PC era' haha..

Henry - I so totally agree with you. I keep trying to do my part here on this blog and I know often my articles here do get mentioned at Finnish papers and every so often picked up by some UK and US news services but the outrage is not there. Other tech giants have fired incompetent CEO's for far less than what Elop has done to Nokia. I am hoping Nokia's Board would want to save Nokia and fire Elop for incompetence. Lets see if that happens before Nokia as we know it, is gone.

Vikram - have you seen the reviews of MeeGo? The actual user reviews of the tech press are universally glowing, very often saying not only that its the best phone and OS ever by Nokia, but often saying the N9 is the best phone ever and MeeGo is better than iOS. This is not my opinion, it is what actual tech reviewers write about MeeGo. Lumia gets nothing like it from actual users. And now the 808 PureView shows the real power of Symbian, the tech specs on that phone are years ahead of what Windows Phone can deliver. Symbian was not long-term sustainable, I agree, but unless Elop did his hara-kiri suicide move last February, Symbian would easily have outsold Apple and Samsung in 2011, Nokia easily continuing as the biggest smartphone maker. But I agree, not long-term viable - that is what MeeGo was for, obviously. Is it NOT moronic in your mind, that Nokia CEO refuses to sell the MOST DESIRABLE Nokia phone ever - right now when Nokia's smartphone unit is generating a loss?

As to tablets and competing with iOS. Vikram, you didn't get my point about Porsche vs Toyota. Nokia's primary competitor IS NOT APPLE. And Nokia would be supremely idiotic to abandon all of its markets to focus only on Apple and attempt to mimick Apple. Nokia can do far FAR far cheaper phones than Apple can hope for - that is where the next billions of phones are sold. Nokia can do far more EXPENSIVE phones than Apple, look at the 808 PureView for example. If you Vikram think that Nokia should target Apple and not Samsung, Nokia will die. Nokia's real rival is Samsung, the biggest competitor that can more-or-less match Nokia's broad product portfolio and global sales footprint at nearly 600 carriers/operators. Only Samsung.

Thank you all for writing

Tomi Ahonen :-)

[mobilesguruji]

I always thought Elop opted for Windows Phone 7 to gain marketshare in top end segment of the market but now he is doing completely opposite of it. Two out of four Lumia handsets are Lower end smartphone and priced to compete against Symbian phones.
Look at the recently launched Lumia 610 which has a 800Mhz processor & 256mb RAM which lower than the current gen Symbian phones and leave symbian even S40 is now coming with a 1GHz processors.
I won't even call Lumia 610 a proper smartphone because it can't even multitask, Nokia its 2012 cheap phones like Galaxy Y & Nokia 500 can multitask with similar specifications why can't your Lumia 610 can't.

I find very stupid of any current Nokia feature phone user to upgrade from S40 to Windows Phone 7.

* 1st there is no familiarity between the two UI's. Symbian & MeeGo looks much more familiar to S40 and makes easy for user to upgrade and learning them is much more fast then WP7.

* 2nd upgrading from S40 to WP7 users are end up loosing functionality rather than gaining.
No bluetooth file transfer.
No USB copy paste.
No USB on the GO.
No file downloading via browser (except few formats).
No memory card support.

* 3rd better Android phones in the market at less price and better hardware.

WP7 strategy is utter failure for Nokia and no one is willing to buy phones with stupid looking Metro UI atleast real Nokia fans prefer to buy N9 or PureView.

[laszlo kovari]

Elop was hired without a concept for any kind of strategy (corporate, business, product). He didn't bring a concept and the board hadn't had have any...and since creating one never became a priority the game has shifted automatically and entirely to the product domain which is a game they can't win precisely because there is no concept behind the moves. Typical: time for reflection under pressing circumstances when there is no time.

