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June 18, 2015

Comments

abdul muis

Hip hip hooray

Next stop
Nokia beat Microsoft shipment

Paul

This is really great news!

Catlin Jenner

Now that Microsoft is giving Office 365 subscriptions away with their phones how do you think that will impact the enterprise space?

zlutor

What an ironic it would be if the partner who produces those phones would be Microsoft? 😉

They have factories idle, they can produce devices with Nokia quality... 😃

And of course, hiphiphuraayyy!

Paul

My next smartphone will be a Nokia for sure!

I _guess_ that probably during first 3 years Nokia will reach ~7-10% of the market

John Phamlore

@Tomi, You write:

"Nokia owns the patents to all its innovations and only Microsoft has a licence to all of them ..."

Like I noted 5 years ago:

https://www.qualcomm.com/news/releases/2008/07/23/nokia-and-qualcomm-enter-new-agreement

"Under the terms of the new 15-year agreement, Nokia has been granted a license under all Qualcomm's patents for use in Nokia mobile devices and Nokia Siemens Networks infrastructure equipment. Further, Nokia has agreed not to use any of its patents directly against Qualcomm, enabling Qualcomm to integrate Nokia's technology into Qualcomm's chipsets. The financial structure of the settlement includes an up-front payment and on-going royalties payable to Qualcomm. Nokia has agreed to assign ownership of a number of patents to Qualcomm, including patents declared as essential to WCDMA, GSM and OFDMA. The specific terms are confidential."

Wayne Borean


This has got to have certain people in Redmond doing a slow burn.

Chris

Fantastic news! Now be brave, Nokia. Bring back Jolla into the fold and let them create the high-end Nokia phones we used to love; fund them appropriately, so you can beat the shit out of other vendors.

Mid- and low-range phones can be sold using Android or even Tizen, but a successor to the N9, running Sailfish (but with the financial and branding power behind it), as well as the capability to run Android apps reliably, would take the cake!

Please, please, Nokia ...

RottenApple

The usual gut reactions by the usual suspects again.

So a few remarks:

@Baron95:

Yes, this is a problem for Microsoft. Their entire Lumia momentum has been driven by the Nokia brand in former Nokia strongholds. Now, when Nokia is back all that may just evaporate and their market share may take a serious beating.
And considering how weak they already are this may easily mean the end of it all.

@Chris:
Sorry, but no. High end customers have certain demands which a new OS cannot give them. They demand a good underlying ecosystem which Nokia would have to build up from scratch - and that they are clearly not capable of any longer. The only people this might get are the die-hard Nokia fanatics and their number is just too small. If they want to sell pricy stuff Android is the only viable option for them (and btw., for the same reason, switching their high end to Tizen would be suicidal for Samsung.)

Spawn

@Wayne Borean

> This has got to have certain people in Redmond doing a slow burn.

Certain people are not with Redmond any longer. They all got gone just days ago. Nokia's step are irrelevant for Satya and Microsoft since WP is not there, or anyone else, business any longer. WP was a mistake (original words Bill Gates, http://www.theregister.co.uk/2013/02/18/bill_gates_microsoft_phone_mistake/ ) and the mistakes, Ballmer and Elop, got solved.

Nokia boy

This is bullshit. As long as Nokia does not take care of marketing and selling, THOSE ARE NOT ITS PHONES!
They are just some phones with a Nokia stamp on them.

RottenApple

@Spawn:

Correct. And to be clear, there were some statements by Nadella that, between the lines, hinted at his disapproval with the Nokia deal. This was entirely Ballmer's idea, he just got stuck with the consequences after cancelling it was no longer possible.

I already said this when the deal was made: This time Nokia managed to screw Microsoft over, they got rid of their dying dumbphone business and their hopeless Lumia business without having to pay for closing them down.
And now the two architects of this deal are both no longer with Microsoft and can watch from the outside how things are going to realign themselves - as this is going into its final phase, it's Microsoft who got stuck with the debts while Nokia still made some relatively good money out of it.

Tomi T Ahonen

Hi everybody

Great comments. A few thoughts.

On Microsoft impacts, this was clearly in the cards and Microsoft knew latest when Nokia went ahead with their tablet but the signals were out all the way back to the first Android based Nokia smartphones in the last weeks that Nokia still owned the phone division. So no surprise at all to MIcrosoft but clearly they must have been 'on a clock' ticking time to 2016 knowing that Nokia will be back. Hence the immense urgency to fire so many so fast (Elop desperately trying to turn the loss-making unit around) and now the activities to prepare to end the business overall.

