Pundits this week are describing Nokia's fall from grace as one of the greatest corporate car-crashes of all time. But here's an unfashionable view. Nokia's problem is not Stephen Elop, or his strategy. Its problem is it didn't have Stephen Elop, or his strategy, in place two years ago. And while we are certainly watching a …
He did a Gerald Ratner. His message was : Our products are rubbish, I'm giving what we have developed away and we're going with Microsoft - this is so much better. If you are foolish enough to buy any of our higher priced, higher margin products today, you're buying an obsolete platform.
Yes, Nokia was in trouble before Elop arrived. This ex-Microsoft man has made a controversial but, for him, comfortable decision and rocked the boat. Alas, the boat may sink...
The boat was Sunk to start off with, this is a desperate attempt to re-float the good ship Nokia before it's dashed against the rocks of incompetent and lost forever.
Heartily agree, but...
I completely agree that Nokia's mess was started way pre-Elop, they needed a strategy for the smart-phone market that would compete with iOs and Android and they needed it two/three years ago (a decent UI on-top of Symbian would've made a difference even though Symbian was - and still is - flawed).
The thing is they now do have a strategy but it's arguably worse than simply doing nothing. Windows has never been a viable smart-phone OS. They've had two full goes at making something that will compete and both have failed to make any ground (despite the massive M$ marketing machine behind them).
Also, they're bringing it to market on the back of a platform that is, traditionally, anti-M$. Existing Nokia buyers aren't going to want to touch a Windows phone and the very few Windows devotees are going to be highly dubious of Nokia.
If I were Nokia I'd stay in the brace position for a little while yet, bottom is a long way away but acceleration will get them there soon.
Have you tried Windows Phone 7?
It's pretty bloody good. Forget everything you know about Windows Mobile, which was OK in the context of what they were trying to do, but crap in the context of phone operating systems.
Try and get hold of an HTC HD7, if you haven't seen one. It's a revelation, and I think Windows 8 next year is going to be quite something.
I'll carry on using my Android phones for now, though, having said all that.
I'm waiting to see ...
... what actually happens in the future. What I do know is that I'd have to go a long way to find anything worse than the very fragile Symbian OS on my Nokia 5230. I really wish I hadn't been loyal and stuck with Nokia this time - Android looks like a much more robust and flexible OS. However, even Windows looks like an improvement from where I am at the moment.
Whatever Nokia does, it is going to have to be significant if I'm to change my thoughts that an HTC will be my next phone.
If you understand "good" to mean "lots of gee-whiz eye-candy at the expense of battery life and practical features"... well, judging by the Android-loving masses out there, at least you'd be in good company...
As it stands now, WP7 is simply missing too many features compared to Symbian^3 (USB on-the-go, hot-swappable memory cards, "full" multitasking (not the current hobbled type WP7 now sports), to name a few), to make me even consider making my next smartphone a Nokia Windows Phone handset.
Perhaps these will come in time, and as far as I'm concerned, MS has lots of that, because the way things are panning out, I intend to run my Nokia N8 until it joins the choir invisible. Unless WP7's development follows a path inconsistent with 30+ years of Microsoft practice, my next handset will probably be an Android one, but only as the least worst option on offer.
"...obscure languages such as Russian, Japanese..." ?!
More people speak Russian and Japanese together that English I think (at least more than French or German certainly...)
Er yes, that was his point
Trying to demonstrate how slow MS are at developing products, when in the mobile market their competitors deliver faster, better.
Wonder if Elop will be given enough time to sort things out? I believe he will, and I believe WP7+ will be good enough to compete - almost tempted to buy stock and hold on for 3 years...
Yes, I could see the point...
... if really obscure languages such as Brazilian Portuguese and Finnish were not mentioned in the same breath...
WTF? No they don't. English is the most widely spoken language in the world by some margin. Mandarin is of course technically spoken by a larger number of people but they're mostly all in China, so as a language it is not remotely widespread. Same goes for Russian and Japanese. What matters is in how may countries a particular language is used regularly - English is spoken regularly in around 115 countries I believe. Compare that with regualr use of Russian (16 countries) and regular use of Japanese (1 country - er, Japan).
Brazilian is there because it is a massive emerging market for mobiles and Finnish for the narrowly missed irony of having a Nokia WinPho that none of the devs could read.
I did not mean speak somehow, but use as a 1st language...
...and I did have doubts about English if you read my post carefully...
It. Was. Irony.
No actual body required.
Ever heard of the Internet?
It's a great place for fact checking.
Here's a few fun facts you could have found with the help of a simple search engine:
200 million people speak Brazilian Portuguese as a first language.
