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Smartphone Market Shares after Q1 - Its the Digital Jamboree year of Smartphone Bloodbath

Yes, its now Year 3 (Digital Jamboree) of the Smartphone Bloodbath. We have Q1 results, now that each of the four major analyst houses has given their final count of how many smartphones were sold or shipped in the quarter. I report on this blog the overall market share pictures as the most thorough review of the biggest smartphone makers by every measure you could hope for. Here is my review of Q4 and the full year 2011.

The four big analyst houses (Gartner, IDC, Strategy Analytics and Canalys) were remarkably unanimous this time, just over 1.5 million units separated the highest and lowest, so this is as close to a consensus number as the industry tends to see. For Q1 the smartphone industry therefore sold 145.2 million smartphones, down 6% from Q4 of 2011. Note, that I had projected a growth from Christmas season Q4 into the Q1 period with Chinese New Year gift-giving, and even as China had a very strong year in smartphones, the rest of the world seemed to have an exceptional peak in Q4 (at that time sales jumped 30% from Q3) so we did see what could be called a 'correction' for Q1. But yes, 145.2 million is our number.

FIRST THE THREE BIG MARKET SHARE TABLES

Lets see how the smarpthone makers and the operating systems fared in the latest quarter. I will discuss, as usual, each rival and what is happening to their world domination plans in this blog later, and I will add some goodie stats you won't see elsewhere, but lets do the big tables first.

TEN BIGGEST SMARTPHONE MANUFACTURERS BY UNIT SALES IN Q1 2012

Rank . Maker . . . . . . Units . . . Market Share . . . . Was in Q4 of 2011
1 . . . . Samsung  . . . 44.5 M . . 30.6 % . . . . . . . . ( 22.8 %)
2 . . . . Apple . . . . . . 35.1 M . . 24.2 % . . . . . . . . ( 23.9 %)
3 . . . . Nokia . . . . . . 11.9 M . . . 8.2 % . . . . . . . . ( 12.6 %)
4 . . . . RIM . . . . . . .  11.1 M . . . 7.6 % . . . . . . . . (   9.1 %)
5 . . . . HTC . . . . . . . . 7.9 M . . . 5.4 % . . . . . . . . (   6.1 %)
6 . . . . Sony . . . . . . .  7.3 M . . . 5.0 % . . . . . . . . (  5.8 %)
7 . . . . Huawei  . . . . .  7.0 M . . . 4.8 % . . . . . . . . (  4.8 %)
8 . . . . LG . . . . . . . . . 5.5 M . . . 3.8 % . . . . . . . . (  4.5 %)
9 . . . . Motorola . . . . . 5.1 M . . . 3.5 % . . . . . . . . (  3.4 %)
10 . . . ZTE . . . . . . . .  5.0 M . . . 3.4 % . . . . . . . . (  3.5 %)
Others . . . . . . . . . . .  4.8 M . . . 3.3 % . . . . . . . .  (  3.5 %)
TOTAL  . . . . . . . . . 145.2 M
Source: TomiAhonen Consulting Estimates May 16, 2012 from vendor data and other sources
This table may be freely distributed

Samsung and Apple account now for more than half of all smartphones sold. Then after those two, its pretty much misery down the line from currently 3rd ranked Nokia down through RIM through HTC through Sony, LG, etc. The Chinese Huawei and ZTE are roughly holding station as is Motorola. This industry seems to be one where only Samsung and Apple have figured out how to be a success. Strange, considering how globally competitive this industry is accross so many major tech brands.

Then lets look at the market shares for the major operating systems for smartphones. Here, as usual, the numbers are not that clear and take some manipulation to force into the same total but we do have the finals that are consistent with the above, and other reported data as best as possible:

BIGGEST SMARTPHONE OPERATING SYSTEMS BY UNIT SALES IN Q1 2012

Rank . OS Platform . . . . . . Units . . . . . Market share  . . Was in Q4 of 2011
1 . . . . Android . . . . . . . . . 80.8 M . . . . 55.6 % . . . . . . . ( 49.0 %)
2 . . . . iOS . . . . . . . . . . . . 35.1 M . . . . 24.2 % . . . . . . . ( 23.9 %)
3 . . . . Blackberry . . . . . . . 11.1 M . . . . . 7.6 % . . . . . . . (  9.1 %)
4 . . . . Symbian . . . . . . . . . 7.9 M . . . . . 5.4 % . . . . . . . ( 11.5 %) 
5 . . . . bada . . . . . . . . . . . . 3.8 M . . . . . 2.6 % . . . . . . . (   2.3 %)
6 . . . . Windows Phone . . . . 2.3 M . . . . . 1.6 % . . . . . . . (   1.2 %)
7 . . . . MeeGo . . . . . . . . . .  2.2 M . . . . . 1.5 % . . . . . . . (   1.2 %)
8 . . . . Windows Mobile . . . . 0.4 M . . . . . 0.3 % . . . . . . . (   0.4 %)
others . . . . . . . . . . . . . . . .  1.6 M . . . . . 1.1 % . . . . . . . (   1.6 %)
TOTAL . . . . . . . . . . . . . . 145.2 M
Source: TomiAhonen Consulting Estimates May 16, 2012 from vendor data and other sources
This table may be freely distributed

Android has now passed the 50% level and more than half of all smartphones sold globally run on Android. And an astonishing nearly 4 out of 5 smartphones sold run either Android or iOS (79.8% of all new smartphones sold). Symbian has tumbled further now falling from 3rd to fourth. Samsung's bada keeps shining as the strongest of the new platforms, as we await the launch of the first Tizen smartphones later this year. Microsoft's all Windows Phone makers, Nokia, Samsung, HTC, LG etc combined, barely outsold the one MeeGo handset sold by Nokia, the N9. And as many still give the 'Microsoft OS' market share combining Windows Phone and its incompatible older sibling, Windows Mobile - this to me is misleading and distorts the Microsoft picture, I still report the split between the two, so I'll keep the Windows Mobile stat out here for now as it slowly slips into oblivion.

I also published last time the installed base data and have updated that, so here is the latest installed base market shares globally. We have now actually passed the 1 Billion smartphones in use level, hitting 1,013 million or 1.0 Billion smarpthones in use. Lets see how they are split by operating systems:

INSTALLED BASE OF SMARTPHONES BY OPERATING SYSTEM AS OF Q1 2012

Rank . OS Platform . . . . . . Units . . . . . Market share  . . Was in Q4 of 2011
1 . . . . Android . . . . . . . . . 328 M . . . . . 32 % . . . . . . . . ( 27 %)
2 . . . . Symbian . . . . . . . . 299 M . . . . . 30 % . . . . . . . . ( 35 %)
3 . . . . iOS  . . . . . . . . . . . 178 M . . . . . 18 % . . . . . . . . ( 16 %)
4 . . . . Blackberry  . . . . . . 111 M . . . . . 11 % . . . . . . . . ( 12 %)
5 . . . . bada . . . . . . . . . . . . 17 M . . . . .  2 % . . . . . . . . (   1 %)
6 . . . . Windows Mobile . . . . 16 M  . . . .  2 % . . . . . . . . (   2 %)
7 . . . . Windows Phone . . . .   9 M . . . . . 1 % . . . . . . . . (   1 %)
Others . . . . . . . . . . . . . . . . 55 M . . . . .  5 % . . . . . . . . (   6 %)
TOTAL Installed Base . . . 1,013 M smartphones in use at end of Q1 2012
Source: TomiAhonen Consulting Estimates May 16, 2012 from vendor data and other sources
This table may be freely distributed

Obviously Symbian is continuing to crash very hard after last year's Elop Effect. For every gain of Windows Phone unit installed base since Nokia was announced in February 2011, Microsoft Windows Phone has picked up 6.1 Million additional Windows Phone handsets, while Nokia Symbian and Microsoft Windows Mobile have given up in the same period 70 million smartphone customers. I think its a safe bet that this is the most costly customer migration attempt ever, if for ever 11 customers you try to shift to Windows Phone, you lose 10 of those to your competitors. The folks over at Samsung and Apple are mightly happy for those mostly ex Nokia customers they have picked up in the past year.

Thats the big picture. I think the ironically named 'so-called 3rd ecosystem' ie Windows Phone has not yet passed 10 million total installed base, and lingers at 1% even after massive global push by Microsoft and Nokia. Samsung's bada which launched at the same time as Windows Phone, has sold nearly twice as many. Nokia's own MeeGo outsold its Nokia branded Windows Phone smarpthones in its first two quarters that were the same two quarters that Nokia sold its Lumia series on Windows Phone, although that is likely now to end by Q2 as Nokia is now ramping down some of its N9 sales.

INDIVIDUAL MANUFACTURERS BY BRAND

As always, I'll rank the top smartphone makers by their latest quarter performance and give a US school system grade from A being perfect to F being failing, with some commentary of what happened in the Quarter and perhaps some observations of what is going on right now. And we rank these manufacturers and later the operating systems by biggest to smallest.

SAMSUNG - 44.5M smartphones, 30.6% market share, profitable - A+
Last 6 Quarters Market Share: 11% - 13% - 16% - 21% - 23% - 31%

Samsung is on top of its game right now, doing everything perfectly. They took Nokia's 14 year crown as the world's largest handset maker also this Q1 and in smarpthones, they leapfrogged Apple and retook the biggest smartphone maker title that Samsung briefly also held in Q3 of 2011. Now the lead to Apple is so huge, its likely to hold all through the year 2012. The jump in market share from 22.8% in Q4 to 30.6% now was accomplished without a brand new superphone, while Q4 was Apple's first full quarter of selling the iPhone 4S, making this Samsung achievement even more remarkable. Now we have seen the new Galaxy S3 launched and its likely to propel Sammy's top end sales even further. It also keeps pushing solid sales throughout the range including low-end bada smartphones which accounted for 9% of all Samsung branded smartphone sales in Q1. A particularly strong markets for Samsung was China wher it replaced Nokia as the bestselling smartphone maker. China is, as regular readers of this blog know, the world's largest smartphone market now, having passed the USA for that honor. Here is how I split the Samsung smartphones by the operating systems

SAMSUNG SPLIT BY OS IN Q1
Android . . . . . . . . . 90%
bada . . . . . . . . . . . . 9%
Windows Phone . . . . 1%
Total Samsung . . . . 44.5 M 
Source: TomiAhonen Consulting Estimates May 16, 2012 from vendor data and other sources
This table may be freely distributed 

Sammy also reported excellent profits in its handset unit, so this is all peachy. And we have seen the first developer prototype versions of Tizen, the next generation OS that Samsung is now developing with Intel, that Nokia pulled out of its Intel partnership on the MeeGo platform. Tizen is a kind of evolution beyond MeeGo and includes both Linux and HTML5 based elements. We should see first Tizen smartphones coming late in the year, and if Nokia's sexy N9 was any sign of how good a new OS can be, the Tizen smartphones could be something remarkable. But we have to wait and see. In the meanwhile, Samsung hitting on all cylinders, a clear A+ by far the best performance in smartphones this Quarter.

APPLE - 35.1 Million smartphones, 24.2% market share, profitable - B+
Last 6 Quarters Market Share: 16% - 18% - 19% - 14% - 24% - 24%

Apple had a great quarter again. It did see a sequential decline in smartphone sales (compared to Samsung that managed growth from Q4) but as Apple still managed a modest gain in market share, that was still good performance. In other words, Apple declined less than the industry did, so compared to most rivals like HTC, RIM, Nokia, LG, Sony etc Apple did better. But it did not grow unit sales, hence it was not quite the perfect quarter. Apple lost its title as world's largest smartphone maker for the quarter, and unless something really drastic happens, its unlikely Apple can retake that leadership position in any single quarter anymore, and thus Samsung will likely pass Apple this year as the biggest smartphone maker for the full year.

Still, its early going, we have to see how great the next iPhone model will be. And like I have been saying, if Apple were to split its new product launches to two per year, not just one, and introduce a lower-cost 'Nano' version of the iPhone - that could jump Apple sales significantly back into the scale of what Samsung is doing now. Still, Apple sells nearly one in four of every smartphone sold on the planet - this is far more than I ever predicted Apple could achieve and by some measures Apple is rated the third largest handset maker too (my stats say Apple is ranked 4th, behind Chinese ZTE, but who cares, third or fourth biggest, Apple has passed past masters such as Motorola and LG in making mass market dumbphones). 

And Apple did it making only premium-priced iPhone smartphones. Very good performance indeed. And by those who measure revenues and profits, obviously Apple takes the lion's share of all profits generated by the handset industry (only I won't bother discussing those issues here, this is not a blog about stock prices or wall street evaluations. As long as a company is profitable, it is viable as a long-term competitor, and beyond that, how big the profits are, is not of concern to this blog. We look at the installed base and platforms, focusing on the developers in this industry). Apple slighly fell unit sales but still picked up some market share, and doing all this very profitably, Apple earns a B+ for Q1 of 2012 in the Digital Jamboree.

NOKIA - 11.9 Million smartphones, 8.2% market share, loss-making - F
Last 6 Quarters Market Share: 29% - 24% - 16% - 14% - 13% - 8%

Nokia is dying before our eyes. One year ago at this time, Nokia was still the world's largest smartphone maker and highly profitable. Just before the Elop Effect ie 15 months ago the last quarter for which we had the data, Nokia was literally bigger than Apple and Samsung combined, with a massive 29% market share, growing unit sales, growing revenues, growing average prices and massively growing profits, under its new leadership of Stephen Elop. Since then we had the Elop Effect and even Stephen Elop admitted to the Nokia Shareholders' Meeting now two weeks ago, that yes, his Burning Platforms memo did hurt Symbian sales. How badly? Symbian sold 35% of all smartphones sold in the world in the last quarter before his moronic memo. Today? Symbian sells 5.4% of all smartphones in the world! The Burning Platforms memo did a lot of damage, some of the most obvious, was to scare away Nokia Symbian partners such as NTT DoCoMo, Fujitsu, Sharp and Panasonic etc, helping collapse Symbian sales. They all have since shifted to Android of course, no doubt the Google management team send nice bottles of Champagne to Elop's disgruntled execs to cheer them up.

From 35% to 5.4% in 15 months? When calculated as a percentage loss, that is a collapse of 85% of your customer base in just over one year. Was that recovered to Nokia's Windows Phone platform? No. Nokia's total Windows Phone sales on the Lumia brand in Q1 was 2.0 million units which had 1.5% market share. So Nokia trades 29.6% Symbian market share loss for 1.5% of Windows Phone market share gain, under Elop? This is a world record in management failure. In fact, while Elop has refused to support his hot new OS and handsets, still in Q1, the orphaned Nokia N9 on the MeeGo platform outsold all Nokia Lumia handsets, yes 2.2 million to 2.0 million. And even as the N9 wins global recognition like the industrial design oscars, the D&AD awards beating out not just Lumia smartphones but even the iPad 2, what does Elop do with the N9? He still refuses to sell it in most market and is discontinuing it now in some, like in Finland and Sweden. But at least there are some tiny breakthroughs. We hear that the N9 will after all, be quietly sold in the USA, at last. Six months too late, and without a carrier subsidy deal, but still.

So one year ago Nokia was as big as Samsung and Apple combined. Now Nokia is only one third the size of Apple and yes, one quarter the size of Samsung in smartphones! A total comprehensive collapse. Nokia's own market share excluding other Symbian partners was 29% before the Elop Effect - and remember, Nokia was growing sales, not declining at the time - which then fell to 24%, 16%, 14%, 13% and now is at 8%. I was the most accurate forecaster to predict those levels - some crazy 'experts' actually promised over 20% market shares for Nokia and to be as high as 28%. Now the collapse continues. Nokia has already warned that Q2 will be worse than Q1. We see latest market share data from such early indicators as ComScore and Kantar Worldpanel and several local stats from China to India to the Middle East and find that Nokia continues to crash. I project Nokia total smartphone market share ends at 3% for the end of this year, and if Nokia continues on the suicidal Windows Phone strategy, it will hit 1% by summer of 2013 as Microsoft shifts to Windows 8, that will be comprehensively rejected by the carrier community, as I have explained on this blog, and something, again, that CEO Stephen Elop admitted to the Nokia Shareholders' Meeting two weeks ago (answering 'of course' to a question asking if it was true that Nokia carrier/operator distributors were reluctant to sell Nokia Lumia not because it has Skype - it does not (yet) - but because Skype is owned by Microsoft). So currently Nokia's Symbian/MeeGo/Windows Phone split is like this:


NOKIA SMARTPHONE SPLIT BY OS IN Q1
 - 65% of Nokia branded smartphones still are sold running Symbian.
 - 18% are running MeeGo and
 - 17% are running Windows Phone.
Source: TomiAhonen Consulting Estimates May 16, 2012 from vendor data and other sources
This table may be freely distributed

We have now heard that yes, it was the carriers who insisted on prolonging Symbian sales - and like I said, they would go through Nokia's Board to force Elop's hand - as reported by Lucian Armasu at the Android Authority - yes, carriers are now restless about Windows Phone and want Nokia to offer alternatives, both MeeGo and Symbian Belle, such as the highly praised 808 Pureview cameraphone. Reversing yet again another Elop idiotic edict, from last year when he suddenly said Nokia would no more sell Symbian in the USA, now they are bringing the 808 Pureview to the US market as well. 

Meanwhile we hear of the 101 faults with Windows Phone, and that resellers are refusing to sell it, and the Lumia owners are generating Nokia-record level returns being extremely dissatisfied with the devices. One of Nokia's branded store chains is abandoning the Nokia brand altogether while Nokia slashes Lumia prices globally to try to pump up some sales.

I could go on and on about Nokia, pay attention to this time, we are witnessing a world record in management failure, of any industry ever. Nokia has collapsed and is making so severe losses, it will be gone before you know it. At least gone as the company we once knew. What becomes of Nokia? My guess is that Microsoft will buy it or pump billions into it to keep it afloat, just so Microsoft can prolong the inevitable decline of the Windows mobile strategy - which just five years ago held 12% global market share in smartphones. Now Windows Phone has.. 1.6%. Even Windows Mobile was able to do better than that, Microsoft's previous OS had 5% before Windows Phone launched, in 2010... Anyway, keep an eye on Nokia. This is a sad tale that will be repeated ad nauseum in business legends, the most incompetent executive of any industry ever, who swapped 29% dominating market position making huge profits and growing strongly, for the 8% Nokia has now, and 3% by end of year, making ever bigger losses in its smartphone unit...  Nokia is on a Certain Road to Death. How to grade Nokia? The market fell 6% from Q4. Nokia fell .. 39% in just three months! This is the biggest fall I've ever seen in any one Quarter. Yes. Last year 2011 Stephen Elop traded growing Nokia smartphone sales for the biggest collapse ever seen in this industry in a period of one year. Now he is not satisfied with that world record, he now adds to it, by producing the worst quarter ever witnessed in smartphones in any 3 month period. Is he done? Nokia's profit warning and all signs suggest Nokia's Q2 will be even worse.. Sorry. What was the score? Fell unit sales, fell market share, made even bigger losses. Unfortunately I can't give a score worse than an F, but I'd like to give an F- (F-Minus) or actually an F - - - - - (F Minus, Minus, Minus, Minus)

RIM - 11.1 Million smartphones, 7.6% market share, loss-making - D-
Last 6 Quarters Market Share: 14% - 14% - 12% - 9% - 9% - 8%

The Blackberry maker is seeing a see-saw period, it is up slighly in some quarters like it was in Q1 and Q4 of last year, but then its down again, like it was in Q2 and Q3 of last year, and once again now, in Q1 of this year. Blackberries do sell but in ever weaker numbers. Its market share has tumbled almost in linear fashion from its peak in Q3 of 2009 when RIM had 21% of the global market share to the 15% it had a year later and 9% it had by Q3 of 2011. Now today Blackberries only account for 7.6% of all smartphones sold globally. In unit terms, actually RIM has had modest growth over the period, but the global smartphone market has exploded and Blackberry has not been able to capitalize on that massive opportunity. RIM has stayed stagnant. Hence its market share is now in single digits and headed to oblivion. I could argue there is some silver lining if there was profits being made, but RIM lost all that too and now generates a loss. So yes, there is yet another 'saviour of the year' coming from RIM, this time it is the Blackberry 10 operating system, but will it come in time and is it good enough. I have severe doubts. Currently, RIM's performance of declining sales, declining market share and loss-making gives it a D-. The only reason I cannot give RIM an F, is that I am grading on a curve. To rate RIM's pitiful performance as bad a Nokia's would be far too kind to the horrid world-record failure Quarter that Nokia has just reported. So RIM gets a D-

HTC - 7.9 Million smartphones, 5.4% market share, profitable - C
Last 6 Quarters Market Share: 9% - 10% - 11% - 10% - 6% - 5%

HTC is providing a large volume of well-received Android smartphones (the second biggest Android provider behind Samsung) and also sells Windows Phone based smartphones but is not able to capture the success that Samsung has been able to on mostly the same platforms. HTC has actually a longer history on both platforms so it should technically know them better than Samsung does.. But yes, HTC which had reported essentially an unbroken streak of sequential growth in smartphone unit sales up to Q3 of last year, suddenly turned into declines and now we see the second consecutive drop in sales, falling 17% from the Christmas Quarter to Q1, and 7.9 million smartphones sold. HTC's market share is down to 5.4%, a level it has not seen since mid 2009. HTC is still profitable, so this is not all bad but HTC has to recover and find its winning ways again. I grade the HTC performance in Q1 as a C

SONY - 7.3 Million smartphones, 5.0% market share, loss-making - D
Last 6 Quarters Market Share: 5% - 5% - 5% - 6% - 6% - 5%

Sony got rid of its partner, Ericsson and now goes it alone in smartphones. This is a genuine transition stage and Sony can be forgiven for stumbling somewhat in the transition. But it did see sales tumble a lot from 9 million smartphones and 6% market share to 7.3 million and 5%. This, while the company slipped into loss-making again. Sony is likely to be the first of the legacy handset makers to complete the migration from dumbphones to smartphones, and is past 90% migration rate already. That is good, but Sony has to restore its profitability and then stabilize the downward sales trend and become a viable global competitor again. I grade Sony at a D.

HUAWEI - 7.0 Million smartphones, 4.8% market share, profitable - B
Last 6 Quarters Market Share: 3% - 3% - 4% - 5% - 5% - 5%

Huawei does not report quarterly numbers like most Western companies, it reports annual numbers and then gives occasional tidbits of data. But Huawei is growing strongly and capitalizing on the lower-end market opportunities in the industry, in China and in many parts of the Emerging World economies. My 7.0 Million number is a projection as its Huawei's market share but consistent with recent Huawei performance and also consistent with the overall industry totals. It might be off a couple of hundred thousand one way or another but currently its unlikely Huawei had passed Sony yet, and it is far bigger than the next in line, LG. Note, Huawei has also passed the half-point where more of its phones sold are now smartphones than dumbphones. I grade Huawei's steady sales performance and profitable business as a B.

