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Bizarre Stat of the Day: Microsoft (and Nokia) have only achieved 50M Lumia activations? Seriously? Out of 76M shipments? What happened to the other 26M? Seriously! Tossed into garbage by retail?

I am doing my catch-up reading after some heavy travel and found a truly bizarre stat from mid November. Microsoft proudly announced they had just passed 50 million cumulative Lumia activations. Yeah, that may sound like a big number until you remember Lumia has now existed as a product available for sale for 37 months and has achieved 76 million cumulative shipments through mid November. Yeah. I know. Thats a massive 26 million missing smartphones. Where the hell are they? What has happened. This was a true WTF moment for me on Twitter when I noticed that number and I had to go back and double-check my numbers through every Nokia and Microsoft quarterly release to verify my numbers. But yeah. 76 million cumulative shipments through mid-November (I have added the half-quarter sales estimate obviously, as we only have the quarterly data through end of September. The cumulative sales were at 70 million at the end of Q3).

LUMIA SHIPMENTS

So lets first check on the math. This is the table of total Lumia shipments from the dawn of this Eloppian disaster in Q4 of 2011.


LUMIA QUARTERLY SHIPMENT NUMBERS

Q4 2011 . . . 0.6 million (TomiAhonen Consulting estimate based on Nokia numbers)

Q1 2012 . . . 2.0 million (TomiAhonen Consulting estimate based on Nokia numbers)
Q2 2012 . . . 4.0 million (official Nokia number)
Q3 2012 . . . 2.9 million (official Nokia number)
Q4 2012 . . . 4.4 million (official Nokia number)

Q1 2013 . . . 5.6 million (official Nokia number)
Q2 2013 . . . 7.4 million (official Nokia number)
Q3 2013 . . . 8.8 million (official Nokia number)
Q4 2013 . . . 8.3 million (TomiAhonen Consulting estimate based on Nokia numbers)

Q1 2014 . . . 8.1 million (TomiAhonen Consulting estimate based on Nokia numbers)
Q2 2014 . . . 8.7 million (TomiAhonen Consulting estimate based on Microsoft numbers)
Q3 2014 . . . 9.3 million (official Microsoft number)
Q4 2014 . . . 6.0 million (TomiAhonen Consulting projection through mid November based on Q3 numbers and historical Christmas sales bump)

TOTAL SHIPPED . . . . 76.0 million
TOTAL ACTIVATED . . 50.0 million
Estimated in channel . . 3.1 million (4 week inventory based on Q3 numbers)
Shipped not activated . 22.9 million (is 30% of total shipped)

Above data by TomiAhonen Consulting 6 Dec 2014, based on Nokia and Microsoft quarterly results and industry data
The above data may be freely shared


So wow. Even if we allow for a generous 4 week inventory build-up (Nokia historically reported about 3-4 weeks of inventory, this is at the high end of that historical pattern) it still means nearly 1 in 3 Lumia smartphones that shipped from Nokia/Microsoft was never activated !!! 

how is that possible? A few scenarios. So some were given to various potential users as samples or as gifts - that were never then even used. And others - probably the majority - were just shipped to stores that were never sold. Some would be returned in later periods and thrown away by Nokia as unsellable obsolete inventory. Others would remain in the stores in disocunt bins until discarded as trash as unsold. Note a significant number would be in that Q3 2012 time period (when Ballmer 'osborned' the Windows 7.x series not allowing an upgrade to Windows 8) and in the Q2 2014 time period when Nokia introduced the X Series. And some may have been given out as cheap kids' toys from those discount bins, never activated but used as a child's toy, unconnected phone. Totally meaningless in the 'ecosystem' that Microsoft attempted to build for Windows Phone. So yes. 30% of all Windows Phone based Lumia smartphones shipped have not been activated. That must be an industry record for futility.

