The Only Thing Worse for Nokia to Do, than Launch a Tablet Now - Is to launch a Windows based tablet

A few words on the rumored Nokia tablet.

If its a phablet, a very-large screen but still marginally pocketable touch-screen smartphone, that is ok. To race to the top on the screen size races, thats ok. It could work. If its pocketable-sized.

If its a proper tablet however, that is the second worst thing Nokia could do right now. Why? Because launching a new device type, into a new market where Nokia is not established (portable computers) where Nokia doesn't have any retail and distribution presense - is VERY expensive for any global brand. Worse, it means fighting the two strongest brands in the IT industry right now - Apple and Samsung which just about control the tablet market globally. In smartphones, by contrast, Nokia was there before either Apple or Samsung even launched their first smartphones. Nokia has invented and reinvented the smartphone space and has deep, years long relationships with the sales and distribution channels (even as they have recently been damaged by Elop's actions). And differing from handsets, in handsets the carriers/operators have a disproportionate impact to the actual sales - in the PC market there is no such thing. Nokia's long-standing strength in all markets except the USA, has been its carrier relations (which were only damaged by Elop's Microsoft madness).

Nokia would move from the market where it still commands considerable carrier good will, into a market where no such thing exists. Nokia would be abandoning what advantages it holds, to move into a market it never knew, that is well established, contested by dozens of players and dominated by the two strongest players of the industry. What is wrong with this picture?

What Nokia's CEO needs to do right now, is to STABILIZE his company and its flagship unit, the smartphone unit. His strategy plunged Nokia's profit-generating machine, the smartphone unit that had never reported a loss, into a downward spiral where it has not reported one quarter of a profit since. This while the smartphone industry is exploding globally and powering the profits of Sony, LG, Samsung, Apple etc. The CEO has to put his effort into fixing what is wrong, not pursuing costly new adventures into spaces where winning is incredibly difficult.

Samsung could succeed as could Apple with tablets, because both Samsung and Apple were PC makers and had the right distribution and sales channels to sell portable computers. Nokia has none of that. Look at Motorola, look at Blackberry (ie RIM). Both were pure handset makers who had no history in the computer market - and both failed disasterously in their tablet launches and both companies were fatally damaged in that attempt. A phone maker should not pursue the tablet market - which is tiny compared to the phone market - whereas phone makers should pursue the smartphone market - which is far far FAR larger.

The right thing for Nokia CEO to do, is to put all his resources into fixing the smartphone unit (which would start with announcing a new parallel smartphone OS platform, either MeeGo (or its derivative, Sailfish) or Android or Firefox. He would not have to announce the end of Windows (that is inevitable) but just to announce a new OS for his smartphones, and he could escape the carrier and retail sales 'boycott' that Windows based smartphones have been under for two years now. Not my words - Elop himself said speaking to Nokia shareholders that mobile operators/carriers were refusing to sell Windows based smartphones from anyone. Not my words. Elop said that. So this point is not up to argument on this blog.

So, Elop should put his effort into fixing what is broken (his company, his smartphone unit, incidentially, a unit that was reporting record profits before Elop broke it).

The only thing worse, than for a pure handset maker like Nokia (or Motorola or Blackberry) to launch a tablet, is for anyone to launch a Windows based tablet now, that Microsoft itself has admitted its own tablet has utterly failed the market. That is taking a totally suicidal strategy - handset maker launching a tablet - and compounding it with the most hated platform going - Windows.

The Nokia share price was $9.36 on the day before this mad Microsoftian misadventure was announced. Nokia's share price is now $4.06. Elop's predecessor, Olli-Pekka Kallasvuo saw the Nokia share price fall 55% in three years and was fired. During Elop's tenure, the Nokia share price has fallen 57% in less time. I am not claiming all was good at Nokia before Elop. I was on this blog critical of Kallasvuo and I agreed with the decision that he was fired. But the Nokia share price has fallen more in less time - Elop is certainly a worse CEO, than Kallasvuo was. Why is Elop not fired? Is the Nokia Board in collusion with this idiot? If the Nokia Board doesn't fire Elop, the Nokia Board is also incompetent and must be fired as well.

Back to the tablet. If Nokia now wastes its precious resources to launch and market a tablet against the iPad and various Android tablets, it only means massively more waste at Nokia, more good people then being fired, and ever deeper trouble for the company. If Nokia announces a tablet, nothing good will come from that, just be warned. Look at how tablets killed Blackberry and Motorola and why can't Microsoft's own tablets find any love and traction?

Comments

[dies felices]

@leebase

The problem with a short production run is that this increases the cost per unit and thus reduces the profit per unit. This means there's a limit as how few you can produce before each unit is so expensive at cost value that there no profit in it. So far Lumias aren't being profitable per phone so how do you expect a short run of tablets to do any better?