LG - 5.5 Million smartphone sales, 3.8% market share, profitable - C+
Last 6 Quarters Market Share: 5% - 5% - 5% - 5% - 5% - 4% 

LG seems now to have turned a corner. Like just about anyone before it, when a handset maker jumps into bed with Microsoft, it usually goes from highly profitable to higly loss-making (and many have gone bankrupt in that process, bled dry by the Evil Empire). Now LG has stated its not bothering with Windows Phone, it will focus its smartphones on Android. LG is still well behind the rivals in migrating its handset unit from dumbphones to smartphones (only a third LG branded phones sold are smartphones currently). But as LG has returned to profit-making, now the company is healthy once again, and can pursue now better growth and success in this industry. I grade the LG Quarter with a C+

MOTOROLA - 5.1 Million smarpthones sold, 3.5% market share, profitable - B-
Last 6 Quarters Market Share: 5% - 4% - 4% - 4% - 3% - 4%

Motorola is also on the mend, under Google's leadership. They have stabilized the boat, are no longer generating huge losses, and the damage to smartphone unit sales has also stalled. They kept pace with the industry so unit sales fell slightly, but Motorola held market share and thus earns a B-

ZTE - 5.0 Million smartphones, 3.4% market share, B
Last 6 Quarters Market Share: 2% - 2% - 3% - 3% - 4% - 3%

Another Chinese brand showing steady pace, ZTE does solid quarters, nice sales, roughly on par with industry and holding its market share. They are profitable so I grade ZTE at a B.

OPERATING SYSTEMS GRADED

Thats our Top 10 biggest smartphone manufacturers right there. Now lets turn to look at the operating system providers in the same way, from largest to smallest OS:

ANDROID - 80.8 Million smartphones, 55.6% market share, A
Last 6 Quarters Market Share: 24% - 32% - 40% - 47% - 49% - 56%

Google's Android is now the dominating platform, selling literally more smarpthones than all other smartphone operating system makers, combined. Android has now in Q1 passed the 50% milestone and powers almost 56 out of every 100 smartphones globally. While the industry shrunk 6% in the past 3 months, Android grew 6%, efffectively doing 12% better growth than the industry. Note also, that for the first time ever, Android is now more than twice as big as its nearest rival, iOS. A very VERY strong performance by the market leader, when everybody else targets you. Android is of course thriving in part due to the success of Samsung, its top dog. I will offer the Android market share split also later in this blog posting (see at the bottom of this blog article for split of Android makers) But yes, I grade Android in the Digital Jamboree with a solid A.

iOS - 35.1 Million smartphones, 24.2 market share, B+
Last 6 Quarters Market Share: 16% - 18% - 19% - 14% - 24% - 24%

Apple's iOS had a good quarter but didn't keep pace with Android growth. Apple's iOS actually slightly lost sales from Q4 but less than the industry declined, so iOS did pick up a bit of market share. Note, like all OS platforms, I only count the smartphone part of the OS, so I don't include tablets and other devices, not for iOS, not for Blackberry, or Android, or Windows etc...So specifically with iOS, the full addressable ecosystem is significantly bigger with the other iOS powered devices, but in smartphones, Apple's iPhone operating system holds strong second place selling almost a quarter of smartphones worldwide. I grade Apple in operating systems at a B+

BLACKBERRY - 11.1 Million smartphones, 7.6% market share, C
Last 6 Quarters Market Share: 14% - 14% - 12% - 9% - 9% - 8%

The RIM owned Blackberry OS was once considered by Nokia to replace its Symbian (RIM said they weren't interested) and about a year later, last summer, it emerged that Nokia and Microsoft had then considered buying troubled RIM. There is always interest about the Canadian Blackberry maker. Now it is in the news, having retaken third ranking in smartphone OS new sales, as Symbian falls below Blackberry. This is quite telling, that the third-bestselling smartphone OS platform globally, has only under 8% market share. Yes, its a difficult place, the Digital Jamboree. I grade Blackberry OS with a C.

SYMBIAN - 7.9 Million smartphones, 5.4% market share, F
Last 6 Quarters Market Share: 35% - 26% - 17% - 15% - 11% - 5%

The Symbian market share is in free-fall, ever since the Elop Effect. I am not going to suggest Symbian was fully competitive and modern, but if you look at for example the 101 faults of the Windows Phone OS platform, and recall that Symbian does most of those things natively and has done for years already, it does remind you that there are more than one type of human and smartphones are used for very varying needs, not just touch-screen web surfing on ultra-slick iPhones. Symbian used to sell 77% of China, over 60% of India and over 80% of African smartphones. And the phone of the event award at the world's biggest telecoms event held in Barcelona two months ago, awarded the Nokia 808 Pureview as the best phone of the event. Powered by.. Symbian, yes. Even now there is life in that old dog, abilities that Nokia and Microsoft both say, they cannot do on Windows Phone today, what is standard on that 808 Pureview. Symbian could have had a gentle controlled ramp-down, powering millions of smartphones sold in China, India, Africa, etc - where Nokia's Ovi Store and Symbian based apps exist in local languages and supported by carrier-billing. Now all that is collapsing thanks to Elop Effect. Like I said, Nokia CEO Stephen Elop himself admits, he did cause Symbian sales losses with his moronic Burning Platforms memo, the costliest management memo of all time. Symbian had 35% just over a year ago. It is now down to 5.4%. Never in the history of technology, has there been a 'platform' in any industry, not in video recorders, not in personal computers, not in gaming consoles, not in smartphones, or anything else. Never has there been any platform that was the market leader, to see it lose 85% of its customers in just 15 months. We have witnessed a world record in destruction of a market leader. Assassinated by CEO Stephen Elop - he now even admits to this murder, when talking to Nokia shareholders. If you were bigger than all your rivals, and then destroy that market to go from 35% to 5% in 15 months, that is pathetic. To call this the world record in management failure is to understate how big the damage has been.

If Nokia had somehow been able to exchange 1 for 1 the existing Symbian market share for Windows Phone (and/or MeeGo) market share, then yes, it would make sense. But no. Nokia and Microsoft, separately had 38% market share before the Elop Effect. They now have a combined 7% for Symbian and Windows Phone combined. (And they are headed to 3% by year-end) This totally validates that joke, that two turkeys do not make an eagle. This is total abjunct failure. Yes. Nokia rates an F for Symbian in the past quarter.

BADA - 3.8 Million sales, 2.6% market share, B+
Last 6 Quarters Market Share: 1% - 1% - 2% - 2% - 2% - 3%

Samsung's bada stays mostly below the radar, doesn't make much noise, but keeps increasing sales steadily. They now sell nearly 4 million smartphones per quarter and have amassed an installed base of nearly 17 million smartphones in use. As Samsung has done this as a side-line project, while their flagship has been on Android, and with Samsung also offering Windows Phone devices, it is quite remarkable. What is extraordinary, is that Microsoft's Windows Phone launched at the same time, with half a dozen manufacturers, now adding Nokia even, and powered by the biggest marketing push of any OS ever, Microsoft's Windows Phone still only sells about half the level of bada. Astonishing. And good job Samsung. Now lets see how this knowhow and ecosystem transfers to the Tizen OS that is coming later this year. I grade bada a steady good B+

WINDOWS PHONE - 2.3 Million sales, 1.6% market share, C 
Last 6 Quarters Market Share: 2% - 1% - 1% - 1% - 1% - 2%

Microsoft is still ashamed to break out the split of Windows Mobile vs Windows Phone, which tells us they are still unhappy with the level of Windows Phone sales and try to spin the story talking of all Windows smartphone sales instead. But we do have some insights into some markets and can calculate out roughly the Windows Mobile sales. So I get total Windows Phone sales at 2.3 Million, of which 2.0 Million were Nokia Lumia sales and 300,000 were all other Windows Phone sales by Samsung, HTC and others. I also counted 400,000 Windows Mobile sales so if you see a number of roughly 3 Million Windows OS smartphones and roughly 2% market share, that is consistent with these numbers but it includes that market spin by Microsoft to try to count Windows Mobile sales into the Windows Phone numbers. As we know, Windows Mobile is not compatible with Windows Phone, so that is an artificial number. Oh, and the rumor mill is busily demanding Microsoft (and Nokia) to commit to whether current Windows Phone based smartphones, especially the new Lumia phones by Nokia, are able to be upgraded to Windows 8 OS. As Microsoft is reluctant to confirm this (as is Nokia), I think the safe bet is that they current smartphones are not going to be able to be upgraded. Its yet another gripe to add to the long list if 101 faults in the Windows Phone platform. But lets be fair, Windows Phone had seen declining sales for almost every quarter since launch, that was finally reversed now in Q1 with Nokia Lumia sales appearing in some numbers. So Windows Phone is growing now (from a very miniscule base level) and that is something. (See below for full split of Windows Phone manufacturer shares). Even as that sales growth is achieved by essentially bribing sales staff, and showering buyers with Xbox 360 videogaming boxes and super quality stereo headsets, etc, as well as severe price cuts throughout the Lumia range, there is clear measurable growth in Windows Phone, finally, 18 months after launch. So I grade Windows Phone at a C

MEEGO - 2.2 Million smartphone sales, 1.5% market share B+
Last 2 Quarters Market Share: 1% - 2%

Nokia's orphaned MeeGo OS is shining where nobody pays any attention. The N9 won the industry award for best design in the UK by the D&AD awards (kind of 'Oscars' for designers) beating the Lumia 800 and the iPad 2 - but the N9 is not even sold in the UK. The German newsmagazine Der Stern loved the N9 so much, it urged German buyers to travel to other countries to buy it, but Nokia refuses to release the N9 in Germany. This is the phone that could have saved Nokia, and MeeGo the OS has, sadly, even another smartphone not as a prototype, but being currently manufactured by Nokia in small numbers, called the N950 (its like a QWERTY slider variant to the N9). And Elop refuses to let that be sold anywhere. While carriers globally hate the Windows Phone based Lumia - and customers return it at record rates - and yes, it has those famous 101 failures - and Nokia's CEO himself admits carriers are not selling Lumia because Nokia's partner Microsoft now owns Skype, something the carriers fear as an existential threat to their business. This is not something I claim - it has now been verified by Nokia CEO that yes, 'of course' it is true that some operators are not selling Lumia because Microsoft owns Skype. While Nokia forces undesirable Lumia smartphones down the operators' throats, there looms the saviour in the wings, the N9 and N950, running MeeGo, that could have been the Razr for Nokia. Motorola recovered from 14% market share to 25% in fifteen months powered by the Razr. Nokia could have seen the same with the N9, as the N9 and MeeGo have had the strongest positive reviews of any Nokia phone ever released. But Elop refuses to sell the N9 in many of Nokia's best markets like the UK and Germany; and refuses to sell the N950 anywhere. Even so, in the obscure markets where the N9 is available, globally both in Q4 and now in Q1, the one N9 smartphone running MeeGo outsold all Lumia based Windows Phones made by Nokia. No wonder Elop refuses to reveal the N9 numbers, even when asked about it point-blank. At least there is some good news, that the N9 is now (quietly) being released to the US market. Lets cheer for small gains. But yes, how is the orphaned MeeGo doing, in its last moments? It bravely still outsells the total Lumia line by my analysis, and for that alone, MeeGo earns a B+

WINDOWS MOBILE - 400,000 smartphones, 0.3% market share - D
Last 6 Quarters Market Share: 3% - 2% - 1% - 1% - 0% - 0%

Windows Mobile refuses to die. It is dwindling before our eyes, but still small numbers do sell. It will soon be gone.

SOME MORE STATS FOR THE SEVERE PROPELLERHEADS

Thats the review of the big smartphone manufacturers and operating systems. I will add a few specific data items here to the end, lets do the Android and Windows Phone splits:

ANDROID MAKERS IN Q1
Samsung  . . . . . . 50%
HTC . . . . . . . . . . 10%
Sony . . . . . . . . . . 9%
Huawei  . . . . . . . . 9%
LG . . . . . . . . . . . . 7%
Motorola . . . . . . . . 6%
ZTE . . . . . . . . . . .  6%
Others . . . . . . . . .  3%
Total Android . . . . 80.8 Million
Source: TomiAhonen Consulting Estimates May 16, 2012 from vendor data and other sources
This table may be freely distributed

WINDOWS PHONE MAKERS IN Q1
Nokia  . . . . . . . . . . . . . . 87%
Samsung . . . . . . . . . . . .  9%
HTC . . . . . . . . . . . . . . . . 4%
Total Windows Phone . . 2.3 Million
(Note above does not include 400,000 Windows Mobile smartphones sold in Q1)
Source: TomiAhonen Consulting Estimates May 16, 2012 from vendor data and other sources
This table may be freely distributed

One Plug - if you are interested in the handset industry stats more deeply than this blog, don't forget my TomiAhonen Phone Book 2010. That volume has over 90 tables and charts of handset industry stats. And now I have a special offer - I will be releasing the 2012 edition of the Phone Book late this Summer or early Autumn (there was no 2011 edition, the 2010 is the current edition). If you buy the 2010 edition of the Phone Book now, you will receive both it and the 2012 Phone Book for the same low price of only 9.99 Euros. If you don't know what the Phone Book data looks like it is similar to the Almanac - you can download the 2010 edition of the TomiAhonen Almanac 2010 for free and no registration etc, at Lulu.com. Its an unrestrictred pdf file formatted for the small screen and has over 90 tables and charts about the mobile industry, including one chapter about handsets. Get yours now, it has a ton of useful stats and data, even as its a bit older. You can see the table of contents and buy the new edition of the Almanac here - TomiAhonen Almanac 2012 edition at 9.99 Euros. And you can see the table of contents and ordering info of the TomiAhonen Phone Book 2010 edition here.

Mobile Services Beyond Messaging? Excellent TNS Global Survey Reveals Tons

While that Nokia market share collapse is going on, there is life elsewhere. I've been chronicling on this blog the rise of the mobile data economy since my first book came out on the topic more than ten years ago. Early on we saw services around very basic digital technologies like SMS and WAP. Then we started to see more powerful services like MMS and gradually HTML web based solutions for mobile. Now we see smartphone apps and QR codes and Augmented Reality and a whole host of newer technologies. 

The data on their usage has always been scarce, and I have been eager to publish here when we had global or regional or sometimes even national data on significant mobile service use. I've chronicled the long rise of SMS text messaging which is now nearing 'Peak SMS' user, usage and revenue levels (SMS has not yet peaked, don't worry, but Peak SMS is coming soon, as OTT services are rapidly cannibalizing the users and usage, especially the heavy users). I've reported here on this blog that SMS has reached 5 Billion active users by end of 2011, and generated revenues of 126 Billion dollars. MMS is the second most widely used data service on the planet, still growing strongly globally, which has 2.5 Billion active users and generated 39 Billion dollars in 2011. Then I've occasionally reported on some of the early 'mobile web' users and usage, like news, search, gaming, music and advertising on mobile. Today I have something magnificent, on the more advanced uses in mobile, courtesy of TNS.

TNS has run a global survey across 57 countries covering 48,000 people on all six inhabited continents. It is one of the largest if not the largest survey of its kind in mobile usage, with a harmonized set of questions. And differing from most major global surveys done in the past decade, they didn't bother with the basics of who uses a camera on their phone or who sends SMS text messages, haha, those are widely known. TNS went digging much deeper. Who uses QR codes for example (!) and the mobile wallet, etc. They also surveyed who download apps, who use WiFi on their mobile phones and who use the mobile web ie do browsing on the phone. Very VERY interesting findings.

I've been digging through the numbers, you can actually go and see the individual data on very many data points, for each of the 57 countries, so wherever you live, I suggest you go see your country (or if its not included, then some of the neighboring countries). This is remarkable data, out in the open and public domain. Thank you TNS for a brilliant study and for making so much of the data available.

BIG PICTURE: APPS & WEB

So, lets start first with the big picture. TNS surveyed mobile phone users (not networks for their 'subscribers' so this is pretty accurate human usage data, not skewed by stats where some countries now have over 200% mobile phone subscription penetration rates. But as TNS only reports the data as percentages (and I couldn't find a global number), I calculated each of regions, as I use in the TomiAhonen Almanac series of annual statistics, and then used the actual 'unique user' statistics from the Almanac to calculate regional usage data for each category TNS reports. Then I added them up, so we get the following, quite astonishing usage numbers:

Mobile Browsing, ie 'mobile web' or 'wireless internet' use on mobile phones has reached 1.6B unique users, based on TNS data, and calculated across the regional unique user numbers of my Almanac for year 2012. This is measured data by TNS, and it removes multiple users by the same person - ie if you have a Blackberry and iPhone, and do your emails on your Blackberry (thus using the internet on a phone) and do your web surfing on the larger screen of the iPhone (also using the internet on that phone), you are using the mobile internet on two devices. But you are one person. TNS data, when multiplied across the current unique user base globally, tells us there are 1.6 Billion unique people using the mobile internet ! (remember, some of these will use the internet also on a PC). This compares by the way to 1.8 Billion that I counted as total subscriptions used for mobile browsing (allowing multiple handsets by one person). Very consistent data. And yes, the world has about 2.4 Billion active internet users so the 'midway point' of how many people use a mobile phone to do (at least some of their) internet surfing has obviously passed years ago, not like some misguided analysts keep promising that this point will come in the near future. It has happened already! Get over it. Most of the users on the planet who access internet content on browsers, do so on mobile phones, not on PCs or tablets. Obviously this type of browser-based activity is not limited to smartphones, most featurephones have full HTML browsers and even older basic phones tend to have simple WAP browsers. Still, 1.6 Billion unique mobile internet users, that is a massive number, where the global total of PCs is under 1.4 Billion and they are not all yet connected to the internet..

Apps are a big growing area of excitement in mobile. How many mobile phone owners use apps today? 1.1 Billion worldwide. Note, this is significantly more than the total installed base of all smartphones in use of about 900 million worldwide today. Why is that? Because obviously it includes apps downloaded to simpler, 'featurephones' that usually accept Java or Brew based apps. Yes. 1.1 Billion people currently download and use apps on their phones. Big opportunity indeed. But do remember, this is a vastly fragmented world, with 350 million Androids, 275 million Symbians, 150 million iPhones, 80 million Blackberries, 30 million old Windows Mobiles, 12 million badas, 9 million newer Windows Phones, plus many hundred million Java/Brew based featurephones. And tons of small OS platforms like Palm, LiMo, MeeGo, Maemo, etc. And keep in mind, the mobile web user base is dramatically bigger.

WIFI USERS

Then lets take a look at the WiFi threat to the industry. Who is using WiFi? This is very useful data, we haven't had anything like this before in the public domain. Out of 6 Billion mobile phone subscriptions in use in the world, and 4.0 Billion unique users, how many access the internet via WiFi? 1.0 Billion thats who. Yes, again, more than the total installed base of smartphones at about 900 million (because many featurephones include WiFi). What is that as a percentage of all unique users? Yes, 25% of the global mobile phone user base is already using WiFi services today.

This is one area which has a very clear regional split, according to the TNS findings. When I grouped the 57 countries according to my TomiAhonen Almanac split to 8 regions, we find WiFi usage divides like this: in the Industrialized World 35% of us use WiFi on our phones, but in the Emerging World markets, only 12% do so. The highest use is in Advanced Asia-Pacific where 42% of us use WiFi on our phones. Meanwhile the lowest use is, not surprisingly, in Africa where only 3% of mobile phone owners use WiFi based services on their phones.

MOBILE SOCIAL NETWORKING? BIGGER THAN FACEBOOK

And what of social networking on mobile? This is a massive number. We've heard that the majority of Facebook users today access FB on their mobiles, but what is the global number for social networking users on mobile? According to TNS numbers, again multiplied by the unique users as per my Almanac, we get to .. 1.3 Billion currently active users of social networking on mobile! Yes, thats QQ and Mobage and Cyworld and Mig33 and all those other social networks that I identified recently on this blog in the first global survey of the space. 1.3 Billion say 'Communities Dominate Mobiles' haha.. Excellent.

QR CODES, M-WALLET

And what of QR Codes and Mobile Wallet. These are VERY interesting numbers too. QR Codes are rapidly gaining acceptance worldwide. How many of us use them? 380 million already are active users of QR codes globally. Japan, Hong Kong and South Korea lead globally with 60%, 47% and 43% of their mobile phone owners currently using QR codes. But even regionally, while Advanced APAC region leads (27%), North America (19%) and Western Europe (14%) are rapidly following suit. 

How about mobile wallets. Here the TNS study has perhaps had some questionnaire issues, when we look at for example Philippines and Kenya numbers, so this is not 'mobile payments' users or 'mobile banking' users which will be significantly bigger, but lets consider this as a 'floor' level for more advanced mobile wallet solutions perhaps. The real user number of mobile payments is definitely bigger. But yes, what did we find? The world today has 290 million users of mobile wallets. That is also a very big number considering how recent the innovation is.

There is very much more in the TNS data, please go dig through it for yourself. Let me end here with two relevant regional splits of the advanced service usage, that is new data for us globally:

MOBILE SOCIAL NETWORKING USERS, REGIONALLY

The number of users of social networking, as a percentage of all unique users, and a total number are:

REGION . . . . . . . PERCENT . . . ACTUAL USERS
North America . . . 34% . . . . . . . 114 M
West Europe . . . . 31% . . . . . . . 127 M
East Europe  . . . . 16% . . . . . . .   54 M 
APAC Advanced  . 40% . . . . . . . 149 M
Asia Developing . . 13% . . . . . . . 474 M
Middle East . . . . . 29% . . . . . . .   74 M
Africa  . . . . . . . . . 11% . . . . . . . 113 M
Latin America  . . . 33% . . . . . . . 200 M

TOTAL  . . . . . . . . 33% . . . . . . . 1.3 Billion

Source: TomiAhonen Consulting May 2012 estimate, based on TNS Global Survey April 2012 and TomiAhonen Almanac 2012 
This data may be freely shared

QR CODE USERS REGIONALLY

And this is exciting to see, the first global survey of QR Code users, by the same methodology, split regionally for you:

REGION . . . . . . . PERCENT . . . ACTUAL USERS
North America . . . 19% . . . . . . . 65 M
West Europe . . . . 14% . . . . . . . 59 M
East Europe  . . . .   5% . . . . . . . 15 M 
APAC Advanced  . 27% . . . . . . . 99 M
Asia Developing . .   1% . . . . . . . 36 M
Middle East . . . . .   6% . . . . . . . 16 M
Africa  . . . . . . . . .   1% . . . . . . . 16 M
Latin America  . . . 12% . . . . . . . 74 M

TOTAL  . . . . . . . . 10% . . . . . . . 380 M

Source: TomiAhonen Consulting May 2012 estimate, based on TNS Global Survey April 2012 and TomiAhonen Almanac 2012 
This data may be freely shared

Lovely to have such good strong data on how this industry is growing. Thank you TNS ! And anyone who is interested in recent global mobile data, remember the TomiAhonen Almanac 2010 edition (still very recent data) is totally free for you, complete and uncensored, as my gift to my readers. Please visit Lulu.com to download your free copy of TomiAhonen Almanac 2010 Free Edition.

