If Microsoft Could Just Do ONE Thing Right with Lumia/Nokia/Windows on Smartphones

There is an excellent article by John Kirk about a month ago at Techpinions about Microsoft, and how in the past decade or so Microsoft has been the 'antithesis of strategy'. Microsoft have done quite literally the exact opposite of what strategic thinking would suggest. John often quotes from Sun Tzu in that article (and my readers will find some strong similarities to how I analyzed Stephen Elop's strategic blunders at Nokia two years ago using the same methodology). So when sound strategic thinking - consensus over literally thousands of years of writing about warfare has a clear rule 'you should not do this' or 'you should do that' - then Microsoft has done the exact opposite of that - with obviously disasterous results. Nowhere is that more clear than in Microsoft's catastrophic path in mobile.

Just for context, the very latest Strategy Analytics numbers just came out for smartphones Q2, and total Windows Phone smartphone market share (not just Nokia unit at Microsoft but all manufacturers on that platform including Samsung and HTC) is down to guess what.. 2.7%. Yes. 2.7%. Windows Phone on all devices in Q2. Nokia alone on Windows Phone had more than that a year ago this time.... Yes, Windows Phone is in its deathspiral. The Microsoft acquisition of Nokia has of course angered the last remaining 'Windows Phone partners' even more and making Windows Phone OS free will do nothing to change that anger. Those promised 14 new Windows Phone vendors are mostly so tiny nobody had ever heard of them and many of those will never even launch their smartphone on this platform, but they are happy to take Microsoft's money because Microsoft needs desperately the propaganda victories while they are losing the actual battle, badly.

Now, I am the first person to cheer when Microsoft exits the handset space. They have been a disgrace here not unlike they've been the evil empire just about everywhere in the IT space for as long as we've known the brand haha.. But... Lets be fair. If under new CEO Nadella Microsoft could re-invent itself, and become less evil and more normal as an IT company, it is very rich, and very talented, and very experienced and by far the largest software company on the planet. We - as the industry - could use a friendlier Microsoft helping this industry and giving us consumers a choice. It would not be good for the industry for Microsoft to die or disappear. And whlie I write often about how Microsoft lost the big war for the platforms (to Google's Android), Windows has a long life in it still especially driven by its dominating presence on the desktop and on traditional PCs (desktop and laptop PCs) even as Windows has failed in smartphones and tablets.

SO WHAT SHOULD MICROSOFT DO

So lets be fair to Microsoft (haha, that'll be a first on this blog, eh?). What should Microsoft do? I am seeing the advertising by Microsoft/Nokia/Lumia on business-enterprise oriented channels, saying something like 'your next business phone should be a Windows Lumia phone'... and they show a couple of different Nokia Lumia smartphones/phablets and a tablet.

Lets assume Nadella is in charge and not that idiot anti-Strategy buffoon Elop. Elop could not understand strategy if it was shot out of a cannon and redirected towards Elop with the new smart ammunition that can change direction mid-flight. No Elop will not get this. But Nadella will. And those near Elop - who read this blog - will get it of course. If we for ONCE did what strategic thinking suggests, there is a clear path for Microsoft now.

Strategic thinking says, don't attack the enemy where the enemy is strong (and worse, where you are weak). Use your own strengths, attack where the enemy is weak and you are strong. Duh. This is so basic, it makes me weep.

The strongest player in the smartphone industry is... Apple. The iPhone has the highest loyalty. After three years of Lumia failure (most hated new phone on the planet, biggest return rates, highest dissatisfaction levels ever measured) - this is where the enemy is the STRONGEST and where Microsoft/Nokia/Lumia is WEAKEST. It is sheer madness, sheer madness, SHEER MADNESS, for Nokia/Lumia/Microsoft to try to create an iPhon-a-clone. We saw how Elop did this. Nokia before Elop made phones with larger screens than the iPhone. Elop? Refused larger screens, made smaller screens for his first Lumia and over-ruled his Nokia experts that consumers wanted larger screens, Nokia knew this, Nokia had been offering those before. No. Elop wanted the Lumia to be like the iPhone. Nokia had smartphones which had removable batteries - because in most markets where Nokia is strongest, electrical supply is not reliable. Elop wanted an iPhone clone so early Lumia didn't have removable batteries, just like the iPhone. Avoiding Nokia strengths and going against the strongest partner with now weaknesses. So microSD cards? Nokia smartphones had always had removable memory cards until Elop came along, noticed that the iPhone doesn't have those - so he removed that - staple - strength - of Nokia from the early Lumia. Then the best cameras of the business. Nokia had for YEARS been the best camera on any smartphone. Nokia was known for this. But Elop looked at what camera was on the iPhoen and DOWNGRADED Nokia's cameras on the top phones to the Lumia series. He has made this same error again and again and again. Note - Elop made these decisions AGAINST the advice he got from his team at Nokia. He overrruled his best minds on all these points (and many more that i don't now have time to go into).

Then - the customers spoke. And Nokia was forced to reverse those morning Eloppian mistakes. Now the Lumia series has larger screens than the iPhone, includes removable batteries, includes microSD slots, includes better cameras - including the monster 41mp Pureview sensor of Nokia's current flagship.

