If you want to understand the existentialist despair of many Nokia staff today, then you need to understand how thoroughly its entire business has been about avoiding Microsoft. This is soaked into its identity, its culture, and its business model: Nokia has defined itself differently. But the economics underpinned everything. …
All the power in the mobile phone industry lies with the operators. Nokia is no-where in the US because the US operators don’t take their phones. They have cosy deals with the Koreans.
Operators buy 80% of the mid to high end phones sold.
But today the operators are scared of Apple and google. While the operators used to think they could make money from content and apps they’ve seen iTunes waltz away with the money.
Apple wants a soft SIM, so you will be able to change network with an iTunes download.
They are even more scared of Google. While Android is open source the apps on an android phone – things like the ability to make a call, phone book and text messaging are apps in this context, are not. They are a fee licence from Google and you can’t mess with them the operators are scared that Google will mandate Google voice, sucking the operators main source of revenue into google.
They are scared as in they’ve been having meetings about it. The nudge, nudge, wink, wink agreement is to support Nokia and Microsoft
So when Elop polled the operators about what to do next, the answer wasn’t Android. The operators said that they could see Symbian (or actually S60 on top of Symbian) wasn’t getting the developer support and Nokia needed a new direction. They would support Nokia with Windows.
This isn’t just about Nokia and Microsoft teaming up to take on Google and Apple, it’s about Nokia, Google and the major operators teaming up to take on Google and Apple. It remains to be seen how brave those operators are when it comes to not stocking the latest Apple phone if that means losing customers.
Why not Microsoft?
OK so you're effectively saying that because operators control Nokia they think this deal will allow them to control what Microsoft does, and not let it become yet another Google or Apple?
If that's what is happening oh man are they in for a surprise...
We really need a Techleaks site to know what's going on, someone please start one.
The carriers are clueless - always have been
The problem is the operators are clueless and have had loads of idiot MBA enabled product folks for years who've made IDIOTIC decisions. I would sooner trust a used car salesman than an idiot handset product manager or services product manager at a carrier.
These were the same guys who when handset mfr's spoke of doing 200-500 USD handsets they said "get a life" - no one will ever buy a full featured handset with PC like features. Well look at what happened with the iPhone and how off base every carrier was for months after it came out. (the carriers that didn't cut a deal with Apple)
The carriers that are doing well on this realized they are a pipe and sell value added services which increase ARPU and AREN'T tied to applications (e.g. data plans, intl calling plans)... NO carrier worldwide made anything justifiable on applications considering the investment that was made - bar the excuse of services that revolve around ringtones which is nothing more than extortion to the end users who get stuck with the subscriptions.
Any carrier thinking MS/Nokia is going to increase service revenue to anything more than 2-5% is smoking something.
Re: Big Battalions
The operators may have everyone by the balls in the US, and in this respect Apple have played them all rather well, but...
"So when Elop polled the operators about what to do next, the answer wasn’t Android."
Nokia's problem - well, one of their major problems (we don't want a Spanish Inquisition-style listing of all their problems) - is that they presumably listen to the operators too much and their actual end-user customers too little. Everyone said that Apple wouldn't get the iPhone past the operators, but by driving end-user demand, the operators eventually gave in and fought to be the "exclusive carrier". Listening to the likes of Vodafone ("Can we ruin the user interface and slap our idiotic branding on it?") is arguably why Nokia have been shipping uninteresting products for years.
And although this may not apply to the US, the trend elsewhere is for the operators to get you to pay for stuff you won't use and to stiff you for data. Whether Google decides to mandate Google Voice or not - and any competent manufacturer could easily bundle their own suite of applications, rendering the "Android is not completely open" argument somewhat less potent - probably wouldn't make a lot of difference on a lot of subscriptions and contracts for smartphones, anyway.
Again, Nokia listens to the wrong people (or to the wrong selection of people) and self-congratulatory cigar-puffing ensues amongst the executives.
Re: Big Battalions
Very true. Certainly in the UK you couldn't buy a generic Euro Nokia. It was either an operator supplied or something called a country variant (CV). Firmware updates for operator phones are invariably delayed for 6 months or blocked completely by the operator, meaning you're stuck with the POS early OS version.
CV updates are delayed by some faceless and nameless body that nobody seems to be able to kick up the arse.