Video of my Keynote in New Zealand on Future of Telecoms

This is a video of me in Auckland New Zealand two weeks ago, where I delivered the keynote to the Telecomnz confernce called Tel.Con. 




The presentation looks at how will money be made in the future of telecoms. I discuss such critical topics to telecoms as 'Peak SMS' how long can text messaging revenues and profits sustain mobile, smartphone migration rate, how long will it take and can all phones become smarthpones, and my latest view to the Grand Convergence we will see this decade. I talk about the astonishing developments in mobile money, the 9 Unique Abilities of Mobile, and what happens when money and advertising merge - ie Advocurrency. The presentation runs 50 minutes and the video is very well produced. Oh, and even if you don't want to see the full video, check out the video at about 47:30 what happened on stage haha, this is a memorable event for me for that reason (was first time for me haha)

Emerging World Stories in Mobile, these should cheer you up

I picked up a couple of great stories in a recent Twitterflood I ran on Twitter. I couple of these stories came via Emily Turrettini @textually who consistently finds the best stories in mobile. Lets start from India

Simpa Networks has started to provide solar electricity systems for villages beyond the electrical grid. These are intended for very poor households. How can they possibly afford a modern solar energy system? Well, they pay on a pay-as-you-go principle of about weekly use of electricity in doses. When the right amount of payments have been made, in about 3 years, the person becomes the owner of the solar power system and the electricity will be free from that point on. Pretty nifty eh? Note, that the electricity is used in similar ways to how currently they use kerosene in the villages for lighting, cooking etc. Electricity not only is cheaper, it is far better for the ecology when the electricity is solar powered. Brilliant idea, right. So how do these poor villagers pay, as they often don't even have bank accounts, far less get loans or have credit cards. They pay.. by SMS. One premium SMS of 50 rupees or about one US dollar, will buy about one week's worth of electricity. Three years later,the villager owns the small solar power unit. And the savings are cheaper than equivalent kerosene powered systems. I love it.

Then a bit of news from the World Bank and mobile money. Already 20 countries have reached the point of mobile money, where 10% or more of the national population use mobile money. A good example is Haiti, where a mobile payments system called TchoTcho has been launched one years ago by Digicel and various partners. Out of Digicels 4 million mobile subscribers, 12.5% or 500,000 have already signed up to the service. They now report 300,000 transactions per month in the network. 3,000 retail establishments in Haiti already accept payment by TchoTcho. Remember, this is a very poor country and most of the nation's population are unbanked.

But now lets go to Africa. This is my favorite story right now, and I openly nominate this to any awards of any international mobile innovation and marketing awards. MTN in Ghana has handed out 150 solar powered tricycle wheelchairs to the disabled. That is nice. Why? So they can also act as MTN's dealers to sell SIM cards (mobile phone subscriptions) and airtime. The disabled have a very hard time finding work in Ghana where much of the work is quite intensive 'labor' ie on farms, mines etc. This is a beautiful updated adaptation of the story of branded umbrellas to the disabled in The Gambia by Gamcel, where also they recruited SIM vendors and the umbrellas not only protected the disabled from the scorching African sun, but identified where you could go to get a SIM card or top up your minutes. The electric power wheelchairs have of course sun-visors to keep the sun away and include MTN branding again so the buyers can spot where to get the SIM cards and do top-ups. Brilliant idea MTN. This is 'can-do'. I am very proud of you, this is a truly excellent case of caring for your people while marketing your company and helping the disabled. Excellent idea, deserves to be copied everywhere!

Paging Truth Police: One Last Time - the Reality of Nokia when CEO Elop Took Charge as CEO, and What Was Not Broken

There is a pervasive myth about Nokia that says Symbian was dead and Nokia dying in smartphones, when new CEO Stephen Elop took charge. Like any good myth, there are elements of truth that make the story so compelling. But this blog deals with facts in mobile, not wives' tales. Here is the absolute truth about Nokia when new CEO took charge and what he caused, once and for all. First, lets look at Nokia branded smartphone sales. Please look at this picture.


(Update May 4 2012 - there is now a lawsuit by shareholders in USA against Elop and Nokia. See end of this blog for details)


Here are the three biggest smartphone manufacturers of today, Apple, Nokia and Samsung, not necessarily in that order. Here are their quarterly sales for eight quarters from Q1 of 2009 to Q4 of 2010. Note the dotted line, that is when Elop took charge, just before Q3 of 2010 ended. Tell me which company is 'in trouble' in smartphones. Each of the three giant smartphone makers added about 2 million more smartphone unit sales from Q3 to Q4:



Source: Tomi Ahonen Consulting based on company data
This slide may be freely used and shared


I have taken public info as close to 'apples to apples' comparisons as possible, but unfortunately these three companies do not report exactly the same data. But yes, please consider: the 'Blue Company' grew smartphone revenues 22% in that period, grew average sales prices for smartphones up 14% from the quarter before, and the 'Blue Company' grew net profits in the smartphone unit up 65% from the period before.

Then consider 'Red Company' which grew revenues up 16% from the previous quarter. It grew average sales prices by 1% and the Red Company grew corporate net profits up 39%.

Finally consider the 'Green Company' which grew revenues up 19% from the previous quarter. Its Average Sales Price for all handsets was down by 2% and the profits in the handset unit were down by 23% from the quarter before.

Which of these three companies is 'in trouble' ???  All grew unit sales about the same level, after the big Christmas Quarter when usually after-Christmas sales are weak - all grew about 2 million more unit sales. All grew revenues strongly. All generated a big profit. Blue company also increased average sales price which for Red Company was flat and for Green company declined. Net profits exploded for Blue Company, gerw nicely for Red Company and fell for Green Company. But each generated a strong profit.

So? Which company is in trouble? Anyone? Which of these three is the magnificent Apple that dominates the world of smartphones, mobiles, profits and tech? Which of these is the dominating superpower Samsung? And which is the loser-company Nokia whose smartphones were undesirable and failing in the market?

Please look at those graphs and think, if you were given one of those three companies to run, which would you most love to run? For which of the three would you like to be CEO? All see growing sales, growing revenues, all generate a healthy profit. But Red is 50% bigger than Green. And Blue is bigger than Red and Green, combined. Who is strongest of these three?

I totally understand, from all the bullshit revisionist history written about how Symbian was dead and nobody wanted it, that you might think Nokia is the Green Company and Apple is the Blue Company. But the truth is - please feel free to read ALL the Quarterly Results from 2009 to 2010 - that the Blue Company is Nokia, the Red Company is Apple and the Green Company is Samsung. Yes. This is the situation, more than a quarter after Elop had taken control of Nokia.

The 'undesirable' Symbian based Nokia smartphones were growing sales from Q3 to Q4 - as they did in 7 of the past 8 quarters - and generated a profit once again, as they had in each of the past 8 quarters. Note, that 'dominating' Apple iPhone also had a declining quarter in sales in this period, as did the strongly surging Samsung, also for one quarter.

Nokia's Symbian based smartphones not only grew sales strongly - as strongly as Apple and almost as strongly as Samsung - Nokia did it while growing its ASP strongly (Samsung's fell, and Apple's was flat). Under Stephen Elop's leadership, Nokia's profits in the smartphone unit grew at a Nokia-record level.

ELOP WAS REWARDED

The Nokia investors appreciated the first five months of Elop's leadership so much, that the Nokia share price had climbed 11% since he took charge! Previous CEO Kallasvuo had seen Nokia share price drop 55% over a 3 year period (and was fired for that). In just five months, and while the world was still recovering from the global economic crisis, Elop had already recovered back one tenth of the share price losses, what Kallasvuo had lost. Elop was a 'hero'. The Nokia credit ratings by all three ratings agencies were one notch from the best possible. Nokia's brand was rated 8th most valuable on the planet. Nokia's new phones were winning awards.

These are the facts. There is no truth to the myth that it was the iPhone that killed Nokia's smartphones. It is true, that the iPhone killed smartphones - it killed Palm and Windows Mobile based smartphones, but not Nokia (nor Blackberry, it was Android that killed Blackberry).

Take one more look at that graph in the picture. Imagine being Boeing. Or Toyota. Or Levis Jeans. Or Pepsi Cola. Or Burger King. Or Nike or Timex or Sony or United Airlines or whatever global brand. If that picture was your market, all three giant rivals are profitable and growing, and you could be one? In every case, those CEOs of those giant companies would want to be Blue Company. Literally bigger than the nearest two rivals, combined (as long as the business itself was profitable, ie your leadership was economically sustainable).

WHY THE WIDELY SPREAD STORY THEN?

Ok, why the prevailing story then? First. This blog story is about smartphones. Nokia is much more than smartphones. The corporation of Nokia had become unprofitable in 2010. That was because the networking unit, NokiaSiemens Networks generated a big loss and the profits in the handsets division - smartphones and dumbphones - was not big enough to cover the loss. So yes, you are VERY correct to remember that Nokia had been in trouble, it was so, across the whole corporation but its smartphone unit was very healthy when Elop took charge. Nokia's smartphone unit delivered only a third of the total revenues of Nokia corporation but almost half of its profits by Q4, 2010, the first quarter that Elop was in charge. At an annual level, the profits generated by the smartphone unit (548 million Euros/Q4) would be worth about 2.75 Billion dollars per year. So the Nokia smartphone unit profits alone, would rank 175th biggest profits of the Global Fortune 500 in 2011. (Nokia's ranking by sales revenues in 2011 Fortune Global 500 was 143rd; thus the smartphone unit performance was remarkably strong even in a global corporate context)

SYMBIAN

Secondly, Symbian is not same as Nokia smartphones. Symbian is often considered synonymous with Nokia, but not all Nokia smartphones ran on Symbian (there were other OS platforms even before Windows Phone based Lumia, such as Maemo and MeeGo). Not all smartphones made on Symbian were Nokia branded. Earlier Symbian family included smartphones from SonyEricsson, Siemens, Samsung, LG, Motorola, etc. Even in 2011, there were still many electronics giants producing Symbian based handsets like Panasonic, Sharp and Fujitsu out of Japan. 

You may have seen dramatic decline of Symbian's market share, globally. That is true. Nokia invented the smartphone, it started initially with 100% market share. Then with Symbian, Nokia invited all of its rivals to join and co-develop the OS platform, hoping to avoid a 'platforms war'. It almost worked. Only a few North America-based rivals refused to play nice, and we had rival platforms such as Palm, Windows Mobile and Blackberry. But Symbian controlled over 60% market share still when the iPhone launched in 2007, but after that, the Symbian partnership broke apart. The partners bickered about what should be Symbian's development path and Nokia ended up buying out its partners and turning Symbian into an open source foundation. Most of the facts you may have seen, of the continuous decline of Symbian market share was not Nokia losing market share. It was the Symbian partners shifting away from Symbian, and joining Google's new Android OS. Even so, by Q4 of 2010, the end point of the diagram I drew for you, the world's bestselling smartphone OS was still Symbian and the world's biggest installed base by a wide margin was Symbian. Those are the facts.

USA MARKET

And thirdly, USA. Yes, Nokia has failed in the US market, but that happened YEARS BEFORE there was any iPhone in existence. Nokia had died in the US market long before anyone had used the iPhone App Store etc. So there are those who think because Nokia has not recently had successful smartphones in the US market, it is therefore true, that Nokia died globally. What those analysts do not know, is that USA is a backwater tiny market in handsets, home of obscure standards, crippled phones, bloodthirsty carriers, and truly outdated handsets.

You love the iPhone? Think it was the best thing since sliced bread? Sure. But the original iPhone in 2007, what is now known as the iPhone 2G, the phone known as Jesusphone? That one. It was the hottest tech story in the USA in 2007. In Europe it was launched, and failed. Only the far improved model, iPhone 3G, that launched in 2008, was able to succeed in Europe, because Europe is and was more advanced than the US market. And what of Asia? The original iPhone 2G was literally obsolete for the world's most advanced handset market Japan. Yes. When American analysts ooh'ed and aah'ed about the Jesusphone, its 2G technology was literally phased out from Japan and no such old obsolete tech phones were sold in Japan anymore. Even the iPhone 3G failed in Asia, and only two editions later, with tons of fixes and upgrades, the 2009 model of the iPhone, the 3GS, was finally able to succeed in Asia.

Need any more evidence? So tell me, how many months have you had in your pocket a smartphone with a built-in pico projector? Like those from Sharp and Samsung for example, that we have here in Asia. The Europeans are getting their Samsung Beam smartphones about now. The US market may get their first pico projector smartphones late this year, or next year. I've had mine here in Asia for 18 months already. Who leads, who follows? The US market is not the leader in telecoms, definitely not in handsets or smartphones.

It is true that Nokia had failed in the US market, but that market is not the biggest smartphone market (which is China) and it is not the most advanced handset market (which is Japan). The Apple iPhone was not, and is not currently the bestselling smartphone of China, Nokia is. Nokia was more than 20 times bigger in China at that time, in Q4 of 2010, in smartphones. Meanwhile in the US market? How much bigger was the iPhone than Nokia? Five times bigger. Only five times bigger in the US market, while in the bigger Chinese market, Nokia was 20 times bigger than Apple. Who was winning this race? And Japan? Betcha you didn't know that up until February 2011, Japan's biggest carrier, NTT DoCoMo - half of Japan's market - specified the Nokia Symbian OS as its standard operating system for its phones, manufactured by such Japanese handset brands as Fujitsu, Sharp and Panasonic. Today yes, the iPhone is big in Japan, but at the time of that picture in that graph, the overwhelming dominating OS used in Japan, was Nokia's Symbian and Android and iPhone and Blackberry and Palm and Windows Mobile were literally nowhere.

You may have seen statistics such as those published often by ComScore of US smartphones and seen that Nokia was tiny or nowhere. Therefore it is a vaid belief, that Nokia was failing. But until you understand the global market, it is an incomplete picture. But there is still more. Nokia was having plenty of trouble, in its delivery schedules, many Nokia handsets were severely delayed. There were smartphones that were admittedly failing in their design, like the N97. There were problems with the marketing and sales and customer satisfaction. All was not well at Nokia, I am not suggesting that. But the facts are, that globally Nokia was growing sales roughly at the same speed as Apple and Samsung - witness the picture in the above - and Nokia was profitable, its average sales prices were growing and Nokia's profits jumped at a Nokia record level, after Elop took charge.

GLOBAL FOOTPRINT

Now lets understand regional markets. Lets look at them by size.

OCEANIA = NOKIA, SYMBIAN, iPHONE APP STORE

Oceania (Australia, New Zealand and Fiji) is the smallest of the six continents by population. Their total population is under 30 million, that is 'one Canada' in size. Their smartphone migration rate by Q4 of 2010 was about 60%. The bestselling smartphone brand was Nokia. The bestselling smartphone OS was Symbian. The biggest installed base of smartphones were Nokia and Symbian. The bestselling app store of Oceania was the iPhone App Store. The biggest rival to Nokia in Oceania was Apple's iPhone. The bestselling dumbphone brand in Australia was Nokia (meaning future transition potential to smartphones) as well as the installed base of dumbphones.

NORTH AMERICA = RIM, BLACKBERRY, iPHONE APP STORE

North America is the second smallest of the six inhabited continents. Yes, I know it hurts, but its true. If you want to count geographical North America, ie Mexico and the Middle America region, you can get North America to about 500 million people, but most count North America by cultural divide, ie USA and Canada only leaving Mexico into the culturally similar Latin America.. North America when counted as USA with Canada has a population of about 360 million, so North America is 12 times bigger than Oceania by population. North America was at about 40% migration rate from dumphones to smartphones by end of 2010. The bestselling smartphone was Blackberry as was its OS, the installed base most smartphones was Blackberry as was its OS. The bestselling app store was the iPhone App Store. The biggest rival to Blackberry in North America was the iPhone. Among dumbphones the beststelling brand was Samsung, but the biggest installed base of dumbphones was Motorola.

LATIN AMERICA = NOKIA, SYMBIAN, OVI

Latin America is the third smallest or fourth largest continent by population, at about 570 million so Latin America was bigger than North America and Oceania combined, with plenty to spare. Latin America is not yet strongly migrated to smartphones but will reach 100% smartphone migration well before this decade is done. By end of 2010, the bestselling smartphone brand in Latin America was Nokia, the bestselling smartphone OS was Symbian. The biggest installed base of smartphones was Nokia, as was Symbian the operating system. The bestselling app store of Latin America was Nokia's Ovi Store. The biggest rival to Nokia in smartphones in Latin America was Blackberry. The bestselling dumbphone brand was Nokia and the biggest installed base of dumbphones was also, Nokia.

EUROPE = NOKIA, SYMBIAN, OVI

Europe has a population of about 725 million people, ie slightly smaller than North and Latin America combined, or more than twice as big as North America. Europe had passed 50% smartphone migration by end of 2010. The biggest smartphone brand in Europe in 2010 was Nokia. Symbian was the biggest OS. The installed base of smartphones in Europe were Nokia and Symbian. The bestselling app store in Europe was Nokia's Ovi. The biggest rival to Nokia in Europe was the iPhone. The bestselling dumbphone in Europe in 2010 had become Samsung but still the installed base leader of dumbphones was Nokia.

AFRICA = NOKIA, SYMBIAN, OVI

Africa has a population of more than 1 Billion. Three times as big as the USA. Africa is far from even dumbphone penetration and a tiny fraction of its handsets were smartphones. Africa will probably take into the next decade of 2020s until all of its phones are smartphones. But still, in 2010, the overwhelmingly dominant smartphone brand of Africa was Nokia. The dominant OS was Symbian. The installed base of smartphones was overwhelmingly Nokia, as was Symbian as the OS and Nokia Ovi store as the most used app store. The nearest rival, a tiny one tenth in size of Nokia, in smartphones for Africa, was Blackberry. The new sales of dumbphones were ruled by Nokia as well, and Nokia was by far the biggest installed base of dumbphones.

ASIA = NOKIA, SYMBIAN, OVI

Asia has a population bigger than the other five inhabited continents, combined. India alone is bigger than all of Africa. China is even bigger than India. Asia was early in the migration from dumbphones to smartphones but because of its immense scale, just China alone was selling more smartphones than the USA. Across Asia, the bestselling smartphone in 2010 was .. Nokia. Bestselling smartphone OS? Symbian. Biggest installed base of smartphones? Nokia. Operating system? Symbian, App store? Ovi store. Biggest rival smartphone platform Android and manufacturer, Samsung. Biggest dumbphone maker Nokia. Biggest installed base of dumbphones, Nokia.

The only inhabited continent where Nokia did not utterly dominate smartphones, operating systems, app stores, and dumbphones - is North America - the fifth biggest out of six continents. The continent where only 5% of the planet's population live. But in North America there were 8 separate domestic handset manufacturer rivals, and 6 domestic smartphone operating system rivals, to challenge Nokia. There is definitely a home field advantage to providing high tech like phones, just witness the kind of phones that Americans used to be accustomed to, that often totally failed in most of the rest of the world (like say, Palm or Motorola).

BURNING PLATFORM

Now, with all that. The facts are that Nokia smartphone unit sales had grown 7 out of 8 past quarters and declined one quarter, exactly the same as Apple's iPhone and the Samsung smartphones. The Nokia smartphone unit had been profitable every single quarter and its profitability was increasing strongly by the time Elop took charge. Nokia's smartphone revenues were growing and so were Nokia's smartphone average sales prices. By every conveivable measure, Nokia was doing very well in the enormously competitive cut-throat smartphone business, where rivals such as LG, SonyEricsson and Motorola were generating losses.

Nokia's smartphone brand and the Symbian OS was the bestselling smartphone and OS on five of the six inhabited continents, and the Nokia Ovi store the bestselling app store on four of the six inhabited continents. If you wanted to argue the future of handsets belonged to smartphones, or the software side of operating systems, or the ecosystem including app stores and digital content, Nokia dominated over its rivals including Apple, iOS, Samsung and Android.

This is where the Nokia CEO issued his infamous Burning Platforms memo, the costliest management communication ever, that was half of the Elop Effect, and caused the total collapse of Nokia's smartphone business (and far more damage to Nokia as well). Yes. When Nokia towered over its rivals and held 29% market share, growing profits. That is when CEO thinks its time for Burning Platforms memos. So lets re-visit that graph I drew for you. This is what happened in February 2011:




Source: Tomi Ahonen Consulting based on company data
This slide may be freely used and shared

That is the truth. Nokia exchanged strong consistent profitable growth of smartphones for a world-record collapse of sales, revenues, average sales prices - and plunging the strongly profitable smartphone unit into generating huge quarterly losses.

I am NOT saying Nokia had no problems before Elop took over. Previous CEO, Olli-Pekka Kallasvuo was in charge when Nokia produced its first-ever corporate loss (while the smartphone unit still generated a profit). Nokia corporation (networks, dumbhones, Navteq navigation and maps, Symbian, Ovi store, smartphones) was bloated, inefficient, bureaucratic and needed strong management in 'execution'. Nokia did not need a new operating system and the headaches it would generate to transition to it. Nokia's Chairman, Jorma Ollila said very plainly when Elop was announced, that his primary mission would be to help streamline Nokia operations to run Nokia more efficiently. Elop's job was to solve 'execution' problems, not to cause more of them by silly Microsoft misadventures.

I am also NOT attempting to claim that Symbian is fully modern and capable of winning the world, it is not. But before Elop destroyed Nokia's Symbian in February 2011, up to that point, Symbian based Nokia smartphone sales were not just growing - they were holding their huge lead over the iPhone and Samsung! Before Elop destroyed Nokia, Nokia's smartphone sales were twice as big as those of the iPhone and three times as big as those of Samsung. Today Nokia's smartphone sales are one third the size of Apple or Samsung.

