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back to article Nokia's phone division burned us so badly we HAD to flog it, says CEO

Nokia’s smartphone strategy was unaffordable, the company’s chairman said at an extraordinary general meeting today, defending the €5.44bn sale of the phones division to Microsoft. Nokia had called the EGM to seek shareholder approval for the deal. The EGM drew a far larger crowd to the Helsinki Ice Hall than was usual, some 5, …

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Bronze badge

Ah, but why did they sell the dumb phones?

Nokia still had the best logistics and solid market share with the S40 phones. They should have kept that bit

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Re: Ah, but why did they sell the dumb phones?

When the competition arrived with something else, more desirable to the masses (note I don't say better), the massive portfolio of Nokia phones became a liability not an asset.

They simply couldn't get past the mindset that brought those early phones to market. I was enamoured enough with a Nokia Internet Tablet (the N770?) in 2007 to buy one & while it was 'fun', it really didn't have a serious use as the software was left to the opensource community. Everything just fizzled out when an application became near usable. I recall they also built a netbook, while pretty in a MacBook sort of way, it was underspec'ed and overpriced.

A disaster of under commitment to some really good ideas.

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Re: Ah, but why did they sell the dumb phones?

Read the quarterly reports, the phone volumes have been dropping in all segments.

S40 has also struggled massively with market share and revenue inspite of the overall market growth.

Q3 2011 Non smartphone volume 89.8 million av. sales price €32

Q3 2013 Non smartphone volume 55.8 million av. sales price €27

Landfill Android ---just sayin' ...

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Re: Ah, but why did they sell the dumb phones?

What's more of a question is "Why do they still make dumb phones?"

Ten years ago dumb phones were still profitable. But now? Margins are razor thin and everyone and their dog is in the game. Huawei et al might still make a profit out of them but Nokia probably can't feed many expensive European engineers just on dumbphones.

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Anonymous Coward

Re: Ah, but why did they sell the dumb phones?

The dumbphone business was declining.

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Silver badge

Re: Ah, but why did they sell the dumb phones?

My old man just bought a Samsung dumb phone outright for the princely sum of A$29. I think it might be network locked but still . . . .

Nokia can't make money at that price point.

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Re: Ah, but why did they sell the dumb phones?

"Nokia’s smartphone strategy was unaffordable"

Erm - but Nokia were on target to make a profit on that business this quarter?

Windows Phone now has nearly 12% market share in the EU top 5 including the UK....

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Re: Ah, but why did they sell the dumb phones?

Nokia went from 40+% *worldwide* to a measly 12% … and you call that affordable? I don't think that's affordable at all.

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Windows

Watching the news on YLE (Fin. BBC) as I write.

Nokia down 2%, disinct sense of melancholy. Sale approved.

http://yle.fi/uutiset/nokia_shareholder_meeting_expected_to_seal_microsoft_deal/6942778

Helsingin Sanomat (newspaper) quote:

"Siilasmaa: Emme tee mitään typerää ja hätiköityä" (We don't do anything stupid or rash")

Yeah? Really?? Elop???

History now, sunshine.

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Re: Watching the news on YLE (Fin. BBC) as I write.

"Nokia down 2%, disinct sense of melancholy. Sale approved."

I think the biggest tragedy is that Nokia only made $5.4bn for the phone business. There was only one buyer in town, admittedly, but that buyer has at least $60bn in cash, and the Nokia phones business was the only option. Had Nokia shut down the phone, business, it would have been the end for WP.

If Nokia had been smarter, they should have got a lot more for that business.

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Marketshare

While WP may have a marketshare of ~ 10% in some areas, worldwide the marketshare is 3.6% - the same as what Windows Mobile + Windows Phone had a couple of years ago.

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Anonymous Coward

Re: Marketshare

Yeah, but it is a bit of a bigger market now than it was two years ago.....

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Anonymous Coward

Re: Marketshare

"the marketshare is 3.6%"

But now growing at over 150% a year....

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WTF?

How the fcuk...

can Nokia get it so wrong??

'We have the phone market sown up, ah crap we just flushed it down the toilet.'

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Re: How the fcuk...

I'm sure Novell, WordPerfect, Ashton Tate, et al would like to know the answer to that question too...

