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« Nokia Q2 Topline Numbers | Main | Apple Q2 Results. Signs now DO indicate that we have passed 'Peak iPhone' »

July 21, 2013

Comments

paul

Just a quick technical question..Can any of the current Lumia range run Android with a little work by the software guys? Do you think there is some sort of black ops team within Nokia that have Android running on a 920 for example just in case? How much work would be required to port Android to Lumia devices? Any modders done it yet?

AndThisWillBeToo

@tomi
I love it how you say you're doing "the full analysis of Nokia numbers and Q2 Results" and spend a bit over half the words explaining Nokia past. Double by love on the fact you repeat the same stories you've been repeating over two years now.
But hey, big hand for mentioning RIM/BlackBerry as second largest rival of Nokia, probably first time since February 2011. Where were they now? 10th? 11th? Did Elop put them to disasterous WP path with his burning platform too?

Bob,Boulder,Colorado

some folks here are supporting NOkia's decision to support only Windows phone. That is not the point, the point is why can't they make both ? almost every OEM is making both android phone and Windows phone and the few that make only android phones is because of business reasons, not some false reasons(it almost sounds like a faith based decision) as trotted out by Elop.
In any case, if Windows phone does succeed, what is to stop Samsung from coming in and taking over Windows phone, Samsung is a manufacturing powerhouse. Nokia would have faced competition from Samsung sooner or later, whether android or windows phone. Running away from war is a stupid reason to embrace a then failing and now failed 3rd platform.
And people look at HTC as an example of what happens to android OEMs. what they forget is HTC also manufactures windows phone. And people forget how Sony and LG have somewhat improved their performance by using android.

Mark Levine

I've heard that getting stuck doing windows phone 8 development was seen as some sort of punishment, due to having to reinstall the whole workstation PC (forced windows 8) along with the strange visual studio 2012, and all the bizarre new Metro APIs that aren't compatible with anything else.

c.y.c.n.u.s

@Bob, Boulder, Colorado

GOOD COMMENT!!!!
Yes, that's right!!!
This is Elop sin. Why he has to do the burning platform and not do both.

My answer is Because ELOP IS SMART!!! Elop know that:
1. If he didn't kill symbian, there will be only a few OS guy that will move from symbian to WP. and the WP strategy will fail.
2. If he didn't kill symbian, and symbian win, His best buddy the baldy balmer won't have the glory.

So, I only find reason that Elop do this because he were a trojan horse. I hope someone that PRO WP in this blog will point out there were another logical explanation for this action

AndThisWillBeToo

@c.y.c.n.u.s
You got it half right there.
The board decided to go WP only. As much as we want to believe in mind control capabilities of Elop, he could not have done the choice alone. And the board has shown their support for the decision several times afterwards. That decision has been said to be stupid enough many times so let's not waste words on that part, but:
When that decision was made, Elop HAD to announce Symbian and MeeGo dead. Any developed left to develop on Symbian or MeeGo was a developer lost from WP. Any sales of Symbian or MeeGo were not WP sales.

KPOM

@Leebase, Samsung was still smaller than Apple in terms of market share when Nokia shifted to Windows Phone. Had Nokia switched to Android, Samsung might still be #3 or #2, depending on how much market share Nokia would have retained. They would have lost some market share, but customers might have been more forgiving knowing that they were going to a stable platform. Windows Phone was unproven in February 2011, and as it turns out, was not ready for prime time in November 2011 when the phones started coming out.

tm

Hi Tomi,
couple corrections to numbers:

> In 2010, Nokia sold 103.6 million units of smartphones running Symbian and Maemo, up 53% from 2009.
According to the Nokia earnings reports, in 2010 they sold 100.3M compared to 67.8M in 2009. That gives 47.9% increase.

> 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've understood correctly) In the earnings report it is saying that the IPR isn't included in the ASP:
Smart Devices Results Summary table:
"Note 1: Does not include IPR income. IPR income is recognized in Devices & Services Other net sales."
Also, I couldn't find information if 250M donation was included in the ASP. Maybe it's also in the Other net sales?

