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« 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


Paul Ionescu

Under the terms of the sale deal, Nokia can't license or use the Nokia brand to anyone that might use it to sell mobile phones for a period of 30 months. Is quite a coincidence that exactly the same 30 months (that is 2.5 years) were left from 5 years contract between Microsoft and Nokia regarding Nokia making only Windows smartphones!!!!


@V900: "First of all, Microsoft offered them significant concessions in terms of cash, marketing, licensing etc. Google didn't offer anything like that.

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."

The first part depends on the cash position having been so dire that there was no hope even to survive to the first launch of an Android phone. I don't remember anything like this having been disclosed at the time.

The second part doesn't make any sense at all.

(1) Everybody has to compete on all dimensions, with everybody else, at all times. What was the evidence that having a less popular ecosystem than Samsung would make customers want to pay a substantial premium?

(2) Nokia traditionally had a huge low-end business. Why wouldn't that be a good niche for it to target anyway? As it is, Lumias died on the high end and got traction once the price came down.


You know, Tomi, you have some very good points, but I strongly advise you to learn to write more concisely. You repeat yourself so much that your word count could well be cut by at least a half. People are impatient, especially on the web, and few will read an entire 12,000 word post unless it is very, very interesting -- and non-repetitive. I stopped at about halfway (though might continue later).

Futhermore, you could usefully cut down a bit on the emotion -- phrases like "Its now pure Evil of the Evil Empire" are just puerile, and do your argument's thrust no favours.

If you do make this into a book, I hope you'll get a good editor. I promise you they will say the same thing.

Brevity is the soul of wit.


@V900: " that Samsung, with their integrated production of everything from SOC/CPUs to screens would be a formidable enemy and competitor on Android"

When I hear this all the time one question comes into my mind: what prevents Samsung utilizing this power in WP arena? Nothing...

Not to mention when Nokia made the decision it was as heavy weight fighter as Samsung was - or even more...


Tomi, thanks for the blogpost, interesting as usual!

What do you think about the integration process of 30000+ Nokians into Microsoft?
I'm afraid that it's going to be a dramatic corporate culture clash (or crash!). If already the joint-venture between Nokia and Siemens has produced many serious internal frictions, what may happen in this case?

Earendil Star

Again on the topic of conspiracy and opinions.

An opinion is saying that Nokia was failing and had to team up with MS. Why? Because we'll never know what would had happened if it had stuck with Meego or chosen Android as additional platform.

On the contrary, choosing an unproven and unfinished platform as ONLY option is a bad decision, since it goes against common sense and sound risk management. Fact, not opinion.

That all decisions taken by THTRH Elop were favorable to MS and terrible for Nokia is proven fact, not opinion. Just look at the figures and at the price Nokia was eventually sold to MS.

That THTRH Flop was a MS exec before joining Nokia and is now once again a MS exec despite his utter "failure" while at Nokia is fact, not an opinion.

When THTRH Flop spoke, he always spoke as a supporter of WP and MS, while badmouthing anything Nokia.

Now, if you wish, connect the dots.

If you can`t, then I must conclude you have a hidden agenda.


@Earendil Star:

Nothing you say about Elop points to any hidden agenda. It just shows that the guy hat a severe case of tunnel vision.

He clearly had a fatal focus on Microsoft but that still doesn't mean it was some nefarious scheme to destroy Nokia.


"He clearly had a fatal focus on Microsoft but that still doesn't mean it was some nefarious scheme to destroy Nokia."

You are conflating two issues:
1) There was a nefarious scheme
2) They wanted to destroy Nokia

Point 2 is indeed ludicrous. Point 1 is not so ludicrous.

If a number of large share holders and board members had interests or a large position in MS stocks, then there could be a nefarious scheme to use Nokia to bolster the value of MS shares.

They could risk Nokia's future for the benefit of MS. The destruction of Nokia would then simply the consequence of high risk stakes, and not the original plan itself.


It seems to me the elephant in the room is what becomes of Microsoft?

Can Microsoft prosper without a viable mobile strategy?


"... what becomes of Microsoft?"

They adapt or die. I bet on die slowly.


Moron95 obviously sees the cash flowing in from his investments. What an utterly disgusting person!


Remember this one ?

Ironical, isn't it ?



Android would be nothing without its partners (Samsung, ZTE, Huawei, etc.)

Stop thinking Silicon Valley is still the centre of the world, it's the shadow of itself nowadays, with more insecurity than wealth.



>> They adapt or die. I bet on die slowly.

I agree. And our beloved Baron (or rather Moron :D)95 can repeat endlessly how 'awesome' this is, I don't think that Microsoft will ever be able to succeed in this business. They have proven time and again that they cannot move fast enough. That was no problem in the PC market where even now a very large percentage uses a 10+ year old OS but in a rapidly developing market like mobile they won't stand a chance.