Remember, first of all, that this was a new smartphone series replacing the world's bestselling smartphone for which Elop boldly promised 1-to-1 transition. Not allowing any growth while the market has more than doubled, even at 2010 sales levels Lumia should have sold 338 million smartphones. For every one conversion Nokia then gave away 4 loyal customers to the competition (most of them went to Samsug as we've seen). But those numbers were based on the reasonable assumption that every Nokia Lumia that actually shipped from Nokia factories was then sold by retail. Not that another third of what shipped were not ever sold. So the rejection rate of loyal Nokia existing (Symbian) smartphone owners was more like 5 out of 6 rejected.

We know of course now what were causes to the comprehensive Lumia market failure. There was the carrier/retail boycott that even CEO Stephen Elop openly admitted to the Nokia shareholder meeting. This had started just before the first Lumia handsets started to be sold in 2011 Then there were the infamous 101 faults (later upgraded to 121 faults) that caused the series to produce Nokia record level return rates and huge dissatisfaction by loyal Nokia users and severely bad word-of-mouth in 2012. This was to the degree that even the new Asha series outsold Lumia for the full period that the two were sold side-by-side from 2012 to 2014. And various consumer surveys found that the early buyers of Lumias (and other Windows Phone smartphones) rated them as the worst things they'd seen and would not buy another again, etc from 2012 on. And then no upgrade path to Windows Phone 8 in 2013. And pigheaded refussal to give Nokia loyal customers what they wanted (like good cameras, big screens, QWERTY keypads etc) until Elop was no longer calling the shots and the first good cameras and big screens came too late in 2013 to stop the handset unit collapse. Nokia even launched Android based smartphones in early 2014 as the ultimate proof that the Windows Phone based Lumia series was a dead duck. Even Asha series outsold Lumia in the periods when both were sold side-by-side while all the marketing push went to Lumia. Total utter comprehensive market failure if you sell your phones at a loss and still one third are never even activated!

While Elop's propaganda machine was churning out lies about how iPhone users n England were fed up with Apple and how Lumia was a big success in America and outselling the iPhone in China (all later found to be totally unfounded lies) the reality was that the product line was a sales disaster. The Lumia line never once even broke even any quarter. Even now through two quarters of Microsoft ownership the Lumia series is sitll generating a loss. Not one quarter of a profit.

So now we know. Nokia shipped its 50 millionth Lumia smartphone to its retail channel in the first week of March 2014. Since then Nokia/Microsoft has shipped another 26 million more Lumia smartphones running Windows Phone. But they didn't achieve 50 million activations of Lumia until after the third week of November 2014. Thats pathetic. Lumia is the most disasterous smartphone series of all time. It is a dead phone shipping. Even those who receive it as a gift or as a freebie are apparently not bothered to activate it. Yes, even if we allow for large inventory buildup, an unprecedented 26 million smartphones running that hated Windows OS, yes a massive 30% of the Lumia branded devices have never been activated. What happened to them? Most probably were just thrown away by the retail channel as unsellable junk.

Notice by the way, that my previous estimate of the installed base of Windows Phone smartphones is clearly far too big. If the 50 millionth Lumia had been activated mid-November then Lumia installed base was only about 41 million and the total Windows Phone ecosystem installed base would then be only about 44 million rather than the 59 million I have reported on the blog about Q3 smartphone market shares. And that 44 million for Windows Phone would mean 2% market share of installed base not 3%. I will go correct that blog.

Handset Market and Installed Base in 2014: The Total Handset Picture by Communities Dominate Blog

So its that time. Every year I publish the TomiAhonen Almanac in the Spring and do the big mobile industry statistics blog article. And every two years, in the Autumn, I publish the sister volume, the TomiAhonen Phone Book. That has just been finished, and it always looks at the ending year stats (while the Almanac looks at the starting year) so this is what the world of handsets looks like in 2014. All the stats you ever wanted.. if this blog is not enough for you, then you gotta dig into your wallet for that 9.99 Euros and start paying for more detail haha...