Nokia had a clear announced migration path from Symbian to MeeGo and Meltemi (Linux based, open source operating systems). This migration path included Nokia's developer tools Qt and the Ovi store. The immensely strong positive market acceptance of MeeGo OS (powering Nokia's much beloved flagship smartphone the N9 and its sister phone the N950) is confirmed the world over in comparisons where it is seen far superior to Windows Phone and Symbian, and far ahead of Palm, Blackberry, Android; and is rated usually roughly on par, in many cases better even, than the iPhone iOS. That is strong praise indeed.

The Windows Phone OS is not compatible with Nokia's Qt developer tools. The Windows Phone is not compatible with past Microsoft smartphone operating system Windows Phone, and early gossip says it will also not include a migration path to the next Microsoft OS, Windows 8. Microsoft based smartphones and the Nokia Lumia smartphone series are under reseller boycotts reported from China to the USA, from Finland to France to the UK. Nokia smartphone sales are now collapsing, as you can see in the second diagram. This while both Apple and Samsung global sales are exploding. Nokia had victory in its grasp, but Elop snatched defeat from the jaws of victory.

Since the Elop Effect, Nokia has now lost more than 60% of its share price value in only 14 months. Elop's predecessor lost 55% value in 3 years and was fired. Now Elop has lost 60% in half the time! Nokia's credit ratings have been cut many times and now on all three credit rating agencies, Nokia is at the last level just above 'junk' status. Nokia's brand value dropped out of the global Top 10 for the first time since the ratings were reported globally.

Note that just a few weeks ago, Elop said that today Nokia is no longer having a Burning Platforms problem! So when Nokia smartphone unit sales collapse, revenues crash, average sales prices fall, the profits are changed to losses, and Nokia's market share is down to 7% ie literally one fourth of what it was just a year ago - 'now' there is no problem at Nokia!! Now today, no platforms are on fire. Now Elop is satisfied and can sleep soundly. Now Nokia is safe. What a moron! 

But anyone who claims that Apple killed Nokia, does not know what he or she is talking about. In North America, Nokia was already dead years before the iPhone. Rest of the world, look at the evidence. Nokia utterly dominated its rivals. Dominated until the fateful Elop Effect. You can say that Nokia had problems in its marketing and execution. You can say Nokia was bloated and slow to bring innovations to the market. But the facts are irrefutable. Before and after Elop took charge, Nokia was growing its smartphone unit sales, its smartphone revenues, its smartphone average sales prices and its smartphone profits. Only after the Elop Effect, did all those turn into disasters. The causes of the profitability problems at Nokia corporation or Nokia's Networking unit may be many, but the only cause of Nokia's smartphone unit collapse - is new CEO Stephen Elop who demolished that hugely profitable business unit. How bad is that? Ignoring the troubles in the other Nokia business units, the smartphone unit today (Q1 of 2012) generates a loss of 311 million Euros, or at an annual level about 1.6 Billion dollars. How big is that? In the Fortune Global 500 the smartphone unit alone, as managed by Elop, would be the 11th biggest losses of the year! Shame! Going from 175th biggest profits to 11th biggest losses on the planet. This is a disgrace!

So. You may think that the Ovi store was a failure. You are entitled to that opinion. Yet the facts are, that on four of six inhabited continents, it was the most used app store. You may think Symbian is obsolete and useless. You are entitled to that opinion. Yet the facts are, that on five of the six inhabited continents, Symbian was the bestselling smartphone OS. And you may think that Nokia's smartphones are not fit to sell in any market. You are entitled to that opinion. The facts are, that until Elop destroyd the brand just 12 months ago, Nokia branded smartphones were easily selling more than all iPhones and all Samsung smartphones added together - and growing at about the same rate, while growing profits too. The real paying customers in China, rest of Asia, Africa, Latin America, and to a lesser extent, in Europe and Oceania - were snapping up those Nokia smartphones quite happily. And today, that most award-winning 808 PureView superphone, it also runs on Symbian, on tech so advanced you cannot build the same phone on an Android or Windows Phone OS. Symbian is not dead (yet). 

With this, I end my lecture, and if you wanted to know how Nokia might be saved, I have that blog for you as well. It is here: Nokia can be saved.

PS - there is a follow-up now, 'Nokia is on a Certain Road to Death' which explains why this current path and management cannot lead to salvation  

UPDATE May 2 - Welcome Kauppalehti/Nokialandia readers (thanks Pekka Nykanen for mentioning this blog article). If you want my latest projection of how bad it is at Nokia, note that I just released my official forecast for how Nokia smartphone market share will go in 2012 - it falls from 29% a year ago to the 8% it is now to 3% by end of year. Read it all here: Nokia 2012 Forecast.

UPDATE May 4 - A 'class action' ie group lawsuit has been filed against Elop and Nokia by a group of USA Shareholders for violations against US regulations about the stock market. Please see more including links etc at this link: After the Shareholder Meeting Situation is Far Worse. 

 

Previewing Year 2012 in Smartphone Bloodbath - Year 3 is the Digital Jamboree

I started to monitor the 'Bloodbath' in smartphones in year 2010, when it seemed like this space was really heating up. I had given many blog updates about mobile phones before, but from January of 2010, I've done deep analysis every quarter of the smartphone market and given my commentary on the various players and their strategic moves. (Long blog warning, this article runs about 10,000 words and very deep detailed numbers and facts)

MOST CONTESTED GLOBAL INDUSTRY

In 2010 I counted that among the Global Fortune 500 largest corporations on the planet, four years before, in 2006, only 6 brands were manufacturers of smartphones. By the start of year 2010 it had ballooned to more than 20. That was not just massive growth in the competition of smartphones in a very short time, but of any globally contested industry, it was the most competition we have ever seen among Fortune 500 sized companies. There have never been 20 car manufacturers or airplane makers or home electronics brands in the Global Fortune 500. Banks and oil companies are industries with more than 20 competitors, but they are not competing globally. Citibank and HSBC do offer banking services globally, but most of the banks listed in the Fortune 500 do not have offices in most countries. Same is true of petroleum. BP and Exxon do have gasoline service stations worldwide but many local giants like Pemex and Petronas do not. In smartphones, once Apple jumped in, the iPhone is sold in just about every country. The smartphone industry had become the hottest and most fiercely contested industry on the planet. And with massive rewards if you did it right - Apple is now the world's most valuable company by market capitalization, and most of its revenues and profits do not come from the Macintosh PC business or its iPod and iTunes music unit. More than half of Apple's revenues and profits come from - yes - its smartphone unit. Apple calls itself a mobile company.

I applied my business consulting training and analysis to the heated market in 2010, and suggested that the competition would become so intense, that some of the big brands would falter and exit the smartphones battles. Not everyone could make money in it. And so I called year 2010 the 'Year of the Bloodbath'. How right I ended up being. Former smartphone giant Palm died that year. Microsoft's highly anticipated Kin family of youth phones appeared onto the market, and in six weeks was killed off. Two big-name Smartphone industry CEOs were fired as their companies stumbled, Nokia and LG. Google's first attempt at a smartphone, the Nexus One, while highly regarded in the press, was not warmly welcomed by the carriers and Google soon pulled it from the market, but did return with later versions of the Nexus series.

After the carnage of the Year of the Bloodbath, I looked into 2011 and decided the carnage was not over, and called last year 'Year 2, Electric Boogaloo' of the smartphones Bloodbath. I felt there were too many rivals and many of the startegies were idiotic (almost all rivals attempting to copy-cat the iPhone). We saw the end of Motorola and HP. We saw the exit of Ericsson, a former giant mobile phone maker and early smartphone pioneer - finally throw in the towel after a ten-year partnership with Sony. Arguably this departure releases Sony to do what Sony does best. Time will tell.

That would qualify for a truly Bloodbath'ish year in smartphones, but we have not even mentioned Nokia. Nokia's new CEO Stephen Elop decided to take the growing smartphone sales of Nokia (which after he took over, also produced increasing profits) and demolish those. He took the growing sales of the world's most sold smartphone operating system, Symbian, with half a dozen partner manufacturers (mostly out of Japan)  and the bestselling smartphone OS on five of the six inhabited continents, and by a massive margin, the world's most used smartphone OS by installed base - and announce its end and the termination of its migration path to MeeGo. Elop committed to 150 million more Symbian based smartphones (he has since reneged on that promise saying now that Nokia cannot deliver that amount). Never in the history of any 'platforms' based industry, has a market leader quit while it was ahead. Microsoft didn't abandon Windows when ahead. Sony didn't abandon PlayStation while ahead. The VHS alliance didn't abandon the VHS video recording standard when it was ahead of Sony's Betamax. The Blueray DVD platform didn't abandon its market when it was ahead. But Nokia took the Symbian platform - while it was towering over its rivals - and abandoned it last year. And Nokia decided to announce its replacement platform, MeeGo as stillborn. As we know, Nokia annouced it will migrate to Windows Phone.

Last year thus saw the announced deaths of two major platforms - Symbian what had led the industry from its beginning. And MeeGo the Nokia and Intel partnership that was to have replaced Symbian (which had several handset makers and PC makers already committed to it). We saw a couple of netbooks released on MeeGo by the tech partners including Fujitsu, and two smartphones by Nokia, the N9 which was sold, and the N950 which was only produced in tiny quantities for demonstrator purposes.

And the carnage still wasn't over. As HP had bought Palm, it had acquired WebOS and had initially intended to use WebOS as its platform across various portable technologies. HP's revised Palm and the WebOS platform were also killed last year.

But it wasn't all contraction in the industry. Many smaller or 'dumbphone' oriented phone makers were entering the smartphone space from the low-cost side, such as African Mi-Fone and India's Micromax. On the platform side, Intel replaced outgoing Nokia with Samsung to announce Tizen in 2011 as a smartphone OS we should see devices released this year. Some local/regional players like South Korea's Pantech, and Japan's Panasonic and Sharp, announced intentions to spread internationally and have showed early smartphones on that path.

YEAR 2012 IN SCALE

So lets look first, at the overall size and scale of this Smartphone Bloodbath Year 3: Digital Jamboree. What do we see? First lets talk scale. Last year the smartphone industry grew in units sold from 298 million units sold, to 486 million units sold. That was a growth rate of 63%. Understand how massive this number is. The growth rate, I mean. This industry which already sells more devices than the TV industry or the DVD players or videogaming consoles or digital cameras, still grew 68% in just one year. If you grow 68% in a decade, that is a nicely growing global industry. Smartphones grew 68% in one year!

And yes, last year for the first time, more smartphones were sold than all types of personal computers (Desktops, laptops, netbooks, and tablet PCs like the iPad) combined. And of the migration from dumbphones to smartphones, last year 30% of all new phones sold were smartphones (that was up to 33% by Q4 of 2011).

What kind of numbers will we reach this year? I am modeling (again, conservatively at the start of the year, this may be and likely will be revised during the year) that the overall growth rate will slow down. The growth rate was 73% in 2010, and 63% in 2011. I am thus pegging my first target saying smartphone growth this year will be 53% and we'll reach 745 million smartphones sold this year. That would be roughly 43% of all mobile phone handsets sold this year. (please note, last year I upgraded my forecast several times in the year, it is likely I will do so for this number too)

Now. How enormous is 745 million? Its twice the number of new TV sets sold globally. All those nice flat screen TVs we see in the home electronics stores. Its more than 5 times bigger than the total number of stand-alone digital cameras and camcorders sold worldwide. It is about twice the number of all portable computers (laptops, netbooks, tablet PCs). This year we will pass 1 Billion smartphones in use, and sometimes next year, there will be more smartphones in use than any type of personal computers in the world.

Where will be the bulk of smartphone sales? While we all will no doubt admire the next iPhone out likely in June of this year, the big growth in smartphones is not at the top, where we have the Blackberry Bolds and HTC Titans and Samsung Galaxies and Sony Xperias. The big growth is at the bottom of the pyramid. Deloitte estimated that this year we will see 300 million new smartphones sold with a cost of 100 dollars or less (unsubsidised price - remember the unsubsidised price of the iPhone 4S is 660 dollars, not the 179 dollars you might see at a store, when you are forced to take a 2 year contract). Who sells 100 dollar smartphones? That market is heavily contested by mass market volume produces especially from China like Huawei, ZTE, Lenovo and G'Five. Samsung is contesting that market with its bada-powered smartphones. Google is rushing to make the Android OS competitive in the low cost space. Nokia's Windows Phone smartphones are not suited for this space, and Nokia is discontinuing the Symbian OS which worked well with low-specification phones. As Nokia's new Asha series of 'featurephones' are not true smartphones, Nokia may find its Asha soon uncompetitive against these low-cost smartphone rivals. But what is certain, is that the top end iPhones, Blackberries and premium smartphones like Samsung Galaxies are not able to contest this low end of the market. And that is where 40% of the market exists this year.

DIVERSIFICATION

I had said that the harmonization of the smartphone market at the time of hypergrowth was a bad sign, where everybody tried to do their iPhone-clones. Now in 2011 we saw more diversification and even more signs of that in early 2012. Nokia's 808 PureView is perhaps the best example of this now, as a phone that is definitely not 'slick' and 'slim' but does offer that glorious 41 megapixel camera and all its camera-oriented goodies. But look at other smartphones, from large screen phones (HTC Titan, Nokia Lumia 900, Samsung Galaxy Note) to the smartphones with pico-projectors (Samsung Galaxy Beam and others) to smartphones with 3G glassless displays (from LG and others) to phones optimized for videogaming (Sony Xperia Play, and likely soon a 'true' Playstation Portable smartphone). And we've of course had the QWERTY oriented Blackberries and their countless clones.

This is good for the industry. This is an unprecedented opportunity for diversification and giving consumers what they need. Not everyone wants the slimmest phone with a minimalist specification set, like the iPhone. I have been saying that Apple leaves money on the table, if they just released a QWERTY slider version, they would increase iPhone sales by at least 30% maybe 50% and they could price the QWERTY variant above the price of the regular iPhone and make a ton more of profits. But of course Apple doesn't listen to anyone haha..

But that is the overall big picture of the industry. Now lets look at the major brands and what to expect for 2012, Year 3: Digital Jamboree. Oh, why call it Digital Jamboree? I think this is now starting the first year of consolidation and deeper partnering. Many of the weak rivals are out of the game (Palm, Motorola, HP, Ericsson) and some platforms have been culled (or their end announced) in the past few years (Windows Mobile, Palm/WebOS, Symbian, MeeGo, LiMo, Maemo, Moblin). We saw major pairings of major players last year: Google buying Motorola, Nokia joining Microsoft, Samsung and Intel partnering. Now we have a period we will see more of that dance and likely we see the camps solidifying, not unlike the big Boy Scout Jamborees we see every four years (I was a Boy Scout way back when in my youth, and attended the World Jamboree in Norway in 1975). So lets look at the brands in order of their size, starting first with handset manufacturers:

APPLE

Apple took the crown last year as the world biggest smartphone maker. Just a year before, Apple had been half the size of Nokia the massive market leader. Now by Q4 Nokia's smartphone unit had fallen to almost half the size of Apple's iPhone by unit sales. Apple sold 24% of all smartphones worldwide in the Christmas quarter, and 19% for the full year. The iPhone 4S was delayed but continued Apple's incredible streak of hit smartphones where each year its new model outsold the previous model by a large margin. Can that continue? I think this year 2012 definitely yes. The iPhone 4S was in reality only a modest upgrade compared to the iPhone 4, and many analysts expected more tech brilliance out of the 4S. I said on this blog that the iPhone 4S was a last-minute redesign and thus somewhat a compromise due to Apple's over-reach with its intention to do the iPhone without a SIM card. We now see Apple in a battle with other handsets wanting to go from the microSIM to a nanoSIM. But apart from the SIM card, the iPhone 4 line is starting to fall behind on the screen size battle. The original iPhone 2G and even 3G were globally screen size leaders, with 3.5 inches, where most contemporary smartphones had 2.5 inch screens and the biggest rivals were at 3 inches in 2007 (excepting for some superpremium phones like the Nokia E90 Communicator with its 4 inch screen). Today we have many smartphones well past the 4 inch screen size, and the top dog is the Samsung Galaxy Note at 5.0 inches in screen size. Compared to the iPhone 4S, the Note screen is about twice as big, a massive competitive advantage when held at arm's length.

If Apple releases a new bigger screen iPhone, I expect it to be called the iPhone 5 (rather than iPhone 4GS or something like that). And a 3.5 inch screen on a flagship phone is now being obsolescent in 2012. Many other tech specs are hoped for or expected by fans, from WiMax '4G' to NFC to of course a higher spec camera.

No matter what Apple does, the next iPhone will be cool and desirable and people will once again wait in line to be the first to get it. Some things to look for with Apple. Is the next iPhone released in June or September. The sooner the better for Apple's world domination plans. And will there be a split in the product line. I have been advocating on this blog that Apple needs to introduce a low-cost 'entry level' model, what I call the iPhone Nano. I have said that releasing the Nano variant (and splitting the product line) would increase Apple's total unit sales by at least 50% and if done intelligently, a Nano variant would not eat into existing iPhone customer sales, but would open massive markets in the lower-cost countries where most phones are not subsidised and a 660 dollar price tag puts the iPhone 4S as much beyond the reach of the common consumer as a Rolls Royce or a corporate jet or a luxury yacht. But even in those markets, the newly affluent middle class could afford a 300 dollar (unsubsidised) Nano iPhone.

The other sign to look for is a tech called TD-SCDMA. That is the exclusive 3G standard for China Mobile. If Apple starts testing a TD-SCDMA variant of the iPhone, the only client would be China Mobile (alone as big as all US carriers, AT&T, Sprint, Verizon, etc - added together - and that number still doubled). Currently China Mobile has millions of iPhone users while the iPhones do not operate on China Mobile's 3G network. If Apple did release a TD-SCDMA version, this would signal a huge jump in iPhone sales in China. Obviously Apple would not bother to do that, if they cannot get a contract with China Mobile to carry the iPhone.

SAMSUNG

 

The world's second largest mobile phone handset maker, Samsung, became last year the second largest smartphone maker too, for the first time ever. For one quarter (Q3) they were briefly the world's largest smartphone maker but for the full year, Apple took the crown. But as Samsung is growing far faster than Apple - Apple almost doubled but Samsung grew more than 3x last year - and as Samsung offers a far wider portfolio of smartphones from the top of the line (Galaxy Beam, Galaxy Note) to the ultra-low-cost basic smartphones running on bada, Samsung is certain to pass Apple for the global crown this year. I think Quarter-by-Quarter we may see a see-saw effect with these two brands battling for the quarterly lead, but for the year, Sammy is pretty set to become the top dog. And for the full year, they are likely to reach their decade-long ambition - to pass Nokia as the world's largest handset maker too. That might not happen for the full year sales, but is very likely to happen in Quarterly handset sales around Q4 or even Q3.

If I was to predict a direction, I think Samsung felt stung by Nokia's 808 PureView taking the crown for the Phone of the Event at the world's biggest mobile industry event, the Mobile World Congress in Barcelona a few weeks ago. Samsung has been an early pioneer in cameraphones and has done many high resolution cameras in the past. We might see Sammy do a top-line cameraphone but obviously running Android, and branded Galaxy. As Nokia seems reluctant to sell the 808 PureView everywhere (bizarrely, for example refusing to sell it in the USA, where Nokia wants a come-back and where the 808 PureView has been warmly received in the tech press) - as Samsung is the bestselling dumbphone of the USA, and the bestselling Android powered smartphone of that market, Samsung could just steal some of Nokia's thunder with this option. It would not be the first time Samsung took what Nokia madly threw away - witness stepping in for Nokia after MeeGo with Intel to develop Tizen.

NOKIA

 

For Nokia this is the year of proof for the Microsoft partnership, the Windows Phone OS and Nokia's Lumia line. I have reported that the early prodcuts in the Lumia line are surprisingly flawed and the next updates seem to be more bad news. I also reported that the Lumia sales are now encountering so many returns that the retail sales channel is revolting and refusing to sell Lumia even when asked for by name. But Nokia's new CEO Stephen Elop, the ex Microsoft guy, forges on and pushes Lumia into every channel he can. We hear that in the USA the Nokia-Microsoft partnership paid AT&T 25 million dollars so that AT&T would allow its own staff to use Lumia phones as company phones (but would need to hand in their iPhones or whatever Android/Blackberry phones they currently use, not an easy switch as the Lumia 900 is quite deficient in many ways). Same with China, Nokia and Microsoft seem to have been willing to invest heavily in breaking into the China market.

I am wary of the Lumia push, as the phone series itself is so deficient, and not suited for (non-American) consumers and markets. But we will see. I calculated that early evidence from UK statistics suggests that when Nokia tries to migrate from Symbian to Lumia, they cannot achieve 1 to 1 replacement, but bleed about 30% of their customer base in the transition. Maybe with better models later this year, Nokia can do better. But the early signs for Lumia are not strong, and as long as Nokia's CEO refuses to sell the N9 and N950 on MeeGo globally (the N9 is sold only in tiny or inconsequential remote markets; and its sister product, the N950 is not sold anywhere) there is no relief to the smartphones unit. Expect Nokia not only to bleed market share, but to see actual unit declines in smartphones this Spring. It may reverse if Nokia bring better Lumia devices to the market (or reverse its idiotic decisions on the MeeGo devices, N9, N950 and others in the pipeline).


Nokia is still producing new Symbian phones - witness the superphone 808 PureView which will end this year 2012 as the undisputed top dog cameraphone on the planet. Bear in mind, the camera feature is more important to buyers than the operating system or the apps. Why Nokia is not capitalizing on its global leadership in cameras with the Lumia series is beyond me (but it is greatly due to the crippled nature of Windows Phone and how unsuited it is for premium camera operations on a phone. Nokia itself has said that the Windows Phone environment cannot support the porting of the 808 PureView technology until 2013 at the earliest. Says something about the 'burning platforms' Symbian OS and how 'obsolete' it actually was not).

Nokia's low-cost smartphone strategy cannot be built with Windows Phone, even the lowest cost Lumia 610 will have an unsubsidised price of about 250 dollars. So Nokia will be abandoning much of the 300 million sub-100 dollar market to the rivals who are able to produce low-cost smartphones at Samsung, ZTE, Huawei etc and the ultra-low cost local rivals like Micromax and Spice in India, Mi-Fone in Africa, G'Five in China etc. Nokia was supposed to fight for this segment with the Symbian line until its low-cost Linux based Meltemi is finished. The madness of course is that as MeeGo was Linux based, and compatible with Nokia's Qt developer tools (as is Meltemi, Symbian, Maemo, and Nokia's featurephones OS, S40; plus Qt also is compatible with Android and Blackberry), the only OS that Nokia supports that is not compatible with Qt is.. Windows Phone! So the past of Nokia is Qt compatible, and the future of Nokia is Qt compatible, but Nokia's 'main' smartphone platform for 2012 is not Qt compatible. Something is wrong with this picture. But yes, we await Meltemi to launch its first low-cost smartphones. That might happen still this year. Elop has been good at pushing far more aggressive delivery times at Nokia.