Sander van der Wal

Nokia only grew in markets were it had no competition from iOS and Android. The moment iOS and/or Android entered one of their markets, Nokia's Symbian sales collapsed. There were no Maemo sales ro speak so that OS can be safely ignored.

Proof: look at the collapse of the revenue reported for Nokia's top ten key markets in its annual statement. Both in Western Europe and in Asia you can see Nokia's revenue collapse starting in 2008.

In this specific business case, your competition immediately eating you alive in markets they have just entered, do you continue with the strategy that causes you te be eaten alive? For how many years?

And a fun fact, the USA was Nokia's second biggest market in the early noughties. Look it up for yourself. So in case you were wondering why Nokia wants the US market, they want it back.

Tester

To anyone comparing Nokia with Blackberry and concluding that MeeGo would have failed:

This conclusion is utter rubbish for one single reason:

MeeGo was ready for production in mid 2011 when it was crucial. BB10 was ready early this year when the market was already taken by others.

Sam

Lumia vs iPhone sales, starting from the date they entered market:
http://imageshack.us/photo/my-images/27/2xp1.jpg/

AndThisWillBeToo

@LeeBase
As you probably know I share your view. I hope you realize people in this forum will not buy the idea that Samsung could use more marketing money than Nokia or have better economy of scale than Nokia (assuming comparison comes from time where Nokia is claimed to be four times the size of Samsung etc.). Just hope you have thick skin as typing text to here may be waste of perfectly good skin on your fingertips.

Henrik

@Sam
The Lumia vs iPhone sale.
Remember that the first iPhone was only sold in the US. And when the second iPhone (iPhone 3G) it took a month or two after the US release before the rest of the world got it. And then again it was not the hole world that could buy it.

So 5Q iPhone sale has about if still not fewer markets then Lumia had in it's 1Q.
So start comparing iPhone 5Q with Lumia 1Q.

Lumia is still doing okay when you look at it that way. But far from that good. And then when you think about the amount of smartphones sold is rising FAST. Then market share it's looking bad for Lumia.... But it's on it's way up for now.

Tester

@Leebase:

>> Clearly Meego wasn't ready or else Nokia would have shipped it

Well, to me the N9 seemed to be ready to ship - long before the first Lumia -, just Nokia chose to bury it after a token release.

And please, please stop this Samsung nonsense. In 2010 Nokia was significantly stronger than Samsung so they would have entered the market from a position of strength Samsung, to a large extent, only got to where it is now is because Nokia threw it all away and cleared the playing field.

Brand recognition for Samsung was close to zero back then - in fact they had a bad reputation for their shitty feature phones - and was nowhere near what Nokia had back then.

For now, you are correct: Nobody has the strength to compete with Samsung. But we are talkina about decisions that were made more than 2.5 years ago.

Spawn

@eduardo

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

My guess is its done in a more clever, law waterprof, way like that Nokia needs to pay back platform support payments when aborting that 5-year contract.

@c.y.c.n.u.s

> Does any other company would like to have a relationship with Microsoft

Nokia is by far not the first company that got burned in a strategic Microsoft partnership. There are a few impressive multiple pagds long lists circulating. But Nokia completed the "Microsoft strategy partner? NoNoNo" saying (NoNoNo = Nortel, Novel, Nokia). There are not much No* tech-companies left now to expand on that.

@Eurofan

> Isn't Elop simply shipping more Lumia's every quarter to more markets in order to provide the appearance of growth quarter to quarter

Good point. I think so too. Also inline is the shift from high-end to mid- and lower-end not only with new markets but also at established markets. Buying more volume with lower ASP. May also be seen as contiuation of Elop's fear to compete eith Samsung.

@geektech

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

They don't need to and its maybe not there main target. They just need to make profits to beat Nokia.

@przemoli

> Bottom line: You do not know ... about strenghts of Nokia.

Making products customers sell isn't among them any longer as was and is proven since 2 1/2 years. Unfortunately that's what counts at the end.

@Bob,Boulder,Colorado

> the point is why can't they make both ?

