Nokia Q2 Analysis - This is Textbook Comprehensively Failed Strategy in Numbers

So yes, lets do the full analysis of Nokia numbers and Q2 Results. As this is now the first quarter in which Nokia reports zero Symbian sales, it is also a critical milepost in the strategy that Stephen 'Call Me the General' Elop, new CEO of Nokia, announced in February 2011. His strategy promised a 1-to-1 transition of Nokia smartphones as well as a 1-to-1 transition of revenues as Nokia shifted its smartphones from Symbian, Maemo (and shortly-to-release MeeGo) to Windows Phone OS.

SETTING THE STAGE

So to be clear. Lets see what was at stake. In 2010, Nokia sold 103.6 million units of smartphones running Symbian and Maemo, up 53% from 2009. Nokia's smartphone revenues in 2010 were 14.8 Billion Euros, up 17% from 2009. Nokia profits of its smartphone unit were 1.5 Billion Euros in 2010. Nokia's market share was 33%. And it bears repeating - Nokia was more than twice as big as Apple, four times the size of Samsung in smartphones. Nokia was also more than twice as big as its nearest rival (RIM/Blackberry) at the time. It is nearly unprecedented in modern business for one company in a competitive industry to be twice as big as its nearest rivals, in the Fortune 500. Toyota and General Motors have never been twice as big as their nearest car-maker rival. Never in car-making history. HP, Dell, Lenovo etc have never been twice as big as their nearest rival in the PC industry. This is very VERY rare, and a massive competitive advantage that Nokia held in 2010.

Then the truly amazing part - Nokia in 2010 grew more unit sales in smartphones than Apple or Samsung. Yes its true. All those lies that somehow Nokia was 'losing' to Apple - while Nokia grew MORE than Apple in 2010, and Nokia did this profitably, with increasing profits towards the end of the year. In fact, Q4 of 2010 saw Nokia break its own record for most unit sales, most revenues and most profits out of its dominating smartphone unit. What madman wouldn't want that? Being more than twice as big and growing more? Not only that, but also Nokia's Ovi Store app store had become the second-bestselling app store behind only Apple.

And for the record, Nokia share price which had tumbled 55% under previous CEO Kallasvuo, had already recovered 11% during the first 5 months of Elop in charge, a very strong healthy endorsement of Elop as CEO. All three ratings agencies had Nokia listed as one notch below perfect by February 2011. This inspite of an industry in deep trouble due to the global recession. So this is what Elop wanted to set on fire with his 'Burning Platforms' memo and what he wanted to exchange for Windows Phone (which at the time was the tiniest of 8 major operating systems in smartphones).

Windows based smartphones sold 12 million units in 2010, down 20% from 2009 when they sold 15 million. The number of Windows smartphone manufacturer partners was declining, not growing! Windows had a market share of 5% for the year 2010. So the 'two turkeys' had a combined market share of 38% in 2010, before Elop decided to destroy Nokia and its dominant position. 

NOKIA Q2 RESULTS 2013

Now we have Nokia Q2 results. Nokia now sold 7.4 million smartphones, up 21% from Q1 for a preliminary market share of 3.4%. Over the past four quarters, Nokia has sold 6.3M, 6.6M, 6.1M and 7.4M smartphones for a total of 26.4M and a market share of 3.6%. So compared to the 'burning platforms' situation of Nokia just before this Windows disaster was announced, Nokia sold 103.6M per year. In the last 30 months since then, Nokia's unit sales of smartphones have fallen by 75%. As the industry has grown by 2.5x in the same period, Nokia's market share has tumbled from 33% in 2010 to 3.4% now. Nokia has lost almost exactly 9 out of every 10 customers it had in smartphones, by market share.

Maybe there is a silver lining? Maybe this change was to massively expensive and profitable new smartphones? Lets see. Just before this strategy was annouced, Nokia witnessed strongly growing revenues in its smartphone unit and generated 14.8 Billion Euros (21.1 Billion US dollars). How is it now? This Q2 the smartphone unit revenues were 1.2 Billion Euros (flat from Q1). So the past 4 quarters? Nokia revenues were 4.5 Billion Euros (6.4 Billion US dollars). Nokia has wiped out 10.3 Billion Euros (14.7 Billion US dollars) ie destroyed 70% of the revenues of the smartphone unit in the past two and a half years, as the smartphone industry revenues globally more than doubled.