[Tomi T Ahonen]

Patrick - I removed your comment as it clearly had several statements that were already refuted in the original blog article. Please read the blog article FIRST, then please repost your comment after that. I know you made several good comments and you probably didn't know I have a rule here, that any comment that reflects that the person didn't read the blog will be automatically deleted. Please repost after you read the above blog, not only the exchange between Baron and me here in the comments.

Tomi Ahonen :-)

[ste]

"Tablets are a tiny market niche compared to all portable PCs"
That was before the iPad.

Another prediction:
"the day when the tablet market (by units) will exceed that of traditional PCs will come sometime in the fall of 2013."
http://www.asymco.com/2012/03/02/when-will-the-tablet-market-be-larger-than-the-pc-market/

[cycnus]

about N9, how good N9 is?
For a platform that were cosidered DoA (Dead on Arrival),
N9 is rank 13 in GSMArena: http://www.gsmarena.com/stats.php3
How good Lumia 800? not even half good in user interest.

Now,
How good Microsoft Platform were?
http://www.phonearena.com/news/RIP-Windows-Marketplace-for-Mobile-6.x_id27857
Microsoft just kill the WM Marketplace, and tell the user to move on to WP7.
Would this ex-MS fanboy buy/upgrade to WP7/WP8? Probably?
But I'm sure a certain percentage of them will be outraged by this decision and switch platform.
and PS: In WM you can sideload apps, but in WP7 you must download app from Microsot Marketplace.

[anobserver]

The analysis could be a bit more nuanced.

1. The famed "ecosystems" are not about mobile phones, but about computing: phones, tablets, PC, gaming machines, MP3 players, TV, e-book readers. Apple is present in most of these, and unifying its platforms. Microsoft is too, and doing the same. Google is inconsistently present in several of these. Samsung manufactures PC, tablets, phones, TV, and doing well. I also thought that RIM forays into tablets was madness, but in retrospect I think they were trying to extend their ecosystem which was becoming too exiguous; to survive as a major, leading player, one can no longer be limited to mobile phones.

This being said: Nokia has little experience outside phones (e.g. 3G Booklet), which it probably lost when the people involved departed anyway, and precious few resources to extend its product line-up. So tablets would be useful and even necessary to regain dominance, but it is a no-can-do at present.

2. Paring down the product line-up is probably a good thing if and only if it is accompanied by a re-balancing of the portfolio. Many similar touchscreen slabs, but very few qwerty terminals, and a disappearance of communicator-style and traditional keypad devices. Nokia could indeed pare down the first category to avoid duplicates (they already cancelled the 600 for instance), and provide a few more models in the other categories.

3. Location: unclear what Nokia really wants to do there. Navteq is really good, but has not been exactly a profit maker, for instance. They could start by using this asset a bit better.

[ejvictor]

ComScore numbers out yesterday last qtr USA # 13yr+ smartphone subscribers Windows Phone share drops 1% from 5.4% to 4.4% (Symbian drops only 0.1%)add to that the disaster that is TANGO with it's 1990 feature set and restrictions, PLUS the Nokia credit downgrade. A clear indication that Elop and his strategy are DOOOOOOOOOOOMED!

Oh and the N9 bug tracker was closed yesterday = Elop really killed MeeGo

[vladkr]

How good is Meego ?
It's Linux based, and Linux proved to be reliable and quite versatile : one can see it in servers, in PCs, in few cellphones, in medical systems and even in ovens or avionics. I think this os' range can be trusted.

I have a N9, that was a pain in the... that was painful to get, from Australia as my contacts in Russia couldn't easily access it (thank you Stephen for closing 95% of Nokia stores, you exactly know how to get products to your customers!).

What's incredible with Meego, is that it's highly customizable... but what's sad is that most of this personalization is hidden if not de-activated; it has a FM transmitter, but it's unusable : no antenna no interface. It has a front facing camera, but nothing to use it. It can have a dynamic wallpaper, but one has to go deeply in the terminal or download a 3rd party program to use it.
OS updates are managed erratically (as for Symbian), as many consumers complain.

Everything is done to kill the OS, to make it less desirable than it is.

