My Photo

Ordering Information

Tomi on Twitter is @tomiahonen

  • Follow Tomi on Twitter as @tomiahonen
    Follow Tomi's Twitterfloods on all matters mobile, tech and media. Tomi has over 8,000 followers and was rated by Forbes as the most influential writer on mobile related topics

Book Tomi T Ahonen to Speak at Your Event

  • Contact Tomi T Ahonen for Speaking and Consulting Events
    Please write email to tomi (at) tomiahonen (dot) com and indicate "Speaking Event" or "Consulting Work" or "Expert Witness" or whatever type of work you would like to offer. Tomi works regularly on all continents

Tomi on Video including his TED Talk

  • Tomi on Video including his TED Talk
    See Tomi on video from several recent keynote presentations and interviews, including his TED Talk in Hong Kong about Augmented Reality as the 8th Mass Media

Subscribe


Blog powered by Typepad

« Another Death in Smartphone Bloodbath - Windows Phone strategy so failed, now Nokia handset unit sold - to MIcrosoft | Main | Thank You For The Smartphone - Some Abba Lyrics Revisited on a Nokia Theme »

September 03, 2013

Comments

vvaz

I think most people still are misunderstanding goals of Tizen (including Tomi and some commentators; former is overstating importance of Tizen for Samsung smartphone strategy, latter are seeing only small segment of it) .

Tizen has two main purposes:

- unify all Linux platforms used currently in Samsung: starting from refrigerators, through TVs and cameras, ending in smartphones; by volume smartphones are probably the smallest segment of future Tizen users

- keep Google honest - with time you will see unified TouchWiz experience on Samsung Androids and Tizen, with Alien Dalvik or similar technology switch could be painless from users perspective; Google is silently fighting this with strengthening of position of Google Play in Android ecosystem

Note that all depends on execution. Nokia in 2010 had the best strategy for future. But this strategy was supported only by minority of players in Finland and had significant opposition from Symbian old-timers. Board chose third way which ended in disaster.

Boris

Blaming Elop and board for Nokia destruction is joke.

NOK was Finnish corporation long time ago. MSFT and NOK have the same shalholders. Don't believe? See yourself:
http://investing.money.msn.com/investments/institutional-ownership?symbol=MSFT
http://investing.money.msn.com/investments/institutional-ownership?symbol=NOK

After all those leaks last several months (and which are coming almost every day), we know know that many US corps are nothing more than NSA divisions and it was in their best interest to destroy any non-US competition so everybody would use US mobile OSes (like is in the desktop with Win) which are all filled with backdoors. Nokia happened to be main obstacle. Via market, big US investment and hedge funds bought NOK shares, and rest is the history.

That's why shareholders were fine with shares decline because it was all about destruction.

Look at Sony and how Daniel Loeb (Third Point LLC) is trying to break up Sony business, but Japanese corporate laws are completely different from USA and Europe so he can't do it.

But, there is one huge problem to global domination - Chinese manufacturers use Android but without Google (just like Amazon) except when they export. Chinese manufacturers developed their own Android OSes - MIUI (the most popular one and I would say the best one), LeWa OS, Baidu Cloud, LeOS, Aliyun OS and so on and Chinese have their own companies which provide same services as big US corps (Baidu, Weibo, QQ, Youku...). Look how Huawei and ZTE are banned in USA and Australia.

It's all about monitoring, spying and controlling.

Louis

@V900: "By the time Elop came into the picture, it was too late, but he chose the best strategy facing the circumstances, and obviously the board and top management at Nokia agreed with his strategy and implementation."

It's only best if you frame the problem (as the board did) like:

"Oh, shit! We don't control a platform that hits the basics every phone buyer is demanding. Since we can't survive at niche scale, we need to find a greenfield platform that is good enough and that we can dominate."