What of profits? Nokia's full-year profits in 2010 were 1.5 Billion Euros. But get this, before Elop was hired, Nokia profits in the smartphone unit were declining. After he took over, the yes - Symbian and Maemo based smartphone unit - saw massive increase in profits. By Q4 of 2010, Nokia reported its best-ever quarter for the always-profitable smartphone unit. The profits by Q4 powered by the new Symbian version and its hot new flagship phone, the N8, were up to 548 million Euros. So on an annualized level, that 'so-bad-I-call-it-a-burning-platform' Symbian smartphones unit was generating profits at a level of 2.2 Billion Euros (3.1 Billion US dollars) at an annualized level. 

Immediately after he released his ridiculous memo and announced the mad Microsoft partnership, Nokia's smartphone unit went into loss-making from the first full quarter it reported since. It has never recoved. So yes, Nokia has produced a loss every single quarter since Elop announced his new strategy. We are two and a half years into his new era, and not one quarter has Elop delivered a profit out of Nokia's smartphone sales. Not with the original Lumia series. And now, 9 months into the second stage of the 'better' and 'improved' Windows Phone 8 based new Lumia. No profits ever. Not once. Nothing. Nada. Niente.

Nokia's never-ever-before-losses-reported superbly profitable future-division, the smartphone division, has again in Q2 of 2013 produced yet another loss. How big? 164 million Euros. Over the past 4 quarters, three of which were selling the new Windows Phone 8 version of the Lumia series, Nokia's losses have been 1.1 Billion Euros (1.6 Billion US dollars).

WHEN IS BURNING ACTUALLY BURNING?

Yes, the 'burning platforms' so-called-failing Symbian strategy saw massive dominating market position, that saw bigger growth than Nokia's strongest rivals, and produced Nokia record-breaking and indeed increasing profits at an annualized level of 2.2 Billion Euros/3.1 Billion dollars. Now Elop's strategy has been fully executed, no more any Symbian sales. And ever since this strategy was announced, he hasn't managed one profitable quarter in the smartphone unit. He has instead now, one year and 9 months after the Lumia series started selling, in the latest 12-month period produced a 1.1 Billion Euro/1.6 Billion US Dollar loss.

So Elop's strategy costs Nokia, and its owners every year 3.3 Billion Euros (4.9 Billion US dollars) of abandoned profits. Under no possible scenario can this be seen as a success. He promised us a 1-to-1 transition on this new strategy - that itself is a bad bargain, as Nokia had grown 53% in the year before and was growing very strongly at the time - so just going 'flat' sales into the Windows era, is a bad bargain for Nokia owners. But instead, he has slashed smartphone unit sales from 104 million per year to 26 million per year. He has burned Nokia's dominant market share position of 33% to now its pathetic 3.4%. He has devastated Nokia revenues in the smartphone unit down from 21 Billion US dollars to 6.4 Billion, down to less than a third what he inherited). And he demolished Nokia profits, going from a mountain to a massive hole. From 3.1 Billion dollars of profits per year to 1.6 Billion dollars of losses per year, wiping out 4.9 Billion of profits Nokia shareholders should have been earning easily, if he had not messed with the utterly dominating strategy. In 2010, Nokia had 70% of China's smartphone market for example - the world's largest smartphone market by the way.

When Elop announced the strategy, Nokia was more than twice as big as Apple and 4 times bigger than Samsung. Today after Elop's new Microsoft strategy has reached its end, Apple is 5 times bigger than Nokia and Samsung is 10 times bigger than Nokia in smartphones (and to add insult to injury, Samsung also jumped past Nokia in total handset sales). Before this strategy Nokia's smartphone unit has never reported a loss. Since the strategy was announced, Nokia's smartphone unit has never managed a profit.

