What Does It Mean that Nokia Launches 3 Smartphones on Android, Now? It means desperation and that Windows Phone is dead

So its not just one X series smartphone. Today at Mobile World Congress in Barcelona, the biggest event of the mobile industry Nokia in its last appearance as an independent handset maker revealed 3 smartphones that run on Android, called the X-series. One is available immediately and two will be released in April. We do not know exactly when the transition to full Microsoft control will happen for Nokia's handset unit. The earliest it can happen is the start of April. Its pretty obvious that Microsoft doesn't like this and will end the Android based X-Series as soon as Microsoft gets control of the Nokia handset unit.

To understand just how ludicrous this is, this is as if Sony would now announce a new edition of the Playstation the Playstation 5, which would run on Wii - the system owned by competitor Nintendo! Or of Apple's next iPhone the iPhone 6 would suddenly be running Blackberry OS... Any sane person looking at either of those situations would deduct that clearly Sony is ending Playstation as a platform or Apple ending the iOS. And it would be a massive coup for the rival ie Wii or Blackberry. That is what Nokia is now signalling to the world. That Windows Phone is so flawed, they have to rush Android to the market.

But what does this tell us about Windows Phone? Nokia for a year has manufactured exclusively Windows Phone based smartphones (its last Symbian devices rolled out of the factory this time a year ago). Nokia's own Linux based smartphone platforms, MeeGo/Maemo and Meltemi were also killed by then-CEO Stephen Elop. Nokia has spent literally the world's largest ever handset launch budget to promote the Windows Phone platform, boosted even further by Microsoft's enormous contributions and in many cases for the carriers/operators launching the Lumia series - their largest launch budgets for any handset as well. In mobile the past year a Nokia smartphone has been exactly the same as Windows Phone - and for Windows Phone, Nokia has been shipping about 9 out of 10 smartphones on that platform, so for Microsoft, Nokia had become the critical component.

Now there are mere weeks left that Nokia exists as an independent smartphone maker brand. This would be the time to truly use every means possible to take advantage of the Windows Phone platform - if that had any life left. What does it tell us that now, suddenly, Nokia launches not one, not two; but three Android based smartphones - the platform that has 79% of all smartphones sold in the world (and Apple's iPhone has another 18%). Windows smartphones had 5% market share when the Nokia partnership was announced. Now after all the sacrifice of Nokia market share has been 'contributed' to Windows, did Windows grow? No! Windows has still fallen in share! The latest industry analysts report Windows Phone at about 3.5% market share (give or take one tenth of one percentage point, depending on which analyst numbers you look at).

What does it mean that Nokia now launches 3 Android smartphones at the world's largest telecoms fair? It means that Windows Phone is totally dead.

It means that Windows Phone is totally dead.

If the world's largest supplier of Windows Phone based smartphones - Nokia - which for a year has made nothing but Windows Phone smartphones - and the partner that will be taken over by Microsoft - now launches Android, it means only one thing.

That Windows Phone is so dead, Nokia would rather take the extra costs of launching on a new platform - rather than using Windows Phone for one last time! Talk about Elop setting Nokia's 'platforms on fire' haha...

Obviously we now can see that the promise of Windows Phone allowing Nokia 'differentiation' was false. Nokia is now resorting to Android for differentiation. We now know that Windows Phone was utterly unable to serve the mass market opportunity for hte big growth in smartphones - lower price points and emerging world markets (where Nokia used to utterly crush the competition selling more than half of all smartphones on its 'obsolete' Symbian only two years ago). Windows Phone cannot serve emerging world needs, so Android is needed there. And what of the apps, the 'ecosystem' that Elop tried to sell us? Now we see that Windows Phone is such a clown-show as an 'ecosystem' that Nokia's latest smartphones run desperately to the Android market where the most apps reside. Yes. Windows Phone is good for one thing, and one thing only: to destroy a smartphone maker's business (as it did for Motorola, Palm and Dell, and almost ruined LG. SonyEricsson, HTC, Samsung, Huawei and ZTE have all shown with their actions that the only way to escape the ruin of Windows Phone - is to go Android. Now Nokia is the latest proof that this is the only way to resce some profits out of the pit of desperation that is Windows Phone)

