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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? | Main | Updating Progress on the 'Recreate iPhone of 2010 for $10 by 2020' Projection - Yes we are perfectly on track still in December 2014 so yes by 2020 you'll get a good spec smartphone for ten dollars (Revised) »

January 02, 2015

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EmmanuelM

Tomi

Thanks for your repli to my post..

Wow I want to add I love your Hollywood ending scénario, that I just read for a 2nd time.. It almost made me cry.. And the thing is that it is plausible.. One thing you didn't t mention is what about the finish government ? May be they can help make this a reality ?

Thanks for the insight and I ll be there reading your blog in 2015 !
Cheers

KPOM

@Tomi, Nokia wasted a lot of money trying to turn Symbian into a touch-oriented OS. And S^3 was widely panned. They lost market share, and more critically, valuable time. Sure they were selling phones, but sales were falling. They needed a clean break, but should have went with Android. I know you like to think that Nokia was "growing" and things were just fine until Elop came along, but they weren't. They were slashing prices on phones, and essentially buying market share. It was unsustainable. Nokia also made some bad acquisitions, such as overpaying for Navteq.

Meego wasn't the answer. They spent too much time worrying about backward compatibility with a small library of applications while Apple and Google were quickly ramping up their own application libraries. It didn't matter whether or not Meego was "better" than iOS (that's subjective, anyway). Arguably, Android wasn't "better" than iOS, particularly in the early days when it was knocked for being laggy and crash-prone. But it had Google's support and development behind it. By February 2011, it was clear that Android was the "new Windows," and iOS was firmly at the top of the premium market. What wasn't yet clear was whether a third OS could have succeeded. But it wasn't ever likely to be Meego. Developers in the US ignored it, and rightfully so. There just wasn't much demand in the Ovi Store. It had 1/20th the activity of the Apple App Store at the time when Elop took over:

http://www.theguardian.com/technology/blog/2010/sep/10/nokia-profits-falling-explanation

Nokia had cash, but not the kind of cash pile that Apple had. They also had more debt. Apple has debt only because it doesn't want to repatriate income to the US and pay 35% tax on it. Steve Jobs specifically said that they hoarded cash precisely because he never wanted the company to be in the position they were in back in 1996 when he came back. IOW, he wanted them to be able to weather bad times. Tim Cook is returning some of that cash, but is still keeping a huge pile of it around.

Henrik Nergard

A nice article to read. Will be a interesting 2015 to follow.
About the state for Windows Phone in general Steve Litchfield (the site AWWP) had a prediction how it goes under 2015:
http://allaboutwindowsphone.com/features/item/20374_The_Story_of_2015.php

He think they (Microsoft) will end with about 4% marketshare. Seems not so unrealistic after all.
But we se how it goes.

AndThisWillBeToo

@KPOM
Oh please. Nokia was not losing sales but increasing them. All the way until Feb 11th. And Apple was not catching up on Nokia, instead Nokia was running away from Apple. Nokia was over twice the size of Apple, over four times the size of Samsung before Feb 11th. And Ovi Store was second largest app store just behind Apple and catching up. This has all been explained here before. I'm sure Tomi can list the numbers behind that and/or link to his earlier posts that do.

Peter N

Its easy to forget that Windows Phone are not all about Nokia/Microsoft now.
Look at the market in India.
Many make windows phone now.

iBall was the latest factory to show one.

Lava
Micromax
Xolo
Karbonn
Celkon

So 6 brands in total in India alone. That are a sign to me there is some kind of market for them, maybe not in western europe or USA.
So I think its to early to say that the Windows Phone platform is dead so to speak.

John Fro

Samsung is a S. Korean conglomerate that makes a lot of products. Their big problem is that they've become strung out on Android phones, and who knows how their other business units are faring. They need a lot more transparency in their corporate quarterly reports. Analysts are sweating over the lack of details and a lot of shady numbers. After a very murky Q3 set of books released, many analysts switched from hold to sell. Their CEO is in hot water now.