HOW FAR IS VIABLE BREAK-EVEN BUSINESS?

We can take a peek at how far Nokia is from steady viable and break-even profitable business. At the moment, the smartphone unit gets the 250 million US dollar infusion of cash per quarter. That Microsoft infusion is quite a large amount of the revenues 'earned' by the smartphone unit - but that is not money that consumers were willing to pay. Notice that if Nokia was selling at the 2010 levels, then the Microsoft money would not be a major component to the business. But now that the smartphone sales are down to one fourth of what they were, the Microsoft money is a large proportion per handset sold. How big? 250 million dollars is about 175 million Euros, so 15% of the revenues attributed to the smartphone unit, did not come from consumers buying smartphones, it was the 'bribe' from Microsoft to get Nokia to sign originally to the contract.

But wait, there is another item now in Q2 results. IPR revenues. Nokia says that its IPR proportion was 3 Euros across the whole handset division. That was another 6.7% of total revenues earned (in the handset unit) or 183 million Euros (262 million US dollars) this quarter.

Lets remove the 15% Microsoft 'donation' to the Lumia case, and remove the attributed IPR income of 6.7%. Notice I am being very generous to Nokia, assigning the IPR in proportion to total revenues of the handset unit (majority going to the featurephones unit). If I was not so generous, this business case would be even worse. But lets try to keep a positive outlook. So instead of the 157 Euros, the actual Nokia retail customers are paying for handsets 21.7% less than what Nokia reports as its ASP (Average Sales Price). The end-user customers find the Lumia so underwhelming, they only pay 123.17 Euros per Lumia smartphone sold, globally, on average, this quarter.

(For those who want the reminder, yes, Nokia just before this crazy strategy was announced to go Microsoft, was selling smartphones at an Average Sales Price of 156 Euros, and that was without any Microsoft money, and with very minimal IPR income at the time)

Now, where is the break-even level then? We see that Nokia's smartphone unit now generates 14.1% loss per smartphone sold. So for it to break even, if using only a higher price and all other things remaining the same, would mean raising the Nokia smartphone price from the reported ASP now of 157 Euros all the way up to 182.91 Euros. So this is the minimum price level that Nokia would need to sustain across the Lumia range, to reach profitability.

Now understand the problem of consumer rejection (and/or of retail boycott, and/or carrier refusal to sell, all amounting to the same). The actual end-user price paid (that gets to Nokia, after resale channel mark-ups) is 123.17 Euros. But Nokia needs 182.91 Euros to break even. The difference is 59.74 Euros (about 85 US dollars). So Nokia would have to boost its end-user willingness to pay, up by 49% !!  Imagine if you're Ford, selling cars, and you find that you must bump up your prices by 49%? Or if you were say LG with flat screen TVs and your CEO said that the unit needs to increase end-user prices by 49%? You'd be out of business!

That is how huge the hole is for Nokia. Its not enough for Nokia to 'recover the last 14%' - because the Microsoft well will soon run dry, and the IPR money only seems big now, when Nokia's smartphone volumes are so tiny. If Nokia were somehow to return to say, double-digit market shares - it would also require end-user customer prices to go up - on average - 49%. This, in a market where all smartphone prices are falling, as the market is shifting from the mature US and European markets to Emerging World countries like China, India, Brazil, Indonesia and Russia.

Economic theory says that if you raise prices your sales volume will decline and vice versa, if you reduce prices, you should see some level of increase in sales (ceteris paribus, ie if all other things remain the same). These are not necessarily linear, there is 'price elasticity' ie in some cases a big change in price might only result in a small change, etc. But yes, observe the dilemma. Nokia is consistently producing a loss. That loss now, with very small smartphone shipment numbers, is subject to unusually high impacts of the Microsoft 'gift' and the IPR income.