Those points were all aimed at the consumer market. Some have a significant impact also in enterprise (large screens) but mostly they are consumer-focused features and abilities. The good camera, the removable battery, the microSD card to share data and move data from one device to another. Enterprise IT managers want tight security and these are not high on their priorities.

MICROSOFT STRENGTH VS APPLE WEAKNESS

What is the one area where Microsoft rules over Apple? The Enterprise PC market on the desktop. Apple has been making regular slight gains with the Macintosh into the PC market but most of the gains by the Mac have been in the consumer market, not the enterprise market. 

In the enterprise space, where you find Macs as the PCs are either the marketing DEPARTMENT of any company, or else a company working in the advertising/marketing/media industries. Thats 3% of the enterprise/corporate/business PC market globally. And they are fanatical about their Macs and they clutch their iPhones and iPads and iPods (and probably secretly also still their old Newtons) with fierce commitment. But that is 3% of the enterprise market. Almost all of the remaining 97% of enterprise PC market is not Linux haha... its Windows. Windows on the desktop, Office Suite for the apps, and Windows on the servers.

Here is a smartphone market that is incredibly underserved by dedicated and useful devices. Blackberry used to own this space and Nokia's E-Series was the world's second most used OS in smartphones used by business/enterprise (globally, obviously). Windows Mobile - not Windows Phone - was for years the third leading business platform even as Windows Phone tried to enter that space. Windows Phone was built with business-oriented features and aspects but Windows Phone was a total redesign to target consumers (trying to become iPhone) and failed the enterprise customers so much, that many would continue on the old Windows Mobile platform for long long long.

Apple constantly issues press releases about what tiny victories they have in the enterprise space but the iPhone is incredibly badly suited for the enterprise. To begin with its too expensive at its bottom range, so its good for senior execs but no corporate IT department of a major enterprsise (over 10,000 empolyees) will go iPhone-only (except if serving advertising/marketing/media industries) because they'd then have to buy 600 dollar iPhones for their secretaries etc... They need a platform that also includes smartphones in the below 300 dollar range and ideally below 200 dollars by now. (remember I am talking of unsubsidised prices here, so without contract, and no, they won't be buying OBSOLETE devices that are more than a year old haha, they have to be new, when IT buys new hardware that needs to last years, so last year's iPhone now sold with a discount is no solution for enterprise IT buyers either haha)

In reality Apple's market share in the enterprise sector is single digits. That market is still strongly Blackberry - almost all new Blackberry sales now go to replensh enteprise customers almost all who are looking for some alternative. Nokia's Symbian E-Series had its strong share that was killed by Elop. Some of that did migrate to Windows Phone - usually it is hated, as Windows Phone doesn't even support such basic enterprise computing BASIC needs as VPN haha (something of course Blackberry did, and of course Symbian did, and of course Windows Mobile did). Some are going to Android and finding horrid threats to corporate security now with all the malware and spyware in free apps on Android.

The Enterprise/Corporate market is THE strongest suit for Microsoft. That market is where Microsoft Windows and Office are strongest. That market behaves DIFFERENTLY from the rest of the smartphone market, because it is served by professional B2B sales at the carrier side, and professional equipment BUYERS at the side of the enterprise. So the carrier/operator doesn't care one iota which handset brand is selected by its enteprise customer - if that enteprise sales rep at the carrier/operator gets the next year or 3 year deal from that corporate customer and its 10,000 SIM cards renewed on their network. So if that customer says 'I want the ZTE model Z' and that handset is not officially sold by the carrier/operator, you know what happens? The sales rep says 'ok, I'll get it for you' and next week ZTE gets an order of thousands of model Z smartphones from this carrier/operator... the ZTE salesdude will be thrilled but that is how corporate sales happens. The sale here is the telecoms TRAFFIC and the handset is only the vehicle to get there. 

So this is TOTALLY different from the consumer market where a given in-store sales rep's commission is dependent on those individual handset sales and their commisisons (and fear of returns, etc). So its TOTALLY normal, for a carrier who officially does not sell Blackberry, to actually supply Blackberry to a coupe of its enteprise customers who are Blackberry houses. Totally normal. But you won't find BB on their website or in their stores. This is how enterprise sales works in handsets.

THIS IS AN OPPORTUNITY for Microsoft/Lumia now. The consumer market for Lumia/Windows Phone is dead. It will never come back. The race in the price is so badly skewed against Microsoft - their current lowest price models are twice as expensive - TWICE - as the cheapest Android devices. All their significant partners admit Android is where all the market is - including Nokia until now Nadella shut down the Nokia X Series that ran on Android haha.. Google releases new Android versions far faster than Microsoft can with Windows. Android is far more backwards-compatible than Windows is. Android has a vastly larger app store selection. Android has far more handset makers and all carriers/operators provide Android handsets while many refuse to sell Windows/Lumia at all. Its a total vicious cycle which at every stage causes mroe death to Windows Phone. Its a death cycle.

