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

[RottenApple]

@zlutor:

Sure, $20 can be an investment. But let's be serious here: These $20 will get held against the price for staying with the services vs. upgrading to better hardware when the time comes.

"Nokia Music..."

With those services it depends on what they offer and whether the existing content can be transferred.
As long as it's music bought in their store there should be a way to get if off the old phone and onto the new one. You can even do that on Apple's devices without too much of a hassle.

And if it's a subscription service, that can be terminated so that on the new phone another subscription service can be used, no big deal. There's no loss involved.

The stuff that can really cause a serious case of lock-in is like Apple's eBook offerings which are hardwired to Apple's hardware.

But if you ask me, offering a service that requires one's own product to be bought is a dead end business model. It only can work if one manufacturer, like Apple in the US, holds a major piece of the market. Microsoft and Nokia aren't even close to that in the countries where they are moderately successful.

[Spawn]

Thing is new $70-$100 Android devices running AOSP 4.4 on dual-core with 512MB RAM are standard already in this, the emerging, markets since a while now. This markets are highly competative, much choice, latest and greatest long before it hits in way more expensive and crazy limited variants western markets. In this markets Google Android is not number 1, AOSP is. Its a 1 minute job to add GSP but not much do because Google services are just not demanded. Thing is in this markets western services like Google, Facebook and Microsoft are not of much relevance.

[Mao Nixon]

It's really funny to watch microsoft astroturfer such as Leebase & Baron comment on this news.

They used to say that "Android user can't appreciate the apple luxury ecosystem, yada, yada, yada, apple got the most profit, yada, yada, yada"

But when Nokia announce cheap phone with small profit, they talk something else.

LOL.

[foo]

> Tomi - sorry to say, but you are missing the point.
>
> This is a MASSIVE attack on Google from Washington State - Both Amazon and Microsoft are now in the AOSP
> camp, eviscerating all signs of Google Services from their Android devices.
>
> Sadly, you (and others) will be reporting these devices together with Google Android for market share, and are
> missing the point that this is really a completely different ecosystem.

The question is... why hadn't Nokia done that before?

No, it's not an attack against Google. It is a desperate move.

And, maybe, a way to put pressure on Microsoft -- the deal is not complete, you know?

[Vesku]

These NokiaX products aren't really a replacement of anything Nokia previously had. This price band of smartphones is the fastest growing smartphone segment. WP simply doesn't run on devices at this price point (assuming positive margin) and WP also lacks support for dual-SIM, which is a mandatory requirement in the target markets for NokiaX. This is a very pragmatic product move from Nokia to stop bleeding market share, and I hope they succeed.

[foo]

Bad news for those expecting a huge success:

> Here, the phone-maker borrows, bends, and recombines elements of Android, Windows Phone,
> and Nokia's own Asha OS (...)
>
> The result is an awkward amalgamation that doesn't do justice to any of the hybrid platform's
> component parts. For someone familiar with all three inspirations, the Nokia X OS mashup is an
> ill-fitting mix at best and an unholy union at worst.

Source: http://reviews.cnet.com/operating-systems/nokia-x-software-platform/4505-3671_7-35835188.html

It looks like a half hearted project designed to force Microsoft's hand.

Given that the result of the experience is not good, and Windows Phone could be used in equivalent hardware, I don't see why Microsoft would keep the project alive after acquisition.

[Spawn]

Remember Elop announcing that WP needs to go faster low-end? Remember the pressure he got from investors for not offering Android? What we know is that NokiaX must have been in development since at least 1.5 years judging by use of AOSP 4.1. That matches to the time it became visible for everybody that the WP-strategy totally failed. It matches to Meltimi being canceled because Android was plan B. Asha/Smarterphone as desperate move to delay a Nokia Android.

But better yet, AOSP 4.1 means they didn;t bother to upgrade last 1.5 years even with the for low-end vital important optimizations done in later versions. 1.5 years ready but closed away in box and just now, after contracts with Microsoft are signed, moved out and pushed to public.

This is so fishy, so corrupt, so questionable. Nokia got f*cked up from inside by the whole upper management on intention.

[pole]

That is probably correct that chief Elop wants to get WP towards low end. The problem simply lies within the OS, its requirements and hardware which support the OS. The problems with that have been known from day one. WP has certainly moved to that direction but without success to get close with Android.
It just shows competitiveness status of WP.

[Tomi T Ahonen]

Hi all...

Great comments please keep discussion going

First to all. I saw the comments and also lots of comments on TW and read a few articles about Nokia X and decided I have to do some analysis both of the Why and then the How Much sides of this matter. I have that analysis in draft form, I'll hope to post soon. So I will skip many good comments here about 'why' Nokia did this and also the ones speculating of the market chances and what parts of the business could be cannibalized. That all is coming in the blog.