So in terms of sustainable smartphone business, out of Nokia's Lumia - the end-users would need to pay 49% more for the Lumia line, just for Nokia to break even and remain viable business, in the longer run (or go negotiate even tougher deals out of the other handset makers, in terms of dramatically higher IPR income to correspond with the far bigger unit sales of smartphones.)  The consumers are voting with their dollars, they are refusing to pay what Nokia needs just to break even. How badly are they under-paying? Yeah, Nokia would need to raise prices 49% just to break even, on the handsets sustainable business. But yeah, if they only sell a couple of million smartphones, then the 250 million dollars per quarter from Microsoft and similar funds in IPR will actually go a long way to make it seem, like the handset business is 'healthy'. Maybe these were reasons why Microsoft said no to the deal to buy Nokia. Elop has so utterly destroyed the Nokia business, that it is not fiscally viable. 

NOKIA HAS RECOVERY IN USA, OR DOES IT HAVE?

So what of the USA then? One of the big reasons to fire Elop's predecessor, Olli-Pekka Kallasvuo, was because he had failed to recover Nokia's position in the US market. Now we have had Elop celebrating not just AT&T and T-Mobile launching Nokia Lumia smartphones, but for Q2 of 2013, we finally had Verizon also selling Lumia. How well did Lumia do in the USA? Nokia grew its North American phone sales a pathetic 100,000 more units from 400,000 in Q1 to 500,000 in Q2. Do I need to mention that Nokia's North American sales were 700,000 that last quarter before Elop announced this mad strategy. Yeah. I know. How is this possible? After all the singing and praising Elop and Ballmer have been telling us that the USA sales are so strong... 500,000 Lumias sold in Q2, up a mizerly 100,000 units after Verizon was added to Nokia's resellers.

Didn't I say the carriers will always take the Microsoft money, and then not sell the phones. They hate Microsoft. And Nokia is suffering because of Microsoft and Windows. Everybody knows this, everyone else is saying it, but only Elop refuses to see it. Because Elop is that much 'Call Me the General' smart, that he can look at 52% growth in smartphone sales, dominating over Apple and Samsung more than Toyota dominates cars or HP dominates personal computers - and with massive growing profits, he says 'we are so much in trouble, we are on a burning platform. But now? At these results, when Nokia's market share is literally one tenth it was when he took over, and the smartphone unit continues to generate huge losses, Elop says in the Q2 results that he is "proud" of this unit. He hated dominating Symbian with big profits. He is proud of diminishing Windows with perennial losses. What is wrong with this moron. He is undoubtedly the most incompetent fool to run any Fortune 500 sized company.

Oh, and Nokia share price had tumbled 70% since Elop announced his mad strategy. It only started to recover after rumors emerged (that turned out true) that Nokia was in talks of being acquired - by Microsoft (which since have broken down). And all three ratings agencies have downgraded Nokia at every stage, only further and further down, so now all three rate Nokia as junk, and keep finding Nokia further into that junk territory of despair. If your strategy takes near-perfect ratings and a growing share price, and instantly plunges it to free-fall and now your junk ratings are in the news only because your company is even more junk? That means you have a failing strategy, Mr 'Call-me-the-General' Elop.

VIEW IN THE WINDOWS

Meanwhile Microsoft? So as Nokia now produces about 80% of all Windows Phone based smartphones, the only life left in Windows on smartphones, is how long Elop remains in charge of Nokia. The moment he is fired, any sane new CEO will announce a shift to Android or some other Linux-based OS (Sailfish, MeeGo, etc). That announcement is the death to Microsoft in smartphones. Why didn't Ballmer then buy Nokia as we heard they had had serious talks between Nokia and Microsoft? Because Elop has mangled this project so badly, that Microsoft cannot stomach the pain of continuing.

If you remember, when this partnership was announced, my first tweet was - great for Microsoft, disaster for Nokia. And I honestly, honestly believed, that when Nokia walks in with 33% market share, and Microsoft with 5%, no matter how badly it goes for Nokia (obivously collapsing market share) there cannot be anything but a bounce for Microsoft. That if Nokia is halved to 16%, and if we assume half of Windows partners quit, their combined share would be 18%. Or of we assume Nokia loses 3 out of 4 points of markets share, and so too Microsoft, then still Nokia would have 8% and Microsoft's other partners another 1% and their combined share would be 9%. So even in a very VERY pessimistic scenario, while Nokia would feel all sorts of pain and layoffs and factory-closings at that kind of carnage, Microsoft would be dancing, their market share would have almost doubled. In this very very negative scenario.