The Ballmer-Elop level thinking from 2012 (one year before the announced sale of Nokia to MS) must have been along the lines that 'there is too much resistance within old Nokia to prevent the obvious big succcess for Lumia and Windows' driven by delusional thinking by Elop. That must be the root why Ballmer wanted Nokia to begin with. Then when those discussions went badly in early 2013, Nokia played the Android threat - developing the Android based Nokia X series. That in turn forced Ballmer to return to the table and made the 'better' deal to Nokia which then resulted in the eventual sale. By 2014 when the phones unit was finally transferred to Microsoft, Ballmer was gone and Satya Nadella was in charge. He saw the business without the history of Ballmer-Elop and could see that the unit was in dire straights. After some calls to the distribution channel (CEO's of major carriers/operators) he quickly found otu that Windows Phone is already dead. So then it was a question, this is a dead business, what do we do with it.

The transition from a separate Windows Phone OS to a unified single OS makes sense. Do it larger-screen-optimized not to damage desktop PC sales and support the tablet side, who cares how well it does in the dead Lumia/smartphone side. Then fire Elop. Now ramp-down the smartphone business and shift some of those resources to Surface and keep firing the rest. Hence also the clear reduction in any new phone launches in the Lumia division. If Microsoft believed in 2014 that Lumia could survive, we'd have seen a broad range of new Lumias in 2015 'now under Microsoft ownership'.

This to me seems pretty logical as roughly what probably happened under the new CEO reviewing the massive 7 Billion dollar purchase of Nokia's handset business by his ousted predecessor and discovering that the freshly-purchased business is totally dead already. With all that, once the news comes out that Nokia is indeed coming back - on that hated Android OS - it only forces Microsoft to shut down the directly competing Lumia business even faster. The worst image problem for Microsoft is if there are competing flagships of Lumia on Windows Phone and 'real Nokia' on Android and the Nokias then crush the Lumias in the market. It will be seen as a clear vindication of how bad the Windows OS and ecosystem is (compared to Android). So rather, kill it yourself, don't do the big new phone launches and try to turn this unit into more-or-less profit-neutral rump of a business before it is quietly shut down.

The writing was on the wall before the Nokia news dripped in but this was clearly in the cards and Satya Nadella got out - by the skin of his teeth - just before the Nokia confirmation of their phones. It would have looked far worse if this Microsoft announcement came a few days AFTER the Nokia CEO confirms he is returning to smartphones on Android.. (There may even have been a gentlemans' agreement between Nadella and Suri, remember the leaked story some weeks ago that Nokia is setting up an R&D unit in China to design those Android smartphones? Then Nokia USA rushed to squash that story - which now we know was true anyway - well, this has the makings of a call from Redmond to Espoo, where Microsoft CEO asks Nokia CEO to please give me a few weeks, I'm already shutting down the Lumia business, let me fire the people before you announce officially, that way we both benefit, I am not seen as reacting to you, and you seem smart capitalizing on the changed environment). I do find it funny these two stories came out so closely to each other. Its even possible it went the other way, that Suri called Nadella and said his interview was given to the German business magazine, now Nadella has x days to get in front of the story if he wants... Nadella obviously had been planning to fire Elop anyway and re-organize the hardware business under Windows, that has been in the works for many months no doubt.

Would be great to get to know the inside workings at some point.

Tomi Ahonen :-)

Tomi T Ahonen

Then on Jolla and Sailfish, RottenApple had it completely correctly that this won't work at the high end of the market in today's environment and Nokia cannot now be seen to achieve anything other than breathtaking success in its 'glorious' return. The first phones have to be flagships and have some ooh-aah features and must push the envelope and be instantly desirable. The kind of what Nokia did in the previous decade and even on its hardware occasionally flashed at us with Lumia. But think back of the original 808 Pureview on Symbian (41 megapixel camera sensor, what? and specifically WHY? to allow zooming without losing image resolution) how brilliant is that.

So yeah we all Nokia fans would love that 'Hollywood happy ending' of new Nokia going back to the only unit of the old Nokia left, where the heart and soul of its phone innovation was kept alive, like in some post-apocalyptic underground human community living out the nuclear storm, but no its not viable as a solution for the platform now, as all of Nokia is wiped out. Nokia has to go Android (at least for now).