BUT not in the enterprise. What is the one thing that Enterprise smartphones want? What is the one thing that enterprise-oriented smartphones always have? A full QWERTY keyboard. That is what Blackberry was made with. That is what Nokia did with the E-Series, a whole division that Nokia created to just make Blackberry-clones - with physical QWERTY keyboards either the narrow 'Blackberry' style or the wider full -width 'Communicator' style of folders and slider form factors. 40% of Nokia's smartphones sold in 2010 were ones with a physical QWERTY keyboard !!!! And so far after two dozen Lumia handset models launched, not one has a QWERTY keyboard?????

This again is Eloppian madness and his totally lunatic goal of copying the iPhone, of running away from Nokia strengths and rather going where Nokia is weakest. Nokia INVENTED the QWERTY keyboard smartphone with the original 9000 Communicator !! It was Blackberry who copied Nokia's idea, but did it in a narrow format. There are millions upon millions of loyal Nokia fans who still use their old E7 or other E-Series Nokia smartphones with those excellent QWERTY keyboards that are brilliant for emails and SMS and Twitter and all text entry.

Note how mad this is. Microsoft Surface, the tablet that was supposed to be the super-tablet that kills the iPad, does have a physical keyboard. That is the area where Microsoft is weakest - both in tablets and keyboards (never was a master at either). But with Lumia phones, where Nokia HAS had the BEST keyboards, and Apple iPhone has none Nokia/Lumia/Microsoft refuses to give us one??

LET ME SHOW YOU

So lets go back 3 years, to the last smartphone released by Nokia before the infamous Burning Platforms memo, and after Nokia's best-ever new smartphone launch, the award-winning N8 which even a year later would win all side-by-side comparisons with Elop's first Lumia 'flagship' the Lumia 800. The last really proper Nokia smartphone released that Elop had not had time to damage, was this, the E7 in early January 2011, sold just in time to reach China's gift-giving season, even as it missed the Christmas sales for the Western markets. Note the laptop on the bankground was a full-sized laptop that I had back then my lovely Fujitsu.




So the E7 was an iPhone-sized smartphone but had a larger screen than the then-current iPhone model. Had a bigger camera than the then-current iPhone model. Had almost all of Nokia's normal bells and whistles. It was yes, slightly bulkier than the iPhone or Galaxy but because of the tapered edges, it did not feel really much thicker than the top flagships by the rivals. And its party piece was the best keyboard ever created by Nokia on any phone, far far superior to what Blackberry had, or any other rival at the time like QWERTY versions of Galaxy etc. Note that for consumer type uses, like watching a video, the touch-screen obviously tilted so watching videos was now more pleasant too. So far so good. Now this is the relevant point to 'enterprise' and business customers, especially any CEO of those companies. This is the spirit of 'Communicator' in the E7. Look at this picture and understand what it has:





Yes. The E7 was the first mass-market consumer/enteprise smartphone sold, that had truly full pocket PC functionality so far, that it could connect via HDMI to a full screen (video projector or your plasma screen TV or any PC screen you have. I connected it in this 'laptop replacement concept' to a portable TV that had HDMI in and was battery operated). It could also connect, simultaneously, to USB drives - note, I do not mean that the smartphone can be 'used' as a USB drive - that is what almost all smartphones can do - but yes in 2011, you could take your thumb drive and plug it (via adapter) to this E7 and read all your business files on it, or transfer easily files between your desktop and this magical E7. And then look below the E7, both a full size Bluetooth keyboard and a Bluetooth mouse !!!

Remember this is Symbian so it has all the enterprise-level security features starting with VPN of course. And thanks to Elop earlier in his career when he still worked at Microsoft, of course Nokia E-Series had full Office Suite softare and compatibility, so all Microsoft software runs out of the box. This was THE solution to go capture the enteprise market. A

This was commercially available by Nokia E-Series in January 2011? This was the holy grail. This was what almost every highly-mobile executive dreamt about every night packing the carry-on bag for tomorrow's business trip. If only I could do it all with my smartphone and connect all the peripherals to it, including keyboard, including mouse, including high def screen and USB memory. This is Nokia competence in the enteprise three YEARS ago. Why hasn't Elop shown this concept to the world? Why hasn't he bothered to do this ever since his Lumia was failing in the consumer market? Microsoft owns the enterprise space. But the enterprise-oriented smartphone concept STARTS with a phone that is optimized for enterprise and that means it starts with QWERTY keyboards...

