Ok, a Few Words About Microsoft Under Satya Nadella

So congratulations to Satya Nadella, who gets to run one of the very few Fortune Global 500 sized multinationals which enjoys near-monopoly status in most of its core businesses - Windows and the Office Suite. Microsoft is also strong in videogaming consoles and cloud computing. Microsoft is a player in mobile on the software side and just bought the second largest handset manufacturer in the world in its acquisition of the handset division of Nokia. Microsoft is filthy rich with enormous profits only put to shame by those other PC industry pioneers with the logo stolen from the record company that the Beatles started. 

What do I think? I really liked the tone in the memo he released to all Microsoft staff at this link on the official Microsoft site. Very up-beat and optimistic visionary tone. Lets work together, cum-ba-yah. If I was an MS employee I would like this to be the first communication from the new boss, especially after the reputation Ballmer had had for his fierce temper tantrums etc.

THE MOBILE DREAM

So first my professional judgement as the most published author (12 books and counting) in my industry - mobile - and measured by Forbes in 2012 as the most influential expert of my industry. I was the most accurate forecaster for how Nokia would fare in the past few years as its new CEO Stephen Elop attempted a conversion of Nokia's massive and loyal customer base to convert to Windows Phone. The race was not even close. While no forecaster can be perfectly correct (if that happens its an accident) I was so good on both Nokia smartphone and Microsoft Windows Phone forecasts that the next most accurate forecaster was nearly twice as much off as I was. I was almost twice as accurate than the next most accurate forecaster specifically on Nokia smartphone and Windows Phone performances. Bear that in mind on my 'judgement' about Microsoft and its Nokia acquisition.

You may have read recently some optimistic reports that Windows Phone was growing in the past year. That is true. Its about as relevant as if you asked me to talk about the big oceans and I answered talking about the Great Lakes. Lets talk about the reality.

Nokia's market share in 2010 was a massive 35% in smartphones, more than twice that of its nearest rivals, Blackberry and iPhone. That was running 'obsolete' Symbian. Then came Elop who decided to wreck the market by creating his Elop Effect (he badmouthed his own products through his Burning Platforms memo - an idiotic mistake that replicated the Ratner Effect - Elop was reprimanded by Nokia's then-Chairman Jorma Ollila for this; and that Ratner Effect was combined by an Osborne Effect when the CEO announced the new Windows platform far too early, instantly collapsing all current smartphone sales on Symbian. I have coined the term Elop Effect when you do both a Ratner and an Osborne.)  Nokia's market share set a world record fall in the handset industry by falling by more than half in just 12 months to reach 16%. Yes, a world record. This was worse than Palm or Motorola or Blackberry or Siemens or any other sudden fall in the history of handsets.

Then for 2012 we saw the global launch of the promised new Lumia smartphones running the wonderful new Microsoft Windows Phone operating system that was supposedly better than Symbian. Surely the new Lumia smartphones would sell as well - indeed should sell better - than those obsolete Symbian smartphones? Nokia could not sustain a 1-to-1 conversion from Symbian to Windows Phone. Nokia's market share kept sinking reaching 5% when the final numbers were out at the end of the year. Yes you read that correctly. This was a collapse losing two thirds of what you had at the start of the year - Elop actually broke his own world record for failure in the handset industry. Oh, I forgot to tell you, all the Lumia smarpthones were now being sold at a loss. At its worst peak in Q3 of 2012 the Nokia smartphone unit reported a 49% loss per unit sold! 

Then there was the new savior, the Windows Phone version 8 that arrived to the end of the year. Lets see how that fared. Nokia's market share for year 2013 when the Lumia range was migrated to this new Windows Phone 8 system achieved a global market share of how much better than the older Windows 7.x versions? Not better. Worse. Nokia's smartphone market share fell still more in 2013 reaching 3%. It is true yes, that compared to Windows Phone sales one year ago, Nokia did grow the Windiws Phone sales. That was while the smartphone industry grew by 46% according to fresh numbers by Canalys. And what was the cost of this 'success'. Nokia CEO massacred 35% market share on Symbian to deliver 3% on Windows Phone! No wonder they didn't name Elop the new CEO. Even after the first Lumia was launched, just in the last two years, Nokia exchanged 16% of Symbian-based market share for 3% of Windows Phone based market share. All this while posting losses in every single quarter that the Lumia series was ever sold, even after Elop had departed. This is total utter complete market disaster. Not my words. Nokia's past CEO and Chairman when Elop was hired, who chaired the Board that accepted Elop's recommendation to shift to Windows. Ollila admitted to the largest newspaper of Finland, Helsingin Sanomat that yes, Nokia's Windows Phone gamble turned out to be a total flop. A 'big mistake' was how tne newspaper reporter phrased it to which Ollila agreed.

In 2012 when all smartphones sold by Nokia ran only Windows Phone, and most of those were already on Windows Phone version 8. And the ex-Microsoft dude Stephen Elop was in charge. And he had installed hs own Microsoftian buddies to run Nokia's sales etc. That Nokia achieved 3% market share in the industry Nokia invented, and utterly dominated still only three years prior. The only way Windows Phone grew from 2012 was at the expense of the massacre of Nokia's huge customer loyalty worldwide. Yes, before Elop damaged Nokia, it was the most beloved handset brand in all countries except the USA, Japan and South Korea - three markets with many domestic handset brands AND strong local carriers that protect their domestic market. In the rest of the world where 90% of us humans live, where there mostly were no domestic rivals and Nokia competed on even terms, Nokia held over 50% market share in smartphones on every continent! Dont' be misguided by US-market anomalies when you analyze the mobile industry. 