In retrospect, this is horribly convoluted, but it does set up a race between Meego/Meltemi/Tizen and WP. Given the total failure of every HTML5/QT/Linux, it is safe to say WP probably won that race. A different framing is just:

"Oh, shit! Our software stack doesn't support the UI hardware/idioms and 3rd party services that are the sine qua non of selling at scale. We should correct this as cheaply and quickly as possible."

The answer here is just "Android". The backwards-looking analysis is just that the WP strategy didn't solve the immediate problem Nokia had, and then it busted waiting for the long-term to arrive with WP.

Buried here is something important to understanding Microsoft, which isn't covered by Tomi's psychodrama and hurt feelings theory: Microsoft's immediate problem is that licensing operating systems for money isn't a viable business model in mobile devices and the center of mass of computing is moving to mobile devices.

The movement of computing to mobile devices that started with the iPhone first disrupted the "phone" business, but, after the iPad it is disrupting the "PC" business too. Bill Gates is a smart person who would obviously figure this out, and any analysis that doesn't take it into account is going to be wrong.

ChrisG

Tomi,

If I were an engineer do you think I would have been so uninformed about FirefoxOS? There is something you are missing about open source development. Who are the biggest players in Linux and Linux-like systems today? Google (to the extent Android is Linux-like) and Canonical. And where were they five years ago, say? They were trivially small companies/units dwarfed by other Linux providers. Today, they have overtaken all of them. How did this reversal happen? Well, they were tenacious, secured a footing in a particular area where good software was needed and executed brilliantly on well thought out strategies. And, importantly, they sought to take a whole industry along with them.

So far, while I am much impressed with your statistical grasp of Nokia's decline, you show little awareness of the genesis of the industry conditions that have made them so vulnerable. When Nokia killed off Maemo (a bad enough decision in itself) and then failed to embrace Android, they were done for.

Tizen, precisely because it represents the pre-eminence of Samsung over all of its rivals will ensure that it gets the cold shoulder by everyone while ever there are alternatives to it.

Pat

Tomi, I'm sure how you feel about Nokia is how we felt about Apple in the mid-1990s, it was an emotional time for us. At one point, Bill Gates met with the incompetent executives at Apple to try to convince them to put Windows on Macs, and they almost did it. What a disaster that would have been. Thank God (for us and the whole industry) Steve Jobs came back to fight that evil. Nokia wasn't so lucky -- they were and could have been another Apple. I really hope Nokia can make a comeback in 2016 when their legal agreement runs out, or at least some ex-Nokia employees will start something. -- I think they could be a important contributor and the industry will need them.

Tester

@Boris:

http://investing.money.msn.com/investments/institutional-ownership?symbol=MSFT
http://investing.money.msn.com/investments/institutional-ownership?symbol=NOK

Aside from the fact that today's ownership means nothing for decisions made two years ago you'll find the same names everywhere. Those global investment funds own shares of most major corporations but they are also mostly passive investors.
But since these are mostly passive investors they obviously don't exert much control over the board even if they make bad decisions. For them both Microsoft and Nokia are only a small part of their portfolio. More importantly, any serious investment fund has some vested interest in the company succeeding. The problem are the hedge funds which speculate on short term effects but their actions are much more obvious.

This entire conspiracy nonsense has absolutely no proof. And without proof I do not believe in conspiracies. This stuff can't be solely done behind closed doors in absolute secrecy. If not even the NSA can't keep their actions a secret who genuinely believes that some publicly traded corporation can? It's preposterous!

About the Sony thing, sure, this happens, but it's done in public. There is no conspiracy. There's an open attempt of one investor to force some restructuring. But no long term plan to systematically ruin a company.