If you take this set-up to your corporate enterprise buyer today, and show what Nokia's E7 was able to do 3 years ago, it is still impressive today. How easy would this be to now update by Nokia/Microsoft/Lumia/Windows ???? (well, obviiously the early version of Windows Phone couldn't even support bluetooth keyboards far less a mouse and as Symbian of course was able to, Elop decided to kill Symbian instead, to help crash Nokia smartphone sales. He even stopped sales of Nokia's own Bluetooth keyboard - because yes, Windows Phone didn't support it, but Nokia's current enterprise customers on Symbian based E-Series loved that keyboard,,,)

MY SUGGESTION

My suggestion is, that Microsoft Lumia unit rush two devices with QWERTY keyboards to augment the Lumia line. One a genuine flagship, 6 inch screen and large physical slider-keyboard with the big 16mp camera etc... Top of the line specs but also the slider keyboard. Take the E7 form factor and update it. This prototype has to exist in Nokia's designs. They could rush this to the market before Christmas. It would be the rebirth of the Communicator. Price this as THE most expensive smartphone on the market! Say 800 dollars or 900 dollars. This is NOT for you and me who live on a budget. It is the Mercedes S Series that the CEO gets and it doesn't matter what it costs. Its for that guy who walks into the phone store and says simply - give me the most expensive phone. THAT phone. What the Communciator always was for Nokia. Priced far above the iPhone. Far more expensive than the iPhone because on every technical detail and aspect, it is better (and Microsoft will of course argue that the software now with Windows Phone 8.2 or whatever, is also supposedly better than the iPhone haha). Make it ridiculously expensive so that just its price is a shock and helps create buzz about Microsoft's flagship Lumia device. And ensure that this model, selling a couple of million units will actually be profitable to Microsoft's Lumia unit.

Then do the 'karvalakki' cheap version of the above. A mid-price smartphone Lumia with 5 inch screen, 8mp camera, mid-specs, and still the full slider QWERTY keyboard. The 'lite' edition of the Communciator for the enterprise. The boss will want the top model with all the bells and whistles - like a Mercedes S series, and the mid-managers get the cheaper Mercedes model... This is the big seller. It should sell 5 million or more. The 'Junior Communicator' costing maybe in the 300 dollar range. This is the main engine of returning the Lumia unit to profits, as this becomes Microsoft's best seller, as most who aspire to own the amazing full Communicator, will settle for this junior model instead, with its reasonable price. This is the phone bought in bulk by enteprises, and only VP's get the full Communicator.

The two QWERTY mdoels are THE logical versions to include into the Lumia series for Microsoft now, because they ALREADY have that same strategy with Surface. And because Nokia ALREADY has this competence in-house. Because Nokia already has the exact physical components and competence from the E7 (and N950). This is what Nokia management pleaded for with Elop month after month, year after year, and Elop simply overruled them out of his total strategic ignorance. Elop preferred to abandon Nokia strengths and go where it is weakest, and against the rival who is strongest.  

Today if Nokia released a new pair of Lumia smartphones with slider form factor and full QWERTY keboards, they would be CREDIBLE in the enterprise segment and some consumers would give this Lumia line another look as well. Note - for the enterprise, the glaring faults HAVE to be fixed (like no VPN haha) on the software side. Make this a top priority now, and by year-end Microsoft could have a mild hit prodiuct on its hands, and could start to see some mild recovery to its smartphone business.

Note, ALL rivals in the enterprise space are weak and confused and do not offer a competitive product. MIcrosoft can come and own that space. It is far less than 10% of all smarttphones sold by now, and its share keeps shrinking but it is a HEALTHY niche and Microsoft must understand, Windows Phone can never become a mass market product, if they want it to become profitable and contribute to MIcrosof'ts strategy, its only path now is to become a niche OS that targest the enterprise. 

Go where you are strongest (enterprise). Serve them with what they desperately beg for - QWERTY keyboard high-end super smartphones with full-size touch screens too, what Apple the strongest rival will never give them. Use the assets you have that are the strongest (enterprise sales, handset design and components for QWERTY slider form factor). DUH....

This is the logical thing to do. Elop is the wrong guy to run this. The next VP who will replace Elop will OF COURSE do this as the last desperate act. The underlings below Elop ALL KNOW the strategic sense of this action, but Elop blocks them. Hey you at Microsoft - just go talk to Nadella or send him a note about this or send Nadella to come read this blog. This is so obvious but the ONLY reason it hasn't happened at Nokia is Elop. He has said in public he has overruled his underlings on this (and the other things too). This is the MOST obvious thing Microsoft HAS to do, but Elop wont' do it. So its time for Nadella to overrule Elop so that this Lumia unit can generate SOME profit contribution to Microsoft and will not be shut.

Was I correct in predicting original Lumia was designed to fail, and the original models could not sustain 1 to 1 transition from loyal Nokia smartphone owners on the old Symbian system (which everybody agrees was no longer competitive). So even as the old Symbian system was not good, the new Lumia smartphones on Windows Phone failed to even hold that share. Then was I correct in predicting Windows Phone version 8 will not fix the problem either. Was I correct that Nokia had to get to its strengths and return the parts that Nokia always had in the past - the big screens, even bigger than now larger new iPhone screens. Cameras even better than the newer better iPhone cameras. And yes, removable batteries, microSD slots, and the other things I clearly requested from Xenon 'real' flashes to haha, such basics as inward-facing second cameras... DUH. Nokia had all these before Elop deployed his mad ideas. 