Out of customers not scared off by the Elop Effect during 2011, of the remaining 16% market share, Nokia managed to scare off 13% of that or more than four out of every five attempts to convert to Windows Phone. And remember, those were not iPhone users. They were users on Symbian, the 'obsolete' smartphone platform. Yet somehow Windows was so poisonous that four out of five loyal Nokia customers would rather switch brands than take a Nokia using Windows! That is your 'success'. Or more precisely, the Windows based smartphones had 4% market share in year 2010, just before the Nokia partnership was announced. Now after Nokia sacrificed 32% of its market to the altar of Redmond, where is Microsoft? At 3.5% market share. The Nokia partnership resulted in a net LOSS of one half of one market share point. THAT is not success in any book.

The market has spoken loud and clear. We do not need to revisit tens of thousands of words about the how and why and when (you can read all about that in my shortly to be released 13th book). The facts are obvious. And here is my point. MIcrosoft's new CEO wrote eloquently about mobile in that nice first memo. He even welcomed the Nokia employees shortly joiing Microsoft. There is great hope at Microsoft that they can use the Nokia handset division to propel Microsoft into something akin to Apple who sells its highly profitable iPhones and owns its iOS ecosystem. There is a lot of reason for the new CEO to be optimistic that Microsoft's Nokia will be a success. It will not. Trust me because I was by far the most accurate forecaster of both Nokia smartphones and Windows based smartphones of the recent past. Why will this not work?

CARRIERS, WHAT ARE CARRIERS?

The mobile industry differs from the PC industry and almost every other tech industry in one vital way. The carriers/operators are gatekeepers to their domestic markets that no handset maker can successfully circmvent. Google tried this with the original Nexus and failed. Apple tried for years until it relented to agree to terms with the biggest carrier in the world, China Mobile (about the size of seven AT&Ts). Microsoft ifself felt the wrath of the carrier community after it spent billions buying the Danger handset manufacturer and then releasing its own Kin phones. The Kin series was killed in only 6 weeks from launch (that too is a world record failure in mobile). Why killed. Because the carriers suddenly withdrew the promised support. Yes. Microsoft itself has felt the devastation of how the carriers rule.

Nokia testified to the NY Stock Exchange and the Securities Exchange Commission in filing its Form 20-F in 2011 that the carrier relations of Nokia were the world's strongest, but that if they were damaged, all other Nokia competitie advantages such as its scale, logistics and brand would be damaged too. The carrier relations underpinned Nokia's dominant position. Elop himself said that the biggest lesson he learned out of the Lumia launch failure was how strong the carrier commnity was and he hadn't correctly dealt with them. When the three ratings agencies Moody's, S&P and Fitch each downgraded Nokia numerous times from near perfect to junk status - at every downgrade they mentioned the poisoned carrrier relations or sales channel problems as a cause. Usually the first mentioned cause. Often the ONLY cause why Nokia suffered another downgrade! Nothing was more important to Nokia's dominant position than the massive lead it had built in its carrier relations. Relations that were destroyed under three years of Elop's rule. Relations that had taken decades to build. Relations that have now been snapped up mostly by Samsung by the way so they won't be coming back either.

Nokia's fall was not because handsets were not good enough. Certainly Windows Phone by version 8 was better than the outgoing Symbian. Nokia did not fall because the marketing was bad or the prices too high - come on, every single Lumia was sold at a loss. At its worst, a loss of 49% per handset! Microsoft threw a quarter of a Billion dollars into the Lumia marketng every single quarter to help boost the handset success. Yet dismal failure.

LETS PLAY BAD COP - BAD COP

And here is the kicker. Carriers had loved Nokia (except US carriers - even neighboring Canadian and Mexican carriers loved Nokia but not the US carriers). But carriers had distrusted and disliked Microsoft. That dislike turned into hatered when Microsoft bought Skype. Not because Skype appeared on Windows Phone smartphone - Skype was available on Android smartphones but not on early Windows based smartphones. No. Carriers hated it that Microsoft the rich tech giant could now bankroll the single biggest existential threat to their business. Skype threatens voice calls. Skype threatens messages. Skype threatenes videocalls. While carriers dislike all OTT providers from Whatsapp to Blackberry Messenger, only Skype attracts pure hatered. Again not my words. Stephen Elop told the Nokia annual shareholder meeting in 2012 that carriers were boycotting all brands of Windows smartphones and it was because of Skype.

The boycotts have neen independently verified in secret in-store surveys by journalists from San Francisco to New York to Boston to London to Paris to Helsinki to Beijing and Hong Kong. Its a fact that after Microsoft bought Skype the total carrier commnuity put all Windows based smartphones into boycott. LG and Sony quit the Windows ecosytem completely. HTC and Samsung reduced their involveemnt to a token handset or two. Huawei and ZTE abandoned Windows Phone launches. In all cases that there was a statement why, it was because the carriers said they don't want the Windows based smartphones. They wanted the same manufacturers to give them Android handsets instead. Ex Microsoft executive who was in charge of the Windows smartphone unit at MIcrosoft, Charlie Kindle said that Microsoft's carrier relations were bad before the Skype purchase and then Microsoft made matters even worse essentially giving the middle finger to the carrrier community.

Understand the market now. Nokia were the 'good cop' of the pairing with Microsof the 'bad cop'. That can only work if there is one bad and one good. It cannot work with only the bad cop. Now that Nokia is removed from the equation - with all this history - can Microsoft ever succeed in mobile handsets? No. Literally never. They may stumble on for many years throwing good money after bad attempting to generate modest sales out of the 'Nokia' unit in the low single digits of market share. But the carrier community has spoken, loud and clear, that even with Nokia as the partner they will punish Microsoft. Now with Nokia no longer in the mix, the performance of the handset unit under MIcrosoft's sole management will be worse. Don't believe me? The Christmas quarter from October to December is traditionally Nokia's best quarter of the year in smartphone sales. Nokia traditionally grows 25% from just the quarter before. Most analysts were expecting Nokia to report well beyond 10 million sales in that ballpark. Nokia actual sales fell from 8.8 million to 8.2 million. This while the industry grew 15% from Q3 according to Canalys. And why the sudden totally unanticipated crash now? Bad Nokia phones? No, the brand new Lumia 1020 was shipping with the monster 41 megapixel camera and the new phablets too with screens of gargantuan size. Sprint was added to Nokia's USA sales etc. But sales? Fell. What else happened? Nokia announced the sale of the handset unit to Microsoft. Who is punishing Nokia/Microsoft now? Its the carreirs, stupid!

