There is a pervasive myth about Nokia that says Symbian was dead and Nokia dying in smartphones, when new CEO Stephen Elop took charge. Like any good myth, there are elements of truth that make the story so compelling. But this blog deals with facts in mobile, not wives' tales. Here is the absolute truth about Nokia when new CEO took charge and what he caused, once and for all. First, lets look at Nokia branded smartphone sales. Please look at this picture.
(Update May 4 2012 - there is now a lawsuit by shareholders in USA against Elop and Nokia. See end of this blog for details)
Here are the three biggest smartphone manufacturers of today, Apple, Nokia and Samsung, not necessarily in that order. Here are their quarterly sales for eight quarters from Q1 of 2009 to Q4 of 2010. Note the dotted line, that is when Elop took charge, just before Q3 of 2010 ended. Tell me which company is 'in trouble' in smartphones. Each of the three giant smartphone makers added about 2 million more smartphone unit sales from Q3 to Q4:
Source: Tomi Ahonen Consulting based on company data
This slide may be freely used and shared
I have taken public info as close to 'apples to apples' comparisons as possible, but unfortunately these three companies do not report exactly the same data. But yes, please consider: the 'Blue Company' grew smartphone revenues 22% in that period, grew average sales prices for smartphones up 14% from the quarter before, and the 'Blue Company' grew net profits in the smartphone unit up 65% from the period before.
Then consider 'Red Company' which grew revenues up 16% from the previous quarter. It grew average sales prices by 1% and the Red Company grew corporate net profits up 39%.
Finally consider the 'Green Company' which grew revenues up 19% from the previous quarter. Its Average Sales Price for all handsets was down by 2% and the profits in the handset unit were down by 23% from the quarter before.
Which of these three companies is 'in trouble' ??? All grew unit sales about the same level, after the big Christmas Quarter when usually after-Christmas sales are weak - all grew about 2 million more unit sales. All grew revenues strongly. All generated a big profit. Blue company also increased average sales price which for Red Company was flat and for Green company declined. Net profits exploded for Blue Company, gerw nicely for Red Company and fell for Green Company. But each generated a strong profit.
So? Which company is in trouble? Anyone? Which of these three is the magnificent Apple that dominates the world of smartphones, mobiles, profits and tech? Which of these is the dominating superpower Samsung? And which is the loser-company Nokia whose smartphones were undesirable and failing in the market?
Please look at those graphs and think, if you were given one of those three companies to run, which would you most love to run? For which of the three would you like to be CEO? All see growing sales, growing revenues, all generate a healthy profit. But Red is 50% bigger than Green. And Blue is bigger than Red and Green, combined. Who is strongest of these three?
I totally understand, from all the bullshit revisionist history written about how Symbian was dead and nobody wanted it, that you might think Nokia is the Green Company and Apple is the Blue Company. But the truth is - please feel free to read ALL the Quarterly Results from 2009 to 2010 - that the Blue Company is Nokia, the Red Company is Apple and the Green Company is Samsung. Yes. This is the situation, more than a quarter after Elop had taken control of Nokia.
The 'undesirable' Symbian based Nokia smartphones were growing sales from Q3 to Q4 - as they did in 7 of the past 8 quarters - and generated a profit once again, as they had in each of the past 8 quarters. Note, that 'dominating' Apple iPhone also had a declining quarter in sales in this period, as did the strongly surging Samsung, also for one quarter.
Nokia's Symbian based smartphones not only grew sales strongly - as strongly as Apple and almost as strongly as Samsung - Nokia did it while growing its ASP strongly (Samsung's fell, and Apple's was flat). Under Stephen Elop's leadership, Nokia's profits in the smartphone unit grew at a Nokia-record level.
ELOP WAS REWARDED
The Nokia investors appreciated the first five months of Elop's leadership so much, that the Nokia share price had climbed 11% since he took charge! Previous CEO Kallasvuo had seen Nokia share price drop 55% over a 3 year period (and was fired for that). In just five months, and while the world was still recovering from the global economic crisis, Elop had already recovered back one tenth of the share price losses, what Kallasvuo had lost. Elop was a 'hero'. The Nokia credit ratings by all three ratings agencies were one notch from the best possible. Nokia's brand was rated 8th most valuable on the planet. Nokia's new phones were winning awards.
These are the facts. There is no truth to the myth that it was the iPhone that killed Nokia's smartphones. It is true, that the iPhone killed smartphones - it killed Palm and Windows Mobile based smartphones, but not Nokia (nor Blackberry, it was Android that killed Blackberry).
