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« Video of my Keynote in New Zealand on Future of Telecoms | Main | Mobile Services Beyond Messaging? Excellent TNS Global Survey Reveals Tons »

May 03, 2012

Comments

TheOneThatGotAway

Asko - essentially there is only Nokia left, so whatever features is/will be supported by Microsoft is for Nokia. In fact there is no point at this moment for microsoft to spend energy on any other OEM than Nokia.
Tomi - Nokia is not capable of supporting a wide portfolio. There is simply not enough 'product development slots' available anymore - it can't go back to Sammy strategy (which is basically old Nokia strategy). Spending ressources on tablets only adds to this problem.
Tomi - one major mistake Elop made was a profound misunderstanding of Nokia's composition/organization. Nokia was formed by extremely fast organic growth recruiting at different locations to support business with competence. This caused a fragmented organization in terms of geography. Elop has 'site focus' which is theoretically understandable - but in practice you need to move people far distances in order to retain competences. If you have a hard time moving people from Oulu or Salo to Helsinki, how do you expect them to move to Beijing ?
Elop is a change manager with poor cultural insight and a CFO box thinking leadership style, shuffling the org like it was SW modules.
Virtually all competent Nokians with ambitions are just looking for an escape.
Nokia org is a shadow of its former self and ability to invent and to make wide a portfolio is gone.
Most former Nokia sourcing execs are gone along with the setup for true economy in scale and logistics.
So apart from the market implications you so well cover, R&D capabilities, Sourcing capabilities as well as a lot of competences are equally history.
It renders Nokia incapable of competing in the Smart phone segment AND the 'dumb phone' segment.
I am truly sorry to see this - if Nokia is to survive it has to do so from a blue ocean strategy and not the red ocean with-arms-chopped-of-strategy that Elop has chosen.
Why team up with a defensive, controling and reluctant giant like Microsoft, when you need agility and speed of execution to support the challenger position you are in ?
One can argue that when the decision was made to partner with Microsoft, Nokia came in with the definite leadership position and that could act as the base for transformation.
Now this invalid and you play the challenger game from a position resembling Zero in terms of market share. This calls for a strategy change - as this is not coming from Elop, the board has to act and install a CEO capable of taking leadership in the new situation.

zlutor

Shares are in free-fall... :-(

http://www.4-traders.com/NOKIA-OYJ-439932/news/

JD!

Why do I see "ECOSYSTEMS BURNING"!

Eurofan

@Asko: Thank you for your report from Nokia's annual meeting for all the rest of us who weren't there.

@Hoista: I agree, a Meego phone with a Pureview camera.

A Meego phone with a Pureview camera and modern innards would be the next logical top end Nokia phone after the Windows phone and tablet experiment proves a total failure in 2013. I'm sure the development costs for such a modernization of the N9 would be on par or less than the total costs of Nokia's new tablet. But a tablet will get made, unfortunately. It will get made, it will fail, and it will bankrupt Nokia in the process.

Amazon's tablets are sold at a loss so Amazon can own the content sales channel. Apple tablets are sold at a nice profit because of the rich apps environment and the desire of wealthy iPhone owners to have an even bigger iPhone in their lap when they are in public waiting areas, like airports, dentist's offices, and meetings. No one else has made any money on tablets or is likely to for the next few years, the clear lesson of the last two years in tablets.

Meanwhile, RIM may well emerge from the ashes of analysts' low expectations by persevering in their original plans to develop an in house successor OS. I saw their BB10 PR video showing touch keyboard typing prediction and it looks really nice. They have decided to refocus on business users and have never publicly disrespected their most affluent fan base as Nokia did when they pulled the plug on Meego. I agree with Tomi: messaging is the number one use for smartphones. For business users, number one/two is email. If RIM solidifies its position as the most powerful messaging and email phone maker while providing an up to date browser experience, I think Blackberry will start to claw back sales from IPhone in the business world where email is still king. I really like RIM's chances now. They are going again after the most lucrative market, their original market, high value professionals that need to be in constant messaging and email communication with each other along with having access to the web.

In contrast, what is Nokia's plan and outlook? Hope and pray that the W8 ecosystem provides a heretofore missing halo around Windows phones and tablets.

Imagine where RIM would be today if instead of pouring the effort they put into their Playbook tablet, they put that effort into developing the next BB10 phones. They'd be further along and in better shape, that's for sure. But they learned from their tablets. They marked them down 60% and cleared out stocks, fired their co-CEO's and kicked them off the Board. And now in less than half a year they have a viable path to recover the high ground in the message and email heavy world of business based on BB10 phones. Tablets may some day be a profitable sideline but the phone comes first as Apple has shown. First perfect the phone ecosystem. Then introduce the tablet.