BIG BIG PICTURE

So the world sells 1.95 Billion mobile phone handsets (smartphones and dumbphones combined) this year, again a new record. Nothing else comes even close in consumer electronics or other such industries, not TVs, not computers, not music players not videogaming consoles, not wristwatches, etc. Who are the biggest? For the year, including dumbphones and smartphones the Top 5 brands are:

Top Phone Manufacturers of 2014 in units and market share (and 2013 number)
1 . . Samsung . . . . . . . . 370 million . . . 19% (20%)
2 . . Microsoft-Nokia  . . . 190 million . . . 10% (14%)
3 . . Apple . . . . . . . . . . . 175 million . . . . 9% ( 8%)
4 . . LG . . . . . . . . . . . . . 160 million . . . . 8% ( 9%)
5 . . Lenovo-Motorola . . 100 million . . . . 5% ( 4%)
Others . . . . . . . . . . . . . .950 million . . . 49%
TOTAL in 2014 . . . . . . 1,950 million 
Source: TomiAhonen Phone Book 2014 (preliminary estimate of full-year sales based on 3 quarters sales data and trends for Q4)
Above data may be freely shared

Total handset sales are up 3% from 2013. Note that the market share stats are of course preliminary for 2014, we will know the exact numbers in about February 2015 but I've used the actual data for the first three quarters of 2014, and with recent trends and Q4 of 2013, have estimated Q4 of 2015. These numbers are very close when we use the rounding-off levels up to nearest 5 million units. But yes, of course this blog will also have the final 2014 full-year stats when they can be calculated in two months from now. But the Phone Book always makes this preliminary projection for the full year numbers based on the first three quarters of info for the year and its always been close to the mark.

Now, if you need more details like regional splits of the handsets more brands than the top 5, market shares in other ways such as by revenues etc, then you have to get the Phone Book 2014. There also is data on the continental split of where phones are sold as well as the 8 regions I use to give more detail on various data poins. But I have a lot more free info to share with you here today. Lets move first to the smartphones. Last year we passed the point when more smartphones are sold than dumbphones. This year two thirds of all phones sold are smartphones. So lets look at that market a bit more in detail. 

SMARTPHONES 2014

Top Smartphone Brands of 2014 in units and market share (and 2013 number)
1 . . Samsung . . . . . . . . 330 million . . . 26% (32%)
2 . . Apple . . . . . . . . . . . 175 million . . . 14% (16%)
5 . . Lenovo-Motorola . . . 95 million . . . . 8% ( 3%)
4 . . Huawei. . . . . . . . . . . 75 million . . . . 6% ( 5%)
5 . . Xiaomi  . . . . . . . . . . 60 million . . . . 5% ( 1%)
Others . . . . . . . . . . . . . 525 million . . . 42%
TOTAL in 2014 . . . . . . 1,250 million 
Source: TomiAhonen Phone Book 2014 (preliminary estimate of full-year sales based on 3 quarters sales data and trends for Q4)
Above data may be freely shared

Yes the smartphone market grew by another massive 25% from year 2013, exactly as I promised on this blog and against all those clueless 'experts' who were suggesting a saturation in the smartphone market. Samsung is safely the largest smartphone maker shipping nearly twice as many smartphones as number 2, Apple. Apple's iPhone is also safe in its position nearly twice as big as number 3, which is the new Lenovo after its Motorola unit sales are added into the Lenovo total. The rest of the Top 5 are also Chinese brands, Huawei and Xiaomi.

Again if you want historical diagrams of how the various brands did, if you need to see more than the Top 5, if you want regional market shares across the continents and the regions that I always report the stats on, then you've gotta get the Phone Book 2014. So what about those OS wars?

OPERATING SYSTEMS

Android won this war.