Nadella loves the cloud and cloud computing above everything else, and it's in his background, but for him to be able to dump smartphones he'd need to get better control of the MS board, with its activists members clamoring for the supposedly huge profits and stock evaluations that come from this sector. It's all Apple and Google envy for these guys. Fortunately, Azure is doing very well for them, and "cloud computing" is still an active buzzword that can keep the board distracted for at least another year until the huge scaling problems that cloud computing present will start to ware them down as they compete with Amazon and Google in this space. You don't mention Amazon, but they are a critical factor in this market even without a phone. MS continues to announce pointless business agreements and vaporware in the cloud space to keep IT managers worldwide from defecting, but they really aren't delivering on too much here. Their announcement with Docker was interesting but just a tactical maneuver to keep people from switching to EC2 (a sort of emphatic "Please Wait!" from them). How many more rabbits they can pull out of their hat while they are competing with essentially "free" services is hard to say, though they are making good money off of Office and Exchange subscriptions. Azure probably makes money, but how it sustains itself is not clear, since at home people are not going to want to pay $100 per year for an Office subscription when they can get free services elsewhere, even though Windows 10 will be all about the cloud subscription model.

Bottom line is that Nadella needs to prove his cloud strategy is working before he can rearrange the board structure enough to ditch the smartphone business.

John F.

@Huber

How many people do you know off that would buy a Bang & Olufsen, nespreso premium coffee maker, Porsche, high end Samsung TV and would try customizing and reprograming the thing?

See, Hubbert, you belong to the 1-2% of users that are technically advanced and worries about those things, lots people value user experience, go for a good brand, perceive quality and want and are happy with a controlled environment, that’s apple target group, the day you can live with it your point of via will not change of course but you will understand that not everyone cares about open systems and being able to install whatever, there is a lot more that others consider.

The Porsche/BMW comes from Tomi, I borrowed from him, he has made that point , please address it with him, one thing is clear, he understands that market a bit better than you do if he is using it.


Your comment regarding the watch clearly shows that you measure the market according to your needs and your particular taste, it also implies that you have ZERO idea of the watch market, so briefly I share this with you, it might help you understand your mistaken assumption or the perception that you are the golden yardstick to measure the watch/fashion/apparel market

* Yearly watch production 1.2 billon watches ( yes, you read right)

* China manufactories aprox 660 million watches at an average price of 3 $ ( yes! that’s correct)

* Switzerland has 2,5% market share but almost 60% of the profits with an average price of 750 dollars
and 95% of all watches above 1000$, sounds familiar ?


See ? Apple is targeting the watch industry, they were clear when they announced it, specially did not mention smart watch and that’s why Tag Heur calls it a tsunami, they very well know that watches will evolve to something different and 350$ for an apple branded watch is JUST PEANUTS, we are talking another industry that can be disrupted, and it’s about time, the swiss are worried and rightfully so, they surely know a bit more than you as well.

Also, if you are open minded and entrepreneurial, you should see that in the years to come wearables in forms we do not yet dream about will invade our body and apple is plating the tree, also, apple watch 1 is the worst watch they will ever make, lets see 3 years from now, they just need to compete with the swiss for a small portion of the market and a chunk of the profits, clever guys!

And remember, get your average mobile user and ask an explanation of what this means “ you just need to be rooted” … 2% … maybe.

Winter

@Boron95
"Now, Microsoft took WP from zero to 3%, with a shot at 4 or 5%."

Nore like WP took off from 12%. You know, Windows on Phones did exist before they destroyed Nokia.

Huber

@John F:

"How many people do you know off that would buy a Bang & Olufsen, nespreso premium coffee maker, Porsche, high end Samsung TV and would try customizing and reprograming the thing?"

You make the classic mistake of comparing single-purpose devices with multi-purpose devices (AKA PCs). A smart phone simply is a small computer/ PC in my pocket. And what is the purpose of a computer?

==> To follow my orders <==

So why on earth would I spend my money on a device I cannot fully control? This would be moronic!

"you will understand that not everyone cares about open systems and being able to install whatever, there is a lot more that others consider."

