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October 18, 2012

Comments

Mark

@Operational

You wrote: Nokia barely gets aby real money from Symbian. Most of the Symbian handsets are very low end and the 808 sells only small amounts.

Can't see how that is true, as Nokia smartphone ASP is EUR 155 and Symbian ASP is 151 EUR.

Giacomo Di Giacomo

Looks like my personal forecast of 1 May was accurate then... :-) http://communities-dominate.blogs.com/brands/2012/05/are-we-ready-for-the-numbers-nokia-smartphone-market-share-projection-2012-ends-year-at-3.html

harri

Finnish Verkkokauppa.com Top 10 list of phones sold: http://t.co/BI83lX8o

Even in Finland no one is buying Nokia. Game over, man.

stoli89

Curiously, Nokia's Revenue and EPS beat market expectations and its cash position has marginally improved. With NSN having returned to profitability and being prepped for sale, the turn in this turnaround is becoming clear. I also think Q4 will be a bloody one in terms of smartphone results simply because the WP8 product line will have only entered the picture after a third of the quarter has expired and Symbian sales will have hit near nadir. Legacy WP7 products are only getting residual action at this point, given the near term release of WP8, so there is a substantial vacuum left for Q4. Nevertheless, Q4 will also likely see the final big write-downs and, as well, signal the initial results for the 920/820 line in some key markets (e.g.: USA, FR, RU, IT, DE).

If WP8 proves marginally successful, the stock has good upside. If WP is able to enter the double digit marketshare territory by end 2013, then the upside will be substantial. I'm long.

Mark Wilcox

@stoll89 - by "its cash position has marginally improved" do you mean that they just lost less money this quarter than last? Net cash was down by another several hundred million again.

What's so different about WP8 vs WP7.5 that you think there's any chance of double digit marketshare by the end of next year?

stoli89

What happened at Nokia reminds me somewhat of a large Multinational that I worked for, insofar as being incredibly profitable for years and with culture that "WE ARE THE BEST". This "WE ARE THE BEST" mantra is a very good thing, but it can also have negative consequences. Sometimes, like our Old Guard management, the company believed it could only benchmark within itself...so SVC's, Markeshare, Quality measurements and other metrics were always bench-marked from within. It got so extreme, markets and factories competed internally for volume, didn't share best practices, and NEVER shared cost/pricing information, etc. There was literally no company wide buying power because employees were afraid to share with their counterparts in other geographic markets for fear of being fired. Even specifications on a global brand (hint, a cowboy that smokes) were altered to create internal barriers to entry on sourcing opportunities for certain markets.

What happened between Symbian and Meego strikes me as a similar case where the "WE ARE THE BEST" attitude takes over at the expense of missing out on what proved to be a clear and externally generated disruption. Ultimately this miss lies with executive management...they are paid to see the forest for the trees. Hell, they are paid enough to see the damn solar system, for that matter.

It's truly sad that Nokia was not able to strike a clear way internally, before external events outpaced their ability to transform without severe pain. But this is the sad norm for many successful companies. I dare say, Apple could see its Nokia moment in a few years. But great companies usually prevail...they may look a lot different coming out of a turnaround...but they continue to play the game hard.

I am long on Nokia for more than one reason, but its clear that the company has a long history of meeting these types of challenges.

Winter

And with W8 coming, can we be too pessimistic? Or too paranoid? Will Nokia make it to Q3 2013?

http://www.theverge.com/2012/10/17/3514556/windows-8-vs-windows-rt-surface-confused-microsoft-store-employees

"With an estimated $1.5 billion budget, Redmond is plastering subway stations, spraying walls and sidewalks, erecting website banners and planning holiday pop-up stores, not to mention running expensive commercials on national television. So far, Microsoft is focusing much of that effort on promoting its flagship Surface tablet, which went on pre-order yesterday.

There's only one problem: Microsoft's Surface RT doesn't actually run Windows 8.

The $499 tablet uses Windows RT, a stripped-down version of the operating system designed for low-power ARM chips like the kind you'll find in today's smartphones."

zlutor

@stoli89: maybe WP8(9)(10)(whoknows) will be successful because M$ will push it like crazy.

The problem is, Nokia gave up everything for WP7.x which is a big ZERO as we see...

They should have joined WP ecosystem now earliest - like Samsung and HTC do. Meanwhile - beside pushing Symbian and MeeGo - they should go for Android and earn big money from there...

Now Samsung (and even HTC) will come out with WP devices and they will start price war with Nokia. They can do it since they have diversified income sources but Nokia has NOTHING but WP (beside S40)!

Especially Samsung can finance this war 'forever' from its Android portfolio...

It is unbelievable how Elop and the board did not see it... :-(

vladkr

At least, Stephen Elop is happy : "however, we are pleased that we shifted Nokia Group to operating profitability on a non-IFRS basis."