INSTALLED BASE BY OS

Then what of the installed base? There are some lingering Symbians, some Blackberries and if you look real hard, you'll even find some Lumias on Windows that are in use. Not enough to sustain any real 'ecosystem' beyond the rich users of iOS and the mass of the mobile OS market that runs on Android. Here is the installed base of the smartphone OS platforms at the end of 2014 (ie the only really relevant chart for any developers)

Top Smartphone OS by Installed Base end of 2014 in millions and market share (and year 2013 number)
Android . . . . . . 1,600 million . . . . 75% (64%)
iOS . . . . . . . . . . 395 million . . . . 18% (19%)
Windows . . .  . . . . 46 million . . . . . 2% ( 3%)
Blackberry . . . . . . 45 million . . . . . 2% ( 5%)
Symbian . . . . . . . .25 million . . . . . 1% ( 7%)
Other . . . . . . . . . . 20 million . . . . . 1% ( 2%)
TOTAL . . . . . . 2,200 million 
Source: TomiAhonen Phone Book 2014 (preliminary estimate of full-year sales based on 3 quarters sales data and trends for Q4)
Above data may be freely shared
NOTE: the above chart reflects update bombshell Microsoft news that only 50M Lumia handsets have been activated out of 76M shipped, so Windows Phone market share real installed base had been over-estimated by about 1/3

Yes Android now just keeps padding its lead and as its demolished the other rivals from Windows to Symbian to Blackberry to bada, it now is taking share even from iOS as the Android installed base market share starts to approach its global new sales share. What helps iOS is of course that the iPhones are still so desirable, they have a far longer life in the second hand market (similar to Nokia and its Symbian and totally different from say Windows and Lumia which many people can't wait to get rid of - or to quit using them as phones and only use them for the cameras or media players as stand-alone unconnected units, obviously not at all of use to any developers in the 'ecosystem' haha). While yes, there is data on the regional splits of the various OS platforms, who cares. If you do Android you have most of the market. and in the rich industrialized world, you obviously need to do iOS as well. Nothing else really matters, nothing else is large enough to care.

PRICE PYRAMID 2014

So then lets look at the price pyramid of new phones sold in 2014. This is what that looks like:

Price Pyramid of New Phone Sales 2014
Premium Smartphones costing over 450 US dollars . . . . . . . . . 20%
Mid-price Smartphones costing between 150-449 US dollars . . 12%
Low-cost Smartphones costing between 40-149 US dollars . . . 33%
Ultra-cheap phones costing less than 39% US dollars . . . . . . . 36%
NOTE: these are real prices when handset subsidy is removed
Source: TomiAhonen Phone Book 2014 (preliminary estimate of full-year sales based on 3 quarters sales data and trends for Q4)
Above data may be freely shared

Clearly the growth in the handset market is at the bottom end of the smartphone market but there is also a peculiar pattern, the mid-price segment is now smaller than the premium segment. That is very rare in any competitive industry and it suggests there is room for far more expensive phones to be sold than the current lineups. I think Apple's cautious move up the price points with the iPhone 6 models reflects this truth but there is plenty more room towards the 999 dollar and above price levels for true premium phones with advanced features. Lets see if anyone will explore that type of phones (I am reminded of the Nokia Communciator series which often cost over 1,000 dollars. I wonder if Nokia might return to that segment now on Android next year with a true superphone?)

But yeah. Again given for free, the handset price pyramid globally, again on the CDB blog, where else? The global average price across all phones sold in 2014 is 191 US dollars. For Smartphones its 287 US dollars in 2014 and for dumbphones its 24 US dollars. If you need more info on that dimension, like Average prices by type across the regions or price trends over time, then read the Phone Book 2014.

HANDSET FEATURES

This is the more fun part now. How many phones have a touch screen or a good quality camera or how many are phablets etc. The features part is fun info in the Phone Book and I always share some of the findings in this review. Lets look at what kind of phones are in use globally:

Features In Use Globally On All Handsets (Dumbphones and Smartphones)
SMS support . . . . . . . . . . 100%
WAP or HTML browser . . . 97%
Color screen . . . . . . . . . . . 97%
MMS support  . . . . . . . . . . 87%
Camera. . . . . . . . . . . . . . . 85%
Bluetooth . . . . . . . . . . . . . .83%
Memory card slot . . . . . . . .80%
HTML browser  . . . . . . . . . 79%
Java/Brew support  . . . . . . 69%
Touch screen . . . . . . . . . . 40%
Smartphone . . . . . . . . . . . 37%
Source: TomiAhonen Phone Book 2014
Above data may be freely shared

