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« On The Twelfth Day of Christmas My Elop Gave To Me.. The Classic Christmas Carol Updated for Nokia | Main | Picture Tells it Better - first in series of Nokia Strategy Analysis diagrams, how Nokia smartphone sales collapsed »

January 02, 2013

Comments

Tester

@CN:

Anything that just reblurbs what some vague press statement says isn't worth much without any background information.

I haven't informed myself about Tizen-DoCoMo so I won't make any comments about what they have to say.

The devil with there 'strategic partnerships' is always in the details buried deep in the contracts. It may be worthwile, then again, it may not. Hard to say for sure before anything concrete surfaces.

With Microsoft it's worse because there have been so many announcements which ultimately were only slightly more than smokescreens to get some good press that I don't believe anything of this anymore until proven otherwise.

Lasko

@CN

This is part of an interview from Charlie Demerjian with OEMs at the Computex, as published on S|A earlier this year.

MarcoAustria

@CN
please don't take a statement rip it out of contest. I mean partner, not sales partner - as stated in my previous post. China-Unicom is a sales partner, like AT&T. They have no say-so in the development of Windows Phone/the ecosystem.
http://news.softpedia.com/news/China-Unicom-Will-Support-the-Windows-Phone-Platform-Too-313016.shtml
„The company has just signed an agreement with Microsoft for the distribution of these smartphones [...]“
or
http://www.chinadaily.com.cn/business/2012-12/07/content_15994579.htm
„Alliance to boost sales of Windows Phone devices“
or
„The key member of the alliance is China Unicom, who will be giving "strategicc priority" to Windows powered devices. This will likely translate into additional device subsidies and marketing activity.“
http://allaboutwindowsphone.com/flow/item/16361_Microsoft_and_China_Unicom_lau.php

I mean partner as can influence the strategy, direction and development of the OS and ecosystem. It might be with arguments and conflicts, but they have influence.

Tizen: „Tizen's main goal is to create an open ecosystem,[...]“ (source: en.wikipedia)
http://www.tizenassociation.org/en/tizen-association/board-of-directors
including 6 carriers
and open for other business cases
„The workgroup, using Tizen as its reference distribution, will create an Automotive Grade Linux (AGL) reference platform, which the car industry can use for [...]“
http://www.zdnet.com/tizen-linux-heads-for-vehicles-as-car-makers-and-tech-firms-form-workgroup-7000004491/

Sailfish „The Sailfish Alliance is open and can be joined to contribute or just the effects can be used.“
1 carrier (source: http://en.wikipedia.org/wiki/Sailfish_Alliance). One isn't much, but for a startup all they need.

In the end
Samsung is the new Nokia.
Tizen is the new Symbian.
MeeGo is a Hydra (why? It lost one head and get two new ones. Microsoft might have cut the head (Nokia), but two new emerged (Tizen, Sailfish)

MarcoAustria

The new Nokia China business model
* go from 70% marketshare to „nowhere“ and count it as success …
* celebrate if mobile vendors entering your market and you have to fight with them. And count it as success ...

“As more mobile phone vendors start selling Windows Phone devices, it demonstrated that Nokia made a very bright choice at the very beginning,” said Gustavo Eichelmann, Nokia China chief reportedly said.“
http://news.softpedia.com/news/China-Unicom-Will-Support-the-Windows-Phone-Platform-Too-313016.shtml

Just hilarious ..

CN

@Marco

Understood. So "China Unicom and Microsoft officials said the new Windows alliance will lead to the development of more innovative devices and attract more partners." is not enough.

And "This will likely translate into additional device subsidies and marketing activity." is not good.

This is a challenge for all of us, using statements selectively. I guess you do your part in it. Sorry if I did it, I initially did not understand what you meant with "(not meant as sales partner)."

So now we can conclude that not just Windows and Nokia, but also HTC, Samsung, Huawei, ZTE, Asus, Lenovo, Qualcomm, and Intel are wasting their time in the alliance. ;-)

Tester

@CN:

No, sorry, those phrases are empty corporate talk.

The same talk that has been used for every previous partnership that all failed.

Essentially it means that Microsoft is pumping more money into the market to dupe people into buying their unpopular platform.

