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« In Bloodbath News: Nokia Q1 Results: Market Share Crashes to 7% yes, one fourth of what it was before Elop Effect | Main | Certain Road to Death and Definition of Insanity (updated) »

April 23, 2012

Comments

ChrisD

And... Nokia debt rating cut to Junk by Fitch: http://www.bloomberg.com/news/2012-04-24/nokia-debt-rating-cut-to-junk-at-fitch.html

The highest junk rating, BB+, but still.

JD!

All I can see is a sinking ship which was made with best material in the world but driven by the worst Captain!

The ship is already hit not sure if is allowed another trip "around the world in 80 days" with same captain. :-)

Foo

@karlim "Ok. I do agree that the facts that you provide are irrefutable. But they certainly are not all the facts. Only the selection of facts to support your theory.

Here is another set of hard facts that you have ignored.

Nokia market share losses 5% in Q3 and 5% Q4 2010. From 39% to 34% to 29%. And in Q1 2011"

I think everyone agrees that Nokia was loosing market share to iPhone and Android. BUT Nokia was still *growing*.

Elop was hired to accelerate the growth rate, not to perform an U turn in the corporate strategy.

If Elop did nothing, Nokia would continue to grow, albeit slowly, and not crash and burn as it started to happen after the Elop Effect.

"And all Nokia Q4 positives - increased sales, profits, ASP, even the unit growth - come singularly from those 5 million Symbian 3 smartphones shipped into the channel and recorded as sales."

Considering that Elop was already in charge in Q4, this "stuffed channel" theory can be partly attributted to him.

But he made the problem worse by declaring Symbian dead. Suddenly the channels were stuffed with obsolete material! That explains the boycott.

"Btw, if the catastrophic Nokia Symbian unit volume drops in Q1 and Q2 2011 were caused by Elop effect, how do explain even more catastrophic drop in Q1 2012?"

Poor execution of a bad strategy.

Lumia is good, but not great; but Nokia needed a great smartphone to compensate for the declining Symbian sales.

And the worse part is about to come: if the rumors are correct, Lumia devices will not be able to run the next Microsoft operating system, so the channels will end up stuffed with another obsolete smartphone from Nokia.

Expect a new boycott.

RobDK

Is it not true that Nokia had been stuffing the channel up to Q4 2010 and Q1 2011? And that they took an extraordinary write down on this inventory? And that several senior managers departed or were fired? The channel stuffing had started before Elop arrived.

Foo

@WMT "This post is a great example of a failure to grasp reality. Nokia died when it failed to respond to changes during '05-08. All senior management during this period are at fault. It can recover but it will be a different company. All Elop did was pull the cover off of the dead corpse."

Symbian was not dead, and, in fact, it is still the biggest seller from Nokia. Without Symbian Nokia would be dead.

The problem is that Elop declared Symbian dead months before he had anything to show, and before Windows Phone could get a any traction.

That was a colossal mistake.

If channels were "stuffed", as some of Elop advocates say, that action alone would trigger an immediate boycott, because the existing obsolete phones should be sold!

What should be the sane thing to do? Nokia should keep quiet about the Microsoft partnership, and make a surprise launch when the phone was ready.

Why didn't Elop do that? Because he was trying to do what was best for Microsoft, who needed a big endorsement. Elop not only endorsed Windows Phone, but declared that the current platform was on fire, for greater dramatic effect.

That was the costliest communication mistake, ever.

thomas

hi tomi,

you mixed up the different wp/win flavours:

"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"

should be:
" The Windows Phone is not compatible with past Microsoft smartphone operating system Windows Mobile, and early gossip says it will also not include a migration path to the next Microsoft OS Windows Phone 8"


Elop has no clue about economics and about technology.
http://felipec.wordpress.com/2011/06/21/my-disagreement-with-elop-on-meego/

He is always talking about ecosystems but he doesn't understand network economics, maybe that was not part of his mba....


vvaz

People are assigning to much value to Feb.11 date and burning platform memo. But it were only signs clearly visible from outside - Elop began making changes in Q4 2010 (like cutting Maemo/MeeGo team). And carriers and other high volume clients of Nokia had to know that.

That explains start of collapse in Q1 2011 - before all proles would read about burning platform or (in)famous announcement.

vladkr

That's funny that some people keep on telling that "Symbian is obsolete" or "past era"... I'd be curious to know what they think of Windows, OS-X (+iOS) or even Android:

- Windows is 27 years old, and no-one is shocked that it's still massively present on office/home computers

- OS-X takes its roots from Unix, which was created in... 1969, by the way, top notch iOS is closely related to OS-X, so it shares same roots.

- Android is a Linux (1991), which is inspired by Unix.

Of course you'll answer me that Windows evolved since 1985, that Windows 7 has nothing common with Windows 1, but the name.

Why wouldn't it be the same with Symbian? Do you really think that Belle and EPOC are the same thing? Don't be ridiculous.

So to MS aficionados who are convinced that Elop is the Messiah, and that he just accelerated what was inevitable, please, explain me what's the point in ruining a company so quickly, risking to harm MS reputation? Explain me in what Symbian and Meego were less modern than WP or other competitors?

vladkr

@Foo:
"What should be the sane thing to do? Nokia should keep quiet about the Microsoft partnership, and make a surprise launch when the phone was ready".

Exactly !

That's what Apple does... that's actually what all industries (Car, entertainment, food, electronics...) do.

