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« Was That 007 at Shanghai GP this past weekend? | Main | Paging Truth Police: One Last Time - the Reality of Nokia when CEO Elop Took Charge as CEO, and What Was Not Broken »

April 20, 2012


So Vatar

the real bad thing is that it is now too late for Nokia to survive. Their cash burn increases, and they are running into liquidity problems. They still show net cash of $5 B, but their bonds are rated almost junk, means their cost to get liquidity increases. At the same time vendors want to see cash before they deliver their wares, and carriers won't pay any faster. Add losses and add lost trust, and you have the recipe for failure.

This is a classical financial downwards spiral, leading into cash shortage, illiquidity and bankruptcy. The only hope is that someone takes over Nokia and sell its parts.

They do not have products to sell that would be able to cut this viscous cycle. WPs are duds, and the rest of the line up gets old (even the N9 is yesteryear's phone).

I cared for Nokia and still do, but realistically the game is over.

Matthew Artero

Hello Mr. Bond,

Good work as usual. Of course the Nokia spin will continue to be that Nokia was on its way out anyway so Elop's blunders are not the real cause as something had to be done anyway and nobody had another viable answer.

Nokia Board will never fire Elop because they lack the ability to see the forest from the tree that is in front of them. None of the Board has the required experience to understand the business of pleasing customers at the individual human level. They only have the ability to see technology and big business decisions but the individual consumers are the foundation; but a foundation with a mind of its own that decides what it will support.

Nokia's Board is like military leaders who fail in battle because they disregarded the intelligence reports comming in from the fields of battle. They will never replace Elop because they do not have the ability to comprehend what is going on and are unable to handle the responsibility of choosing the correct replacement.

In Elop they found a scapegoat that allows them to wash their hands of responsibility and that was their true goal and the limit of their ability.

Just as they use the excuse that Nokia was on its way out anyway they will also use the excuse that they couldn't have gotten anyone better. They will continue to disregard Tomi's observation that Nokia was defeated by companies that did things that Nokia was also capable of doing.


And Ellop remuneration for this great achievement of destroying this great company was $10.3m in 2011 including a $2m salary. Its difficult to not be shocked.

Matthew Artero

This failure of Nokia is in line with Nokia's history. Nokia got out of its other businesses like making rubber boots where it had to pay a lot of attention to pleasing individual customers. Nokia hated having to do that for those lower profit margins.

When it got into the new technology of cellphones they were free from that. When a technology is very revolutionary it is very easy to make profits and let the technology make the decisions rather than individual customers.

The time came when the technology was no longer considered revolutionary and it was time to once again pay attention to individual customers. But by then Nokia had changed its culture away from being attentive to individual customers.

Of course Microsoft is the wrong partner to compliment Nokia's weekness as it also does not compete in the required manner for success. Microsoft's existence on desktops and laptops is so pervasive that it primarily competes by maintaining lock-in and path dependence. The very thing Nokia was doing before Microsoft came along.

Somehow the world is supposed to beleive that it is correct for Microsoft to maintain its customers and offer them a path from one upgrade to another but it was wrong for Nokia to do the same thing.



Your information/evidence about Lumia sales boycott might be a bit outdated.

For U.S. - you base the boycott theory on a sampling of a total 14 AT&T stores on a first day of sales (Monday, April 9th) done by Cnet and NYTimes. 5 stores in Manhattan by CNet, "a handful of stores" (probably no more then five) by an analyst in Ohio. Who actually found 1 sales clerk who knew Windows Phone well, recommending Lumia. So - in total 13 stores, not recommending Lumia. Here are the articles:

A week later Gizmodo did its own survey of 36 AT&T stores all around U.S And found absolutely no evidence of boycott. With most of sales staff enthusiastically recommending Lumia. With phones sold out in many stores (though I admit - from a very low stock). Here's Gizmodo survey:

This week Ars Technica also checked out 3 stores in Albany, NY. And found AT&T staff enthusiastically recommending Lumia 900. Some of them even going as far as tell a customer that Lumia is better then iPhone:

So in total 40 AT&T stores-36 from Gizmodo, 3 from Ars Technica and 1 from CNet pushing Lumia. 13 stores pushing something else. Seems that there is no AT&T Lumia boycott, after all. And AT&T is as strongly behind Lumia 900 as their public statements say.