The result is that in the UK the updates just don't arrive, the phones are buggy, people curse them, bin them and go buy an iphone/android.
The "cheat" is to change the model number on the phone to generic Euro and then you get the firmware update when Nokia release it... Guess which subject is banned in the Nokia user to user discussion forum... Yup, you got it... Model number hacking... The one thing that can fix so many user problems in one hit. In their conceit for being such a huge mobile phone manufacturer they forgot that a happy punter is a returning punter, and nobody returned. Personally I've been planning my jump to an HTC Android after 10+ years of Nokias for the past few months.
Nokia has spent so much time bent over with their tongue up the arse of the operators they didn't spot Ballmer swaggering up behind them with a pot of vaseline in his hand!
Re: Re: Big Battalions
Not sure I agree with that - I've had a few PAYG phones over the years, from Nokia, Motorola and my current Samsung, and I have updated the firmware on each of them pretty regularly when new ones became available (and they DID become available) to me in the UK.
I am confuse
Google are teaming up to take on google?
Nokia smart phones
I still have a Nokia 9110 communicator smart phone as a backup. My wife has the 9300 communicator , and one of my current phones is an E90 communicator.
Between the 9300 and the E90, Nokia royally lost the plot. The E90 hardware should´ve blown everything else away, but the appaling state of the software, and built-in apps spoilt it. Even the 9110 (practically running DOS) outshines it.
It seems that switching to WinCE is just to get rid of the mess they made with their own SW through keep changing their policies on it. Just my 2p.
And another thing...
I fear Nokia's tendency to throw stuff out when it's just starting to come together. (I'm not the only one to use "baby" and "bathwater" in the same sentence in the last few days. Yes, they made a big mistake by backing the keypad-centric S60 while S90 and UIQ died. But having realised their mistake after the iPhone came out, they made painful efforts to come back but, just as the N8 has something starting to look like a numpty-proof OS, they decide they're going to let Symbian die. Then they set up Ovi services and, just when some of them are starting to look good (namely maps, and the store now seems to work), seem to have chucked those by the wayside too. Then there was Qt, which also seems to be being ditched just as it's starting to come together. The pearler, though, surely has to be allowing Maemo to bubble along for years in the background then, just at it's a potential world-beating smartphone OS, chuck that in the bin too and go back to square one with Meego.
I fear that today represents just another case of foot-shooting, and in a couple of years time, another CEO will come along and chuck out Elop's achievements, just as they're starting to come together.
"but life as a Windows OEM still leaves a greatly reduced pot of money at the end of the day"
We don't know what Nokia's licensing terms for WinPho7 are (well, I don't). They didn't announce that they had got a good deal but then maybe they weren't allowed to. Microsoft is desperate with WinPho7 in a way it absolutely doesn't have to be with its other OSes.
knowing MS, Nokia probably even got it for free this time (well, in exchange for their Ovi stuff) but if Nokia actually starts making money on it - and after really running MeeGo to the ground, just in case - you'll see...
MS then comes out WP8, maybe finally with copy&paste, which means a renegotiation and suddenly licensing costs go up to 11..
I think you are on to something wrt licensing terms
Don't be surprised if Nokia weren't paid by Microsoft. And Nokia might initially end up in credit from the agreement.
From the New York Times:
“To get Nokia to switch, Google and Microsoft are offering hundreds of millions of dollars worth of engineering assistance and marketing support, according to a person who has done consulting for the company and was told of the talks.”
When the iPhone launched, it succeeded because Apple knows how to twist the media around its little finger. It didn't have an app store, it only had a nice interface. It was good, but not THAT good, and as far as phones are concerned, it was not a HUGE improvement on the competition.
As a Welshman, I can say that Apple's success was like when Wales beats England at rugby; not so much Wales playing well but England being uncharacteristicly poor. Likewise, the iPhone itself, as a phone in my pocket was not awesome, it's just the others weren't on top of their game.
I went Apple for iPhone and Mac and learned that it is all marketing, like a beer with too much head, Apple is just froth.
I wish Nokia all the best and ask that we all remember Sendo, the company that Microsoft shafted to achieve nothing for an OS that sucked. Long live Windows Phone 7!
Long live Windows Phone 7!
