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« News from the Smartphone Front: Blackberry Results, other news | Main | Nokia Q2 Analysis - This is Textbook Comprehensively Failed Strategy in Numbers »

July 18, 2013

Comments

bobby

Business 101
Your products are divided into 4 by high/low profit and high/low increase in sales (or market share)
The goal is to develop a cash cow (high profit, but low sales increase) this pays for everything else.

Each product (area) goes through several of four stages:
problem-child, rising-star, cash-cow, pet-project.

Problem-child requires development money and resources, has low profit and low sales.

Rising-star rapid increase in sales with good profit. Your problem-child has become a hit.

Cash-cow: mature product high market share, flat increase in sales and good profit.

Pet-project: falling market share, low profit. Should be killed off, but kept for sentimental reasons.

Some projects fail and turn from problem-child to pet-project.

Like many companies Nokia was in two parts, although most companies have separate brands for each market segment (Fiat and Maserati). Nokia has plain phones, feature phones and smart phones. It should be noted, feature phones are just low-cost smart phones, otherwise you have the expense of two development areas. The old Nokia had the 1, 2, 3, 5, 6, N and E ranges.

So Elop perceived Nokia's cash-cow as end-of-life, and many agree (unless Symbian and the UI slapped on it, reinvented itself) it was dying. All the problem-children (Qt based MeeGo and feature-phone) were incomprehensible to Elop and he traded them in with Microsoft for marketing money. Elop doesn't understand consumer devices, especially mobile phones, the emotional relationship of purchasing something for yourself. He doesn't see how you could make money from open-source. USA centric marketing seems dumb to Europeans (from a UK POV): USA TV shows present US people as stupid (any sit-comm) or evil (Dallas), even CSI presents smart experts and stupid general-public. (I'm not saying UK TV shows are much different.)

IMHO, Windows Phone went straight from problem-child to pet-project, the phone market has more user choice than MS is accustomed to.

Louis

There's lots of going over arguments that are nearly three years old now. But the numbers from Nokia's report and weird, and to me don't look that good.

1. Despite new carrier partners and lots of ad spend, WP and Lumia have ZERO traction in the US and minimal EU success. This basically undercuts one key premise for the MS/Nokia alliance. It also leaves a strategic mis-alignment: MS wants in to the iPad space, so it NEEDS WP to be successful in the US and EU5, but if Nokia can move a few more low-end Lumias in the emerging world, it might be able to recover R&D costs.

2. On the other hand, the ASP for Lumias is tanking and volumes are missing estimates.

3. HERE loses 30M euro every month. Some of this is just writing down the bloated NAVTEQ purchase price, but some of the revenue is "internal". It's not clear that even if it was given away that it wouldn't be a money pit.

Louis

Another thing. You heard this here first: WP is the new Symbian. It combines the following features:

1. Weird UI people don't like

2. Uncompetitive hardware, except for weird cameras

3. Low single-digit "other" platform in North America

4. Some people buy it in Europe for sentimental reasons, and then get upset over low quality and lack of access to apps their friends have.

5. Has some traction as a kind of cheap "high-end" position in emerging markets.

Spawn

Here the central comment that nails it down and answers all the questions our new commentors have written by our very own Tester:

> Losses are losses. Nokia still doesn't make any profit from selling smartphones.

Point. No debat needed, this are the facts. Its so since Elop's burning started and it still applies years later quarter after quarter, no exception.

Let me repeat the central shareholder-question: "Are you aware that results are what matter?"

china pc tablet

Howdy, i read your blog from time to time and i own a similar one and i was just wondering if you get a lot of spam feedback? If so how do you reduce it, any plugin or anything you can recommend? I get so much lately it's driving me crazy so any assistance is very much appreciated.

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