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

[Asiannutija]

Tomi, will you make estimates on NokiaX sales? Would be interesting to see your estimate.

[Sander van der Wal]

@Leebase

Don't be such a spoilsport, people are always having so much fun with conspiracy theories.

Seriously, consider Microsoft delivering Google Apps replacements with less onerous terms than Google. They could for instance offer OEM's a share of the data gathered, or let them pay less for the patents. Which means that Google will not be able to gather mobile data, or at least a lot less of it.

That is much more than a warning shot, it is going for the throat. Worse than Google Docs going after Office.

[chithanh]

From hardware specs and presumably price, the Nokia X phones compete directly against the low-end Lumia 520/521 which together make up a third of the Windows Phone market according to Paul Thurrott.

http://winsupersite.com/windows-phone/windows-phone-device-stats-february-2014

If these phones make a significant dent in low-end WP sales, this could cause the WP market to contract, which would result in a major problem for Microsoft.

And of course it is an excellent example of how Android is open source ("the vast majority of Android apps can be published to the Nokia Store as is"), despite some people trying to mislead their readers into thinking that it is not.

[Tomi T Ahonen]

about market forecasts...

We already saw in Nokia Q4 results that Nokia doesn't want to break out the performance of the handset business. For example the Asha line has outsold all of Lumia smartphones since the quarter Asha was released. Again did it in the Christmas Q4 quarter of 2013 - and for several quarters the featurephones ie Asha side of Nokia handsets has generated a profit while Lumia has never turned a profit for even one quarter since it launched in Q4 of 2011.

So we won't get the numbers. But even more so, Nokia will want to limit the X series to markets where Lumia sales are negligable - fearing the rapid cannibalization of Lumia obviously - and then the moment Microsoft takes over, they will end the X series. Its very possible that 2 of the 3 announced X series will never be sold anywhere...

But if Lumia only achieved conversion of 1 out of 10 loyal Nokia customers - while Nokia still had often 50% or better intended purchase by loyal owners - and Asha outsold Lumia - then at the very least these low-end priced Android based 'real' Nokia smartphones would sell better than Lumia (if sold in all markets) and very likely also sell better than Asha. They would kill the low end of the Lumia line and severely dent the high end of Lumia too - remember the effect of sales force and retail channel - no boycott against Android. And very likely would cannibalize severely into Asha sales. In short if sold globally for one quarter, X series would be easily Nokia's bestselling phone line and should be somewhere in the 9 to 10 million unit sales levels easily - and profitably. Could be much more than that if all went well and as long as there aren't early bug problems that often plagued first-run Nokia handsets of recent past. Remember this X series is a rush job....

As I said on Twitter, if these 3 X series were released just a year ago - when any sane CEO would have done that after the market clearly rejected Lumia - Nokia would not have had to sell its handset unit. And sadly, Nokia had 3 ready Linux based open source and almost-Android compatible smartphones for sale back in 2011 - the MeeGo series (N9, N950 and what became Lumia 800) which would have rocked the planet if the CEO would have allowed them to be sold globally back then...

Tomi Ahonen :-)

[TimoT]

I think Mr. Elop really thought, coming from Microsoft dominated PC world, that Windows Phone will start selling like hot pancakes back in 2012. All he needed to do was to create massive marketing campaign and wait for the money to start flowing in.

He was just another blind believer of the Microsoft outdated hubris and maybe he still is. The Nokia governing board was totally clueless to prevent the destruction of Nokia. These two things doomed Nokia.

I think the closest similar case would be the story of Commodore in the early 90's. They also made a couple of very bad strategic errors in their ignorance and arrogance and soon after that, Commodore was history.

[vasra]

I agree this smells of desperation. This is how I see it:

MS-Nokia is offering a limited Android with low end 4-year old hardware, made to imitate Windows Phone and no access to Google infra/services (out of the box, anyway).

The idea is to try and stop from MS & Nokia Asian/emerging market share from being a total fiasco, by selling Android phones in emerging markets at cheaper rates than WP phones, because WP just can't compete there (MS stupid insistence on too high royalties, royalties, too high ASP and thinking their brand means something).