So mark my words. Nokia smartphones under Microsoft ownership will never pass single digits. I mean never ever ever in this lifetime or the ones to follow. Never ever cross-my-heart-and-hope-to-die never. Initially this year Microsoft can report total handset market shares in the low teens as Nokia's dumbphones help it to 15% of hte total handset market. But Nokia's smartphone market share had fallen to 3% last year. That was achieved when Nokia was balancing the evil out of the Evil Empire. When Ballmer played bad cop and Elop played good cop when visiting carrier CEOs together attempting to sell the new Lumia solutions.

The only thing that could reverse the hatered carriers have towards Microsoft is, if Microsoft would soon sell off the Skype asset. I am sure Microsoft investors would revolt on that decision as its about the only strong play Microsoft has going into the internet wars now as Internet Explorer, Hotmail etc are losing market share. So that would be a bombshell of news but I would suggest that is a day they would be making snowballs in hell if that happened in the next year or so.

AND NOKIA'S HANDSET UNIT FATE AT MICROSOFT THEREFORE IS

Ok. I am on record with my dire prediction. Luckily Nadella has no idea who I am and has very little knowlege even of the mobile industry so he can't judge how valid my points are. The issue will further be obfuscated by the disgruntled Elop who hates it that he didn't get the CEO job and certainly won't want to take any credit for the downfall of Nokia's handset empire. He will not tell the truth to the new CEO and those old Nokians who would have been brave enough to tell the truth to power have long since been fired by Elop or resigned in protest or left for personal reasons etc.

The new CEO will probably give Elop a chance at the helm of the Nokia he brings to Microsoft. It will continue to be a disaster and the new CEO very likely sees the history and will fire Elop - no do the Microsoftian amputation by giving Elop a non-job with no staff like say SVP of Mobile Strategy - and then post Elop into some far-away office like Ouagadougou or Antananarivo. But the CEO will give the Nokia unit another boss no doubt a very capable one who will spend another year or two in hell trying to turn the doomed operation around. How much beyond 2016 can Microsoft linger in useless state as a nobody of mobile will primarily depend on how long the profits from desktop Windows and Office Suite sustain the luxuries of loss-making divisions. I think Microsoft will play it like Xbox for many many years but by the end of the decade the writing will be on the wall. All the smart Nokia transfers will quietly migrate to 'any department other than handsets' at Microsoft...

Thats my prognosis on the happy memo talking so nicely about the importance of mobile to Microsoft. I do want to say that I expect Microsoft to continue making obscene profits in its other businesses so please don't read into the above that Microsoft is in trouble in the short run. Only its mobile dream is a nightmare that will never pan out.

CHANGE OR NOT TO CHANGE

(I honestly didn't want to write that part today, this second part is what promted me to end my night at my PC to author this blog)

Here is the real test of Satya Nadella. Microsoft is a bully. It has earned its nickname of being the Evil Empire. It has crushed rivals with illegal means and then armed itself with armies of attorneys so in the end it only paid some penalties that were pocket change out of its deep pockets. Microsoft has definitely been the nastiest player all over the years in tech. This was not just Ballmer, it was the total corporate culture and history. It was against its VARs, it was with its partners (Sendo, anyone?) and now the Nokia crash is also attributed to Microsoftian 'Trojan Horse' behavior by Elop especially after word leaked of his 25 million dollar bonus for wrecking the handset business. The Financial Times calculated that for every 1 Billion dollars that Elop wiped out of Nokia's shareholder value, his bonus clause paid him another 1.5 million dollars. A nice job if you can get it. The FT compared the audacity of Elop's heist to Bernie Madoff. (Incidentially I have explained why Elop could not have been inserted as a Trojan Horse but he may still have been acting in Microsoft's best interest out of misguided loyalties - and should be investigated by the securities industry watchdogs)

Ok so yes, MIcrosoft has earned its reputation as the biggest bully in the tech industry. You know what? That tactic only works if you are a monopoly (or a dictator). In any fair market conditions (or real democracies) the bully is soon ousted and never gets to that kind of behavior at the Fortune 500 sized giant corporation level. Only in monopolistic situations. Microsoft is quite different in the videogaming consoles market and in cloud computing where it doesn't hold monopolistic market power.

So what happens next. The big war for the IT industry was already lost two years ago when more computing devices were sold running Android than Windows. The installed base tips over this year when more total computing devices in use (mainframes, servers, PCs, netbooks, tablets, PDAs and smartphones) on Android will be bigger than those on Windows. So Microsoft has already lost the war while it still keeps on trucking in the lucrative desktop Windows and Office software world that will continue to be big for many years still to come. The future via smartphones is lost (see above) and last year was the first year that traditional PC sales - desktops and laptops - fell.

The gaming consoles have reached their peak as well. So where is Microsoft's futurei if not smartphones? The cloud maybe but in that world the giant is Amazon and there are several strong players. Microsoft's whole history was built on a monopoly or monopolistic market even from the very start when IBM gave MS the DOS license for the operating system on the first IBM PC. MIcrosoft has learned every nasty trick of intimdiation and nasty contract clauses and hostile attorneys to breaking contracts to breaking laws - and it gets away with it - in those markets where it is monopolistic. It isn't behaving like that on the cloud services I am told (I am not an expert on that side of Microsoft).

