How Do You Know If Your Strategy Has Failed - The Nokia Form 20-F Submitted to the NY Stock Exchange - Elop, your two-year experiment has failed and so have you

If you really want to cry about how badly Nokia has been mismanaged, go and re-read the Form 20-F that Nokia filed shortly after Nokia's new CEO Stephen Elop announced his surprise strategy and turned the strongly growing, profitable, market-dominating handset maker into the diminishing, loss-making, loser it is now. Oh? You didn't read the Form 20-F which Nokia Corporation filed with the USA Securities and Exchanges Commission on 11 March, 2011? I did. At the time I remarked how many of the possible problems that Nokia warned might come true, I was in fact already convinced would also come true, and now we see from the evidence, that they also have indeed come true.

So? If we want the truly honest measure of Stephen Elop's CEO tenure, his radical strategy, and measure is it working or not - this is Nokia Corporation's own statement to the USA Securities Exchange Commission and the New York Stock Exchange, about its radical new strategy, and what all might go wrong. This is not my suggestions of why or how we should measure Nokia's success or failure, this is Nokia's own statement, issued during Q1 of 2011, after the new strategy was unveiled on 11 February 2011. Please also note, this is a very long article, that is not my fault, I only selected a FEW of the main risks as identified by Nokia in the Form 20-F. If Nokia had decided not to pursue such a risky strategy two years ago, I wouldn't need to write such a long article. This whole article is only around Form 20-F and the risks that Nokia itself identified as threatening the Windows strategy. Yes, there are plenty of OTHER mistakes that Elop has also done since then, but we will limit this blog only to Form 20-F. These are the problems that Nokia itself identified. So get yourself a cup of coffee before you embark on this long blog but if you are interested in can Nokia (or Elop) survive, read this blog and how Nokia itself identified its risks with Microsoft.

FORM 20-F STATES CLEARLY  WINDOWS STRATEGY IS FULL OF RISKS

In the filing, Nokia Corporation told us how long the transition to the new strategy would take "We expect the transition to Windows Phone as our primary smartphone platform to take about two years." The exact two-year milestone will be on 11 February, 2013, in about 40 days from today. I expect many business, telecoms and strategy writers to re-examine the Nokia failure in its Microsoft strategy at that point. Lets now use Nokia's own standard for how to measure success or failure of its strategy, as Nokia told us in the Form 20-F.

Nokia warned that if the Nokia strategy with Microsoft were to fail, most likely Nokia would then become a low-margin box-mover basic handset maker (hey, thats what I said on Twitter within minutes of this strategy first revealed). This is what Nokia wrote:

Our proposed partnership with Microsoft and change in our smartphone platform strategy are subject to certain risks and uncertainties, which could, either individually or together, significantly impair our ability to compete effectively in the smartphone market. If that were to occur, our business would become more dependent on sales in the mobile phones market, which is an increasingly commoditized and intensely competitive market, with substantially lower growth potential, prices and profitability compared to the smartphone market.

So please understand - Nokia explicitly said if this Microsoft strategy were to fail in the two years period, that would leave Nokia as only a dumbphones-maker of very low-margin business. That this strategy in effect threatened Nokia's future as a smartphone maker. If the Microsoft strategy were to fail, Nokia would become a 'box mover' like Dell is in the PC market. Very low-margin, cheap dumbphone maker.

Lets get back to Form 20-F. After that, Nokia listed its perceived risks. And there were many. Just general risks related to the Microsoft strategy produced 21 itemized risks, before Nokia went onto specify hundreds more risks as they related to the Symbian platform, the competitive 'ecosystem', differentiation, speed of innovation, employee morale, etc etc etc. I am not going to take every single item from the risks assessment, it would else produce the longest blog I've ever written, and even on the holiday break, I am not about to do that amount of writing. I will take some of the most obvious risks, as specified by Nokia, and see how they panned out. Remember readers, this is not somehow 'Tomi Ahonen's petty list of complaints'.. this is Nokia's official testimony, in its official filing to the SEC and NYSE about what may cause the Nokia Windows strategy to fail. This is Nokia's own published set of 'failure standards'. Nokia told us how to measure failure (or success) with its strategy. This is directly from the Form 20-F in the explicit section 3D Risk Factors, where Nokia wrote in bold:

Our proposed partnership with Microsoft may not succeed in creating a competitive smartphone platform for high quality differentiated winning smartphones or in creating new sources of revenue for us. (bold in original)

WINDOWS WAS RISKY PLATFORM OF TINY SCALE

Nokia then gave a lot of text and explanation about the changes in the smartphone market, and then listed explicit problems with this lead in: "Our proposed partnership with Microsoft and change in our smartphone platform strategy are subject to certain risks and uncertainties .. those risks and uncertainties include the following:

• The Windows Phone platform is a very recent, largely unproven addition to the market focused solely on high end smartphones with currently very low adoption and consumer awareness relative to the Android and Apple platforms, and the proposed Microsoft partnership may not succeed in developing it into a sufficiently broad competitive smartphone platform.

So now we know. When this strategy was announced, the Windows Phone platform had a 2% market share and as of the latest quarterly data reported, all Microsoft based smartphones, running both Windows Phone and its older Windows Mobile version, had a combined market share of 4%. Today, latest data from Q3 reveal that Windows on all platforms combined had a market share of under 2%. Latest market data from selected major markets suggests Windows Phone sales have suffered even more, and total Windows Phone market share for Q4 may be rounded off to 1%. The Windows Phone operating system was already sold and in production when Nokia selected this platform. Since then it has shrunk in size. Nokia started selling Lumia based smartphones running Windows Phone more than a year ago, so Nokia has now had more than a year of contributing to the Windows Phone success. When this strategy was announced, Nokia had 29% market share on its own operating systems. They are now down to 2%. So Nokia has sacrificed 27 points of market share of its own smartphone customers and that has not moved the Windows Phone share up even one point of market share. This after more than a year of Lumia sales. Absolutely, concretely, beyond a shadow of a doubt, the Windows Phone startegy for Nokia has failed. 

Then on the price. Windows Phone was and still is focused only on the 'high end' of smartphones. When this strategy was announced, Nokia average sales prices of its smartphones was 152 Euros (190 US dollars). Informa has just reported that for year 2011, the average price of smartphones globally was 188 US dollars. Earlier, Deloitte had calculated that 300 million ie 41% of all smartphones sold in 2012 will cost under 100 US dollars. Nokia's Symbian was well suited to provide smartphones into the low-cost segment. But Nokia's Lumia series, the Windows Phone based smartphones had an average sales price of 160 Euros (200 US dollars) and the first set of the newest 'second generation' Lumia smartphones that run Windows Phone 8 have an average price of 570 Euros (717 US dollars). Nokia knew when announcing this strategy that the prices of Microsoft based smartphones would be a risk. We have now seen, that as the market has moved down in price, Elop's strategy has pushed Nokia into the implausible business case level. The Windows Phone Lumia series is priced far too high to sell in the volumes Nokia needs. Which is why for each release, almost instantly, within weeks of launch, the Nokia prices for Lumia handsets have collapsed. So happened a year ago now, with Lumia 800. So happened with the Lumia 900 last spring. So happened already now for the brand new Lumia 920!! The prices have been slashed because nobody wants these Lumia phones and Nokia has to move undesirable phones so they slash prices.

WINDOWS LIMITED NOKIA ABILITY TO DIFFERENTIATE

• Our ability to innovate and customize on the Windows Phone platform may not materialize as expected to enable us to produce smartphones that are differentiated from those of our competitors.

Yes. So far we've seen 9 Lumia models, which are all near clones of each other, and arguably, all are clones of the original iPhone, via the iconic design of the Nokia N9 that runs on MeeGo. There are no premium camera models like has been famous for ever sinc the award-winning N93 with real optical zoom, or the award-winning N8 that had a 12 megapixel camera, real Xenon flash, etc, that ran on Symbian; or now, the award-winning 808 Pureview, which has the monster 41 megapixel camera, real Xenon flash etc, that also runs on Symbian. Even the top Lumia 920 does not even match the N8 for camera sensor size, with Nokia's top flagship severely regressing to 8 megapixels, the level where most rivals are, and leading rivals have long since moved to bigger camera sensors. Nokia has a strategic partner in Carl Zeiss and yet under Elop's Microsoft strategy, Nokia's Lumia series has been unable to capitalize on Nokia traditional strengths, and abilities that Nokia customers expect. A 2012 survey of Nokia smartphone buyers by Nokia, published at Nokia's website, revealed that when coming to replace their phones in 2012, the number 1 request Nokia loyal existing customers had was the camera. And what do we now see? Samsung has taken the top cameraphone specs crown with the brand new Galaxy Camera. Why, if Nokia knows this from internal consumer surveys, would Nokia voluntarily abandon this competitive advantage - to Samsung no less?

Similarly QWERTY inputs. Nokia invented the full QWERTY input method for smartphones long before there was a Blackberry. The last data Nokia revealed before Elop came to run the company, was that for the year 2009, 27% of Nokia smartphone buyers selected the E-Series which was essentially all QWERTY handsets (there also were other Nokia smartphones with QWERTY keyboards). So Nokia has millions upon millions of satisfied loyal customers who want a smartphone that is differentiated from the iPhone and some of those love the real physical QWERTY keyboard. Nokia even sold a separate Bluetooth-based foldable QWERTY keyboard for those who wanted to have a larger keyboard for their smartphones. Bizarrely, the Lumia series does not even support the foldable Bluetooth keyboard and not one of the nine Lumia models released so far has a QWERTY variant. Elop has admitted that there have been 'debates' inside Nokia whether to release QWERTY variants. As we know every major Nokia flagship recently on Symbian and MeeGo have had QWERTY variants like the E7 to the N8 and the N950 to the N9, but there is none for Lumia, we can see which side of the 'debate' Elop has been on. He is a moron. Nokia's own customers beg for QWERTY variants, yet the Microsoft Muppet won't give us any on Windows Phone. And worse - if he won't do one on the Lumia series, then what moment of madness was that 'decision' not to sell the N950 with MeeGo, after the N9 was winning all the awards and had massive sales success a year ago? Why not then release at least the N950 on MeeGo if Elop didn't want to do a Windows based QWERTY Nokia superphone? Idiot!

Nokia was able to differentiate very broadly with its Symbian OS, and the Maemo and MeeGo advanced smartphone operating systems. But with Windows, Nokia has not been able to differentiate. Not against other platforms, not even against other smartphone makers on Windows Phone platform. Nokia's Microsoft strategy has comprehensively failed in a critical ability for Nokia to build scale and volume and win market share, because the Lumia series and Windows Phone do not allow Nokia to differentiate. Nokia's ability to differentiate was promised to increase with Windows. It has been severely curtailed instead. Early Windows Phone models did not even support NFC, a feature Nokia had started to roll out on its top end Symbian and MeeGo devices. Who only increases their differentiation, across Android, bada and Windows platforms? Samsung thats who? Differentiation and a broad product portfolio gives you reach and scale. Nokia knew that before Elop came to town. But Elop has refused to allow that now. Elop only wants to make i-Phon-a-Clones. Before Elop, Nokia never had Apple iPhone-envy. Elop contaminated Nokia and now it seems the Lumia series is all but cheaper-looking plasticky iPhones.

WINDOWS IS SIMPLY NOT COMPETITIVE IN GLOBAL MARKET

• The Microsoft partnership may not achieve in a timely manner the necessary scale, product breadth, geographical reach and localization to be sufficiently competitive in the smartphone market.

Scale? Nokia sold 103 million smartphones in 2010. That refleced a growth level of 53% from 2009. Every single analyst who during 2010 published a forecast for Nokia performance into 2011 and/or 2012, said with total confidence that Nokia's then-current Symbian (and MeeGo) based strategy would yield solid growth into 2011 and 2012, and every single published handset industry analyst was convinced Nokia would remain the world's largest smartphone manufacturer in 2011 and 2012. Every single analyst was convinced. The scale Nokia was expected to hit would be about 130 to 140 million smartphones for 2011 and 170 to 200 million for 2012. That is the scale that we are looking at, that Nokia was prepared to support, with the world's largest factory capacity to produce smartphones, spread across 7 factories around the world, including the world's largest handset factory facility, in China. Nokia had the massive sourcing ability to buy components at bulk discounts. Those all depended on Nokia's ability to continue to grow. 

Instead of Nokia growing from 103 million in 2010 to about 135 million in 2011 and  about 185 million now in 2012, what happened, right after Elop announced his Microsoft strategy, Nokia smartphone sales collapsed to 77 million in 2011 and 35 million in 2012 and something like 20-25 million in 2013. Nokia has absolutely failed to "achieve in a timely manner the necessary scale to be sufficiently competitive in the smartphone market.:." In the latest Q3 results, Nokia's smartphone unit generated a 48% loss per every smartphone it managed to sell! 48% loss per handset. When Elop announced this strategy, Nokia's smartphone unit was healthy and reported growing profits from 9.3% profitability before he took over, to 12.5% in the first full quarter he was in charge. Elop's strategy has exchanged 12.5% profit for 48% loss. This is total comprehensive failure, and it stems from the fact that his mad strategy cannot sustain the level of volume that Nokia needs just to remain viable.