RIM and Nokia have been equally impacted by the market disruption of iPhone and Android, but RIM, despite their Playbook misadventure, will be the more successful of the two. Because they were first to jettison incompetent CEOs and return to their root customers with a highly competent in-house solution to their customers' needs in an iPhone dominated world: BB10. If BB10 succeeds on phones, Playbooks will become a more viable sideline.

Nokia has a similar in-house solution waiting in the wings, Harmattan as in an N10 with Pureview camera. It meets the needs of Nokia's core customers far better than any offerings based on Microsoft software. Will Nokia ever get there? The next 12 months are going to be horrific for Nokia. Competence to produce a N10 has been savagely cut at Nokia and is likely to be cut further as Elop husbands resources for his pointless Windows tablet exercise amid anemic sales of WP7.5 and WP8 phones, both sold at a loss.

HP, RIM, Motorola, Samsung, and how many others have tried and failed in tablets? And Nokia will succeed because of the halo of W8? Just ridiculous. At the very least, a competent Board would demand the postponement of any developments of a Nokia tablet until profitability is returned to the smart devices division based on WP sales. Nokia's crown jewels are the software knowhow embedded in the N9. Nokia must preserve a plan b against the possibility that Nokia discovers an ex-Microsoft manager turned CEO and his Leadership Team are incompetent.

BB10 video: http://www.youtube.com/watch?v=JEPYYo0-gfc

Teppo Q.

HARHAHAHAHA, Nokia is going below 2 euros per share. DIE NOKIA, WE ALL HATE YOU AND YOUR ENGINEERS !!!

I have been working in NSN when I look those engineers I see people with lunatic gaze. All nokians are just the same. burntout fucks.

Pureview is just scaledup 5 megapixel. Downscaled for market hype.

Eurofan

@TheOneThatGotAway: Thank you, thank you, thank you. I have been looking around and reading everything I can find on Nokia and you have managed in a modest block of text to encapsulate all the essential points of fact about Nokia I have been looking for. You obviously know what you are talking about. I love coming to Tomi's Communities Blog because Tomi obviously cares about Nokia and there is much to learn from his postings and the comments he attracts. But you, TheOneThatGotAway, have really added quite a bit just with one comment. Please post again sometime and know that however much you write you will have very avid and appreciative readers who are trying to figure out how a once dominant and promising company came to this.

Every word you wrote is so valuable. But in particular I appreciated:

"Nokia was formed by extremely fast organic growth recruiting at different locations to support business with competence. This caused a fragmented organization in terms of geography. Elop has 'site focus' which is theoretically understandable - but in practice you need to move people far distances in order to retain competences. If you have a hard time moving people from Oulu or Salo to Helsinki, how do you expect them to move to Beijing ? Elop is a change manager with poor cultural insight and a CFO box thinking leadership style, shuffling the org like it was SW modules. Virtually all competent Nokians with ambitions are just looking for an escape. Nokia org is a shadow of its former self and ability to invent and to make wide a portfolio is gone. Most former Nokia sourcing execs are gone along with the setup for true economy in scale and logistics."

Every word has the ring of truth and every concept is so well communicated. Whoever you are, it is a tragedy you are not on YLE explaining this to Finnish Nokia stockholders. I read that the Finnish stockholders represented at the annual meeting yesterday represented 40% of Nokia shares. There could be a revolt if Finnish media would get over their head in the sand view of Nokia, that anyone against the Elop/Microsoft plan for Nokia is out of touch with the modern world, is a reactionary or worse. In fact, it is Elop and his crew who are out of touch with reality and Old Nokia was far more in touch with its customers' interests and ambitions than this bunch from Seattle. There is such a craven attitude in Finnish higher circles that Microsoft is big and powerful and so Nokia has made a powerful and safe alliance. In the USA we know better. Nokia has made an alliance with a very dangerous and clumsy entity which is as likely to crush Nokia rolling over in bed as it is to make love to Nokia and give it children.

TheOneThatGotAway

@ Teppo
Get some help, you seem to need it.

You are right in one thing though, Elop is surrounded not only by incompetent employees but also incompetent operators and now shareholders ;-)
He is doing his best effort to severely reduce this epidemic incompetence in the company - he is executing like there is no tomorrow :-)

Personally i have tried to use all my Nokia shares to wipe my behind - thinking it was a truly financially based executive decision minding the price of toilet paper - though subsequently i understanding what Elop meant about sitting on a burning platform - maybe this is what you mean about being a burntout engineer.....

All those burntout headless chickens....