I could not see a down side for Microsoft out of this partnership. You can read my early analysis, I expected Nokia to 'bottom out' at about 8% now, in year 2013 (and that was the lowest guess by any forecaster, and most thought it would be 2x to 3x to 5x better than that). So if Nokia had today something like 8% market share (and another 1% or 2% from other partners) then yes, Microsoft could see a future for Windows Phone and would also want to buy Nokia to own that future.

That Microsoft looked at Nokia's pathetic 3% and said no, I don't want that, makes perfect sense. When Bill Gates ran Microsoft, they had managed to build Windows smartphone market share globally up to 12%. After Ballmer took over, it fell and was down to that 5% before this partnership was annoucned in February 2011. Now the Windows Phone market share is 4%. So even after the total Nokia Symbian smartphone base was sacrificed, devastated, it did not produce even one market share point gain to Windows. On the contrary, the life at Windows has gotten worse in smarpthones, not better, with Nokia on board. So obviously, when Microsoft itself says, you are doing such a bad job with my product, that I don't even want to own you - it means Windows Phone is doomed. It is on life support only as long as Nokia holds onto its delusional CEO who pumps good money after bad, attempting to push Lumia phones at huge losses, via carriers and retailers who clearly don't want it.

THIS IS UTTER COMPREHENSIVE FAILURE OF STRATEGY

Bottom line. Nokia failing. But we have probably seen the bottoming-out of the Nokia smartphone sales. It can now be expected to continue in the 3% to 4% range (was 3.7%, 3.0%, 2.9% and 3.4% the past 4 quarters). For the full year that would mean Nokia to sell between 30 million and 40 million smartphones. So Nokia is now positioned in the bottom of the Top 10, while it was far-away number 1 when the Elop strategy was announced. Never in the history of any global industry of Fortune 500 sized players, has the market leader fallen from number 1 to outside of the Top 5 in less than three years. This is by far the biggest collapse of not just any handset maker, of ANY company ever in the Fortune Gobal 500, due to management error. Yes, 'Call Me the General' Elop, the worst CEO of all time. So, we keep hearing that he is selling ever more of Nokia's assets and firing again more people (another 400 were fired when the Q2 results came out). Any competent CEO would end all that, Nokia is a sound company, with great engineering, capable of massive market innovations like the 41mp camera they introduced last year for the 808 Pureview and now incorporated into the latest Lumia flagship, the 1020. Nokia has strong customer loyalty. But the Windows strategy is a total failure. We have now seen the full migration from Symbian to Windows, and Nokia exchanged dominant growth and big profits, to miniscule sales and big losses. And most of all, Elop's 1-to-1 promise of the transition has been comprehensively missed. Any other strategy would be better now than continuing with Windows.

For the record. This is what Nokia has done the year leading up to this mad strategy, and the two-and-a-half years after it was announced. Nokia unit sales, market share, revenue and profits by quarter:

Q1 2010 . . 22.7 Million smartphones . . 42% market share . . 3.4B Euro Revenues . . +350M E profit
Q2 2010 . . 25.2 Million smartphones . . 41% market share . . 3.5B Euro Revenues . . +283M E profit
Q3 2010 . . 27.1 Million smartphones . . 34% market share . . 3.6B Euro Revenues . . +335M E profit *
Q4 2010 . . 28.6 Million smartphones . . 29% market share . . 4.4B Euro Revenues . . +548M E profit

Q1 2011 . . 24.2 Million smartphones . . 24% market share . . 3.5B Euro Revenues . . +217M E profit **
Q2 2011 . . 16.7 Million smartphones . . 17% market share . . 2.4B Euro Revenues . . -150M E loss
Q3 2011 . . 16.8 Million smartphones . . 14% market share . . 2.2B Euro Revenues . . -191M E loss
Q4 2011 . . 19.6 Million smartphones . . 12% market share . . 2.7B Euro Revenues . . -189M E loss ***