USA FAIL AT EXPENSE OF CHINA SUCCESS

• The Microsoft partnership may erode our brand identity in markets where we are strong and may not enhance our brand identity in markets where we are weak. For example, our association with the Microsoft brand may impair our current strong market position in China and may not accelerate our access to a broader market in the United States.

Duh! China is the world's largest smartphone market, accounting today for almost a third of all smartphone sold. Nokia had over 70% market share in 2010 in China's smartphone market according to Canalys and 6.8% market share in the USA smartphone market in 2010 according to Kantar. After the Microsoft strategy was announced in 2011, Nokia's China market share has fallen to 6% according to Canalys Q2 data for China, and was that achieved with any corresponding growth in the US smartphone market? Kantar reports that Nokia's Symbian and all Windows Phone (which includes HTC, Samsung and other WP manufacturers) total market share in the US market is now 2.9%. The Chinese market was sacrificed achieving a LOSS to the USA market in return! Yes, the numbers do not lie. Before Elop's Mad Microsoftian Misadventure, yes using 'obsolete' Symbian, Nokia had nearly 7% of the USA smartphone market and over 70% of the far bigger Chinese smartphone market. Since then the US market has grown a little but the Chinese market has grown massively. And in both markets Nokia has collapsed. This is a totally, comprehensively failed strategy. A December survey of Chinese online sales found that Nokia's Symbian based N8 and 808 Pureview were among the top 5 besteselling Nokia smartphones and the N9, which runs on MeeGo was the second bestselling Nokia smartphone in China. Why is the idiot CEO forcing the utterly undesirable failing Windows based smartphones to the market where Nokia's Symbian is well entrenched and MeeGo is beloved?

NOKIA ABANDONED ITS ADVERTISING UNIT

• We may not succeed in leveraging the Microsoft advertising assets to build and achieve the required scale for a Nokia based online advertising platform on our smartphones that generates new sources of advertising based revenue.

Among his desperation moves, Elop sold the Nokia advertising unit, while global mobile advertising is doubling year after year after year, and Nokia had one of the most used mobile advertising platforms of the planet.

WINDOWS DEMOLISHED ANY PROFITS IN SMARTPHONES

• We may not succeed in creating a profitable business model when we transition from our royaltyfree smartphone platform to the royaltybased Windows Phone platform due to, among other things, our inability to offset our higher cost of sales resulting from our royalty payments to Microsoft with new revenue sources and a reduction of our operating expenses, particularly our research and development expenses.

Duh. Nokia generated 12.5% profit per smartphone sold when Elop was only executing the Symbian/Maemo/MeeGo based strategy he was given. After he foolishily abandoned that, today Nokia's smartphone unit reports 48% loss generated per every smartphone sold. Yes, its clear, the new strategy was not able to create a profitable business model. The new strategy has comprehensively failed. Spectacularly failed. I cannot think of any industry ever, where a global market leader went from 12% profits to 48% losses in a period of less than two years (while the industry itself continues to be highly profitable, so excluding world economic downturns, wars, natural disasters etc)

Note - this is EXACTLY the same problem with Windows that has previously been observed by LG, Motorola, SonyEricsson and HTC - that out of all smartphone operating systems and 'ecosystems' the Microsoft one is the only one that is always the unprofitable one, and anyone who attempts to use Windows as the primary operating system will only be plunged deeper into losses (as observed by LG, Motorola and HTC, all who after attempting Windows as the main OS, soon thereafter shifted their majority (and then all) smartphones to Android instead. Windows is known to be the loss-making platform. Everybody knows this. Only a Microsoftian Madman would insist, after two years of damage and devastation - and ever increasing losses in the smartphone unit - come on, Nokia was generating increasing profits at 12.5% exaclty two years ago using Symbian, now when roughly half of all smartphones run Windows at Q3, Nokia produced 48% loss per every smartphone sold.

PATENTS

• We will need to continue to innovate and find additional ways to create patentable inventions and other intellectual property, particularly as we would no longer be developing the core platform technology for our smartphones under the proposed Microsoft partnership. As a result, we may not be able to generate sufficient patentable inventions or other intellectual property to maintain, for example, the same size and/or quality patent portfolio as we have historically.

If Patents are so valuable, why is idiot-CEO Elop selling key patents to trolls (and is it not a criminal offense for a Nokia CEO to gift Nokia patent rights to Microsoft when selling some of those rights to the patent trolls. Elop must be investigated for this and any illegal patent-transfer contracts must be revoked)

OPERATORS, DISTRIBUTORS

• The proposed Microsoft partnership may cause dissatisfaction and adversely affect the terms on which we do business with our other partners, mobile operators, distributors and suppliers, or foreclose the ability to do business with new partners, mobile operators, distributors and suppliers.

Touche! Nokia expresses in bold in Form 20-F how vital this is for Nokia survival. Nokia writes:

Our ability to maintain and leverage our traditional strengths in the mobile product market may be impaired if we are unable to retain the loyalty of our mobile operator and distributor customers and consumers as a result of the implementation of our new strategy or other factors. (bold in original)

Nokia further explains how much this is a true competitive advantage and key to Nokia long-term market dominance:

We have a number of competitive strengths that have historically contributed significantly to our sales and profitability. These include our substantial scale, our differentiating brand, our worldclass manufacturing and logistics system, the industry’s largest distribution network and our strong relationships with our mobile operator and distributor customers. Going forward, these strengths are critical core competencies that we will bring to the proposed partnership with Microsoft and the implementation of our Windows Phone smartphone strategy. Our ability to maintain and leverage these strengths also continues to be important to our competitiveness in the mobile phones market. (bolded emphasis added by me) 

As discussed above, however, the proposed Microsoft partnership and the adoption of Windows Phone as our primary smartphone platform are subject to certain risks and uncertainties. Several of those risks and uncertainties relate to whether our mobile operator and distributor customers and consumers will be satisfied with our new strategy and proposed partnership with Microsoft. If those risks were to materialize and mobile operator and distributor customers and consumers as a consequence reduce their support and purchases of our mobile products, this would reduce our market share and net sales and in turn may erode our scale, brand, manufacturing and logistics, distribution and customer relations. The erosion of those strengths would impair our competitiveness in the mobile products market and our ability to execute successfully our new strategy and to realize fully the expected benefits of the proposed Microsoft partnership. (bolded emphasis added by me)

(Wow. This is like text lifted from my blog! I have been writing here until I was blue in the face, how vital it was for Nokia to maintain strong carrier relationships and maintain positive dealer relationships, and I have chronicled here how much Elop's actions have damaged those relationships.)

On May 31, even before the first full quarter of Elop's new strategy was in place, Nokia stunned its investors with a profit warning. Elop admitted being surprised by how much Nokia had been damaged by his statements and Nokia said in its press release on 31 May about the profit warning that the main reasons why Nokia was suddenly unprofitable were:
- the competitive dynamics and market trends across multiple price categories, particularly in China and Europe;
- a product mix shift towards devices with lower average selling prices and lower gross margins

So, as of May 2011, the CEO had seen that his strategy is having severe backlash in China and Europe. At the Q2 results, Elop wrote "In Q2, our immediate action to manage unexpected sales and inventory patterns enabled us to create healthier sales channel dynamics." He also added "Most notably we took action in China and Europe. We have shifted our sales focus and marketing resources more towards retail interactions with consumers. We made changes in certain critical sales management."

CAN ELOP FIX PROBLEMS AT NOKIA?

In the Form 20-F Nokia tells us that the carrier/operator and distributor support is vital for the strategy to succeed. So explicitly, that if operator/carrier and distributor support is lost, the strategy will fail. Then immediately at the first profit warnings only weeks after filing Form 20-F, and then a few weeks later, at the first quarterly results under the new strategy, Elop starts to complain about lack of sales support. But he promised he will fix it immediately. Stephen Elop, CEO of Nokia has identified an existential threat to Nokia's strategy. He has publically committed to fixing the problem with operator/carrier and distributor sales support. He has had 18 months to fix that since. How has Elop succeeded?

Just before he announced his strategy, in Q4 of 2010, Nokia sold 33.5 million handsets in Europe and 21.9 million in China. When Elop reported that his biggest problem driving growing-profits Nokia to sudden loss-making, was China and Europe, for Q2 of 2011, Nokia European sales fell by 45% down to 18.4 million units and China (the world's largest handset market) Nokia sales fell 49% to 11.3 million units. So, Elop announced that he understands the issue and will fix it. Elop was attributed in The Wall Street Journal saying "Nokia needs to streamline its distribution channel and ensure profitability in the region, where local operators such as China Telecom and China Mobile are playing an increasingly active role in determining the range of handsets available."

When the Q2 results were released in July 2011, Elop said "The challenges we are facing during our strategic transformation manifested in a greater than expected way in Q2 of 2011." So in other words, his strategy stumbled right from the start. The problems ('challenges') were 'greater than expected' already in Q2. So yes, lets now go see how well Elop has fixed these problems 15 months later. As of Q3 results 2012, Nokia sales in Europe have not recovered, not even to the same level. They are now down another 9% to 16.8 million. And what of China, the world's biggest market? The Nokia brand has utterly collapsed, falling another 49% and now Nokia only sells 5.8 million devices in the market that is growing at breakneck speed.

Note - The new Nokia Windows strategy pushed Nokia away from low-cost friendly Symbian smartphones to very high-cost Windows Phones. This bizarre strategy was unveiled when the world market was already going faster to lower-cost smartphones, and right after Elop announced his strategy, his company fell victim to the truth. "Lower average sales prices". Has Elop been able to recover from that since? In Q2 of 2011, Nokia's ASP was 56 Euros. By the end of 2011 (Q4) it was 53 Euros. Now, the latest data we have, in Q3 of 2012 the Nokia ASP is 43 Euros. When Elop announced his strategy, his mix of smartphones (high ASP) out of all handsets was 25%. Now, today, by Q3 data, as the world nears 50/50 split of smartphone migration, Nokia's migration rate from dumbphones to smartphones has regressed towards the lower-cost featurephones, and is only at 7.5% !!! Before Elop took over, Nokia had every single quarter had safely better migration rate from dumbphones to smartphones than the industry average. Every single quarter (and doing that profitably). Now as he pushes Nokia away from smartphones, to dumbphones, Elop is very literally snatching defeat from the jaws of victory.

Most - MOST bizarrely, Nokia had been developing its low-cost smartphone platform, called Meltemi, which was weeks from announcing its first low-cost Nokia smartphones for the Emerging World markets like India, Brazil, Indonesia, China etc - and Elop suddenly cancelled the whole project! This is like if Sony - the master of portable music with the Walkman brand, had observed Apple take big market share with the iPod, and then developed its own MP3 player, and when it was weeks from launch - to truly address the way the market is evolving, the Sony CEO suddenly kills the project. Weeks from launch! Instead Elop is offering even more costly new Lumia smarphones now for Christmas 2012, compared to those from last Christmas. He is like a madman who looks at the world, sees its night time, and decides its daytime and refuses to turn on the headlights of his car. Elop is acting 100% against the best interests of his company, and 100% against the trends of the industry! Elop had 15 months to fix the existential threat to Nokia and has not even stabilized the problem, it just keeps getting worse. Nokia's CEO, Stephen Elop is not trusted by the carrier community/mobile operators & distributors. He has proven to be incapable of rescuing Nokia nor of restoring Nokia's strong carrier relations and distributors.

STAFF MOTIVATION

• The implementation of the proposed Microsoft partnership may cause disruption and dissatisfaction among employees reducing their motivation, energy, focus and productivity, causing inefficiencies and other problems across the organization and leading to the loss of key personnel and the related costs in dealing with such matters.

Yes. Tons have left.

REPLACED BY INCOMPETENT BUT MORE EXPENSIVE MICROSOFTIANS

• We may not have or be able to recruit, retain and motivate appropriately skilled employees to implement successfully the Windows Phone smartphone platform and to work effectively and efficiently with Microsoft and the related ecosystem.

And worse, by allowing relatively low-paid long-term Finnish employees to depart, and attempting to replace them - especially to take jobs at Headquarters in cold Finland - by bringing in experienced West Coast talent with Ex-Microsoft background etc, he is massively adding to the top-level compensation all while replacing competent knowledgable experts with unknowledgable outsiders who clearly do not understand Nokia nor its customers nor its markets.

TABLET MADNESS

• We do not currently have tablets in our mobile product portfolio, which may result in our inability to compete effectively in that market segment in the future or forgoing that potential growth opportunity in the mobile market.

