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« Picture Tells it Better - first in series of Nokia Strategy Analysis diagrams, how Nokia smartphone sales collapsed | Main | The Seven Biggest Collapses in Mobile Handset or Smartphone History - this is part 3 in the Nokia Disaster analysis series »

January 04, 2013


Interested to know

How many billions have shareholders lost because of Elop?


Tomi, your predictions and analysis are mostly great, but you're being held back by being unrealistic. The argument that "Nokia was doing perfectly before Elop" is simply not true. If Nokia was doing so well, then why did their stock fall about 50% in 2010 before Elop started? Did they anticipate that he would ruin the company? Why did they even hire Elop if the company was doing so well?

Give Elop negative credit where it's due. He didn't destroy a great company on its way up, he destroyed it on the way down, hastening its demise and blocking any alternative that could allow it to recover. He was hired because Nokia was vulnerable and MS took advantage of that. The stock market knew Nokia wasn't on a good path in 2010, and company insiders knew. Elop's burning platform memo simply let consumers know too, killing a troubled platform, making Nokia now more vulnerable and desperate.

Yes, Elop is the worst CEO ever, and a criminal who conspired to destroy Nokia, but exaggerating the facts about it does nothing to convict him for his true crimes.

Tomi T Ahonen

Hi Interested

I'll have a better answer and nice picture for you a bit later in this series, but the cumulative abandoned revenues just in the smartphone unit are about 49.5 Billion dollars (cumulative, over 2 years) and the abandoned profits and created losses amount to 7.0 Billion dollars of profits eliminated (cumulative, over 2 years) again, just in the smartphone unit. I'll get you a nice picture and story about that soon. but yeah, he is also the costliest or most destuctive CEO ever in terms of wiping out revenues and profits in any 2 year period following a highly profitable year.

Tomi Ahonen :-)


Interesting, but I see the Nokia line in the second graph as being close to a ballistic curve. You can clearly see the line levelling out during 2010 while the Apple and Samsung lines have increasing upward curves (which the Samsung growth continues to follow nearly perfectly).

If you draw Nokia's sales as a continuous curve it would have peaked about Q2 2011 and then continued on down to hit the Apple, Samsung lines about Q1 2011.

That might be an artifact of the graph, but the delta in sales growth would be interesting. Just giving absolute numbers for one quarter doesn't show the full story. By that I mean it is necessary to see the change in growth per quarter. Given the graph I would guess that the quarterly growth in Nokia sales was decreasing per quarter while Apple and Samsung increased.

John Phamlore

There's an alternate explanation that puts the blame for the misunderstanding of the entire phone industry on analysts who in a just world would be in jail for fraudulent analysis.

Spot the anomaly in the following article about the Nokia and Qualcomm settlement in 2008:

The claim in the article is that Nokia paid up front approximately $2.3 USD in royalties for the next 15 years of using Qualcomm's IP. That simply does not make any sense. What exactly are the other precedents for such an amount of money being paid in a lump sum in cash?

What occurred after the settlement is even more puzzling given the assertion that Nokia paid for a true cross-licensing agreement with Qualcomm. Nokia sold off its baseband chipset related units, going from a company that shortly beforehand owned the IP for the entire chipset stack to a company owning none of it. Nokia would eventually switch to using Qualcomm SoCs for its higher end phones including the ones it used in an attempt to re-enter the US in force. No, the actions of Nokia after the settlement bear no resemblance to that of a company that attained a cross-licensing agreement. Everything looks like an exit fee paid to Qualcomm, not a continuing license.

I suspect with the expiration of the previous 15 year cross-licensing deal with Qualcomm, Nokia simply lost the right to keep making smartphones without Qualcomm SoCs in them. I find it odd that in this corporate murder, the finger isn't pointed at the suspect who was the most bitter rival and who had the most to gain from Nokia's destruction. If one reads the article I linked, the article is implying at the time it was Qualcomm who was suspected to be the company that was dying. Nokia had to die so that Qualcomm could live.

Now if one wants an astonishing graph, graph the swing in the baseband chipsets used for smartphones in the same time period. One will find Apple switching from Infineon to Qualcomm almost immediately after Intel purchased Infineon, Nokia switching to Qualcomm, and soon apparently RIM switching from Marvell to Qualcomm.

Tomi T Ahonen

Hi m

This is EXACTLY the problem I have nowadays on this blog, when I attempt to cut corners and write a quick short blog story. Your comment is 100% valid, this is not in any way your fault, m. Thank you for the comment. You are 100% right, Nokia WAS in trouble before Elop came in, and Nokia had seen its share price fall by 55% over 3 years of the previous CEO management etc.

But - Nokia problems were of 'execution' in the overall corporation, from networks to dumbphones to Navteq to smartphones. The 'execution' problems were particularly seen in massive delays to new promised phones - the N97 was delayed by more than a year. And first phones were plagued with bugs and problems. When Chairman Jorma Ollila introduced Elop as the new CEO, Ollila expressly stated that Elop's primary mission was to fix Nokia's 'execution' problems.

Instead of fixing those, Elop changed the smartphone operating system (and other problems of the Elop Effect like announcing the Microsoft partnership with no phones to sell, etc). So its like a doctor, finding a patient whose heart has stopped, and deciding the doctor will now amputate a healthy leg. The original problem is not fixed, but the patient has a further new problem.