150 million speak Russian as a first language.
130 million people speak Japanese as a first language.
375 million people speak English as a first language.
150 milllion + 130 million = 280 million which is less than 375 million.
Even can use it...
... http://en.wikipedia.org/wiki/Russian_language: primary language for 175 million (instead your quote, did not bother to check the rest...) It is internet, dude: take it with a pinch of salt :)
So your still wrong
375 million > 305 million
Indeed Nokia started digging their grave 2002 onwards.
Their Mobile division despite being the world leader was doomed.
strawman arguments as usual
Nokia was certainly in trouble before Elop. But it wasn't dead, it took Elop to actually kill the company instead of curing it.
Right now it's a zombie heading inexorably toward total Microsoft control then ownership. Nokia as a company is dead. In Microsoft's hands Nokia the brand is tarnished and dying.
Re: strawman arguments as usual
It's too early to tell if Nokia is out of the game completely, by about 18-24 months. The operators will rally around whatever Nokia has to offer next spring & summer. We'll then see how the market reacts, and after that, know if Nokia can make real money on those devices.
The criticism that Elop announced the deal prematurely has a lot of merit, and I said so at the time. I'm sure Elop would have preferred to have had teams working on WP, so he could wave a real working prototype around when the deal was announced.
But he didn't have the luxury of time. He was bequeathed an empty product pipeline. My contention is that Nokia's sales would be in the tank if it hadn't announced a new platform strategy.
@ Andrew Orlowski...
Ok, let me see if I have this straight.
"The criticism that Elop announced the deal prematurely has a lot of merit, and I said so at the time. I'm sure Elop would have preferred to have had teams working on WP, so he could wave a real working prototype around when the deal was announced."
As part of this deal, Nokia gets 1 Billion dollars. Ok. When do they get it? When they inked the deal?
Now I don't know about you, but transferring a billion dollars would be considered a material event, right?
Not to mention the deal itself would be considered a material event.
For those who live outside of the US, both NOK and MSFT are traded on NASDAQ so there's this thing called 'Rule FD'....
It seems that a lot of the 'bloggers' who are calling for NOK's impending doom or MSFT doing a buy out are reading too much in to what's been said.
Conspiracy theory? I think not.
Operators have already counted out RIM?
Analysts and IT journalists may have (with that same 'unerring accuracy' that they've shown over just about anything else in the mobile computing arena in recent years), but operators still seem keen on RIM, and with just cause, I'd say.
All the kids...
... want Blackberries.
And most of the ones I see seem to have them. I also see a lot of flyers coming through the door advertising deals form them. There's no 'counting out' of RIM round here. He' talking out of his a*se.
Actually from my personal experience with talking to kids is that *most* kids want iPhones or failing that a fancy Android. Very few want blackberries. The only ones I know with them actually got them because they were on really cheap contracts, and still want iPhones.
This is in the UK, from my daughters groups of friends/family. Obviously this will be different in different markets/schools/etc.
RIM is as doomed as Nokia is. Consumer sales are falling fast in the face of iPhones and Android. And I have to say that it's a pretty horrible user experience on a BlackBerry, even though it has some sound underpinnings. The tablet thing they did isn't going very well either.
At least Nokia is taking the leap off the burning platform. I'm not sure RIM knows what to do.. but where Nokia is now, RIM will probably find itself in 12-24 months time.
All my nieces and nephews (I am not a parent) who are between 17 and 25, have traded their iPhones and Android devices for Blackberries, as have most of their friends. I certainly know one of my nieces, some time ago, changed her phone to that phone on 'The Hills' (I think that was the show) - which was a Blackberry.
Interesting......... because I believe it shows that there are as many preferences as their are devices out there. The problem for Nokia is my girlfriend, who has an 8 year old Nokia and won't change it because it works. Nokia will get no business from her until that phone totally dies, by which time I am not sure Nokia will be about..........
I only know kids in the UK, but of them, only two have Blackberries, bought for them by their parents, and they hate them. Of the others, the objects of desire seems more or less equally split between Apple and Android.
I think Elop took the only path available to him and Nokia. Whether they survive remains to be seen, but it's certain they would have died with MeeGo as their party trick.
Better check the numbers
In 2009 Nokia sold 67 million smartphones that were Symbian based. in 2010 they sold 100 million; so 33 million more. Their net increase was 10 million MORE then Apple.
How is increasing your sales a burning platform? Sure Nokia lost market share, but they still increased sales.