Now Microsoft : I can't predict MS' future.

It has a strong base of customers, CEOs, IT directors who are not courageous enough to spend money on changing the OS, preferring to stick to Windows, even if it's as expensive (most companies I know in two continents still use venerable XP, not ready to change for Vista, 7 or even 8.)

However, everything is possible; remember what happened to GM, despite their captive customer pools (administrations) in North/Central Americas, in the UK and in Australia?
Why couldn't it happen to Microsoft (what is quite scary considering what happened to SAAB, and what could happen to Nokia) ?

Windows is still strong, but Microsoft is making a lot of mistakes :
Most of time, they don't know their own products as they come from other companies they bought before firing all their employees (MS-Dos, Microsoft Project, Sharepoint, add ons in Windows, Microsoft Flight Simulator... just look at who registered patents before they bought them, and you'll see.)

The latter case - Flight Simulator - is significant; it used to be one of the best existing simulators, and MS decided to bash it, firing people working on it. Some years later, they release MS Flight which is unliked and misunderstood product.

So MS did a lot of mistakes lately, and Apple, though still a small player in PC sales is growing slowly, but surely, even in places where it's not expected (China, Wild Russia...)

What I think Stephen Elop (and Microsoft) didn't understood about Nokia, is that we - customers - like it for the same reasons we used to like SAAB (except SAABs used to be too expensive to most people) : they used to make brilliant and innovative products, full of details that could please users even if they weren't of primary importance.

Now Nokia is BBB- rated with a negative outlook, which means it will be hard for the company to invest without Microsoft's help.

The patient is kept artificially alive by Microsoft, but sooner or later someone will turn the respirator off... and believe me, the affection I have for the company is much more painful to me that the thousands of Euros I lost buying Nokia shares.

[zlutor]

@vladkr: "It has a front facing camera" - in fact, with PR1.2 you can make video call using the FFC via GTalk (at the moment).
See e.g.: http://mynokiablog.com/2012/03/05/video-video-calling-on-two-nokia-n9s-with-gtalk/

[another patrick]

I didn't read the blog but only the comments and because I post a comment without reading the blog I break your f***ing rule so could you delete this comment MoFo?

[F.OO]

Nokia’s risk factor: Windows Phone could “significantly impair our ability to compete effectively in the smartphone market”

Outlined on Page 13 of the report are Nokia’s risk factors, and they are many. The company acknowledges that Windows Phone may be a precarious investment, and though it is earning $250 million every quarter from Microsoft in exchange for Nokia’s smartphone commitment, the company is weary at best of the plan.

"Our plans to introduce and bring to market quantities of attractive, competitively priced Nokia products with Windows Phone that receive broad market acceptance and are positively differentiated from competitors’ products, both outside and within the Windows Phone ecosystem are subject to certain risks and uncertainties, which could, either individually or together, significantly impair our ability to compete effectively in the smartphone market."

The report goes on to say, in no uncertain terms, that unless Nokia can pull a rabbit out of a hat and make Windows Phone an attractive ecosystem for developers, the chance of the company regretting its decision to get into bed with Microsoft is pretty high.

Finally, perhaps the saddest and most emotional paragraph ever written in an annual report:

"In choosing to adopt Windows Phone as our primary smartphone platform, we may forgo more competitive alternatives achieving greater and faster acceptance in the smartphone market. If the benefits of the Microsoft partnership do not materialize as expected, more competitive alternatives may not be available to us in a timely manner, or at all."

If you’re interested in a candid look into Nokia’a current headspace, this SEC filing a great read.

http://mobilesyrup.com/2012/03/09/nokias-risk-factor-windows-phone-could-significantly-impair-our-ability-to-compete-effectively-in-the-smartphone-market/

http://i.nokia.com/blob/view/-/1015984/data/3/-/form20-f-11-pdf.pdf

[F.OO]

More Microsoft risks, from Nokia's report:

"Our partnership with Microsoft is subject to certain risks and uncertainties, which could, either individually or together, significantly impair our ability to compete effectively in the smartphone market.