Yes its an astonishing place and so many smartphone app developers are stunned to discover that Java actually reaches 3.9 Billion mobile phones worldwide - twice the number of all Android and all iPhone smartphones in use, combined. MMS now reaches 4.9 Billion pockets so if you are a brand or advertiser or media company that uses SMS, why not include color pictures, videos, links, QR codes, sounds into your messaging and reach 87% of all phones in use on the planet and almost 100% of the phones in use in the Industrialzed World. The consumer thinks its an SMS so they don't need to be taught to do anything, they know how to open an MMS and they know instinctively how to respond - because its the same way as an SMS. In fact most consumers don't know the difference so if you send them a branded MMS message like an airline ticket for example, the consumer just looks at it in amazement and thinks, I didn't know you could put color pictures into SMS text messages... Perfect evolution to your SMS strategy. And I need not remind readers that SMS is the most used data application on the planet with 4 times more active users than Facebook for example on mobile phones.

So thats the summary of the major features from the Phone Book 2014. If you need less used features like GPS or QWERTY keyboard or WiFi or dual SIM etc, that all is also in the Phone Book 2014. There also is a plethora of details about 3G and network standards and cameras and screen sizes etc. Also the Phone Book 2014 has info on regional migration from dumbphones to smartphones as well as the penetration rate of smartphones per active subscriptions in the region. Now lets move onto perhaps the most popular aspect of the volume, the Digital Divide.

DIGITAL DIVIDE

I am studying the differences in the mobile industry how the Emerging World has its differences and similarities to the Industrialized World when it comes to mobile phones and the mobile industry. For example this year 2014 among my several international conference speakerships in the USA, Europe and Asia, I also spoke at various mobile industy conferences in the different regions of the Emerging World, in Latin America in Ecuador, in Asia in Nepal, and six times in three different countries in Africa: Kenya, Nigeria and South Africa. More than half of my consulting work is now in the Emergiing World countries. And I try to share lessons I learn and obserations I get to make with that exposure that obviously differs often greatly from what I know and have seen in countries I have lived in like Finland, USA, UK and Hong Kong. So in the Phone Book 2014 (just like in the Almanac 2014) there is always a whole chapter dedicated to that analysis. A chapter that looks at how the market is in the Emerging World, for which we rarely get solid data. Here is a snippet of the market info about the installed base of handsets in the Emerging World from that chapter:

Comparison of Handset Market Industrialized World vs Emerging World in 2014
ITEM . . . . . . . . . . . . INDUSTRIALIZED WORLD . . . . EMERGING WORLD
Population  . . . . . . . . 1.2 Billion . . . . . . . . . . . . . . . . . . 5.9 Billion
Mobile Subscriptions . 2.1 Billion (175%) . . . . . . . . . . . 5.2 Billion ( 88%)
Unique Subscribers . . 1.1 Billion ( 92%)  . . . . . . . . . . . 3.6 Billion ( 63%)
Handsets in use . . . . 1.7 Billion (142%) . . . . . . . . . . . . 4.0 Billion ( 67%)
Cameraphones . . . . . 1.7 Billion (142%)  . . . . . . . . . . . 3.2 Billion ( 49%)
Smartphones . . . . . . 1.0 Billion ( 83%) . . . . . . . . . . . . 1.1 Billion ( 19%)
Source: TomiAhonen Phone Book 2014
Above data may be freely shared

So there you have it, the only free source online that gives you this kind of breakdown so you can understand how different the Emering World markets are from the more familiar 'Western' Industrialized World markets when it comes to the handsets and the overall mobile industry. Again far more data in the chapter on Digital Divide such as handset features, market data like average revenues, comparative data to other technolgoies etc all split into the two regions across the Digital Divide.