Yes, as long as this does not pose problems. Of course, if you e.g. buy a car for €50000+ and then find out that your beloved iPhone supports only a small subset of the features available, it looks much different - I can tell you first hand that iPhone-users look funny when you mock them because they stood in a traffic queue for 90 minutes, only because their shitty phone cannot receive online traffic information for the car's built-in navigation system.

But at least it is shiney ;-)

"The Porsche/BMW comes from Tomi"

That does not make it more correct. Of course Apple would love to be the Porsche of smartphones, but they are not.

"Your comment regarding the watch clearly shows that you measure the market according to your needs and your particular taste, it also implies that you have ZERO idea of the watch market"

I think it is the other way round:

Wrist watches are pure status symbols/ jewelry nowadays.

I personally got rid of my last watch about 10 years ago. It wasn't even a conscious choice. The watch simply ran out of battery and I never bothered to replace it, because I did not have the need for it anymore.

There is exactly zero benefit in using a smart watch, too. You can as well use your phone without having any disdvantage.

So smartwatches are the same as regular watches, "useless" jewelry. They are worse as long as they have to be charged daily or every two days. They are even more worse as long as you have to press a button to see the time.

Perhaps Apple will make some money with it, but it won't be a hype like the smartphone.

RottenApple

@Baron95:

"Now, Microsoft took WP from zero to 3%, with a shot at 4 or 5%. That is certainly not very impressive, but it is a lot more impressive than anyone not names Apple or Google."


Yes, it's truly impressive that in order to get there they had to annihilate not only their own 12% in Windows Mobile market share but also Nokia's >25% of market share. Of course you end up with a little bit if you eat a huge pile and take what you can digest, let the rest be extracted as waste.

None of the other smaller platforms had the luxury of such a huge base to build upon - even Blackberry had already declined to irrelevance when their new OS was released. And what kinds of users did they get?
No, not the valuable premium customer.
Not even the price conscious mid range customer.
No, the vast majority of their users are the undiscriminating kind who bought feature and resource limited low end devices, based on price alone.

And here's one of the big problems: Those low end devices are that much limited that normal app development for WP is close to impossible - to get what you'd get out of a 512 MB Android phone, an app developer needs to target 1MB on WP. I know because the one game my employer released on WP had to be butchered to make it work on these crap devices - we only had 170MB at our disposal, but needed around 250MB to fit everything in. The same game ran without any hiccup on 4 year old v2.3 Androids with 512MB RAM.

Also, continued loss making doesn't mean you succeeded but that you actually bought the market share - once the cash flow stops, those 4-5% will go poof in an instant.

AndThisWillBeToo

@RottenApple
If you want to bring in RIM into mix, don't forget that they had 20% market share in 2010 and annihilated it to get nowhere. There was a time in 2010 that RIM was half the size of Nokia, at the same time bigger than Apple and also at the same time over five times the size of Samsung.
And that did not last in 2011 either.

Microsoft has failed in mobile. Enormously. They kicked out their CEO for it. But compared to BB, FFOS, Tizen, Ubuntu, Palm, Sailfish,... Microsoft has fared much better.

Should Nokia have played MS card? NO! Go Android!

But when it comes to operating systems if you are OS maker in mobile and can not be Apple or Google, be Microsoft. Rest

Tomi T Ahonen

PS From Monday:

I had time to reflect over the weekend and it hit me two things needed to be added to the story. First, there was a part in the early draft that I accidentially erased and didn't notice it was missing until now, so I rewrote it. The obvious part about iPhone product line. See it in the above early in the Apple section.

Secondly the Samsung marketing argument was not clear, as I can see obviously from some of the comments. So I added a piece to the end of Samsung story about 'how' Sammy should use the K Zoom in its marketing vs Apple now. I think that helps clarify what I mean and how badly Sammy is failing in its marketing to capitalize on a HUGE technical lead. Imagine if Mercedes Benz launched the worlds's first floating car, would they not show off this leadership in every ad and every country? But the K Zoom marketing has been as if Toyota after releasing the Prius as the world's first hybrid car, then hides it from most markets haha..

PS Gotta go do some 'work' now but will return later to chat with you guys here..