No, the plan A was clearly the naive assumption to migrate 100% of Nokia users to Windows Phone. But after that had failed it was an unstoppable downward spiral.


marnix

R.I.P nokia. Nokia wont be in good hands by microsoft.if i understand right nokia is still a market leader in india and nokia is still stong in south america..So will they destroy the feature phone unit too or sell it to others? It looks like microsoft just keeps the lumia smartphone devision an sell/destroy/asset strip the rest nokia instead of keeping it alive. I as a loyal and satisfied nokia consumer/fanboy will miss it and feel bad for the (ex) nokia workers..the Good news is that some of nokia s creativity will reincarnate into jolla.i will support jolla and wish them a bright future.

khim

@zlutor: If Samsung plays clever - and we can bet on it - they will bring Tizen Android app compatibility - with ACL e.g. - and it's done. Of course, Google can play nasty and forbid using some services from Tizen phones but I think they will not do it. They want to partner with Samsung, not fight with it...

I'm not so sure. They can do what they did for Acer. Remember it's Aliyun phone? The one that was cancelled because Acer decided to stay with OHA alliance?

Google may swallow ACL layer or it may decide termonuclear from the day one. You just never know. And Sammy is smart enough not to try to find out.

THAT is why Tizen does not have ACL. Sammy also knows that this route was tried by BlackBerry - and failed.

"Compatibility layers" sound great in theory but in practice they only work when you need to go from one FAILING platform to another platform. Failure can be planned (MacOS classic was failing platform by decree - simply because Apple refused to further enhance it) or accidental (SCO Unix was failing because it was expensive while Linux was free), but if platform is successful then people will stick with it and will bring "compatibility layers" from other platforms. For one simple reason: "compatibility layers" are ALWAYS buggy. One way or another. You can and will tolerate them if that's the way to bring "that one app which I really need", but if you'll need to use them for half of your apps then it's much better to just pick the right platform and "go native".

There is a reason for why Apportable only appeared in 2012 when Android was well on it's way to the domination and not in 2008 when it was starting. And even then it's not a true "compatibility layer", more like "porting aid".

Michiel

Does this mean that real Nokia phones will be called "Jolla" for the foreseeable future? Any chance of Nokia boarding that safety vessel?

Tester

@V900:

Your reasoning contains a major flaw:

Samsung, as you said is a well integraded company which plays all niches.

In other words: No matter what system Nokia chose, as long as Samsung had access to it they would have pushed it mercilessly if it was a success. So even had WP taken off, they still would have had to fight Samsung.

And with that in mind the decision is not clever.

As for Android, it would have gone better without any doubt. Why? Simply because Android is popular. Even a weak performance in the Android market would have been better than a strong performance in the WP market. Nokia may not have remained at #1 and maybe not even at #2 but I think they'd have had a lock at #3 behind Samsung and Apple - even without Microsoft's marketing money. Unlike WP a Nokia Android device just would have sold. Why? Just because people liked Nokia and they liked Android, they would have loved to own a combination of both! But here people like you made the decision, only looking for superficialities instead of investigating what the customer really wants.

This was what people have been waiting for all of 2010: that Nokia would finally jump over its own shadow and embrace Android. Imagine how all those patient customers reacted when the WP announcement was made: Obviously that was the time when they finally jumped ship. This was the final event that pushed Samsung into the dominant position.

It had been repeated by marketing people time and again that the major obstacle in selling Lumias was the operating system and had it been equipped with Android they'd have sold like hot cakes.

So please don't repeat that nonsense that they had no other choice. That's plain and simply not correct.


Earendil Star

People are asking for "proof" of "conspiracy".

Conspiracy?

Adding to the tons of evidence already provided, two further observations:
1) why wasn't Nokia's handset division offered to more competitors, to increase its sale price? Different operators had already manifested their interest. Once again, everything was done in MS' best interest, with a paltry income for Nokia.
2) why were ALL terms in this sale agreement a total and utter favor to MS and completely unfavorable to Nokia? Perpetual licences on everything (= less money to pay by MS but same result as actual ownership), loads of limitations for Nokia, which cannot even use its own brand, etc.. Just as the notorious 2011 exclusive agreement for WP (yes, the incomplete WP7 (P)OS, signed when MS -not Nokia- was in desperate need for help in mobile)? WHY? Ehm... easy to explain when the signatories are both MS people...