So my advice and 'test' of Satya Nadella is the Evil test. If he wants to transform Microsoft and bring it as a healthy vibrant major tech company in the 2020s decade 6 years from now, the only way that is possible is if Microsoft is transformed totally into the gentle giant and friend to all. Not the closed garden - my way or the highway - thinking that is Windows and its 'ecosystem'. It is the open source type of thinking best epitomied by Linux (yeah Finnish dude Linus Torvalds can be thanked for that haha) that was also very close to the core of Nokia's culture up to when Elop the cancer arrived in 2010. Android is Linux based by the way (as was Nokia's replacement platform to supercede Symbian, the highly praised but short-lived MeeGo - its succesor, Sailfish by Jolla can run Android apps natively! Imagine that, Nokia could have the full benefit of the 700,000 apps of Android while keeping its own - Linux based open souce operating system today if Elop hadnt' murdered MeeGo in pursuit of his 25 million dollar bonus)

The rot inside Microsoft is deep. I don't mean every person at Microsoft is evil. But the corporate culture is one that takes the nasty option almost whenever it presents itself. I always say 'lawyer up' when you have any dealings with Microsoft as it so often ends in tears (did I mention Sendo, MIcrosofts very first step into mobile destroyed that smartphone pioneer in a prolonged lawsuit that in the end had Microsoft paying Sendo but by then Sendo was destroyed).

HOW SOFT? MICROSOFT AS A LOVELY PUSSYCAT

The memo is a nice first step. Nadella is a young CEO closer in tune to the modern IT tech thinking of sharing - haha Communities Dominate eh, like this blog and the book we wrote with Alan Moore a decade ago. But yes. The young CEO perhaps can guide MIcrosoft into a new era, for the tiger to shed its stripes and the Evil Empire to transform into a lovely pussycat. I am not holding my breath. I think that is far too much to ask of the new CEO while Microsoft still seems so healthy today... It will take a near-death experience perhaps to motivate the then-new CEO to that desperation move. One that starts incidentially by a massive mea culpa by the CEO apologizing for all past mistakes like all lawsuits settled out of court or fines paid to the EU and US regulators 'with Microsoft admitting no fault' haha... that to me is the only way, and yes, It will obviously not happen. So expect Nadella to supervise a continuous slow death spiral from now to maybe 2025 or 2030 but I know a dead parrot when I see one, and I'm looking at one right now. Its stone dead. The parrot is definitely deceased. He's passed on. This parrot is no more. He has ceased to be. He's expired and gone to meet its maker. He's a stiff. Bereft of life he rests in peace. This is an ex-Parrot!
 
but good luck Satya I hope you prove me wrong. The industries (digital and mobile, increasingly converging) really could use a strong Microsoft for another 20 years and if you can somehow revive the Nokia handset business back to growth, I'm sending you a bottle of James Bond's favorite whisky, a nice 25 year old single malt of Macallan. Good luck! 

Comments

[Tomi T Ahonen]

Baron 9-5

If you are going to repeat silly comments WITHOUT responding to my answers I will start to delete all those unneceesary noise comments of no value. I have several times responded to you about the Kantar numbers. If the EU average is at 10% and the total market share is 3% then there must be other markets that are under 3%. And that China - bigger than EU and US combined - fell from the previous quarter Kantar numbers. I also explained that the Windows performance by Nokia is pitiful in Italy where Nokia had over 70% market share according to Kantar in 2010 and now has 17%

Now to the new stuff. Haha.. So you say Windows is the only surviving non iOS and non Android OS. No it isn't. Blackberry is still doing new sales - and Blackberry's installed base is still 3x bigger than total Windows Phone..

But Baron 9-5. I have CLEARLY stated in the BLOG not just in the comments that I now fear for Tizen. Why can you not be a man enough to admit there is some areas you and I now agree. Why do you have to come to this blog and write such hostile comments. I sometimes find some value in your comments and I tolerate you Baron 9-5 but when I EXPLICITLY say that now Tizen is in trouble and you then post a comment as if I was still promising a Tizen success - that is childish. I would hope that some day Baron 9-5 you could grow up that much that you could have an adult conversation on this blog, admit where some situations have changed - acknowledge it if I might come to your view point - as I have many times done - and admit that there are areas where you and I also agree. Obviously I mostly ignore you and as long as you want to play childish games I am prone to look for any excuses just to delete whatever was you latest 'contribution'

And on the 'only viable' point Baron 9-5 you left out Blackberry also making its own hardware, software and having a strong vibrant business-oriented highly valuable ecosystem but a niche one. And LG has the potential at any time to deploy its Palm WebOS if it wanted to become a maker of both hardware and software. It is deploying WebOS onto its TVs already so that development effort is being financed at the company. It would not take much to do an update and launch some special LG TV-phones that have some particular TV convenience. I could even see a clever play with say Nintendo to use WebOS as the platform to bring a gaming/TV/phone solution that had a lot of differentiation..

Tomi Ahonen :-)

[Tomi T Ahonen]

LeeBase (to the 'Tomi Ache' long comment)

Haha yeah.. First of all, while once again you disagree enormously with what I thought you'd mostly agree - this is the big difference betwen you and Baron 9-5 and why you get far more replies than he does. You clearly listen to what I say and you are open-minded. Baron is so dogmatic and seems like he is close-minded to any possibilities.. But enough with the mutual admiration society lets move to the topics

haha ok that is definitely possible that I was right but for the wrong reasons. And if that is the case then very likely I will be wrong the next time and wrong by a big margin... On the other hand, however, is possible I was right for the right reasons and if I turn out again very close to the truth, that becomes a more likely scenario (or the very wild coincidence I am right twice but still for the wrong reasons haha)

On RIM.. I've said many times that my Blackberry predictions have been most off and they seem to confound me all the time. Luckily/obviously that is true of all prognasticators of the industry. Nobody gets them not even their own management. But you know my fave saying 'numbers are my buddies'. Whenever I find that some numbers roughly conform with what I expected I move on. But whenever I find the numbers don't turn out as I expected, I become very curious. Why. And it sends me on some interesting hunts of info and detail and facts. Sometimes I end up in wild goose chases or arrive at totally wrong conclusions (haha, this memo could not have been written by Elop. Microsoft is clearly quitting Windows Phone..) but it also often helps me find some insights into this wonderful but weird industry.