I do still think there is a viable commercial path for Nokia to return as a full phone manufacturer with full marketing and distribution. That may be - almost should be - one of the strategic options that Rajeev Suri is now testing with the first smartphones by verifying first, with minimal Nokia investment of resources or brand. So if the Nokia smartphones on Android only do ok level sales, some random successes here or there but the other Android brands are strongly entrenched and this technology has moved past its innovation phase and its only cheap boxes now moved, then why bother. Collect the licencing fees from whoever sells those modest few millions of Nokia smartphones. But if the demand is strong and a big growth opportunity exists and Nokia sees plenty of chances to differentiate from the Android rivals, then they could return more significantly, I think first by keeping the manufacturing outside Nokia but taking over the sales and marketing side. And eventually why not, return also by setting up Nokia own factories in low-cost labor markets near the best markets, like India, China (so a factory in say very low cost Vietnam, cheaper even than Shenzhen China, would make a lot of sense). This is years down the line, after the market has been clearly proven to be robust.

At that kind of stage, it is conceivable that Nokia could then buy the Jolla company, not to run Sailfish OS smartphones but rather to acquire a lot of very senior competent (mostly Finnish) handset experts. Nothing would prevent that acquisition to keep the Sailfish OS alive as now in reality what Elop seemed to suggest about MeeGo as the premium tech platform but now that scale is totally out of whack with opportunities to grow into a world platform. Firefox has pretty much thrown in the towel. The only OS that has any chance is Tizen and that depends on Samsung which is the only handset maker with large enough scale to do its own OS (obviously in addition to Apple already established on iOS).

But yeah, we now know the Nokia brand returns next year. I am quite confident that will be a spectacular first flagship, likely the winner of the phone-of-year or phone-of-show type of awards. And most of us who still love the brand (and who can afford a flagship-class device) will buy it. I also anticipate its price range to be very close to the top of where now flagship smartphone prices are climbing so expect it to be more of an 800 dollar or 900 dollar device than a 500 dollar device (unsubsidised price ie without contract). And as the USA is a tough market where Nokia was never strong, the first smartphones might not even be released there, at least not through the carriers. Europe yes, China yes, some Advanced Asia-Pac markets like Singapore, Hong Kong, Australia yes but not Japan or South Korea. Much of Emerging World Asian markets (India, Indonesia, Vietnam etc) And the Middle East definitely, Africa definitely and probably much of Latin America. But being a 'very expensive' device it probably won't sell in massive numbers initially. I think all signs suggest Nokia is moving cautiously, it has burned itself very badly under Elop and must be careful in its return.

If they only release one flagship in 2016 then even Q4 they won't have 1% market share, with this strategy. The partner will be struggling to get distribution deals and likely a disproportionate share of first Nokia sales will be via online sales or one non-carrier handset store per major country etc. But Nokia might get 3 or so devices out that first year with prices somewhat in the range of current iPhone series from top-end flagship to a mid-price still expensive premium smartphone. Three handsets if sold in most Nokia-friendly markets could get Nokia into a 2% market share range through partners by say 2017. That would be a strong signal to return 'properly' at least on the side of sales and marketing and distribution, which were Nokia strengths before Elop and would find significant synergies from networking infrastructure sales organization (carriers/operators).

The next stage to await is who is announced as a partner to make & sell Nokia designed phones. If you think of Nokia in 2010, and think 'Apple has revolutionized the phone business, it does the profitable design and brand but has outsourced the manufacturing' and noticed Nokia was historically burdened with the investments that truly prevented that strategy option, now growing from zero - but with the second best phone brand on the planet behind only Apple's iPhone - nobody else has an 'easier path' to pursue an iPhone total strategy clone as Nokia has now. No doubt they are considering this as one path forwards and might never return to making their own phones.

Tomi Ahonen :-)

E.Casais

I am much cooler as to the perspectives depicted by Tomi.

In order to develop a true high-end flagship commanding the price level posited by Tomi, Nokia would have to provide superior software and hardware features. What cards does Nokia have?

1) In software, there is just one: Nokia HERE -- which is a superior mapping system, at least as good as Google maps.

Problem: Google does not allow competing services to assume a core position in Android devices. We have known this from the conflict with Motorola and Samsung way back in 2009-2010. In other words: Nokia HERE cannot be the default mapping application; hence, Nokia cannot fully bring its sole software jewel in a mobile environment to bear.

2) In hardware, Nokia has lost everything; it is starting from scratch.

Cameras? Nokia had superior camera technology -- all gone to Microsoft and partially disbanded. Samsung and even LG are now leading.