MUCH MORE DATA 

There is very much more in the Phone Book 2014 such as employee/business phoens vs consumer phones, data cards/dongles, a whole new chapter now on tablets which includes phablet data, and of course the chapter on the app store economy etc. There are tables summarizing the 60 major handset market countries worldwide including the national handset market sizes and their market value plus the locally leading handset brands both by dumbphones and by smartphone for each of the 60 countries. There is also a discussion of the three strongest handset companies (Samsung, Apple and Lenovo) including their global revenue splits across the eight regions that I use to report all regional data.

All data and tables in this blog may be freely shared and used in any context. I appreciate it if you do use any data in an online article that you include a link to this blog. In print, please indicate that the source is the TomiAhonen Phone Book 2014 from which all data in this article were excerpted.

For those who want the brand new pdf ebook TomiAhonen Phone Book 2014 which only costs 9.99 Euros, please follow this link (and don't worry as it currently still discusses the previous 2012 edition, I will of course ship you the 2014 edition not the old one. The price is the same and this new edition actually is slightly longer with a bit more charts and tablets than the 2012 edition)

So What Do We Learn From the Nokia N1 Tablet on Android?

So the Nokia N1 tablet has been annoucned for Spring 2015 launch (China first). It runs on Android and has an 8 inch screen, 8mp rear camera and 5mp front camera. Its very light. And it will not be the monster-seller tablet of 2015. Its not a phone, there is as of yet, no sister smartphone products in the phablet size. But the Nokia N1 is the return of the 'real' Nokia to consumer electronics. What will this mean..

WONT BE BIG SELLER

So lets do quick review. Nokia was world's largest mobile phone maker from 1999 to 2011. Nokia invented the smartphone and was the world's largest smartphone maker from its birth till 2011. Nokia developed several operating systems for smarthones and its main system, Symbian, was the world's largest smartphone OS until that magical year, 2011. What happened in 2011? Nokia's new CEO torpedoed the massive highly profitable market juggernaut, Nokia's handset business (including smartphones) and sunk it with his idiotic move to Windows Phone. The quarter before Elop made his change, Nokia held 29% market share in smartphones with Nokia-record profits and during hte past 12 months had grown MORE than Apple's iPhone, so the gap to the rivals was only growing in Nokia's favor. Nokia had brand new award-winning smartphones that featured elements and aspects that it would take Apple years to copy (larger screens, better cameras, NFC etc). Nokia's app store had just grown to become the second bestselling app store just behind Apple's and closing the gap. Nokia knew how to succeed in the handset market. The problems at Nokia were in its networking unit which was making losses, and in delivery schedules and 'execution' with some phones delayed by a year even. But Nokia knew how to win in the handset business. Nokia was the bestselling phone and bestselling smartphone brand on four of the six inhabited continents including by a wide margin China, the world's largest phone and smartphone market (China is now twice the size of the USA, accounting for 40% of all smartphones sold today).

Elop wiped that all out with a rampage of destroying Nokia. Three years after the new Windows Phone based Lumia smartphones were released, Nokia's smartphone market share was down to 3%. Yes Elop had managed to wipe out nine out of ten customers for the most loyal dumbphone customer base on the planet and the second highest loyalty smartphone brand (behind only iPhone). It was kterally a world record in market leader destruction. No industry has ever seen this rapid collapse of its market leader, not even under catastrophic conditions like Toyota's brakes failures in cars, or from sheer management stupdity before like Coca Cola's launch of New Coke. Never has any company collapsed its global leadership position as fast as Elop demolished Nokia. And note, when Toyota hit its brakes or Coca Cola decided to go New, they were not twice as big as their nearest rival. Nokia's smartphone unit was more than twice as big as Apple in smartphones, and the unit was four times as big as Samsung's smartphone business. (PS we found out after he was ousted from Nokia's CEO job as the shortest-duration biggest failure Nokia CEO of all time, that Elop had a personal bonus clause that rewarded him for destroying the Nokia handset business... yeah, irony of ironies. The Financial Times calculated that Elop was rewarded an extra 1.5 million dollars for every biillion dollars he wiped out of Nokia shareholder value. The FT compared Elop's heist with the worst of Wall Street criminals like Bernie Madoff)

