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« The 'Cliff Theory' ie How Handset Makers Die, why in Mobile Phones do Companies Collapse so Rapidly (Siemens, Motorola, Palm, Nokia, Blackberry and Windows Mobile) | Main | Largest Mobile Social Networks Today by Size of User Base »

April 02, 2012




“Nokia before THT Elop was profitable and growing in total smartphone sales (<> market share).”

Sure. Just like RIM before last week. Was losing market share by droves. But was profitable and growing total smartphone sales. Over 30% in Q4 2011.

Much good did it do in 2012. Now, in Q1, RIM smartphones sales are crashing. It has now reported the first loss in ages. And will likely to continue losing money for the rest of the year at least.

Almost a mirror image of what happened to Nokia in 2011. Only much worse, almost exactly a year later, and with no credible path to survival.

Regarding the market and Nokia share price. I agree - the more I think about it - the more I’m sure that the market was and is right. It was right to take Nokia’s share price down from $40 in 2007 to $11 in February 2011. Because despite all Nokia assurances and bragging and great numbers and market share, it saw that Nokia does not have plan to effectively respond to iOS and Android. And it is right to take the price from $11 to $5 today - because the current Nokia WP plan is extremely risky - and we still have to see a single scrap of evidence that it will succeed against Android and iOS.

Yep - you read that right. I am too not sure and do not insist that Nokia WP strategy will succeed. I do see some encouraging signs - like improved execution at Nokia. But the growth of Android and iOS and overall transition to smartphones in 2011, was way faster than anyone expected back in 2010. So whether MSFT with Nokia will be able to carve a meaningful niche for themselves - its still an open question. With no evidence yet that they will be able to do that.

But we only have Nokia WP sales numbers for about 9 weeks on a very limited footprint. So I am in the wait and see mode for the rest of this year until more data comes in. I’ll wait and see the Q1 numbers to see how it did with Lumia 800 and 710 on wider availability. Then Q2/Q3 when the results of their U.S AT&T Lumia 900 push, and China with Lumia 800/610 selling for a full quarter, come in. And then will wait and see what they will come up with for WP8, and how those devices sell in Q4 2012.

“Nokia is destined to become a mere WP OEM.”

What’s wrong with being a mere OEM? I think Samsung is doing pretty well being a mere Android OEM (its other smartphone sales being negligible). HTC was doing pretty well too, before it stumbled for a couple of quarters - but it now seems starting to turn around too.

And I can also easily argue that the main reason Samsung was able to beat Nokia in smartphone game was precisely because its strength was in being a damn good OEM, and it focused on it. While Nokia - a much better OEM then Samsung before 2007 - forgot its hardware roots and strengths, and got distracted. Wasting its resources on doing it all alone, with Symbian/Meego, and its OVI misadventure, failed to develop software platforms competitive to Android and iOS, and now it is where it is.

That MSFT needed Nokia way more then vice versa, and that Nokia had other alternatives. Agreed 100%, it’s obvious and there’s nothing to argue here. That’s the reason they have the contract they have - and it puts Nokia way ahead of any other WP OEM.

Except that where you see malice, conspiracy and/or incompetence - I see a hard business decision made in good faith under very bad conditions stemming from previous mismanagement. It may have been the right decision, it may have been the wrong one - we’ll see in about 9 months.

And, btw, MSFT IS paying Nokia, and not only for marketing. But also covering all the costs for Nokia developed technologies that becomes part of overall WP platform. And there probably is revenue share deal in place for all the LBS stuff that may or may not become a big revenue stream eventually. And what’s wrong with getting outside cash for marketing your own products? And they ARE Nokia products, with WP OS inside - for which only small part of the price Nokia gets per device, get sent back to Redmond in form of license payments.


Tomi, what's your take on Lumia 900 and lackluster reviews that it's getting? Does its "mediocre" (not my words, reviewers are calling it mediocre) OS and hardware stand a chance in today's fast-pace mobile market?


@karlim Nokia didn't do it all alone with Meego, they had Intel on board. And Intel got hit quite hard by the demise of Meego: their plans on getting Atom CPUs into smartphones went poof on the day when Nokia went WP7. Or at least delayed by the year they need to get Tizen in shape.


@chithanh Meego: their plans on getting Atom CPUs into smartphones went poof on the day when Nokia went WP7. Or at least delayed by the year they need to get Tizen in shape.

Meego was terribly mismanaged. At one point I was a Nokia fan boy, and I still have the N800 device which was a tablet computer before anyone else knew what a tablet was. The big problem with Meego was that by going with Intel, Nokia punched the active community that had developed around Maemo. The other problem was because Meego was part of the *Intel* strategy, it was extremely unfriendly to non-Intel devices. I remember that it was difficult/impossible to get a build for Meego that worked on netbooks with non-Intel graphics cards, which punched any developers that weren't running non-Intel netbooks.