Ah, the tablets madness. Yes, MICROSOFT may want a tablet, it would be suicidally stupid for a pure handset maker like Nokia to launch a tablet PC. The tablet market is very hard to get into, has a totally different resale channel, pricing model, distribution chain and Nokia has zero brand there. For any PC maker like Apple or Samsung, a tablet makes sense. For any pure phone maker like RIM or Motorola - or yes, Nokia, a tablet would be utterly mad - as we can see from how the Blackberry and Motorola tablets have struggled and plunged both companies into losses (killing Motorola in the process and almost bankrupting RIM too).

RATINGS DOWNGRADES NOW JUNK LEVEL

• The assessment of our proposed partnership with Microsoft and new strategy could cause lowered credit ratings of our short and longterm debt or their outlook from the credit rating agencies.

Ah, yes. Moody's, Fitch and Standard & Poors (S&P). Yes. They might lower their credit ratings. At the time this strategy was unveiled, Nokia had emerged from the global financial crisis with a healthy profit-generating business where most of its rivals were producing losses, and the credit ratings agencies liked Elop and his early first five months of management by raising Nokia's credit ratings to one notch below perfect. One notch below perfect. And yes, Nokia warned that this new strategy might cause that sterling credit rating to be damaged. And you know what happened? The credit ratings agencies did in fact - each of them downgraded Nokia - incidentially, citing Nokia distribution and sales as the primary reason at every downgrade. Then they downgraded - each of them - Nokia again, citing what as the reason? Again the sales and distribution problems. And they downgraded Nokia again and again and again, sometimes as severely as two notches at a time, until all three ratings agencies now rate Nokia as junk. Ah. Yes. If you were near perfect by the ratings agencies, and in a period of just over a year, you are downgraded so many times you are now junk - that is total failure of your strategy and yes Elop has precided over the biggest strategic management catastrophy of all time. If this was an earthquake in Japan causing a Tsunami and nuclear evacuation, that would be understandable. If this was an oil spill in the Gulf of Mexico, this kind of a series of ever worse downgrades would be (or could be) understandable. But what happened at Nokia was a totally unnecessary self-inflicted wound to Nokia, by the arrogant, ignorant CEO who refused to deal with reality and continues to live in some parallel universe of delusion in his mind. This series of Nokia downgrades was caused by the Elop Effect, and CEO Elop's inability to stop the sales erosion and carrier boycott. Which brings me to..

CARRIER BOYCOTT

Remember what Nokia testified to the SEC and NYSE in its Form 20-F ? Nokia wrote the following

We have a number of competitive strengths that have historically contributed significantly to our sales and profitability. These include... the industry’s largest distribution network and our strong relationships with our mobile operator and distributor customers. ...Several of (the) risks and uncertainties (of the proposed Microsoft partnership) relate to whether our mobile operator and distributor customers and consumers will be satisfied with our new strategy and proposed partnership with Microsoft. ...The erosion of those strengths would impair our competitiveness in the mobile products market and our ability to execute successfully our new strategy. (emphasis added by me)

At the Q2 results of 2011, how did Nokia report the carrier support of the new strategy? "During the second quarter 2011, distributors and operators purchased fewer of our devices across our portfolio as they reduced their inventories of Nokia devices." (emphais bolding added by me) And specifically smartphones? Nokia announced "the sequential decrease in our Smart Devices volumes was driven by distributors and operators purchasing fewer of our smartphones during the second quarter 2011 as they reduced their inventories of those devices." (emphasis bolding added by me)

So how did Elop manage to fix this? Did he get the carriers onboard to love the Windows strategy? Elop told the Nokia annual shareholders meeting in April of 2012 (as reported by Finland's largest newspaper Helsingin Sanomat, in response to a direct question of does Nokia have a distribution problem, that: "If the operator doesn't want us, it doesn't want us. We will appeal to them with other arguments." (Note, quote is from Helsingin Sanomat, directly quoting Stephen Elop at the Annual Shareholders Meeting). Elop openly admits Nokia has now a severe problem with its operators/carriers and distribution. A year earlier, in Form 20-F, Nokia proudly said it has "strong relationships with mobile operators and distributors" which were the industry-best and a clear competitive advantage Nokia held over all its smartphone maker rivals. 

Now, a year after Elop's strategy, he admits to the Nokia shareholders meeting, that yes, there is such a severe problem with many operators, that some don't even want Nokia, period. That he, Elop, has to now try to appeal to those operators by winning them back. And yes. The Nokia smartphone sales at that time (Q1 data) was 11.9 million units. Now, six months after Elop tries to 'argue' with the operators to win them back, how is he doing? The latest quarter has Nokia smartphone sales (Q3 data) down 47% from that level !!!! Nokia sold 6.3 million smartphones after Elop tried to 'argue' with the operators. He lost half of what little customer base Nokia had left - AFTER he admitted carriers/operators hate his strategy and many are refusing to sell Nokia. He lost almost half his market in the past six months. How incompetent is that?

By the way, the Helsingin Sanomat quotation was MY translation of the actual published Finnish translation from original English as spoken by Elop. The Helsingin Sanomat quote is in fact, a slightly shortened version of what Elop actually said. His full statement has been released in full video and actual transcript. I have not taken the significant point about carriers hating Nokia out of context, but yes, a more accurate full transcript of 12 sentences has been released by Nokia. I won't bother us with the full text here. The point is, that Elop admitted to the Nokia shareholders that many carriers refuse to sell Nokia smartphones now after the Microsoft strategy was released, and Elop admitted that the Microsoft partnership was explicitly the cause of that sales boycott. And more than that, this fact was published (in Finnish) by Finland's largest newspaper reporting from the Nokia shareholders' meeting, and that story was also reported widely by the global press in other languages.

Separately, Finnish biggest TV broadcaster YLE reported that Elop was asked directly about Nokia market share in relation to resale problems (what I have been calling the Nokia sales boycott for now for nearly two years already). Elop's answer, according to YLE was that Elop hoped "that sales staff in retail outlets would offer Lumia handsets to customers asking for a mobile phone." Elop admits to Nokia shareholders on the explicit question, yes there is a retail problem - akin to a sales boycott - where retailers HAVE Nokia smartphones in the store, but are refusing to sell them. Refusing to show Nokia customers those phones when Nokia customers ask for them. This problem has been independently verified by press studies into various handset markets relating to Nokia smartphones overall, and the Lumia series specifically, from Finland to France, from New York to California, from UK to Hong Kong by countless press stories. But the fact was settled by Elop in April 2012, when he openly admitted that in stores where Nokia smartphones were in stock, the sales staff were refusing to show customers Nokia smartphones, even when asked by name!

That was in April 2012, when the latest Quarterly data (Q1) had Nokia still holding 8.1% market share in smartphones. Had Elop been able to fix that problem? He released tons of new Lumia smartphones and lowered prices and massively boosted marketing expenses and added new operators to his distribution since then. But the retail boycott is continuing, or why else is Nokia's market share only six months later (Q3) at 3.7%?

MARKET EROSION IS IRREVERSABLE

• Our mobile operator and distributor customers and consumers may no longer see our Symbian smartphones as attractive investments during the transition to Windows Phone. This would result in a loss of market share, which could be substantial, during the transition and which we may not be able to regain when quantities of Nokia Windows Phone smartphones are commercially available.

Yes, how clear. Nokia smartphones using Symbian had 35% market share in 2010 just before this strategy was announced. The 'mobile operator and distributor customers' did not indeed support the 'Osborned' operating system. By the time Lumia smartphones were launched one year ago for Q4 in 2011, the Nokia smartphone market share had plummetted to 14%. To call the loss of six out of every ten customers you had in just nine months as "loss of market share which could be substantial" is a severe understatement.

Has Elop's wonderful Windows strategy now managed to regain any of the lost 19% of market share? Hardly. Since Q4 of 2011 when Windows Phone based Lumia smartphones were launched by Nokia, the market share has continued in total freefall and was now 3.7% by Q3 of 2012.

THE MIGRATION DID NOT SUCCEED

• We may not succeed in transitioning over time our installed base of Symbian owners to our Windows Phone smartphones.

Yes. That is now obvious. After Lumia launched in Q4 of 2011, Nokia has not recovered ANY of its past 35% market share. The attempts have failed totally to try to "succeed in transitioning over time our installed base of Symbian owners to our Windows Phone smartphones."

After Lumia was launched in Q4 of 2011, this is how poorly Nokia has "succeeded" in transitioning the installed base of Symbian owners per quarter:

In the four Quarters that have reported so far, Nokia has attempted a total of 13.2 million Symbian users per quarter to be migrated to Windows Phone (ie a total annual customer base transition attempt of 52.6 million loyal Nokia smartphone users). Of those in how many cases did Nokia "succeed in transitioning over time" the installed base? The level at Q3 of 2012 was 2.7 million per quarter (10.8 million on an annual basis). Nokia has lost four out of every five conversion attempts SINCE Lumia has launched! (If we count from when the strategy was announced, and the full Elop Effect, in reality it is 9 out of every 10 customers Nokia had.) If Elop was able to sustain roughly a one-to-one transitioning level of Symbian to Windows Phone - what Elop promised with his new Windows based strategy - then he could at least claim modest 'success' to this strategy. (incidentially, I personally would NOT consider abandoning a 'guarateed growth' path on Symbian/MeeGo for only 1-on-1 no-growth stable transition to Windows, when the industry doubles every 18 months, but thats perhaps me, I prefer growth and profitable business in mobile, not stagnant business. But lets not talk about Tomi's higher standards, lets keep this only to Form 20-F and what Nokia warned two years ago)

So, as Nokia bleeds 4 customers to rivals for every attempt to shift a Symbian customer to Windows Phone, the Microsoft-based Lumia strategy is pure suicide for Nokia and must be terminated immediately. Those customers must be given alternative Nokia smartphones that run on MeeGo and Symbian that conform to Nokia customer expectations (like great cameras, some QWERTY form factor alternatives, great connectivity from unrestricted Bluetooth to microSD card slots and FM radios, etc)

WINDOWS WILL NOT BE BELOVED

• The Windows Phone platform may not achieve or retain broad or timely market acceptance or be preferred by ecosystem participants, mobile operators and consumers

Duh. Microsoft had a 12% global market share for Windows smartphones once, briefly in 2007.  It was briefly the world's second most popular smartphone ecosystem behind the far bigger Symbian and just ahead of the rapidly growing Blackberry and iPhone operating systems at the time. You can definitely call 12% ie one in eight smartphones sold as being a "preferred ecosystem" for some "mobile operators and consumers". For 2010,. just before Nokia partnership was announced, the combined market share for the older Windows Mobile and newer Windows Phone smartphones for Microsoft had fallen far from that level. It was 5%. To try to push Microsoft as "preferred ecosystem" at that time was utterly misleading. Microsoft had 5% market share with the ecosystem that was bought only by one in 20 consumers and was ranked 5th behind the massively bigger Symbian, Android, iOS and Blackberry.

But certainly, it was 'plausible' in February of 2011, when the two CEOs, Stephen Elop of Nokia and Steve Ballmer of Microsoft strutted on the stage together, that Nokia and Microsoft could turn their two worlds into one big ecosystem. That was plausible at the time, not likely, but plausible. Now we have the facts. Windows Phone was seen so poisonous and undesirable, that many Windows Mobile equipment maker partners bailed out even before Windows Phone launched, like the Top-10 smartphone manufacturers SonyEricsson, Motorola and LG. After Windows Phone launched, Dell quit the partnership, Samsung announced a new operating system to be directly a competitor of Windows Phone (called Tizen, with smartphones to launch in 2013). Now after Windows Phone 8 launched, HTC has reduced its offering and ZTE and Huawei have decided not to bother to launch any smartphones on this new operating system. Every one of these smartphone makers had shifted their attention to another or other smartphone platforms, usually Android (although Dell has since also quit the smartphone business altogether).

What do they know at Samsung, HTC, SonyEricsson ie Sony, Motorola, LG, Dell, ZTE and Huawei, that only the Microsoft Muppet CEO Stephen Elop cannot see? Its that Windows Phone is utterly undesirable. From 12% in 2007 to 5% in 2010 to 2% in 2011 to yes, 1.9% in Q3 of 2012, and - if the usually very good predictor Kantar early market sales numbers prove to be accurate - an expected about 1.5% for Q4 of 2012. The Windows Phone platform has not achieved "broad or timely market acceptance by mobile operators and consumers". Windows Phone has comprehensively failed to gain any traction at all! Understand, after Nokia was added to the Windows ecosystem, the world's biggest smartphone maker and the world's biggest dumbphone maker Nokia, since then Windows market share has shrunk! Not grown, shrunk! Windows was the 5th biggest ecosystem at the time, it is now the 6th. (Oh, and watch this space, after Tizen launches on a couple of handsets and manufacturers, it may push Windows to 7th ecosystem, haha, during late 2013.. At least Tizen - like MeeGo before it - has strong carrier support, whereas Nokia CEO tells Nokia shareholders that carriers hate Windows Phone)

ABANDONING FIRST-MOVER GAINS

• Other competitive major smartphone ecosystems have advantages which may be difficult for us to overcome, such as first-mover advantage, momentum, engagement by developers, mobile operators and consumers and brand preference, and their advantages may become even greater during our transition to the Windows Phone platform.

