Nokia! If Microsoft Chairman Bill Gates calls Microsoft's Smartphone Strategy 'Clearly' A Mistake and one that 'Doesn't allow us to get the leadership' Why Do You Think It Is Working? (updated)

Did you see what Bill Gates, the Chairman of Microsoft, ex CEO of Microsoft, and until he retired from actively managing Microsoft, the world's wealthiest man, said about the Windows Phone strategy just now?

(note - I added the transcript to the end of this blog, as there are some Microsoftian trolls who are trying to spin it as if Gates was talking of past Windows Mobile not the current Windows Phone strategy - which he clearly was when you see the video or read the transcript.) 

Nokia and Microsoft had a combined 38% market share in smartphones in year 2010, before the Nokia+Microsoft partnership was announced. Nokia was the world's biggest smartphone maker using its own operating systems. Nokia towered over its rivals in ways that Toyota, General Motors, Fiat, Volkswagen etc could only dream of in cars, or in ways that Hewlett-Packard, Dell, IBM, Apple and Compaq had never felt possible in their industries, yes, Nokia was more than twice as big as its nearest rival - and profitable - and growing faster than its rivals like Apple and Samsung! Yes. True. The numbers don't lie. Who is that strong, they grow more than Apple or Samsung in smarpthones globally (and doing this with increasing profits?) Nokia thats who. Nokia just before the crazy Microsoft 'strategy'. 

WORLD RECORD FAILURE

Nokia's new CEO, Stephen Elop, came from Microsoft and threw that massive growing success away - yes, Nokia grew - GREW - smartphone unit sales by 53% in year 2010 (Nokia just shrunk smartphone unit sales by 55% in year 2012) - and grew revenues by 17% in year 2010 (vs shrinking revenues by 50% in 2012) and Nokia generated 11% profit in smartphones in 2010 (vs 29% loss in the smartphone unit in 2012). Nokia has tumbled from being by far the biggest smartphone maker on the planet to now ranked 10th by Q4 of 2012. This was all done by the sudden shift away from the world's most used - and bestselling - smartphone platform to that of Microsoft, Windows Phone, which was the 7th out of 7 platforms, that had a 2% market share at the time.

Now that Nokia-Microsoft partnership has had 2 years to get its act together. Nokia has spent the world's largest launch budgets ever, to launch the Windows Phone based smartphones on its Lumia series. Many of the operators/carriers that helped launch the Lumia series, like AT&T in the USA, had also thrown the biggest marketing push they ever had, into this launch. Meanwhile Microsoft literally threw more Billions at the launch, including giving away free Xbox 360 game consoles to buyers of premium Lumia handsets in some markets. The launch push by Nokia and Microsoft and carrier partners is the biggest bash ever seen in the mobile industry history. Where does it get us today? Nokia's market share has collapsed from the 35% it was in year 2010, to 3% it is as of Q4 of 2012. Yes. Nokia has lost almost 11 out of every 12 customers it had, in only 2 years - this is by far a world record in market destruction by a globally leading brand. A world record in failure.

And what of Microsoft? The Windows Phone platform had 2% market share before this partnership was announced (Microsoft also had its older but incompatible platform Windows Mobile which had also about 2% market share). Now we have had the world's most expensive new product launches in mobile, and the world's largest handset maker has migrated essentially all of its over 100 million sales per quarter level of smartphone business to this Windows Phone platform. What was the gain to Microsoft? If you take 35% market share and shift it to your product, surely most of that succeeds? Or half of it succeeds at least? If your product is reasonably competitive and desirable, at least a third of it succeeds? How much has Windows Phone gained from this partnership? Try nothing.