If you thought the Windows Phone strategy was right but Nokia was just inept at implementing it, nobody should be able to do it better than Microsoft. So now we have six months of Microsoft ownership of Nokia's handset business. How is the smartphone business? The Lumia business market share under full Microsoft control now is... 3%. And mind you, in four years since Elop announced his Windows strategy the Nokia smartphone business has not managed one quarter of a profit. Yes now its been 18 quarters straight, launching Lumia, launching Windows Phone 8, and switching ownership from Nokia to Microsoft and nothing helped. Not one quarter of profit. The Microsoft handset business dream is utterly dead.

NOKIA TABLETS

Now, we know that tablets are kind of related to smartphones, especially now when almost all smartphones are touch-screen devices. There is that class of interim devices, 'phablets' smartphones of larger than 5 inch screen size, started by Samsung's Galaxy Note and now copied by the iPhone 6 series. Phablet sales have now in Q4 of 2014 passed total tablet sales for hte first time ever. Next year is the first year when more phablets are sold than tablets.

Nokia saw this coming too. Nokia has developed tablets on five platforms (Symbian, Maemo, Meego, Windows and Android) and launched commercially on three (Maemo, Windows, Android). So where many tech brands are new to tablets and only paid attention to the market after the iPad appeared, Nokia had been there before and explored the market. Nokia, world's largest handset maker, knew also - partly from commercial launch - that a tablet is not just a larger smartphone. Its a different device. Look at Apple, the older iPhoen keeps growing sales but the younger iPad has seen its peak and sales are now declining. Is not one market, it is two, as I explianed here years ago and now recently many are coming also to that view.

The distribution and sales of tablets is drastically different from smartphones and there is no real synergy between the two. So Nokia for example resisted a Windows Phone/Lumia tablet project until the desperation set in and Elop was willing to try almost anything. As we know, the Nokia Lumia tablet was yet another failure in a long line of handset-maker tablet failures (starting with Blackberry). Tablets were a great idea for PC makers (like say Apple and Samsung) but for pure handset makers (like Nokia, Blackberry) it was lunacy and a huge drain on their marketing and sales costs.

Interestingly, for Microsoft, the tablet market is more promising than the smartphone market, for those same reasons. Microsoft Windows for the PC is sold through IT tech sales channels. The XBox videogaming console is sold through consumer electronics sales channels. These are both good for tablets. And all Windows Phone based smartphones face a global mobile operator/carrier sales boycott (or sales suppression by now, boycott is definitely too strong a word now when the market has been effectively destroyed, they don't really care anymore about Windows). This global carrier dislike of Windows was explained by Elop when he spoke to Nokia shareholders, and Elop said it was not explicit to Nokia, it was against all Windows based smartphone brands. So its first of all a fact, its been confirmed as a well-known phenomenon with Elop underlining the issue using the word 'obviously' -and it is why most Windows based smartphone makers quit the system around that time like LG, Sony, Dell and Motorola. And why the other remaining Windows smartphone manufacturers (Samsung, HTC, Huawei) all shifted away from Windows to Android today doing a trivially tiny slice of their business on Windows at best. Only MIcrosoft/Lumia remain and all 10 of the 10 most used Windows Phone smartphones now are Nokia/Lumia branded. Not one Samsung, Huawei or HTC among them anymore.

So for handsets Windows Phone is poison and smartphones on Windows do not sell. They can't turn a profit and the total Windows Phone market share for Q3 including all brands was only 2.9% (according to IDC). But IDC finds that in the far smaller tablet market, Windows is doing better. They have a 4.6% mraket share there. Microsoft can perhaps grow that Windows tablet slice to a viable business in coming years if they keep throwing tons of money at it, like they managed with XBox in videogaming after years of loss-making.