The idea is to make emerging market users become Nokia (the brand) users first and then WP-style UI users/MS-ecosystem users second and only Android OS users (and masqueraded Android at that) third.

This way MS-Nokia is "abstracting away" Android UI/OS and Google ecosystem/services, while trying to stop the hemorrhage of market share from MS and Nokia.

Of course, once you own people's calendar, email backlog, accounts, etc. it's going to be very hard to switch. This is what MS-Nokia is aiming for. Own the data. Own the accounts. By any means necessary.

Then, slowly and surely they will change this low end phones to be WP phones (when they can finally ship cheap enough hardware) with similar interface and MS services in the future.

They are betting on the fact that most ordinary users will not care or notice this transition.

And then jack up the prices, once they've done this (and own the data/accounts).

That's the plan. Simple 101 OS abstraction / UI layer logic. Nothing fancy. Any economist should be able to figure this out in a spreadsheet.

I don't think it's going to work. People in India, China, Vietnam, Indonesia, Thailand and the rest are not stupid. They want the best services and full access to the ecosystem, not some watered down Microsoft-Nokia versions.

But time will tell...

[RottenApple]

@vasra:

This is never going to work. Nokia still has the problem that other manufacturers will enter that price segment as well - and not with some crippled stuff.

So, when facing the decision to buy one of these crapphones or a real Android - even if it may cost a tad more, the choice will be obvious.

[RottenApple]

Baron gets fooled by propaganda again, heh!

What does this OEM expansion for WP mean in reality?

Actually, two things:

- Microsoft is trying to give the impression that they are not the only manufacturer using the platform
- taking Microsoft's bribe money and not delivering is actually a nice way to make money.

My prediction: This will fall completely flat. So far nobody except Nokia managed to move a substantial amount of Windows phones and this will not change in the future. People do not buy Windows phones, they buy Nokia phones.

[jcamdr]

Suddenly, the last year news about Google trying to lock down the android SDK to avoid fragmentation look different.

My guess is that the android apps API can be the de facto standard that everyone have to support in a few years. I found this situation comparable to the Flash player in the internet browsers arena. Both of them might be theoretically superseded by HTML5, but the reality is actually far from that, especially for the mobile apps.

Ironically, this is one step into the direction of the prediction I have made already 10 years ago: someday, Microsoft will have no other choice but to publish his own Linux distribution. Not really that today, but still in the good direction. The reason is very simple: Linux will become a so huge market that Microsoft can't ignore it and will be forced to port his applications to it. View from that perspective, the today news is relatively well aligned, even if it's actually the android Linux distribution that forced them to act, and that Microsoft try to hide that fact under the Nokia brand.

[Giacomo Di Giacomo]

I am beginning to think that this is a move by Nokia management and employees to keep their jobs safe, since having to depend on WP means being jobless in a few years at most. They are doing this now while they still can, before M$ takes over.

[Huber]

I think that again this is proof that the Nokia/ MS-management has no clue, really.

The only upside on these phones is the Nokia-brand - and perhaps the build quality.

All other features are inferiour to a real Android phone.

Can you use Google instead of BING as a search engine? On my Android phone, I could chose BING as the default search engine for Chrome instead of Google.

You can also install various launchers, even WP-wannabees like Launcher8 on Android. Will Nokia allow users to replace these tiles with something else, like Nova or Apex launcher?

I assume they will force their users to use the phone as is, with no options.

They do not understand that you need to offer a USP (Unique Selling Proposition) when releasing a product - there actually must be a reason for customers to prefer your product.

This is also one of the reasons why WP failed so spectacularily in the market - it offers nothing the competition doesn't, except for useless gimmicks like a tile-based launcher which you must not replace.

Now the same concep is repeated with a forked Android version, this really is the idea of a genius!

[CRConrad]

Maybe the BBC was talking about the British market only?

[RottenApple]

@Baron95:

"What is amazing is that Nokia X is getting more press than the Galaxy S5."

I think you hit something there. Maybe that's the sole reason to do it - to get some buzz in the press - clueless as it is.