The end-of-year stats for smartphone OS sales for year 2012 are in. Windows Phone has managed to sell 2.4% of all smartphones according to IDC, and 2.5% according to Gartner. By demolishing Nokia's massive market standing, sacrificing Nokia's globally dominating smartphone loyalty, wiping out all of Nokia's smartphone future, Microsoft's Windows Phone has managed to eke out half a percent - HALF A PERCENT - of market share over a two year period of this 'partnership' ??? The market is comprehensively rejecting the new Microsoft Windows Phone based smartphones by Nokia. Out of 20 customers Nokia has tried to migrate from its own platforms to Windows, 17 have run away to the happy hands of competitors. 2 out of the three that took the plunge, hate the Lumia and Windows Phone smarpthones so much, they will never buy another. Only one in 20 attempts results in a satisfied customer. (at that level, its probably the family of Nokia and Microsoft employees who is left). See the migration failure analysis here in its gory details.

WE KNOW WHY

There is a reason why the Windows Phone ecosystem cannot succeed. We heard the explanation by Nokia's CEO Stephen Elop himself, in May of 2012, when he confessed to the Nokia annual shareholder meeting, that carriers hate Windows Phone because Microsoft bought Skype. Carriers/operators fear Skype, Elop explained its because Skype threatens the revenues carriers make out of telecoms traffic - the latest TeleGeography stats tell us that a third of global international voice traffic and under Microsoft's ownership, Skype has grown a massive 44% in size in the past year. Elop was so explicit in describing how much carriers hate/dislike Microsoft because of Skype, Elop used the words 'of course' - it is something everyone inside the industry knows. Elop further articulated that many carriers now refuse to sell any Windows Phone based smartphones (not just those made by Nokia). This is what Nokia's CEO told the Nokia shareholders meeting in May of 2012.

Its not just Nokia. Look at the Windows partners back then. LG quit Windows Phone altogether. So did SonyEricsson. So did Motorola. So did Dell (they later quit the whole smartphone business). Samsung launches its own new Tizen OS. Huawei also joins Tizen this year. ZTE launches on Firefox. HTC has reduced its emphasis on Windows Phone to a pittance. Nobody - except idiot Nokia CEO - even bothers to push Windows today, why? Elop told us - because the carriers hate it and won't support it. Why oh why oh why oh why, why would any sane CEO fight against this torrent of hostility? Any sane person would have known by May of last year, when Elop confessed carriers hate Windows Phone, that this Windows Phone strategy is a failure, and cannot succeed. Any sane person saw that then.

NOW BILL GATES TELLS US THE TRUTH

Do you need more proof? I cannot find a more eminent, more insightful, more intelligent, more competent expert on what is ailing Microsoft's strategy, than Microsoft's Chairman, former CEO, formerly world's richest man, Bill Gates. Bill Gates was on Charlie Rose on CBS just yesterday, and said that the Microsoft Windows Phone smartphone strategy has failed. Bill Gates puts it this plainly, he uses the term 'clearly' in describing the failure. Bill Gates said "The way we went about (our smartphone strategy with Windows Phone) didn't allow us to get the leadership, so its clearly a mistake."

I HAVE TWO POINTS TO MAKE

One. Bill Gates the Chairman of Microsoft says there is no doubt whatsoever about is the current Windows Phone smartphone strategy by Microsoft succeeding to any possible degree. It is not. Bill Gates says it is 'clearly' a mistake.

Two. Bill Gates, the Chairman of Microsoft says that the current Windows Phone based smarpthone strategy by Microsoft is failing because "it didn't allow us to get the leadership". He knows this strategy will be rejected by the carriers, and the Windows Phone 'third ecosystem myth can never be realised. Bill Gates tells us Windows Phone cannot succeed in achieving leadership. It is 'clearly' a mistake!

YOU KNEW IF YOU READ THIS BLOG

Bill Gates tells the world now, in February 2013, that the Windows Phone strategy for Microsoft has 'clearly' failed and cannot succeed, ever. That may be a shock to some. Not to my readers on this blog. I have told you so on this blog, ever since Microsoft bought Skype in a year and a half ago, that the strategy was doomed. It is no secret! Even ex-Microsoft Windows Phone execs admit to it! Now we have the evidence. Now we have the clear statement by Nokia CEO to Nokia shareholder meeting that yes, Skype is the very reason why carriers won't help Nokia win in smartphones with Windows. And now, Microsoft's own Chairman admits, that while his appointed replacement as new Microsoft CEO, Steve Ballmer, has done many things good with Microsoft like Bing and Xbox and on the desktop, Windows 8, yet the smartphone strategy on Windows Phone was 'clearly' a mistake and that it cannot ever succeed in achieving leadership. It is fundamentally flawed. It cannot succeed.