Take one more look at that graph in the picture. Imagine being Boeing. Or Toyota. Or Levis Jeans. Or Pepsi Cola. Or Burger King. Or Nike or Timex or Sony or United Airlines or whatever global brand. If that picture was your market, all three giant rivals are profitable and growing, and you could be one? In every case, those CEOs of those giant companies would want to be Blue Company. Literally bigger than the nearest two rivals, combined (as long as the business itself was profitable, ie your leadership was economically sustainable).
WHY THE WIDELY SPREAD STORY THEN?
Ok, why the prevailing story then? First. This blog story is about smartphones. Nokia is much more than smartphones. The corporation of Nokia had become unprofitable in 2010. That was because the networking unit, NokiaSiemens Networks generated a big loss and the profits in the handsets division - smartphones and dumbphones - was not big enough to cover the loss. So yes, you are VERY correct to remember that Nokia had been in trouble, it was so, across the whole corporation but its smartphone unit was very healthy when Elop took charge. Nokia's smartphone unit delivered only a third of the total revenues of Nokia corporation but almost half of its profits by Q4, 2010, the first quarter that Elop was in charge. At an annual level, the profits generated by the smartphone unit (548 million Euros/Q4) would be worth about 2.75 Billion dollars per year. So the Nokia smartphone unit profits alone, would rank 175th biggest profits of the Global Fortune 500 in 2011. (Nokia's ranking by sales revenues in 2011 Fortune Global 500 was 143rd; thus the smartphone unit performance was remarkably strong even in a global corporate context)
SYMBIAN
Secondly, Symbian is not same as Nokia smartphones. Symbian is often considered synonymous with Nokia, but not all Nokia smartphones ran on Symbian (there were other OS platforms even before Windows Phone based Lumia, such as Maemo and MeeGo). Not all smartphones made on Symbian were Nokia branded. Earlier Symbian family included smartphones from SonyEricsson, Siemens, Samsung, LG, Motorola, etc. Even in 2011, there were still many electronics giants producing Symbian based handsets like Panasonic, Sharp and Fujitsu out of Japan.
You may have seen dramatic decline of Symbian's market share, globally. That is true. Nokia invented the smartphone, it started initially with 100% market share. Then with Symbian, Nokia invited all of its rivals to join and co-develop the OS platform, hoping to avoid a 'platforms war'. It almost worked. Only a few North America-based rivals refused to play nice, and we had rival platforms such as Palm, Windows Mobile and Blackberry. But Symbian controlled over 60% market share still when the iPhone launched in 2007, but after that, the Symbian partnership broke apart. The partners bickered about what should be Symbian's development path and Nokia ended up buying out its partners and turning Symbian into an open source foundation. Most of the facts you may have seen, of the continuous decline of Symbian market share was not Nokia losing market share. It was the Symbian partners shifting away from Symbian, and joining Google's new Android OS. Even so, by Q4 of 2010, the end point of the diagram I drew for you, the world's bestselling smartphone OS was still Symbian and the world's biggest installed base by a wide margin was Symbian. Those are the facts.
USA MARKET
And thirdly, USA. Yes, Nokia has failed in the US market, but that happened YEARS BEFORE there was any iPhone in existence. Nokia had died in the US market long before anyone had used the iPhone App Store etc. So there are those who think because Nokia has not recently had successful smartphones in the US market, it is therefore true, that Nokia died globally. What those analysts do not know, is that USA is a backwater tiny market in handsets, home of obscure standards, crippled phones, bloodthirsty carriers, and truly outdated handsets.
You love the iPhone? Think it was the best thing since sliced bread? Sure. But the original iPhone in 2007, what is now known as the iPhone 2G, the phone known as Jesusphone? That one. It was the hottest tech story in the USA in 2007. In Europe it was launched, and failed. Only the far improved model, iPhone 3G, that launched in 2008, was able to succeed in Europe, because Europe is and was more advanced than the US market. And what of Asia? The original iPhone 2G was literally obsolete for the world's most advanced handset market Japan. Yes. When American analysts ooh'ed and aah'ed about the Jesusphone, its 2G technology was literally phased out from Japan and no such old obsolete tech phones were sold in Japan anymore. Even the iPhone 3G failed in Asia, and only two editions later, with tons of fixes and upgrades, the 2009 model of the iPhone, the 3GS, was finally able to succeed in Asia.
Need any more evidence? So tell me, how many months have you had in your pocket a smartphone with a built-in pico projector? Like those from Sharp and Samsung for example, that we have here in Asia. The Europeans are getting their Samsung Beam smartphones about now. The US market may get their first pico projector smartphones late this year, or next year. I've had mine here in Asia for 18 months already. Who leads, who follows? The US market is not the leader in telecoms, definitely not in handsets or smartphones.