So how Nokia in Year 3, Digital Jamboree? I think Nokia will certainly bleed market share and depending on how hard Elop pushes away from Symbian and MeeGo based smartphones to Lumia series, Nokia may see actual unit sales declines even, continuing this year. Nokia started the year 2011 with a 29% market share on January 1 with only Symbian based smartphones. It ended the year on December 31, after 2 Lumia handsets and one MeeGo handset had launched, and still with dozens of Symbian devices, with 12% market share. As I have written, this is a world record in destruction of a market-leading brand in a one-year perdiod, in any industry ever. For 2012 I think its pretty clear we see Nokia plunging into single-digit market share territory. A good year would have Nokia ending the year with 8% in Q4, a bad year would see Nokia with Lumia, and what maybe remains of Symbian and MeeGo devices, as low as 6% market share. 10% is to my mind impossible, considering the bad replacement ratio we now see with Lumia not replacing Symbian even 1 on 1, far less gaining market share in that transition.

 

If Elop is fired and/or the Microsoft strategy is abandoned, and/or MeeGo wildely promoted with both N9 and N950 and/or Symbian 'reinstated' via the 808 PureView and also low-cost Symbian sub-100 dollar smartphones - any of these could resurrect Nokia to profits and a return to growth. I have said to not be surprised, if Elop is packaged with the Lumia division and sold to Microsoft, where Nokia and Microsoft might part ways this year. If you look at past Microsoft partnerships, most of them have had their falling-out periods, often very quickly after the truth of Microsoft's intentions has become clear to the 'victim' in the partnership (I am thinking of say Sendo, LG, Motorola etc)

RIM

Blackberry was seemingly in deep trouble early last year, as it tried to push the tablet PC and simultaneously cut its staff especially in marketing and sales. That has however stabilized and by Q4 RIM was back to growing again. For the full year RIM only grew 9% but in Q4 the Blackberry maker grew 33%. The good news at RIM is the return to growth. The bad news is that RIM is almost immune from being able to grow at the rate of the industry. The reason is that RIM was 'too successful' in the two biggest early-adopter market segments for smartphones - business/enterprise users, and the youth segment. They are now pretty well saturated for smartphones and the main business for RIM is to try to replace those handsets (and neither of them will replace their Blackberries at the global average replacement cycle). So Blackberry now is seeing 'anemic' growth when compared to rivals like Apple and Samsung.

The problem is worse with the iconic Blackberry form factor. The inbuilt full QWERTY keypad is a key to the addictiveness of the Blackberry form factor to all who do heavy messaging from emails to SMS to Blackberry messenger to Facebook to Twitter to other instant messengers like Whatsapp. Five years ago when the iPhone emerged, a Blackberry Bold style handset with its 2.5 inch screen was a reasonable substitute to the 'huge' iPhone display, where the buyer would need to weigh now big a screen they wanted, and whether they wanted a tactile 'real' keyboard or only a touch-screen keyboard. But today if you place the same Blackberry Bold style flagship phone from RIM against the Samsung Galaxy Note with its gargantuan 5 inch screen, the Blackberry screen looks like a postage stamp and today this form factor is on its way out among smartphones. It is replaced in smartphones by touch-screen slider-QWERTY hybrids, which address both the needs of a large screen and touch screen, as well as the full QWERTY - and as the keyboard is a slider, it fits length-wise, not width-wise, so the keys are much larger and easier to type on than the squeezed QWERTY on the Blackberry. On the low-cost end, Blackberries are challenged by far cheaper featurephones with similar QWERTY keyboards on Blackberry clones that in some markets are called 'Chinaberries' coming from the hundreds of low-cost handset manufacturers situated here in the Shenzhen region just outside of Hong Kong in China.

RIM will be in the news a lot for 'disappointing' numbers quarter in and quarter out. It will come out with its new operating system version which may help things, but this industry is not about handset design as much as it is about handset sales. The sales and marketing of Blackberry has suffered time and again with carrier concerns about Blackberry messenger eating into SMS text messaging revenues especially among heavy users. And in some markets (China, Japan, Korea) the Blackberry brand is not a significant player. The news that Blackberry will be supported by the Qt developer tools by Nokia had the potential to boost Blackberry and even possibly bring a long-term merging path for these two giant makers, but now that Nokia is not pushing the Qt environment (being incompatible with Windows Phone), that has turned into a mirage also for RIM.

HTC

 

HTC was once the bestselling Windows Mobile smartphone maker - it was the launch customer for WinMo and stayed as its bestselling phone brand until 2010. HTC was also once the bestselling Android provider until replaced by Samsung in 2011. Today HTC seems a bit adrift. It seemed to have found a new direction with the Titan series and especially the early specs on the Titan 2, which raised the stakes in the megapixel races with its 16 mp camera, but that lead was short-lived, with now Nokia's 808 PureView breaking through the stratosphere in megapixels jumping to 41 mp. And the Titan 2 has failed in side-by-side comparisons of the camera against slightly lesser megapixel count sensors like the Nokia N8 with its 12 mp camera, due to other factors like sensor size, the quality of the optics etc. I should note that for mobile handset buyers, still today, latest data from 2011 said that twice as many consumers used their camera feature on their phone, than downloaded apps on their phones - these numbers are consistent globally including in the USA - and thus, if a major handset maker has a great camera, it can address a far larger audience than a maker who has the best app store. So the HTC move seemed very smart. Maybe it was an early attempt and HTC will do better with the Titan 3 or whatever comes next. But HTC was strongly growing in 2010, it stumbled somewhat in 2011. It did grow for the full year faster than the industry - 81% but by Q4 HTC saw a severe decline in sales of 28%. The near term future for HTC is uncertain, can it recover or is there something systematically wrong with the company. 2012 will tell.

That was the big 5 smartphone makers who together control 70% of the world's smartphone market and where each had a market share in 2011 of between 19% (Apple) and 9% (HTC). The rest of the rivals are not really contenders, they are the pretenders, the largest of which had only about 5% market share sizes (Sony and LG) and down from there. But lets take a few to consider of the pretenders class

SONY

Sony is finally rid of the Ericsson part of the partnership. This is no doubt good in some ways and bad in others. What Sony did get, over the past ten years, is the best possible good will and reputation that Ericsson had managed to build on its side of the telecoms brand, in particular any synergies from Ericsson the world's largest telecoms networking infrastructure provider. Sony had given some of its consumer electronics brands to the SonyEricsson partnership to exploit - Walkman for musicphones and Cybershot for cameraphones but a big source of pain had been that the Playstation brand, Sony's strongest brand of the 2000s decade had not been given to the handset partnership. The nearest thing was the SonyEricsson Xperia Play but that was not a pure Playstation compatible device. It was a crippled little sister to the Playstation Portable. Now that Ericsson is gone, expect Sony to give its smartphones a big push, including using the Playstation brand. Also don't forget Sony is a huge player in the content side of digital media from movies to music. Meanwhile Sony has a vast array of consumer electronics where it can leverage the Sony synergies, starting with TVs that are becoming more intelligent and connected and internet-enabled.

Sony is firmly in the Android camp but does some lip-service also in the Microsoft family. It used to support Windows Mobile and has some commitments to launch Windows Phone smartphones but those are likely to be very few and far inbetween, just enough to prevent Microsoft from starting to sue Sony in the courts (like Microsoft already did to Motorola after it quit the Microsoft family for good). Sony has stated that this year 2012 it will finish its migration from dumbphones to smartphones, becoming the first of the legacy dumbphone makers to complete that transition. I should also point out, that the past SonyEricsson has suffered from generating a loss several times in the past quarters, perhaps with Sony's leadership now and clear focus, it can return to healthy profits and become a viable strong contender in the industry once again. I would say Sony is the strongest of the pretenders if it gets its act together, that could climb into the contenders class in a year or two.

LG

LG was the world's third largest handset maker at the start of last year but suffered throughout the year and downgraded its targets and goals. LG was hoping to ride a similar Android-powered rise as its cross-town rival Samsung, but LG has been a pale shadow of what Sammy has been able to do in mobile. Earlier, if you remember, LG bet big on a Microsoft-powered 'strategic partnership' about three years ago which went totally sour. After the Microsoft-powered smartphone dud turned profit-making LG handsets unit into loss-making, LG abandoned that path and shifted to primarily providing Android smartphones (with a smattering of other platforms supported) and climbed to borderline profitability after two years of hard struggle, and abandoning large swaths of its market share globally (yet another warning to Nokia, some have said that as the Microsoft Lumia adventure goes nowhere fast, Nokia's future is increasingly destined to join Android but now as a wounded giant rather than the proud leader it would have been a year ago).

LG was trying to use the 3D glassless displays and 3D stereoscopic cameras as its gimmick to differentiate and capture success. That has not panned out at least so far. We need to give LG another year to play with this strategy, as the 3D television technology is still in the early adopter level globally. LG might be poised to capture a good strong trend, or it may be that on phones 3D will never amount to much. A time of anxious analysis at LG this year.

HUAWEI

 

The largest of the new Chinese handset makers in the smartphones space. Huawei's cross-town rival ZTE is bigger in dumbphones, Huawei is bigger in smartphones. Both companies seem to copy-cat everything the rival does, so they provide just about any mobile telecoms tech from networking infrastructure to 3G data dongles and modems. Huawei is growing strongly especially in the low-cost smartphone segment on basic Android powered handsets and aims for the Emerging World markets like India, Africa, Indonesia and obviously its home market of China. Huawei is pretty certain to capture a nice slice of the 300 million size sub 100 dollar low price end of the smartphone market this year and here is where we will see Huawei mostly competing.

GOOGLE-MOTOROLA

So Google bought Motorola last year. Will Google hold onto Moto this year, time will tell. I felt that Google's main aim with the Moto purchase was to secure a strong patent portfolio to defend itself in the increasingly hostile patents wars. The family of Android vendors was not pleased that Google now became a handset manufacturer itself, especially Samsung has been clearly signalling its diminishing love of the Android environment, both pushing its own bada and in 2011 announcing it will replace Nokia with the Intel developments in smartphone OS that became now known as Tizen. I think Google itself will minimize the smartphone emphasis of Motorola, focusing strongly on returning the Motorola loss-making handset unit into profit-making, finishing the transition from dumbphones to smartphones, and being happy with a smaller market share but healthy unit. And Google might spin off the handsets side of Motorola in a year or two, after it is healthy, 100% smartphones and profitable. Google could also push the emphasis of the tablets side of the Motorola unit, so as to not compete very directly against most Android smartphone makers.

Don't expect Motorola to grow in a meaningful way this year, but rather, to stabilize and become profitable. I think Google will continue with its strategy of producing Nexus smartphones that are built by the Android makers, so that is another way that Google can try to keep its partners happy. But the brand that seven years ago sold more than one out of every 5 mobile phone handsets in the world - powered by the hugely popular Razr, is now gone and last year Motorola was a total bit-player of smartphones, with a market share of under 4% and falling. It was down to 3% by Q4.

MINNOWS

Then we have the truly little fish, whose market share is 2% or less in smartphones. I will only discuss this briefly as a group. This includes former big smartphone brands like Panasonic, Sharp, Fujitsu and Kyocera; includes big dumbphone makers who also make some smartphones like ZTE, Mi-Fone, Micromax; includes PC makers like Lenovo, Acer and Dell; and the obscure other maker like Pantech the 3rd mobile phone handset maker of South Korea (behind far better known Samsung and LG), or such smaller brands as INQ of the Hutchison group better known in mobile telecoms for the 3G brand Three in many European and Asian markets. Someone from this group can climb into the contenders during the year. Others may find it too expensive to fight for this market and quit. I would place more promise on the small makers who focus on the Emerging World markets than those who focus on the more affluent markets but you never know. Being the 3rd or 4th bestselling phone brand of a significant market alone is good enough to keep you in business, so you don't need to be a global hit to be able to survive and plot your cunning plans for world domination.

OPERATING SYSTEMS

 

So then the battle for the operating systems in the Smartphone Bloodbath, Year 3 Digital Jamboree. What do we see here? Over the last two or three years have set in motion the end of several of the big platforms and now we see more clarity of where the end-game is going to be fought. It will be a race with six major rivals or groupings. Lets look at them by size

 

ANDROID

Android has reached the point where it is selling roughly half of all new smartphones worldwide. The rocket-ship like rise in its market share growth has slowed and now is only growing by smaller gains per quarter, as is likely when you approach the half-point of any industry with several rivals. Google has on paper a phenomenal army of its Android supporters - of the ten biggest smartphone makers, seven produce Android smartphones today and each of the last 3 in the Top 10 are supporting a different OS, meaning Android is now the giant big bad wolf, that faces three little pigs to face off against, so to speak. But that is the optimist's view. The glass-is-half-empty view says that Android's strongest partner, Samsung, is not fully committed and could easily move half of its total smartphone production to its other platforms in just one year; and several other Android rivals have stated a willingness to support other platforms including HTC to Windows Phone and Huawei to the now-deceased MeeGo (and thus could go to Tizen). Android is not built on a solid foundation, but it was built very fast. Google is now adding many supporting elements, not the least of which is the various initiatives around Google Money.

Android's big growth obstacle in 2012 is that the rest of the field is mostly weeded out, the weaklings are gone and who remain tend to be stronger players with long-term interests. If we say Apple will do about 20% of the market in 2012, and say Blackberry does 10%, and the Nokia-Microsoft mess of Symbian, Windows Phone, Windows Mobile and MeeGo - to have a combined about 10% this year, then we have blocked out 40% and if Android walks into 2012 with 50%, there is maybe 10% to fight for. And biggest in that ring is Samsung with bada/Tizen which took 2% last year - its first full year and twice what Microsoft's Windows Phone did in the same period, also its first full year, but Windows Phone had HTC, Samsung, Nokia and others selling its phones. bada did it alone with Samsung.

So the upside potential for Android is somewhere under 60% for 2012 and it could end that we see the ceiling at 50% if Samsung shifts strongly away from Android. The big Nokia give-away from Symbian has already happened so there is not much to take from there and the Palm give-away has already finished and the Windows Mobile market give-away has about 1% left to go. I think we are seeing this year a settling of the 'natural' state of Android into the 50% to 60% range where it is likely to be relatively stable for some years go come.

iOS

The second bestselling smartphone OS last year was Apple's iOS. Remember, I am only counting smartphones, so if you want the full iOS ecosystem, it is bigger when we add iPads and iPod Touch devices. But I only count smartphones for this market, as smartphone sales are drastically bigger than tablet PCs or media players etc. And the other platforms like Android have tablets too. I will analyze the full ecosystem battle later in this blog

 

Apple's iPhone has shown a stunning ability to reach past supposed ceilings of where its price would be a limit. Last year selling 93 million iPhones, Apple took 19% of the smartphone market but when we count all mobile phone handsets (1.6 Billion sold last year) that was only 6% of the global handset market, and that percentage is well in line with the historical market share of what the Macintosh PC has been doing over its 28 year history. Apple is an aspirational luxury brand, make no mistake about it. While in the premium phone 'smartphone' category Apple can near one in five smartphones sold, in all mobile phones, where the iPhone costs more than 10 times the average price of a mobile phone handset worldwide - it is simply too expensive. I have said for several years, that the iPhone cannot grow its market share in meaningful ways anymore. I have been proven wrong, but I say it again. If Apple only release one new superphone priced iPhone this year, they have a natural limit of what they can do with such an expensive device. If they grow, it will be in very slight increments, a percent or two. Far more likely - remember the Deloitte projection of four out of ten smartphones sold this year will cost under 100 dollars (unsubsidised price) - the 660 dollar iPhone (unsubsidised price) will hit a market share ceiling due to being overpriced. As to an ecosystem, for developers of say smartphone apps and games, the iPhone installed base reaches one in six smartphones used worldwide. In installed base it is now third behind Symbian and Android, having overtaken the Blackberry installed base.

SYMBIAN

 

Nokia's Symbian started the year as the world's bestselling smartphone OS and had half a dozen significant smartphone manufacturers as its partners like Fujitsu, Sharp, Panasonic etc. After Stephen Elop created his communication disaster with the Elop Effect, Symbian sales crashed. Today it is the third bestselling smartphone OS and at Q4 of 2011 managed only 11% market share. It should be noted, that even 11 months after the infamous 'Burning Platforms' memo and more than a year of Windows Phone sales, Symbian alone on Nokia still outsold all Windows Phone smartphones made by HTC, Samsung, LG and yes, Nokia itself - by what? By 10 to 1. So don't think Symbian is going to go down quietly. Just looking at the spectacular 808 PureView and its monster camera technology, Symbian shows abilities that Windows Phone won't be able to replicate for at least another year. But yes, Elop did announce the death of Symbian and we see it now going.

This is very likely the swan song year for Symbian, we will probably see the very last Symbian based smartphone launched this year and then it will be over. Nokia never reached the 150 million more Symbian devices as promised by Elop. And this year we should see a strong ramp-down of the Symbian devices, with the intention of a 1 to 1 replacement by Nokia's Lumia line of Windows Phone based smartphones. Like I wrote in the above, the early evidence suggests that won't happen. But in any case, we should see Symbian's current 11% market share dwindling down to about 2% or so by the Christmas quarter, when no new Symbian models are released and only older Symbian models are still being moved off the shelves, at severe discounts. It is sad, as still today, by installed base Symbian is the world's most used smartphone and even in Q4, was the bestselling smartphone OS on each of the three most populous, of the six inhabited continents. I feel like Symbian is being killed while it still had a lot to give, come on, just look at the 808 PureView for example or other recent Nokia flagships like the E7.

The only difference to this scenario is if Elop is fired and/or the Windows Phone 'only' strategy is abandoned. I have said long before Elop came to town that Symbian is not viable for the future of Nokia, it has to go, but that as Nokia migrates away from Symbian, Symbian is still very well suited to low cost smartphones, those under 100 dollar devices with low specs. Windows Phone is not viable in that segment (at least not yet). So if Nokia had a clear change of leadership and/or smartphone strategy, the Symbian OS might live on at the lower end (and arguably its partner OS, MeeGo at the high end).

BLACKBERRY

 

The Blackberry OS was the fourth bestselling smartphone OS last year and its market share is gradually eroding while the smartphone sales are modestly growing. As Blackberry is not licenced to other manufacturers and RIM itself has had horribly bad luck in trying to expand the platform to other devices (epic failure with its tablet PCs), the Blackberry OS is the weakest of the ones with big footprints. For the installed base, the Blackberry smartphone does still reach over 100 million devices potentially, but many of those are enterprise/business smartphones which have limits and restrictions how they can be used, so this potential is severely limited in reality, as a far smaller addressable market on the consumer side of Blackberry at perhaps half that number.

That was the big bad wolf and the three little pigs, Android, vs iPhone, Symbian and Blackberry. Then what else is in the forest? Some ants. Lets start with the biggest, the killer ant:

 

bada

Samsung's bada is the fifth biggest smartphone OS by new sales and this year will become the fifth biggest by installed base, passing the size of the dwindling installed base of outgoing Windows Mobile. bada devices captured a 2% market share in Q4 of last year and have grown steadily and outsold for example the Windows Phone OS across all its makers by more than 2 to 1, even after Nokia jumped into the Windows Phone market. bada is so far only a Samsung-supported OS, but it is said to be developed into the Tizen path, which has other handset makers also committed to it. We should see the first Tizen smartphones launched by Samsung during 2012 and we should learn more about the converging development paths of these two operating systems then. In any way, when Microsoft talks about 'Windows Phone is the Third Ecosystem' please note that it is not even the 5th ecosystem by any measures, bada is. Microsoft's operating systems come in at 6th and 7th today.

WINDOWS PHONE

Microsoft's Windows Phone is a year and a half old now, and after its launch quarter when it splashed onto the scene with Microsoft handing out millions of free devices, and the OS briefly held a 2% market share at launch, it fell ever since. By Q3 of 2011 the Windows Phone market share was nearing one half of one percent (yes, 0.5%) and only when Nokia's Lumia smartphones were launched with Nokia's biggest marketing push ever, did the Windows Phone sales recover, barely, to 1% market share in Q4 of 2011. Note that when you look at various industry analyst reports, they report now a 'Microsoft' market share in smartphones, which adds both Windows Phone and the incompatible older Windows Mobile OS. I do not fall for that trickery, the operating systems are incompatibile and should be counted separately. But Microsoft doesn't like that, as it highlights how badly Windows Phone is failing in the market.

And before we look at this year's potential, let me make one more point. Samsung, HTC, LG and others have been providing Microsoft based smartphones for years. They should know how to do it well. Samsung and LG are the bestselling dumbphone brands in the USA, Microsoft's best market, so they should be able to really do well in the US market with Microsoft powered smartphones. Both are doing well in smartphones in the USA, using Android. And HTC is one of the USA's bestselling smartphone brands, again on both Android and the various Microsoft platforms. If you want a 'dream team' of handset makers to support your Windows Phone platform in Microsoft's strongest market, the USA, then the group of Samsung, LG and HTC is it (not Nokia, which has failed in the US market recently). How was this trio doing in the USA? Saw failing Windows Phone sales all year. How did they do worldwide? Without counting Nokia Lumia smartphones, Windows Phone smartphones saw falling smartphone unit in four consecutive quarters! This while the industry grew 63% last year! Please do not delude yourself into thinking that the Windows Phone 'ecosystem' with Samsung, HTC and LG joining Nokia is strong. The Windows Phone OS would have died last year, were it not for the last minute savior seen in Nokia. And in its first quarter of sales, the poorly performing Lumia series for Nokia became the bestselling Windows Phone brand in the world. Nokia did not need Microsoft to survive; it was the other way: Microsoft desperately needed Nokia to survive.