"I can't really blame the press, though. GS5 still no 64 bit (remember the we'll have it soon). GS5 no ship date yet - "April" is what they are saying. GS5 copies Apple's fingerprint sensor on the home button. Still plastic. Still looks like GS4/GS3."

That's the problem with the press. They don't care about quality. All that matters is empty buzzwords ans superficialities. Like with the S4 again the most important thing, i.e. increased screen resolution gets ignored. Strangely enough, nobody complains that the iPhone 5S is still the same clunky design like the original iPhone - something so sensitive that you need a protective cover to prevent serious damage in case you drop it. Never needed such a thing with a plastic covered Android phone.

64 bit is completely irrelevant unless it brings some provable performance boost. But everybody with some tech knowledge knows that by itself it will never do.
As for the plastic covers: Good. I hate metal covered phones. They tend to get damaged far more easy than plastic covered phones - even worse if you consider that most metal covered phones have no removable parts, i.e. if the phone gets damaged it'll stay damaged. A damaged removable plastic cover can be replaced.
But yeah, I know. The tech press seems to think that creating unrepairable devices is the way to go. Fortunately Samsung givess these idiots the finger - each and every year. And as it looks they get rewarded for it.

[Tomi T Ahonen]

Guys... lets keep this discussion on Nokia X and related topics ie Android, Windows Phone, Microsoft. Lets keep Samsung's Galaxy and other MWC news away from this blog. I will go post a topic on MWC news where we can debate the merits of S5 and the other news and non-news

Tomi Ahonen :-)

[Mao Nixon]

I think it's a bad sign for Microsoft that Nokia X got more press coverage than Samsung Galaxy S5. It's mean that Nokia brand is STRONGER than samsung, but WP is bad. It's like this math...

Android = 9
WP = 1
Nokia brand = 10
Samsung brand = 7

Nokia + WP = 10 x 1 = 10
Nokia + Android = 10 x 9 = 90
Samsung + Android = 7 x 9 = 63

LOL

[Earendil Star]

This the vindication of all my previous posts. Total. Complete.

Let' recap what has been unfolding here:
2010: Nokia's board sells Nokia to MS
THTRH Elop, Mr Nobody in mobile, is sent to Espoo to burn Nokia
All Nokia's own platforms are burnt down, paving the way to WP (P)OS. No Plan B.
Why? Because the target is to promote Lumias and get rid of Ecosystem n.1 (Nokia's)
Nokia's interests count zero for the new owner: MS
Idea is to transition 100% of Symbian to WP. Total Flop and Elopcalypse.
2014: Plan B (for MS), since WP has no apps and still no market share.
Build a Nokia Android without Google bits. Skin it like a Lumia. Load it with MS services.
Have a phone that, unlike Lumias, has a plethora of existing apps (Android's).
Plan: transition the next billion smartphone users to Lumia.
Result? Success or second Elopcalypse? Only time will tell.

A couple of observations:
Nokia was no longer independent since 2010, after Elop the Flop nomination.
Whatever was going on in Espoo had total approval by MS.
Actually, MS was the initiator and driver behind all Nokia's decisions since then.
Saying this (Nokia X) is an independent Nokia decision is ludicrous.

This move explains perfectly well why suddenly Meltemi was aborted.
Why develop a new platform when you can leverage Android and its apps ecosystem instead? MS is using its parasitical instinct at its best.

This is also the best demonstration we could have ever hoped of, that Android allows total flexibility. As I have repeated time and again, there was no comparison between the open nature of Android and the WP (P)OS no differentiation straitjacket. Android would have been a perfect choice for Nokia alongside Maemo/Meego.
Curiously (not!), Astros will repeat Elop's meme that Nokia had to go WP to differentiate. What a laugh. Nokia could have adopted this precise strategy on its own. With its own ecosystem. With its maps. Partnering with any of the dynamic Finnish startups. But, no, only when MS does it, then it is ok and acceptable.

So what does Nokia X show: that MS shrewdly destroyed Nokia from the inside , and is now fighting for survival using its arch-enemy's (Google's) own developed platform.