DWZ

Keypoint for the problems is the fact that Nokia always was a hadware company - they never ever understood the dynamics of software. I had some very frustrating discussions with Nokia management in PD in Espoo in 2004 and 2005. They simply ignored the importance of software for their phones!
So the fundation of failure was created in 2004/05 onwards.
The Meego could have been a way out with the lousy and unperformant Symbian, but it was not driven agressively to become a ready to use OS. Nokia just tried to make the development of a new OS as cheap as possible - but no intention to do a serious investment in the area of operating software.
Then Apple and Google changed the rules of the game from Hardware to software as the driver - and in this moment Nokia was immediately in serious trouble.
Of course it took a while to become visible to the outsiders, but then it was already too late.
It is sad to say, but I believe we will never see Nokia coming back as a strong, innovative manufacturer with highly desirable products. The shiny NOKIA brand is history!

Sander van der Wal

@Foo

If Nokia would have keep peddling Qt as their main platform, and switch secretly to Windows Phone, announcing it when ready, then nobody would trusty Nokia anymore, as they had no problem at all screwing their ecosystem. You cannot expect third parties to work with you if you are completely unreliable.

Beside, such a thing cannot be kept secret very long. There's always somebody going to leak. Imagine the consequences of being shown the kind of business that is busy screwing their third party developers at a time when companies are vying for developer attention. That is insanity.

ds

As for Feb 11 effect we fail to take the enterprise factor into account. In Q4 nokia Symbian was still one of dominant enterprise phone platforms in a place where IPhone effect was much delayed is only starting to be evident now a year after with BYOD.
While the announcement could have a delayed response in consumer space it could have resulted in wave of contract cancellations and resulting steep decline (esp. given that orders are usually realized at the beginning of a year) as IT managers are paid for not investing in obsolete platforms.

ds

@Sander Nokia has screwed its developers and consumers anyway by killing symbian without any kind of migration path. Besides most of them deflected to Android anyway as there's more in common with that platform than with WP.

Louis

"Why wouldn't it be the same with Symbian?"

@vlad: If iOS has vi as its main interactive application and ran only on the PDP-11 it probably wouldn't have become popular. A platform is a great deal thicker than its system call API.

If your counter-factual is that there was no design error in Symbian's kernel that would have prevented somebody willing to do the work to get it on modern hardware, and that somebody else with good taste could have built a compelling user experience and app platform on top of it, that may be true.

The point, though, is that this didn't actually happen, despite a lot of effort.

RIM tried to solve the same problem by changing the kernel, and we've seen how well that worked. Not at all, because a better kernel with an environment designed by the people who didn't get it right the last time doesn't help users.

Elop was, at least, trying to solve the right problem. (Actually, the same problem Apple solved by buying NeXT.) What's happened is that the state of the art is moving ahead faster than Nokia and MS can catch up on the "basics". (Note that the "basics" includes many things like Dropbox, a large app catalog, etc., etc., etc.)

ejvictor

@Karlim, @Baron95 what? You guys related to ELOP?

What is the problem with admitting that the CEO –the Captain of the ship – EOL-ing an entire ecosystem (Symbian, OVi Services, QT), shutting down retail locations en-mass, junking entire migration strategies, not having a product to sell for several quarters, basically killing the USP of the brand, bears the majority of the responsibility for Nokia’s plight (bet you were also trumpeting Job’s keen leadership and insight as instrumental for Apples success)?

In the end shit rolls up hill, the captain gets the praise and the blame. TODAY,NOW – no matter who did what,when – Elop gets the blame.

Tomi is refocusing the discussion to leadership, Android, iPhone, blah blah, blah is just noise to cover up one fact – a utter failure of leadership.

Foo

@ste "Tomi, can you add RIM to the graphs? They had no Elop."

Here's a comparison between RIM and NOK, in terms of net revenue:

http://oi42.tinypic.com/2sbl6vm.jpg

This chart shows that NOK net revenue started to fall in Q2/2008, and started to recover in Q4/2010.

The second big slump came in Q2/2011 (Elop Effect), the net revenue became negative in Q4/2011, and is accelerating.

So:

We can't attribute all the problems to Elop, but he did aggravate the problem by declaring the product line obsolete before he had anything new to show.

Dziadek Felek

Lot's of comments about boycotts, conspiracies, Elop being a trojan horse purposedly planted to lower the value of Nokia... At the same time we have basic facts at our disposal:

- the replacement cycle of smartphones is around 18 months,
- N97 in all its glory is introduced June 2009,
- Nokia market share crashes end of 2010.

Coincidence? I think not!

ejvictor

Hey guys.... share crashing Q4/2010 - Q1/2011 Remember this brainstorm announcement

In 2009, we established the Symbian Foundation to make the Symbian platform available open source and royalty-free. In November 2010 we announced that the foundation would ramp down its operational activities as a result of changes in global economic and market conditions.

care of http://licensing.symbian.org/

Hummmm I wonder who was instrumental in that announcement?

ejvictor

Killing the Symbian foundation - who killed Symbian , not iPhone, not Android, not N97... Nokia management, ELOP.

ejvictor

Seeing that Elop killed the Symbian foundation in Q4 2010 - a CLEAR indication to carriers, most likely accopanied by calls fielded in Espoo and "off the record" reassurance of new platform [email protected] any change of heart in your comments below?

Quote @Baron95 "You are trying to be tremendously disingenuous to suggest that *ANY* meaningful shipments reported by Nokia in Q1 could have been altered in the last 6 weeks of the quarter (post Elop memo).

You will have absolutely no credibility left if you fail to acknowledge these simple facts of the smartphone order-shipment cycle in this industry."

Brand distruction of Nokia was so systematic, complex that sometines it's hard to keep track.

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