It is true that Nokia had failed in the US market, but that market is not the biggest smartphone market (which is China) and it is not the most advanced handset market (which is Japan). The Apple iPhone was not, and is not currently the bestselling smartphone of China, Nokia is. Nokia was more than 20 times bigger in China at that time, in Q4 of 2010, in smartphones. Meanwhile in the US market? How much bigger was the iPhone than Nokia? Five times bigger. Only five times bigger in the US market, while in the bigger Chinese market, Nokia was 20 times bigger than Apple. Who was winning this race? And Japan? Betcha you didn't know that up until February 2011, Japan's biggest carrier, NTT DoCoMo - half of Japan's market - specified the Nokia Symbian OS as its standard operating system for its phones, manufactured by such Japanese handset brands as Fujitsu, Sharp and Panasonic. Today yes, the iPhone is big in Japan, but at the time of that picture in that graph, the overwhelming dominating OS used in Japan, was Nokia's Symbian and Android and iPhone and Blackberry and Palm and Windows Mobile were literally nowhere.
You may have seen statistics such as those published often by ComScore of US smartphones and seen that Nokia was tiny or nowhere. Therefore it is a vaid belief, that Nokia was failing. But until you understand the global market, it is an incomplete picture. But there is still more. Nokia was having plenty of trouble, in its delivery schedules, many Nokia handsets were severely delayed. There were smartphones that were admittedly failing in their design, like the N97. There were problems with the marketing and sales and customer satisfaction. All was not well at Nokia, I am not suggesting that. But the facts are, that globally Nokia was growing sales roughly at the same speed as Apple and Samsung - witness the picture in the above - and Nokia was profitable, its average sales prices were growing and Nokia's profits jumped at a Nokia record level, after Elop took charge.
GLOBAL FOOTPRINT
Now lets understand regional markets. Lets look at them by size.
OCEANIA = NOKIA, SYMBIAN, iPHONE APP STORE
Oceania (Australia, New Zealand and Fiji) is the smallest of the six continents by population. Their total population is under 30 million, that is 'one Canada' in size. Their smartphone migration rate by Q4 of 2010 was about 60%. The bestselling smartphone brand was Nokia. The bestselling smartphone OS was Symbian. The biggest installed base of smartphones were Nokia and Symbian. The bestselling app store of Oceania was the iPhone App Store. The biggest rival to Nokia in Oceania was Apple's iPhone. The bestselling dumbphone brand in Australia was Nokia (meaning future transition potential to smartphones) as well as the installed base of dumbphones.
NORTH AMERICA = RIM, BLACKBERRY, iPHONE APP STORE
North America is the second smallest of the six inhabited continents. Yes, I know it hurts, but its true. If you want to count geographical North America, ie Mexico and the Middle America region, you can get North America to about 500 million people, but most count North America by cultural divide, ie USA and Canada only leaving Mexico into the culturally similar Latin America.. North America when counted as USA with Canada has a population of about 360 million, so North America is 12 times bigger than Oceania by population. North America was at about 40% migration rate from dumphones to smartphones by end of 2010. The bestselling smartphone was Blackberry as was its OS, the installed base most smartphones was Blackberry as was its OS. The bestselling app store was the iPhone App Store. The biggest rival to Blackberry in North America was the iPhone. Among dumbphones the beststelling brand was Samsung, but the biggest installed base of dumbphones was Motorola.
LATIN AMERICA = NOKIA, SYMBIAN, OVI
Latin America is the third smallest or fourth largest continent by population, at about 570 million so Latin America was bigger than North America and Oceania combined, with plenty to spare. Latin America is not yet strongly migrated to smartphones but will reach 100% smartphone migration well before this decade is done. By end of 2010, the bestselling smartphone brand in Latin America was Nokia, the bestselling smartphone OS was Symbian. The biggest installed base of smartphones was Nokia, as was Symbian the operating system. The bestselling app store of Latin America was Nokia's Ovi Store. The biggest rival to Nokia in smartphones in Latin America was Blackberry. The bestselling dumbphone brand was Nokia and the biggest installed base of dumbphones was also, Nokia.
EUROPE = NOKIA, SYMBIAN, OVI
Europe has a population of about 725 million people, ie slightly smaller than North and Latin America combined, or more than twice as big as North America. Europe had passed 50% smartphone migration by end of 2010. The biggest smartphone brand in Europe in 2010 was Nokia. Symbian was the biggest OS. The installed base of smartphones in Europe were Nokia and Symbian. The bestselling app store in Europe was Nokia's Ovi. The biggest rival to Nokia in Europe was the iPhone. The bestselling dumbphone in Europe in 2010 had become Samsung but still the installed base leader of dumbphones was Nokia.