So what of this year? Yes. First, its pretty clear, come what may, Windows Phone will see growth. Not just unit growth, but market share gains. Its not much to shout about if you start from under 1% but at least its something. I said earlier that the shift was supposed to be about 1 to 1 as Nokia ramps down Symbian and replaces it with Lumia. If so, Nokia could have shifted about 12% market share at the start of the year, 90% Symbian and 10% Windows Phone to about the same market share but opposite proportion by Q4, ie 90% Windows Phone and 10% remaining Symbian (I am obviously not including MeeGo in this simplified model). Now we know from the facts, that this will not happen. Nokia will still bleed sales as it tries to force undesirable Lumia smartphones to its loyal customers.  Lets say that by Q4 the total combined market is half, so 6% and 5% of that is Windows Phone and 1% is remaining Symbian. If so, Windows Phone on Nokia brand could get something like 4% of the global smartphone market this year - about 30 million smartphone handsets - and if we add another 2% by the other handset makers - which would still be more than doubling their current sales - and say Windows Phone has a total 2012 annual market share across all Windows Phone family smartphone manufacturers of 6%, that is about 45 million devices for the year. Pretty pathetic actually. But that is the kind of levels we should aim for for Windows Phone (remember, for Nokia there will be more smartphone sales from the ramping down of Symbian and what few millions of N9 and other MeeGo devices are perhaps sold as well).

MEEGO

For the full year MeeGo did not even register in the one percent range, but MeeGo only launched in the last quarter of 2011 with only one handset model actually sold, the N9 (even as its sister model, the N950 with QWERTY slider was also manufactured by Nokia in small numbers). Nokia refused to give the exact count of MeeGo powered N9 sales but in every country it did launch, it had very warm reviews, some actually calling it better than the iPhone! We calculated from Nokia's Q4 results that after we remove the Symbian sales and the Windows Phone sales, MeeGo sold about 1.75 million units worldwide in the few countries it launched in Q4. In the same period, the two Lumia smartphones sold at lower prices in more affluent countries that were Nokia's strongest markets - and flopped, selling only 600,000 units. So one MeeGo device, the N9, outsold both Lumia smartphones by 3 to 1, even as Nokia's CEO refuses to give the N9 and MeeGo any marketing support. This is a still-born OS that is likely to die quietly in 2012. The sad truth is, that if Nokia bothered to launch the N9 in those markets where the Lumia is now failing, and only sold at the same level - so Nokia would do about 3.5 million N9 unit sales in total - as its a very high priced smartphone, made in Nokia's own factories to Nokia standard components (the Lumia is not made in Nokia factories and does not use Nokia standard componets) and while the Lumia incurs a royalty payment to Microsoft, MeeGo based smartphones incur no royalty payments - Nokia would generate so much profit just from N9 sales globally, that Nokia corporation would return to profitability. But Elop feels his ego is more important than the profits of his company. So like I said, I expect MeeGo to be killed and buried this year. What a rotten end to a true winner that actually beat Microsoft when launched on the identical Nokia smartphone brand and on touch screen phones of near identical appearance. Also what a powerful last vindication of the MeeGo development team.

(Please note, Nokia seems to have 2 new MeeGo devices under development as reported on 28 March at the Netbook News site. This gives considerable lease-of-life to MeeGo and if these devices come to the market during 2012, would be strong boost for Nokia. Also, this news to me even more strongly underlines the necessity for Nokia now to market the N9 and N950 globally in every market, while they are hot and desirable, since Nokia is clearly continuing also with MeeGo. Why on earth, when a CEO has a hit product on his hands, he would refuse to sell it, especially if this product could turn the loss-making smartphone unit into profit-generating once again)

WINDOWS MOBILE

 

Microsoft's Windows Mobile still refuses to die. It is used in some business/enterprise markets, sold in very small numbers by Samsung, HTC and others, in numbers of far less than 1 million in total last year. Microsoft is now terminating the app store for WinMo etc, but stubbnornly this thorn in Microsoft's side continues to sell in small numbers.

TIZEN

 

And then we have the Intel-Samsung partnershp with Tizen. While most of Tizen's steps have happened below the radar, there is vast potential for this OS to become the real 'third ecosystem.' Consider who are on the Tizen Board: Samsung and Intel, obviously, but also Japanese smartphone makers Panasonic, NEC and Casio. And then there is that 'tiny' player Huawei from China. Yes, that Huawei which has already passed LG and Motorola in smartphone sales per quarter, and is now chasing Sony and HTC. This is not an idle partnership. But wait, then there are the carriers! What? Yes, NTT DoCoMo, Orange, Telefonica and Vodafone are also on the Tizen Board. Just how big is that? These four carrier/operator groups control one sixth of the global mobile market from the telecoms subscriber side, and with 960 million subscribers, are a massive force in the industry. They include 3 of the 6 biggest operator/carrier groups globally. If they end up saying they will specify Tizen as their preferred OS - like NTT DoCoMo had done with Symbian in the past - its a near guarantee of Tizen commercial success. Understand, these four together are more than nine times as big as AT&T of the USA for example.

The keys are when do we see first handsets, will there be serious commitment from the other handset makers, not just Samsung, and how will Sammy itself migrate and grow the bada evolution to Tizen. But this may well end up being the masterstroke by Samsung, snatching MeeGo/Intel partnership from Nokia and turning it into the legitimate 3rd ecosystem while Windows Phone lingers in 6th or 7th place..

ECOSYSTEMS

I will also add a few thoughts about the broad picture when we add other devices, not just smartphones, and the other significant elements of an ecosystem. We go again in size, from the biggest

 

WINDOWS 7 / WINDOWS 8 - 300 million new sales, 1.1 Billion installed base

 

If we look at the big picture ecosystem, currently the biggest is Windows, from the PC side. They sell something like 250 million PCs, and when we add the Windows Mobile and Windows Phone smartphones, we can add a couple of million to that, but they get lost in the rounding-off error. Windows/Microsoft has an installed base on PCs roughly in the 1 Billion range globally. To that you can also add Xbox 360 which sells in the couple of dozens of millions per year, and has something like 75 million perhaps in the installed base (I am not bothering now to research that number, its for big picture scale only, that it is smaller than PC number but bigger than smartphone number for Microsoft). The developers like the Windows world (to a degree) and Windows 8 seems sure to be another global near-monopoly on the PC side. There should be lots of tablets coming also in the Win 8 stage. Note, that this ecosystem is severely skewed to the PC (and Xbox) side, its smartphone side is trivial and is likely to get lost in the shuffle. Microsoft's ecosystem is the most tightly controlled and least open. Microsoft is also most greedy in various licenses and most prone to sue anyone they feel doesn't play exactly by their rules. No wonder Microsoft is called the Evil Empire and for example its ten-year legacy in mobile is littered with ruined partnerships and lawsuits.

QT - (450 or) 800 million new sales, (1.0 or) 1.4 Billion installed base

Qt could already be the biggest ecosystem, it will be that shortly. I am simply not up to date on the development and support of Qt, as I am no longer a programmer and really can't care about that level of the technical detail. The point is, that as the Qt developer tools enviroment is being developed and evolved, it either supports today, or will support soon, most of Nokia's devices, from current smartphones on Symbian, MeeGo, Maemo, to Nokia featurephones on S40, to future low-cost smartphone on Meltemi. Qt does not support Windows Phone. Qt can also be used to develop apps for Android and Blackberry and soon even more (mostly Linux based) smartphone operating systems. Qt compatible sales just on the Nokia brand run about 450 million devices per year, and if we add in Android and Blackberry, that unit sales jumps to about 800 million new devices sold per year !!! The current installed base just on Nokia brand on Qt runs about 1 billion devices and runs well past 1.4 Billion when we add Android and Blackberry to the total. The Qt environment (as the tool is finalized) will be clearly the biggest ecosystem on the basis of installed base, and in new sales, it totally dwarfs the only other big rival, Microsoft's Windows. This is very legitimately the 'first ecosystem' not only in smartphones but in all digital technology platforms. And thats before we see any tablets on any of the supported platforms haha..

Note that the Nokia ecosystem obviously includes the now unbranded Ovi store (ie Nokia store) which is the bestselling app store on five of the six inhabited continents and supports 130 languages and has carrier billing (the most powerful revenue-generating method of paying for mobile apps, so that you don't need a credit card) in over 50 countries. Nokia has traditionally been the most open ecosystem not just using open source principles but also very broadly inviting real competitors as co-developers, from the broad original Symbian partnership to what was the MeeGo partnership with half a dozen handset manufacturers (several of whom have since shifted to Tizen)

iOS - 250 million new sales, 350 million installed base

The Apple iOS ecosystem includes primarily the three iOS platforms, iPhone, iPad and the iPod Touch. But we can consider the Apple community to also include the Macintosh part of the Apple world, so we get to total annual sales in the rough scale of about 250 million (and this year that may grow massively to say 400 million) and an installed base of 350 million which will probably double this year. Apple is expanding into more areas like TV and it also has the iPod/iTunes business in the digital world to add to this arsenal. Apple's control of its ecosystem is legendary or infamous depending on your viewpoint but clearly the iOS ecosystem is very much at the end of 'closed', not open.

ANDROID - 250 million new sales, 275 million installed base

 

The Android ecosystem is very new but growing very strongly. Most of it is centered on smartphones but increasingly there are tablets and other devices too. By current sales, Android smartphones account for just about half of all smartphones sold, so as the migration continues of the handset industry from dumbphones to smartphones, Android is very well poised to capitalize. Android is quite open but not the most open of the open systems. As I've written, if Samsung decides to migrate its Galaxy series away from Android, being the bestselling Android manufacturer currently, that would be a big blow to the Android family but not a fatal one. Google has enormous online assets it can use such as search, Gmail, advertising, mapping etc.

BLACKBERRY - 60 million new sales, 120 million installed base

The smallest of the big ecosystems worth considering here is Blackberry, which does sell about 60 million smartphones and tablets, and has about a 120 million installed base. Blackberry is limited to RIM and is struggling to grow even within its market and suffering as it tries to push tablets. Blackberry's strongest asset from the services side is Blackberry Messenger (BBM).

So that is how I see the Smartphone Bloodbath Year 3, Digital Jamboree. What do you think? How will this market evolve this year? Is it yet another year of deaths, or perhaps a year we see more partnering and collaboration and mergers.

Please allow me one plug - For those who feel they cannot have enough facts and numbers about the handset industry, I wrote a statistical handbook about the handset industry in 2010. The ebook is called the TomiAhonen Phone Book 2010 and runs 171 pages and has 98 charts and tables including just about anything you could ask for, including sales numbers, installed bases, market shares, features, form factors, etc. The ebook costs only 9.99 Euros so if you need the numbers, that is the place to go. And now a special offer - I will be doing the totally updated edition for release in the summer of 2012. If you buy the 2010 edition between now and when the 2012 edition is released, I will give you both for the price of one. So if you order the TomiAhonen Phone Book 2010 now, you will get the 2010 edition now, and for no extra cost, the 2012 edition this summer when it is released. Is that a good value? To see more, please see the TomiAhonen Phone book 2010. 

 

The CEO Insane - How To Rescue Nokia (story updated)

I know I know, nobody is going to listen to me anyway. But Nokia's Shareholder Meeting is coming up, and some have been asking me how would I fix Nokia today. I wrote a long detailed blog last year telling what was broken and how to fix Nokia overall, not just the smartphones part. Its sad to see it took Elop a year to get around to trying some of the ideas that I insisted Nokia needed to do back then (he is now, for example the 808 PureView is exactly what I suggested). So I will try to keep this short and to the point and focus only now on the catastrophic situation with Nokia's smartphones unit and the Lumia line. And am trying to inject some humor into this rant. Lets see how the sane CEO would behave when faced with, lets say, a hypothetical situation...

( UPDATES TO THIS STORY on 28 March, 11 April & 12 April, see end of story )

LUMIA LAUNCH FAILURE

 

Your company launches a new platform called Windows Phone, on a new brand of smartphones called Lumia. This is sold in parallel with two other smartphone OS platforms you also support currently, Symbian and MeeGo. The new Lumia phones are introduced in a dozen leading countries in Europe and Asia. Now five months later, you discover that the first Lumia phones are not competitive in the market on their specifications and designs. They receive mediocre support in the press. They receive alarmingly often published opinions suggesting customers are better off buying smartphones by rival manufacturers or ones using your other platforms. Smartphones have traditionally been a key to the profits of the company but currently your smartphone unit is generating a loss.

The sane CEO moves strongly to embrace the hot smartphones on the two other platforms, in particular the highly rated N9 using MeeGo and 808 PureView using Symbian and takes every opportunity to be seen with these desirable phones, and to try to convince all in the media that if you don't like the first Lumia, don't worry, take these alternatives from Nokia instead. The sane CEO would fight Android and the iPhone (and Blackberry) with MeeGo and Symbian, if Lumia is not working (now). Smartphones on the two platforms would be broadly promoted in all major markets including launching the N9 to all Lumia launch countries and the 808 PureView especially in the USA. This could be done while working to improve the next Lumia smartphones to remove the obstacles to their market success.

The insane CEO refuses to be seen anywhere near an N9 or 808 PureView and only insists on talking about the undesirable Lumia. The insane CEO would refuse to even sell the N9 in the European and Asian Lumia markets and refuse to sell the 808 PureView in the USA.

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

N9 KILLER SUPERPHONE ON MEEGO

 

Your N9 running MeeGo has received glowing reviews in all markets where it has been released. It alone outsold both Lumia smartphones by a ratio of 3 to 1 in Q4, the first quarter when both were sold, even as Lumia smartphones were cheaper; the N9 was sold in less affluent countries, and the Lumia were sold in Nokia's best markets. The comparison reviews consistently rate the N9 a far better smartphone. It is rated consistently a better value even while being more expensive than the Lumia, in consumer reviews from Australia to South Africa to your company's native Finland. Whereas Lumia phones are manufactured at Compal factories in Taiwan, your own Nokia factories are idling and the N9 could be manufactured at far lower costs in your own factories - the most efficient handset factories on the planet. Whereas the Lumia phones use components not usually used by Nokia, the N9 uses standard Nokia components so the manufacturing of the N9 gain from bulk discounts in its components. Whereas the Microsoft Windows Phone OS causes a royalty payment per handset that Nokia has to pay to Microsoft, the MeeGo OS on the N9 is (co-)owned by Nokia and no royalty payment is needed. The profitability of selling the N9 is far higher than the Lumia, even before marketing expenses are considered. Meanwhile because the N9 is a true flagship phone and significantly more expensive, it would not even threaten to cannibalize Lumia customers. But because of the outwardly similar appearance, the N9 could actually help sell the Lumia. The current attraction of the N9 is so intense, the biggest European handset market, Germany, had the extraordinary review by Germany's biggest newsweekly magazine, Der Stern, suggesting to its readers, they should drive to another country - like Switzerland or Austria - to purchase an N9 because it is truly that good, but inexplicably, the N9 is currently not sold in Germany (rather than to buy an Nokia Lumia which is sold in Germany).

The sane CEO immediately orders mass production of the N9 and releases it to every country and makes massive promotions in Germany, personally appearing in Der Stern inteviews holding the N9. Judging by the Q4 numbers of the few relatively poor and often small countries where the N9 was sold, if it was offered globally, Nokia would sell at least 4 or 5 million N9 units per quarter. This single action alone would return Nokia's loss-making smartphone unit to profitability.

 

The insane CEO steadfastly refuses to sell the N9 in most of Nokia's best markets, and puts his own ego ahead of the profitability of Nokia.

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

RETAIL CHANNEL REFUSES TO SELL LUMIA

 

You have already admitted in public that many retailers in many countries do not support the Lumia fully. You have mentioned the retailers in the UK as particularly problematic. Now comes news from Nokia's home market where Nokia traditionally had over 80% market share - even higher in smartphones - that the Finnish handset retailers are refusing to sell Lumia. This is the nail in the coffin, really. When your own dogs bite. When sales people in Finland refuse to show Lumia phones when asked for by name! Even as Nokia has massive marketing support and huge in-store displays. Similarly a separate survey by Talouselama of European handset retail stats, says Lumia sales are collapsing.

The sane CEO takes the two other platforms, Symbian and MeeGo, and rapidly pushes several highly regarded phones on those platforms, in particular the N9, the 808 Pureview and the N950 - and rushes those handsets to the retail channel. The sane CEO warmly embraces the Symbian and MeeGo based smartphones and issues a public statement about Nokia's acknowledgement that Lumia needs more work, to restore the retail channel's trust in Nokia. If he feels so inclined, the sane CEO may end the Lumia series or consider relaunching it with new handsets next year. In any case the sane CEO points out the strong synergy Nokia's Symbian has with MeeGo and Nokia's featurephones running S40, to Nokia's developer community, through Nokia's Qt developer tools and Nokia's Ovi store.

 

The insane CEO refuses to sell the hot new phones on the MeeGo and Symbian platforms, and keeps pushing more and more undesired Lumia handsets to the market. 

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

N950 KILLER SUPERPHONE ALSO ON MEEGO

 

Your company designed and started production of a second MeeGo based super-smartphone, the N950, as the sister phone for the highly loved N9, last year. This is the QWERTY-slider version, well suited for high text messaging users, Twitter and Facebook users, email and business users, similarly to how Blackberry, Nokia E-Series and Communicator smartphones are used. The N950 uses the highly praised MeeGo OS and is built in Nokia factories, running on Nokia components and could be priced above that of the N9 to be very profitable for Nokia. As none of the four first Lumia smartphone have a QWERTY keyboard, nor does the N9, nor does the 808 PureView, the N950 is the topmost and only modern QWERTY flagship smartphone for Nokia, since the E7 from more than a year ago - a smartphone that in many markets is still the bestselling Nokia smartphone today. The N950 would be in rare status, where for example Apple still refuses to sell a QWERTY version, so only the N950 would be isolated from iPhone rivalry for the approximately 30% of consumers who prefer QWERTY keyboards on their smartphones. The N950 is comprehensively loved by all who have used the device as an exceptionally solid premium smartphone from Nokia. And as there is no comparable QWERTY device on Lumia series, the sale of the N950 now would in no way 'hurt' Lumia sales. There is no downside to launching the N950 everywhere, only a huge, profitable upside.

 

The sane CEO rushes to launch the N950 to every market now, to capitalize on the good will of the N9 and MeeGo. The launch of the N950 to Nokia's major markets alone would be enough to turn Nokia's loss-making smartphone unit into profit-making.

 

The insane CEO takes the N950 that its factories already manufacture in trickle levels, and refuses to sell the N950 in any country, only handing out a few of the N950 smartphones to some developers.

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

CONSUMERS REJECT LUMIA

 

Your Windows Phone vision as communicated a year ago was to replace Nokia's Symbian based smartphones on a 1 to 1 basis, with Windows Phone. This assumed Microsoft could deliver a competitive and desirable OS out of Windows Phone version 7.5 and that Nokia's first Lumia smartphones would be well received. Now evidence comes from the early markets that even when supported by the biggest marketing campaign ever seen in mobile history, by the largest handset maker in the world; and then further augmented by a massive support campaign by Microsoft - including giving free Xbox 360 videogaming consoles to customers who buy Lumia 800 smartphones - the customer are not willing to take Lumia smarthpones. The crushing statistics from Britain report that Nokia is now losing a third of its last, most loyal, remaining customers, when pushing the transition from Symbian to Lumia. And British press, such as the Guardian, actually recommend consumers to return their Lumia smartphones. The second hand market and auction sites like Ebay are overflowing with Lumias being discarded.

The sane CEO acknowledges the first attempt at Lumia has failed in the best Nokia markets and reacts rapidly to offer strong substitutes to those markets - in particular the Nokia N9 which has consistently in all side-by-side reviews outperformed the best Lumia 800, and also rush other top Nokia smartphones such as the 808 PureView and N950. The sane CEO would be seen broadly embracing these smartphones and issuing clear statements that Nokia is not abandoning the Symbian and MeeGo platforms - while showcasing how advanced these platforms are.

 

The insane CEO refuses to sell Nokia's best phones but pushes ever worse and ever less desirable, and ever cheaper Lumia clones to these markets where the first Lumias have already failed.

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

TABLET FOLLY

 

Apple is making a ton of profits out of the iPad. The tech press love stories of tablets. The reality is, that if you are a PC maker like Apple, Samsung or Lenovo, a tablet can be a great strategic move. There is a lot of synergy between the PC/laptop business and tablet business, from shared components to the same distribution channel to synergies in marketing, pricing, and branding. If you are a handset maker like Motorola or RIM, to try to compete in the tablet space is lunacy. There are few shared compoents, the distribution channel is totally different, the marketing is different, the pricing is totally different and so is the branding. Apple and Samsung have been very profitable doing tablets. RIM and Motorola found massive losses out of their forays into tablets.

 

The sane CEO would never contemplate any tablet project as long as Nokia corporation was producing massive losses. The sane CEO would concentrate on Nokia's core business in handsets, and put the biggest effort in restoring the profitability of the smartphone unit. With smartphones even against Apple, Nokia would have many natural strengths from its long history in mobile phones, such as the fantastic camera on the 808 PureView or the swipe touch technology on the N9, to the QWERTY on the N950 etc, to a home-field advantage of still today the biggest installed base of both smartphones globally, and dumbphones who will soon migrate to smartphones.

 

The insane CEO would squander scarce resources on a futile tablet project, resources desperately needed to fix the leaking ship of the smartphones unit. With tablets against Apple, Nokia would bring no assets and no competitive advantages while facing Apple at its home turf and massive market share domination in both tablets themselves, and compared to Nokia, Apple's considerable installed base of Macintos PCs and laptops.

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation. But Microsoft would ever so dearly love to see someone make tablets for Windows, and Microsoft couldn't care less if that manufacturer made any profit out of it, nor indeed whether it lived or died. Microsoft just wants a tablet to face off against Apple. But I'm not saying Elop is in Microsoft's pocket)

CHINA

 

The world's largest mobile telecoms market is China. The world's largest mobile phone handset market is China. The world's largest smartphone market is China. The world's largest carrier/operator is China Mobile, alone bigger than all US carriers combined - and twice that number still. Yes, take all US carriers, AT&T, Verizon, Sprint etc, add them together, and then double that number, and its still not as big as China Mobile the carrier is alone. Your Nokia brand is China's biggest handset brand and most desirable handset brand. Your Nokia smartphones have been the bestselling smartphones of China and the Nokia Ovi store is China's biggest app store and the Symbian OS has by a huge margin China's biggest smartphone installed base. Nokia had achieved the exceptional partnership arrangement with China Mobile, that they were a co-developer of the MeeGo OS. Windows Phone has not yet even been introduced a single smartphone model in China by any handset brand, not even HTC or Samsung, while the Nokia N9 has been selling there since Q4 of last year.

 

The sane CEO issues public reassurances to China Mobile that Nokia will remain with MeeGo and use it as one of Nokia's platforms and to support China Mobile, and to help China Mobile's initiative and software partners to expand the Chinese-language services even beyond MeeGo to other Qt compatible platforms including Nokia's Symbian, S40 and Maemo, and also Android and Blackberry. The sane CEO will immediately commit to producing TD-SCDMA 3G versions of all MeeGo capable handsets today - the N9, the N950 and the older N900. TD-SCDMA is a China-specific 3G standard that for example Apple does not support with the iPhone. Nokia has traditionally provided Symbian based smartphones on TD-SCDMA. Before those Chinese variants are finalized, the sane CEO would rush the N950 to the Chinese market now to capitalize on China Mobile's interests in MeeGo.