As I see, assets are melting like snow in the sun. But the Goodwill seems a bit high to me (it's also the biggest part of assets). Can anyone explain that ?

zlutor

@vladkr: ...thanks to NSN and the dumb phones. Let's hope Q4 will be better... :-(

Fabio Correa

Depressing.

Mats

vladkr,

I believe part of that Goodwill is the really industry-leading patent portfolio and its value. There are some trademarks as well, but most of it should be from patents.

As I discussed with various PE companies, the two real assets left at Nokia at the moment are Patents and the Maps Group (roughly 70:30 in valuation)

Tom Gorr

Double digit marketshare....? It could be, but perhaps in some alternate universe where pigs can fly and human beings are nice to each other.

Here? Meh.

QtFan

"We're encouraging of HTC and Samsung and Microsoft or whomever to have devices in the market and to be making whatever investments that helps spur the ecosystem on," says Elop.
http://www.theverge.com/2012/10/18/3520492/nokia-ceo-stephen-elop-microsoft-surface-phone-comments

What?!?! He doesn't even try to hide it. His main objective is the success of WinPho not Nokia.

felix mentalklutz

Good blog, I like the facts and opinions. In spite of being an engineer, I am very tuned into people. I perceive you don't like Elop. ;-)
I think Nokia got itself into an impossible situation and neither Elop or anyone else is going to get them out of it. Same for RIM. Apple and Android will crush anyone making a competitive mass-market smartphone. You cannot compete with Free (Android) and Good (Apple) in a market which requires applications. As an old-timer, it reminds me of the early 80's where we had IBM OS, Apple OS, Commodore, Tandy, .. The small OS's were killed by the PC and Apple.

peter123

Regarding the sales/units figures, how's the data collected? Are discontinued devices included in the report? Only production devices?

Tester

@SaunUS:

Even if that's the gamble, Nokia will be out of money long before it'd become profitable.

Don't forget that Nokia is only a fraction of the WP market with much - MUCH - stronger companies to compete with.

If push comes to shove Samsung will eat them alive because they are present on all segments of the market and can be a lot more aggressive in their marketing efforts.

Even if it's true, it is utterly insane to bet an entire company on such a far reaching goal with no second leg to stand on.

Besides, who says that MS will conquer this market? The void RIM left is already being filled by iOS and Android.

newbie reader

> You cannot compete with Free (Android) and Good (Apple)

Let me now think some conspiracy :)

Elop is MS takeover trojan, that's not real conspiracy, that's just how it works. Were Nokia Board deluded, arrogant, or in collusion, i dont know, but Elop is apparent leader of takover team, dont call him crazy or stupid.

MS CEO acting on killing NokiaOS, is clear point, now conspiracy theory goes.

***What was the point of killing Nokia foot in OS realm? Suppose NokiaOS efforts are still here, where it leads us to?***

Point one, apparent: It competes with W8. Would there be still NokiaOS, then MS marketing guys could bla-bla only about "fourth ecosystem", and that sounds laughable :)


No, NokiaOS would not succeed iOS-style. Neither it would be 'burning platform'. I see hard, tough, mostly defensive battle. Nokia's envy, arrogance, artifical OS delays, whatever, but ***after hard struggle there is only one outcome possible***

Another free system, Android-like, qt-based, open. Could easily be better speed than java-based Android.

Point one++: NokiaOS cross-platform Qt-applications could penetrate W7 realm. Taking some of the battle on MS home turf.

Point two: ***NokiaOS would compete with Google's Android.***

Point three: Competition of two free OSes will make them BOTH better (for customer, not for companies) accelerate their technical growth and maturity. And this in turn will be a ***serious push to iOS.***

What in common has these three companies, Apple, Google and Microsoft? Who ALL, as we see, benefit from NokiaOS artifical death?

Some country over there needs all these tech profits back home, you european guys. Cold War is over, now it's China battle, and you do not border China, do you? So what's the purpose of your eating fat tech profits?

And all these profits should not be damaged en route, no accidents allowed. So shoot them, potential offenders.

Tester

@newbie reader:

That really makes sense...

... but only in a disturbed mind.

This whole conspiracy theory is nonsense because it hinges on a particular issue that would be a no-go for Microsoft - WP failing!

MS wants WP to succeed. Otherwise they wouldn't develop it.
Nokia fails because WP is failing. Had it not, Nokia would be a profitable company again.

And here the conspiracy comes falling down like the house of cards it actually is.


tired

@leebase

'So yes, it is fair to say that WP is vying for 3rd ecosystem. As dismal as WP sales have been, it's still in a far better platform/ecosystem position than RIM or Symbian or Bada or Meego or Tizen.'

Of course you are right. Even with 1 wp phone being used, just because it has apps, it IS the 3rd ecosystem.
Get real.

@Tester

Not failing, failed. And taking Nokia smartphones down with it.

Fire Elop. Keep wp. Keep Symbian. Go Jolla as Nokia let whole Meego team go, so no go for Harmattan or Meego. Migrate from Symbian to Jolla over the next year or 2.

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