AFRICA = NOKIA, SYMBIAN, OVI
Africa has a population of more than 1 Billion. Three times as big as the USA. Africa is far from even dumbphone penetration and a tiny fraction of its handsets were smartphones. Africa will probably take into the next decade of 2020s until all of its phones are smartphones. But still, in 2010, the overwhelmingly dominant smartphone brand of Africa was Nokia. The dominant OS was Symbian. The installed base of smartphones was overwhelmingly Nokia, as was Symbian as the OS and Nokia Ovi store as the most used app store. The nearest rival, a tiny one tenth in size of Nokia, in smartphones for Africa, was Blackberry. The new sales of dumbphones were ruled by Nokia as well, and Nokia was by far the biggest installed base of dumbphones.
ASIA = NOKIA, SYMBIAN, OVI
Asia has a population bigger than the other five inhabited continents, combined. India alone is bigger than all of Africa. China is even bigger than India. Asia was early in the migration from dumbphones to smartphones but because of its immense scale, just China alone was selling more smartphones than the USA. Across Asia, the bestselling smartphone in 2010 was .. Nokia. Bestselling smartphone OS? Symbian. Biggest installed base of smartphones? Nokia. Operating system? Symbian, App store? Ovi store. Biggest rival smartphone platform Android and manufacturer, Samsung. Biggest dumbphone maker Nokia. Biggest installed base of dumbphones, Nokia.
The only inhabited continent where Nokia did not utterly dominate smartphones, operating systems, app stores, and dumbphones - is North America - the fifth biggest out of six continents. The continent where only 5% of the planet's population live. But in North America there were 8 separate domestic handset manufacturer rivals, and 6 domestic smartphone operating system rivals, to challenge Nokia. There is definitely a home field advantage to providing high tech like phones, just witness the kind of phones that Americans used to be accustomed to, that often totally failed in most of the rest of the world (like say, Palm or Motorola).
BURNING PLATFORM
Now, with all that. The facts are that Nokia smartphone unit sales had grown 7 out of 8 past quarters and declined one quarter, exactly the same as Apple's iPhone and the Samsung smartphones. The Nokia smartphone unit had been profitable every single quarter and its profitability was increasing strongly by the time Elop took charge. Nokia's smartphone revenues were growing and so were Nokia's smartphone average sales prices. By every conveivable measure, Nokia was doing very well in the enormously competitive cut-throat smartphone business, where rivals such as LG, SonyEricsson and Motorola were generating losses.
Nokia's smartphone brand and the Symbian OS was the bestselling smartphone and OS on five of the six inhabited continents, and the Nokia Ovi store the bestselling app store on four of the six inhabited continents. If you wanted to argue the future of handsets belonged to smartphones, or the software side of operating systems, or the ecosystem including app stores and digital content, Nokia dominated over its rivals including Apple, iOS, Samsung and Android.
This is where the Nokia CEO issued his infamous Burning Platforms memo, the costliest management communication ever, that was half of the Elop Effect, and caused the total collapse of Nokia's smartphone business (and far more damage to Nokia as well). Yes. When Nokia towered over its rivals and held 29% market share, growing profits. That is when CEO thinks its time for Burning Platforms memos. So lets re-visit that graph I drew for you. This is what happened in February 2011:
Source: Tomi Ahonen Consulting based on company data
This slide may be freely used and shared
That is the truth. Nokia exchanged strong consistent profitable growth of smartphones for a world-record collapse of sales, revenues, average sales prices - and plunging the strongly profitable smartphone unit into generating huge quarterly losses.
I am NOT saying Nokia had no problems before Elop took over. Previous CEO, Olli-Pekka Kallasvuo was in charge when Nokia produced its first-ever corporate loss (while the smartphone unit still generated a profit). Nokia corporation (networks, dumbhones, Navteq navigation and maps, Symbian, Ovi store, smartphones) was bloated, inefficient, bureaucratic and needed strong management in 'execution'. Nokia did not need a new operating system and the headaches it would generate to transition to it. Nokia's Chairman, Jorma Ollila said very plainly when Elop was announced, that his primary mission would be to help streamline Nokia operations to run Nokia more efficiently. Elop's job was to solve 'execution' problems, not to cause more of them by silly Microsoft misadventures.