So about RIM.. I have been drafting one of my thinking pieces about handsets that is coming out in the next few days. I might get it up even today if I could finish it but soon nonetheless. It has some fresh thinking very much about the recent failures at Blackberry and some thoughts of where it might/should go next. I think you'll find it interesting. My point here is to say I am revising my thinking re Blackberry and it will be up on the blog soon. The article overall hopefully also helps start some new discussion about the handsets biz...

On MS going long with mobile yes. I agree. I think its a very safe bet they will continue till about 2020 at least. But if the WP market share in 2020 is still ssy 3% or 5% or 7% - and the handset division still bleeds them money - as it will - then the whoever-happens-to-be-CEO will think very seriously about should they continue as a handset maker. But yeah. As they've already dumped $10B into the Nokia project (the marketing support and the purchase) and the CEO made immediately a strong commitment to 'mobile' - this is going to be a high-visibility project and they have very much cash to burn to try to make it work.

I agree with you that (assuming Tizen is truly dead not just delayed for later launch say towards Xmas) it would have been very interesting to see how Samsung the biggest tech company played the Tizen card when their prototype bada had a better launch than the iPhone or Windows and bada had no hardware partners and no carriers on its board. And as Intel was the enternal bride's maid in mobile, I had a soft spot for them too, hoping that finally with Sammy they would get their day in the sun with Tizen.

HP will be an interesting play. If they try to do business phablets they will be irrelevant in mobile but if they decided to go consumer phablets and get truly serious about mobile, they are very strong too and could become a Top 10 player in 2 years or so. Did you notice Sony is selling its Vaio unit to concentrate on smartphones. Interesting and again speaks to Microsoft facing a cul-de-sac in the tech path of desktop Windows.

Finally on Surface. Here I think Microsoft will be actually hurt the most. The hardware partners on Windows had been complaining about Microsoft's dictatorial style for decades. They had hoped to find some alternate operating system to get away from Windows but none really emerged. Until now. Not on the desktop but who cares. On tablets. Microsoft cannot get the huge desktop-Windows style global footprint going it alone. Microsoft desperately needs the partner ecosystem of HP, Dell, Lenovo, Acer, Asus, Toshiba, Sony/Vaio etc.. Without those, even if the next edition of Surface is magnificent - and it won't be most of all because of all the nastiness of Windows 8.x - but even if it was, Microsoft would at best get to Amazon Kindle type of scale in tablets. A small fraction of what the iPad can do. Meanwhile Android is the operating system every traditional Windows partner is rushing to do their tablets on. Android tablets obviously already outsell iPads and the tablet market is growing at speeds similar to the smartphone market while obviously far smaller. So the decision to launch the Surface (and now buy Nokia who also launched a proper tablet) is the thorn that pushes MS desktop Windows partners actively away from Microsoft. That Google sold Motorola, it is no longer any threat to the hardware makers. I think the Surface strategy is the biggest damage to Microsoft in the long run but Nokia will be the biggest drain on profits in the short run.

Tomi Ahonen :-)

[Satya Nutela]

I was gonna replied here: http://communities-dominate.blogs.com/brands/2014/02/microsoft-announces-new-ceo-not-elop.html , but the thread is closed....

Why would Microsoft choose Elop to be their CEO?
1. If they already use elop as their CEO, they can't send elop to any other company.... again....
2. Why would detonating a nuclear bomb on themselves and got killed?

Next Elop Mission impossible mission is:
1. Tesla, and microsoft got a future in Car technology
2. Google, long time microsoft foe
3. Cisco, and got cloud based (rival) company at cheap.

Stay tune for elop mission impossible

[Baron--95]

Microsoft, once it completes the Nokia acquisition, will be the only viable Phone Maker, other than Apple that controls it's cloud/ecosystem/content stores.

All the others - Samsung, LG, HTC, Lenovo, Huawei - are simply dumb screens funneling traffic to Google et al.

[Satya Nutela]

@LeeBase

Why you and Baron keep saying iphone as corporate phone. BussinessInsider say that apple is not mainly used by corporate anymore....

----
Android Dominated Apple At CES
http://www.businessinsider.com/android-and-apple-at-ces-2014-1

About 150,000 people attended the Consumer Electronics Show in Las Vegas this year, about 5,000 of whom were tech journalists.

Yet everywhere you went, people were using large-format Android phones instead of Apple’s iPhones, which are generally smaller.

There is an assumption that most tech bloggers are Apple fanboys and girls. Yet when I got in line to see the big Samsung keynote address on Day 1 of the show, the crew from one of Business Insider’s more annoying rival publications were all using Android.

I must have seen thousands of people (not just bloggers) using their phones at CES this year — and I felt alone as I tapped away on my little iPhone 5.

Of course, there is a huge bias in my anecdotal, straw-poll impression. Samsung dominated the show this year, and the company had flown in hundreds of its employees for the conference.

(cut).....

[zlutor]

@Tomi: "Now Microsoft - it can never allow Android on its ie Lumia ie Nokia or any other MIcrosoft-owned phones."

Well who knows. If they can remove 'Android' and especially Google stamp from it...

M$ has nothing to offer in low(er) end smartphone range (below L52x) due to WP hw requirement: DirectX9 compatible GPU. Android has no challenger there - to be honest, current Asha line is not capable of doing it.

In that arena these phones - using OS called next version of Nokia/M$ Asha platform - would be a perfect solution: stock Android (myriads of apps) without including any Google service but M$/Nokia variants instead - then it should work.
Of course, YouTube, GMail would be available anyway...

Nokia brand is still really strong in that segment and theses phones would sell like hot cakes. Ok, I know that it is not developed by US West Coast super-duper guys (but who knows), so there can be comment indicating it is POS - ;-) - but I see potential in - even in the US but definitely in the rest of the world...

So, I still hope it will be revealad soon - MWC?