Now what happened when these things WERE deployed onto the Lumia line in 2013? The sales stabilized, as I suggested it would. It is not growth yet, but the rot was ended. Then, as I said back in 2013, the need was to get the loss-making unit back to profitable. I have been 100% correct in every fault I identified in Elop's mad strategy, and Nokia has vindicated me, that by doing those things, it has found that sales stability that for the past 5 quarters, Nokia's smartphone business has recovered from the bottom level of 6.1 million units per quarter, and now been living in a steady range between 7.1 million and 8.8 million for 5 quarters in a row. (note Microsoft's newest quarter only had 2 months of Lumia sales so when adjusted for 3 months, it is in line with this, at about 7.7 million smartphone sales). I know this industry and I have a clear track record as the most accurate forecaster of Nokia. This is the OBVIOUS strategy for Microsoft which Microsoft WILL do, either now with Elop in charge or by the guy who replaces him, because it is the STRATEGICALLY right thing to do. Go where you are strongest, and the enemy is the weakest. Enteprise smartphones at the top end, with flagship QWERTY slider-format touch-screen superphones that would be worthy of the 'Communicator' name back when that name was the gold standard for the ultimate CEO superphones used by princes and kings and billionaires proudly on the planet.

And if you want your QWERTY project to totally fail today, you do a Blackberry narrow keyboard wasting half of your phone size on the keys so the screen is tiny. Or you do the 'enteprise' phone only in the lowest end of the market without the flagship so this is always seen as the janitor's phone that nobody will want. No. It has to be as Nokia always did it when the E-Series grew every single year until it had taken a third of the global enteprise market till 2010: you have you flagship super CEO model ('Communciator') on the top like the E7 was in January 2011, and then have cheaper variants for mid-level business users. Because this strategy produced 40% of Nokia's profitable smartphone sales in 2010, and enterprise business customers still today 3 years later beg for those type of smartphones - this is something Microsoft has to try, the moment it gets a sane executive in charge of the Lumia unit, who understands what is strategy.

People argued before on the first Lumia that screen size didn't matter, or camera didn't matter or removable battery didn't matter etc. Now those all came into Nokia Lumia series and the sales collapse halted and has become stable. When the two QWERTY models will be released by Microsoft-Lumia (and they will, either by Elop now or his successor) they will be so obvious 'hits' that everybody says 'of course' just like now they try to say the large-screen Lumia was 'of course' what Nokia had to do, or the 41mp Pureview camera (from Symbian) was the obvious thing to do, etc... This is OBVIOUS and Microsoft will do this before they shut down the Lumia unit for good. The next guy will of course try it, because all the logic dictates that Microsoft has to try it - they ARE doing this with Surface for gosh's sake!

Ok. I've said my piece. I am not an expert on Microsoft in the same way that I am or have been an expert on Nokia. But it wasn't my article who suggested that Microsoft has consistently selected the 'anti-strategy' option and thus caused incredible damage to its business. Its time to try the correct strategy for once. If this strategy is 'dumb' - Microsoft can find out in one hour. Make ten phone calls. Call its biggest enterprise customers and ask would they want this. They all will say yes, the majority will say if you do this and the Lumia is as good as the E7 was, they will BUY ON THE SPOT. The E7 was the ultimate Blackberry-killer which Elop killed literally three weeks after it had phenomenally successful launch in China, the world's largest smartphone market. (Elop didn't kill the E7 specifically, just all Symbian based smartphones with his silly memo).

What is there for Microsoft to lose. The consumer space is lost. The incredibly costly strategy of going where you are weakest, and with that against the enemy who is strongest - this total 'anti strategy' path has been proven to yield a world-record collapse in the market. Microsoft just fired half of its Nokia staff. Isn't it now time to try something truly logical, strategically sound, go where you are strongest Microsoft, combined with where Nokia is/was strongest, and attack where the strongest enemy is weakest, and where other enemies are all weak. Time for two QWERTY slider Lumia phones (finally, after I have been begging for these for three years!!!) But what do I know haha...   :-)

Comments

[JMM]

I don't think your suggestion will work.

Apple has in its favor:
* An incredible mindshare as "secure"
* Very interesting new tools for the enterprise under iOS 8
* Very strong MDM tools (from IBM, Oracle, HP, etc)
* Very easy to adopt BYOD policies
* A very competent enterprise deployment tool
* Minimum support requirements.
* An official MS Office app far better than the one included on Windows Phone
* A new agreement with IBM (don't know at this time what will bring to the table)

Also Google is making a good progress with Android L focusing more on the enterprise.

Additionally (IMO) nobody wants a 12cm deep slider brick in the pocket, I'm with you that a lot of people want a physical keyboard, I know a lot of people that carry a corporate Blackberry an other phone, imagine them carring your desire brick but also a 5 inch phone (because still will need an android/iPhone for apps, friends interaction, etc).

It won't happen.

[Gonzo]

Tomi, you talk about

"What is the one area where Microsoft rules over Apple? The Enterprise PC market "

But you fail to mention the alliance Apple - IBM for enterprise, that brings 100 thousand consultants and sales from IBM to push iPhone/iPad as mobile first strategy, plus adopting swift ASAP and develop enterprise mobile solutions.
This is a marriage of equals that complement each other, IBM has chosen iOS and apple hardware to push its mobile strategy in enterprise. Reasons abound but one to which I am directly exposed to is security, android's achilles heals. Mac keeps gaining Market share, your favourite measure stick in corporate, it outgrew the industry and it's the top of the corporation, the decision makers that are bringing apple into it. We used to talk a lot to CIO//CTO, no more, discussions and decisions are at a different level at least for my company and those enterprise decision makers are asking for apple and their employees too.   