The only open question is whether China Unicom is taking the deal seriously or only doing it because it's a no-lose proposition for them. Considering the current market situation the latter is far more likely, if you ask me.


More generally about corporate talk: Never EVER let any doubt creep into your statements. Never EVER make anything sound negatively, even if it's a major disaster.

Remember how Nokia justified selling their HQ? No, they didn't say they couldn't afford it any longer. They said they weren't into the real estate business!

Sometimes I wonder who these people are trying to fool with such statements...

Lasko

@CN

Various OEMs have been interviewed by an S|A journalist at the Computex this year, and this is what they've told him in confidence. What do you expect? Names and transcripts? The value of this interview is the private information given, which is obviously quite contrary to the public statements OEMs are forced to publish.

And publishing information departing from this public statements is 'hatred against Microsoft'? So I can report about Microsoft as long as I do in favor of? And if I don't I become a 'Microsoft hater' and the truth becomes a lie?

That's quite a comfortable way of looking at things.

CN

@Lasko

Did you read it yourself in here?

http://semiaccurate.com/2012/07/02/microsofts-scapegoating-explanation-doesnt-hold-water/

"Instead of learning from that debacle, the same geniuses who took Microsoft’s phone operating system share from above 10% to below 2% were let loose on the tablet space. Their harebrained master plan blew up in their face once again, and took the entire OEM community with it. Microsoft then panicked and took a public scalp instead of holding those responsible to account. There is no plan on where to take things from here, Microsoft’s tablet hopes and dreams are stone cold dead. If upper management is allowed to survive this, the company has no chance."

Can you honestly say they don't have a negative attitude towards MS?

I'm not saying anything about your attitude.

Wayne Borean


@CN,

Disclosure: Some of my stuff has appeared on SemiAccurate, and I know Charlie.

The reporting in SemiAccurate isn't biased, except against problematic products/companies. Microsoft is a problematic company, with problematic products. I was reading their SEC report three years ago, and came to the conclusion that Microsoft was heading towards bankruptcy.

Google the term 'Microsoft Death Watch' and read about it.

Microsoft has a severe problem, in that they don't make a lot of hardware. Their software has a lot of alternatives, some better, some worse. But the 'worse' alternatives come within 90% of Microsoft's products for capabilities, and cost far less. The company is vulnerable to 'Disruptive Technological Innovation', one example of which is Apple owning over 25% of the classic 'PC' market in Canada, where five years ago Apple's PC market share in Canada was way less than 5%.

Microsoft's customers, I.e. Dell, Asus, HP, Nokia, etc. have the option of using competing software, and the barrier to entry is pretty low. Linus Torvalds and people like him have seen to that.

So what happens to Microsoft? I estimate bankruptcy. I originally said Fall of 2014. I may have been overly pessimistic about the companys chances, but if you read their SEC report, and look at their cost structure, it's hard not to be.

Wayne

Lasko

@CN

Again, what does the diction change relating to what had happened and what Demerjian had been told from the OEMs?

Just because Demerjian doesn't mince matters Microsoft did _not_ fall from 10% to 2 market share%? Windows RT does _not_ have severe market acceptance problems? Microsoft did _not_ alienate the OEMs? And the OEMs do _not_ get paid in large volume for marketing and production to offer Windows 8 products?

It doesn't matter if someone telling the truth has a negative or postive attitude, a loose tongue or not. It still stays the truth.

"You are a liar and a hater if you don't say something nice about Microsoft." No, seriously.

CN

@Lasko

No Lasko, not at all, I don't call anyone a liar or hater. Sorry if I made you feel that way.

Let's park it here. We don't get into an agreement. I feel the writer has a negative and biased attitude, you don't.

winter

I used to collect truthful statements by MS officials. After 25 years I stopped collecting. My total collection contains ZERO examples. :-)

My impression is that around 2008-2009, major shareholders in MS and Nokia made a deal to use "sell" Nokia's customers to MS. MS was in desperate need of a credible future in mobile while Nokia wanted to get rid of costly software developement. Nokia went down, but the "promise" of zlumia has kept MS' shares up for another two years.

That is, the market value lost by Nokia is one tenth of what MS' market value gained.

Win/WP8 has been one big stock fraud of MS.

Lasko

@CN

"No Lasko, not at all, I don't call anyone a liar or hater."

Say what?