Let's face it: Nokia's phone business is in shambles and even the recent surge in low end sales and the new ownership won't provide a magical fix to something that's essentially broken. This will cost Microsoft a lot of money in the long run and there's still no guarantee for a fix.

@Baron95: Concerning the patents: One Microsoft and Apple try to squeeze the market dry as you predict, my prediction will be that the carriers will start to squeeze Apple and Microsoft dry and they got the power to do it. Those have absolutely no interest to see these evil twins continue to manipulate the computing business for another decade and will do their best to prevent it.


nice write up

So Vatar

@maxxfi: "What do you think about the integration process of 30000+ Nokians into Microsoft?"

Yes, it will be tough and creaking and crashing, however the scope of integrations is not that enormous:
A large part of the ~30000 ex-Nokians are workers employed in assembly plants world wide. I assume MS will get rid of these plants and use them via a manufacturing contractors (just like Apple does). For the most part it is nor relevant if they work for Nokia, Microsoft, Foxconn or Pegatron.

Remaining corporate functions for feature phones do not have strategic value for MS, they can be run as an extra with the scope of winding down operations. I doubt that MS has any interest cranking out dumb phones for $25 a piece.

Leaves the smartphone central functions (Lumia), and I doubt that there are many good people left that were not already installed by MS / Flop, or announced their resignation. But yes, there will be a core of in-fighters, stubborn bureaucrats that will have a nice fight with MS's stubborn bureaucrats. I'd pay for a premium ticket just to get a front seat and watch them fighting their petty in-fights focused on the color of the coffee cup, the office with the larger window, and and mutual distraction. After all in the smartphone business Mirosoft AND Nokia have proven that they are unable to compete with the likes of Apple, Google, or Samsung. Just a bunch of losers trying to get a paycheck as long as they can.

Giacomo Di Giacomo

There's one thing that makes me wonder. The shareholders must approve the sale. How can they willingly approve such unfavourable terms? Why should they not want Microsoft to pay more, or ask for justification for the sale to Microsoft without looking for other potential buyers willing to pay a fairer price? It's like Elop hands them a gun asking them to shoot themselves in the foot, and he is sure that they will.


One person who is almost forgotten from this story is the great leader the brilliant leader el mahico himself Jorma Ollila he was the guy who started the damn fall. He instituted the unflexible leadership culture in Nokia of the mid level management bullshit he was the guy controlled OPK strings and steering the ship from the backseat. Jorma Ollila personally selected Elop as Nokias CEO he is the one who started this mess in first place, yes he did create the Nokia legend that is still remembered today but he should have stepped down over 10 years ago dont get me wrong Elop had his fingers in the cookie jar big time but he mess he inherited was way bigger and almost impossible to fix. One thing that bothers me with this text is that in 2006 Symbian had 60% market share of smartphone platforms 2007 it had dropped to 50% 2008 40% in 2009 it was around 35% in q1 2011 it was around 23%.
When Elop took the wheel in feb 2011 so yes he destroyed what was left but ship was allready sinking way before that he just put the damn thing in overdrive.
One thing that is positive about this deal is that now all the bad stuff is gone from Nokia they have a fresh new beginning to start again they still own the patents and the name they are licensed to MS but Nokia owns the rights they still have NSN a profit making operation and the mapping that could have a bright future ahead of itself.

So Vatar

@Giacomo Di.G.:

The answer lies in the situation the Board and Flop have navigated Nokia into:

- There are contractual obligations that Nokia signed that binds them to Windows Phone. If Nokia would release non-Windows Smart Phones - which they would need to do in order to survive - it would mean they had to pay hefty penalties to M$.

- Their cash situation is unsustainable: Flop's misguided strategies cost Billions of Euros cash, and Nokia as whole does not generate enough cash to be sustainable. Add to that rumors about a very bad Q3 for the handset unit and you can see that another Billion or two go away easily.

- They acquired the 50% stake of NSN held by Siemens, another cash out flow. While Nokia Networks (formerly NSN) is cash flow positive the overall contributions is tiny.

- Nokia's bond rating is junk, which means that they can borrow cash only by paying hefty interest rates if they are able to borrow money at all.

Bottom line: They think they have 2 scenarios left: Selling the assets that drain cash (device business) or prepare for bankruptcy.

In the absence of a real leader with strategic vision and business acumen there really seems to be no other alternatives. No Steve Jobs on the horizon who can turn around Nokia's fate. Current actors (board and Flop) have proven to be incapable and maybe worse.


"...nobody buys Windows Phone smarpthones because it runs Windows. They buy the Lumia device because of the Nokia brand, not the Microsoft brand. Nokia has fierce loyalty, even today. Most who bought Lumia, had no idea what OS that phone has, and so too was the case with their previous smartphone"

That was exactly my experience when I was in a rush to replace my BlackBerry last year. Prior to the BlackBerry, I'd only used Nokia phones (6101, 6085, and 3590). I guess I just assumed the Lumia ran Android but I like the WP7 and am open to getting a Lumia running WP8 sometime in the future.

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