Oh man, this hurts so bad. Yes, "first mover advantage" - how about Mobile Money? Did you read in the Harvard Business Review where Google Chairman Eric Schmidt wrote last year that Google's number two priority now is mobile money? Where is the Google Money? It is still coming, as part of Google Wallet and various NFC etc related experiences. And what of Nokia? Nokia has launched Nokia Money years ago. Nokia had 12% of the mobile money market share in India - the world's second largest mobile market behind only China - and where regular banking is underserved and mobile money is growing at breakneck speeds. Nokia was ahead of Google on Google's number two priority, in the second biggest mobile market. Who is that smart that they get ahead of Google in tech? Who gains a first-mover advantage over Google? (and what idiot CEO abandons the lead where Google says in public this is their number 2 priority? Why isn't Elop celebrating Nokia's lead over Google and showcasing Nokia Money as the prototype Google should follow?)

Nokia Money was 100% compatible with Symbian, with MeeGo and even with S40 based featurephones of Nokia that sell in large numbers in India. But Nokia Money was not compatible with Windows Phone. So what did Elop do? He decided to act against Nokia's best interests, just to please Microsoft! This is against his fiduciary duty as CEO, and Elop must be investigated for this kind of acts against Nokia's best interests! Nokia did not expand his Nokia Money-oriented Emerging World market handsets running Symbian, MeeGo and S40 for India that could have secured Nokia tremendous competitive advantages and loyalty hooks into this decade. Rather? He shut down the unit! He did not even sell it! 12% market share in India's rapidly growing mobile money market. And Elop shut it down. Yes, Nokia is fully capable of first-mover advantages if built on Symbian or MeeGo or even S40, but not using Windows Phone.

What of the N9? The MeeGo based smartphone was released in 2011 and immediately got massive positive responses everywhere. In 2012 it was rewarded by the D&AG Awards (the "Oscars" of industrial design) as the best designed device of 2011, not just besting the Lumia smartphones, but besting the iPad 2 ! Who beats Apple at design? Nokia did, thats who. And did Mr Microsoft Muppet allow the huge publicity in Britain at the D&AG Awards be used to help promote and sell the N9 in all of Nokia's major markets? No. Elop rather refuses to let the N9 be sold in the biggest European markets including - yes, the UK (where the D&AD Awards are handed out).

Brand preference? Wanna really cry? The German newsmagazine Der Stern loved the N9 so much, it told its readers to travel to Austria or Switzerland to go get one, because Nokia was not selling the N9 in Germany (Europe's biggest smartphone market where Nokia had 49.5% market share in 2010 according to Kantar). Note, this is not a techie magazine but a weekly newsmagazine like Time, doing a smartphone review! And they reviewed a smartphone not even sold in Germany! And they loved it so much, they did actually recommend their readers to go to another country to get one. Nobody achieves that level of brand love (this side of Apple's iPhone). And did Elop rush to Germany to be pictured on the cover of the very next issue of Der Stern holding the N9 in many colors and promising the German readers that yes, of course the N9 will be immediately launched in Germany and its sister phone, the N950 will also be soon? No. Elop forbids selling the N9 in Germany! No wonder Nokia's market share is down to 5.6% (Symbian and Windows Phone combined) in Germany now in November 2012, according to Kantar's latest numbers.

Nokia is fully capable of building highly desired, beloved, award-winning handsets - and on Symbian and on MeeGo they are not artificially restricted by all the weird limitations that Microsoft has built into the compromise that is the Windows Phone 8 operating system. Symbian was open source, had at its peak over 20 equipment manufacturers as partners as well as operator/carrier partners. Nokia's MeeGo OS was also an open source system with many handset vendors and carrier partners. Windows Phone is a closed system, where Microsoft holds a dictatorial control over its world and its equipment maker partners are deserting the platform and not one carrier has signed onto it. But its not like they don't want to. The MeeGo platform that Elop abandoned? Samsung took over, renamed it Tizen and has today - get this - Telefonica (Spain's biggest operator/carrier) as a carrier partner, as well as NTT DoCoMo (Japan's biggest operator/carrier), SK Telecom (South Korea's biggest), and others such as Sprint of the USA. Its not that the carriers do not welcome and wish for a 'third ecosystem'. But very clearly they have comprehensively rejected Microsoft and Windows Phone.

DAMAGED NOKIA BRAND

• Our brand preference may erode due to various factors, such as inadequate marketing, quality issues, lack of affordable locally relevant services, applications and content or lack of success in smartphones.

And yes, that too has happened. Nokia's brand had been in the top 10 most valuable brands every year since the list was released. After the Elop Effect, the Nokia brand fell out of the Top 10 for the first time ever. How much of that damage has resulted in the Nokia handset average sales price falling (which was growing when Elop took over), or the Nokia costs of marketing going through the roof just to move handsets (Nokia profits were growing when Elop took over, the handset units profits vanished and have produced ever bigger losses ever since) and how much has it hurt Nokia market share - was 35% in smartphones in 2010 when Elop took over, and was 3.7% in Q3 of 2012, the latest Quarter for which we have data.

SOURCING PARTS

Talking about sourcing parts, components and subassemblies: Additionally, with the increased bargaining power of other large manufacturers in the mobile device and electronics industry, we may not be able to achieve as favorable terms as in the past resulting in increased costs that we may not be able to pass on to our customers.

Yes. In total handset production, Nokia was 50% bigger than Samsung in year 2010. Today Samsung is 25% bigger than Nokia. In Smartphones, where most of the innovation is happening, the issue is even more pronounced. Smartphones have far more features and abilities, and more technical sophistication within those matters. Thus in smartphones Nokia faces a far more broad range of critical components and subassemblies. In 2010, Nokia was not just the largest smartphone manufacturer in the world, Nokia was twice as big as Apple and four times bigger than Samsung. Today (latest Q3 data) Nokia has tumbled to 10th largest smartphone manufacturer meaning Samsung, Apple, Huawei, Sony, ZTE, HTC, Lenovo, RIM and LG are all now bigger than Nokia and have more scale-based advantages in sourcing parts and negotiating bulk discounts. In Q3 just in smartphones, today Apple is 4 times bigger than Nokia, Samsung more than 8 times bigger.

CLOSING FACTORIES

In the Form 20-F, Nokia reveals that it ran 10 factories that made handsets. Seven of those (Finland, China, Romania, Hungary, South Korea, Mexico and Brazil) were able to produce smartphones. In 2010, Nokia's total smartphone production was 103.6 million units or 35% of the global smartphone production capacity. To understand the scale, Apple sold 47.5 million smartphones that year and none of those iPhones were made at Apple factories, they were physically manufactured at various Foxconn factories in China. No rival smartphone manufacturer exceeded Nokia's 2010 smartphone production capacity in the year 2011, even as the industry grew 63% that year! Only in year 2012, has Nokia's massive smartphone capacity of year 2010 been exceeded by Foxconn and by Samsung.

The Form 20-F reveals that on contract manufacturing (such as Compal of Taiwan, which made the first Lumia handsets), Nokia warned "In future, we may increase the use of contract manufacturers to produce in the normal course the entire product, which is subject to certain risks." Nokia wrote a long list of possible problems that this might introduce, concluding: "Such failures or interruptions could result in our products not meeting our and our customers’ and consumers’ quality, safety, security and other requirements, or being delivered late or in insufficient or excess volumes compared to our own estimates or customer requirements, which could have a material adverse effect on our sales, results of operations, reputation and the value of the Nokia brand." (emphasis in bold added by me)

Remember, Nokia had when this strategy was announced, by far the world's largest mobile phone handset manufacturing capacity, with a globally placed set of factories, of the utmost modern design, capable of handling in perceived proportion the mix of low-cost high-volume featurephone handsets, and the higher cost smartphones. Nokia had 10 handset factories spread across the planet, near the customers. There was no lack of ability to build smartphones in Nokia's own factories, yet Stephen Elop went to the bizarre option of using an outside company, Compal, to build the first Nokia Lumia handsets. That was, as can be seen from the above, with predictable results. The early Lumia handsets were built with considerable amount of bugs, production flaws and problems that caused a lot of PR damage to Nokia, necessitating recalls, replacements, total new software re-installs, purchase discounts and refunds. The outsourced production was a disaster and damaged the launch and early perception of the whole Lumia brand as well as Nokia overall. There was the further problem of having committed to certain volume levels of production that Nokia could not then adjust, something it could have easily done with its own factories.

The worst aspect is, that Nokia's own smartphone production ability, when the Lumia series was launched, was already running at more than 60% idle! So Nokia carried the costs of its own factories idling, while Taiwanese Compal was charging outsourced production premiums, while delivering underperforming quality problem ridden products. To even suggest this kind of stupidity, is a sign of a totally incompetent CEO. Elop has no concept of how to run his own company. He had his OWN smartphone factories at 60% idle, yet he purchases outside production for the first Lumia series. He is a moron. He has to be fired.

As the Nokia smartphone market has continued to shrink, today out of total Nokia smartphone production capability Nokia used to have, more than 90% has been idling. As to featurephone/dumbphone capacity, Nokia has receeded about 25% from its peak capacity two years ago, so one quarter of its high-volume dumbphone factory capacity has also been idling. Nokia has thus shut down or sold several of its factories as this incredible amount of overcapacity was so large, Nokia's own management admits by these actions, Nokia will not be returning to its old levels of production! Nokia has totally failed in the strategy and abandoned a key competitive advantage out of scale and the resulting production capacity advantage which traditionally is a very long-term competitive advantage that is very difficult for smaller rivals to match or exceed. Nokia gave it away and admitted comprehensive failure of this aspect, by selling or shutting down several handset factories already.

Note that of the seven factories Nokia had that were capable of producing smartphones, two have been shut down completely or sold (Finland and Romania). So Mr Elop's strategy has definitely resulted in Nokia's total maximum capacity being so severely damaged, Nokia's maximum smartphone production capacity is down 29% from what Nokia had in 2010. Thus, if you ever thought Nokia would 'return' to just the levels of smartphone sales it did in year 2010, of 103.6 million smartphones, think again. That Nokia sold or shut down 29% of its smartphone production capacity - even after the debacle of disasterous experimentation with outsourced production - means Nokia's own management knows it cannot return to over 100 million per year smartphone sales levels or beyond, in the foreseeable future. 

Remember, a phone handset factory project is a costly investment in the several hundreds of millions of dollars that takes years just to get the factory up and running. These decisions are not taken lightly. So, Stephen Elop initially promised his strategy would, as Form 20-F said "This strategy recognizes the opportunity to retain and transition the installed base of approximately 200 million Symbian owners to Nokia Windows Phone smartphones over time." And the time-period for this transfer was, as Nokia wrote: "We expect the transition to Windows Phone as our primary smartphone platform to take about two years." (emphasis in bold is by me).

But well before the two-year window is even closed, Elop has already admitted he will come nowhere near his goal to 'retain and transition' the existing Nokia Symbian customer base to Windows Phone on Lumia. He has so far lost 9 out of every 10 Symbian customers he even attempted to migrate. And he has sealed the fate of Nokia's ability to compete as the world's biggest smartphone maker, by selling 29% of his factory capacity in smartphones (but not sold any of the capacity in high volume low-cost dumbphones).

How much capacity does Nokia have? We do not know how close to peak capacity the factories in 2010 ran, but roughly speaking as Nokia's own smartphone sales grew 52% from 2009 to 2010, they must have been highly utilized already. If we take 29% out of the capacity in 2010, it means Nokia management, under Elop, looking realistically at the market demand for Lumia, now suggest by factory closings, the peak Nokia capacity is somewhere near 74 million smartphones. This starting year, 2013, the world will buy about 1 Billion smartphones and if Nokia were to fully sell its maximum capacity in smartphones - that would only give Nokia 7% market share this year!

Elop's strategy suggested he is capable of transitioning the total Nokia customer base from Symbian to Windows Phone. Nokia owned more than a third of the global smartphone market when he said that, and Nokia's smartphone sales grew more than Apple, more than Samsung and more than RIM that year, doing it profitably (with increasing profits to the end of the year). One third of the world's smartphones would be 333 million smartphones in 2013. Samsung will be doing roughly that level. Nokia could easily have done as much, if Elop had not meddled with Nokia's dominating smartphone strategy at the time. Instead, in year 2012, Nokia sold only about 35 million smartphones. Elop has destroyed nine out of every ten loyal customers relationships Nokia has had, and Elop has now admitted defeat by his actions by limiting Nokia's ability even to compete with the biggest smartphone makers anymore.