And correct me if I'm wrong but in the commercial PC market we've had only two choices for many years now. 1 Apple, who have focused their business on the consumer experience. 2 Microsoft Windows for which their strategy has been, you want a new PC, new licence fee please, that PC needs their office software, new licence fee please, Netscape is out selling IE, then ship IE as a mandatory part of Windows so Mozilla (or what ever they were call at the time) can't compete. Microsoft don't have now, nor have they had for a long time a strategy that is able to operate effectively in competitive market.

To put it simply when there's a choice, consumers don't choose Windows, no matter what you attach that brand to.

[RottenApple]

@leebase:

Yeah, sure. More unreflected Apple praise and more wishful thinking about Microsoft.

Let's be clear about one thing. The Surface RT hasn't just been a failure. It has been a complete and utter disaster. Period. It didn't even meed the most conservative expectations. Office couldn't change that. The conclusion that can be drawn is clear: People do not buy tablets to run Office.

So what number of sales do you expect? Nokia still makes loss in smartphones with 7 million sold units per quarter. How many tablets would they have to sell to make even a tiny bit of profit? A few 100000 certainly won't cut it. Microsoft's position in all this really doesn't matter. The important question is what this will do for Nokia. And short term it will mean more losses, eating further into their cash reserves. In the situation where Nokia is now, any sane management would see to evaluate business routes that have some chance of succeeding. But not Nokia. With Elop at the helm they only do things that serve Microsoft. This entire tablet story, from start to finish has only one goal: Improve Microsoft's standing in the market. It's really just another attempt of Microsoft trying to keep their failed tablet OS relevant. But where does this help Nokia? The clear answer is: nowhere at all - even if Microsoft is giving them some marketing money. If they do it's probably just like the mobile phone business - not enough to offset all costs Nokia has.

>> Msft owns the desktop both corporate and consumer.
>> Msft has a decent phone and tablet STRATEGY.
>> Msft is still fixing the kinds in it's execution.

Really? And how does it look in reality:
- Msft has pissed off consumers and corporate left and right with their misbegotten Windows 8 user interface.
- Msft currently has 3 operating systems called 'Windows', that are all mutually incompatible. There's no synergies between the systems, unlike Android and iOS. This strategy is not decent, it's completely ignorant of reality and it is a situation that's completely unattractive to external developers which isn't helped by the fact that two of these 3 systems have rather small market shares that make app development relatively uneconomic.
- Msft isn't fixing anything. In order to fix their problems they need to do the same thing Nokia needs to do: Fire their CEO whose limited vision is entirely responsible for the bad situation.
- Msft is completely dependent on Nokia right now to get their unattractive products into the market. Msft can't afford for Nokia to go down at any costs. If Nokia does, the game will be over.

As for Android tablets, what are you smoking? Even Apple isn't really doing the best business in the high profit segment here but at the lower cost point of the iPad mini. And again that idiotic remark that Android only sells when it's cheap. Your constant anti-Android FUD is really getting annoying and there's no substance behind it.

>> The app ecosystem is not anywhere near where it should be given that Android tablets have been out since about 6 months after the release of the original iPad.

Ignorance is bliss, isn't it?
A few facts to get straight:
- the first Android tablets, just like the first Android phones weren't really that great. They didn't sell well and developers rightfully said that supporting them is low priority.
- app development takes time. So even from starting at that point you'll have the planning stage and the implementation stage to factor in until an app is ready. In reality that means you'll need up to a year from the point of decision making to the final product. This is quite a significant delay.

Android tablets started to get attractive some time last year so it's no real surprise that there's still a lot of software out there that has no good support for them. This isn't something that gets solved overnight. But it will get solved, now that Android is taking the lead in market share. Those who take their software seriously cannot afford to look like ignorants.

[R]

leebase: "Office all by itself, is a reason some people will like RT."

Haha, yes, but I don't think you can sustain a multi-billion-dollar corporation from the profits of a market that small. In fact, many people doubt there is any profit to be made in that market.

But, hey, if the Windows RT market starts growing, then Elop wants Nokia to be the big fish in the small pond. I'm just waiting for the Microsoft misadventure to start making profits.

[Tester]

Is there even a point to discuss leebase's 'opinion' anymore?

It's clear where he stands:

1. Apple is the God of mobile and can't fail by default.
2. Microsoft has a long enough breath to make any turd succeed eventually.
3. Android is cheap crap that only sells at the lowest price point (a.k.a. nobody wants it but everybody buys it because they got no choice.)

And no matter in how many words it is put, it's always these 3 points to what it all boils down.
Just strange that the market figures do not really agree with it...
The most fun thing is that the market's realities seem to make 3. actually true when used for Windows Phone...

[foo]

DigitalTrends recognises that Nokia is helping Microsoft, but Microsoft is holding back Nokia:

Though Windows Phone is showing signs of life, it’s only because Nokia is holding the defibrillators. Indeed, the canary is dead; the hippo is humped; the wizard has spoken … However you want to say it, Nokia is in trouble. Though it is a stronger company than it was in 2011, Nokia may, again, be standing on a burning platform. Despite owning almost all Windows Phone sales, and making some great phone hardware, Nokia is not even in the top 5 when it comes to smartphone sales.