Let me be clear: talking of "conspiracy" is bullshit. Evident things cannot be labelled as "conspiracy". They are facts. THTRH Elop, the puppet with no previous experience in mobile, was put as Nokia CEO to promote MS interests. Period. And no, a signed declaration from THTRH Elop admitting that he actually was a Trojan Horse from MS cannot be counted as the only "proof" that can be accepted. Let's move on.

***

On a different note, if I understand correctly, MS will not use the "Nokia" brand on its smartphones any longer from now on. Fantastic! This is further proof of what a moron THTRH Elop is. The "Nokia" brand is what was saving Lumias, Ashas and the like from total failure. This is just another proof of his total incompetence in the field. Can it be that MS monopolist days as the one and only are finally over? Only time will tell.

RFX

Now elop-free Nokia, start helping Jolla, re-start the phone division from scratch, and at the 01.01.2016 introduce the Sailfish-based Nokia branded smartphone line. Fantasy? Who knows...

Earendil Star

For those hoping that Nokia will come back, phoenix from the flame, forget it. Why?
1) Nokia has almost nothing left in it related to mobile (people, assets, etc. all went to MS)
2) Nokia is now full of MS zombies in its own management
3) the contractual terms for the sale, completely written by MS, forbid the use of the Nokia brand in mobile, just to be sure that Nokia is really never allowed to come back. Just the last nail in the coffin.

Nokia - RIP - 2 September 2013

...or will regulators say something? Ah, forget it!

willz

After thinking about yesterday´s news I really believe it is a win-win-situation for both. Not because it is a result anyone in the beginning really wanted (I believe MS actually wanted a strong independent Nokia) but because the current situations for each MS and Nokia suggested some strategic decisions had to be made.

For MS it´s becoming more and more obvious that time is running out. The old business fields and models are slowly but surely fading (Desktop OS, Office, et.al.) and new ones are not taking off as wished (Windows for phones and tablets in particular). Also expanding the old business model (selling licenses for software to hardware manifacturers) did not work out. So the new mantra "service and devices company" as a (imho cheap) copy of Apple´s strategy was born. From that point of view it makes perfectly sense to buy Nokia. Nokia was already trimmed down on Nokia´s expenses to fit to Microsoft (abandoning all of Nokia´s own software ambitions except for what is now running Asha phones). Also I think that over at Microsoft they still believe (what already has proven wrong once) that they can turn current customers to WP, so the current feature phone user base is seen as an asset too. And last: losing OEMs is a reasonable trade off for gaining full forward integrated control of supply chain and product policy of the market leader in this particular field (Nokia as the biggest manufacturer of Windows Phones). I believe MS thinks that controlling hard- and software can increase their gross margin on sold devices and makes breaking even more likely than sticking to the licensing model. So even if MS does not gain the proclaimed 15 % market share they might even have a foot in the door of the mobile gaming room and make money.

For Nokia it was more kind of a die fast or slow decision. I think that Nokia was running out of cash in foreseeable future. The recent gains in market share are so small that they might have not been making money with the smartphones division for another year or so (I am just guessing, I don´t know any forecasts or current numbers in detail). The other divisions (networks, maps, feature phones) could not compensate the loss making unit. So clock was ticking but the alternatives were rare. There was no chance going back to an in-house development of an own competitive operating system due to lack of strategy, know-how and resources (thanks to Elop). I guess there was also no chance of getting on the Android waggon due to restrictions in the agreement with MS. This could have been a way out but the door was closed. So without an alternative than doing more of same that lead to this disaster (selling Windows phones) what could you possibly do as a company to avoid going bankcrupt? The only answer I can think of: destroy what destroys you. Or in less martial words: get rid of it while you can. And Nokia could because if Nokia had failed so spectacular with Windows Phone not only Microsoft´s biggest OEM would have been gone but also Windows Phone as a platform would have lost any credibility and justification. So actually there was no other chance without risking big damage for both MS and Nokia than to settle the deal. So the win-win-situation is more of not-lose - not-lose situation in reality.