Not in my pocket.
iPhone WAS very good and very disruptive
> When the iPhone launched, it succeeded because Apple knows how to twist the media around its little finger.
Nonsense. But I'll keep on reading.
> It didn't have an app store, it only had a nice interface.
But no one else had the user experience, so it didn't matter.
> It was good, but not THAT good, and as far as phones are concerned, it was not a HUGE improvement on the competition.
It improved in measurable ways people care about. It was the first phone to ship with a really good media player and the first phone to ship with a really good web browser
> As a Welshman, I can say that Apple's success was like when Wales beats England at rugby; not so much Wales playing well but England being uncharacteristicly poor.
I'm English and I'd disagree as Wales have had some better teams with better players than England over the years. This current crop with Youngs and Flood in he halves are particularly good.
> Likewise, the iPhone itself, as a phone in my pocket was not awesome, it's just the others weren't on top of their game.
You can say that about almost anything. I some of Windows success was down to poor execution on behalf of others as well. The rise of the first Sony Playstation was part good execution by Sony and part poor execution by their competitors.
> I went Apple for iPhone and Mac and learned that it is all marketing, like a beer with too much head, Apple is
Disagree. Maybe Apple's hardware and software isn't what you are looking for, but I personally love the Mac and would hate to use something else at home. I don't see how that proves anything. The Mac under the hood is a fully certified UNIX 03 system. It has a great community of third party developers (Panic, Omni etc.) and has all the big names on the platform too (Adobe, Microsoft). There's not much you can't do with a Mac.
I bought an iphone because I could go to the Carphone Warehouse store, hold it in my hand and use it. Most other phones are still sold using bullet-points and dead plastic facsimiles hanging on the wall.
Humiliating and sad!
All this is because Nokia despised non-proprietary software. When it came about freedom or death, Nokia picked up death. Let's hurry prying Ot software from their getting colder-and-colder hands before they move into history.
I will lay my idiotically designed E62 phone on their corporate grave.
...but i think the longer term purpose is for these two to merge. HTC and the others will anyway drop Win completely in favour of android, and so Nokia will be able to leverage and demand influence in the development of the Win Mob OS. In effect it will be their OS, just that someone else will be paying for its development...until they merge completely.
I think a lot of people are going to be surprised about this one. In 3 years they will be definitely top 3.
MS has had years to perfect a Mobile OS and has failed; why should not be any different? Nokia has also had bad luck the past several years getting software perfected, so they won't be much help.
Look at the last attempt from MS; Kin. WP7 is next of kin. I think MeeGo is being kept as a project just in case WP7 fails miserable and it will.
It ook around 7 weeks for 1.5 million handsets to be sold to carriers. At that rate, that is 11 million a year. in 2009, Nokia sold 67 million smartphones. in 2010, they sold over 100 million smartphones. During that time, Apple sold an addition 22 million. Nokia had sales growth between 2009 and 2010, Android just had more. Apple say stagnant sales between Q2 and Q3.
Two turkeys don't make an eagle
Merge? I fully expect that, in a few years, Nokia's shares to be worth so little that Ballmer will be able to buy Nokia outright with just the change he finds down the back of his sofa.
Interesting, the things that happen when you bring in a Microsoft man to head your company.
Who in their right mind would actually buy a WP7 device after Maemo/Symbian?
I am struggling to articulate exactly how sad this abject failure makes me.
Frying pan, burning platform, fire, ecosystem... it's all the same to me.
Naturally, I feared the worst when I read Elop's metaphor-laden speech/memo/bullshit, and short of a hostile takeover this is about the worst. Being told my Nokia that we should all "get excited" about the merger really isn't helping.
Windows? On my phone? A BSOD in my pocket? Malware? Reporting crashes and who-knows-what-else back to base?
What the hell was wrong with MeeGo/Symbian/Qt? (I mean technically - obviously the rudderless promotion & marketing was a big fat fail) Why put 98% of the work into the Linux-on-Nokia roadmap and then axe it? It's not just for geeks if it has a great user experience and apps that people actually want, but that is now quite impossible.
I love my N900 and I have no idea what my next phone will be. Probably another N900, but only because I don't know what else to buy. My brand loyalty (fanboy-ness, whatever) has evaporated. There were problems, certainly, but as many others have observed, Elop is fighting the fire with a big bucket of petrol which he bought from MSFT.