Q1 2012 . . 11.9 Million smartphones . . . 8% market share . . 1.7B Euro Revenues . . -311M E loss
Q2 2012 . . 10.2 Million smartphones . . . 7% market share . . 1.5B Euro Revenues . . -559M E loss
Q3 2012 . . . 6.3 Million smartphones . . . 4% market share . . 1.0B Euro Revenues . . -489M E loss
Q4 2012 . . . 6.6 Million smartphones . . . 3% market share . . 1.2B Euro Revenues . . -259M E loss ****

Q1 2013 . . . 6.1 Million smartphones . . . 3% market share . . 1.2B Euro Revenues . . -194M E loss
Q2 2013 . . . 7.4 Million smartphones . . . 3% market share . . 1.2B Euro Revenues . . -169M E loss

NOTE: in the same period since Nokia strategy change Q1, global smartphone market grew 251%
* Elop is hired by Nokia
** Elop announces strategy change to Windows based smartphones (at middle of the quarter)
*** Nokia Lumia smartphones on Windows Phone 7.5 launched
**** Nokia Lumia smartphones on incompatible Windows Phone 8.0 launched
Above data from Nokia quarterly results (using latest updated data by Nokia), market share calculation by TomiAhonen Consulting using average of 4 big analyst houses for total market size.
This table may be freely quoted and shared

So, Nokia Board? If you cannot see that Elop is the worst CEO ever, far far worse than Kallasvuo, who himself was failing as Nokia CEO, then you must act now. If you can't fire Elop then you, the Nokia Board, are either incompetent or in collusion with the CEO. You too must be fired.

I guess I need not say that again more ratings agencies are downgrading or have already again downgraded Nokia further into junk territory. And that Nokia fell out of the Fortune Global 500 top 200 rankings (now ranked 274) but unfortunately that fall will continue into next year's issue, as the numbers only reflected December 2012 levels, from which Nokia has again fallen much further. 

Comments

[Ecc]

Great story!

What was Nokia's market share of phones with capacitive displays in 2010?

[eduardo]

"The moment he is fired, any sane new CEO will announce a shift to Android or some other Linux-based OS (Sailfish, MeeGo, etc)."

My guess is that Nokia has a contract with Microsoft that prevents them from doing that.

[Eurofan]

Thank you Tomi for continuing to cover the tragic Nokia story. Three things:

1) Thanks for highlighting that Microsoft had a 5% market share in smartphones in 2011 and now has a 4% market share despite Elop turning Nokia upside down.

2) Is Nokia profitable at any level of employee-count with Windows Phone? Are Windows Phones simply a loosing proposition as they appear to be in the United States and Western Europe.

3) Isn't Elop simply shipping more Lumia's every quarter to more markets in order to provide the appearance of growth quarter to quarter. The true marker of growth is sales per market per quarter and in the United States that statistic is flat or negative.

Thanks again, Tomi. Nokia is the greatest bad gamble in management history, no Plan B, etc.

[c.y.c.n.u.s]

Tomi,

This is one of your best article!! I think Nokia share owner would be easier to take your advice if you write with this tone earlier.

I think someone need to make this ELOP into big screen soon

[c.y.c.n.u.s]

Does any other company would like to have a relationship with Microsoft if this Nokia-Microsoft were taught as case study

[Bradley]

Elop is an idiot and that will not change. He doesn't want to choose Android because he's afraid of the competition aka Samsung. He prefers to ride the real burning platform to the ground. MeeGo is by far the most intuitive OS. That swipe feature was unparalleled at the time. It was refreshing and new. Everybody loved and praised it, but Elop was fixated with Microsoft.

Android fans are begging for Nokia to make a Google flavored device. But he turns a blind eye to it. Just imagine a 41MP beast like the Lumia 1020 running Android Jellybean. Samsung would be finished, and will make it harder for HTC to generate the profits they so desperately need right now. The Galaxy Zoom is a joke, the 808 takes better photos and records better videos than it, and its 2 years older. The 808 could have been a great success to, if only Mr Elop in his infinite wisdom had made available worldwide.