I am sorry, I really have to stop here for a moment. Do you realize what this means? Nokia had in its pocket, the monopolistic exclusive rights to 12% of the planet's mobile phone total market! All it needed, was for Elop to go, hat in hand, to China Mobile and promise there will be glorious MeeGo and Symbian smartphones, running Ovi in Chinese, on that TD-SCDMA 3G standard which Nokia already supports fully, and China Mobile would forever block the iPhone and Blackberry and Android and Samsung and HTC and all others from its networks. This is as near to a monopoly as you can hope for. This was the greatest coup in mobile. This was a license to print money. Canalys reported that Nokia's smartphone market share was 77% in China in 2010 - and it was even higher on China Mobile's network obviously. This was Nokia's cherry on the top, just before Stephen Elop's suicidal Elop Effect. And with Nokia's massive factories in China, they could churn out those millions of smartphones at great profit. Any sane CEO sees, this is the most imporant customer relationship that has ever existed in the mobile industry, and you do not screw with it. The sane CEO will turn heaven and earth, to get China Mobile smiling and happy back, to a MeeGo and Symbian based partnership with Nokia. Ok, lets return to my rant...

The insane CEO spits in the eye of China Mobile's commitment to MeeGo, and forces China Mobile to contemplate Windows Phone based, clearly undesirable and globally market-failing Lumia smartphones instead, especially where MeeGo is fully compatible with the Nokia Ovi store and the Qt developer tools, while Windows Phone is not. Where the Ovi store has tons of Chinese apps and Windows Phone obviously has nothing to offer. And the Chinese market has very little utility and compatibility with Microsoft platforms where PC penetration is low, Zune is not popular and Xbox 360 is actually legally forbidden in the market.

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

 

SUPERPHONES

 

Nokia's global brand, price premium and overall appeal has been driven over the years by genuine iconic superphones from the 9000 Communicator to the N93 to the E90 Communicator to the N95 to the N900 to the N8 to the E7 to the 808 PureView. Nokia's flagship phones are expected to showcase technology nobody else has, much like the automotive world looks at the Mercedes S-Class for the ultimate cutting edge tech that will come to normal cars only years later.

The Symbian OS is fully capable of delivering superphones (as is MeeGo for the most part) but Windows Phone is not. Windows Phone is severely crippled when contemplating superphones. Nokia has just admitted, that for example just the camera technology of the 808 PureView, which yes, runs Symbian happily today, won't be able to be put onto Windows Phone based Lumia phones until in 2013 at the earliest. Standard Nokia superphone features like NFC and multiple displays and TV out and HDDI output and enhanced Dolby sound and Augmented Reality etc are simply not supported on Windows Phone. There is no ability to use the Lumia as a WiFi hotspot. Some of the first Lumias have even more problems like not offering forward facing cameras so you can't do videocalls. Not to mention more mundane features we expect like folders and the ability to edit a text message and to display the clock in idle mode and genuine multitasking etc.

A sane CEO will observe from what Microsoft has now delivered on its promised Windows Phone to Nokia's Lumia, and conclude, Windows Phone is not ready for prime time, and certainly not suited for top end premium phones, superphones that can compete head on with the iPhone 4S and Samsung Galaxy Beam etc. The sane CEO will start to issue clear statements that of course Nokia will continue with MeeGo into the future as its OS for the top line superphones - because MeeGo was designed from the ground to be an OS for superphones - and that also Symbian will live on, as it is actually quite well suited as well for many top phone uses from cameraphones to business-oriented QWERTY phones.

 

The insane CEO abandons the top of the market that Nokia used to rule, to the iPhone and Samsung Galaxy, and only competes in the middle of the smartphone market where every rival is competing and prices are squeezed and profit margins are thin. The insane CEO would continue to suggest that there is no future for Symbian nor for MeeGo.

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

 

ECOSYSTEMS

Yes, the consensus is - and has been for quite a while - that the big race in smartphones is for the ecosystem. The key to the ecosystem is whose OS has the biggest installed base, not the number of apps on an app store for example or some billion-level download number. Your memo told the world what are the main elements of a mobile phone ecosystem as you wrote that after counting the hardware and software, an ecosystem will also include: "developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things."

Nokia has recruited the world's largest army of developers to its ecosystem (over 400,000 copies of Nokia's developer kits have been issued, this totally dwarfs all other smartphone developer communities). By the app store, Nokia's Ovi was ranked second best by number of downloads when you took over and is still third best, far ahead of for example Windows Phone. In ecommerce Nokia not only had the world's most widely used mobile content store in Ovi - the bestselling content store in every language except English, Japanese and Korean - ie covering 93% of the planet's population. And Nokia had a huge lead in its mobile money solution, Nokia Money, ahead of rivals like Google. Nokia's in-house mobile advertising agency was one of the first, and one of the world's biggest. And so forth and so forth.

The sane CEO believes what he wrote, that the future is won on the ecosystems and he would safeguard Nokia's ecosystem lead and build upon it. Like how mobile money is a key to customer loyalty and Nokia handset branding in Emerging World countries.

The insane CEO would spit on Nokia developers by announcing that the promised migration path from Symbian via Qt to MeeGo is ended. The insane CEO would sell Nokia's advertising unit and simply discontinue Nokia's mobile money project when it had already won 12% of the mobile money market share in India, the world's second largest mobile telecoms market. The insane CEO would open the door for a rival company's ads to be shown on Nokia screens without Nokia control to potentially threaten Nokia's brand loyalty.

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation. I cannot but be bewildered, what in the world could possess Mr Ecosystem Elop to actually destroy Nokia ecosystem components? I mean, about the only conceivable reason would be if Elop somehow wanted to help Microsoft's ecosystem defeat Nokia's ecosystem? No, that cannot be, Elop is a Nokia CEO)

 

AFRICA

 

The largest part of your current customer base and new phone sales are in the 'Emerging World' markets, in particular Africa, India, the Middle East, Indonesia, Brazil, Russia, etc. You talk of the 'next billion' users there. Windows Phone is utterly unsuited for this market. Microsoft itself says Windows Phone OS is not currently suited for low-cost smartphones. Nokia itself said last year that Windows Phone was not suited for the Emerging World markets. Windows Phone is the most closed and restricted environment which in Emerging World markets is far more damaging, where due to problems with cellular coverage, electrical supply, poverty, illiteracy etc - the need to be able to transfer files via Bluetooth, and with microSD cards and using interactive USSD etc is vital. PC penetration is minimal, Microsoft's PC Windows markets share even among PC owners is low and most of Microsoft's platforms are not used such as Zune and Xbox. The ability to use cloud-based file sharing and storage is both prohibitively expensive and incredibly unreliable in these markets.

Nokia's Symbian is perfectly suited for this market, as Symbian is fully functional with modest specification handsets and is fully open in various connectivity from Bluetooth to NFC to microSD to TV-out to HDMI etc. Nokia's Ovi Store is the run-away dominant market leader in this market. Symbian today can power smartphones that cost less than 100 dollars (unsubsidised price). Windows Phone lowest price Lumia costs 250 dollars (unsubsidised price). In the Emerging World markets this price differential is decisive. Morgan Stanley Deloitte told us that 300 million smartphones at a price of under 100 dollars (unsubsidised) will be sold this year. Nokia cannot compete there with Lumia, only with Symbian.

 

The sane CEO continues to expand Symbian to lower cost smartphones in rough parallel as Samsung and Android, and uses Nokia's scale as a competitive advantage to capture the Emerging World markets to Nokia's Symbian based ecosystem, including Ovi Store and Qt.

 

The insane CEO tries to push 'lower cost' Lumia handsets like the Lumia 610 - which still costs 250 US dollars (unsubsidised price) and issues statements that Nokia is accelerating the end of Symbian while Lumia is not ready to take over this low end and Nokia has no alternative.

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

CLOUD COMPUTING

 

The emerging view is that the future of the whole internet, telecoms and computing industry is headed to the clouds. Nokia believed in cloud computing and mentioned Elop's background in Microsoft's Cloud Computing project as a desirable skill when Elop was hired. One would think he would understand and value the leadership position that Nokia had gained in Cloud based solutions.

 

The sane CEO would fully support and expand and capitalize on Nokia's leadership in cloud based solutions.

The insane CEO shuts down Nokia's Ovi Share and Ovi Contacts and forces Nokia users to migrate to cloud-based solutions run by rivals.. like Microsoft's Skyshare, Windows Live and Outlook. 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation. The conspiracy theorist might suggest that Mr Cloud Computing would deliberately sabotage Nokia's cloud solutions just so Microsoft would have less competition. You might think that; I could not possibly suggest such a thing.)

808 PUREVIEW

 

Your stunning 808 PureView cameraphone with gobsmackingly awesome camera technology won the phone of the show award at the world's biggest mobile telecoms trade show in Barcelona last month, ahead of stiff competition such as Samsung's Galaxy Beam with its tantalizing built-in pico projector. The 808 PureView runs on Symbian, an OS you have previously suggested was obsolete and equivalent to a burning platform. Yet on this magnificent superphone, Symbian does tricks Windows Phone cannot even hope to do this year, from normal Symbian abilities such as true multitasking to abilities more relevant to the camera excellence such as HDMI output. The 808 PureView is receiving the best early reviews of any Symbian based phone ever, even in usually hostile US tech press. The 808 PureView starts shipping in weeks, for example to the UK market.

 

The sane CEO celebrates the excellence of the PureView, rides the hot press, is seen everywhere with that phone, and uses it to celebrate the competitive advantages of Symbian, its open system, its Qt developer tools, Nokia's Ovi store etc and of course, the sane CEO launches the 808 PureView to the US market immediately.

 

The insane CEO refuses to be seen near the 808 PureView and even facing strong US media love of the astonishing cameraphone, refuses to launch it in the USA

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation. This could not have possibly anything to do with the embarrassing fact, that even after Elop's Burning Platforms memo, the 'failing' Symbian continued to outsell Microsoft's Windows Phone - in Microsoft's home market of the USA last spring. No, there can't be any such grudge between Redmond and Espoo, could there? And besides, the CEO of Nokia would look after Nokia's best interest, right, not Microsofts in any case)

 

LOYAL CUSTOMERS

 

The Lumia smartphones are now obviously a dud. They were not designed by Nokia's A-Team out of Finland, in fact the Lumia designers come from California, from what at best could be called the junior squad, the farm team, the total novices. And now we have seen the evidence is overwhelming. They messed it up rather comprehensively for Nokia's new line of smartphones. The Lumia is just barely suitable to make a good impression in the store, but by the time you bring it home, it will disappoint you day in and day out. Not unlike the complaints about Detroit cars of the past, made to look good in the showroom but a disaster to live with over time (I trust this has long since been fixed with the new Detroit). But its a common accusation of US designs, focusing on the shallow first impression rather than the durable value.

So lets look at Nokia's loyal user base. They have used Nokia branded phones for years, many for over a decade. They have always expected certain levels of utility and convenience and logic and rational behavior on their Nokia phones, whether smartphones or featurephones. How is Lumia today? The user may be impressed in the store. But takes the Lumia home, and tries to move old pictures from the old phone to this new phone or vice versa. There is Bluetooth yes on the Lumia but it won't do file transfer. What of the microSD slot? There isn't one. Shot some video in the camera? Try sending it via MMS? Yes, the Lumia will do MMS and let you send pictures, but not videos. What of messaging? Nokia practically invented mobile messaging (Matti Makkonen, my mentor at Nokia, actually did invent SMS, but he did it at his previous employer, Telecom Finland ie Sonera). So many users, especially the youth and business users, heavily into messaging will tend to favor Nokia phones. Try to draft an SMS text message and save it? You can't. Lumia won't let you save message drafts! What of the FM transmitter you have had for years with Nokia phones so you can connect to your car without cables. There isn't one. What of the TV out you want to show friends your pictures or videos that you shot on the Lumia? Nokia has supported TV out for six year already. The Lumia doesn't do that either. The alarm clock won't wake up on the phone like it used to on all previous Nokia's - a really nasty problem to discover the first time. And so forth.

 

The sane CEO looks at these serious usability problems, which are all traced to the deficiencies of the Windows Phone OS and the design of the Lumia. The sane CEO decides this Lumia series is now more of a threat to Nokia's reputation - and long term damage to Nokia loyalty - than a way to succeed in the market and will at least limit its production and market launches. The sane CEO will explore less mature markets where the Lumia might succeed even with these deficiencies, like the USA, where far less advanced phones and often phones with crippled features are commonplace. The sane CEO will either end the development of Lumia phones or suspend their marketing in Nokia's main markets like Western Europe and advanced Asia-Pacific, until newer, better Lumia devices of far more modern design can be brought to the market.

 

The insane CEO pushes even more, even cheaper, even worse Lumia devices to the market to ruin what is left of Nokia's loyal customer base.

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

 

CUTE

 

Your company has built an application developer tools environment, called Qt. Qt is effectively an ecosystem. Developers can make apps via Qt that work on Nokia's Symbian, Maemo and MeeGo smartphones, today. These have an combined installed base of 300 million smartphones currently in use worldwide. That is the biggest installed base of any smartphone platform. Qt is far more powerful than that. Qt will enable development of apps to Nokia's proprietary 'featurephone' OS, called S40. That means that just on Nokia platforms, Qt reaches a potential of 1 Billion with a B-Billion pockets. Yes. On Nokia's own platforms, Qt is four times as big as Android, five times as big as all iOS devices ever shipped including iPhones, iPod Touch's and iPads, ten times bigger than the Blackberry ecosystem - and 100 times bigger than the Windows Phone 'third ecosystem'.

Qt is a true key for Nokia's global dominance. And I haven't even gotten to the good part yet. Qt also allows development to Android and Blackberry smartphones. Qt is tested to be faster by a whole order of magnitude in development time and development cost. It is by far the best way to develop apps to smartphones. Qt is also compatible (or will be) with other less common platforms such as Limo, bada and Tizen. Of all smartphones in use today, using Qt you have the ability to reach .. 83% !!!!!

 

And wait. Nokia's new upcoming low-cost smartphone OS, Meltemi - is also of course, compatible with Qt. The total potential reach of Qt is not just bigger than any other smartphone ecosystem - Qt potential reach today is bigger than the total installed base of Microsoft Windows based personal computers and all Windows family smartphones, combined. This is a juggernaut. And the only OS that Nokia currently supports, that is not compatible with Qt is.. Windows Phone. That Windows Phone which is not viable for 90% of Nokia's current market. (Not viable for the high end smartphones, not viable for low-cost smartphones, and utterly incompatible with the featurephone market segment). So Nokia will have to, into the foreseeable future, support systems other than Windows Phone - that are compatible with Qt. You get the picture?

The sane CEO will cherish this enormous power and  celebrate Qt at every stage he opens his mouth, repeating the amazing stats about Qt, and fully funds its rapid development so all the platforms will be soon also in production (Qt is not yet finished). The sane CEO will always favor any Nokia solution which is compatible with Nokia's Qt ecosystem, the legitimate 'first ecosystem' of the planet, and always try to avoid mentioning any rivals that threaten Qt.

 

Only a certifyiably lunatic CEO would waste incredibly valuable and rare media time and attention, by promoting a rival to Qt - the Windows Phone 'third ecosystem' - a product of a competitor company that is unsuited for 90% of Nokia's future. That is not just moronic and mad, it is a direct violation of his fiduciary duty to Nokia's best interests and an obvious conflict of interest. Whether Nokia buys and pays for Windows Phone OS or not, and whether Elop himself thinks Windows Phone might or might not succeed - it is Microsoft's duty to promote that OS, and as long as Nokia produces a rival ecosystem - Qt in this case - it is madness for the CEO to invest his valuable media exposure to promote a competitor to Nokia's ecosystem. He must be fired for this blatant breach of his fiduciary duty. The Nokia shareholders should demand a million dollars for every time he uttered the term 'third ecosystem' in front of a TV camera!

(But I'm sure it wasn't done on purpose, I mean, he'd be a criminal if he promoted Microsoft's interest ahead of Nokia's best interest, and still collected a Nokia paycheck.)

 

TO BURN OR NOT TO BURN

 

I think we see the picture. Now, I will end with a little comparison, to burn, or not to burn. Consider these facts.

 

In Q4 of 2010, just over one year ago, the first full quarter that Stephen Elop was in charge of Nokia, this is how Nokia performed under his watch: Nokia's smartphone unit - the unit of Nokia's handset future - grew unit sales by 7% from just the quarter before. Yes. You read it right. Nokia was not 'declining' smartphone sales when Elop took over. Nokia in his first quarter in charge, grew unit sales by 7%. Was that at the cost of price cuts? No! Nokia average prices of smartphones grew by 14% ! (When does that happen in economic theory, that you increase your price massively, and yet grow sales strongly?) Nokia's smartphone unit revenues grew by 22% from just 3 months earlier! And profits? Check this out. Nokia's smartphone unit profits jumped a Nokia-record of 65% from the quarter before!

Nokia smartphone sales were literally twice as large by unit sales than its nearest rival, Apple's iPhone. (Imagine how much Coca Cola or Toyota or Boeing would love to be twice as big as its nearest rival). Nokia's Symbian was the world's bestselling smartphone OS. Nokia's market share in Q4 of 2010 was 29% of all smartphones sold globally. Nokia's Ovi store was the world's second bestselling app store by downloads. Nokia's smartphone migration rate was 25%, ahead of the world migration rate to smartphones.

Nokia's Symbian OS had as its carrier partner NTT DoCoMo of Japan, the most advanced, most inventive and most innovative company of this whole industry, which not just launched this industry, it has literally invented about half of the total industry's inventions. This carrier was committed to using Nokia's Symbian in its radically futuristic phones for years to come. Nokia also had for the MeeGo OS as its carrier partner China Mobile, the world's biggest mobile operator/carrier. Thus Nokia had exclusive preferred access and market to both the most advanced mobile country and the biggest mobile country, where both NTT DoCoMo and China Mobile had explicitly said they do not want the iPhone! But They wanted Nokia's platforms!

Nokia's credit rating was an A. Nokia's brand was ranked the 8th most valuable brand on the planet by Interbrand. Nokia's shareholders so much loved Elop's first five months in charge, by early February, Nokia's share price had climbed 11% since he took over. That was Q4 of 2010.

 

Now lets move just 12 months ahead in time, the latest quarter for which we have Nokia data. Now in Q4 of 2011, this is how Nokia performed: Nokia's smartphone unit sales have collapsed 31% from where they were a year ago (while the industry grew 71%). Nokia average sales price has fallen by 10% - but this is by an accounting gimmick, where Elop assigns a Microsoft marketing support payment of 250 million dollars to the price. The real price (what consumers are willing to pay for Nokia branded smartphones) has actually fallen by 16%. Nokia's smartphone unit revenues have fallen by 38%. Instead of reporting a profit of 510 million Euros (663 million US dollars), Nokia's smartphone unit now generates a loss of 190 million Euros (247 million US dollars) per quarter. So Nokia has destroyed 757 million Euros (910 million US dollars, nearly a Billion dollars) of profits per quarter.  

Nokia smartphone unit sales now are half the size of the new market leader in smartphones, Apple's iPhone. Yes, Nokia went from being twice as big, to half the size of Apple in just 12 months! Nokia's market share has collapsed to 12%. Nokia's Symbian has fallen to third bestselling smartphone OS. Nokia's Ovi store has fallen to third bestselling app store by downloads. Nokia's smartphone migration rate is now 16%, severely behind the world migration rate to smartphones.

Since Nokia selected Windows Phone, NTT DoCoMo has abandoned Symbian and today runs Android as its primary operating system. Since Nokia selected Windows Phone, China Mobile has become miffed too and today strongly supports Android (and its Chinese variants). Nokia has abandoned exceptional and unique competitive advantages that had blocked Nokia's most dangerous rival.

Nokia's credit rating was downgraded three separate times and is near junk. Nokia's brand fell out of the top 10 for the first time since rankings were published. Nokia's shareholders so much hated Elop's next twelve months in charge, since its February peak, Nokia's share price had crashed 60%. This is Q4 of 2011.

 

The sane CEO would look at the situation one year ago, conclude Nokia was doing reasonably well, was healthy, profitable - and growing strongly in every single metric imaginable. That is where a sane CEO would say Nokia's platforms are "not on fire". And the sane CEO would say looking at today's situation, that if ever, today Nokia's platforms "are on fire".

 

The insane CEO looked at the situation a year ago when everything was growing including profits, Nokia smartphone sales and Nokia share prices, and issued a Nokia-wide memo claiming bizarrely that Nokia's platforms were on fire. And truly the Roadrunner cartoon Wiley Coyote moment, using Acme rockets, running over the cliff and then looking down into the canyon and starting to fall.. the insane CEO would look at the world today, and say he feels the platforms are no longer on fire (and that he need not fear Samsung as a rival, he can sleep soundly today).

 

(The criminal CEO would act in the best interests of Microsoft but obviously I am not suggesting that is Elop's motivation)

THE SANE BOARD

 

The sane Nokia Board looks at its recently hired CEO, Stephen Elop, objectively and observes that since he took over, he did not focus on his primary task, to fix Nokia's execution. He issued damaging memos and statements that destroyed Nokia's market share, retail support, and trust by consumers and developers alike. He has continued to consistently act against Nokia's best interest and refuses to make obvious right choices such as releasing the two MeeGo handsets globally, yet continues to pursue wild goose chases like tablets. The board would use metrics such as plunging strongly profit-generating smartphones unit to losses, the crashing share price and the disasterous credit ratings and falling brand value. The sane Board would calculate the long-term damage of the wanton destruction of Nokia's previously mightly market share and observe that this year Nokia's market share is headed to single digits. The sane Board would evaluate the long term damage from destroyed partnerships with the leading companies of the industry, the devastation of the ecosystem and the abandonment of all sensible paths to a future from cloud computing to mobile money. The sane board concludes that no matter how clever Elop sounds like in his interviews, the con-artist is an utter fake and a madman who will destroy Nokia with his delusions. The sane Board fires Elop now.

 

The insane Board looks at the evidence of Lumia failing by every metric, and lets the delusional psycopath go on to ruin Nokia, to sell all its assets from patents to programing skills to the advertising unit to the Vertu unit while the Nokia share price continues to fall.