Let me quote you your statement about Demerjian just from two hours ago: "...they have their agenda set pretty clear. Similar hatred towards MS as we can see in some other places.", implying that he is telling the untruth out of a personal dislike.

And please save us that 'I didn't say hater, just hatred.', that'd be great.

Tomi T Ahonen

Hi all

Excellent discussion going on, please keep it continuing. I'll comment on a few thoughts in the thread

m - thanks and very good point. Elop seems to be on a mission to downsize and diet Nokia to be palatable for ingestion by Microsoft. If we examine all of Elop's tenure in the light, that he was brought in to get Nokia sold to Microsoft, then all of his decisions make sense. Unfortunately for Microsoft, Elop has been so disasterous as a smartphone maker CEO, that what Microsoft thought it was getting in February 2011, is not there now. So Microsoft may not want the wreck that Elop is now holding in his hands..

rino - thanks, and TO ALL IN THE THREAD - if you want to have a really big laugh, go read the Forbes article now, that rino links to (the one forecasting that Nokia will be sold to Microsoft and Huawei during 2013) and read through the comments. Talk about massive Nokia and Microsoft astroturfing, with a vengeance. That is EXACTLY what we do not want here. I don't mind sensible discussion but try to troll around here, and you are gone.

A - you asked what do I foresee for Nokia's future? I wrote on this blog more than a year ago and again several times last year, that I am convinced Nokia will be sold and split for its parts. I started to believe that when Wall Street analysts (not me) calculated that Nokia's parts were worth more than the share price - this was in the summer of 2011 when the Nokia share price fell under 4 Euros. Its now about 3 Euros. I am pretty sure there are plenty of buyers who would love to take Nokia's big patents portfolio - which gave Nokia in 2011 a rare win against Apple and just recently gave Nokia a win against RIM. Nokia's patent portfolio is the biggest in mobile, and that would be of interest to just about any big global player from Google to Samsung to Microsoft to Intel to Apple to Sony to Huawei etc.. Then the other parts, like the Nokia brand, not very useful in the US market haha, but the most valuable brand of Africa for example, could be sold to someone who wants to own the Emerging World phone market - like ZTE, Huawei, Lenovo, Samsung, etc. or one of the local brands of Africa, India, Latin America, Russia, China etc. Nokia's smartphone unit would be of most value to Microsoft, but it doesn't want the rest of Nokia. Nokia's networking parts could be sold piecemeal or as a whole to Ericsson or Alcatel-Lucent or Huawei or ZTE or Cisco etc. The 7 remaining handset factories could be split by the entity that buys the smartphone part, and the entity that buys the dumbphone part. I said last summer (and was obviously very mistaken) that I felt Nokia might be sold within weeks. I still think Nokia will be sold soon. It may now be until we see Q4 results, and likely an adjustment to Nokia's share price around then based on how good or bad the results are, and then the bidding war might start. I do think, part of why it didn't happen was the global uncertainty related to the US economy, the US elections and 'fiscal cliff' - as very many US corporations are sitting on big piles of cash, but not investing it. I think there are really interested buyers of Nokia - Samsung, Microsoft, Huawei, Sony have been often mentioned - and the bidding war may start literally any day. Seriously, I don't think Nokia exists as we know it, by the summer of 2013 and whoever buys the company will probably sell parts it doesn't care to keep.

Sander - you make a valid point about why did Nokia management decide suddenly to abandon the old path to Symbian and MeeGo. I have posted a new picture in a new blog today that partly answers the question, but there will be several more coming. Lets discuss it there. I am 100% sure, that Nokia made the biggest single management mistake of all time, when the Board accepted Elop's strategy suggestion to hasten the end of Symbian, abandon MeeGo and go only Windows, in February of 2011. But I will explore that through several pictures, lets discuss it in context there. Every bit of evidence is CLEAR that Symbian was not dead, and that MeeGo had far more potential to it than Windows 7.5 in 2011.

More comments to come, keep the discussion going

Tomi Ahonen :-)

HappyToBeLeaving

As a soon-to-be-ex-employee of Nokia myself I find myself in complete agreement in all but one regard: Mr. Elop was not alone in this foolishness.

The rot started in about 2000. That's when we first saw top management's mistakes going unrectified and the beginning of the growth of the top-heavy bureacracy that crippled the company with its inertia and infighting.