I always said Elop was a trojan horse sent from Microsoft to infect Nokia, and the infection has taken over

[geektech]

Cancer end a person if not treated at the right time;
does Nokia still can be saved? if operated now and remove the cancer from it?

I think they could diversify and let customers choose what OS better suited for their needs.

Unfortunately i don't see that happenning soon.

I think Jolla will outsell Nokia just in the first quater they get into the market.

[Robert Atkins]

N8 was good phone, N9 and N900 could have sold many millions in global market as Nokia wound Symbian down. Imagine a Nokia 41 mp camera on a N1020? Nokia would still have control over OS and manufacturing had Elop stayed the course and released their best phones to the adoring public.
Having abandoned their own ecosystem, OS software, and forced to compromise hardware to run Windows phone, they were doomed. And just putting someone else's OS and software(Android) on a reboot of Nokia would be just as disastrous.
Maybe they could still buy Jolla and use familiar system on new Nokia, but not as long as His Generalship Elop is still around.
What a trainwreck. Fascinating to watch.

[sve]

Even if Nokia was starting today with a completely blank slate I still don't know which of Android or WP is the best choice.

Samsung is completely dominant as an Android manufacturer, and any innovation Nokia were to make would be quickly copied and bettered. That said, Google stewardship on the OS would be great assurance as to staying at the forefront of mobile apps and pushing the boundaries of new features and services.

Choosing MSFT would give you the main player status and a benign competitive field in WP hardware. But MSFT has always been a laggard and a bumbler in fielding important new categories of software. It also is shameless at pursuing its personal agenda often at the expense of its partners.

What Nokia correctly saw is that the world of phones was moving to computer ecosystems and Nokia was not strong enough to field a competitive offering on its own. It needed to join another one. I suspect as the battle evolves from smartphones to combined devices+phones+tablets+consoles+computers that the role of a pure handset maker will fade in importance. The impression I get is that we are arguing the role of buggy whip makers at the end of their era. For Nokia and the others, it just won't matter in a few short years.

[c.y.c.n.u.s]

@Bradley

I agree with you that Elop is a trojan horse. Thus he can't be a coward that were afraid to compete in Android ecosystem. Saying that Android ecosystem is too crowded is just a way to justify his reason.

@geektech

I also wish Jolla the best. But I don't think Jolla will make great impact (on nokia) in their 1st quarter. Maybe they need 3-4 quarter.

@LeeBase

I don't agree with you regarding RIM. RIM and Nokia were two different beast with two different identity. RIM used to be a feature phone maker with 4 main feature, SECURITY, PUSH EMAIL & BBM, QWERTY thumbboard. Real CrackBerry will claim they need nothing else than that 4, and will not go away to Android or Apple. The BB user that flee to other platform is not a real CrackBerry. The real CrackBerry doesn't even bother that BB phone need a constant rebooting.

On the other hand, Nokia is a cutting edge company. They dare to try everything. Witness the strange Nokia 3650/3660 (my first SMARTPHONE). The lipstick Nokia 7380/7280, Nokia 3250 with a twisting based, Nokia N90 with optical zoom. and to quote Tomi, the first in MP3, clock in the phone... This conclude that Nokia/Symbian user characteristic is different from BB. The main reason nokian stay with nokia was because IT HAD THE BEST TECHNOLOGY with GOOD QUALITY.

If you had Nokia N9, you'll know that Nokia has a chance to stay on top. N9 were very fluid, and C++/QT made developer easier to develop for N9 (compared to original Symbian AVKON language). Nokia has the user, has the tools. and the user were excited about it. Why? Because the user BELIEVE nokia as the leader can make a GREAT product. Just as iphone user believe the next iphone will be great.