I am also NOT attempting to claim that Symbian is fully modern and capable of winning the world, it is not. But before Elop destroyed Nokia's Symbian in February 2011, up to that point, Symbian based Nokia smartphone sales were not just growing - they were holding their huge lead over the iPhone and Samsung! Before Elop destroyed Nokia, Nokia's smartphone sales were twice as big as those of the iPhone and three times as big as those of Samsung. Today Nokia's smartphone sales are one third the size of Apple or Samsung.
Nokia had a clear announced migration path from Symbian to MeeGo and Meltemi (Linux based, open source operating systems). This migration path included Nokia's developer tools Qt and the Ovi store. The immensely strong positive market acceptance of MeeGo OS (powering Nokia's much beloved flagship smartphone the N9 and its sister phone the N950) is confirmed the world over in comparisons where it is seen far superior to Windows Phone and Symbian, and far ahead of Palm, Blackberry, Android; and is rated usually roughly on par, in many cases better even, than the iPhone iOS. That is strong praise indeed.
The Windows Phone OS is not compatible with Nokia's Qt developer tools. The Windows Phone is not compatible with past Microsoft smartphone operating system Windows Phone, and early gossip says it will also not include a migration path to the next Microsoft OS, Windows 8. Microsoft based smartphones and the Nokia Lumia smartphone series are under reseller boycotts reported from China to the USA, from Finland to France to the UK. Nokia smartphone sales are now collapsing, as you can see in the second diagram. This while both Apple and Samsung global sales are exploding. Nokia had victory in its grasp, but Elop snatched defeat from the jaws of victory.
Since the Elop Effect, Nokia has now lost more than 60% of its share price value in only 14 months. Elop's predecessor lost 55% value in 3 years and was fired. Now Elop has lost 60% in half the time! Nokia's credit ratings have been cut many times and now on all three credit rating agencies, Nokia is at the last level just above 'junk' status. Nokia's brand value dropped out of the global Top 10 for the first time since the ratings were reported globally.
Note that just a few weeks ago, Elop said that today Nokia is no longer having a Burning Platforms problem! So when Nokia smartphone unit sales collapse, revenues crash, average sales prices fall, the profits are changed to losses, and Nokia's market share is down to 7% ie literally one fourth of what it was just a year ago - 'now' there is no problem at Nokia!! Now today, no platforms are on fire. Now Elop is satisfied and can sleep soundly. Now Nokia is safe. What a moron!
But anyone who claims that Apple killed Nokia, does not know what he or she is talking about. In North America, Nokia was already dead years before the iPhone. Rest of the world, look at the evidence. Nokia utterly dominated its rivals. Dominated until the fateful Elop Effect. You can say that Nokia had problems in its marketing and execution. You can say Nokia was bloated and slow to bring innovations to the market. But the facts are irrefutable. Before and after Elop took charge, Nokia was growing its smartphone unit sales, its smartphone revenues, its smartphone average sales prices and its smartphone profits. Only after the Elop Effect, did all those turn into disasters. The causes of the profitability problems at Nokia corporation or Nokia's Networking unit may be many, but the only cause of Nokia's smartphone unit collapse - is new CEO Stephen Elop who demolished that hugely profitable business unit. How bad is that? Ignoring the troubles in the other Nokia business units, the smartphone unit today (Q1 of 2012) generates a loss of 311 million Euros, or at an annual level about 1.6 Billion dollars. How big is that? In the Fortune Global 500 the smartphone unit alone, as managed by Elop, would be the 11th biggest losses of the year! Shame! Going from 175th biggest profits to 11th biggest losses on the planet. This is a disgrace!
So. You may think that the Ovi store was a failure. You are entitled to that opinion. Yet the facts are, that on four of six inhabited continents, it was the most used app store. You may think Symbian is obsolete and useless. You are entitled to that opinion. Yet the facts are, that on five of the six inhabited continents, Symbian was the bestselling smartphone OS. And you may think that Nokia's smartphones are not fit to sell in any market. You are entitled to that opinion. The facts are, that until Elop destroyd the brand just 12 months ago, Nokia branded smartphones were easily selling more than all iPhones and all Samsung smartphones added together - and growing at about the same rate, while growing profits too. The real paying customers in China, rest of Asia, Africa, Latin America, and to a lesser extent, in Europe and Oceania - were snapping up those Nokia smartphones quite happily. And today, that most award-winning 808 PureView superphone, it also runs on Symbian, on tech so advanced you cannot build the same phone on an Android or Windows Phone OS. Symbian is not dead (yet).
With this, I end my lecture, and if you wanted to know how Nokia might be saved, I have that blog for you as well. It is here: Nokia can be saved.