ToTTen - 'Microsoft doesn't have much to lose' - in terms of handset sales, sure. Who cares if they are low-cost devices whether they run Nokia proprietary S40/Asha or Android. But that is not Microsoft's core business and foundation for its total empire. Windows is. Windows is in a death-struggle against Android for all the marbles, for world domination - and Windows is already losing. They can't have 'their' Nokia now waving the flag of surrender and jumping onto the enemy bandwagon. Microsoft would be far better served to simply eat the 7 Billion dollar investment in Nokia and shut down the dumbphones business than letting 'their' Nokia promote the superiority of their direct rival - the only global rival to Windows in 3 decades - is Android, which now ships on more computing devices than Windows and as of December 2013, is also in installed base on more devices than Windows. Microsoft is losing the war - badly - and one of Microsoft's best allies - Nokia is now shifting to fight on the enemy's side... Its like Italy switching sides in World War 2.

Jaqiit - yes that hit me too. There is eerie similarity to MeeGo in Nokia X. Its partly because Lumia was a bastardization of MeeGo (Lumia 800 was originally the third intended MeeGo smartphone after N9 and N950) and obviously the Linux history at Nokia...

NW - I am pretty sure that Nokia is forbidden to sell any phones for several years now, as Microsoft bought their handset business. So that scenario while lovely, is not going to happen. BTW Elop 'control'? If you were CEO and removed from CEO, you are now only a figurehead. The Nokia Board is livid that Elop ruined Nokia's crown jewels. Elop has no control whatsover at Nokia. Chairman Risto Siilasmaa who is acting CEO is no doubt scrutinizing every email and meeting that has Elop's name on it haha... no power whatsoever - but - but - Elop will be in full control not just of Nokia handsets but also Xbox and Surface once he and the Nokia handsets business is transferred to Microsoft. Trust me nobody in Finland trusts Elop for one half of one word. He is now just seen as a traitor and muppet and is ignored. But Elop is a good actor in front of cameras, send him to do press, that is what the clown is good for. He can even convince press to report that as Nokia teaches loyal customers to use Android now, that means they are easily converted to Windows Phone in the future (when that very same experiment failed totally from Symbian to Windows Phone - and Android is by no means as lousy as Symbian was)

There were some clauses in the transfer contract by which Nokia's exact compensation depends on sales performance of handsets up to the transfer. That is in Microsoft's overall best interest - they don't want Nokia to now strip the handsets division of all talent and resources and let it sink for half a year. Microsoft has written into the contract clauses to reward Nokia for growth in handset sales. That is partly what is motivating this action. Nokia Board knows that Windows Phone based Lumia is dead and won't deliver sales so they need something else - that is Android now and Nokia X. Even if they only are able to sell some weeks of Nokia X, that helps overall achieve better performance and have Microsoft pay a better final price than without it... What helps Nokia in the final analysis now, will be damaging to Microsoft's image but all the more certain that Microsoft will end the Nokia X project the moment they get their hands on it.

mark - brilliant point! I actually copied that onto Twitter, mentioning it was your comment. Thanks!

E.Casais - good thinking but it fails on the pricing. The prices for the X series fall right in overlap of lower-end of Lumia. They will yes no doubt cannibalize Asha but they will devastate low end Lumia sales where the only action is currently. Compare Lumia 520 vs Nokia XL and its no contest. Priced about the same with same CPU, you get bigger screen, second camera, LED flash, dual SIM etc on the XL. It will crush low-end Lumia. Yes the cheapest X series targets Asha but the top end will bite Lumia and hard. (I'll do the analysis in the upcoming blog)

Tomi Ahonen :-)

[Jamie]

"Outgoing chief executive Stephen Elop presented the new handsets, stressing that they will become part of the Microsoft product family."

This goes to prove that Elop was out to destroy Nokia right from the beginning. Why did he not plunge into Android right from start ? At this eleventh hour because MSFT will want to offload ASHA range then he jumps in bed with the Droid??

[Tomi T Ahonen]

E.Casais - about 'dead'. When the company that makes 90% of the devices and previously said they will only do Windows Phone, reports declining Lumia sales while industry grows, and now comes to the biggest industry event and show NO new Lumia devices but suddenly introduce THREE smartphones on Android - that means Nokia has determined that Windows Phone cannot sustain growth. They have to go to Android to get growth. It is tantamount to admitting Windows Phone cannot succeed. By the company that makes 90% of Windows Phone smartphones. WP is dead. It is only maintaining an illusion of life by the artificial injections of emergency cash by Microsoft to Nokia, and injections of more cash to carriers, and injections of more cash to developers, and injections of even more cash to other handset makers to make noises they might launch another device here. This is a barren dead land. Its been poisoned beyond life. If there was some chance of modest life in Lumia, Nokia would have shown us 3 new Lumia devices now. Not even one.

Bruno1024 - haha yes. Well guessed...