The worst news out of an Android smartphone series by Nokia is what it says about Lumia loyalty and Windows Phone inability to draw migration from Asha and S40/S30 dumbphones. Remember how Elop promised Lumia and Windows Phone would result in a 1 on 1 conversion from Symbian (reality was total catastrophy, 9 out of 10 existing loyal Nokia customers ran to the competition - mostly Samsung and Apple - while only 1 out of 10 loyal existing customers was willing to try Lumia on Windows Phone). Now we are seeing the first generation of Lumia owners considering their next phones. And we already knew from the Bernstein survey and Yankee Group study that early Lumia loyalty was atrocious. Four out of five Windows Phone owners would prefer ANY other device than another one on the Microsoft system. Hence: Android in 2014. And what of Asha and S40/S30 conversion? That didn't go well either. Before Windows on that so-called 'obsolete' Symbian, Nokia achieved 1 to 1.2 conversion - yes Nokia GAINED market share when migrating customers from dumbphones to smartphones. That never happened with Lumia. And now the Android X series is proof Nokia knows this. There is no way to get loyal Nokia customers to take Windows Phone but if you give them Android, they may well be happy to take that instead. All in all a devastating indictment of the failure of Windows Phone in general and Lumia in particular.

If you want to read more about how Microsoft lost the battle of the century with its mistakes on Windows (and Google won with Android) you may enjoy this analysis I wrote a year ago - How Android Won and Windows Lost the Battle of the Century. 

And if you thought that it was Nokia who 'messed it up' with Windows Phone but that somehow the future will be different once Microsoft takes over, please read this for a dose of reality. What happens after Microsoft takes over the Nokia handset business. (for those new to this blog, I have been the most accurate forecaster of every stage of the sad Nokia saga since the Microsoft partnership was announced in February 2011. I even said that at some point Nokia would be forced to launch smartphones on Android haha..)

PS I somehow think that Elop on stage showing Android smartphones by Nokia does not endear him to his masters upon his return to Microsoft in some weeks. I don't think Elop will last long at Microsoft...

So if you're a developer. Here is the ultimate sign that Windows Phone cannot win. Its biggest hardware partner prefers Android instead (like all past Windows smartphone partners - all of them - have done. See HTC, Samsung, SonyEricsson, Motorola, LG. etc)

Comments

[Dipankar]

Tomi, it sounded so strange when Elop spoke "based on AOSP"... I was both happy (for the Nokia Android), and mighty pissed at Elop (It took the d##khead 3 years to figure out which platform was really burning).
I personally feel the Nokia XL would be pretty good value, and would sell well in all emerging markets (fingers-crossed for XL launch before MS closes the acquisition). XL would certainly wipe out all the Lumia 520, 525, & 620's from market.

[ToTTen]

Tommy I think you're overestimating these new phones.
They all use dirt-low specs everywhere (low-res screen, low performing cpu/gpu, less than 1GB RAM, terrible fixed-focus cameras with 3MP..). They're not aiming for flagship competition or worldwide attentiom.

The X line is just the replacement for the asha line, witch no one wants nowadays because of the excellent chinese androids that have flooded the market. Instead of launching yet another asha that would probable go unnoticed, they launch these low-ends with Android because it's free to use. There's not even any google app or access to the Play Store, so zero royalties to Google and zero mention to Google in the device itself.

Microsoft doesn't have much to loose with this. They don't want to sell Windows Phone for 100€ devices, so either these had S40 or a forked "Google-less" android would be the same to them.

[Jagjit Dusanjh]

Looked at a review of the Xs. Look like Meego really...

[NW]

As others have said, Nokia and Android is a good combination in any market, especially those starting the transition to smartphones. Therefore I presume that Microsoft are now pursuing a different strategy in order to get people into their Microsoft Services ecosystem.