PS - there is a follow-up now, 'Nokia is on a Certain Road to Death' which explains why this current path and management cannot lead to salvation
UPDATE May 2 - Welcome Kauppalehti/Nokialandia readers (thanks Pekka Nykanen for mentioning this blog article). If you want my latest projection of how bad it is at Nokia, note that I just released my official forecast for how Nokia smartphone market share will go in 2012 - it falls from 29% a year ago to the 8% it is now to 3% by end of year. Read it all here: Nokia 2012 Forecast.
UPDATE May 4 - A 'class action' ie group lawsuit has been filed against Elop and Nokia by a group of USA Shareholders for violations against US regulations about the stock market. Please see more including links etc at this link: After the Shareholder Meeting Situation is Far Worse.
@ejvictor
Finally someone gets it - Elop began destruction of Symbian and Maemo/Meego in Q4 of 2010. There were only internal movements but long time customers *had to know* about it (you don't have long term relationship and don't know what is going on inside). That's why slump was visible in Q1 2011 - they didn't renew contracts in Q4 of 2010! And later came memo and Feb 11. Elop policy was self-fulfilling prophecy.
He came to Nokia with promises of firm renewal, clients went with it and get new contracts in Q4 2010 - hence Tomi's rise. But Elop duped them and immediately started to dismantle 'old' technologies. In reaction they became very, very cautious when dealing with Nokia. Symbian became 'burning platform'.
Posted by: vvaz | April 24, 2012 at 05:41 PM
@Louis:
AAAaaaah... sorry, as I wrote in past comments, I couldn't understand the situation, but now, everything becomes clear, I think I've got it:
Stephen Elop is a smart and wise guy, who offered the most advanced OS to Nokia; average smartphone user is stupid as (s)he doesn't understand that WP is the right stuff for him/her, way better than Symbian with its apps, larger memory, connectivity (memory cards), lousy hardware (41Mpix), etc. or even better than Android/iOS which don't deserve their success.
Really, Elop is certainly the most misunderstood guy in the world. Even economical intelligence all around the world doesn't trust him... too bad, really!
Posted by: vladkr | April 24, 2012 at 07:30 PM
To the people saying symbian foundation being closed down and that somehow proves elopes is out to destroy symbian, please consider this.
http://crave.cnet.co.uk/mobiles/samsung-dumps-symbian-too-leaving-nokia-all-by-itself-50000987/
And how does this prove elopes destroyed symbian?
Like honest question here. It looks to me like everybody is bailing from symbian.
Not a healthy symbian being wiped out by elopes.
Posted by: puzzled | April 24, 2012 at 07:48 PM
So many people disagree, and all they have to show for facts are opinions on how bad Symbian/Nokia has been.
This blog was clean and to the point, don't let these my-feelings-first people bring your facts down.
February 9th/11th, Elop put a bullet in Symbian's head without having a replacement ready. It was a WTF moment and it was OBVIOUS that this meant the death of the Symbian->Qt->MeeGo symbiosis strategy and any other internal strategy, just as these was ready to market.
I saw this Elop stunt, and I knew instantly that this ment Nokia would crash totally in income. I thought I didn't understand enough of the market to be right, but Tomi echoed my thoughts and he did it using facts and knowledge. Other people, especially the US based tech media saw it and celebrated that Nokia finally gave up on their holy cow and it was a company saving move.
Other people were wrong. I was right. Tomi was right. Numbers are in: Nokia crashed. Nokia is on it's death bed now.
And even as they are bleeding out, it wouldn't even make sense for them to reevaluate strategy now. Why? Because Nokia put everything on, Not the concurrent Windows Phone 7, not the soon-after released Windows Phone 7.5, no, their new strategy was drawn up around Windows 8. They barely managed to stress a few phones out in time to even be on the Windows Phone 7.5 platform, but clearly it's Windows 8 that is where we're supposed to get products. And honestly we can't really tell if it's a good platform or not. We can't really tell until it's clear that Windows 8.1 or 8.5 has flopped on cell phones, the way Windows 7.5 now has.
Until then, we don't know if Nokia's new platform will be any good. So, why would they reevaluate their strategy? Except, by that time, it's too late to change strategy. That is, if they can cut enough costs to survive till the first major update of Windows 8.
Unlike some, I won't be crystal clear on Windows Phone/8 being a bad OS. It just sells horribly bad ATM, it may still have a bright future in the next round. But I'll be crystal clear on this: Elop didn't have an alternative ready when he murdered the Qt Strategy and Symbian. Everybody saw this. Stocks dropped. Sales dropped. These are simple facts.
Posted by: volt | April 24, 2012 at 08:06 PM
Hi all
First, please note, I wrote a follow up to this blog, called the Certain Road to Death (it has some Monty Python references and some T-Dawg rap references to cheer you up about the sad Nokia saga..)