 

The criminal Board colludes with Elop or is criminally negligent in ignoring his blatant disregard of the CEO's fiduciary duty and conflict of interest. A criminal Board would face stock market regulator investigations on both sides of the Atlantic. Individual members of a criminal Board would face lawsuits and massive fines and be barred from any Board work in the future. But I am not suggesting the Board is criminal.

THE WAY OUT

The sane Chairman of the Board looks at all of this, understands the CEO has lost all trust and respect and sees the demoralized company on the brink of ruin. He takes the CEO aside, says, this won't work, and tells Elop to go back to Ballmer with an idea. Next the sane CEO manages a divestiture of only the Lumia unit, sell it yes, to Microsoft, and make them take Elop with them. Throw in a 3 year license to use the Nokia brand in the North American market with the Lumia but not for other markets. Pay back the several hundred million dollars so far that Microsoft has paid Nokia. Get rid of all of it. The split is relatively painless, as most of the hardware is from Compal of Taiwan with non-standard Nokia components, so few factories, designers, employees are involved. The Windows Phone software is obviously also mostly Microsoft so again, few Nokia staff would be involved.

The insane Chairman of the Board watches as the proud Nokia ship slowly sinks as the clown CEO, no, thats not fair to clowns. As the Microsoft Muppet CEO blasts ever more holes to the sinking ship, below the waterline and just boosts the speed by which Nokia sinks. And the proud legacy of the Chairman, thought by most in his home country as its greatest industrialist and even in European circles held in highest esteem, rapidly sinks along with it.

NOKIA CAN BE SAVED

Nokia can be saved. I am not saying Microsoft Windows Phones have to be discontinued (while it would be the best move right now, in my estimation). I am saying the magical MeeGo devices, N9 and N950 have to be sold globally now, now when they are hot, and can command a good price, and bring Nokia back to profits. The CEO has to commit to MeeGo also into the future and restore the damaged relations with China Mobile. Symbian is best suited for Africa and Emerging World markets until Meltemi is available. Qt is Nokia's smartphone strategy and the only OS that is incompatbile with Qt is Windows Phone. Lumia has been tried, it is failing now. Nokia had a superior ecosystem a year ago, now Elop is destroying it piece by piece. He has to be stopped while there is anything left. For Nokia to survive as an independent company, it must take drastic actions now. The first step is strong embracing of MeeGo and the N9 and N950, globally in every market from the UK to the USA. And Elop is utterly incompetent, he has to be fired!


UPDATE 28 March, 2012 - Nokia finally takes partial step in right direction! Nokia reported at Netbook News quoting info from Mary McDowell and Nokia's 'Next Billion Group' - that Nokia is now developing not one but two lower-cost MeeGo devices, (hooray! Finally! Some sanity at Nokia HQ! We celebrate!) aiming for the Emerging World markets. Note this completely reverses the idiotic statements CEO Stephen Elop said less than a year ago about MeeGo. Good move Nokia, more of this. Except why is CEO Elop not running at the front of this story? Why is he refusing to be seen near any MeeGo story about Nokia! And now, EVEN MORE WITH THIS DRAMATIC NEWS DEVELOPMENT, if there are new MeeGo devices coming - and there is unprecedented press support of the N9, why not release the N9 and N950 on MeeGo now, sold in every market now, to help support the interest in, and future sales of those upcoming newer and cheaper MeeGo devices.

 

UPDATE APRIL 11

For anyone still reading this blog, Nokia just issued its profit warning today and I have commented on it and crunched some numbers. In 2011 Stephen Elop set the world record for biggest destruction of a Fortune 500 sized company any one year. Now in Q1 of 2012, he went even better, producing the worst quarter results ever seen anywhere. Read my view of the Nokia Profit Warning and why things are even worse.

UPDATE APRIL 12

I have written a 'proper' and not very 'Elop sucks' type of posting, honestly, accurately, precisely, comphrenesively, with facts and stats, about what is not wrong, and what is wrong, and what must be done, if Nokia is to be saved. If you want to read it, it is here The Hearbreaking Fact is that Nokia Can Be Saved and within one Quarter at that. 

How do children learn to read when you have no books?

In Chapter 5 - which is about mobile communications and its empowering capability - we look at Worldreader.org a company that is in fact taking up this very challenge.

Rather than a laptop for every child - a noble cause but faced with overwhelming infrastructure problems - Worldreader have given Kindles to school children in Africa that can now harness the wealth of knowledge that exists easily for many of us at a cost which means; access is no longer a barrier to learning. The significance is explained by Brookings

Being able to read and write is the most basic foundation of knowledge accumulation and further skill development. Without literacy, there can be no quality education. Presently, 1 in 5 adults is illiterate, two-thirds of whom are women. At the current pace, over 700 million adults worldwide will still not be able to read in 2015. [1] In global education discussions, literacy rates are most often reported for adolescents and adults, an ex post facto measure of the failure of primary school systems to impart basic skills in the most formative schooling years. It is clear that much needs to be done to provide these adolescents and adults with access to successful literacy programs. But we must also ensure that children with access to schooling are not growing up to be illiterate.

They cite the enormous potential of the Worldreader initiative

the important difference between (the worldreader) e-reader program and similar projects focused on putting computers in classrooms is that e-readers usually operate on the mobile phone system, which has exploded in developing regions over the last few years. In Kenya, more than 80 percent of the population has mobile phone network coverage and more than half of the population has purchased a mobile phone subscription. The GSM compatibility of e-readers allows for downloading of new reading materials wherever there is mobile phone coverage and sufficient funds available to purchase new texts. E-readers also have relatively low levels of energy consumption (a one-hour charge can last more than a week). In addition to gaining the support of community leaders and teachers from the beginning, the pilot began with intense in-service training for teachers in how to use e-readers to complement their existing curricula.

While Worldreader.org has not solved all of the challenges posed by technology initiatives in education, it has taken some important steps toward addressing the barriers to project success.

When we look at archetype organisations for NSL, Worldreader very much meets the criteria of the 6principles of No Straight Lines.

1. They embraced ambiguity - to seek a pattern that might suggest a way forward
2. They evolved a literacy to enable them to adapt to a challenging problem
3. They built an open ecology of scale
4. Enabled by the kindle's the children were able to participate in collective learning
5. Craftsmanship is evident in the ability to craft an entirely new organisational model.
6. They designed for Transformation

If you would like to read more about literacy, or the 6 principles of No Straight Lines you can via our open access participatory book please be our guest and click here. Or pop over to our store.

If you would like to know more about our Transformation Labs then click here.

Here is a link to a short video from Al Jazeera about worldreader

How To Surrender War of Ecosystems - Nokia's Elop Sets Ever More Platforms on Fire: Nokia Money killed today

I am stunned by news from Nokia today. We hear that Nokia is terminating Nokia Money, the Nokia mobile payments solution it has launched in several countries in Asia including India the second largest mobile phone market on the planet behind only China, and other big Asian countries like Pakistan.

THE FUTURE OF MONEY

 

This is mind-boggling to me. Nokia saw the birth of mobile money, when the world's first mobile payment solution went commercial, in Finland. It was Coca Cola which deployed the world's first two SMS text messaging payment based vending machines in the Helsinki region in 1999. One was at the Helsinki airport. The other? In the technology city part of Espoo, Otaniemi - yes exactly the same township where Nokia Headquarters are based.

 

The world's first major international consumer survey of mobile commerce was .. by Nokia in May of 2001, covering over 11,100 people in seven major countries across four continents. (I happen to know, as it was my department at the time that conducted that survey and I was often quoted about its findings in 2001). By the time I presented a keynote to the world's first conference on mobile commerce in London in June of 2001, there were dozens of commercially launched early mobile payments solutions from lotteries to train tickets.

 

Since then we've seen ever more clever mobile payments and solutions. Smart Money out of the Philippines won industry awards for the first complete mobile payments solution (built around SMS). Soon its cross-town rival Globe launched G-Cash in the Philippines. More advanced solutions arrived in the form of NFC based payments solutions in Japan and South Korea, onto the SIM card based centralized mobile solution first executed in South Korea.

The world's first full 'mobile wallet' solution was launched by NTT DoCoMo as Osaifu Keitai in Japan in 2006. NTT of Japan is the company that launched the whole mobile industry years before the famous Motorola phone was sold in the USA. NTT DoCoMo is the most inventive and innovative company in mobile, they launched the world's first mobile internet service, first 3G service etc. And again, Nokia would know of this mobile payments development quite intimately, as NTT DoCoMo was a strategic partner with Nokia on the Symbian platform - those Osaifu Keitai mobile wallet phones were using Symbian as their operating system. NTT DoCoMo reports that Osaifu Keitai is the most loved service by its customers in the illustrious history of the company and is exceptionally 'sticky' in building loyalty.

In 2008 Safaricom of Kenya launched M-Pesa the internationally most famous mobile payments solution. Its creators including my friend Susie Lonie won the Economist Innovation award for 2010. Today more than 30% of the total Kenyan economy transits a mobile phone. Vodafone, the world's largest mobile operator group by revenues has been expanding the M-Pesa solution from South Africa to parts of Asia.

China Mobile the world's largest mobile operator group by subscribers believes strongly in mobile payments and has an initiative to develop it together with Vodafone and Softbank of Japan. Again Nokia would know this intimately as China Mobile was a strategic partner in the MeeGo operating system environment, and MeeGo was designed from the start to include NFC support (something that Microsoft Windows Phone for example cannot do today).

Nokia got involved in mobile money directly in 2009, with the launch of Nokia Money in India in 2009. Nokia has since been saying that the mobile money side of Nokia is one of the main keys to securing market success for the 'next billion' internet users that Nokia wants to serve.

Nokia said in 2010 that from 2011 all Nokia smartphones would support NFC, both using Symbian and using the upcoming MeeGo OS. Then Nokia's CEO Olli-Pekka Kallasvuo was fired, and Nokia hired ex-Microsoft man Stephen Elop to run Nokia. In February 2011 Elop released his infamous Burning Platforms memo (the costliest management memo of all time and half of the Elop Effect, the most damaging management communication by any Fortune 500 sized company in the economic history of humankind).

POURING MORE GASOLINE ON BURNING PLATFORM?

I am not going to re-litigate the Burning Platforms memo here again. I am only going to quote Nokia's CEO Stephen Elop about the very survival of Nokia. Elop wrote in his memo:

 

"Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem."

Stephen Elop also provides his definition of what is an ecosystem and what are its components, when he wrote in that memo:

 

"The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things."

Note that Elop says after developers and applications, the third item he lists is ecommerce (mobile payments) ahead of advertising, search,. social apps, location-based services etc.

Elop has been critical of Nokia management of the past, and stated that Nokia had missed major trends and was falling behind, as he wrote:

 

"What happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind."

And Elop blamed past management and promised he would correct these errors when he wrote in his notorious memo:

"I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally. Nokia, our platform is burning. We are working on a path forward — a path to rebuild our market leadership."

Nokia has seen the birth of mobile money, in its own 'backyard'. Nokia has seen some of its closest strategic partners invest heavily and reap great rewards out of mobile money. Nokia has moved into this space early and strongly. Mobile payments are one of the MOST CRITICAL ELEMENTS of any ecosystem in mobile. 

Elop accuses Nokia of missing the big ecosystem view to winning in the mobile handset wars, and that Nokia has "missed big trends" and fallen behind by years. But in the case of Mobile Money, Nokia has literally been ahead of the curve, and literally years ahead of any other handset manufacturer, and often partnered with the major players of the industry.

BIGGEST MOBILE TREND THIS DECADE

In 2009 Estonia became the first country to eliminate the use of cash in a traditionally coins-operated industry - parking meters. Today you cannot pay for parking by coins in Estonia, but you can of course pay by mobile (Nokia knew this, Finland's first mobile parking solution was launched in 2000). In 2010 Sweden joined that idea by prohibiting coin use in bus fares, you can of course pay by mobile (Nokia knew this too, as the world's first public transport payment by mobile was launched in Finland in 2001 by Helsinki Public Transport). By the summer of 2010, Sweden became the first country on the planet to start Parliamentary deliberations of when to end the manufacturing of cash altogether - replaced by mobile phone payments. Today that race has been joined in countries from Kenya and Somaliland to Philippines and South Korea and Japan. In 2011 Turkey became the first nation to issue a target date for the end of cash: 2025.

In 2011 Visa became the first major financial industry giant to state that the future of payments is mobile. Yes. Visa. Visa says cash will disappear to be replaced by mobile money. The thinking is that radical, Visa only said that last year. If there ever was a major digital disruption opportunity in the world, here is one moment, in early 2012, that we can safely say, the biggest change to humankind this decade, is the shift from coins and cash, to mobile payments. A truly massive global trend. And Nokia had an enormous head-start in it. Here, more than anything else, Nokia was truly ahead of its rivals. Where Elop said Nokia had "missed big trends" and did not capitalize on the leadership, here was a case of true Nokia leadership which had been executed better than any other handset makers. Apple is not even out with its iWallet concept and Google's mobile payments are at their infancy.

In the memo Elop mentions Google or Android five separate times as a major threat to Nokia's future and a strong player in the battle of ecosystems, suggesting Google is a rival that Nokia should learn from. Google's Chairman Eric Schmidt wrote in the Harvard Business Review last year, that mobile money is the number 2 priority for Google's strategy. Not Google's 'mobile' strategy or its 'smartphone' strategy. Number 2 priority for all of Google!

Elop promised his staff that Elop will change Nokia leadership. To return 'accountability' and to 'align' Nokia to the new disruptive trends and to 'deliver innovation fast enough' on a 'path forward' to 'rebuild market leadership' - obviously suggesting Elop will be using the ecosystem thinking.

Now we hear that Nokia Money will be terminated. After Nokia had recruited 1.2 million paying consumers to its Nokia Money service (which is not free - it has a registration fee), now Nokia gives 3 months for those customers to deplete their Nokia Money accounts and then the mobile payment service will be discontinued. Nokia will also return its mobile banking license to the Reserve Bank of India etc. Note, as the India banking regulator tells that there are currently about 10 million mobile banking users in India, Nokia had achieved a 12% market share in the early going of a market that will soon pass 100 million users - most people in India do not have regular banking accounts and don't use such 'common' payment methods to many of my readers here, as credit cards etc.

I am flabbergastered. I have been critical of Elop's management but at least I believed Elop did understand that the future of smartphones was dependent on ecosystems - he did write that in his memo. But Elop is now actively dismantling and destroying something that he said was a major key to winning in ecosystems? Where Nokia had indeed built a huge lead over Google and Apple, Elop now destroys that leadership position. This is the same lunacy we saw a month ago when Nokia sold its advertising unit! What happened inside his brain? This man is a menace. He is single-handedly destroying all assets that Nokia had built. Specifically, Elop is destroying all the parts of the leadership in the ecosystems battle, from screwing the developers by killing the QT based migration path from Symbian to MeeGo, to now, yes, unbelievably, terminating the Nokia Money service! Why? So that Nokia could become a slave to Microsoft? Elop has to be fired NOW !

(PS anyone who wants to understand the mobile money opportunity, my 12th book was the world's first book on mobile money. If you want to see more, see Tomi Ahonen Pearls Vol 3: Mobile Money) 

This is Delusion - Nokia CEO Elop today in interview

Honestly, I do NOT want to make this blog only about Nokia and its madman CEO Stephen Elop. But the story took such a bizarre twist today, I HAVE to comment on it.

Remember the Star Trek (original series) episode where Captain Kirk returned to the Starship Enterprise on the transporter, to find himself in a parallel universe where his staff is evil and sadistic, Spock had a beard etc. The episode was called Mirror Mirror. Anyway, Kirk had to think real fast to adjust his behavior, so that his evil crew in that alternate universe did not notice that they had accidentally received a 'kind' Captain Kirk rather than their evil one..

That is the kind of utter total twisted sense of reality we now face. The definition of delusion says that the person will look at overwhelming facts to the contrary, and still hold onto a false image of reality. So I ask you, our readers, is this not delusion in Nokia CEO Stephen Elop? He was interviewed in South Africa by the daily financial newspaper, Business Day. And Elop said that Nokia was no longer on a burning platform.

Because Elop has openly admitted to authoring the February 9 Burning Platforms memo - the costliest management memo of all time (I just calculated last week that it has cost Nokia in just one year, 3.9 Billion dollars of profits lost, directly attributable to the memo) - and he now says Nokia is not in the Burning Platforms memo situation. Lets compare the two and you tell me, is this evil Kirk or gentle Kirk. Who is delusional.

On November 9, 2011, one year ago, a few days after Nokia's latest quarterly results were released, we found out the following: Nokia's smartphone unit sales had grown 48% in the previous year. Nokia sold literally more than one out of every 3 smartphones on the planet. Nokia's total smartphone sales were more than twice as big as its nearest rival (RIM) and Nokia also sold well more than twice as many smartphones as Apple sold iPhones. Nokia corporation revenues and profits had grown, and the driver of Nokia revenue and profit growth was the smartphones unit. Nokia had by far the biggest market share in the world of smartphones, selling the most smartphones on five out of the six inhabited continents: Europe, Asia, Africa, Oceania and Latin America - only in North America was Nokia not the bestselling smartphone. Nokia was so dominant in China, the world's biggest smartphone market country, that Nokia's market share was 76% and Nokia was by far the most desirable smartphone brand.

Elop lectures us about the future of the smartphone wars being won by 'ecosystems' rather than handsets alone. Nokia's ecosystem was by far the biggest by installed base, by developers, by new sales of handsets, by carriers/operators covered, by language support etc. By downloads, Nokia's Ovi store was second, to Apple's iPhone App Store but closing the gap. Nokia's migration from dumbphones to smartphones was well ahead of the global level at 25% vs 22%. Those smartphones that accounted for 25% of Nokia's total handset sales, generated 34% of Nokia's revenues and nearly half of Nokia's profits. In the first five months that Elop had been in charge, the Nokia share price had gained 11% - a very strong growth level well ahead of the global economy or the telecoms market overall for the same period.

And into that context, Nokia had just in Q4 of 2010 launched a new operating system version, called S^3 for Symbian, which had set a Nokia record for most new sales in the first quarter, of 4 million units, led by the N8, a flagship touch screen smartphone that won numerous awards as the best phone of the year.

This is what Nokia CEO Stephen Elop calls a total Nokia corporate disaster so bad, he says it is a 'Burning Platform'

Now today, one year later. Nokia has released its latest quarterly data which tell us that Nokia overall smartphone sales have collapsed, they fell 31% from this time a year ago - while the global smartphone industry grew by 63%. Nokia's market share has crashed from 33% to 12%. Where just a year ago Nokia smartphones alone were more than twice as big in unit sales as all iPhones, now Apple's iPhones are almost exactly twice as big as all of Nokia's smartphones. Nokia has not just fallen behind Apple, it has also fallen behind Samsung in smartphones. Nokia corporation now generates a loss, which is driven by the biggest loss-performing unit of Nokia... its smartphones unit! This while Apple, Samsung etc all find smartphones the most lucrative part of their corporations - as Nokia did itself just a year ago. The smartphone unit now drives Nokia's losses! Nokia has retreated now from market leadership positions and is no longer the biggest on four out of the six continents, having lost the leadership in Europe, Latin America and Oceania (as well as North America) and only leading in Asia and Africa. In China Nokia's market share is crashing, with only 18% of Chinese now even wanting to buy a Nokia branded smartphone. 

In ecosystems Nokia has terminated the migration path for its developers - which angered the developers. Nokia has sold its advertising unit. Nokia broke its promise of another 150 million more Symbian devices. Nokia has rebranded (or unbranded) its app store. Nokia has switched from the biggest ecosystem that it controlled, which was based on open principles, for the smallest of 8 mobile ecosystems, Microsoft's disasterous Windows Phone, which is shrinking in size, where Nokia is slave to Microsoft, has to pay Microsoft a license, and a system which itself is not based on open principles. Where Nokia's own ecosystem was growing by 48% a year ago, the Microsoft Windows Phone ecosystem has been shrinking the past year, and was last measured at less than 1% in reach. Nokia's migration from dumbphones to smartphones has been reversed, now Nokia lags the industry which is at the point of 33% of all new phones sold being smartphones, but Nokia has regressed where only 17% of its new phones are smartphones. The smartphones account for a minor fraction of Nokia revenues anymore and yes, generated a huge loss to the corporation. In the past 12 months since the Burning Platforms memo, Nokia's share price has fallen by 55%.

In the past quarter, Nokia launched its new Lumia smartphones on the new Windows Phone operating system in the most expensive and massive marketing launch of any new smartphones ever. Using all that Nokia marketing could do, Nokia then had hundreds of millions of dollars of Microsoft's marketing money to boost that - including giving away free Xbox 360 gaming consoles for those who bought Lumia smatphones. Yet the new flagship Lumia 800 and its sibling the Lumia 710 did not sell more than 600,000 units in Q4 (passing 1 million sales when counting the added sales of January). The Lumia launch is probably the weakest Nokia flagship launch in history and the Lumia 800 did not win any significant awards - it is so despised, some like the UK newspaper the Guardian who used it are already returning it and others like the Germany newsmagazine Der Stern suggest Nokia fans should drive to another country to buy another Nokia new smartphone called the N9 running the MeeGo operating system - that is not even sold in Germany, rather than this lousy Lumia on the failing Windows Phone - that is how disliked Lumia is. Meanwhile analysts like Morgan Stanley project further crash of Nokia market share even with Lumia to fall from 12% today to 8% a year from now. All ratings agencies have repeatedly downgraded Nokia and its prospects.

And this today, is Nokia's situation that CEO Stephen Elop says is 'not a burning platform' anymore. That Nokia's future is 'secure'. And yes, after Samsung sold nearly twice as many smartphones - very profitably - than Nokia in Q4 - and is now poised to pass Nokia as the world's biggest overall handset maker this Spring - Nokia's CEO says he is not losing sleep over Samsung.

Is it just me? Is this not an alternate universe? If your product is utterly dominating its rivals, growing massively, and making huge profits, that propel your company share price to jump - when ALL the numbers and trends are good - that is a platform on fire? But when your product is failing in the market place, dwarfed by your rivals, losing massively, making huge losses, that propels your share price to collapse - when literally on every measure the good has been reversed to bad - that is a platform today somehow suddenly 'not on fire'?

What planet is Elop on? (please read his interview of utter total denial in Business Day of South Africa) and if you want to read my analysis of the reality - yes the truth - behind the Burning Plaforms memo, my blog is here.

 

He is not just an incompetent CEO - he is looking at the facts, and making absolutely opposite conclusions to the reality. Elop is truly delusional. He is destroying Nokia due to his deliberate wanton disregard of the facts. Elop must be fired now!