Funny to think about this, but apple could even acquire IBM at current valuation  and swallow blackberry for pocket change, there is a lot more to this alliance that we don't know about, but Cook spent 10 years at IBM and 10 with Jobs, it seems to me that your predictions for the  rest of the decade will miss the Mark, starting with samsung and their compaq race to the bottom strategy ...

Apple has a lot to gain with the IBM alliance and a HUGE, and I mean HUGE Market where to grow and keep on growing, the 97% that belongs to Microsoft, it's not the other way around

[Tomi T Ahonen]

JMM and Gonzo

Thanks for the quick comments haha...

Let me say one thing off the top. A great phone has nothing to do with success in the large enterprise space. They don't go by one phone model. They go by the platform and make decisions that impact years and even decades. These decisions are made with very many considerations that all come to the platform. Apple has NOTHING to offer there even with IBM, when it comes to the IT platforms used in the enterprise (large corporations and government departments) that have 10,000 to 100,000 employees. (Apple with the exception of advertising/marketing/media). That IT manager has Windows there. And he/she couldn't care less what nice phone comes along or nice Mac from Apple. He won't throw out years of IT integration across dozens of IT systems because of some nice new toy.

That being said, the IBM alliance is interesting more for IBM than Apple. Apple has little to offer to enterprise because it is so expensive and so limited. Most enterprise software is OF COURSE not available on iPhones (except Advertising/Marketing/Media) because the devices are just too expensive. Try to find major banking or CRM or whatever corporate solutions that run on the iPhone - and I mean enterprise-size so able to support 100,000 people size organizations. They don't exist. Apple's iPhone in enterprise story is a pure myth. Look at the numbers. The Mac. If the Mac was succeeding in the enterprise to any scale, it would have to have AT LEAST 30% of desktop and laptop sales. Mac has what, 8%. It is a consumer product. Too expensive for the enterprise. Same for iPhone. Its a myth.

Now. Will Apple give the enterprise a QWERTY iPhone? No. Even if your points were 100% true, there is a SIGNIFICANT segment of the enterprise market who prefer QWERTY based smartphones. Even if your points were true and valid - they do not in any way touch my thesis - that these 2 phones go EXACTLY where Apple refuses to go, and where IBM left years ago (laptops with full keyboards obviously when IBM sold that business to Lenovo)

Is the enterprise market shifting, yes it is. Is there a market today for enterprise-optimized smartphones, of course there is. Will Apple (or IBM) give us a smartphone that is optimized for enterprise - absolutely not. There won't be an enterprise-iPhone simply because that segment is too small for Apple. But a company like Blackberry or Hewlett-Packard now in its return to smartphones, or Lenovo - or Microsoft/Lumia - can target the enterprise with smartphones that were never intended to be consumer devices. It is the only way for Microsoft to keep this unit alive as the consumer market is burned.

Tomi Ahonen :-)

[Timo M.]

My much loved Nokia foldable keyboard died a while ago. I wanted to buy another one and what did I find? Foldable keyboards are pretty much gone from the market. After looking extensively for a pro-quality foldable I finally bought the small keyboard made by Apple. It does not fold but unlike all other portable keyboards I tried it is good enough to work on and still fits my bag. Good quality portable keyboards are tough to find these days! Keyboards for phones pretty much no longer exist. The shelves are filled with keyboards for tablets which dual function as covers. I think this is crazy.

Please remember that I need a Finnish keyboard which has more characters than, say, an English one. To be able to work I need the proper layout. It is devilishly difficult to find one which is also small enough to carry in a pocket.

[Per "wertigon" Ekström]

Tomi, you say WinPhone market share of new sales for Q2 is 2.7%, isn't that an increase of market share by 0.5% units? Or are you referring to total installed base (which went from 3% to 2.7% in that case)? A bit confused right now as you can see... :)

[chithanh]

Per:
The Strategy Analytics numbers show a decline of market share from 3.8% in 2013Q2 to 2.7% in 2014Q2, along with a decline in unit sales.
http://blogs.strategyanalytics.com/WSS/post/2014/07/30/Android-Captured-Record-85-Percent-Share-of-Global-Smartphone-Shipments-in-Q2-2014.aspx

The press release does not talk about installed base, maybe you can enlighten us what your installed base numbers are based on.

[Thomas]

I like the idea, because it plays to MS's strengths and could with a bit of imagination serve as a credible alternative app ecosystem and whatnot. (Hey, maybe selling apps to enterprises for $10 per seat is more satisfying than the usual "$0.99 in the app store, lost from view 3 days after launch".)

Drawback: If the enterprise market is dominated by Blackberry, how much will winning it move the needle?

PS. Why on earth is there a "session" associated with reading a bleeding blog? It only shows up to tell you it has expired and you need to reload the page when you try to comment. But in the larger scheme of things, perhaps this is a good example of plodding enterprise tech -- no upgrades unless the supplier goes out of business, right?