A further change in smartphone strategy could be costly and further adversely affect our market share, competitiveness and profitability. Risks and uncertainties related to our partnership with Microsoft include the following:

• The agreements with Microsoft may include terms that prove unfavorable to us.
• We may not succeed in creating a profitable business model as we transition from our royalty free smartphone platform to the royalty-based Windows Phone platform due to, among other things, our inability to offset our higher cost of sales resulting from our software royalty payments to Microsoft with new revenue sources and a reduction of our operating expenses, particularly our research and development expenses.
• The implementation and ongoing fostering and development of the Microsoft partnership may cause disruption and dissatisfaction among employees reducing their motivation, morale and productivity, causing inefficiencies and other problems across the organization and leading to the loss of key personnel and the related costs in dealing with such matters. [THIS IS ALREADY HAPPENING]
• We may not have or be able to recruit, retain and motivate appropriately skilled employees to implement successfully our strategies in relation to the Windows Phone platform and to work effectively and efficiently with Microsoft and the related ecosystem.
• New business models require access and sometimes possession of consumer data. If we do not have such access within our own control, this may hinder our ability to pursue such opportunities.
• The implementation and ongoing fostering and development of the Microsoft partnership may cause dissatisfaction and adversely affect the terms on which we do business with our other partners, mobile operators, distributors and suppliers, or foreclose the ability to do business with new partners, mobile operators, distributors and suppliers. [THIS IS ALREADY HAPPENING]

We have a number of competitive strengths that have historically contributed significantly to our sales and profitability. These include our scale, our differentiating brand, our world-class manufacturing and logistics system, the industry’s largest distribution network and our strong relationships with our mobile operator and distributor customers. Going forward, these strengths are critical core competencies that we bring to the partnership with Microsoft and the implementation of our Windows Phone smartphone strategy. Our ability to maintain and leverage these strengths also continues to be important to our competitiveness in the feature phone market.

As discussed above, however, the Microsoft partnership and the adoption of Windows Phone as our primary smartphone platform are subject to certain risks and uncertainties. Several of those risks and uncertainties relate to whether our mobile operator and distributor customers and consumers will be satisfied with our current strategy and partnership with Microsoft going forward. If those risks materialize and mobile operator and distributor customers and consumers as a consequence reduce their support and purchases of our mobile products, this would reduce our market share and net sales and in turn may erode our scale, brand, manufacturing and logistics, distribution and customer relations. The erosion of those strengths would impair our competitiveness in the mobile products market and our ability to execute successfully our new strategy and to realize fully the expected benefits of the Microsoft partnership. [THIS IS ALREADY HAPPENING]

http://i.nokia.com/blob/view/-/1015984/data/3/-/form20-f-11-pdf.pdf

[Alfonso]

Baron95: It would be interesting to hear your views on Nokia's potential in location based services? Clearly protecting the Navteq acquisition (made before Elop took over) plays a part here.

[kevin]

Tomi, I appreciate that you gather mostly facts. But facts look at the present or the past, not the future. One needs to perceive trends from the facts that may help forecast the future.

Facts are like the scores and statistics in sports. One can look at them and try to forecast the future. But it's just as important to look at how the game is being played to figure out how it will be played in the future.

I say all this because I think the mobile market is changing. Even you say that someday, almost all phones will be "smartphones". And you based that on a trend that you derived from facts (growing unit sales). But we need to also look at what is driving those unit sales. And at the increasing diversity and range of smartphones. The difference between a low-end smartphone and high-end featurephone today is much different than it was 4 years ago. So what is being measured by smartphone unit sales is changing.

So to keep this short, I believe that the ecosystem is becoming a more important driver of profitable smartphones, as Baron and anobserver have pointed out. And that's why Nokia has chosen Windows Phone and is interested in tablets. More later.

[Tania Tani]

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