I personally do not believe the theories saying that it was a long planned strategy to take over Nokia and that this was Elops only target. These theories have strong points which cannot be denied (e.g. getting rid of Nokia´s in-house expertise on software, etc.) but I rather believe that Elop, the Nokia board and Microsoft were rather naive and believed in a strategy where a strong Microsoft and a strong Nokia can convert the user base to Windows phone and as a result turns it into a strong third platform. I don´t hope that any of the conspiracy theories are true which say that Nokia as a non-US technology company was in the way of a US technology hegemony or worse to supply NSA or whoever with access to user data. I think that the MS-Nokia-Elop-gang did not read their Porter on strategy, have no glue why open source software is not only a philosophy but also the oil of the information age that runs the engines and last made all their decisions with a big portion of arrogance against these stupid little Europeans and Asians (by underestimating Samsung´s ability to profit on Nokia´s decline). This turned out to be a fatal cocktail and the result is that the Nokia we knew (and obviously a lot of people loved) has ended. Thanks Steves, thanks Microsoft, thanks Nokia BOD for that!

Tester

@Earendil Star:

>> Adding to the tons of evidence already provided, two further observations:

There is no evidence that's conclusive. Everything that happened can be explained by bad business decisions and Microsoft-centric delusions on Elop's behalf.

>> 1) why wasn't Nokia's handset division offered to more competitors, to increase its sale price? Different operators had already manifested their interest. Once again, everything was done in MS' best interest, with a paltry income for Nokia.

Do we know it? If someone really had wanted to own Nokia they could have attempted a hostile takeover. But let's face it. With their focus on Windows Phone I doubt anyone would have paid good money for it. The business was already completely ruined and in a state where it was worthless to most. Don't forget that this had been a loss making business for 2.5 years, including a full division that's about to be terminated in the near future. If I had wanted to buy the smartphone division but the only way to get it was to take along the feature phone division I would have tried to lower the price as much as I could to offset the inevitable costs. You can bet that the feature phone division was sold for negative value. It may still be slightly profitable but the writing is on the wall that this won't be the case for much longer.


2) why were ALL terms in this sale agreement a total and utter favor to MS and completely unfavorable to Nokia? Perpetual licences on everything (= less money to pay by MS but same result as actual ownership), loads of limitations for Nokia, which cannot even use its own brand, etc.. Just as the notorious 2011 exclusive agreement for WP (yes, the incomplete WP7 (P)OS, signed when MS -not Nokia- was in desperate need for help in mobile)? WHY? Ehm... easy to explain when the signatories are both MS people...

Patents: There are no 'perpetual' licenses because patents expire after 20 years. Why should it be unusual to license in such a way? The licensing costs Microsoft has to pay are not small.
Not using the brand name for phones: Would you buy something if the seller could theoretically immediately rebuild its business and get into direct competition with you again? I sure wouldn't unless I get a hefty discount on the stuff I buy. Sorry but that'd just be idiotic for Microsoft not to demand such a thing because it'd devalue the entire deal. Do you remember when VW bought Rolls-Royce only to find out later that they had no rights to the brand name which was sold to someone else? Not having this restriction would be on the same level of stupidity.


>> Let me be clear: talking of "conspiracy" is bullshit. Evident things cannot be labelled as "conspiracy". They are facts. THTRH Elop, the puppet with no previous experience in mobile, was put as Nokia CEO to promote MS interests. Period. And no, a signed declaration from THTRH Elop admitting that he actually was a Trojan Horse from MS cannot be counted as the only "proof" that can be accepted. Let's move on.