Eurofan

@TheOneThatGotAway: I can not help reposting your appreciation of Nokia's strategic position, too:

"If Nokia is to survive it has to do so from a blue ocean strategy and not the red ocean with-arms-chopped-of-strategy that Elop has chosen. Why team up with a defensive, controling and reluctant giant like Microsoft, when you need agility and speed of execution to support the challenger position you are in ? One can argue that when the decision was made to partner with Microsoft, Nokia came in with the definite leadership position and that could act as the base for transformation. Now this is invalid and you play the challenger game from a position resembling Zero in terms of market share. This calls for a strategy change - as this is not coming from Elop, the board has to act and install a CEO capable of taking leadership in the new situation."

Your full post should be quoted in every discussion of Nokia in Finnish media. Thank you again for visiting this alphabetic ant farm. We are too often going in circles, here, in the comments section of Tomi's Blog. Your post has blown the roof off and I can smell the fresh air. I look forward to your next post.

Tomi T Ahonen

CN I removed your comment - obviously - because you know the rules here and we don't accept postings that waste the time of the readers. You clearly did not read the full blog. I CLEARLY stated in the blog that Finland DOES have a sales boycott, and explicitly that it has been reported.

READ the blog, CN, then re-post your point(s) but don't claim I ignore the Finnish sales boycott when I explicitly say it in the blog!

Tomi :-)

J.T.

TheOneThatGotAway = Tomi (The similar use of smileys)

Just FYI

TheOneThatGotAway

Nope I am not Tomi, but I am flattered, there could be other reasons than the smileys why Tomi and I might share some 'mental space'......

watsGoingOn

What happened to Nokia, even LG is making much better smartphones than Nokia. This is ridiculous, Engineers and employees at Nokia what are they doing, how are they feeling? I guess they were smart, or all smart ppl left!

Asko

More on shareholder meeting.

Elop refused to give numbers for N9 sales when asked compared to Lumia but Elop told the shareholders that you cannot compare Lumia and N9 sales numbers because N9 was released only on very small and selected markets without advertisements. He said something that Lumia's sales have exceeded N9 because Lumia's sale have started much faster than N9. I was left unclear as to what he really meant by that.

Elop was asked twice if Nokia has Plan B. On both times he said that they will adapt to the market when needed. For me it sounded like that there isn't plan B or that plan A must work and will be made work no matter what. It sounded bad. It might be that I'm overreading into it. Maybe Elop has learned not to do Elop Effect again :)

Elop said that he cannot tell specifics but there are multiple new products coming this year, first ones will come in Q2. He didn't say but I'm predicting based on Nomura's information that Q2 product announcement will be about Meltemi as a successor for S40, but we will see on June. You could tell that Nokia's management is betting everything on the new products coming out this year.

For question about cheap Android smartphones eating Nokia's feature phone sales Elop said Nokia will counter that with Lumia 610. It is specially designed for that. He said Microsoft and Nokia have done huge job to slim down Windows Phone to fit on Lumia 610.

Small shareholders were unhappy that Steven Elop was on the board, because they thought that the board should supervise CEO Elop and cannot do it properly if Elop is on the board. Small shareholders also thought that Nokia is grossly overpaying the board for their work.

Bruce Brown, Mårten Mickos and Elizabeth Nelson were selected as new members for the board. There was short video presentation of all of them. Bruce Brown was advertising P&G and its products for almost the whole part of his introduction to the Nokia's shareholders. He was very like Donald Trump. Not very promising.

Mårten Mickos and Elizabeth Nelson told mostly what they had done. Mickos was little bit stiff but I think his resume is more in direction what Nokia needs. Nelson was inspiring but I couldn't tell if she will be good or bad selection for the board.

Elop was asked about employees and their mood at Nokia. He told based on regular polls inside Nokia that employees' mood was getting better than for long time. It is good if that is happening but my contacts tell little different story. Maybe the situation has improved in some parts of Nokia but not for the whole Nokia.

Elop also told that the reason for burning platform memo was to wake up the whole Nokia. Nokia had already Windows Phone project going on in the silent mode. It had to be kept as small project so it wouldn't leak out. Then a couple of Nokia's customers (probably carriers) were rejecting some Symbian products. That caused Nokia to press panic button. So to speed up and widen the Lumia portfolio it became necessary to get much more employees to Lumia project and much sooner than planned. So the memo and publication of the new strategy on February 2011. That was what Elop told and it is possible that is true but I'm not sure that is necessarily the whole truth.

TheOneThatGotAway

@Eurofan
I'll do a more elaborate in a couple of days. A little squezed on time today and tomorrow.
I wouldn't do good on YLE as I am not a Finn.

zlutor

@Asko: "Elop refused to give numbers for N9 sales when asked compared to Lumia but Elop told the shareholders that you cannot compare Lumia and N9 sales numbers because N9 was released only on very small and selected markets without advertisements. He said something that Lumia's sales have exceeded N9 because Lumia's sale have started much faster than N9"

HAHAHA! I would be really surprise if it was true. As being in love with Lumias Elop would proudly tell the numbers if N9 were outsold by WP phones. Am I too naive? :-)

Small market such as Brazil, Russia and China? Of course, it was hell overpriced for the average consumers there but that is an other story... :-(

But let's assume he is right and Lumias really oversold N9 - but the difference can not be too huge...
Maybe it is a good reason why they should revise the strategy and start selling N9 in en Western Europe and India - at least until WP8 devices , the "saviors" come...