Nokia, though, doesn’t have much of a choice. Thanks to a public pact it made with Microsoft and customers, its hands are tied. If it makes an Android device (Why we want a Lumia Google Edition), many would see it as a death knell for Windows Phone, potentially hurting already weak sales of its entire line. So, with nowhere to go, Nokia continues to release new and unique Windows Phone hardware in the hope it can drive the OS to greater success.

http://www.digitaltrends.com/mobile/nokia-windows-phone-problems/#ixzz2cgxxfvZ3

[antacid]

Even after all this time since the Elop era began, it still feels bad to think of all the regular Joe and Jane workers who've lost their lively-hoods to the likes of these megalomaniacal monsters. Elop and Ballmer, using what Nokia had built over many decades, all of its good-will trashed, just for the purpose of running a scorched-earth scam in a vain attempt to reclaim the big-dog crown. Sickening...Shameful...

[vladkr]

Errr... Tomi, Nokia's flagship unit is the one making (winter) tyres. Oh wait, they separated in 1988, which is too bad as the latter is quite successful actually.

By the way, have you tried to calculate how much Elop did cost to Nokia overall (losses, loss of earnings, cash-drain, loss of patents, factories idling, etc.) ?
I started calculating, but I'm limited to the information I have, lacking some figures (loss of earnings on patents Nokia offered to patent-trolls + Microsoft), being unsure on others (some figures change wether they are in one Nokia report or in another - for instance there can be one figure for Q2 results in the Q2 report, and another figure for Q2 results in the Q3 report)...

But so far, my bet is about 50-60 billions euros. What number would you say ?

Of course, I don't include collateral losses, like the one faces by Salo, Oulu, and Finnish revenue agency.

[Nokia Cunt]

Nokia guys are confused, they are waiting for the company to close on its own.CEO and his bunch of Jokers would finish this great company quite faster.

[Kenny]

After all the brickbats and stones thrown at Microsoft over Windows 8 due to the lack of a start button MS finally caved in and will include a Start button in Windows 8.1.

But has it? This new Start button is nothing like the classic Start button with gives access to your apps. The new Win 8.1 start button merely gives access to a range of os settings.

MS isn't a company which listens to feedback. It has the corporate culture of a monopolist and operates best in an environment where there is little or no competition. With its new Start button MS thumbs its nose it at its critics and users and says, "Deal with it!"

[daz]

I think Tomi has mentioned several times that Nokia failed to produce a querty lumia. Now LG has released one:
LG Enact with slide-out QWERTY
http://www.gsmarena.com/lg_enact_with_slideout_qwerty_keypad_goes_official_-news-6625.php

[Tester]

Great. A phone that looks two years old by looking at the specs.

Can't it just be that the demand for physical keyboards is grossly overrated by some people?

I don't think that a company like Samsung would pass if they felt there was a significant market for such a device, wouldn't they?

It can't be a coincidence that none of the major manufacturers produce a keyboard device with decent specs, can it?

[zlutor]

@Tomi: are you aware of this one: http://www.gamespot.com//news/microsoft-ceo-steve-ballmer-to-retire-6413579?

How does it effect Nokia?

[daz]

Ballmer gives up all hopes.

[So Vatar]

Well, now that MS's Ballmer announced to retire within 12 months, what will this mean for Flop's Windows only strategy? Sure, we don't know Ballmer's successor, but changes in strategy are more than likely. Will MS go all in and purchase Nokia's smartphone operations? Give up on windows phone because no meaningful market share is obtainable?

If Nokia were a well run company they would have plan A, B, and C ready to go in the drawer to address changes at MSFT. As we know Flop has only plan A.

Best scenario: Flop follows his boss at MSFT and retires too, hopefully within less than 12 months.

BTW, MSFT's stock is up +7% just because Ballmer announced his retirement! Wanna guess what Nokia's stock will do once Flop steps back?

[daz]

Now only Elop needs to resign as well and the world can return to sanity.

[foo]

Ballmer announces retirement and shares jump 10%.

I wonder what would happen if Elop announced retirement...

[Winter]

I think it is entirely possible that Ballmer will not be able to sit it out for 12 months. He might not even make it to next January.

[Name]

Elop goes to Microsoft as the new CEO. One can hope...

[chithanh]

@leebase
>> Office all by itself, is a reason some people will like RT. Just like some people are just fine with a tablet as an eReader.

None less than NVidia CEO Jen-Hsung Huang has said it publicly: The reason for the miserable Windows RT sales is the lack of Outlook. How did Microsoft not think about that!! Of course Windows RT 8.1 will come with Outlook and Surface RT 2 will be a great success, fuelled by handing every Microsoft employee two devices instead of just one.

http://news.cnet.com/8301-1035_3-57597706-94/nvidia-ceo-were-working-hard-on-surface-2/
http://www.zdnet.com/microsoft-employees-start-collecting-their-free-surface-rts-7000008712/

[cornelius]

@Name
Oh, man, Elop the next Microsoft CEO, that would be awesome. Is there an online petition, or anything like that? We should start a grassroots movement.