Blackberry Instant Messaging
Da yoof want Blackberries because they all communicate through Blackberry Instant Messaging which they get free. Texting and dataplans cost. Blackberry IM is thrown in with their deals.
What would Nokia's situation be today if everything was the same, except for Elop not announcing the move to WinPho?
Maybe it's harder to keep a secret in Nokia than it is in Apple, but he wouldn't have Osbourned Symbian quite so much...
Elop is not the problem
Elop is not the problem. Elop is the solution.
Pre-Elop, Nokia was doomed. This was clearly obvious to anybody with an ounce of knowledge about the mobile phone market. The problem is that the market did not realise just what a deep hole Nokia was in, so when the truth was admitted by Nokia then shareholders (who did not really understand the market) dumped stock in a panic.
Elop's approach has been pretty brutal and blunt, but then in order to get the business fully behind Windows then these things have to be done. Pussyfooting about will only take longer.
So, Nokia's gamble (and be in no doubt that it IS a gamble) is that the new "Windows plus the next billion" strategy will work and turn it around. But that's a better position to be in than the agonisingly slow death scenario that they were already in.
(I think we need a Stephen Elop icon at this rate)
Re: Elop is not the problem
"The problem is that the market did not realise just what a deep hole Nokia was in, so when the truth was admitted by Nokia then shareholders (who did not really understand the market) dumped stock in a panic."
Excuse me, but "the market did not realise just what a deep hole" a publicly listed company was in, whose financials have to be stated every quarter and whose sales are widely reported, and whose strategy was increasingly in question every quarter as no response to the iPhone was forthcoming? Are you serious?!
The reason why shareholders dumped the stock was because you have a guy walk in as CEO and do the equivalent of saying, "This big balloon thing is wasting a lot of gas, and that ostrich just told me that we can do without it, so let's slash these ropes!" To be more literal: instead of actually dealing with the company's problems, the CEO takes the superficial approach and perpetuates the "software is an assembly line" delusion by doing an org. chart widget swap while keeping all the make-work management idiots and yes-men.
"So, Nokia's gamble (and be in no doubt that it IS a gamble) is that the new "Windows plus the next billion" strategy will work and turn it around. But that's a better position to be in than the agonisingly slow death scenario that they were already in."
That's why the share price agrees with you. Oh wait, it doesn't!
Difference with 90s Apple
I think there are some key differences with Apple in the 90s and Nokia now:
1) Apple made both hardware and OS, so were in charge of their own destiny.
2) Apple had a hardcore of followers who would buy their new kit irrespective of current reputation.
3) Apple were pretty lean still from an organisation perspective
4) Apple's competitors at the time were less formidable (no Google, PC makers were beginning to be squeezed on margin, so not massively profitable themselves, etc.)
And probably some others that I can't think of.
One more difference
Apple got out of its funk by abandoning the existing software platform, bringing in external management and merging in an external development team, then segueing into a brand new market and then several other new markets.
Nokia already switched management and are outsourcing a large part of the software stack. But they're effectively ceding a significant part of their destiny, something Apple have always managed to avoid.
That said, I agree with the article. Nokia's nothing like finished, its old strategy was on a crash course long before Elop turned up, and the platform switch gamble is the only workable way forwards. You can argue about the decision to use Windows Mobile versus other comers, but its hardly the most significant of his decisions.
Also most of Apples competition was actually crap at the time.
Windows wasn't great - but was starting to be 'good enough' and being cheaper meant it would spread faster etc.
RichyS, I worked at Apple from just before the NeXT reverse-takeover, to just after the iPod came out, and your recollection doesn't match mine at all. The Pre-97 Apple was sprawling, un-focussed, had a major R&D effort that was going to go nowhere, and couldn't market its products.
I will give you point 1. And point 2 is famously true (in my time there, there was an celebrated market-research report that suggested there was a 5% core of the Apple customer base that would buy ANYTHING the company produced, regardless of what it was).
On the other hand, you can't discount Nokia's brand image either. There are parts of the world where Nokia are still undisputed brand leaders including markets like India and China which dwarf EU and US. Visit some mobile-phone websites, and there will be many Nokia fans, just as irrational and deluded as Apple fanbois.
On "pretty lean still from an organisation perspective", I can't agree. Apple was grossly inefficient and overstaffed in the mid 1990s, and in terms of revenues it was doing far worse than Nokia. The losses in 1996 alone were colossal, and nearly closed the company.
I can only really speak about software, because that's what I was in, but while there was some good R&D work done at this time, the majority was wasted dead-end projects like AppleLink, PowerTalk, QuickDraw GX, the entire Newton product line, Pippin, the first Apple TV Set-Top Box (brought to production casing, then canned)... and let's not dwell on OS8/Copland, the most costly software project in the industry at the time. The big staff reductions happened in 1999-2000, after Apple's recovery had begun. While they may be lean now, they weren't then.