No, these are no facts. These are opinions. It's quite obvious that Elop was a Microsoft fanboy and that this attitude negatively affected his decisions but this still doesn't mean any intentional ill will.

As for the restrictions in the original 2011 deal, if I wanted to spend a large amount of money on marketing another company's products I'd also demand some protection against that company going into competition with the product I want to promote. It clearly was 'money and restrictions' or 'nothing at all'.

You see, nothing what happened needs some evil scheming to have happened and therefore there's no proof.

Eric

I am outraged by the way things have gone!! Thanks Tomi for writing about Nokia in an open way. I am curious about the possibility of sueing the CEO and/or Board for gross negligence of steering the business. There should be a lawsuit to investigate the business case that was used to choose WP Platform (which must be the ultimate in wishful thinking) and also the leaking of a business destroying memo (did Mr. Elop send it himself to media?). So many horrendous mistakes... Sadly, the damage is done. Even the extra AGM will not have the guts to shoot this down. Or will it..

jcdr

I wonder if the Microsoft action against Nokia could be qualified as a international economic war, now that no doubt can sustain about the initial intention of the Nokia board when there elected Elop. If the board have been abused by Elop, there faced many warning signals and occasions to fix the issue. There don't, so there agree on the strategy from the start.

How a board can evolve to agree on a so suicidal strategy ? This is the biggest mystery point to me and I suspect that the board have been manipulated.

Have anyone more information about the hidden story of the Nokia board evolution ?

Winter

"Secondly, Elop and Nokias board very cleverly foresaw, that Samsung, with their integrated production of everything from SOC/CPUs to screens would be a formidable enemy and competitor on Android. They feared Samsung would come to dominate the Android ecosystem, and that's exactly what happened."

I simply do not believe that. At the time, Nokia had their own facilities and was much bigger than Samsung. This is simply using hindsight to justify a gamble going awfully wrong.

And when Elop was hired, the Nokia board was under pressure from US shareholders that had huge stakes in MS. They even appointed two board members at the time IIRC. For these shareholders, any foreseeable loss in Nokia share values would have been made up by keeping MS share price up.

Tester

There won't be any hidden story, except the nonsense that gets repeated by conspiracy theorists.

@jdcr:

>> How a board can evolve to agree on a so suicidal strategy ?

It has happened countless times before, it will happen countless times again that the leadership of a company becomes incapable of judging the market, resulting in bad decisions that eventually lead to bancruptcy or sale. Nokia is not by far the first company in the mobile handset market that goes down. Remember Siemens? Or Palm? Or Motorola? They were all at the top of the field but are long gone as independent entities due to mostly the same kind of decision making that killed Nokia. And Blackberry will be next.

@Eric:

>> There should be a lawsuit to investigate the business case

Sorry, but what would you want to investigate. Bad business decisions are not a criminal offense. And to prove intent things need to go a lot further. It can never be proven but the lack of proof for no criminal act seems to be enough for some people to claim that something fishy was going on.

Roger

The big mystery is the board of directors, why did they let Flop kill the company?
Are they getting kickbacks?

I have a new respect for Microsoft, they managed to reduce the value of Nokia to the point where it could be brought for a pittance. Flop is brilliant and I really don't know how he did it.

The comments to this entry are closed.

Available for Consulting and Speakerships

  • Available for Consulting & Speaking
    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

Tomi's eBooks on Mobile Pearls

  • Pearls Vol 1: Mobile Advertising
    Tomi's first eBook is 171 pages with 50 case studies of real cases of mobile advertising and marketing in 19 countries on four continents. See this link for the only place where you can order the eBook for download

Tomi Ahonen Almanac 2009

  • Tomi Ahonen Almanac 2009
    A comprehensive statistical review of the total mobile industry, in 171 pages, has 70 tables and charts, and fits on your smartphone to carry in your pocket every day.

Alan's Third Book: No Straight Lines

Tomi's Fave Twitterati