Continuing with replies
Hi Laughing, karlim, Asko and Kimmo
Laughing - me too, love the Titanic rudder analysis on Communities Dominate haha
karlim - ok, first on market share decline. That is inevitable when you invent a new industry. Nokia started with 100%. That it was still twice the size of its nearest rival when Elop took over, tells us all we need to know about market share. ANY other globally competed industry the market leader would kill to have that powerful a position. Ask Toyota if they'd like to be twice the size of GM while being profitable at it. Or Boeing. Or Coca Cola. Yes, the market share declined, so what, it is inevitable if you start at 100% and other rivals enter your industry.
Now, to your alternate theory of why the sales fell, that is on the surface of it, plausible, for Q1. It does not explain why the sales continued to crash ever since. If the problem in Q1 was channel stuffing in Q4, then Nokia should recover to 'normal' level of growth by Q2 or Q3 at the latest. Why did the sales fall even more dramatically in Q2? Because of a sales boycott which continues to today.
On the Kantar numbers you raise a good point for Britain, clearly there was a decline happening already in the UK, the numbers are obvious. But again, the fall was even bigger in Q2 so whatever damage was happening, Elop made it worse.
I appreciate it that you say it was Android that killed Symbian, and there is considerable statistical (inverse) correlation with the two. I claim it is cause and effect, the initial loss to Symbian was picked up by Android, exactly as I predicted on this blog in February last year, when I made my 'who wins and who loses' out of the Nokia customer give-away bonanza blog, remember that? Nokia's loss was almost in every way Samsung's gain (even in dumbphones)
Asko - thanks for mentioning YLE and the MOT program. Yes, I agree Finnish media is finally waking up to the issue, I've seen coverage in Taloussanomat, Kauppalehti, Helsingin Sanomat, Iltalehti, MTV3, YLE etc.
Kimmo - I appreciate the sincere posting and you cannot know what else I've written in the literally several million words on this blog over the past 7 years. I did write the most comprehensive cross-industry forecast of what Apple's iPhone would achieve - published before iPhone started to sell - and it covered all those points you made, and more. It was the most accurate forecast of Apple's influence not just in mobile, but in tech & media. That blog created the term 'Jesusphone' which is often now used to describe the iPhone. I agree with you Kimmo, only you didn't know that. But this blog is not about what all good Apple did, this is the truth about Nokia not being dead when Elop arrived.
Which brings me to the second part. I recognize the stats you quote, you are confusing now Symbian stats and Nokia stats. Symbian at the time was supported by several major global handset makers like SonyEricsson, Samsung and LG who then withdrew (while leaving still Sharp, Panasonic etc with Nokia) so that is the primary reason why Symbian market share fell in that period. Nokia's share did not fall by much and in some quarters grew. Nokia Board obviously has those Nokia numbers and would see which is Symbian, which is actual Nokia smartphone sales.
Great discussion on the blog, keep comments coming!
Tomi Ahonen :-)
Posted by: Tomi T Ahonen | April 24, 2012 at 08:28 PM
@vlad: Users are smart, which is why they switch to the iPhone and Android in droves, despite your assurances they would be happy with something else. The people who hired Elop at least realized that being competitive with those two was the requirement, not some new vapor Linux announcement and hard to use, highly "segmented” product.
Catching up, now that is another thing entirely. So the WP strategy may or may not work, but I simply don't buy that the Symbian/Meego one would have. Meego itself was a reboot of a reboot.
Posted by: Louis | April 24, 2012 at 08:58 PM
As a former Maemo user, and current owner of three Android units of different segments, I rebuke the unfounded claim that the Maemo or MeeGo products are hard to use. Maemo 5 was, and I am sure Maemo 6 also is, superior to Android in many ways, and is as easy or easier to use.
Maemo was a very good mobile operating system, even if it lacked in many areas that would have been improving quickly if Nokia didn't keep it in a niche market. Android is okay too, but I'd much prefer Maemo to live on than not.
Symbian I don't care about, but up until Elopgate it was still making a lot of money for Nokia, and would for months or years if the transition to Windows Phone, MeeGo or any other next OS had been done in any controlled manner.
Up until 2011Q1 it was still a growing OS! Despite US tech blogs announcing it's dead back in, well, 2007 or so. That's a lot of growing months for a dead OS.
Posted by: volt | April 24, 2012 at 09:24 PM
BTW, I must clearly be a bot, because I am totally unable to read these captcha images lately.
Posted by: volt | April 24, 2012 at 09:25 PM
Tommi says " The future of the handset industry is smartphones."