Tomi Ahonen :-)

RottenApple

@AndThisWillBeToo:

"If you want to bring in RIM into mix, don't forget that they had 20% market share in 2010 and annihilated it to get nowhere"

Yes, and they did it by NOT releasing a new OS. At the time when they finally released it they were already dead in the water with minimal market share. They had nothing left that could boost their new OS, the old customers already were at Apple or Android. That's the vast difference to Nokia/Microsoft who managed to release a platform almost none of the existing customers was interested in.

"But compared to BB, FFOS, Tizen, Ubuntu, Palm, Sailfish,... Microsoft has fared much better."

No, not really. It's a major difference to enter a market with nothing and achieving nothing than entering a market backed by one of the most powerful handset manufacturers and end up with almost nothing.

The first just indicates that the product didn't gather much interest, the second clearly says that the product was outright rejected.

"But when it comes to operating systems if you are OS maker in mobile and can not be Apple or Google, be Microsoft. "

Well... if continued loss-maling and having a product hanging on continued life-support is any form of success, sure. From an economical standpoint, though, it's a complete and utter failure, that's even more compounded by the damage it inflicted upon the rest of their infrastructure.


KPOM

Tomi, I think you are off base with the Galaxy K Zoom. It's not that no one else can produce such a phone. It's that no one else WANTS to produce such a phone. Samsung's strategy has been to produce phones in every kind of form factor to see what sticks. Whether it's big phones, phones with a curved "edge" screen (funny how quickly Xiaomi announced a copy that one - with a 2-"edged" phone on top of it), waterproofing, different case materials, Samsung's been one to try to make every phone for every customer type. But even they are changing focus and will concentrate on fewer models. My guess is that the K Zoom is one of the ones that was in development before the change in strategy.

Yes, Apple finally made a "bigger" phone, but I don't see them making anything like the Galaxy K Zoom, in part because I don't think that the K Zoom will be a big seller. Samsung will be focusing all their efforts on the Galaxy S6 and the Note 5. Those phones will need to be huge successes if Samsung is to continue dominating the Android scene.

You like to think of Samsung as the most innovative company out there, years ahead of Apple, but it's still Apple who is the most disruptive. Sure, processors aren't "glamorous" (though look to Apple's presentations to see how they relate the advantages in terms ordinary consumers can understand), but they caught the entire industry, including dedicated chip designers like Qualcomm, off guard. It's been 16 months since the A7 chip was introduced, and it's only been NVidia who has produced a custom-designed AArch64 processor that has comparable single-core performance (at a much higher rate of power usage), and it will have taken Samsung nearly 2 years to even come out with its first AArch64 phone. Qualcomm executives admitted that Apple caught them off guard and sent all their processor roadmaps back to the drawing board. Samsung immediately jumped on the "we'll get a 64-bit processor out soon, too" bandwagon (but clearly didn't get one out soon).

RottenApple

@KPOM:

I don't think you understand what Tomi tries to say.

It's not about the fact that people may want or not want such a phone, it's about the fact that Samsung doesn't use it as an asset for advertisement purposes.

You can say what you want: Samsung sucks at making good ad campaigns. If you want to sell stuff you have to make people believe that it's something they must own, and if your ad campaign cannot do that, it's a failure.

AndThisWillBeToo

Yeah but Nokia knew how to use their advertisement budget properly and make good ads. Before Elop blew it.

KPOM

@RottenApple, but Samsung doesn't "suck" at making good ad campaigns. Reportedly it was the Galaxy S3 ad campaign with those waiting in line that got Apple to move most of its advertising in-house. A lot of details came out during the Apple v. Samsung trial in 2013.

The issue Samsung has isn't one of advertising. It's more about the actual products. The S5 just wasn't seen as much of an improvement over the S4, and no amount of advertising would make it so. In some respects, Samsung is actually too quick to release new features. Apple tends to release new features in a trickle. The original iPhone lacked 3G. They added it a year later. The next year they added camera improvements. The next year they added the Retina screen. Rather than release LTE in the 4s, they waited until the 5. The 5s added Touch ID but not NFC. The 6 added NFC and the larger screens. So each new product gave users something new but left room for further improvement that is tangible to the consumer. Samsung threw everything including the kitchen sink with the S4, and so couldn't really deliver much "new" with the S5. Is it a marketing failure? Perhaps, but it is not necessarily an advertising failure.