Acoustics? Same. The 808 had (and still has) the best microphones on smartphones (stereo, high quality recording, etc). The people and the technology are no longer in-house.

Electronics? Nokia used to design its own chips for RF, at the latest with Lumia it abandoned that sector and must rely, like almost everybody else, on third-party CPU, RF chips, SoC.

System design? All engineers designing and building entire handsets were transferred to Microsoft, or fired, or soon to be fired. The experience of those guys who could design anything from the cheapest mobile phone to the feature-laden smartphone is gone.

We could go on. The big question is: where is the competitive advantage that would justify a 800-900 (€/$/CHF/whatever) price for a Nokia-branded device? Not the look and feel -- as much as people like to discuss the materials, color or curves of a phone, this is not enough a justification (especially since most high-end devices end up hidden inside a protective plastic shell anyway). Without radical innovations like those seen in Jolla, it would at best be yet another distracting Android variation, so no justification either.

Without at least 2-3 really innovative, superior hardware/software features, I do not see a revived Nokia being anything else than an overpriced wannabe high-end Android, in a saturated high-end smartphone market where even well-established Android manufacturers are getting out of breath.

But I am ready to be proven wrong.

Wayne Borean


As I said, this has got to have certain people in Redmond doing a slow burn. I wasn't talking Balmer or Elop. I meant current high level people in Microsoft. Microsoft does not like to loose, and like being given the finger even less.

*****

As to Nokia releasing a super high end phone - I don't know the people well enough to guess, but there is one thing that Nokia could do, if they have a phone like that. Sell it worldwide from their website unlocked.

If the phone is good (and I drooled over the 808 Pureview), people will buy. The artificial constraints of national borders are Twentieth Century. Go Twenty-First century. Use the Internet to reach their loyal users.

As someone who spent years doing sales, that's what I'd recommend.

Spawn

@Wayne Borean

> As I said, this has got to have certain people in Redmond doing a slow burn.
> I wasn't talking Balmer or Elop. I meant current high level people in Microsoft.

There are no such high level people in Microsoft left. This, the definitive end of WP and the shift to a cross-platform strategy, is going on in Microsoft since at least 2013. When Bill Gates declared the WP-strategy as failure, in 2013, in a public interview, speaking about Microsoft strategy, things where absolute set in stone. Note how there was no single voice coming out of Microsoft question his statement about Microsoft's mobile strategy? Because that was a defintive statement.

Today, years later, there is no question where Microsoft heads to. Here an example:
https://channel9.msdn.com/Events/Build/2015/3-670
.NET, the whole stack, running on Linux and OSX now. This is *THE* new "Windows Universal Apps" story widley unreported by now. Windows Universal Apps includes Linux, Android, OSX, iOS. And its not in planing-stage, its now. Check out the code at github and have a look.

When Satya wrote in 2014, http://news.microsoft.com/ceo/bold-ambition/index.html , that
"Windows will create a broad developer opportunity by enabling Universal Windows Applications to run across all device targets."
Then he wrote: Windows developers will be able to run there applications on Android and iOS.

Thats what happened with Office, thats whats going to happen with everything Windows. Across ALL devices, if they run Windows, Android or iOS not matters.

Spawn

Now how is this related to Nokia and its announcement? I think its very related. The comment from Tomi about the timing of both events, NokiAndroid & WPElop, is indeed very interesting. Microsoft searches for partners to preload, transport there software-story on Android. Nokia searches for partners to rebuild its hardware-story on Android. Add a mysterious 3th party which does take both, combines and sells it and there is a deal. If its really going to happen stays to be seen but I see why both may keep contact.

"hey, here Microsoft, lets talk!"
"hmmm... is that you again Elop? I sayed you a thousand times not call me ever again!"
"no, its satya, I am abnout to fire Elop"
"oh, lets talk!"

M Christopher McFann

I think the solution is quite simple. Nokia is a hardware company at heart. It has few services. So any foray into mobile will be about how they integrate their hardware and software.
Nokia could easily build Android AND Windows Mobile handsets using common hardware. We've already seen W10 on Xiaomi Android hardware. No reason Nokia couldn't do similar. I know there is money to be made in the Windows Mobile high end, especially an imaging device. And we all know everyone has begged for Nokia to sell high end Android.
Maybe partner with Xiaomi and One Plus...

RottenApple

Nokia would be INSANE if they put Windows on their phones. It'd be utter suicide. It ruined them once and it'd outright kill any ambitions they might have.

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