Mao Nixon - haha that would be great but no it will never happen. Microsoft was for most of the past 3 decades the most profitable tech company and by far the most profitable software company. Still today their profits are essentially all in software, anchored on Windows. Xbox is at best neutral and Surface hasn't come close to recovering its development costs and the new Nokia unit is massively unprofitable. They would be foolish to take the miniscule profits they could squeeze from the low-end of the smartphone market and give up in return the massive profits driven by Windows on the desktop and related Office Suite and other software... Remember Windows is in a death-struggle vs Android. Google's Chromebooks are already a major piece of the notebooks sector, etc. Its not just Android on smartphones and tablets.

Bruno1024 - yes this is what Nokia could have done in 2011 if the 'do we select Android of Windows' choice was done honestly. If Elop had ay integrity, he would have recused himself from that decision-making process and would have brought in some past Nokia exec like Pekka Ala-Pietila to run an evaluation project with no bias. Obviously as most industry experts said on Feb 12, 2011, the right choice was Android not Windows. But what we saw when MeeGo came out, the best case for Nokia would have been Linux based open source Android-compatible Nokia-controlled software, MeeGo. Like we saw on the N9 and N950, Now the Nokia X is a desperation move to recover a few million sales. If Nokia's CEO had fully supported MeeGo and let the N9, N950, Lumia-800 MeeGo version and other devices be sold widely in 2011, Nokia would never have been in trouble and would easily rule still today as the world's largest smartphone maker - remember, the N9 was judged better than the iPhone - no other phone by ANY manufacturer has had that kind of reception. And now the evolution of MeeGo, Sailfish OS by Jolla, is Android-apps compatible. If rather than destroying MeeGo budgets and forcing MeeGo managers to resign, Nokia's new CEO would have supported MeeGo, we'd have fully Android apps compatible but Nokia-optimized Linux based open source MeeGo on all Nokia smartphones today and Nokia's market share would be near 30% and Samsung's somehere near 20%. And Nokia's smartphone unit would still today be reporting the second best profits of the industry behind only Apple as it did still in 2010.

Wayne - I'll do my math on the blog but roughly speaking half of Asha and half of Lumia. But that is if Nokia still controls the handset unit through most of Q2. If Microsoft takes over on April 1, the X series is killed on April 2 and we'll never see 2 of the 3 promised devices.

Keep the discussion going

Tomi Ahonen :-)

[CharlieSouth]

I agree with LeeBase on the notion that MSFT can act rationally. It's about time, lol.

What I don't get at times is Tomi's glorification of the MeeGo platform. If there was an alternative to the 'obsolete' Symbian other than WP, it was clearly Android or AOSP. Why spend millions on in-house software development and support when another company (Google) already put in all the effort?!

What benefit did MeeGo offer over AOSP, when the latter is fully modifiable and can be made to look like anything you want?

Nokia X, like the Kindle Fire, is a proof that AOSP-based devices have serious potential to become mainstream and make a dent on Google's dominance in web services. Isn't that what MSFT ultimately wants?

[Henrik Nergård]

If X is the death for Windows Phone I dont think we should read this:

"Microsoft has announced that it is now working with nine new Windows Phone 8 hardware partners as it seeks to "scale the platform" to higher volumes. The new partners include industry heavyweights LG, ZTE, Lenovo, and Foxconn, plus a number of smaller OEMs in the form of Gionee, JSR, Karbonn, Lava (Xolo), and Longcheer."

[Bar-Mobi-on]

Ballmer’s relations with the board hit a low when he shouted at a June meeting that if he didn’t get his way he couldn’t be CEO, people briefed on the meeting said. The flare-up was over his proposed purchase of most of Nokia Oyj (NOK1V), and part of an ongoing debate: Should Microsoft be a software company or a hardware company too?

Several directors and co-founder and then-Chairman Bill Gates -- Ballmer’s longtime friend and advocate -- initially balked at the move into making smartphones, according to people familiar with the situation. So, at first, did Nadella, signaling his position in a straw poll to gauge executives’ reaction to the deal. Nadella later changed his mind.

Ballmer was so loud that day in June his shouts could be heard outside the conference room, people with knowledge of the matter said. He’d just been told the board didn’t back his plan to acquire two Nokia units, according to people with knowledge of the meeting. He later got most of what he wanted, with the board signing off on a $7.2 billion purchase of Nokia’s mobile-phone business, but by then the damage was done.

from: http://www.businessweek.com/news/2014-03-05/microsoft-ceo-nadella-inherits-legacy-of-ballmer-board-division#p1

[zayıflama]

Realy ? 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!

[AndThisWillBeToo]

The Windows Phone that is now dead is rumored to see new devices.
http://www.wpcentral.com/nokia-will-unveil-morelumia-world-april-2nd
It's probably Nokia reading this blog and reacting accordingly.
No, better yet: it is Nokia launching new phones since China and Korea regulations issues lenghten the closure of M$ Nokia deal.
Actually - I think it is Elop being clueless.

What do you Tomi think? Desperation? Windows Phone dead? Microsoft spinning the story?

[AndThisWillBeToo]

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

http://conversations.nokia.com/2014/04/02/lumia-930-lumia-630-lumia-635/