Back to Finland. If I remeber correctly, you based your evidence of Lumia boycott there on 6 shop survey by MTV network in early March. When commenters pointed out that all Finnish carriers publicly said that Lumia is #1 on their February bestseller list - you dismissed that. Arguing that the boycott just started in early March because of high return rates. If that's the case - Lumia sales had to fall off quickly. But now carriers have released their bestseller data for March and Lumia is still at the top of the charts. Lumia 800 #1 on Elisa and Sonera, and #2 - behind iPhone 4S on DNA. Lumia 710 #3 on Sonera, Elisa and #9 on DNA. HEre are their press releases with sales data for March:

Contrary to MTV claims - real sales data for the full month of March shows absolutely no evidence of boycott.

So Vatar

@ Karim:
You still do not understand: It does not matter if there is a sales boycott or if there is none. Fact is that Nokia sold only 71 Mio feature phones and 12 Mio smart phones in this quarter. There is no way that Nokia is able to survive on this low sales volume with this downwards momentum. Additionally they need cash, need to make money. Giving products away for cheap cannot save them.

Nokia has no attractive flag ship devices, there is nothing that garners consumer interest in their mid range phones, and the collapse of their feature phones shows that customers don't care for these either.

Debating if there is or is not a sales boycott is like arguing if the mouse found dead in the burnt down house died because of lack of oxygen, because the fire burnt the skin, or because the the falling ceiling hit the head. The mouse is dead.


Does the ASP reflect the rebates Nokia offered to US & Canadian customers?



If there is no boycott, then Nokia is in deeper trouble.
It means that there is only a few percentage would consider WP7 as their phone.
Which mean no matter how hard nokia try it will fail very hard.


It's worse than I imagined. Nokia is soon to be S40 dumbphone provider for the third world only! I totally agree with Tomi now that Elopism isn't working for the late giant.
They deliberately killed the Symbian sales by stopping production and distribution in order to clear the wall for Lumia. It failed and the sales dropped like a rock in water. I may be a Nokia fan BUT I will never buy Lumia, let them go bankrupt when they are so unwilling to listen to their customers. Do Android, do MeeGo, do Symbian, do S40, do everything at the same time like Sammy does, what is wrong with that?


If, by some miracle, Elop is removed from Nokia, they must not do the same mistake again. Do not kill WP in public, kill it behind closed doors. But I am afraid that it too late and the the "agreement" with Microsoft contains a "poison pill" for Nokia if it tries to break with his "partner".


From the financial report:

"Our agreement with Microsoft includes platform support payments from Microsoft to us as well as software royalty payments from us to Microsoft. In the first quarter 2012, we received a quarterly platform support payment of USD 250 million (approximately EUR 189 million). We have a competitive software royalty structure, which includes minimum software royalty commitments. Over the life of the agreement, both the platform support payments and the minimum software royalty commitments are expected to measure in the billions of US Dollars. The total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitments."

This means nokia actually wont get reimbursements for the expenses spent on ms in the form of cash payments but only "free" wp licenses. So indeed, Elop didn't sold nokia, he gave it to ms for free.


Nokia used to have along term, publicly announced, dream of 40% market share. They actually rwached it at around 2008. In my opinion, the collapse started at that point. When you have achieved, what you want, whati will drive you forwars? There was no next stateme t as bold ans the 40%

Samsung has long said that they will become number one and overtake Nokia. Now they have done so. Let's see if Samsung can define new ambitious targets to reach for or will they become complacent - just like Nokia did.



i think you must also consider that cheap android is entering the US$99 now. and Eric Schmidt said expect the US$ 70 android next year.

So, I don't think S40 will survive fighting against US$ 70 android.

Frame Agreement


Good point. Related risk is that typically companies either agree a fixed term of the minimum software royalty commitments or they agree on the minimum until certain volume is exceeded.

In any case, the minimum royalty payment from NOK to MSFT will be reviewed business as usual at some time in the future hence the situation will turn even worse for Nokia due to higher royalty payments to MSFT.


How does a 70$US Android compare to 10$ to 20$ superbudget Nokia or random Chinese clone? Answer is it doesn't. Not the same market.


For those questioning Tomi’s “Skype hated by carriers theory” did we see in MS reporting 100 BILLION minutes of Skype in Q1 , up 40%!!!

