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.

Comments

[jumbli]

You forgot to mention one significant aspect of N1. During Elop's regime Nokia launched the phones first in US, now Nokia is targeting China first.

[TDC123]

Seems the main question to ask here is what does the Nokia brand mean? what does it stand for?

I can't be something generic? like good build quality? I think even SONY, HTC, LG, SAMSUNG all have that?

How is NOKIA differentiated? It seems NOKIA's brand image seems to be a has been? a feature phone or phones which had keypad?

How can NOKIA compete now? from the above N1 it seems just on price? I know device looks nice but so does a Galaxy or a MiPAD.

Is the Nokia Z launcher good enough for differentiation? Not sure. I mean how much did Touchwiz help/hinder SAMSUNG.

Can Nokia eventually leverage HERE maps somehow?

Can't think of anything more that. The article seems to continue all the old Elop stuff, I think everyone here is over that and needs to move on...

[Josef]

I said before and will repeat again: Elop was not important. I am so surprised that not one analyst or journalist was investigative enough to look who was in Nokia board at the time and which investors they were representing.

The end result is that all viable (I use viable to describe completeness of software stack, not market potential) Mobile OSes, with the exception of BlackBerry are now in the hands of US corporations.

[RottenApple]

@TDC123:

I think the intention is clear: This is not supposed to be a bestselling device, hell, it's probably not even designed to make significant profit.

The main reason this exists is to keep the Nokia brand alive. Now that Microsoft has dropped it for their phones, Nokia can slowly start building up again. Where this leads to is anyone's guess.

But one thing is certain: Pessimists have never been good business people so not doing anything at all is the worst Nokia could do right now.

[Wayne Borean]

When I saw the first coverage of the device, I laughed. Nokia is moving to compete with Microsoft. I wonder if Microsoft saw this coming.

I have no idea if Nokia will succeed with this device (or what Nokia would comsider success). But just think - all of the other tablet and phone manufacturers are also being targeted by Nokia. Effectively it is a declaration of war.

The great General Elop must be annoyed.

This is great for the consumer. There's nothing like competition to drive innovation.

Wayne

[NotARealNokia]

WTF?!

The N1 is NOT A REAL NOKIA.

It's just some Chinese crap with a Nokia stamp on it because the Nokia brand is for rent for whomever has the money to rent it.

[Chris]

Patents have played a major role in determining whether mobile suppliers can get on with business or end up mired in costly disputes. Is it clear what happened to Nokia's patent portfolio when the consumer division was sold to Microsoft? It is possible that "the new Nokia" could face enormous pressure from Microsoft if the latter now own the patents that once were Nokia IP.

[RottenApple]

@NotARealNokia:

Stop posting your FUD. This thing is more Nokia than any Lumia.

@Chris:

The patents weren't sold to Microsoft. They only got a license for them. In other words: Microsoft cannot put Nokia under pressure for them.

[NotARealNokia]

@RottenApple:
Ofcourse, because a device built by Foxconn with the Nokia stamp on it for which Foxconn pays royalties to Nokia is much more a Nokia device than a Lumia device built by Nokia in its own factories.
Because fuck you Einstein, right?
Who needs logic when you have fanboyism?!

[abdul muis]

@NotARealNokia

How Microsoft Lumia phone is more nokia than this nokia?

Do you know that Elop hired a new engineer/designer in Silicon Valey to produce the new lumia because the old Finnish engineer/designer could not make a product that american enough? The Microsoft/Nokia Lumia team is just a team bearing the nokia name but without the nokia spirit.

This N1 have nokia spirit in it.

[KPOM]

@NotARealNokia, is an iPhone not an Apple product because FoxConn manufactures it?

I think Tomi is making too much of this. Nokia probably cannot market a Windows phone or table under the "Nokia" name since Microsoft has the rights to it for Windows devices.