NOKIA SET ITS OWN STANDARDS - AND BY THOSE IT HAS FAILED

I end with the same quotes I had in the above. This blog is not Tomi Ahonen's listing of what all is wrong with Nokia's strategy (there is much more that is rotten, beyond these 20 items). This Is Nokia's own list of risks it testified to when filing to the SEC and NYSE. Nokia very VERY clearly indicated what was the biggest risk to the risky Microsoft strategy. Nokia wrote in the Form 20-F

Our ability to maintain and leverage our traditional strengths in the mobile product market may be impaired if we are unable to retain the loyalty of our mobile operator and distributor customers and consumers as a result of the implementation of our new strategy or other factors. (bold in original)

Nokia further explained how much this is a true competitive advantage and key to Nokia long-term market dominance:

We have a number of competitive strengths that have historically contributed significantly to our sales and profitability. These include our substantial scale, our differentiating brand, our worldclass manufacturing and logistics system, the industry’s largest distribution network and our strong relationships with our mobile operator and distributor customers. Going forward, these strengths are critical core competencies that we will bring to the proposed partnership with Microsoft and the implementation of our Windows Phone smartphone strategy. Our ability to maintain and leverage these strengths also continues to be important to our competitiveness in the mobile phones market. (bolded emphasis added by me)

As discussed above, however, the proposed Microsoft partnership and the adoption of Windows Phone as our primary smartphone platform are subject to certain risks and uncertainties. Several of those risks and uncertainties relate to whether our mobile operator and distributor customers and consumers will be satisfied with our new strategy and proposed partnership with Microsoft. If those risks were to materialize and mobile operator and distributor customers and consumers as a consequence reduce their support and purchases of our mobile products, this would reduce our market share and net sales and in turn may erode our scale, brand, manufacturing and logistics, distribution and customer relations. The erosion of those strengths would impair our competitiveness in the mobile products market and our ability to execute successfully our new strategy and to realize fully the expected benefits of the proposed Microsoft partnership. (bolded emphasis added by me)

Understand what this means. Nokia testified in the SEC official filing of Form 20-F that Nokia historically had the world's largest distribution network, which was one of Nokia's biggest competitive advantages. Nokia also testified it had strong carrier relationships with mobile operators and distributors. These too were critical competitive advantages that Nokia held when Elop took office.

Today nobody suggests Nokia has the strongest distribution - Elop himself has been abandoning Nokia distributors and pissing them off, who have gone, in most cases from Russia to Africa - to Samsung, who now have clearly the biggest distribution network in mobile.

Worse, Nokia's very survival depends on the support of the operators/carriers. Nokia testifies so in Form 20-F "Whether our operators and distributor customers (are) satisfied with our... partnership with Microsoft" and how critical is that? Nokia testified in the filing of Form 20-F that "the erosion of these strengths woudl impair our ... ability to execute successfully our new strategy and reaslize fully the expected benefits of the proposed Microsoft partnership." If the operators/carriers and distributors refuse to support fully the Microsoft Windows strategy, the strategy is not viable. It cannot succeed without the operators supporting it!

Not my words. Words of Nokia filing for the SEC in Form 20-F. Nokia saying the Microsoft strategy would "be impaired if (Nokia) is unable to retail the loyalty of the mobile operators and distributors."

Elop reported to the Nokia Shareholders Annual Meeting in April that "Indeed, Microsoft did buy the Skype company as part of the ecosystem that comes with Windows Phone and Windows."  What do these operators/carriers think of Skype? "The feedback from operators is they don’t like Skype, of course." Why? Elop explains because "it could take away from revenues." and the kicker on are the carriers onboard with Nokia and its Microsoft strategy? Elop told Nokia shareholders "And, so what Microsoft has done – and we’ve been part of these conversations as well with operators – is as you correctly say, if operator doesn’t want Skype installed on a Windows Phone from Nokia or any other company, then the operator can make that decision."

Elop told Nokia shareholders this April - six months after Lumia had launched and more than a year after the Microsoft strategy had been revealed - that operators/carriers did not like it, "of course", many were refusing to take ANY handsets that use the Windows Phone operating system - like say NTT DoCoMo, the biggest carrier of Japan - and the reasn they don't like the Microsoft partnership with Nokia is "Skype, of course". So well known is the operator/carrier hatered of Skype, that Elop added 'of course' to his statement to Nokia shareholders. Everybody knows this. Not my words - Elop's words. Of course the carriers hate Skype.

Skype was not in-built into Windows Phone 7. Windows Phone 7 sold at its peak, just over 4 million units per quarter this year. Windows Phone 8 does have Skype fully integrated not only to the Nokia Lumia handsets, but integrated to the 1.2 Billion desktop PCs that Microsoft is now upgrading to Windows 8. If the operators "don't like Skype, of course" almost a year ago, now, that Skype is fully integrated - they positively hate it now with Windows Phone 8 and Skype fully integrated.

This is not Elop's mistake. Elop did not buy Skype for Microsoft. This is Ballmer's call. He wanted Skype to help keep Microsoft relevant in an internet age for personal computers. It may help Microsoft on the desktop, but it positively killed Nokia's chances on Lumia and Windows Phone. Microsoft purchased Skype in June of 2011. Microsoft had 2.4% global smartphone market share at that time across its Windows systems. Since then Motorola, LG, SonyEricsson and Dell have quit the Windows ecosystem (and several said or hinted that the operator/carrier demand had dried up). Samsung has reduced its Windows based portfolio and launched its own OS, Tizen - which has half a dozen carriers/operators SUPPORTING the new OS. And HTC has reduced its offering on Windows Phone.

After sacrificing all those millions of Nokia Symbian customers to try to retain some market, how is Windows Phone today? The Q3 numbers had Microsoft's market share at 1.9% and the early view to Q4 (using usually reliable Kantar numbers as a guide) suggest Windows Phone to have about 1.4% market share in Q4. 

Elop told Nokia shareholders "The feedback from operators is they don’t like Skype, of course."

That is the operator/carrier response to Nokia's Microsoft partnership. They simply hate it. When Ballmer commented on how Windows Phone was doing as Nokia was ramping up in 2011, Ballmer said in September 2011 Windows Phone sales were "below expectation." That is not a success of a so-called 'third ecosystem'. And then, any disagreement by Elop over at Nokia? In May 2012 - yes, after AT&T had launched Lumia even in the USA, Elop's words on how Windows was doing with Nokia Lumia? Elop said the sales were "below expectations". What was Elop's latest statement about Windows Phone 8 market performance? That some early tech reviewers like the new phones and that Elop told CNet on December 10 that he was "certainly pleased" with how the new Lumia were selling - that is not a roaring success either, but then notice this - Elop admits on The Next Web that yes, Nokia had not run a large production of the new Lumia, so this 'pleased' level of sales is out of very small initial production run (far less than how Nokia ramped up Lumia the first time). And meanwhile, many independent analysts who do channel checks, have all said that Nokia sales are sluggish or below early expectations in Q4. As I said, the Kantar numbers that I analyzed, suggested worldwide Windows Phone sales are down (but Symbian sales for Nokia are up? Wouldn't that be ironic).

SKYPE KILLED THIS STRATEGY

Only minutes after the Microsoft partership was announced by Elop on 11 February, 2011, I was writing on Twitter that this was good for Microsoft but deadly for Nokia. I warned that Nokia's market share would collapse and Nokia's smartphone business would become not viable and Nokia would become Microsoft's slave and become a low-cost box-mover like Dell in PCs. But, I did say and write, on Twitter and on my blog at that time, that this partnership might work out for both parties. It was not likely, but it was plausible.

When Microsoft bought Skype, I was immediately on Twitter and on my blog explaining that the Skype purchase had effectively killed the Windows strategy for Nokia. I was the first person to say so in writing or in public. In March of 2011, Nokia told in its SEC fillings, in Form 20-F that the whole Microsoft strategy would depend on whether the mobile operators would "be satisfied with our partnership with Microsoft". One year after that, in early April, Elop had to confess to Nokia shareholder that there was no love for the Microsoft partnership. That even as Elop himself had been sitting in meetings that Microsoft had with carriers, the carriers hated Skype so much, many were not taking Windows Phone at all, and all carriers hated it. Or in Elop's words "The feedback from operators is they don’t like Skype, of course."

Of course

The feedback from the carriers is that they don't like Skype. Of course.

The mobile operators/carriers are refusing to support Nokia in its Microsoft Windows Phone strategy. Elop has heard it for now two years. He keeps complaining that there is no carrier support or that it is weak. Whatever promises he gives us - like that T-Mobile would bring big USA success, or AT&T would bring huge US success, etc, prove to be total fabrications. Before Elop announced the Microsoft partnership, Nokia sold 11.1 million mobile phones in the USA. This year 2012 (with Q4 an optimistic estimate by me) after the full Lumia launch in the USA, Nokia's total USA market sales is .. 2.1 million handsets!

The feedback from the carriers is that they don't like Skype. Of course.

THIS IS THE PERFECT PICTURE OF STRATEGY FAILURE

In 2010 Nokia had 35% market share in smartphones and Microsoft had 4%. The soon-to-be-announced partnership had a combined market share of 39%. Then this happened:

MARKET SHARES OF NOKIA AND MICROSOFT IN SMARTPHONES
Year 2010 . . Nokia 35% . . Microsoft 4% . . Partnerhsip 39%

Q1 2011 . . . Nokia 24%  . . Microsoft 3% . . Partnerhsip 27% *
Q2 2011 . . . Nokia 15%  . . Microsoft 3% . . Partnerhsip 18% **
Q3 2011 . . . Nokia 14%  . . Microsoft 2% . . Partnerhsip 16%
Q4 2011 . . . Nokia 12%  . . Microsoft 2% . . Partnerhsip 14% ***

Q1 2012 . . . Nokia 8%  . . Microsoft 3% . . Partnerhsip 11%
Q2 2012 . . . Nokia 7%  . . Microsoft 3% . . Partnerhsip 10%
Q3 2012 . . . Nokia 4%  . . Microsoft 2% . . Partnerhsip 6%
Q4 2012 . . . Nokia 3%  . . Microsoft 1% . . Partnerhsip 4% **** (est)
Notes: * Nokia+Microsoft partnership announced
 ** Microsoft buys Skype
 *** Nokia launches Lumia on Windows Phone
 **** Microsoft released Windows Phone 8 including on two Nokia Lumia phones
Note 2 the data for Q4 is estimate by TomiAhonen Forecasting, based on preliminary analysis and data by Kantar on November smartphone sales in selected markets
All the above data may be freely shared

Nokia sold 103.6 million smartphones in 2010. Nokia GREW smartphone sales in 2010 by 53% from the year before. Nokia added 35.8 million new smartphone customers during 2010, compared to 22.4 million new smartphone customers added by Apple, 17.0 million added by Samsung and 13.4 million added by RIM. The numbers do not lie. This means that in 2010, globally, Nokia was growing faster than its nearest rivals - the gap between Nokia and the pack chasing it, was growing wider, not narrower. Who grows faster than Apple's iPhone? Who grows faster than Samsung, come on! And Nokia was doing this profitably, with increasing profits. 

Nokia was towering over its rivals, more than twice as big as its nearest rival in 2010 !!! That is more global domination than Toyota has EVER had in cars (or General Motors when it has been biggest, either - ever!). And Nokia's gap to the pack was growing, not shrinking when Elop took over. He had stepped into a winning platform play, Symbian was the bestselling smartphone OS in Latin America (which has more mobile phone users than North America) and the bestselling smartphone OS in Europe (which is bigger than Latin America); and the bestselling smartphone OS of Africa (which has more mobile users than North and Latin America combined); and the bestselling smartphones OS of Asia (bigger than North America, Latin America, Europe, Australia and Africa - combined).

Nokia was the bestselling smartphone and Symbian the bestselling OS in 2010. Nokia's Symbian was also by far the most widely used smartphone OS by installed base, the most used smartphone OS on five of the six inhabited continents (and even Nokia had the most used smartphone of the uninhabited Antarctica, where Nokia's Linux-based Meamo was the favorite of scientists using smartphones and preferring the open source Linux software for the N900).

Not just most sold, and biggest installed base. Nokia had the second bestselling smartphone App Store, behind only Apple's - ahead of Blackberry, Android, Palm and Windows - and the gap to Apple at the time was closing, not growing. Nokia had by far the world's largest army of software developers. Nokia was about to release its new MeeGo operating system we saw winning all sorts of awards on the N9 smartphone which many called better than the iPhone - something the Lumia series is never said to be in any major tech reviews and comparisons.