(and I was right, right from the start, I saw this coming. Microsoft and Nokia DID have a chance, until Ballmer bought Skype which torpedoed this partnership and the chances for Windows Phone have been doomed since June of 2011. I told you so, ex-Microsoft execs have told you so. Nokia's CEO has told you so. Now Microsoft's Chairman tells you so. What more do you want? Nokia! If Bill Gates - the Chairman of your partner company Microsoft now says this strategy cannot succeed, why on earth, would you even CONSIDER continuing on this doomed path? The Road to Certain Death?)

(and yes, I did explain that the Windows Phone strategy is doomed, it cannot succeed anymore. I've also explained how this contest for smartphone leadership was the battle of the digital future that Microsoft has now lost (and was won by Google and Android). I've explained it till I was blue in the face, yet there were all those who came here to claim I was mistaken. So now, we have Bill Gates himself admitting the Windows Phone strategy is 'clearly' a mistake. I think this matter is now closed. The only question remains, why is Elop allowed to remain in charge and pursue this mad direction for Nokia?)

Nokia Board! How can you be asleep at the wheel? How can you let the clown in charge of Nokia, Stephen Elop, continue with his mad Microsoftian Misadventure, the biggest market failure not just in the global handset industry - but any industry, ever! This is a bigger market disaster than New Coke. Worse than the Mercedes A-Series. Worse than the Ford Edsel. Worse than Toyota Brakes. Worse to Nokia's market position than the damage done by Exxon Valdez to Exxon or the Deepwater Horizon oil spill to BP. Elop has inflicted upon Nokia the worst disaster ever by any CEO, and is still insisting on continuing on the strategy that Microsoft's Chairman says is doomed. That is 'clearly' a mistake! Why is Elop allowed to continue? Elop must be fired, now! And any Board member who votes to extend Elop's tenure, must be fired for collusion or incompetence. If your partner Chairman calls this strategy 'clearly a failure' then Nokia, you MUST accept it is failing. All the evidence is clear that this is a colossal, gargantuan, unprecedented distaster in corporate management.

Fire Elop now! 

PS - reading the tea-leaves. So if Microsoft Chairman, Bill Gates, when he was still CEO of Microsoft and Windows Mobile had 12% global market share of smartphones as truly the second largest ecosystem out there behind only Nokia at the time, is now finding the share down to 2.5% and still shrinking - is it just me, or is this an early sign that Microsoft will soon end the costly Windows Phone folly? I think Windows Phone might soon go the way of the Kin phones and Zune players... Don't be surprised if this silly experiment is brought to an end suddenly by a decree from Redmond.

That combined with Elop has started to talk about Windows Phone not being inevitable, that Nokia could do Android in the future. And the recent hiring of Android competence to Nokia. And that the still 10% Nokia-owned luxury phone brand Vertu just released its first post-Symbian smarpthones - not running Windows Phone, but running.. you guessed it - Android. I think it is inevitable that Nokia (in whatever form it may exist) will abandon Windows Phone soon and then its obvious option is Android (would have been MeeGo).

I think we are seeing the early moves in that direction, even when we look at Ballmer with the Surface tablet and openly saying he may release smartphones to run against Nokia's Lumia directly. I think everyone sees the writing on the wall by now. Except the Finnish press and Nokia shareholders and the Nokia Board? If Bill Gates says this strategy is 'clearly' failed and cannot succeed ever in becoming a leader - why would you believe in the fairy tales told by a serial liar, Stephen Elop? Isn't it time to wake up to the truth? 

UPDATE WITH TRANSCRIPT

 

So yeah, now the trolls are at it, on Twitter and even on this blog. Microsoftians in panic, how can Bill Gates tell the truth about this? Either Bill Gates is wrong, or Tomi Ahonen has been right all along. Windows Phone strategy IS failing. 