[NotARealNokia]

@KPOM:
I was so waiting for this reply. :))

Apple handles EVERYTHING except the actual process of manufacturing (ie putting the pieces of the phone together), as opposed to Nokia which licensed the brand and the hardware design, but has nothing more than this to do with the tablet.
Pay attention to their wording in the press release!

"Nokia today announced the N1, the first Nokia-branded AndroidTM tablet."
Not a "Nokia tablet" (like the Lumia 2520), but a "Nokia-branded" tablet.

"The N1 will be brought to market in Q1 2015 through a brand-licensing agreement with an original equipment manufacturer (OEM) partner responsible for manufacturing, distribution and sales."
The key aspect here is the "brand-licensing agreement". Foxconn pays to use the Nokia brand and the hardware design (I suppose this only means the looks).
It's almost like how local phone "manufacturers" like BLU and Allview work (they buy phones from Gionee and stamp their logo on it), but instead of using their own brand, Foxconn pays Nokia to be able to use Nokia's powerful brand.

The N1 is not Nokia's child.
It's just a bunch of ideas they rent to others who are willing to handle the hassle of producing and selling the device. Also, let's not forget customer support and service for hardware. Don't know about the software side, though, since the Z launcher is Nokia's.
I suppose Nokia helps somewhat with the promotion, given that the device appears on Nokia's site.

So no, the N1 is not a real Nokia.

[Timo M.]

The rumours were consistent and repetitive: Nokia would return to consumer devices. The reasoning by management was that Nokia needs feedback from device market as well, not just networks and services. Nokia still develops handset tech and patents as before.

This is a welcome device indeed. Very little risk but possible rewards by keeping the mighty Nokia name alive in the consumer game, a totally undramatic move, but I bet the readers of this blog can still spank themselves enough to get mad and then skyrocket to some higher orbit of rage again. :-)

[ejvictor]

@NotARealNokia

Just maybe the exact-very technical and deliberate- wording of the press release has to do more with the 1000 page legal agreement between MS and Nokia than anything else... just maybe Microsoft has 3,000 lawyers and Nokia knows exactly how wide the crack is that they can squeeze through.

But in reality the core reason for the N1 is NOT to produce another cheap android tablet, but to shift the target to an Apple centric argument - It's about the User Experience. The N1 is ALL about ZLauncher. Mark my words Nokia is looking to succeed where other Android ODM's have failed... Make an android skin that works.

If you make an android skin that works then users stop caring about the underlying OS and you control the UX. Now if I have ZLauncher on my Find7, and I like it why not get a tablet that uses ZLauncher... next Nokia can get my phone ZLauncher to communicate and replicate with my tablet Zlauncher. At that point I no longer care about the underlying OS, I don't use Android...I use ZLauncher.

Just remember the folks left at Nokia aren't as stupid as the press think...

[KPOM]

@ejvictor, the only problem with that idea is that Google doesn't like it when OEMs add their own customizations to Android. With Android 5.0, there really aren't any usability reasons to add a custom interface. It is very refined, and has (finally) achieved about the same level of fluidity as iOS, while offering the functionality of the Android and Windows Phone home screens. Samsung has until now been able to get away with it, but Google is pushing the Nexus line a lot more aggressively than they used to.

[KPOM]

A flaw in Tomi's analysis is that he assumes that Microsoft cares whether Android dominates the consumer tablet market. This isn't Gates' Microsoft anymore, or even Ballmer's. Satya Nadella is all about the cloud. It's telling that they released Office for iPad in March, and will be releasing Office for Android by next March. This is all before they have released a touch-optimized "Metro" version of Office for Windows 8.1. He seems to accept that Windows RT was a waste of time, and is focusing his company's tablet efforts on the Surface line, which is advertised against the MacBook Air (a full-fledged notebook) rather than the iPad or any Android tablet. Surface is a large device (10.6") - small for a notebook, but larger than most other tablets. MS specifically killed the concept of a "Surface Mini." Surface can wait for a touch-optimized version of Office, since Office is used right now in "laptop" (i.e. desktop) mode when a user connects a keyboard to the Surface.