Remember that most Mobile carriers- especially in USA- started as landline carriers. So you really think they want a super easy Skype client on mobiles to act as the gateway for consumers? Because if Skype is super easy on a mobile then the CEO walks in Monday morning and asks the VP of IT, hey lets move our business land lines to skype!

Kodo's on the blog it seemsto be gaining traction in mass media.
P.S. China GP was spectacular - how gutted were you at Buttons poor pitstop.


@svensson the difference is that $70 Android is for smartphones!


As I see in Q1 results published by Nokia, I saw that Nokia sold less devices in North America in Q1 2012 than in Q1 2011. That's quite a performance considering that Nokia sold almost no smartphone there in 2011.

Anyway, there is something surprising I noticed few weeks ago. Going to Costco for my grocery, I noticed that the demo Lumia 710 was off. I asked the seller if I could play with it, she answered me that it is broken, out of order. The same situation appeared at another costco one week after.

I didn't pay attention (I was there for my grocery after all) before a guy from France told me he was p****ed off because Lumia demo devices were systematically out of order at the main retailer chain in France, FNAC (that's kind of Virgin Megastore, or Best-Buy+Nobles book-store+HMV in one).

That's quite a coincidence, isn't it ?

Most financial analysts tend to say Nokia is dead (UBS for instance), some other say that Elop should stay until Feb 2013 (?!?) but it's time for him to face his mistakes; they're way too big to be ignored.

This situation makes me think off a car (Nokia) facing pedal to the metal a brick wall. Elop thinks that Windows will help him to break the wall, so instead of avoiding it, he crashes the car into the wall. The car is severely damaged, but he will try again and again, until either the car, or the wall will break. I think the car (Nokia), will break before the wall.


It's kind of funny that the new dumbphone OS Meltemi, which is supposedly a MeeGo spin-off, starts to create more buzz than smartphone flagship OS Windows Phone 8.


Nokia is really already beyond repair and if Finland wants to remain their competitiveness they must restart in a completely new company. Nokia as I would put it is irrelevant, it's just a Microsoft tool and now its importance is zero. Growth is not the agenda and pushing WP7 is the main goal and also the goal is that Nokia dies in the process so that Microsoft can buy parts of Nokia. If you are a Nokia shareholder, then I can only say that you will not see your money again.

Now, when it comes to the success of WP7 it looks really bad. I have absolutely no problems that WP7 phones sell. The more people who gets WP7 experience, the better. WP7 is an absolute disaster when it comes features and technical professionalism. The moaning about WP7 has only begun. I can give you a few bits and pieces on forums what people think:

* There is a consistent moaning about the battery life of Lumias and lost connections. There is a fix for the battery problem but still people experience bad battery life and get inconsistent results from the upgrade.

* The multitasking is retarded. When an application is put in the background it often halts, if there is a phone call, the application exists and you have to restart it. For example if you use Nokia drive and receive a phone call, you have to restart Nokia drive and go through the process of entering your destination again.

* Many people miss T9 and this is not available as standard in WP7.

* There have been reports that the bluetooth support is buggy, difficulties changing the volume of a peripheral headset.

* The volume setting is the same for everything! Due to different sound levels in recorded music this often leads to that if there is a phone call while you're listen to music, the ring signal might give you tinnitus because it is so much louder.

* There are no sound profiles at all.

* Call waiting is not supported.

This was just a few of the complaints. Many missing features are so essential so that you really think that the Microsoft SW engineers are a bunch of village idiots that doesn't understand how to make decent phone SW. From Windows Mobile that had 12% market share, Microsoft has now reduced their market share to currently below 5%. Microsoft's problem is that they don't understand or have the knowledge to understand how to create decent software for handhelds. Recently Nokia us trying to push for features that was available in Symbian to WP7. So how was it, Symbian was a bad OS right? Nokia must implement features that Microsoft doesn't even realize must be there in order to have a decent user experience. They can implement a few features but many of the features found in Symbian will probably be very intrusive to the WP7 OS that Microsoft forbids it or it requires too many resources. So basically what features Nokia was investing in Meego, they now must do it again FOR MICROSOFT!

So if you don't want WP7 to succeed, don't worry. The more people who see the WP7 the more people will be burnt. I don't think they will see the popularity the had with Windows Mobile.

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