[Thomas]

These days I'm thinking of Elop's reign as Mr Toad's wild ride from Wind in the Willows.

[JMM]

Tomi, I don´t agree, I cannot tell because NDAs but I work for a >300K company and we have a couple of certified devices from our IT, iPhone (5S, 5C and 5) and Galaxy 2/3 (very funny not S4 or S5).

Let me tell you that yes, there are very competent and complex corporate solutions that we use daily available for both iOS and Android based on WIN/UNIX servers that are not available for windows phone (or even Win8/8.1)

Again sorry for this, I know that you know very well this business but me too (I spent my last 18 years in IT department of >100K people corporations), I will tell you this again, Windows Phone in the enterprise will not happen. I know that the cost of an iPhone is very high as an initial investment, but when you make our ROIs the up front price of the device is only a smart part of the equation, support, deployment, life span, etc are very important parts too.

Apple has proven an excellent life span support, in my company the average life of an iPhone is 3 years vs. 2 of a Galaxy S3, we already made a business case of Windows Phone as a platform and was ditched.

You mentioned HP and Lenovo, just tell me how many Windows Phone devices HP released HP in its come back to mobility...the number is ZERO, all devices released by HP (mobility) are based on Android, HP is also betting big on Chromebooks and other Chrome devices...Windows for mobility = NADA.

Lenovo also realized and announced that they will discontinue they small based Windows tablets, again Lenovo strategy for mobility is Android.

Sorry again, but your idea for Windows Phone in the enterprise, will not work, I tell you more, is not working.

[Per "wertigon" Ekström]

chithan: Ah, sorry, my mistake, I was comparing Q1 2014 with Q2 2014, not Q2 2013 with Q2 2014. Tomi has listed WinPhone total installed base as 3.0% and 2.2% market share (e.g. new phones sold) for Q1 2014.

I guess it's hard to keep track of all turns in this industry eh? :)

[sve]

A QWERTY keyboard as a winning strategy. I had to calm down from laughing so hard. So here's the deal, a keyboard doesn't work well when it's so tiny that it fits onto a smartphone. That's why smartphones abandoned them for something worse but more flexible: a touchscreen. If you want to enter text more easily in the future, don't look to technologies of the past. The future technology for text entry is obvious: voice recognition.

[Aryan Ameri]

Tomi,

Your strategy was the perfect strategy for Microsoft/Nokia in say, 2011. Even in 2012 perhaps it would have worked.

The ship has passed. iPhone is the new blackberry of enterprise. Sure, enterprise would still love to have its hardware QWERTY keyboard back, but mostly it's given up on it.

iOS 8 has many enterprise-focused features. Android is catching up fast as well, and while this is a market that Google has traditionally overlooked, I get the distinct feeling that it's now getting serious about it. With the upstreaming of Samsung's KNOX features into Android L, Android L is also looking like a very appealing candidate for the enterprise.

In fact, I wouldn't be surprised if in a year or so, an Asian manufacturer (Samsung most probably but could also be Lenovo, their Thinkpad heritage gives them great entry into Enterprise) make a great Android L device with a QWERTY keyboard and goes specifically after that market.

[John A]

I guess Windows Phone have some sales at the low end. Nokia Lumia 520/521 have sold fine in some markets unlocked etc.
In US by WalMart and HSN Home Shopping Network it went pretty good. A cheap device with no contract.
Apple/iPhone not compete in that field.

Now HSN promoting the Nokia Lumia 635:
http://www.hsn.com/products/nokia-lumia-635-windows-phone-w5mp-camera-t-mobile/7553396

I think the new Nokia Lumia 530 can be a similar story, the launch price for that device will be even lower than the Nokia 520 when it was released. And I think the price it will drop even more before the end of this year and go below the 520 series.

You can think what you want about Windows Phone 8.1 but one thing its do fine it runs fine at low budget devices with no lagging as some of the Android devices in the same price range. Not the Samung Galaxy S5 and similar devices of course but the very low end Android devices.

[Winter]

Tomi, I think Microsoft will not heed your advice.

Microsoft is a cash machine. The meaning of its existence is to siphon off money from corporations. It needs 80% margins to live. They are willing to spend billions to protect their Windows/Office monopoly because that is where they obtain their money.

Your strategy does nothing to protect or increase their income. Their phone division would have to compete on merit, i.e., at low margins, without getting a monopoly nor protecting their other monopolies, Windows and Office. Without a large section of the SMB and consumer market, MS will not be able to block competing Office and OS products from getting traction and depressing their margin.

So, I think that MS will drop WP and will eventually give up on Windows to concentrate on their Office monopoly. Although they will know perfectly well that without an OS monopoly, they will ultimately lose their Office monopoly too.

[RottenApple]

@John A.:

That price for the Lumia 635 is already too high. The market is getting flooded with sub $100 Chinese phones that have similar specs. And with Android being the more attractive platform by default I don't see how Microsoft can hold their ground in that market segment. They'd have to sell below cost.