This all, Elop threw away with a strategy so risky, Nokia itself admitted if the strategy did not work out, Nokia not only would lose its smartphone leadership, it might even damage its dumbphones/featurephones business. Yes, this was the most boneheaded management move of all time. And now the time is up for Mr Elop.

MR ELOP, YOUR TWO YEARS ARE UP

Nokia wrote in the Form 20-F "We expect the transition to Windows Phone as our primary smartphone platform to take about two years." The exact two-year milestone will be on 11 February, 2013, in about 40 days from today. I expect many business, telecoms and strategy writers to re-examine the Nokia failure in its Microsoft strategy at that point. Lets now use Nokia's own standard for how to measure success or failure of its strategy, as Nokia told us in the Form 20-F.

Nokia warned that if the Nokia strategy with Microsoft were to fail, most likely Nokia would then become a low-margin box-mover basic handset maker. This is what Nokia wrote:

Our proposed partnership with Microsoft and change in our smartphone platform strategy are subject to certain risks and uncertainties, which could, either individually or together, significantly impair our ability to compete effectively in the smartphone market. If that were to occur, our business would become more dependent on sales in the mobile phones market, which is an increasingly commoditized and intensely competitive market, with substantially lower growth potential, prices and profitability compared to the smartphone market.

Here are some of the risks that Nokia identified what might go wrong, that did, in fact go wrong:

Explicit Risk 1 Windows Was Weak - "Windows Phone  is an unproven addition to the market focused solely on high end smartphones with currently very low adoption, and the  partnership may not succeed in developing it into a sufficiently broad competitive smartphone platform. That "very low adoption" when the partnership was announced, was 2%. At the latest Quarter (Q3) that market share had fallen to 1.9%. It may fall to 1.4% by Q4. Yes, very obviously the Windows Phone platform has failed in developing into a "sufficiently broad" platform.

Explicit Risk 2 Cannot Differentiate - "Windows Phone platform may not enable us to produce smartphones that are differentiated." Nokia traditionally had the most diverse smartphone portfolio. Today the Lumia series is the least diverse series. Samsung has obviously stepped in to offer the broadest portfolio and taken a huge lead in smartphones.

Explicit Risk 3 Cannot Get Scale - The Microsoft partnership may not achieve in a timely manner the necessary scale, product breadth, geographical reach and localization to be sufficiently competitive in the smartphone market. Nokia sold 29 million smartphones per quarter when Elop took over. It now sells about 6 million per quarter.

Explicit Risk 4 Ruin China while Not Gaining in USA - The Microsoft partnership may erode our brand identity in markets where we are strong like China and may not enhance our brand identity in markets where we are weak like in the United States. Before Elop announced this mad strategy, Nokia was the overpowering number 1 in China the world's largest smartphone market, with over 70% market share. That is now down to about 5%. Did that sacrifice translate into a USA success? No. The Nokia smartphone market share in the USA was 6.8% using Symbian, it is now less than 2.9% in the USA using both Windows Phone and what remains of Symbian.

Explicit Risk 5 Nokia Mobile Advertising Fails - We may not succeed in leveraging the Microsoft advertising assets to build a Nokia based advertising platform on our smartphones. Yes. Elop "Mr Ecosystems" simply sold away the Nokia-owned mobile advertising unit when his strategy was burning too much cash.

Explicit Risk 6 Profitability Ruined - We may not succeed in creating a profitable business model when we transition from our royaltyfree smartphone platform to the royaltybased Windows Phone platform. Nokia profits from smartphones every single quarter they have been manufactured up to Elop's new strategy. In year 2010, when the world was still emerging from the global economic crisis and most of Nokia's rival full-portfolio handset makers were reporting losses, Nokia's the smartphone unit generated 1.5 Billion Euros (2 Billion US Dollars) of profits. And remember, the profits were growing at the end of the year, showing the biggest jump in profitability Nokia smartphones had ever seen. Since Elop's strategy Nokia's smartphone unit generated a loss in 2011 of 400,000 Euros (about 520,000 US dollars) and now, using consensus opinions of Q4 results, Nokia will report roughly a loss of 1.1 Billion Euros (1.4 Billion US Dollars) in its diminishing smartphone unit in 2012. So Mr Elop has destroyed over two years, about 5.9 Billion dollars in profits for Nokia Corporation (why is this Microsoft Monkey allowed to remain as CEO? This is complete madness!)

Explicit Risk 7 Patents  - We may not be able to generate sufficient patentable inventions or other intellectual property to maintain, for example, the same size and/or quality patent portfolio as we have historically. And in efforts to raise cash to cover for the destructive Microsoft strategy, Nokia has been selling its patents in big bunches to various Patent Trolls, poisoning the well of future wealth

Explicit Risk 8 Operators & Distributors Abandon Nokia - The proposed Microsoft partnership may cause dissatisfaction or foreclose the ability to do business with mobile operators, distributors and suppliers. So "cause dissatisfaction" - Elop admitted to Nokia shareholders that mobile operators do not like the partnership, because of Skype, "of course." So clear is the explicit dissatisfaction in the carrier community that Elop added 'of course' when he was asked on point about that question. And worse, "to foreclose the ability to do business" with operators/carriers & distributors? Yes. That too was explicitly admitted by Elop at the annual shareholders' meeting, that yes, some operators who traditionally bought Nokia handsets now refuse any Microsoft Windows Phone based smartphones. The numbers could not be more explicit. Before this strategy, Nokia sold 29 million smartphones per quarter. Since then the industry has more than doubled. Now after the Nokia reseller boycott, Nokia only manages to sell 6 million smartphones per quarter.

Explicit Risk 9 Damage Employee Morale - The implementation of the Microsoft partnership may cause disruption and dissatisfaction among employees leading to the loss of key personnel. The exodus of Nokia staff has been dramatic and devastating including several of Nokia's longest-standing sales and marketing staff as well as Nokia's top technical staff starting with its CTO.

Explicit Risk 10 Damage Recruitment - We may not be able to recruit and motivate appropriately skilled employees to implement the Windows Phone smartphone platform and to work effectively and efficiently with Microsoft and the related ecosystem. The proof is in the pudding, again. The Lumia series launch (and relaunch) have been plagued with all sorts of implementation problems and failures from faulty hardware and software to almost instant massive price discounts to feuding with thought-leaders and bloggers and astroturfing and fake Amazon ratings, to faked 'Pureview' pictures etc etc etc.

Explicit Risk 11 Ongoing Tablet Diversion - We do not currently have tablets in our  portfolio. There is no doubt, that Microsoft - Microsoft not Nokia - would prefer to see tablets in the Windows Phone ecosystem. For any handset maker like Nokia, to turn a non-profitable smartphone unit and refocus any of its scarce resources to try to build a world-beating (iPad-beating) tablet would be foolish. Mobile phone handsets are distributed, marketed, priced and sold totally differently from tablet PCs. A traditional PC maker like Apple or Samsung that has the distribution and sales already for the traditional PC market, would be wise to launch tablet PCs. A pure handset maker like Motorola or RIM (or Nokia) would find it hopelessly loss-making to try to enter that market - witness RIM and Motorola. For Nokia's CEO to even entertain a tablet fantasy without putting a clear stop to any such projects and prospects, shows he is thinking like a Microsoftian, not a Nokian. He is not fit to run Nokia the handset manufacturing giant that is currently in distress. A tablet rumor should be killed comprehensively by the CEO as a luxury Nokia cannot now afford (And besides, the tablet OS should have been - would have been MeeGo, considering the Nokia N9 smartphone beat the iPad as the best design of 2011 at the D&AD Awards).

Explicit Risk 12 Damaged Credit Rating - The partnership with Microsoft and new strategy could cause lowered credit ratings from the credit rating agencies. Yes. Nokia was nearly perfect by all three credit ratings agencies on February 10, 2011, one day before this strategy was announced. Within 15 months of this strategy being announced, all three credit ratings agencies had downgraded Nokia so many times, Nokia was rated (and still is, obviously) junk by all three credit ratings agencies. It is one of the fastest destructions of a credit rating by any global market leader in any industry and all by itself serves as proof that Elop is one of the worst CEO's in the economic history of corporate governance.

Explicit Risk 13 Symbian Collapse - Our mobile operator and distributor customers may no longer see our Symbian smartphones as attractive during the transition to Windows Phone. This would result in a loss of market share, which could be substantial, during the transition and which we may not be able to regain when quantities of Nokia Windows Phone smartphones are commercially available. Totally prophetic. Nokia's Symbian market share was 29% when Elop took over. He promised a 1 to 1 transition from the Symbian base to the Windows Phone base. But the 'Osborne Effect' and the 'Ratner Effect' both caused by Stephen Elop communications during February 2011, caused a collapse of Symbian sales. During 2010, Symbian based Nokia smarpthones had grown more than the iPhone in absolute terms globally, grown more than Samsung, grown more than Blackberry. The gap between Nokia and its rivals had been growing, not shrinking before this strategy. Immediately after Elop announced his strategy, the Symbian sales growth stalled and reversed into an unprecedented fall. Nokia branded Symbian based smartphone sales fell from 29% market share when this strategy was announced to 14% in only three quarters, by the time the first Lumia branded Nokia smartphones running Windows Phone were launched. Elop himself caused the collapse in Symbian sales by calling his own products rubbish (in the infamous Burning Platforms memo, the costliest management communciation of all time) ie the 'Ratner Effect' and the simultaneous announcement of his current platform as obsolete with no replacement devices on the new platform ie the 'Osborne Effect'.

Explicit Risk 14 Transition Failure from Symbian to Windows Phone - We may not succeed in transitioning over time our installed base of Symbian owners to our Windows Phone smartphones. The math is undeniable. For every 10 attempts Nokia has made of its Symbian users to migrate to the Lumia series running Windows Phone, nine have failed! Only one in ten Symbian users from 2010 has so far been successfully migrated to Windows Phone while nine have gone to rivals, mostly Samsung and Apple. The transition failure is comprehensive, and this before we remember that the Yankee Group independent survey of new Lumia owners in 2011 found that 4 out of 10 new Lumia owners was so disgusted with their new smartphone, they ranked their satisfaction worst on the scale. Yes, worst smartphone they have ever seen, say 4 out of 10 Lumia owners. This is not a success. There is the infamous 101 faults list for past Nokia owners to try to migrate to Windows Phone (upgraded with even more Elop, now with 121 faults) and the very latest analysis at All About Symbian still finds major faults in so many Nokia 'staples' in features regular Nokia smartphone owners on Symbian (And Maemo and MeeGo) expect, that are still absent from Windows Phone, like the ability to see the time on the idle screen (bearing in mind, of the planet's population, a Nokia branded phone is the world's most used watch, ahead of Timex, Casio, Citizen etc). Like the lack of full file transfer on Bluetooth, like the lack of data transfers via NFC. Like the lack of microSD support (in all but one smartphone). Etc etc etc. The Lumia series resale price is nonexistent, meaning in most markets where phones are sold at full prices (no subsidy) the resale market is ruined as well, meaning the Lumia series is unsuited for Africa, India, Indonesia, etc etc etc.

Explicit Risk 15 Windows Will Not Be Beloved by Consumers • The Windows Phone platform may not achieve broad market acceptance by consumers. Very obvious. When this strategy was announced, Windows on smartphones was the world's fifth-bestselling smartphone OS (when adding Windows Mobile and Windows Phone based smartphones). That was to replace Symbian which at the time was the world's bestselling and the world's most used smartphone OS. Today Windows Mobile has been extinguished, and Windows Phone remains. Has it grown from 5th ranking to get better consumer acceptance? No. Windows Phone now ranks as 6th most used smartphone OS, behind Android, iPhone and Blackberry - and the new Samsung bada OS - and insult to injury, still trailing Symbian. The latest Kantar numbers suggest that for Q4 we will see Windows Phone market share decline while Symbian market share would increase! By every conceivable measure, it is obvious, that after the biggest marketing spend by any handset maker of all time, with Nokia initial global launches of Lumia, supported by billions more by Microsoft including giving away free Xbox 360 game consoles, and supported by the biggest-ever new phone launch marketing efforts by carriers like AT&T in the USA - Windows Phone has fallen from 5th most used smartphone to 6th most used. It is not beloved by consumers. Windows is despised by consumers.

Explicit Risk 16 First Mover Advantage Lost - Nokia first-mover advantage (may be lost) during our transition to the Windows Phone platform. Yes. Apple is rumored to bring NFC to the iPhone 6. Nokia had NFC on Symbian and MeeGo well before Windows Phone. The first Lumia series did not even support NFC. Google is calling 'mobile money' its number 2 strategic priority. Nokia had its Nokia Money launched commercially years before and was strong for example in India. That is now abandoned because Windows Phone does not support the technology. Nokia had the magnificent camera with 41 megapixel sensor in the Symbian based 808 Pureview but Windows Phone does not support that pioneering technology. Now Samsung has launched the Galaxy Camera smartphone with the biggest optical zoom and best camera on the market. Nokia is losing its first-mover advantages to Apple, to Google and to Samsung. All because of Windows Phone.