However even *this* didn't completely kill the diehard fanboys. What was the last straw was when Elop basically said that there weren't going to be any Meego products at all. At that point all the developers left and went to Android. It's sad because from a technical point of view there are a lot of technical advantages with Meego/Maemo.

A developer community is very useful because it provides a support infrastructure. I can go down to any computer bookstore and buy a book on how to program Android, and there are a ton of forums and websites with information on what you can do with Android. Maemo/Meego *had* that, but Nokia shot it dead.

As time passes, it's going to grow increasingly impossible to resurrect the Maemo/Meego community. Right now, in order to do that you have to prove to people that you aren't going to screw the community over. But it's possible, the key things would be

1) Release an actual product that's non orphaned

2) Have Maemo/Meego compatible with Android. There is a virtual machine that allows Android to work with Meego. It doesn't have to work perfectly or even work well, but if Nokia releases a Android emulator for developers that works, then the development community can whip it into shape for end users

3) Have at least one non-Nokia company release a Meego product. Nokia has screwed developers enough so that you can only trust Nokia if you don't have to trust Nokia. Google has done something like this, in that they've set things up so that Google can't kill Android even if it wanted to.


@Twofish what really were the technical advantages in Meego/Maemo ? Instead of going from Maemo to Meego, Nokia should have just gone to Android early.


@SK, one of them would be no nasty middle-layer VM to soak up half of the system's resources (and require n amount of cores just to perform half-decently), another would be the ability to use most legacy libraries developed over the past decades with little to no modification given that it's a proper GNU/Linux (yes, you can now use native code on Android as well, but for a very limited number of things)

Android has its strengths, but MeeGo/Maemo trumps most of them on the system level without sacrificing the greatest strength of Android - app portability - by using the Qt toolkit. It's a crying shame Nokia didn't make a proper push of it...


@SK what really were the technical advantages in Meego/Maemo ? Instead of going from Maemo to Meego, Nokia should have just gone to Android early.

Maemo was released in 2005, whereas the beta for Android didn't come out until 2007. Had Nokia played its cards right, everyone would be running Maemo phones whereas Android would be an also ran.

It's breathtaking to me the number of missed chances that Nokia had. The N770 was released in *2005*. That's *two years* before the iPhone and iPod touch, and *five years* before the iPad.

The thing about Maemo that makes it nicer to program is that it using the standard Linux software components which means that anything that is written using Linux could be ported over to Maemo with no real work. This means that you can take any sort of desktop app and have it run on your tablet with zero/minimal changes. Android also has a less friendly development system in that you have to do things the Android way which makes it harder to develop in.

But that's irrelevant. The friendliness of the technology doesn't matter if the company that supports it, pulls the rug from under you.

It's also not either or. There is an application called Alien Davik that allows people to run Android apps in Meego.


It's also obvious in hindsight that the partnership with Intel over Meego was a horrible idea. The phone/tablet market is dominated by ARM chips rather than Intel chips. Maemo works fine with a native compile on ARM architectures, and in hindsight, what Nokia should have done would have been to focus on improving things like UI for small devices and improving power management. However, this would have made the ARM chips even more attractive and that was not in Intel's interests.

Once Intel got involved with Meego, it was obvious that "non-Intel" was not welcome, which meant no official support for ARM chips and no support for non-Intel graphics cards. Trying to get Meego working took up over a year of effort during which Android just kept advancing. And then at the end of 2010, it looked like we *finally* were going to get a Meego phone, when Elop just killed that.

One lesson here is not to get into bed with a partner with conflicting interests, which they haven't learned with the Microsoft deal.


I found a blog with pictures of the cell phone markets of Shenzhen. It's from 2009, but this will give you some idea of what the scale of the markets are.

Those markets were not in the smart phone business six months ago, because the chipsets were not available, but things are likely to rapidly change now that MediaTek has come out with the 6573 and 6575 chip sets.

It's going to be interesting to see what happens next. I see the global brands dominating the high end cell phone markets because of branding, but I see no chance that they are going to penetrate the local Chinese market, but a small fraction of a big market will keep the high end manufacturers in business.

The really interesting thing will be to see what happens on non-China emerging markets.



You're absolutely right and there is a lot of astro-turfing going on in here.

I love the absurd embroidered stories about how NOKIA really was just about to nose-dive and the fact it only happened immediately after Elop's public execution of Symbian (a full year before he had anything viable to replace it with) was purely coincidental.

Let's pretend for a moment Symbian + MeeGo was doomed to fail, why would that lead you choose WP7 anyway? It was already a proven failure - Samsung, LG and HTC had already released extremely nice hardware with WP7 on it and nobody was interested.