There aren't enough swear words, so I'll save them for my unfortunate nearby colleagues who have had to put up with me ranting all day.
Watch for the hostile takeover
Nokia is down over 13% and falling on the back of this. Dunno where it'll stabilise, but likely down even further.
They've effectively said that they aren't going to sell many devices in 2011-2012, because who is going to choose a device built on an OS that is going to vanish in a little over a year? Sure, they've a target of 150 million - but that's 1/4 less than last year.
So a 25% drop in revenue as a target, while going through large-scale redundancies with associated costs - and it seems pretty likely that it'll be worse than that...
They can't possibly get a WP7 device out at all this year, and unlikely until 3rd-quarter next year.
They've now lost all their 3rd-party developers who were learning Qt - and those who were using Qt elsewhere and thinking "hmm, we can port this to a mobile relatively easily..." and replaced them with the Windows Phone 7 devs. I'm afraid there aren't very many of those.
Finally, what happens to the 'desktop' Qt?
There isn't another commercial framework that gives us what Qt does - all three common OS platforms. We were paying Nokia a fair bit for this framework - but if Nokia cease development and support of it, then we'll switch to an LGPL fork (there will be one) along with everyone else using it.
And Nokia loses another revenue stream. Ok, probably not huge compared to phone hardware - but still, it's revenue they don't have to lose.
Loyalty? Er, not now, sorry Nokia.
I totally agree with the sentiment.
I love my old N95 and was going to go to a new N8 (I like Symbian despite it's faults and at least it's not iOS; none of the Android phones have grabbed my attention) but decided to wait on the announcement on the future OS before giving Nokia my cash. I too had a lot of loyalty (yes, fanboy-ness) to Nokia, but my loyalty to MS is in high negative numbers. Now I think I might wait for a little longer and check out the HP webOS phones instead.
I only need 1 swear word to describe my reaction to this from Nokia: "Elop".
Get the EU to investigate this
This is all really fishy...
It's all a scam
The real funny part is that the EU invested millions into Nokia (to further develop Symbian) last year. Now with this MSFT-cooporation that money will directly flow to the US. Probably to be divided between the chinese factories and the US CEO's.
Great move from MSFT. Steal millions from the EU through a Finnish back-door. At least now we know who's funding the US economy. While Europe drowns into a deeper recession.
Isn't it obvious. With Nokia out o/t way there's NO european phone OS/development anymore. The US now have the world leadership on smartphone OS's. Al that competition between Android, WP7 and iOS is just fake.
Already the same apps appear both on Android and iOS yet they don't on Symbian (which is supposedly the largest market). Why is that? Because it's "too difficult to develop for Symbian?". Come on! Soon Apps will appear on all major US phone OS's (Android, iOS, WP7) while the minor OS's will get some compatibility-layer (RIM) to run the android apps. But as usual that European one will be boycotted. Sorry folks, I've seen enough.
When people start blaming marketing I get suspicious. Nokia's number one problem is not marketing.
It sounds like you think denial is just a river in Africa. There are VERY real problems with MeeGo and Symbian for that matter.
And I don't think the url is particularly appropriate if implies what I think you are implying.
"They can't possibly get a WP7 device out at all this year,." The phone platforms can run just about any OS you'd care to try: Symbian, WP7, Android... dropping WP7 onto the phone should be pretty straightforward.
What they will lose are all their 3rd party developers. MS surely hopes that 3rd party developers are so wed to Nokia that they will crank out apps that will then be available for all WP7 phones.
Perhaps more likely is that any 3rdparty app developers will realise that now that Symbian has been torpedoed they need to find a new platform to work with. Expect more to go with iOS or Android.
Losing devs ACTIVELY
Not only that, but the word from various Nokia pronouncements is that Qt will not be supported on WP7 (no doubt by special orders from Redmond). So those developers who thought they could rely on Qt to navigate the twists and turns of Nokia's OS strategy have been shafted, and will probably rather develop for anything but MS-Nokia in the future.
There's a reason Nokia doesnt sell anymore...
... Es poo.
Yes, i'll get my coat.