Quite 'funny' that always the next WP release will be the savior, it will contains all the necessary/missing features. And when it comes out, the next planned release stpes into this role again.

First the WP7, then WP7.5 and now WP8... :-(

NoNameRequired

"Engineers and employees at Nokia what are they doing, how are they feeling?"

Polishing their CVs and sending them out to anyone who is hiring? That would be my guess. I've been in that position before, and it is not a pleasant place to be. Productivity plummets as critical people disappear and the rest spend their time web surfing and looking at job applications.

The other day I got a call from a recruiter working on behalf of Nokia, Qt division. And if they are calling me, they are pretty desperate.

CN

@Tomi

You removed my previous comment. I hope this is not a standard operating procedure in here - you simply misunderstood me and then claim I haven't read the blog. Wrong, I did read it, number of times.

I never claimed you ignore something, but I simply asked you what would Nokia/Lumia/WP be WITHOUT a sales boycott when Operators are again reporting fairly good sales in April in Finland.

I did challenge the value of your reference, if MTV3 and Ilta-Sanomat are sources to come to a conclusion of a sales boycott. C'mon, MTV3 and IS...? My personal experiences don't agree with that "study".

My bottom line is that YOU brought Finland into discussions with the "sales boycott study". Now you write Finland is not so important: "Secondly, with Nokia headquartered in Finland, almost any phone released by Nokia will sell well there, so it is not a strong sign that Lumia might sell well in any other markets." So, how should I read Finland's role? Good reference if you find signs of sales boycott, irrelevant if volumes are high?

Next is Amazon. You requested not to use it. Then you use it yourself. Giving examples that people are likely to remember (Lumia is # 5, Lumia is # 5,...). And ignoring other details (AT&T list vs. All-Op's list, delivery troubles admitted, serious shortage with cyan, white version not out yet,...) that might generate more neutral view. Tell people all the facts and let them decide, that would be fair - and neutral.

Well, don't use Amazon then, I do agree it may not give the right picture. Use Canaccord (Canaccord Genuity has confirmed the Nokia Lumia 900 was the best selling smartphone on AT&T after the iPhone).

I'm not saying things look good for Nokia/Lumia/WP. I'm saying they are not necessarily as bad as what many may think.

Daniel

Hi Tomi,

did anyone on the shareholders meeting ask about the sales figures of the great N9 ?
Or is it still top secret, so noboby could see N9 is outselling the Lumia-crap.

Greetz for Germany
Daniel

(although N9 has an ELOP-ban for Germany , I got one !)

zlutor

@Pekka: "Lumia 900 confirmed to be second behind iPhone at AT&T " - it can be true. The real problem it is FAR-FAR behind (at least nowadays). maybe it will be better but currently the whole WP story is a disaster - at least from financial point of view...

As Elop mentioned the whole Lumia line almost failed worldwide (except Finland and the USA, see above) - I would be surprised if either L900 or L610 would change it significantly.

In this case 2012 will be a financial nightmare for Nokia - meanwhile Samsung will collect tons of cash with e.g. SGIII. In the Autumn, when WP8 is supposed to come to save Nokia, they will steal the momentum from Nokia and present some good WP8 devices, too.

Whatever hyper-super devices Nokia will come up with they will attract only one segment of the market while Samsung will capitalize on Android AND on WP8 as well...

No to mention the consequences of erosion of the brand in high end segment has immediate influence on low(er) segments as well...

Patrick

@Asko

"Elop refused to give numbers for N9 sales when asked compared to Lumia but Elop told the shareholders that you cannot compare Lumia and N9 sales numbers because N9 was released only on very small and selected markets without advertisements. He said something that Lumia's sales have exceeded N9 because Lumia's sale have started much faster than N9. I was left unclear as to what he really meant by that."

So on ONE side we have a product that was sold on a very small and selected markets without advertisements. On the other side we have a product (Lumia) which had extensive PR and, according to the CEO, had sold far better than the N9.

And in the middle we have the CEO that refuse to share the numbers despite that the same CEO says the Lumia massively outsold the N9.

Is this some kind of joke? Is this the recipe for success that the Nokia board believes will add more/any trust?

If they were afraid that people would misinterpret the numbers, fine, I can understand that. But then you take the time and explain the numbers and why the picture looks like it does, you don't avoid the god damn subject because then it looks like you have something to hide.

Christ, this is ridiculous and I totally understand why those investors are filing a lawsuit.

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