@Winter:

"So, I think that MS will drop WP and will eventually give up on Windows to concentrate on their Office monopoly. Although they will know perfectly well that without an OS monopoly, they will ultimately lose their Office monopoly too."

If there was one other strategy that's guaranteed to fail it's giving up on Windows on Desktop. Yes, Office may be their major source of revenue, but that's already under serious attack from all sides. It will eventually crumble.

Windows, on the other hand, is still the default OS for desktops, and that market is not going to disappear any time soon, despite some people believing that everything will go mobile. Well, that's not going to happen. Mobile will replace those desktops that were bought due to lack of a more appropriate alternative, but never those used for serious work. And this is the only market Microsoft still has under control, it'd be foolish to give that up. If they did, Office would go right down the drain along with it. And Windows has one huge thing going for it: There's absolutely no serious competition. Apple doesn't count because their OS is tied to their computers, so no custom built machines for special purposes and other money saving measures. You get what Apple gives you, and if they don't want to give you what you need - bad luck! As for Linux, that market is far too fragmented (and far too mired in its Open Source ideals) to be a threat any time soon. So why give that up?

So, what should they do? If you ask me, they are bound for major shrinkage, no matter how things develop. The company is just way too large and way too spread out to be able to survive. Eventually they have to realize what their profitable core businesses are and concentrate on them. I think we all agree on that. If they don't they won't last long. That means, that first they need to end their 'me, too' attitude and compete in every market segment that exists in computing. As for mobile, it's too late - even for corporate. They fumbled around for far too long and nothing they have and/or could do will change that.

The big problem right now is that nobody dares to say the truth. They seem to feel if they give up on mobile it will be detrimental to their shareholders and to avoid that keep going forward with a doomed buisiness (or to be more precise, with several of them.)

[John A]

@rotten Apple

The price for Nokia Lumia 635 probably will drop in time as the Lumia 520/521 did.
(A example Nokia Lumia 520 GoPhone (AT&T)$49.95)

But the very cheap device will be the Lumia 530.

A new factor is that the license cost for the Windows Phone OS is gone now.

So they are more equal to Android in that perspective. If it help I dont know. But I dont think Microft will give up on smartphones for a long time.

[RottenApple]

@John A.:

"A new factor is that the license cost for the Windows Phone OS is gone now."

No, it isn't. It would be if other manufacturers would do Windows Phone, but nobody does.

" But I dont think Microft will give up on smartphones for a long time."

Yeah, me neither. What we have here is a classic case where management considers the right move to 'show weakness'. So they rather burn their money to avoid that impression. If you ask me, that's a classic case of 'maximizing shareholder value' by ruining the economic basis of the company.

[Winter]

@RottenApple
"And Windows has one huge thing going for it: There's absolutely no serious competition. "

Do you know how much effort MS are spending getting LiMux (München, Germany) and LinEx (Extremadura, Spain) shut down?

https://joinup.ec.europa.eu/elibrary/case/limux-it-evolution-open-source-success-story-never

https://joinup.ec.europa.eu/community/osor/news/extremadura-health-care-has-switched-open-source

Both projects show that there is serious competition to Windows. The level of MS lobbying (and FUD) around these projects is phenomenal. For an US example, see the fate of Peter Quinn in Massachusetts and his efforts to get open standards introduced in his state.

[Winter]

@RottenApple
"Windows, on the other hand, is still the default OS for desktops, and that market is not going to disappear any time soon, despite some people believing that everything will go mobile."

IT is clear that technological monopolies are only broken when the underlying technology becomes obsolete. Windows will remain the king of the office desktop. But as everything is becoming a network service in the "cloud", the OS will become irrelevant and people will want to move to the interface they are used to: Android.

Linux already won the Internet server war, the Cloud war, and the Mobile war.

[RottenApple]

@Winter:

"Both projects show that there is serious competition to Windows"

Serious competition - where? If any Linux project was serious competition, it'd have more than 1% market share. These may all well be honest efforts to get away from Microsoft, but so far it hasn't mattered much - and that's not due to MSFT lobbying, that's mostly because the vast majority of customers has no interest in these things. Otherwise MSFT could spend all the money they like - and things would still end up like they did in mobile.

Tell me what you want, but these Linux things will never EVER become mainstream on the desktop. For that you do not need some idealists, you need one thing: MONEY! A lot of it. You'd have to do the same fight Microsoft tried in Mobile and failed. It's never going to work if you try to attack an opponent where it is strongest - especially an opponent who likes to burn money itself. Imagine what they'd do if they really got threatened by such developments!

As for clouds et.al., sure. The cloud is everything. God lives in the cloud. The thing is just: For many things the cloud is impracticable. The world doesn't just consist of text documents and spreadsheets that can be edited online.
No matter what will happen, there will always be things that need to be done locally. Many of these require old custom software. And much of this software cannot just be migrated to another OS.
To be honest, I am sick and tired of everyone preaching the virtue of The Cloud. You can't just offload all the computing to server farms somewhere else in the world and expect it to work.

No, the desktop world belongs to Microsoft and it'd require a major scale earthquake to change that.