The man I heard standing up and declaring to a conference (while a Compaq exec) that 'WiFi was the way to go - find out about it evryone' to a hall filled with delegates, all networked c/o ACM (I seem to remember) via their laptops and, yes 802.11. Technically, not very bright, but a good political player within the merged company.
Nokia Has a Passion For...Money
Others are passionate about their product. Just look at their price figures - anything non-retarded is more expensive than a full Taiwanese laptop with UMTS.
They have great, economic hardware, but don't give developers access to their holy C API.
Feel the creative destruction and succeed in a new company, Nokians. Companies like Trolltech, which you swallowed. Five proper engineers can create something which threatens the iPhone, but I don't think this army of 60000 can ever coordinate their action. Because they have approximately 59995 people too much on board, who will sabotage anything useful.
Fail properly and the R.I.P.
Day of Shame
For the employees and shareholders of this once great company this is is surely the ultimate day of shame.
A company that once sat on top of the mobile phone mountain. A company that sat on that summit and became mesmerised by it's own greatness and self congratulating satisfaction. A company that utterly and totally failed to respond to the game changing iPhone over a period of FOUR YEARS!
A company that now finds itself in such desperate straights and absence of ideas, leadership or inspiration that it has been forced to seek safe haven in the arms of Microsoft, who's own response to the iOS is clearly struggling to gain any traction.
"by the analysts' definition"
Interesting article, and while it's a small point, this phrase really jumped at me. It doesn't take much more than a passing interest in consumer trends and mobile technology to understand that quarterly figures showing that Nokia sells more smartphones than anyone else are grossly misstating the market. As you state, what may be 'smart' by the analysts' definition is far from it from a user - and manufacturer's profit - standpoint.
Good point, well made, and refreshing to see it addressed, rather than glossed over as is generally the case.
The Mighty Have Fallen
Clearly Nokia has forgotten who their customer is, and that got them in this predicament. Isn't free enterprise wonderful!
A Sad end...
I recall how bleeding edge the Nokia 6600 I had (my first S60 first gen device) was and then moving to an E61i (and a slew of other S60 devices between that) - which even though it had it's issues compared to my companies BB device it was acceptable as a personal/business single device.
When the iPhone came out what killed me EVER buying it was 1) First gen device was 2G; when I was already on a 3G network. 2) 2nd gen device was tied to ONE US network (at that time I moved back to the US) - I was NOT inclined to ever go back to AT&T 3) Near impossible Network/SIM unlock for the device - even if I went to AT&T I could not in a legit manner unlock the device to use a UK SIM or Australian SIM as a I travelled
I took a leap with an Android G1 just to see what it was all about and even though it was first gen hardware and had it's issues the OS feature set grew fairly quickly. At a pace S60 and Symbian NEVER matured to over time. A New S60 feature normally meant getting a new phone. With Apple now pushing the fact that OS's on phones change and they will backport to most devices - the writing was on the wall for "swap the phone for new sw features"
As a I got more entrenched to Android, I looked at features that were on my S60 devices upto 7 years earlier. What made Android shine though was the UI made sense for a touchscreen device and that I had device hw choices. I'm on a Nexus One device now and don't ever see how Nokia will ever bring me back to one of their devices EVER again. I've seen WP7 and it's quite good but with a whole slew of apps I'm used to only on IOS, Android and Palm - I fail to see how they will turn the tide.
MS would be better to just acquire Nokia and focus on WP7 in the same manner HP is focusing on WebOS for their devices. Give up the "we're licensing it ploy" and just develop your own handsets for your own OS. I'm very uncomfortable with Nokia putting their destiny with Microsoft - on an OS they have no rights to - other than being a licensee. If I was a Nokia shareholder I would demand a pull back from today's announcement or an all out effort for MS to acquire Nokia. Right now Nokia is stuck in the quicksand on smartphones; either sink or get pulled out.
Last time I felt with ce it was £3.50 a license for 1000 licenses a year. Winmo7 may be more but not near $55 surely?
3 quid 50?
That will just be fore the CE kernel and basic stuff. A full phone stack will cost you more than that.
I expect though that Nokia will get a really good deal because MS want to get that ecosystem of 3rd party develioers writing apps that will work on all WP7 phones.