[RottenApple]

@Leebase:

Don't mistake American developments with the rest of the world. Just like normal people, Apple's presence here is far less than in the US.

Also don't link to misleading articles. It just had a good laugh about how the piece you linked to spins the truth to make Apple look better than it really is. So Apple is 'present' in 90+% of a certain group?
HOW present is it in each member of this group - and how present is Android in the same member of this group? Of course such questions, where it really gets interesting, are not being answered.

This falls squarely under the same kind of manipulation and deliberate misinformation Tomi lambasted in his most recent blog. Just pick a metric that makes you look good, and shove everything else under the rug so it's not immediately apparent.

[Satya Nutela]

@LeeBase

You really are an iSheep. I gave you another example...
EVEN STEVE WOZNIAK said Apple should use android.... HAPPY?

Steve Wozniak: Apple Should Make an Android Phone
http://www.wired.com/gadgetlab/2014/02/woz-interview/

[JMM]

@Tomi: many thanks for your time to answer. Your sense of humor compensates largely your ego :-) !!

For future articles I wish if you can explain briefly if you want until more information surfaces what happened between Tizen and NTTDocomo, was another ban or there are other issues?

Best Regards

[JMM]

@Baron95, could be, because of this want to know Tomi´s opinion, he normally says that Carriers do not surrender...

[RottenApple]

@Leebase:

"Now Android IS supported in the enterprise. Mobile strategies go iPhone first, Android second."

Please remember AGAIN: What you say is true for the US, but not for much of the rest of the world where Apple's market share is considerably lower. It's hard to promote Apple products in a market - even for enterprise use - where the platform isn't that popular.

Also, quite a bit of FUD about Android, not that this surprises me from an Apple proponent.

[Tomi T Ahonen]

..while I was posting two new blogs, you sneaky bastards have been having a conversation behind my back!! You should be ashamed of youselves...

haha great stuff. I'll do some replies again. Hold on, I think our fave Baron 9 to 5 has had some nervous breakdown and posted considered sensible replies. Or else its LeeBase who'd kidnapped the Baron and now posts in his place...

Guys seriously. Very interesting stuff and good dialogue and I'll be back in a moment.. (that one about Woz and Android, yeah, I laughed)

Tomi Ahonen :-)

[Tomi T Ahonen]

Hi Baron 9 to 5. Who are you and what have you done to the real Baron 9 to 5?

Haha seriously, that was refrehing and thanks. Honestly, about every 10th posting you do has a really good gem to it or reminds me perhaps of something you said before that I do agree with but kinda had forgotten. You are a valuable member of our community here but it is so tiresome to read you nasty comments.. that posting was sensible and detailed with a lot to offer. Now lets move to the points

Blackberry at 1% US.. Actually I think the 1% is ComScore stat, isn't it. ComScore only measures consumers and the enterprise use of Blackberry is thus not counted. Its share in the US is significantly higher than 1% as the global share for BB is about 2% and the US is definitely one of its better markets still.. But lets take the 2%. That is perilously close to to not being viable anymore. And definitely 2% is almost hopeless for any attempts in the mass market like attempting to get youth customers etc. 2% is quite ok for purely niche play into enterprise and still sustainable at that level. But mass market ie their youth play - they need scale fast.

That being said. This is a hits business. Motorola was on the roaps in 2003 and then came the miracle, the Razr which propelled them to double their market share (driven by Razr which also boosted cheaper Moto handset sales like a flagship should). If BB can find once again that magic potion, they could come back quite rapidly. Not to 15% market share but from 2% to say 5% or 6%. Obviously they can't hope for that with the current portfolio so it does need a 'hail Mary pass' (am not sure are you US born, Baron, if not, the Hail Mary Pass is a US football term - at the last moment near the end of the game the quarterback throws his last attenpt and tries to score to win..)

But then on that 2% and you saying they're not viable then? Windows Phone was knocking at that 2% a little while ago and their direction is now again down from the peak 3.9% they had in Q2 of this year. They could be knocking at the 2% level by the end of 2014. Are you willing to say now that if WP is at 2% they will be also as dead as Blackberry?

On the point of pre-smartphone devices. I hear you on that. I can't agree on that particular terminology but you know I'm cool with calling all smartphones from before 2007 as pre-iPhone smartphones haha.. I can very easily see that the only 'true' second generation smartphones are not just that they launched after the iPhone but obvioulsly would have to be touch-screen smartphones at that. So we're close on that agreement. The iPhone changed everything of course as Apple always does with the introduction of their latest iToys.

And before I forget lots of the buttons/touch screens/iPhone/BB stuff you wrote about is something I have coming on the blog. I have been thinking about the smartphone usability and form factor and I think I have some hopefully insightful thinking on it. The blog isn't finished yet, but I hope to post now around this weekend-ish.

The Italy 70% argument is then not consistent.. You say when the iPhone was globally available but I think you know that the iPhone was sold in Italy from 2008 - on all 3 carriers - and thus Nokia's 70% in Italy in 2010 is totally valid and doesn't need any 'global' iPhone availability to counter it. (handsets in Italy are not subsidised so all carriers pretty well want to offer the best that is out there including always the full range of top-line Nokia models..)

Good point about BB wanting to become a software company. So they are not necessarily dead even if the handset business were to vanish or be sold. But we in the 'smartphone bloodbath' series obviously would stop monitoring any company that shifts from hardware to just software...

You are right that today WP is the only viable option to Android. It may be that some other viable option emerges but that would need a few years just to establish itself and build the apps and ecosystem etc. Today if a handset maker doesn't like Google, they can't go to iOS and WP is the only other way. Even as BB would like to license its OS, nobody would go there now as it would be far too much a risk that BB might go bankrupt next week..