Will it be success or once again Elopcalypse? Hard to tell.

The risk, and MS knows it only too well, is that Xs cannibalize low end Lumia sales. So, these phones will be available only in Lumialess markets.

Yet there are some other risks here:
1) that the X's UX is so poor that customers would just jump to the real Android (or Firefox OS) instead. Leaving Nokia's image tarnished.
2) that Google provides a sideload Google Suite and users replace en masse the poor and crappy MS experence with Google's much better one.
3) that Google can make some legal case, and limit or monetize MS' use of its own IP, which I strongly doubt, given how Android was licensed (thus disproving allegations of those who repeatedly assert Android is not really open: heck, even MS is using it for free!)

So, if things go horribly wrong, MS wil simply pull the plug. Still, it will have had a nice shot at the next emerging market, the one Boring and Baseless Astros Too are racistly despising.

Shrewd and surprising move by the usual bullying monopolist. With regulators happily watching and doing nothing. As usual. But something that once again fits very well with all the puzzle pieces I've been putting together so far.

Never count MS out. They're all in for the mobile battle and will not desist, be sure of this.

And never hope the Astros stop repeating their BS and lies. Despite proving all along how biased their endless repetition of MS propaganda is.

[zlutor]

@Baron95: "Get cheap phone buyers as quickly as possible to Microsoft Services (and away from Asha apps), while Windows Phone (8.1, 8.2, etc) comes on-line supporting cheaper HW."

I agree with its main purpose is to hook cheap phone buyers to Nokia/M$ services but what do you think about app incompatibility between Android and WP?

Good question what these people will do when update time comes: get stick to the services or go for platform where they can use their previous apps? Especially if they paid for them.

On the other hand maybe paid app is not so frequent in this segment thus they stay with services...

We will see...

[RottenApple]

@Mao Nixon:

I think your 'math' perfectly nails it.
But I see a problem with all the reporting that may easily backfire:

Since for the uninitiated reader the whole thing could be read like Nokiia was supporting genuine Android (can we expect that they know the difference between Google Android and a fork?), customers might expect to get a genuine Android device, while actually they won't.

Ergo: Customers may feel cheated and cheated customers tend to shop elsewhere next time.
And if Nokia proves they can do Android for such a low price so will competitors with the real deal.

[RottenApple]

@zlutor:

"On the other hand maybe paid app is not so frequent in this segment thus they stay with services..."

Sorry, but what services?
We are talking about low end customers here, these are normally not those to invest heavily in services.

They may use WhatsApp or Facebook or similar stuff but normally don't have to rely on manufacturer provided services too much. And manufacturer specific services for similar tasks as the popular third party offerings won't stand a chance in a diverse market. It's pointless, for example, to use a messaging service which only reaches 5-10% of the user base.

So what does that leave them with?

Apps? And it also has been proven (and repeated ad nauseum by the American corporatists here) that these low end customers do not invest heavily in apps. So let's assume that over the lifetime of their phone they spent $20 on apps. Wow, quite an investment - and certainly not enough to make them stick if they have to choose between staying with an inferior service and going where the masses are.

Maps? Not sticky enough. Easy to change without much fuss.

Cloud storage? Last time I checked, Microsoft's cloud services are accessible from all platforms. Not an issue. And that's only if people really use them.

The customers we are talking about here want to use their phone primarily as a phone, secondarily as a mobile web browser and additionally to that as a music player, some social networking and for some generic convenience apps (which normally do not cost money so they are not sticky.) and very occasionally for some casual gaming (mostly the free to play stuff which serves as sufficient distraction for the vast majority of people.)

So in my opinion any talk about platform stickiness in this segment is grossly exaggerated.

[zlutor]

RottenApple: "Sorry, but what services?"

- Nokia Music, whatnot...

"that these low end customers do not invest heavily in apps. So let's assume that over the lifetime of their phone they spent $20 on apps."

And that amount of money can be heavy investment at their side... On the other hand I do not think they spend 20$ on average...

But you can easily be right there is no any 'stickiness' in this price segment...