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« Lets Talk Handset Features - My Hypothesis is that Screen Size Trumps Everything | Main | MWC Related News Day 1 - Samsung Galaxy S5 and other news and non-news »

February 24, 2014

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...

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