As for the Galaxy K Zoom, yes, it has a decent camera, but it has a mid-range processor and 1280x720 display with a lower PPI than the iPhone 6. So it really doesn't work for advertising purposes, since in all other respects the K Zoom is not a flagship product.


RottenApple

@Leebase:

What you describe as Apple's attraction I call the attempt to establish a monopoly where supply and demand is under the sole control of one single entity - and that's never a good thing. Sorry, but for me this is the ultimate nightmare fueled by lazy people - and is the main reason why I have such a strong dislike for Apple - they try to monopolize their customers and all their products are designed to keep them inside their moneymaking prison with little chance to get out.

Earendil Star

With CES ongoing, it is interesting to read the following comments being made on a widely followed business site while discussing Samsung's strategy on Tizen:

《While Apple only has 12.3 percent of the market, the Cupertino, California-based company’s ownership of its operating system gives it greater control of every stage and a slice of each transaction. “The value of an operating system is like intellectual property, you get a piece of the action regardless of the minor changes and you get to set the rules of the game,” Tom Kang, research director at Hong Kong-based Counterpoint Technology Market Research Ltd., said by e-mail. “It’s much preferable for a giant like Samsung to be able to steer its own fate [adopting an own operating system like Tizen].”》

《Google and Apple typically receive about 30 percent of every application, song or movie purchased to run on their operating systems.》

《“There certainly is a limit to just being a hardware maker without having its own operating system,” said Ko Jung Woo, a Seoul-based analyst at BS Securities Co. Ltd. “It’s positive for Samsung to brace for the next new battle, where all products will be controlled under one software platform.”》

In summary, it makes perfect business sense for Sammy to try and pursue its own OS, be it Tizen or whatever. Not easy to accomplish, for sure, but it is clear where the advantages would be if the attempt were to end in success.

As I explained countless times in the past, this also made prefect business sense for Nokia in 2010, when it pursued Maemo/Meego as its own OS. Not an easy path, for sure, but easier than now for Samsung, easier than most other alternatives available at the time (possibly with the exception of adopting *also* Android) and full of potential. This is why ditching its home nurtured OS for an untested WP7 (P)OS that was even less ready than Meego for prime time was total nonsense. It meant renouncing a strategic asset and becoming totally dependent on an external party (MS), which had no previous success in mobile whatsoever and a proven history of betraying its partners. Even worse, this meant leaving the app store (and its associated potential revenue) to MS.

Why on earth should have Nokia (at the time market leader and profitable) opted for this deal that, if all went well, would only have left it as a captive OEM with no control on its destiny and a zero to low margin prospect for the foreseeable future? No business sense whatsoever. Which means the whole thing just stank.

I repeated this concept countless times, but apparently for the MS zealot commenters on this blog, business sense should not apply to Nokia, only to MS and sometimes to Apple.

Regardless, the new Nokia will face a terribly tough challenge to try and regain a foothold in mobile. It will be hard, extremely hard, but well worth the try. The N1 (which is the most Nokia could manage with the few mobile resources left over after the MS pillage), the renewed impetus with Here maps also on Android, are all welcome signs of a rebirth after the disgraceful MS THTRH Flop tenure. The company is finally free (unless MS tries sabotaging the whole thing with some legal action) and looks as if it is finally pursuing its own agenda, rather than someone else's (MS') as was the case before. Not something I would have necessarily expected, considering how many ex softies MS must have been implanted in Espoo.

Let's see now if the usual fanbois reply on the merits of my arguments, a pretty dire task, or if they will indulge as usual in their favorite tactic: skip the hard facts and focus on baseLess personal attacks. Which, of course, would be no surprise.

Earendil Star

For once, I totally concur with Lee's latest comment on the iPhone and the right for consumers to have their own demands... ;)

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Helsinki but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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