You are totally correct, Nokia had problems - I have written on this blog years before Elop came to town, critically of Nokia, that those problems (in execution) must be fixed and have listed often specific problems and specific solutions here etc. But in this 'short' blog today, I did not do my usual verbose 'lets review every step of Nokia's past 140 years' kind of comphrehensive blog posting as some of my blogs are over 10,000 words in lenght - yes, thats a whole chapter in one of my hardcover books - that is normal for this blog, just to avoid this problem.

I agree with you, Nokia had problems before. They were NOT in the choice of operating system and Elop did destroy a healthy part of Nokia. Look at this picture I have for you. Nokia - in its smartphones unit, not all of Nokia - was VERY much healthy and - Nokia as BEATING Apple and Samsung in smartphones. That is not a 'sick' patient needing an operation. That is a healthy athlete who deserves praise from his coach.

Nokia had problems but not in its smartphone operating system strategy of Symbian/Maemo/MeeGo/Meltemi with Qt and Ovi store. That strategy was winning. The evidence is in the pictures and the math in the above

Thank you for writing, and m, this was not in any way meant to be critical of you and your comment. Your comment is 100% valid. I am just venting my own frustration (and some of my regular readers will appreciate)

Tomi Ahonen :-)

John Phamlore

If one reads what the rest of the industry is doing, the clear trend is that China is leveraging its legacy TD-SCDMA and the alternate TD-LTE to induce Western companies to establish research and development branches in China training in aggregate thousands of Chinese engineers in the latest technology. One example is Marvell:

Also companies such as Ericsson are being enlisted by the Chinese to co-develop demonstration projects managing combinations of technologies, open standards as well as Chinese variants.

And in a few short years one suddenly sees rising competitors to Western companies such as this:

Back to Nokia. Well in 2008 it would have been apparent that Nokia gambit backing WiMAX was the costliest IP blunder in human history and they had no backup plan. Observe other companies' backup plan was transferring all of their technological know-how to China in a demonstration project knowing the Chinese in a few years would raise up their future competitor who would crush them.

Interested to know

Losing that much money in still in a cushy job? Maybe Elop is crazy like a fox.

Nah, he's just crazy.


You refer to Elop's actions as mistakes. It doesn't appear that what he and his fellow Microsofters that he has brought in are doing things by accident. They look, as with the ones inside the Finnish university system, to be done on purpose. At this point Nokia is gone in all but name. Any hope for the future hangs on Jolla and the others.


From the user point of view:
Nokia 5800, N97 was terrible in user experience.
S^3 / Anna handsets was terrible, slow, buggy, unfinished work.
EDoF cameras, slow CPUs, low RAM killed the rest.

Nokia N9 had a chance. But then Elop came along.


Tomi, if you save those pictures in "png" format, they'll look good. But if you save them in "jpg" format, they'll look bad, with "blurry" text, because those pictures are not photographs.

Thanks for all! Keep up the good work!


I agree, it's not a mistakes. It's a good planned moves. The goals are different from what you can expect.
Look, even Nokia Maps are how de-branded to here, ready to go away. There is no Nokia anymore. We have Lumia, Asha and Here instead.

Well this is very attractive post Greatest individual Management Mistake Ever Made - Nokia vs Competition in one picture indeed.Would like to read a small more of this. Brilent post. gratitude for the heads-up...This blog post was very educational and well-informed.


About how bad the decision to go with Windows Phone was, Asymco just posted an article on dumbphone to smartphone migration and according to that, Windows Phone user base in the US actually shrank by 1 million during the last 12 months.


This is a nice post.

However there is just one problem. You assume that Nokia was going to succeed with the strategy they had. You haven't presented any actual proof of that. We can't really know if they were going to succeed of not.

For example, can you explain to us, what would have stopped the collapse of Nokia's market share? You said earlier that it's not good that the market share is dropping and who knows how low it will go. I assume you tried to say that you had no idea of what was going to stop the fall of the market share.

You have been talking about market share. Can you make the same analysis with market share as the tool?

Now you are not talking about Nokia's market share in smartphones while you should because it's important. Before and after the strategy change.



Have you read _anything_ of what is published and posted here on this blog?



The marketshare was dropping because the strategy was delayed thanks to the well known execution problems, not because it was bad. If you release buggy devices and delay your next gen system thanks to management errors it's inevitable that it'll show up in your sales figures.

Nokia was already doing the right thing, i.e. preparing a successor for Symbian. And tell me what you want: MeeGo would have been more successful than Windows Phone by default - because it was a genuine Nokia product. It was a continuation from previous offerings, not a complete disruption.
Even if MeeGo had for some unlikely reason been a dud it'd still have sold more than Lumia is doing now.



I have. Analysis on market share, before and after the new strategy, is missing.


Execution problems? Was there any proof that Nokia was successful in repairing those execution problems? If not, it's probable that the market share would have continued to decline while the execution problems continued.


@Interested :

Your question is not that easy :

Nokia's value was 37.73 Billions USD in December 2010, today (jan 4th 2013) it's 10.22 USD (knowing that shares are artificially high).

So that's about 27 Billions USD already lost (equivalent of Latvia's GDP)

If we add Tomi's figures (abandoned revenues, as I'm not sure of what to do with losses, if they're included already in company's value or not)...

So let's say at best, Elop Effect cost about 77 Billions USD (with this amount, one could "buy" the Sultanate of Oman, and have few extra cash left to buy Monaco)

But as I'm not sure of how to combine figures, I'd be interested in the full analysis of how much did indeed cost the Elop effect, overall.


Why Nokia did not turn the strategy plan? Because Form 20-F was Elop
business plan for Nokia. That is why so accurate hits. That guy is an talented destroyer; why some countries need atomic power? They should hire Elop. Lol.

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