In hardware and manufacturing, Nokia are still more efficient - Jobs himself has stated that Nokia are matchless in their supply-chain, logistics and manufacturing. They may suck at software, but they excel in making phones.
And Apple's competition was good, very good. Dell were able to push out PCs at a fraction of the cost that Apple could, and they made mincemeat of Apple's traditional strongholds in Education and Science - sure, the quality wasn't as good, but with a free replacement unit delivered in 24 hours, who cared? In software, Microsoft had a scalable, robust OS with preemptive multi-tasking and protected memory in the form of Windows NT at a time when Apple's System 7.5 could seize up completely if just one app got too busy to call WaitNextEvent() The hot new things at the time were Java and the Web, and Macs had poor support for either: You might think IE is a lousy browser, but it wasn't in 1997/1998. Plus, Microsoft had a monopoly in productivity software, and by refusing to confirm ongoing support for Office on Macs, they were dragging the last of Apple's corporate customers away.
Add to this a bewildering range of products, where people didn't know which were the "good" models, and which were the "economy" ones, marketing campaigns based on feelgood rather than telling people why they might want the product, and an inability to get any significant R&D work out the door, and there's a lot in common. The one big difference is that Nokia is still turning profits, whereas Apple were running on red ink for a long time.
I don't know what's happening within Nokia, but I can tell you that nobody working in Apple in the mid/late 1990s knew where they'd be working 12 months ahead - the company was on a death watch, constantly referred to as "beleaguered computer maker Apple", and nobody gave it a chance until the iMac started to make serious inroads into the home market in 1999/2000.
MeeGo/Maemo was the Apple moment
When Apple hired SJobs, he came with NeXT, something so portable that it could even run on Windows NT. For some reasons, other ports were cancelled and they concentrated on making that the future OS. It was amazingly smooth transform starting with the Carbon framework and "fat" binaries, virtual macos.
What this genius did is not different from Apple asking Windows NT for Apple computers and asking all userbase and developers follow it. It is such an insane and stupid idea that my english isn't enough to describe it.
I just can't handle amateur media/bloggers who have never, ever used a full Symbian handset and think the people using Symbian will move to Windows.
As a last note: If you check Mr. Orlowski's stories from the beginning, you wonder what would happen if Nokia listened to him and very rare other mobile watchers?
Start with reading Ovi Store story and I am sure couple of geniuses who are STILL impressed by numbers will defend Nokia. I can't freaking format my phone as the apps will need manual support to get reinstalled.
Excellent post Kristian
I remember (from the outside) what you have written. Nice summary.
NeXT Step is Mach, a unix micro kernel developed at CMU.
Its an OS that can't run on other OSs although you could probably put an emulator on another platform.
You port it to the hardware not to another OS.
I think you're confused by the fact that the slabs were running on Moto chips and the OS was ported to Intel. (Last things done before Apple brought Steve back.)
When Jobs went back to Apple, they bought and brought NeXT back in house which became the core of the Mac's OS X.
With respect to Nokia...
Until the dust settles you won't know anything.
NeXT can run on any kernel
I can understand your confusion but trust me, NeXT is a collection of frameworks and a development style. In fact, even developers aren't aware of this so they are confused when you show them couple of GNUStep/OpenStep apps which are compiled from exact same source and can run on OS X, Windows and Linux/BSD.
Some people hate SJobs for "prisoning" it to Macs. Funny is, Apple's software on Windows (except iTunes) are somehow developed with exact same philosophy. First versions of Safari for Windows shows this more obviously.
Seek web for openstep, it was the most close thing to the original NeXTstep idea.
OS X on Intel wasn't really some super secret thing, everyone knew OS X could run on any platform. Funny that Apple can release OS X for Windows today, they choose Mach, not because it is a requirement, it is better for their needs and development style. Give "openstep" a modern kernel that can handle its calls, it will still run.
Re: @llgaz Huh?
"NeXT Step is Mach, a unix micro kernel developed at CMU."
Actually, NeXTSTEP is Mach plus BSD technology.
"Its an OS that can't run on other OSs although you could probably put an emulator on another platform. You port it to the hardware not to another OS."
What the commenter is referring to is OPENSTEP which formed the basis of NeXT's strategy after the company realised it couldn't compete either with its own hardware offerings or by trying to get manufacturers to bundle NeXTSTEP.