Explicit Risk 17 Nokia Brand Damaged - Our brand preference may erode due to the lack of success in smartphones. Nokia was ranked in the Top 10 most valuable brands by Interbrand every single year that survey was published, and ranked number 7 when Elop took over. Nokia immediately fell out of the Top 10 after the new strategy was announced.

Explicit Risk 18 Lose Scale Advantage in Sourcing Parts - "We may not be able to achieve as favorable terms as in the past resulting in increased costs that we may not be able to pass on to our customers." The sourcing issue is so damaged, even several of Nokia's long-standing suppliers have gone from healthy profits to loss-making.

Explicit Risk 19 Cause Damage by Outsourcing Production - "We may use contract manufacturers to produce the entire product, which could result in our products not meeting our customers’ and consumers’ quality requirements." The original Lumia 800 and Lumia 710 launch was so riddled with faults that Nokia resellers were reporting Nokia-record returns. Both first Lumia handsets were completely badge-engineered by Compal of Taiwan, using non-standard Nokia parts, and the new Microsoft operating system. So nothing in the first Lumia was true Nokia except perhaps the brand pasted onto the cover and the sexy physical design that was stolen from the MeeGo based award-winning N9. Its like if Porsche took the classic design of the 911, and then asked low-cost car maker Tata of India to manufacture a look-alike 911, with an engine not from Porsche but from low-cost car maker Proton of Malaysia and then just sticked on a Porsche sticker on the hood and tried to sell that as the new 911 - with classic 911 prices mind you - in Porsche stores to loyal Porsche customers. I think the conversion rate would probably be about 9 Porsche customers lost for every 1 retained, and most of those who actually bought this fake Porsche would be incredibly unsatisfied. Its prices would fall within weeks of the first launch (exactly as happened with the Lumia 800, exactly as happened again with the Lumia 900, and exactly as is now happening already with the Lumia 920!!!)

Explicit Risk 20 Destroy Manufacturing Capacity - The most difficult-to-achieve, most costly barrier to entry to scale in smartphones is manufacturing capacity. Nokia had built a huge lead in its manufacturing ability, with 10 handset factories around the planet of which seven could manufacture smartphones. Nokia had in 2010 the ability to produce one in three smartphones sold on the planet. Since the Microsoft strategy was announced, the global smartphone market has grown by 2.4 time. Elop promised that his strategy would take 2 years and he would replace the existing Symbian smartphone sales 1 to 1 by Windows Phone sales. But his strategy has failed so comprehensively, that Nokia has been shutting down factories and selling them. The total production ability of smartphones for Nokia is down 29% since Elop took over - and those were not inefficient old factories, those were highly modern, new factories of highly automated specialized ability. Now we hear that Huawei, the world's third largest smartphone maker has moved into Finland to start a new manufacturing plant there to take over from the skills that Nokia has abandoned. 

By closing its factories, Nokia so expressly admits this strategy has failed, that it has already shut down 29% of its smartphone production ability from Nokia's peak in 2010, while since then the global market has more than doubled in size. And Elop's actions point to how low Nokia thinks its maximum ceiling now is with Windows Phone - even if all smartphone factories run at full capacity, Nokia's global production could only manage about 7% of the smartphone market demand for this year 2013. That is, under 'perfect case'. You may find that many Nokia analysts are now saying the Windows Phone startegy is such a comprehensive failure, they expect Nokia smartphone market share this year to be nearer to something like 2% or 3%..

TWENTY REASONS WHY NOKIA STRATEGY HAS FAILED

When testifying to the US Securites and Exchange Commission via the required Form 20-F about this radical change to Nokia strategy, Nokia wrote that there were explicit risks, which "could, either individually or together" impair öur ability to execute successfully our new strategy."

So some of those 20 items I analyzed in the above might alone derail Nokia's Windows based strategy, or others might 'together' cause the strategy to fail. Now we know. Nokia experienced huge growth in smartphone sales in 2010. The sales turned into decline in 2011 immediately after this strategy was announced - and the decline has worsened quarter after quarter. Nokia towered over its rivals in 2010, twice as big as Apple, four times as big as Samsung. Now Nokia has shrunk to 10th in smartphones with an ever-shrinking share and might fall out of the Top 10 by Q4 results. Nokia's record-setting growing profits in the smartphone unit that generated more than 2 Billion dollars of profits per year have now been replaced by ever worsening losses, Nokia generated over half a Billion dollars of losses in its smarpthone unit in 2011 and more than 1.4 Billion dollars of losses now in 2012. The operators/carriers and distributors hate the Windows strategy - Elop himself admits it "of course" and points out that many carriers/operators refuse to sell Nokia Windows Phone handsets altogether. The Nokia brand is damaged, the Nokia ratings agencies hate this direction rating Nokia as junk. The Nokia share price which had grown 11% in the first five months of Elop's tenure to over 8.20 Euros has collapsed to 3 Euros and Nokia is regularly under take-over speculation, even as Elop fires tens of thounsands of staff and sells factories, units, patents, the Nokia Headquarters buiding etc.

The Windows Phone based strategy has failed. Its not me saying so. It is what Nokia warned when this strategy was unveiled. Nokia filed its Form 20-F which gives us the failure standards, how do we know if the strategy has failed. It was not me who wrote those risks into that testimony, it was Nokia. And now when we examine those points, we find that yes, Nokia's strategy has comprehensively failed. 

Elop must be fired for thrusting profit-making market-dominating Nokia into this self-destructive path. Elop must be fired for continuing on this ruinous path even as he saw clearly it cannot succeed (the most obvious evidence being when smartphone factories are sold or shut down). Elop must be fired for horrid execution of the plan - witness the total failure of Windows Phone even in the new Lumia launch now - where Elop 'learns' from his mistakes and after Lumia first time lost market share and saw collapsing sales, he now raises prices, reduces distribution, cuts operators (the idiotic "exclusive" operator-deals which even Apple wanted to get rid of as soon as it could, stating exclusive deals are not capable of supporting large scale sales) and limits the portfolio with ever less differentiation. The Lumia Windows Phone launch year of 2012 was a disaster. Now, with the new steps, Elop is guaranteeing that the Re-Launch of Lumia for 2013 will be worse still. Why is the Microsoft Muppet allowed to remain in control of Nokia? His strategy has failed on 20 counts. He must be fired now!

These were not ' Tomi's petty reasons' to blame Elop. These were 20 risks that Nokia testified in Form 20-F to the USA Securities And Exchanges Commission and New York Stock Exchange last March, that were risks that could destroy the Microsoft strategy announced in February of that year. This form clearly says, that Elop's strategy would take 2 years to complete. On February 11, 2013 we will have 24 months from the start of this strategy. The last Quarterly data for Nokia related to this strategy is coming now in January (fro Q4 of 2011). The Microsoft Windows strategy for Nokia has comprehensively failed, at least on those 20 points, several which alone will destroy the strategy - not my words, so said Nokia.

I will post this long blog now to start the year, for those who may want to reference this and dig for themselves. I will return to some of these topics with some updated diagrams and numbers to explore some of the failures in more detail in the coming days and weeks. 

UPDATE - I have now published the first short blog dealing with one Nokia problem illustrated with one picture - its the Collapse of Nokia Smartphone Sales and the Elop Effect.

Note, this blog was 100% on risks and problems Nokia identified 2 years ago. Stephen Elop has mismanaged Nokia but he has done far more damage to Nokia, both in smartphones and elsewhere than just these 20 risks that Nokia itself identified. I wrote last summer my 'definitive' piece on the biggest faults of Stephen Elop as CEO. If you want to read another monster-long Tomi Ahonen blog about management failure, and learn the lessons of how Elop through his mismanagement accomplished these risks to come true (and other damage to Nokia), read The Sun Tzu of Nokisoftian Microkia.

Lets do the disclosure part - I am an ex-Nokia employee. I was not fired by Elop haha, I left in 2001, back in the very good days when Nokia was still growing as the giant. In my last job I was at headquarters heading Nokia's global consulting unit which served the major international carrier/operator giants like China Mobile, Vodafone, T-Mobile, Orange, Telenor, etc so I saw not only what Nokia strategy was but I was personally and deeply involved in seeing how the carriers/operators formed their strategies. I have been used by Nokia over the years as their consultant including at various public events from Finland to Pakistan and from Egypt to Colombia. The first of my 12 books was listed as an 'official Nokia book' and sold through the Nokia website. A Nokia President has written the foreword to one of my books. So I am not holding any kind of grudge against Nokia. I have been both supportive of - and very critical of Nokia before Elop came to town. I have been both supportive and critical of Elop based not on any personal vendetta, but on what he has actually done. Clearly being the biggest management failure of all time not just in telecoms or tech, but in any industry, ever, Elop has managed to accomplish more lunacy than any other CEO in a comparable period of time. Hence, most of my writings about Elop over the past two years have been negative, but not all. I was for example very supportive of him and Nokia when the N9 was launched or the 808 Pureview etc. 

Note that I consult for the industry, my refernce customers include just about every giant of the industry and I have been equally critical of past giants stumbling in the handset industry such as Palm, Motorola and RIM. I am not here because I somehow hate Elop (or because he slept with my wife, haha, very funny theory someone once suggested) - I am here as an honest expert giving my honest view when a company is making dramatic mistakes. The release of the Burning Platforms memo WAS a huge mistake - I said so here immediately, and Elop himself has admitted it caused damage to Nokia. I was here to say that when Microsoft bought Skype that was good for Microsoft on the desktop but would damage Windows Phone smartphone sales - and again, Elop himself admits now that it is true, that operators hate Skype 'of course' and many refuse to even carry Windows Phone based smartphones. I called Elop for creating an Osborne Effect and a Ratner Effect - I was not alone in either of those observations, now most tech analysts agree that it is what he did. And so forth. I am calling it as I see it, if Elop stopped making colossal mistakes - like now "exclusive" carrier deals which further damage Lumia market success - not my view, that was the industry consensus view when Elop announced it - if Elop stopped making mistakes, I would stop criticizing him. This is not about hating Elop, this is about loving Nokia. I still am an optimist, I love Nokia, and I hope Nokia can somehow survive, shifting quickly to Android or - more likely - that it might be bought by a friendly new owner that the Nokia brand might still survive and mean something. After all, it was Nokia that invented the smartphone and utterly dominated this market until Elop came in to destroy Nokia's leadership position.

On shares. This blog makes no recommendations on any share prices, I do not personally own Nokia shares and I do not allow discussion of share prices and stock markets in the comments. 

Why am I obsessing about this story? Because this IS the biggest catastrophy in the mobile industry, and one that keeps evolving, going from bad to worse. This is a bigger disaster than Siemens exit in phones, Motorola's collapse from number 2 handsets, far greater failure than Palm falling from number 2 in smartphones. This is bigger than the damage Toyota saw from its brakes problems and recalls. This is bigger than problems British Airways witnessed with the catastrophy at Terminal 5 opening, or BP saw with the Oil Spill, or Exxon saw with the tanker fiasco of the Exxon Valdez, or Coca Cola experienced when attempting to launch New Coke (and note - Coca Cola wisely brought back Coca Cola Classic alongside its new 'platform'). This IS the biggest story in telecoms and tech. Elop has precided over the biggest management failure of all time, and the most rapid collapse of a global market leader - in any industry, ever. He is the biggest failure CEO ever. He is a loser of a boss. These stories must be chronicled and lessons learned so that the mistakes of Stephen Elop will never be repeated by anyone. His name must be synonymous with comprehensive - self-induced - market destruction. I write this story, because I am an analyst of this industry - and wrote 'the' book on how this industry makes its money. If we are witnessing a world record being made in incompetence in this industry - in how money is lost - then yes, I must write this story or I would not be honest to my craft. And I will continue reporting on Nokia's troubles as long as it continues on this mindless suicidal path, of course.

One plug - if you noticed, I have no ads on this blog, I have written more than two million words over six years on topics relating to mobile, telecoms, tech, media and the internet on this blog. We have had over 3 million visitors and have had over 30,000 comments posted here. Yet note, no ads. We have no registration, we don't harvest your emails, this blog is not for sale. I am here only to share with my loyal readership, many of those people posting comments have been on this blog for years. I am already the most published author of my industry, Forbes rated me the most influential expert in mobile, what more could I want? I have zero interest in anything else except sharing my best insights where I can - and often I have been wrong - and I am the first to announce here on this blog whenever I am wrong (how many 'mobile experts' bother to do that?). I've spoken at over 350 public conferences to a cumulative audience of over 100,000 in over 60 countries on all six inhabited continents. I have over 500 press references. What more could I want? I am not writing this to 'try to get visibility' haha, everyone in my industry knows me, most major CEOs in this industry have autographed copies of my books in their bookshelves. I do this only for my readers. I only share my thoughts with my readers out of a passion for sharing. But in my day job I am a consultant and author - I am the most published author in the mobile industry and my books are already referenced in over 120 books by my peers - a truly phenomenal achievement considering my first book is less than 11 years old. So for anyone who needs to understand the mobile handset industry and business, please see my TomiAhonen Phone Book 2012 for the latest industry data and stats. 