....no, actually. Bill Gates actually says more explicitly, it is 'clearly' a mistake and the Microsoft approach to mobile PREVENTS the ability to gain market leadership. It CANNOT succeed.

And yes, this is the follow-up to today's biggest tech story, that Bill Gates admits the Microsoft smartphone strategy around Windows is dead in the water, it is 'clearly a mistake' and cannot succeed. The story is getting due reference in the media, many tech sites are carrying the story, and even mainstream media are picking it up like the Guardian, Huffington Post etc.

But now, yeah, now there are Microsoft trolls, even the MSN network trying to spin Bill Gates's words as if he was 'only' talking of the past and not today. No no no no NOOOOO no. You don't get to do that, not on my watch, not in mobile, not in my backyard. Lets go to the transcript. Charlie Rose asks Bill Gates about the condition of Microsoft today, after Gates stepped down as CEO and Ballmer took over. The questions are about Ballmer's stewardship and the current condition of Microsoft, not the distant past when Bill Gates was in charge. This is what Charlie Rose and Bill Gates on the interview broadcast by CBS yesterday morning (transcript by me from CBS video, any mistakes in transcribing are mine):

Rose - Every time you seen an article about Microsoft its not so much about the success of Surface of Bing, it is about what happened at Microsoft, or five things that you ought to do for Microsoft, when you see all this stuff, what do you think?

 

Gates - No, we appreciate the advice (laughter). There is a lot of things like cellphones, where we didn't get out and lead very early.

 

Rose - Why not, did you just miss that?

 

Gates - Oh, thats too complicated.

 

Rose - Did you miss the cellphones, did you miss search?

 

Gates - No we didn't miss cellphones, but the way that we went about it, didn't allow us to get the leadership. So its clearly a mistake.


Go watch the video. Bill Gates was NOT talking about the past like 5 years ago when Gates was CEO. This is about today! He was explicitly asked by Charlie Rose about Microsoft problems today, what is in the press, the five things Microsoft should change, etc. This is not ancient history of Windows Mobile. This is today, 2013. Bill Gates's reply is explicit and factually correct. Microsoft did not miss cellphones (ie smartphones) as Gates well knows, he led the jump into Windows Mobile more than a decade ago. The original vision at Microsoft and the strategy then - when Gates was in charge was fine. This question is about today, so what happened? Today 'the way we went about it didn't allow us to get the leadership' is not about then - when Gates was in charge and Windows kept growing and became the 2nd biggest OS and had 12% market share. It is about today, when Windows is in continuous free-fall and down to 2.5% (or 2.4%) market share and cannot get leadership, is not first, not second, not third, not fourth, nor even 5th biggest ecosystem in year 2012.

And Bill Gates answers with the explicit example of the cellphone strategy failing. Not that it failed in the past, that it is failing today. He did not say ''it was a mistake" he says clearly "it is a mistake" (emphasis mine) - talking about Microsoft today, under Ballmer's leadership today, in the context of Microsoft's problems as Rose's question posed, about today. (note that earlier in the interview Gates lists several areas where Microsoft is having success today). Don't try to paint this now as if Gates was talking about how in the past Microsoft's Windows smartphone strategy 'was a mistake' - he is clearly talking of today, and says it IS a mistake (and cannot ever win, as this strategy is unable to achieve leadership).

Bill Gates is a smart guy, he was earlier in the interview talking about measurement. When you measure your growth path that achieves 12% for a critical part of Microsoft's future, and then your successor abandons the strategy and starts feuds with everyone, and the market share plummets to 2.5% (or 2.4%) then it is very obvious, that the current "way we went about it" is flawed. Is a mistake. Is failing. And it "didn't allow us to get the leadership." This strategy is not only a mistake, it is untenable. It cannot win. It is fundamentally flawed. The Microsoft Windows Phone strategy is 'clearly a mistake' why? because it prevents Microsoft from being able to achieve leadership. It prevents Microsoft from achieving leadership. The current Microsoft cellphone strategy (ie Windows Phone) is - in Bill Gates's words - 'clearly a mistake'. Not possibly flawed or facing challenges or needing some readjustment. No. Simply put: clearly a mistake.