If they're not, then hopefully the new Android phones will be sold by the part of Nokia that is not being sold to Microsoft. Could that company simply sell phones branded as Nokia X? I'm sure they'll have no trouble manufacturing them (Foxconn) and I'm sure they could tempt the Microsoft transferees they want back quite easily.

Can't quite work out why Elop would allow this launch if it's not sanctioned by Microsoft, unless a) he has no real control at Nokia anymore, or b) he's mega p*ssed off he didn't get the top job.

[mark]

ToTTen: today Microsoft announced Windows Phone 8.1 and said that it supports devices with 512 mb of ram, 4 gb on board storage, snapdragon 200. These are low specs like those of the Nokia X: if Nokia deliberately chose Android instead of Windows Phone 8.1 it means that Nokia has lost faith in the Windows Phone strategy.

[E.Casais]

I said it as a comment in your earlier article, and I repeat it here: this X-series is intended as a replacement for S40, not as a competition to WP.

The fact that it is a customized version of Android based on AOSP means many of existing apps and most of future official Android apps will not run on it. Google is progressively migrating all API and functionality towards its own commercial, closed software package, and Nokia/Microsoft will have serious difficulty reverse-engineering an emulation layer for it. Rather, Nokia and Microsoft are providing Skydrive instead of Google Cloud, Nokia HERE instead of Google maps, Microsoft Bing instead of Google Search, etc.

It is a typically shrewd Microsoftian move. Take the open source part of the most successful platform, inoculate it with Microsoft services and apps, launch it to conquer specifically the low-end where Nokia is still a king, therefore disseminating and fostering the adoption of basic Microsoft services. Shrewd -- but whether it will be really successful is another question.

It also means that WP is not dead yet. And truly: one should never state something "is dead" until it really is. Even WebOS still gives some gasps of life nowadays.

[Bruno1024]

now we wait for astroturfers to say that actually this is a sign of wp strenght.

[Mao Nixon]

I think Elop on stages of Nokia X is like a damage control that he can help microsoft. He clearly state that Lumia is the high end, and nokia X is just some JUNK (my word, based on his word that it's a low end).

Other than that, if Nokia X turn to be a success, it would be funny to watch Microsoft forking the AOSP android project and closing the WP OS.

It would also be interesting to see if developer will be more willing to support Nokia Android compared to WP.

[Bruno1024]

Mao Nixon
well, i think that first custom development for nokia android would be custom roms without any sign of microsoft apps and extracting nokia maps .apk for other android devices. other than that, any "custom" develompent for nokia actually means development for whole android ecosystem.

it's so sad to see now android on nokia. that should have happened 3 years ago, maybe then nokia would still live...
but i must say, if you look closely, nokia xl is, by specs, almost the same phone like samsungs s3 mini, but half the price. this is something to keep an eye on, price is more than affordable.

[Wayne Borean]

Now, the big question is "How many phones will sell before the merger, and will it be an improvement?"

1) Zero phones
2) Half of Asha sales
3) Same as Asha sales
4) Double Asha sales
5) OMG it's a hit!

If the answer is 5), I wonder if it could derail the merger?

Wayne

[Mike]

Have the BBC got it wrong? http://www.bbc.co.uk/news/technology-26320552

"More than 1.1 million devices running Android are expected to ship this year compared with 360,000 using the Windows operating system, according to data from research analysts Gartner."

Surely it should be 1.1 Billion?

[foo]

@Dipankar

> XL would certainly wipe out all the Lumia 520, 525, & 620's from market.

That's the biggest treat to Windows Phone yet, since the majority of the sales come from these devices.

[Gonzo]

What Does It Mean that Nokia Launches 3 Smartphones on Android, Now?

1 - HTC might go bankrupt under intense competition.
2 - Blackberry will cease to exist
3 - Sammy will loose market share to Nokia
4 - Apple is doomed
5 - Microsoft market share won't grow anymore.

[foo]

Some interesting analysis:

> X=Crossover
>
> The reason that Nokia’s Android smartphone is called “X” because it is a crossover of Android apps,
> Nokia product design and the Microsoft cloud.