Nokia was really sold
And the army of ex-Microsofties keeps coming in: now Chris Weber (ex-Microsoft VP of Enterprise sales) is appointed as President of Nokia Inc. (US).
This deal was really just Microsoft buying Nokia on the cheap and calling it a collaboration.. Less legal inconveniences too with those pesky regulators.
Qt is GPL and may survive
Hopefully Qt will get forked PDQ and will continue to be developed, although being GPL will be of less use (those seriously using it have commercial licenses).
Damn shame - Qt was just starting to look like a serious cross-platform development framework.
Handy for MS then
if it brings devs back to Visual Studio - Nokia's Qt IDE is a more than worthy competitor. I hope things turn out well for Qt in the end - maybe someone with more vision will buy it, it certainly deserves a better owner
Don't forget that if Nokia _do_ stop development on QT, the code is automatically released to the community under a BSD license.
@"Qt is GPL and may survive"
True its some kind of GPL, but what patents and other legal paperwork did Trolltech hold on Qt?. Which means what did Nokia get when they acquired Trolltech?.
So what would then happen if in say 2 or 3 years from now, a greatly reduced and shrinking Nokia was suddenly bought out. I don't know, like maybe someone like Microsoft!. At which point, Checkmate. Microsoft gets whatever legal assents Nokia holds on Qt!
After all Nokia's new boss is already turning Nokia into effectively a subsidiary of Microsoft and in the process wiping out potentially many thousands of software R&D jobs. Its a big price to pay for selling its soul to Microsoft. So Microsoft Assimilating what remains of Nokia in a few years from now would be the final icing on the cake as they say, and the cherry on top, is Qt handed over to Microsoft. Then Microsoft goes back after Linux again. :(
Thanks and Errorps
Thank you so much for this article (the best I have seen about this topic). As a Finn I can tell you that Finland will definitely be a different place after today (or, well, not right now but in about two months or so, once we know how many thousands of jobs will be lost). I would like to take this opportunity to thank Mr. Errorps for this great decision that (according to Microsoft's blog) he is so, so, very excited about.
All those people looking for jobs...
...will, hopefully, do some good. Many of them will be "institutionalised" and unable to work usefully again, but the more flexible ones will no doubt start or join some interesting startups. Similar things have happened after other corporate implosions. If I were about to start a new venture that needed some talent, I might be tempted to base it in FInland.
Re: All those people looking for jobs
I wonder if any of them will wander out with the N97 firmware source in his pocket and finally fix the f*ckin' thing whilst enjoying his unemployment just to prove Symbian can do it?
It's like watching...
...two enormous dinosaurs battle it out, whilst failing to notice that the world has moved on and they are no longer able to adapt and will soon be replaced by a more agile race.
Belive their own marketing hype
This is what happens to a company which starts believing in its own marketing and hype. Nokia, according to the analysts, was selling more smartphones than anyone else, so why change anything? A smartphone is a smartphone, right?
Except the source of the 'smartphone' definition is suspect. A smartphone is not a smartphone unless your marketing guys tell the analysts that it is, and it has a reasonable spec. If your marketing is good enough, the analysts will put underqualified phones (and that's what we're talking about, IMHO) in the most desired category, thus artificially inflating your 'market share' and pleasing the stock-holders.
But if you forget about this artificial inflation, there is great temptation to use it as an excuse to slack off on R&D, because (according to the analysts) you already own the market. Why innovate, it's expensive. And you get caught with your pants down, unable to innovate and compete effectively. Hmm, what does that remind me of??
Sorry Nokia, but I've switched loyalties to Android and no way will I ever stick a Windows anything in my pocket.
sounds good move...
Sounds like it is a good move in the short to medium term and depending on the licensing terms and the level of access to the source code.
As long as they invest money in the right areas in terms of R&D then it could be a good thing. Stephen Elop has said they want to invest more money in the low end (S40) to keep that market share and expand upon that by making phones for the next billion. I believe the previous management where trying to reduce investing in S40 which was a mistake. As long as they have a plan in place to invest in the next generation platform then that is a good thing.
Android on Nokia?
Surely all those talented engineers can come together and make programs that will allow porting of Android on to all the symbian S60 phones ?
It will reignite the passion for Nokia hardware and everyone wins. Will also breathe new life into the whole hardware ecosystems.
SURELy someone can do this.
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