It may well happen, that Microsoft will arrive to a conclusion that the 'smartphone' side of the Nokia purchase is not viable but will still continue on the tablets, and migrate the remnants of that workforce to focus on the tablets only. And yeah, I'm not an expert on the tablets business, they might succeed there, but 5% market share is not very viable long term in terms of ecosystem etc. Especially not when you carry all the baggage that Windows has as a hated operating system. 

TROUBLE FOR MICROSOFT

But what Microsoft did not want, when it spent 7 billion dollars to buy Nokia's handset business, is to see Nokia compete against it. The exclusive licence to the Nokia brand was a long term thing for dumbphones but only a short-term thing for smartphones (and apparently, tablets). Nokia already pulled a dirty trck on Microsoft when it launched the short-lived X series that ran on Android. Microsoft killed off that project soon after they took over the handset business this year. But that was further confusion to the minds of consumers on what is the 'Nokia' (brand) intending to do. Is that Windows Phone -thingy, the whats-it-called-operation-system is it viable or not. If Nokia already launches on Android. So yeah, Microsoft had to kill it.

Now Microsoft has stopped using the Nokia branding on its newest smartphones. They are just branded Microsoft Lumia. And just months later, appears a brand new Nokia branded gadget, a tablet. This.. running Android. Even before we hear any rumors of a Nokia branded smartphone again from Finland, this is bad news for Microsoft's tablet strategy.

Will the N1 Tablet sell in enough numbers to show any relevance to Nokia's business? No, of course not. It will be the squeak of a mouse in the noise of a thunderstorm, but it is Nokia's first salvo. It does signal first of all, that Nokia wants to return. Secondly, it signals the total break from Windows. If any device by Finland's 'real' Nokia made sense to do on Windows, more than a smartphone, that would be a tablet. That Nokia now clearly spits in the eye of its 'partner' Microsoft, and does the tablet on Android is clear signal, Nokia is finished with Windows. For good. Forever.

Its a big win for Android (who doesn't need wins anymore, they have won the war). Its a signal for any remaining Windows partners. And its nasty news for Microsoft.

For consumers it will bring noise that the 'Nokia' Lumia device on Windows might not be a good purchase now. For non-Nokia branded pure-MIcrosoft Lumia, it is a clear distinction. This is not-Nokia. This is the real Nokia. And real Nokia runs Android.

Its a signal to app developers that if they were with Windows Phone because of any remaining loyalty to Nokia, its time to break with that, and just quit Windows. Go Android, thats were Nokia will be.

It is also a way for Nokia to signal to the thought-leaders, the tech press etc, what is the real Nokia vision in gadgets, when the Elop experiment is forgotten. Before Elop Nokia made very good tech products in terms of their hardware, often with very innovative and inventive tech. They were beautifully designed, durable, desirable. Now Nokia can return and tbus this first N1 device isn't needed to be any major sales success really anywhere, it just needs to be shown to various journalists and analysts who visit wih Nokia, to start to build that demand again. We want an innovative competitive Nokia back in the gadget business and gosh, does the smartphone slab i-Phon-a-clone market desperately need some innovation again, the kind that Nokia once gave us.

I am certain the plans are there for a possible return at Nokia into the smartphone space. Looking a how Sony and LG and HTC have wandered into and out of profits in their smartphone businesses, and how poorly Samsung has been able to turn a dominant market position into major sustainable profit levels, there must be doubt at Nokia whether its worth returning. On the other hand, in the biggest future markets for tech - China, India, Nigeria, Indonesia, Brazil, Russia, Mexico, Egypt, Thailand, Pakistan, Vietnam etc - Nokia is a very strong brand still today, even after all the Elop damage. A premium ultralight tablet at a competitive cost below that of the iPad and Galaxy Tab, is a clever strategy to remind consumers how much they used to love Nokia. It opens the door for Nokia if it decides to return. And now we konw for sure. Nokia has signalled, that future OS would be Android.