Was it purely accidental or were Nokia's 2 previous CEOs, various members of the board, and a few key executives just unable to hear the warnings above the sound of their own awesomeness? Given the recurrent hubris in Nokia's dealings with the service providers I'm going for the latter.

Arnt Karlsen

..please Tomi, you must stop pretending Elop is like Hitler and Quisling in 1945.
He is not.
Elop is to Nokia what Anders Behring Breivik was to Norway on July 22'nd of AD 2011, only Elop is much smarter, which is why he is still running Nokia.

Distributor

I have insight on both challenges in profitability in own manufacturing, especially when you do not have the negotiation power regarding suppliers, due to small volumes + White labeled OEM chinese manufacturers very competitive pricing and how the current situation is seen with the Nokia distributors. The situation is very different for the distributors, what it used to be in the past.

Distributors are left totally in the dark by Nokia today, regarding manufacturing schedules and allocations. That makes the business of the distributor extremely difficult.

The point and question I have, is that I know, as Tomi wrote, Nokia had and still has the best manufacturing and logistics in the world as one of their key success factor, hence the question rises; is the downgrade of manufacturing intentional?

We all read news occasionally that the demand for Lumia devices is greater than the supply. That is hardly the problem in manufacturing and logistics. Is Nokia intentionally keeping the manufacturing volumes in minimum, to avoid too large installed legacy base to be supported in the market?

Is there already an agreement in place, that Nokia will sell it's mobile development, manufacturing and NSN this year (2013) as seen in few speculations the news lately? Nokia would then focus on services and applications?

Nevertheless, if Nokia is sold in pieces this year, there should definitely be a comprehensive legal process, to study all the mistakes Tomi has pointed out over the last two years and for example what was the motivation for Nokia board members and Elop himself, to buy a significant amount of Nokia stocks in July / August 2012?

Was that the time when [they] knew what will happen this year and e.g. Manufacturing has been ramped down albeit based on news, the demand has been bigger.

Sounds like a serious crime to me.

Dipankar

Tomi, I think all companies are supposed to be realistic-pessimistic about the risks they face, in Form-20F. Idea is to keep anyone investing in the company bluntly aware of the risks that investment is under.

Having said that, I agree that all of the risks Nokia had listed have been realized now. In about a month's time, it will be a full 2 years since the Windows Phone strategy was announced. 2 years is plenty of time to prove that the strategy is not working. All it has done for Nokia is taken revenues of 12 billion euros (Q4 2010) and reduced it to around 7 billion euros (Q1 to Q3 2012). And, of course, profits of around 700 million (Q4 2010) to billion+ euro losses.

Verne O'Leary

I used Nokia exclusively for years, i mean exclusively, waited for their new phones, got them on Optus cause Telstra never released the new phones for about a year after they came out. I always said i would only ever use a Nokia phone. I now have a HTC and am going to get Samsung exclusively for the next forever from now on cause they are now the best looking and best for use phones i have ever seen since before Nokia died. RIP Nokia you were the best now you have been killed by an evil disgusting company that is hopefully dying itself. I am truely disgusted with the depths that that evil company M$ and it apologisers go to bring ruin upon the PC and Phone business. They single handedly stagnated PC's with vendor lockin for over 20 years.

Truely I hope Google and Samsung destroy M$ asap and those cowardly M$ people no mercy just like those horrible M$ people showed no mercy to good decent competitors like Word Perfect , Dr Dos and all the rest.

Regards

James

Thanks Tomi for your great Blog, since im reading it, everything gets much clearer, please go on with writing! This article (like the other ones) makes me sad and angry i have to admit.Nokia is the last european consumer high tech company and instead of growing and saving jobs (in europe and worldwide), this CEO does everything to devastate this former proud, wealthy and innovative company. I really dont know whats going on in the minds of the other shareholders (of course except Elop) but in nearly every other company such a untalented CEO would have been fired immediately. I bought for myself a 808 Pureview, an absolutely outstanding device, everyone is absolutely impressed but Nokia fails to promote it the way it deserves. I hope 2013 will bring the turn and Nokia gets a new (non Microsoft) CEO, I really do hope so, otherwise this company sinks into insignificance.

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