The Nokia angle involves Qt: the idea was to have a platform-independent toolkit (like OPENSTEP) in order to have some flexibility over the underlying technology and to transition away from Symbian for some models. Elop has more or less thrown that lifeline away.
Re: MeeGo/Maemo was the Apple moment
Don't confuse analysis with strategy
I read with interest Stephen Elop's famous speech. I agreed with his observations regarding competitors and his 'burning deck' story was a good way to motivate the troops. However, I am worried by his strategy.
I am a happy Nokia customer, having bought a variety of their phones over the years. I am also an unhappy Microsoft customer, having been given a variety of Windows Mobile phones by employers. I am unhappy because of errors and inconsistencies in their user interface design.
Nokia's products may seem old-fashioned but they are reasonably intuitive. Recently my 13 year old son asked if he could downgrade from a smartphone I had given him to a simpler Nokia, which he found easier to use.
Consequently, when I come to replace his phone one of my requirements is that the replacement must NOT be compatible with Windows Mobile. Similarly for my wife's phone - also a Nokia.
If Mr Elop's strategy is to adopt Windows Mobile then he loses me as a customer. Choosing to annoy existing satisfied customers does not strike me as a good strategy.
The dumping of Symbian cost Nokia 4 sales in my family alone since just before xmas.
We DONT want windows. We cant buy into Sybian without a certain future
Elop pushed us onto Android,
It may not be a trendy school of thought amongst analyst types, and inconvenient for the tone of this article but the cold hard fact amongst those I know is Nokia are now a no-no for the reasons stated above.
RIP once trusted brand
It's not Windows Mobile
That, I suspect, is the biggest problem Nokia's going to have.
It's not Windows Mobile. It's nothing like Windows Mobile. Not even remotely similar.
In the same way that the iPad is not the Apple Newton, this is a whole new ballgame. And the weird part is, it's a pretty fun game to play.
I'm actually convinced that Nokia phones had a strong influence on WP7's design. Not the modern Symbian crop but the old 6310 vintage. Back when EVERYONE had a Nokia phone, it was because they were so amazingly simple to navigate and use, as opposed to, for example, Motorola's horrific attempts at a UI.
WP7 is like that.
What about calling it smart phone?
Go to Ovi App store site, pick a popular handset like N8 or as it is still new, E72. See the tools offered? Utilities? Sports Tracker? Browsers like Opera Mobile which I use right now on a remote village with EDGE?
None of them will ship for Windows Phone as their "code in our failed flash killer" really doesn't work for large software developers or anyone into complex software. These guys doesn't do "10 print "Opera"" jokes.
So, all Symbian/Nokia guys either move to Android or iPhone. People using their smart phone as a feature phone? That is covered too, RIM Blackberry.
WP7 != Windows Mobile 6.X
You do realize that the OS Nokia is moving to is as different from Windows Mobile as Windows 7 is from Windows 98 or C#/.NET are from VBScript?
Thanks captain anecdotal...
well if your fam doesn't want them then that must be it. 4 whole data points. Thanks captain anecdotal...
check a site
http://www.psiloc.com , that is Poland's legendary smart phone development company who does even code something that uses your phones infrared to transform your device to the ultimate smart infra remote.
See their products of that kind are only available for Windows Mobile (poo, a real mobile os) and Symbian since they aren't possible on Windows 7 phone.
Funny is, I am also a Windows 7 desktop owner and I feel sad for that branding. It has absolutely nothing to do with "real" Windows 7. Windows mobile 6.x was the way to go, with modern UI and .NET portable.
..'cept I bought a Blackberry (which REALLY does comms!) rather than that half-finished Android crap.
Elop set fire to the platform
Nokia's existing platform was probably shaky, but it looked strong to outsiders (and undoubtedly still has many strengths). That perception - whether justified or not - was critical to Nokia's ongoing performance. Then Elop stepped up and announced to the world that Nokia was a 'burning platform' to be leapt away from as soon as possible. And - surprise, surprise - everyone is doing just that.
If the problems were really so grave, the transition should still have been done but presented as just one strategy among many, as if to compliment their existing lines. But no, Elop burned the whole lot in one fell swoop and destroyed any strength or credibility that remained (and I think it was considerable).
By way of contrast, look what Steve Jobs did when he returned to Apple. The classic Mac OS was a burning platform, but he didn't announce this to the world. No, he kept the market and existing customers on board whilst carrying out radical surgery behind closed doors. Apple was still a good company, and Jobs leveraged that strength to rebuild. Nokia is also a good company - but Elop has publicly and irreversibly trashed it in the eyes of the world.
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