I think that their actions indicate that they fundamentally disagree with Tomi's premise that the consumer tablet market is "different" from mobile devices. They aren't saying that other tablets are "toys" since they can't run Office. They single-handedly eliminated that argument. What they are saying is that we are not yet in the "post-PC" era, if we even will get there, and that tablets can co-exist with notebooks and phones. If anything, they are saying that the small tablet market is a supplemental market. It may have already peaked, but at a level high enough to sustain a decent, albeit non-growth business.

[RottenApple]

@KPOM:

Wanna bet that the knuckleheads at Samsung & Co. still insist on shipping with their degenerated custom UIs? That's what Nokia will compete against, not what Google produces as it's already hard enough to find an untainted Android phone unless you shop cheap (which is a pity. - Here's an interesting question: What role do those shitty custom UIs play in price pressure as many people just hate them?)

The only way Google can prevent that is to outright prohibit replacement of the stock UI,

[KPOM]

@RottenApple, you also get the "pure" experience on Motorola phones, and the Nexus 9 is aimed squarely at the iPad, not the cheap tablets, complete with a 64-bit processor and a price to go with it. Google did get Samsung to license Knox, which is significant since Android had (has?) a reputation for not being secure (whether it is justified is another question). But why Samsung and others insist on the skins puzzles me. It slows down the OS and makes the user experience worse. "Our Android skin isn't as bad as Samsung's" doesn't strike me as a particularly compelling argument to buy a Nokia tablet, though. N1 strikes me more of a "we know we need to keep our brand relevant and this is the easiest way to do it without violating our non-compete agreement with Microsoft" kind of move.

Anyway, I think Tomi gives the "old" Nokia too much credit, as far as "innovation" goes. Dell came out with the 5" Streak a full year before the first Galaxy Note, so if we apply Tomi's logic on Nokia, it was Dell, not Samsung who invented the "phablet." Samsung made it commercially viable, just as it was Apple who made the tablet commercially viable, yet Tomi claims Nokia "explored the market" before. Sure they did, but like Dell with the Streak, either they didn't know the significance of what they had come up with, and/or they didn't know how to execute the strategy.

Also he's wrong when he says that smartphone makers were foolish to enter the tablet market. It was a new market, and it was the smartphone makers, not the PC makers, who made tablets relevant in the first place. Sure, Apple had experience with OS X, but iOS is the basis of the iPad, not OS X, and that's why the iPad achieved commercial success. OS X wasn't touch-optimized. iOS was.

To this day Apple and Samsung are smartphone makers that dominate the tablet market. He quibbles that we've reached "peak iPad" but that ignores the fact that Microsoft had been pushing "tablet PCs" running full blown Windows for a decade without any success. It took Apple shoehorning a smartphone OS into a tablet to make it viable. Maybe now, that Intel has x86 chips that are power-efficient, Microsoft can try to "attack" the high end tablet market from above, but as I said in my earlier post, they seem to view the Surface more as a notebook than a consumer tablet, and the consumer tablet as a supplemental market, rather than a primary market. I don't care what kind of processor or OS an 8" tablet is running. You aren't going to write a thesis or edit a complex spreadsheet on it. But it's great on a plane or train for light editing or reading. That's why Microsoft developed Office for iPad and Android.

[Phil W]

My guess is this is making a statement of intent and keeping the recovering the brand name back from Microsoft. I think they did it this way so that if it succeeds all well and good, but if it fails it won't take the company down. Foxconn can almost certainly switch resources to and away from this depending on demand, so they are not overly exposed to risk on this either.

As to whather this is a real Nokia, I guess most of you would know Nokia used Foxconn extensively in the past for manufacture. OK, so now much more input is coming from Foxcon, but I'm guessing that Nokia is more interested in focussing its efforts where it thinks it can make a difference ie the ZLauncher. No idea whether this will work - seems a bit of a long shot to me, but who knows?

[Phil W]

Should have read : My guess is this is about making a statement of intent and recovering the brand name back from Microsoft.