Exactly. Elop's argumentation was that the battle of devices became a battle of ecosystems. Then he concluded and applied that Nokia, a device maker, had to go all-in with the ecosystem who was/is last and abort, no irreperable burn, all others. "There is no plan B" ...

Best article ever dealing with that aspect of the story:
http://communities-dominate.blogs.com/brands/2012/07/the-sun-tzu-of-nokisoftian-microkia-mirror-mirror-on-the-wall-whose-the-baddest-of-them-all-waterloo.html

@AndThisWillBeToo

> When that decision was made, Elop HAD to announce Symbian and MeeGo dead.

Gratulations. You just wrote the most stupid comment ever. It's a real Elop you produced there.

@LeeBase

> Clearly Meego wasn't ready or else Nokia would have shipped it

They did. The N9 exists. Please inform yourself. Thanks.

Kenny

@AndThisWillBeToo
>The board decided to go WP only. As much as we want to believe in mind control capabilities of Elop, he could not have done the choice alone.

The Board takes no part in the day to day running of the company. Yes, the choice of WP only is probably Elop's alone.

@Sam
>Lumia vs iPhone sales, starting from the date they entered market:
http://imageshack.us/photo/my-images/27/2xp1.jpg/

Comparing Lumia performance with historical iphone performance is unrealistic when the market has totally changed over the past 6 years. It's like comparing wages now with wages 20 years ago without adjusting for inflation.

crizh

Been poring over recent Nokia financials. Interestingly Nokia didn't stop hiring until 2011 where they peaked at 134000 employees. By 2012 they had cut that by just over 16.33% which had reduced their wages bill by nearly 4.66%.

Anybody see the problem here?

Since 2009 average remuneration at Nokia has risen from about Eur. 53000 to over Eur. 63000.

Obviously Nokia has gone from strength to strength during that time so the remaining employees, who are clearly the driving force behind this improvement in fortunes, deserve their 20% pay rise.

Interestingly, unless sacked for cause, Elop will need six months notice of his Termination by the board, which is a long time for him to destroy what is left of Nokia, and he gets to walk away with 18 months salary worth about Eur. 1.5M.

He does have a 12 month non-compete but I for one would be happy to wave that. Send him to Apple or some other competitor I don't like.

Another interesting factoid is that the number of shareholders in Nokia has increased by 50% between 2009 and 2012. The number of shares hasn't risen so I can only conclude that institutional shareholders have been reducing their exposure and smaller investors have been taking their place.

Maybe that is a good thing. With a larger percentage of stock in the hands of real people maybe a shareholder revolt is a real possibility.

chithanh

@Kenny
> The Board takes no part in the day to day running of the company. Yes, the choice of WP only is probably Elop's alone.

The decision to go WP might have been Elop's. But the decision to not go Android was done before hiring him. This is mentioned on page 2 of this interview with Jean-Louis Gassé whom Nokia consulted in 2010:

http://www.computing.co.uk/ctg/news/2188976/nokia-elop-board-jean-louis-gassee

foo

@Tomi "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."

I think you made a mistake here.

The fact that Nokia makes a loss in the sales of the smartphones doesn't mean that the ASP must change.

Example:

A company sells water bottles in the desert. Each bottle costs $1, but the company sells it for $10.

Does that mean that the company is profitable? Not necessarily.

If the fixed costs of the company (factories, employees, transport, etc) is 1M, and the company only sells 10,000 bottles, the company will have:

Costs: 1M + 10,000 * $1 = $1,01M

Profit: 10,000 * $10 = $100,000

In other words: a huge loss, even though the product is profitable!

So the company doesn't have to raise its price; it must sell more products!

foo

Tomi,

Two questions:

1) What is Nokia's current cash position?

2) When will Microsoft's cash donation (bribe) end?

Depending on the answers, it is possible that Nokia will run out of cash in 2 years or less.

If this is true that means that Nokia no longer makes long-term strategic planning.

All the planning now is for the short-term survival. There is no more "strategy" which implies long-term analysis and planning.

What is your take on this?

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