'Nokia was going to caater no matter what' is something I clearly cannot accept and you clearly hold that view very strongly. First. There is zero evidence of 'cratering' happening in 2010. Nokia had its second generation touch screen OS out on Symbian so by then Symbian was passable and not a disaster as a 'post iPhone smartphone'. But because Nokia had so powerful allies in the carrier community, that was all it took. THey looked at plasticky Samsungs and buggy HTCs and pricey Sonys and obsolete Motorolas and of course they sold Nokias. Nokia had NFC and Dual SIM and HDMI-out and already then a superb 12mp camera etc.. Whats not to love. And Nokia built the Ovi store onto carrier billing meaning every single app sold on the second biggest app store on the planet behind only your beloved App Store, was now contributing profit to the carrier - at Nokia's expense. The Ovi store operated from Nokia's point at near zero-profit basis - precisely so that the carriers would prefer Nokia and Ovi... What is wrong with this picture and model. Why is this cratering.

You know that Nokia grew enormously in 2010 in real smarpthones not pre-iPhone era featurephone-style smartphones. Nokia grew 36 million unit sales from 2009 to 2010 while iPhone only grew 23 million. So Nokia was extending its massive lead over the best smartphone on the planet, the iPhone obviously with also the best loyalty (iPhone). People desired iPhones but often settled for the cheaper Nokia instead (or a Nokia flagship that might cost even more haha)

I would like to know seriously WHY you are convined that Nokia was going to crater. There is ZERO evidence of that happening in 2010, on the contrary, Nokia was strongly improving towards the end of the year and as we know the N8 was one of Nokia's best-received flagship phones ever ( partly because it was so much delayed so they got all the kinks out in time).

I can understand someone saying 'was going to lose share' to x or y, or for reason z. But you say Nokia was definitely going to crater. That does not compute with me. All the published analysts in 2010 who made a forecast for Nokia were utterly convinced that Nokia would continue as the biggest smartphone brand easily not just through 2011 but through 2012. Why is your conviction so certain and based on what, that all those expensive paid and famous handset industry analyst houses couldn't see that but you can?

Lastly the lilliputs. Sailfish, Firefox, Ubuntu I totally agree. Hopeless now that Google sold Moto and dedicates itself to not compete directly with its hardware providers. Tizen I am not convinced but as I've already written, Tizen is on the ropes. You know how much I placed my trust in the carriers signed up to Tizen. Now Sprint has departed as has Telefonica and NTT DoCoMo said 'indefinite delay'.. Tizen is in trouble but it is not dead yet. And here is the difference with NTT DoCoMo. They said immedately after Elop Effect that they are quitting Symbian. No equivocation. They came right out, it may have been that Monday if I remember correctly. They quit Symbian and go Android. If they were serious about ending Tizen, they would say so. NTT DoCoMo has put very serious prestigious matters to delay before - most famously their 'world's first' 3G launch. So this is not the end of Tizen - yet - but it may well be.

If - IF NTT DoCoMo and a couple of other carriers - ahem like the giant Vodafone - do hang on with Tizen. And IF - IF Sammy the Samster Samsung pulls a truly fabulous first Tizen phone - that could be the talk of the town and the buzz that might make the iPhone feel very passee. Samsung is one of the few players left in the industry who has the resources and competence to do a 'Razr moment' type of phone. I am surprised that they haven't even been close so far but they could do that (another who could is Sony, maybe LG and obviously Apple)

So what do you think of all that haha?

Tomi Ahonen :-)

[Tomi T Ahonen]

zlutor - haha yeah, I'd love to see it. But yeah. In Finland we have this saying 'syon hattuni..' which means 'I will eat my hat if' and I'm almost tempted to promise you that except that my Stetson 'Sovereign' Fedora style hat is a genuine antique and can't be replaced so I can't promise to eat it haha, but I am very very very certian Microsoft cannot allow an Android phone. Your arguments are all good and make sense but Microsoft doesn't need at all to make the handset unit profitable now, nor to make the featurephone business succeed or to serve the poorest customer segments. They need Lumia to grow. They need Windows Phone to grow. A lot. I am certian their market share target for end of this year is at least double their current share ie 7%. That will be their mission and they will sacrifice all Ashas and low-cost customers and whatnot to pick up some tiny fraction of a point of percent of market share. No Android phone.. But as I've said, the sneaky 'good new' propaganda ploy is to rename Asha OS as Windows Phone Lite or something silly like that and then tell the world that Windows is already selling something like 8% or 9% for Microsoft immediately after they took over from the obviously-incompetent Finnish management...

LeeBase - haha yeah I laughed at that survey too. If techie geeks are the kind of sheep who run after the next shining object, the normal consumer customer who once uses an Apple product is almost impossible to steal back. The iPhone loyalty did not drop one iota when those gadgets appeared in the hands of the geeks. That being said - Apple NEEDS a larger screen pronto.

Tomi Ahonen :-)

[S V E]

Microsoft's ambitions to become significant in the mobile universe are understandable. They have the money to put up a great effort. But at some point they will need outside developers to support their platform, developers who need to make money. And here's the ugly news for WP:

Avg developer monthly revenue:

Android $100-$200
BB $51-$100
HTML5 mobile $201-$350
iOS $500-$1000
WP $1-$50

http://www.developereconomics.com/developer-economics-ecosystem-wars-drawing-to-a-close/

[Tomi T Ahonen]

RottenApple - just confirming that point, that the USA market share of the iPhone both in new sales and installed base is far above the rest of the world. A few countries are similar but on continental level, North Ameica is iCountry..

Satya Nutela - haha yeah. That gave me a big laugh. Woz is so clued into what Apple is doing, what it should do - and what the handset options are. But to respond also seriously - same as Microsoft/Windows. If Apple offered a single device running Android, the rival of iOS, the confidence in iOS would collapse overnight and all developers would read it to mean that Apple will soon terminate iOS and go fully Android. It would be suicide for Apple. Plus its not Apple's ethos. They don't go play with the normal folks. They are superior beings who only do perfection and therefore they must have total control of everything. No way would they go to an open source pigsty to get down and dirty with the other handset makers.

JMM - I'll respond in next to your q about Tizen as this will be a longer one so let me post this reply now. hold on..