If NOKIA's feature phones are really about to get some derivative of Maemo on them I guess Elop will have to find a way of hamstringing those too so as not to humiliate his boss at M$.

Wouldn't it be funny if that sneaked under his radar? NOKIA's feature phones would spank the pants off their 'smart' phones (and probably everybody else's too).

At least it would give NOKIA some chance of survival.

As things are I suspect more of NOKIA's existing customer base will move to Samsung/Android rather than adopt WP7, the loss of functionality would be far too irritating.

celine outlet

That's a great article there, wonder how I had missed it. Especially this part:

"How to avoid the cliff

To keep a platform viable, you need to focus on two tasks: Keep the customer base loyal, and add adjacent product categories."
celine outlet:

marcas de gafas de sol

Aquí, nos encontramos con una gran divergencia. Mace le dice a RIM para construir básicamente en su audiencia principal, en lugar de hacer algo dramático. La cuestión, creo yo, es si el cambio a WP7 podría "hacer que la estampida del rebaño" o no. La obra de Tomi es, básicamente, una larga discusión para "sí".

Yo no estoy tan seguro. No hay manera obvia en la que WP7 teléfonos de Nokia no son consistentes con ser dirigidas a los consumidores los teléfonos inteligentes en el rango de precio medio, o discordantes con la marca.

Tomi T Ahonen

Wow how many comments, thank you everybody.

As I am fresh back from Easter break, will start off with replies. I'll do them in the order you left them, I will try to get through all in the coming days. Please keep the comments coming

Tomi Ahonen :-)

Tomi T Ahonen

(from Apr 2)

Hi cygnus, Chris, Louis, Sander, TomiFan and Michael

cygnus - yep - but remember also business users, some have proprietary or non-RIM email systems, hence use BB but not their email gateway.

Chris - haha, yeah, they seem doomed. No, seriously, the management needs to be VERY good at communicating why RIM would 'want' less than industry growth, and why their niche markets can be more profitable

Louis - fair point, but you KNOW this is not a financial analysis blog and I specifically do not want that 'debate' here on a daily basis of whose evaluation is valid or not on any given day haha. I look at market share because it matters to the industry, the developers don't care who makes how much profit, they care which platform reaches x percent of the market. That is my core readership of my books and this blog

Sander - yes it was

TomiFan - agree really on everything you said (haha, really!) On who would buy, you know, I could see MS doing that. If Nokia woke up to its senses and just fired Elop's sorry ass and dumped WP7 in favor of MeeGo and prolonging Symbian until Meltemi comes online, Microsoft would almost have to buy RIM just to give Windows Phone another lease of life. But MS would be a bad owner for RIM, not unlike Danger before, haha look at the Kin.

Michael - yeah, it obviously depends on what the patents are in. My gut feeling says the patents in mobile will be worth much more towards the end of this decade than now, as the digital convergence continues ever more towards mobile and any even marginal patents can gain extra value

Thank you all for the comments, please keep the discussion going

Tomi Ahonen :-)


You wrote "the developers don't care who makes how much profit, they care which platform reaches x percent of the market."

I would say though that profit share is a leading indicator for future market share. Customer satisfaction, repeat buyers and other measures of brand stickiness are others.


If Nokia broke its contract and walked away, Microsoft wouldn't buy RIM, instead they'd hand more huge chunks of cash to Samsung. In return, Samsung would launch a flagship Windows Phone-based Galaxy III (or maybe the one after, IV) and a Windows 8-based Galaxy Tab months before the Android versions.


Meanwhile in China smartphones...
OS: 2011 (2010)
Android: 68.4% (33.6%)
Symbian: 18.7% (> 37.4%)
Apple: 5.7% (4.1%)
Others (calculated): 7.2% (< 24.9%)
This is number of smartphones sold (i.e. new smartphone users). The articles are a bit imprecise, but it seems this is for Q4 of each year. The company that published those numbers is called "Analysys International" (according to CBS).
Let this sink in, guys. Within the span of a year, Android more than doubled its share of new sales (in a growing market!), Symbian more than halved it. There are no specific numbers for Windows Mobile/Phone, but it should be under "Others", which crashed by more than 2/3.


Ok one more addition to my previous post... Windows Mobile market share was 1.2% and RIM market share was 0.1% (2.1%).

WP7 only unveiled in March for China, so it would not appear in 2011 numbers.

how to unlock a blackberry

RIM should give up their qwerty-styled smartphones and jump the touchscreen bandwagon. with solid operating system, bb phones can stand against ios and the microsoft in terms of functionality and ease of use. that is, if they enlarge their screens.


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