> Instead of Google services like Gmail, Calendar, Drive and Maps, Nokia has replaced all of the core
> Google mobile apps with the likes of HERE Maps, its own calendar, Outlook, Skype and OneDrive. In
> certain markets, Microsoft is offering a month of free calls to landlines through Skype and 10 Gb of
> data in OneDrive. Essentially, Nokia has released a phone that can download just about any Android
> app but ties directly to Microsoft’s cloud and core functionality.

Perhaps that's part of the plan: after all, Microsoft wants to become a "devices and services" company.

[Tomi T Ahonen]

Mike - the BBC has the decimal points all wrong. Android sells 79% currently. Thus Android number should be 1.1 Billion for 2014. Windows Phone sells 3.5% currently so it should be selling about 47 million if it manages to hold market share (in reality it can't, the share will decline in 2014 as the turmoil of transition causes the retail channel to play it safe and the Nokia/Lumia brand will have a sub-par year).

Tomi Ahonen :-)

[Mao Nixon]

@Tomi

Before we hit another statistic...
Will you put Nokia X sales number under non-smartphone or smartphone?

Thanks.

[Satya Nutela]

My Guesstimate about microsoft action toward this elop/nokia Plan-B situation

If Nokia X eat other android market share (Samsung, LG, etc) and prevent the loosing of Asha market share... it's a green light.

If Nokia X eat other android market share, but Asha line up still loosing market share... need Plan C (real android?? LOL)

If Nokia X eat Lumia market share, and not other android market share, ABORT!!! ABORT!!!

[E.Casais]

@Mao Nixon

"non-smartphone or smartphone?"

This distinction does not make any sense -- if it ever did -- and neither do those other terms that are periodically thrown into the discussion without any tightly worded definition ("superphone", "phablet").

What counts is a classification by low-end, mid-range, high-end (or price ranges). Or by platform (Android, iOS, WP, etc).

@Leebase

"a BILLION non-paying consumers"

But these consumers _are_ paying -- except in amounts you consider contemptible, and not for the services you are thinking about (once more: look at mobile banking in Africa).

It is hard to leave one's affluent-Western-centric view of the mobile world, but there are plenty of opportunities out there that do not look like what has been epitomized by Apple.

[Sander van der Wal]

Hehehe. Microsoft has pulled one on Google.

Google will have to keep working on Androids lower levels, Microsoft was already making money on the patents, and now Microsoft will replace the high end Googly bits with the money-making stuff that is on WP too.

Essentially, Microsoft is still reaping the benefits of owning a closed source OS, but with somebody else paying for the stuff OEM's won't buy from Microsoft anymore.

If Ballmer planned this, he's brilliant. If he planted Elop in Nokia to make this work, he's out of this world.

[E.Casais]

@Leebase

"Will the freemium model or the advertising model work for the next billion?"

Advertising is very country-specific. There is plenty of advertising going on in developing countries -- but advertising models built for the USA cannot be transplanted as such in Uganda or Paraguay -- or in the Netherlands for that matter.

"What value will the Facebooks of the world be able to extract from advertising to the Ugandan farmer?"

The real question is what value can the Ugandan farmer extract from Facebook? If none, then forget about the Facebook model and look at what is happening in Uganda in the mobile/Internet/economic space right now to figure out where to go.

Facebook, twitter, Skype, One drive, Outlook.com, Whatsapp: Amongst these services, to my knowledge only Facebook is truly profitable. The online division of MS is losing money, Whatsapp and twitter profitability is either dubious or quite low. Hence, these are not good examples to question the profitability of services in the 3rd world, since they are not good examples of soundly profitable businesses in the 1st world to begin with.

"Where will the income come to support this?"

Nokia/Microsoft has to figure it out. Regarding mapping services, I would presume developing something to use them in conjunction with bush-taxis/matatas (a kind of mix between Uber, TaxiMagic, Nokia Public Transport, Nokia HERE) could be a way to go. Yes, this requires investment and development, but that should be no surprise.

Now, Tomi had been looking at various business models for services, advertising and mobile applications in Asia and Africa, and I wish he could report on the latest developments. This will be probably give some leads to answer your questions.