Tomi Ahonen :-)

[Tomi T Ahonen]

JMM

First, ignore that reply by Baron 9-5 its his usual babble. Secondly see what I wrote above to the 'other' Baron haha about Tizen and NTT DoCoMo.

Now to your q. I honestly do not know and I have very little on which to try to form an educated guess so much of how I think is based on wishful thinking not any signs of likely scenarios. The sudden and very broad range of cancellations took me by surpise.

That being said. NTT DoCoMo would say no if they really meant no. Sprint and Telefonica DID say no. Something is happening but NTT DoCoMo did not take the extreme step that S and T did. This is not due to Japanese politeness, they rapidly said no to Nokia after Elop Effect and at that time there were no others to give them 'cover' ie NTT DoCoMo if it wanted out, would have left when Sprint and Telefoncia left. They are not desiring to end Tizen but they clearly didn't want to launch now.

Then why did Samsung cancel its first phone and now apparently show no Tizen device at MWC? There is a good plausible theory for it. No evidence to verify it (but it may come out over time like many things we'e pondered on this blog in the past). Imagine Samsung team working hard on the launch Tizen device. Then they have some pow-wow with NTT DoCoMo to show it. And the Japanese say they don't find it good enough. Or even, that in that meeting Samsung's top boss feels embarrassed and confesses to the NTT DoCoNo colleagues that he is not comfortable with that device being their launch handset. Then they decide in the meeting, lets send this project back to be redesigned and improved. We are in no hurry, both of us do fine on Android. Lets make sure the first Tizen phone is the monster-chiller-horror-killer we want it to be. And voila, suddenly we get the orchestrated cancellations... Sprint feels betrayed that the wonderphone won't be coming as they counted on it to be their big winning ace and in an American style they walk out of the whole shebang. Telefoncia who were lukewarm members anyway take the opportunity to quit as they see Sprint walking out...

I have no knowledge in any way that any of this happened, but I could see it happening like that. The key is the first phone. When is Samsung's first Tizen phone going to be shown and will NTT DoCoMo sell it. It really doesn't matter if that comes this summer or for Christmas or next year, because of Samsung's huge size, they can wait till 2017 and still leapfrog Windows Phone to comfortable 3d Ecosystem status simply by shifting one in 8 handsets made on their brand from Android to Tizen. As Tizen has Linux roots even the port won't be too costly. But if NTT DoCoMo announces they quit too. Or if Samsung says they end the phone development and repurpose Tizen onto to TVs or cars or whatnot, then its truly over. I also don't see them - Samsung that is - wasting millions more in Tizen if they inteded to shut it down. So I am hopeful - but mostly because I would love it to work out - that Tizen will still arrive. Do remember, until bada was terminated, it was the fastest-growing new OS - yes fastest-growing but now comparing to any other start-from-scratch OS - faster than iPhone and faster than Windows Phone. That was bada without any hansdset partners. That was Samsung's 'prototype' OS launch. They would make Tizen perform better because the are nothing if not learners. Koreans. They learn. So they took apart the whole bada experience and intend to do Tizen even better - and faster - when it comes (if it comes).

Tomi Ahonen :-)

[AndThisWillBeToo]

May I suggest some other metric for Apple and business use?
Most sold phones to enterprise by Finnish carrier Elisa in December 2013:

1. Apple iPhone 5S

2. Nokia Lumia 925
3. Nokia Lumia 625
4. Nokia 301
5. Nokia 208
6. Samsung Galaxy S 4 +
7. Nokia Lumia 720
8 Nokia Lumia 2520
9. Nokia Lumia 620
10. Nokia Lumia 520

This in Finland. Nokia's home turf.

[Tomi T Ahonen]

Hi AndThis

Thanks for the stats! Great info. But for the non-Finns I have to issue a long list of cautions about this data. One, Elisa (my former employer) is the carrier with the most large corporate clients so the purchasing is distorted to big bulk buys. Secondly, Finland obviously is Nokia's home and huge home turf advantage so Nokia vs rivals comparisons are not relevant to other markets. Thirdly for enterprise, Blackberry isn't a factor because BB decided not to try to compete in the small Finnish environment as Nokia's E-Series so used to own it. Then where are we, fourth, the iPhone is in a special status as the anti-Nokia for white-collar execs because Nokia brand smartphones have the stigma of being engineer-phones. Yes in Finland, the country with the highest rate of engineers per capita, even ahead of Germany and Sweden, in Finland there is stigma to being an engineer. The stereotypical engineer things, Dilbert-stuff. Engineers are inept at social gatherings, can't talk etc. Haha, Finn's who don't talk accusing other Finns of being bad at social situatiions.. But anyway, the iPhone is thus the 'badge' of honor that you are not a geeky engineer with a Nokia smartphones. Ok and now, after the Microsoft purchase, suddenly there is backlash against Nokia, as it is no longer seen as a domestic brand and so Nokia sales are collapsing. That all should be taken into consideration when you look at this list haha.... This is good stuff, Finland very often provides good info into the open domain and for our industry (often even in English) but this list is not very useful for drawing conclusions to the rest of the world, especially in enterprise smartphone analogies because the world's most-sold Enterprise phone, Blackberry, is missing from the Finnish market...

Buyer beware...

Yomi Ahonen :-)

[RottenApple]

@Leebase:

" That was why you WOULD have been wrong had Meego ever been given a real chance."

Yawn...
That one again?

Don't forget that this would have been 2011 with Nokia having a 30+% market share, not Microsoft trying to start with zero. The developers were already working with Qt in 2010. It would have competed with an Android that, compared to what we know today, was a piece of shit. Android won because Nokia forfeited, not because it was so great. Had Nokia in that climate released something decent they would have won by default and no matter how much you deny it it would have happened by default in most countries were Nokia was strong.

Which brings us back to the known problem of Americans just not understanding what made Nokia tick and why they tend to misanalyze Nokia and its effects. You are making the same mistake again.