Comments

[Spawn]

What those Form 20-F shows most is the amazing failure in risk-management. They where aware what it means if that strategy fails but still went all-in, why???

It was not needed. It never was needed to only do WP and kill off everything else. From Microsoft's view there is a "ear of ecosystems" and Microsoft fights on one side exclusive. But not for Nokia. They compete with Samsung, with HTC, eith Apple, etc. and not on any ecosystem front. They compete for sold devices, for services, for customers. It just does hot matter on ehat ecosystem cause rg Samsung is also on WP. O, why woul you turn that into a "war of ecosystems" cause Samsung is on Android but not if they are on WP? It just makes no sense.

That means from the very beginning, from the moment the strategyvwas selected and that form F-20 was written something was faulty.

I repeat: Why would you let your Symbian fight against your WP if you could join them? Like Symbian/Meego was one ecosystem through Qt. How and ehen did it turn from an "extension of our offered ecosystem" and a "ecosystem-merger" into a "fight"?

I think part of the answer can be seen in Elop... he names himself "The General", givea wrong citates of Sun Tzu's Art of War ehn asked about Nokia, talks about burning/jumping as if only drastical actions, like wars, can help. Sure he lost *his* war but *how* was he able to get Nokia into *his* a war the first place?

[foo]

@Tomi: "When this strategy was announced, Nokia had 29% market share on its own operating systems. They are now down to 2%. So Nokia has sacrificed 27% of its own smartphone customers."

I think the correct sentence would be: "Nokia has sacrificed 93% of market share" (27/29 = 93%).

Putting it in another way -- when the number reaches zero, we'll say Nokia sacrificed all (100%) of its market share.

[J.O. Aho]

I don't think we can blame everything on Elop, other board members like Esko Aho are to blame too as major stock owners, they should have stopped the madness of the mad "generalissimo".

The big question is, will Nokai try to jump on board Andriod or Tizen after microsoft kills off WP, there was some rumours at Tomshardware that it would be Android, but I guess Nokia is just looking for people pushing out Nokia Maps App for Android and nothing else.

[Firecracker]

Ohh well what should I say besides that Elop is making the Nokia founder roll around in his grave. And how goddamn stupid is the Finnish government by the way I mean how can they let this dong cracker Elop ruin Nokia? When Nokia is/was about 33% of the GDP. When before Nokia or perhaps Microsoft modified the Nokia article on Wikipedia it was stating that no one wants a windows phone.

[Skender]

Why this obsession with Skype? In 2009, the N900 already came with Skype integrated in the OS, just like the N9 in 2011. Skype was running on Symbian, Android and iOS, long before it was available for WP7. I can understand that operators don't like Skype, but when Nokia launched the Lumia 800, it was one of the few smartphones on the market that could not even run Skype.

[m]

Spawn: "They where aware what it means if that strategy fails but still went all-in, why???"

1. Elop doesn't care about Nokia. He still gets paid millions as they lose billions. The only personal risk is the hatred people would have for him. But Elop was hired to downsize Nokia, so he would be hated by some no matter what. So why not risk an entire company you're planning to dismantle anyway, and bet it all on his true love, MS? He's not from Finland, he doesn't know the employees he's hurting. No need to even meet them.

2. Many share holders got out when the WP strategy was announced, and obviously didn't support the plan. So who did? Who pushed it through? Was it lead by fools, who knew this long list of risks but thought they knew better, thought it would succeed by magic and will power alone? Or has Nokia been fully controlled by MS investors for the past 2 years? The plan was not well received by shareholders, and yet somehow it was pushed through, and Elop was put in power, and the Nokia board was rearranged to consolidate power to the pro-MS side.

So the answer to "why?!" is: Because it was good for Microsoft, and Nokia is controlled by Microsoft.

[rino]

Read in Forbes:

"2013 in mobile"

"Nokia abandons the mobile business:..."

http://www.forbes.com/sites/tristanlouis/2012/12/30/2013-in-mobile/

[Tester]

@Baron95:

Yes, all well known, but that wasn't the point.

The point is that the strategy failed on every single account that had been laid out in that verbose document. They knew all the risks, laid them out in text and didn't succeed on even one single point! - and that they didn't even consider a backup plan, just in case, is just the icing on the cake.
The entire Windows Phone adventure would have been a lot less risky if they had outlined clearly that they still want to continue to pursue MeeGo. But they didn't even give that a chance. They killed it outright, before it even had a chance of making profits.
I'd call that a complete and utter failure.

Even swallowing their pride and going Android would have been a better option. At the point the decision was made, Nokia was still the largest smartphone manufacturer. They would have been the only company able to compete with Samsung, had they been able to migrate their Symbian customers to their own Android phones.

Sure, they probably wouldn't have 25% market share now, but even 15 or 10% is still better than what they currently have.

But no, Google didn't bow to their demands, Nokia said no and went on a wild goose chase for success with a platform that already had lost when the decision was made.

Regarding Elop, sure he's to blame. If a strategy shows signs of complete and utter failure, as the MS adventure did over a year ago, you pull the plug and search for alternatives. What you don't do is continuing this insane game and waste even more money on it.

But what did he do?
Did he ever consider his strategy a failure? No. 'Next time it will be better'.
Did he ever even think about an alternative? Clearly, no. He's deadlocked on Windows Phone. Anything else just doesn't exist for him.

[Interested to know]

The people who read this blog all have a good idea what is happening. The "Microsoft Muppet" moniker sums up the actual reality quite well.

You've covered this before but I would recommend revisiting the topic of how and why Nokia was used to further Microsoft's goals. It's clear that everything that Elop has done at Nokia has been for the benefit of Microsoft.

Everything at Nokia that could be potentially valuable to one of Microsoft's competitors been destroyed or put out of reach. Everything that didn't directly benefit Microsoft has been sold for a song. The few remaining bits that could still be valuable to Microsoft (like the mapping division) will undoubtedly be transferred to Microsoft soon.

In the past, Microsoft's astroturfers (aka 50-cent-army) were able to keep most of the dissent obscured but even they are now failing as the damage becomes so great. Even the general public are now seeing that the emperor has no clothes.

[Dan Thornton]

How about instead of moving to Android - owning Ubuntu for smartphones?

The thing is that Window Phone is actually rather good, it's just the way that Nokia has gone about throwing everything behind it that's been the problem. Speaking as someone who used about 3 pre-Windows Nokias and was willing to persevere due to the hardware, I'm now on Android with a HTC, and my next handset will probably be an Android Samsung...

[Tomi T Ahonen]

Hi all

Just a comment. Many regular readers may remember Ex Nokian who was once allowed to post here and was banned. He/she also runs the anti-Tomi 'Dominies Communicate' blog with hyper-critical arguments against much of what I blog here.

I had blocked Ex Nokian from my Twitter feed and routinely deleted any Ex Nokian comments to this blog. Ex Nokian wrote a surprising - and very warm - blog over Christmas, and mentioned that while he/she and I disagree on a lot, Ex Nokian does consider me the most accurate forecaster for Lumia smartphone sales per quarter (thanks).

I read the blog - you may want to too its at

http://dominiescommunicate.wordpress.com/2012/12/24/merry-christmas-tomiahonen/

And decided, that if Ex Nokian is able to see this level of 'honesty' and fairness in the analysis, then yes, even if we disagree with 90% of the matters but can find 10% in agreement, I should allow Ex Nokian also to resume to post comments here on the blog (and I unblocked him/her on TW and followed back).

So, with the proviso, that Ex Nokian has to still conform to our normal rules and not behave like a total Microsoft troll for example, if the comments are reasonable, Ex Nokian is welcome back to post comments here at CDB.

You don't have to agree with me, as long as you deal with the arguments in a fair and reasonable, or well-argued manner...

Tomi Ahonen :-)

[A]

Great words. We all see prophecy come true. Now tell as what happens NEXT two years. You really think (or hope?) same as Forbes?

[Sander van der Wal]

The Form clearly proves that everybody at the top management level was very aware of the risks being taken moving from Symbian/MeeGo/Qt to Microsoft.

What is missing in the Form and here is a good analysis of the reasons moving away from Symbian and MeeGo.

Consider, if management was competent enough to clearly see the risks they were taking, they were competent enough to see that their old Qt/MeeGo/Symbian strategy was going nowhere, it had to be even worse than going with Microsoft.

So, why did they believe their old strategy was not working? Why did they think they had no choice in following the very dangerous strategy of going with Microsoft?

[CN]

@A

You mean this one?

http://www.forbes.com/sites/greatspeculations/2013/01/02/rim-settlement-shows-there-is-value-in-nokias-patents/?partner=yahootix

No, just kidding. ;-)

But before making conclusions that it is the opinion of Forbes, make sure you know if it really is Forbes who says it or someone in their blog.

[vladkr]

Hi Tomi, Happy New Year (and Happy New Year to you too, folks)

You should know by now; as we say in France, Nokia is like shrimps (prawns) : everything is good except for the head.

[geektech]

@Dan,
Have you used a N900, it is basicaly Ubuntu, Debian phone-tablet.
As we saw and many said it was conspiracy to kill linux , but now it
Is more obious, maybe they have other reason but, what i dont understans is: If Ms have full control of Nokia shares, wasnt that better to profit from it? Or kill the company and keep the IP generate more profit on the long run?

[pwh]

Anyone know whether the MS / Nok contract forbids developing / marketing non Windows smart phones? Has anyone able to speak seen the contract? If so when do the restrictions end? If the contract does preclude non Windows phones, there must be some kind of termination clause...

[Louis]

@Sander: "So, why did they believe their old strategy was not working?"

Clearly it wasn't. This writeup seems to hit on the major points:

http://taskumuro.com/artikkelit/the-story-of-nokia-meego

"Why did they think they had no choice in following the very dangerous strategy of going with Microsoft?"

It's still a little confusing. Remember that a naive argument at the time would be that Nokia isn't a small, software and mapping oriented company, but a big one with manufacturing and hardware competence. Thus scale is required and exploitable, so why not use Android and sell off mapping, which Google wasn't going to take? (About 2/3 of the risks are that Windows won't get the necessary scale.)

Against this is the intuition that WP was new, distinctive, and liked by reviewers. Plus a feeling that there was better synergy with MS on the services side and the idea that a huge marketing budget from MS could get sufficient visibility to bring the platform to critical mass.

It all seems a bit speculative when put this way, even without knowing what happened.

In any event, nobody can say this strategy worked. The huge bet was that Symbian had died on the high-end, so exchanging a bit of market share to get back into the high-priced segment was worth it. But, even after huge launches, Lumias seem only to move in modest numbers in the prepaid segment in Italy or something. (Certainly nobody would take a Lumia 920 over an "obsolete" iPhone 4s, given the choice.) The rest is a total market share and price fiasco.

What's interesting is that we will see a bunch of QT/HTML5-based platforms soon: BB10, Unbuntu, Jolla, and Tizen. I suspect they will do as well as WebOS and MeeGo but, hey, you can never tell.

[Vladkr]

I have few more remarks besides the shrimps stuff :
- Nokia cannot differentiate, despite strong partnership with MS; surprizingly, HTC managed to release a 12Mpix Windows Phone (HTC Titan II, running wp 7.5). How come Nokia couldn't do better with wp8, and the help of both MS (supposed), and Zeiss ?

- Skype may have been seen as a threat by operators. I won't comment this fact/hypothesis, as I'm not competent for that, but I can comment as a heavy Skype user. I'm quite sure in the middle term, Skype will fail. Why ?
* service quality is worse and worse (especially Skype out and skype number)
* operators already offer very competitive rates, which make Skype less competitive and less convenient to use. Of course I don't include North American operators, which still offer cavemen age rates (intercity, no unlimited internet, no unlimited calls, charged incomming calls, etc.)

That's only two issues besides many more, not to mention the aggressivity Nokia's strategy generated in the media, but I don't see anything positive in Nokia's and even Microsoft's futures... At least not while Dumb and Dumber will be in the cockpit.

[Louis]

Aside: to see how unimportant WP is, Google abruptly dropped ActiveSync from its free service as a way to transition its iOS users to the Gmail App:

http://www.theverge.com/2012/12/14/3767626/google-dropping-google-sync-exchange-support-for-gmail-calendar-and

That WP8 depends totally on ActiveSync for Gmail and there is no App apparently wasn't a serious consideration. Since Google has a decent idea of who actually uses its services, this suggests WP was really tiny.