This compared to real BB user, the CrackBerry, that were not a real smartphone user, that were not fleeing to Android/iOS/Symbian/WP because they think they doesn't need apps. Maybe because they real BB user is A SERIOUS NO FUN user? Or maybe because the real BB user has another phone for fun, and were not allowed to have fun on their BB?.... Anyway BB10 is a GREAT platform, that the CrackBerry (by my definition) don't care, and the non-CrackBerry that already flee doesn't think it's good enough to compete with iOS and Android.

It's two different attitude.....
BB want to re-invent their company to be Apple-ish. They use Alicia Keys to show that they were fun.
But Nokia user (in the past) think Nokia is a leading company in phone technology.

This is also a reason why there's a lot of nokia user think they will change from Samsung, Sony, HTC, LG, whatever to Nokia if Nokia have Android phone. But ex-BB user don't think they will change to BB if BB have Android phone.

[c.y.c.n.u.s]

@sve

When you were comparing android/Google with WP/Microsoft don't forget that Microsoft were a company that doing their business like a two headed snake. Witness the 'WinModem' and 'WinPrinter'. A Modem and Printer that can only be run on Windows because Microsoft OWN part of the technology. The software part is belong to Microsoft and can't be ported to other OS. This is what essentially will happened to Nokia. Everything in WP that touch the OS will be owned/co-owned by/with microsoft.

This is also a reason why Android thrive and WP going down. Steven Elop is a person with a great tongue twisting ability and easily fool the one that can't see through him.

[Birdy]

I miss te analysis of Q2. And I miss your assumptions for the next quarter(s).
What was the reasons for the 21% more Lumias? Might the growth continue?
Why and how badly did the handsets go down? Will the new Asha be able to stop that?
After buying NSN, very little cash is left. So there has to be a big move soon. What possible ones are there?

[CN]

@Birdy

No, it's not 21% more Lumias.

Lumia volumes went up by 32%. Smartphones up only 21% since in Q1, 500k Symbians were shipped, in Q2 practically none. Lumias up from 5.6M to 7.4M.

[msft]

Nokia as mobile phone company will die soon, mobile phone goes to msft, nsn stays as nokia and here will become independent and also be sold later on.

[James]

Look at that paid Microsoft shill on here again. As if right on cue.

No need to talk crap about a Nokia/Windows turnaround. It won't happen.

Read this: http://online.wsj.com/article/SB10001424127887323309404578613350124217598.html

and look at the two in-article graphics:

http://si.wsj.net/public/resources/images/MK-CE865_NOKIA_G_20130718175420.jpg
http://si.wsj.net/public/resources/images/EM-AW469_NOKIA_NS_20130718173608.jpg

You can continue to shill... or you can wake up to reality.

That is all.

[Jozo]

@LeeBase: the hypothesis of not being able to execute on MeeGo strategy could have merit. However, point is that WP migration was terribly bungled. Why to announce it so prematurely? Why start with WP 7.5, with no upgrade path, burning most loyal customers? Why badmouth Symbian, own cow cash before transition is fully complete?

[przemoli]

@sve

Nokia do some very good stuff in WinP world (in hardware/design terms)

Yes Samsung did not copied it.

Its not so easy to "copy" Nokia advantage in cameras. Nor is it easy to "copy" nokia in maps/services (as shown by Apple).

Bottom line: You do not know what are you talking engineering/development time wise, or you do not know about strenghts of Nokia.

[CN]

@James

I guess you refer to me with your message. First of all, wrong, I'm paid only by my company that has not a lot to do with Microsoft. NSN is one of my customers, that's the closest we get to your false assumption. Unless using Windows in my laptop makes me "a paid shill".

I read the article. Nothing new, if you ask me.

If you think I suggest there will be a turnaround, you are again wrong. I'm not forecasting anything. I feel it is not very smart since anything can happen with this Nokia/WP/MS story.

Fixing some mistakes and challenging bad forecasts here should not, in my opinion, be taken as having an opinion on something.

[daz]

Matt: why does 920 need mentioning? I don't see the point. Besides it's not their most successful wp8 device, that is the lousy 520, the worst and cheapest wp8 is the most succesful, that is, most sold.

[Matt]

Daz: "lousy 520, the worst"

My mum owns one of these, can you explain your critical judgement of the phone?