He is wrong!
The future is Mobile Computing.
This is where Apple got it right, and where Nokia got it wrong.
Posted by: RobDK | April 25, 2012 at 08:04 AM
Odd though, when I think "Mobile computing", it is but one model that comes to mind. The Nokia N900.
Hopefully there'll be some interesting things from Intel next year, though.
Posted by: volt | April 25, 2012 at 09:51 AM
@Baron95: "and ditched NSN at whatever cost- even giving it away for free" - you clearly have no clue what you are talking about...
On the other hand workforce reduction is not avoidable, for sure - but, you know, differentiation takes time. Firing x% of your staff usually not the most wise solution...
Posted by: zlutor | April 25, 2012 at 10:23 AM
http://crave.cnet.co.uk/mobiles/nokias-windows-phone-bear-hug-is-choking-the-mighty-finn-50007750/
An other fan of Mr. Elop... :-)
Posted by: zlutor | April 26, 2012 at 12:57 PM
Nokia signed its death warrant when it passed over the opportunity to be one of the premium Android Manufacturers. Killing Symbian was right, placing the farm on Windows Phone was not.
If only they had gone Android...
Posted by: Doctor D | April 27, 2012 at 05:48 PM
I used to only buy Nokia smartphones, ever since early 2000s. But now after I have seen other platforms I am happy Nokia is going out of business. If it was up to Nokia, we'd still be using non-touch screen smartphones with huge buttons and crappy small screens just because they could save a nickel on a crappier screen.
I remember when the N95 first came out they priced it at over €1000.- or the 9500 was I think over 1200€!!! The absolutely worthless N97 was priced at over €900 when it first came out!!!! Such greedy behavior needs punishment-now Nokia got what they deserved. They used to abuse their monopoly in the smartphone market and now they will lose every penny they made-I for one am happy when this company closes their doors.
I am happy with my $649 (€491) iPhone 4S, it's an awesome phone, the best in the world and it's freakn cheap!!! (compared to what you had to pay for the crappy Nokias of old)
We need some new fresh blood in this market. Thanks to Apple and Samsung that's what we got.
Posted by: afrim | May 02, 2012 at 02:46 PM
@afrim true dat!
I sense immediately when Nokia engineers are writing to this blog. Their arrogance reeks. They use demeaning, patronizing language when writing, Finnish metaphors and phrases that don't mean shit to a foreigner. What kind of stupid, culture agnostic person does that?? A finnish engineer, I presume.
They pressed that idea forward when they marketed those Symbian phones. They "flicked the switch" and shipped another 100 000's of crappy, buggy Symbian phones to a foreign country.
Nokia developer site was full of that style. Arrogant, patronizing dialogue between developers and so called "Nokia Champions", Champions truly, LOL!
Well, now you can shove your developer site wherever you want!
They deserve their punishment. Yes, they really do.
Another happy person when Nokia shuts its doors and files for bankcruptcy.
Posted by: Plato | May 02, 2012 at 04:01 PM
People want apps in their phones but with windows phone they see only kindergarten building blocks. It shouts "YOU CANNOT INSTALL APPS TO THIS PHONE, YOU ARE FOREVER DOOMED TO HAVING ONLY PREINSTALLED APPS"
Its like Nike or Adidas would start to produce running shoes with only velcro strips *PUKE*.
Posted by: Ungdom | May 03, 2012 at 05:32 AM
That was exactly Nokia's problem! Those technologies and services were success in the past. Do you really think that just because a technology was dominant in the past that it can also be dominant in the future? Do you really believe that? Especially in electronic consumer market.
Posted by: Exclusive mobile phone accessories | May 08, 2012 at 07:24 AM
Meego was the natural successor to Windows and iOS.
Powerful, efficient, safer, ubiquitous and open source. It could run on phones, tablets, laptops, desktops and even cars.
With QT, it was write once run everywhere. Literally.
Developers would have fallen over each other to support it. All users would have benefited.
It would have been the end of the iron fist rule of Microsoft and Apple overnight.
This is the reason for the covert take over of Nokia by Microsoft. Nothing more. Nothing less.
Nokia means nothing to Microsoft now as the destruction is complete. It is just a matter of disassembling Nokia piecemeal and assimilating the useful parts.
A most elegant demonstration of the power and effectiveness of extend, embrace and extinguish.
Bravo Balmer!
Posted by: John | June 21, 2012 at 06:56 PM
At least I hope they're spam comments - if they're serious, there's a lot of people out there who think I need Valium. Or - more worrisome - a Polish snow removal company, UGG boots, and a larger penis.
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