So we have the truth and we have the suddenly desperate Microsoft trolls, running around like headless chicken, trying to convince everyone, 'no he didn't say that'. Haha.. Well, at least I can sit here and say, with a broad smile today, I told you so. Bill Gates sees today in February 2013 that the Microsoft Windows Phone cellphone strategy is 'clearly a mistake' because it prevents Microsoft from the chance even of getting smartphone leadership. Yes. And who told you first? Who was literally the world's first to say, back then, that yes 'today the Microsoft strategy died', and even that the dream at Nokia was also dead? It was that silly little guy over at Communities Dominate, in June of 2011. I was first to call this strategy a dead duck. And I explained in deep detail what killed it. Now Bill Gates (independently and not acknowledging me) agrees with that assessment.

Yeah, I think I have provided a worthwhile service on this blog (for free, no ads, no registration, no spam..). And I think I knows this business they call mobile, haha...

Comments

[John Fro]

Actually, as people have pointed out on several forums, what BG is talking about is the era prior to Windows Phone 7. That is, the CE style of phone ver 6.5 and previous. It was during that era that they failed to capture a dominant position even though they got an early start, and it was that period that contained the "mistakes". BG is suggesting that "now" they have it right, and the situation will correct itself. In no way would he be dumb enough to suggest the current strategy is failing. To admit that MS stock would decline 25%. This does not mean that the current strategy is brilliant, only that your interpretation of what he is saying is incorrect.

[Earendil Star]

I agree that Bill Gates said that the strategy failed, but not that it will necessarily continue to fail. He is a fighter, and will put all the strength of MS behind this effort.
NEVER UNDERESTIMATE MS.

On a side note, one of the reasons WP is failing, is that it's an AD (P)OS.
This is something that is never being pointed out.
The "Live Tiles" are nothing else than xxx annoying ADS.
So, with WP you get a (P)OS which is:
- a closed ecosystem, totally dominated by MS (like Apple, but MS is not trendy...)
- still unfinished and full of bugs
- still with very few apps
- with no support for legacy apps
- at a premium price
- throwing XXX FLASHING ADS CONTINUOUSLY AT YOU...

LIVE TILES = CONTINUOUS ADVERTISMENT = ANNOYANCE = USELESS

This is why...

NO ONE WANTS A WINDOWS PHONE OR TABLET

And Bill realized it.

Meanwhile, THT Elop is still there. Nokia's BOD is still there...

Jorma Ollila knows. Jorma must speak.

[Sergiy]

Hm. Sorry, I'm not a native Enlgish speaker but.
Don't the words "went" or "didn't" indicate about the past tense? I mean - if Bill Gates told about today it would use something like "the way we go now, will not allow ..." and so on.

[cycnus]

Seeing that SONY stay away from WP, but will introduce MozillaOS is also a BIG SLAP for microsoft.

[Tencent]

And not to mention that no one wants a WP because of their computer history (the never ending beta FYI)

[top7mobileapps]

Will nokia can surprise the mobile world with two upcoming feature? http://mobileupdate24.blogspot.com/2013/03/nokia-eos-could-sport-decadent-chassis.html

[writingsmswind]

A new feature is coming to new mobile year. Instead of pressing button on your mobile, you can now write sms only touch your smartphone. But now the scientist makes it easier for smartphone user. You can now write your sms in wind. It will attach with modern smartphone.
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[Durak]

The failure to provide a WM8 upgrade path from WM7.X on high end Lumia phones is kicking customers in the face.

Why would a consumer buy a Lumia 800 when it was obsolete from day 1?

WTF?

Elop MUST go. It's becoming too obvious now who he really is working for!

[LiveFreeOrDieHard]

Next time you see Elop talking about technology, turn it off or run away from the presentation.
He was not convincing from Day -1 at nokia, he's clueless about tech as you can see here in this old article.
http://www.siliconbeat.com/2008/01/11/microsoft-beware-stephen-elop-is-a-flight-risk/

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