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Re: How the fcuk...

@Longrod - "How the fcuk... can Nokia get it so wrong??"

Well, they had a choice - go with the system that's going to garner 81% of the worldwide market share within a couple of years (Android), or go with the one that's going to be stuck on 3.6% market share (Win).

They made their choice.

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Re: How the fcuk...

"going to garner 81% of the worldwide market share within a couple of years (Android), or go with the one that's going to be stuck on 3.6% market share (Win)."

You're mistaking O/S with manufacturer.

I've bought a Lumia, so has my wife. They feel like a distinct upgrade from Android and are far better value. I don't believe we're alone in this. It's been a pleasure to leave behind the tat-filled malware bazaar that is the Play Store - like Poundland with pickpockets.

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Re: How the fcuk...

Cool, How is that instagram app working for you?

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Anonymous Coward

Re: How the fcuk...

"I'm sure Novell, WordPerfect, Ashton Tate, et al would like to know the answer to that question too..."

Blackberry too....

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Gadgets?

Most growth and effort appears to be in the smartphone / tablet market. In general, people just don't want to carry around yet another damn device, just to do what an existing device can largely do. Hence the plummeting sales of compact camera, audio players and satellite navigation devices. I'm not saying that a discrete product specialised for a task won't be better than a more general device that can also do it, just that for many people the combined version is good enough these days.

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HERE for Android?

I wonder if this could mean that they'll consider a HERE maps Android app, if that bit is still owned by Nokia. That's something I'd consider buying if they could sell it for a reasonable price. Nokia maps is something I miss from my Symbian-powered N8 - downloadable maps, and better driving navigation than google maps (I don't need nav software very often, but whenever I do I seem to get misdirected by google maps at least once per journey - never had a problem with Nokia maps).

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Re: HERE for Android?

There has been a beta version around for a while. I just wish they would hurry up with the full app, I an sick of Google's unverified mapping solution and Apple's is just a joke.

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Unaffordable or obviously doomed to failure?

My guess is the latter.

There is no doubt Nokia was rudderless and needed a serious internal reorg. But going with Microsoft made as much sense as someone asking a mental patient to shave their balls.

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Anonymous Coward

Cameras?

Perhaps Nokia has plans in the camera industry. The Sony QX series are interesting but too bulky and expensive for most people. An add-on camera with their high-Mpx and image processing technology would be interesting, or, to rephrase that slightly, I'd like to have one without a Windows phone attached.

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Anonymous Coward

Re: Cameras?

Interesting idea. I wonder if their camera people went with the phone people or not. If not, it frees them up to sell camera stuff to Apple and Android vendors.

That being said, as good as the reviews are of their PureView stuff, I'm not sure I'd prefer it over my iPhone's camera. According to all the reviews I've read, the PureView cameras have a huge advantage in resolution (obviously) but otherwise Apple+Sony seem to have a small advantage in every other aspect of picture taking--metering, white balance, autofocus, SPEED, size (no lumps), etc. I recall seeing a photography web site that claimed to do objective analysis of many aspects of cell phone camera performance and the 5S edged out even the 1020.

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Re: Cameras?

I wonder if their camera people went with the phone people or not.

Sadly yes the camera people did go with the phone people to Microsoft.

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Anonymous Coward

Re: Cameras?

"Sadly yes the camera people did go with the phone people to Microsoft."

That's a good thing. Microsoft will leverage this technology in a far wider range of devices than Nokia ever would have...The next Kinect will probably be 41MP....

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Windows

Is that the end of that fuc*king irritating Nokia tune?

Or will it be replaced by the Windows 'fanfare'?

Shudder.

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android......if only....

If only they had switched to android. Nokia do make nice hardware.

And I bet they used that android threat to get the price of the sale up too. Microsoft would have known it was game over for windows phone if they had gone android.

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Anonymous Coward

Re: android......if only....

The only reason Elop was put in there, was to stop Nokia making the obvious choice of adopting Android. The resulting destruction of their shareprice and eventual sale to Microsoft was the cherry on the cake. But slowing Android dominance was the primary goal.

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Anonymous Coward

Re: android......if only....

"Nokia do make nice hardware."

And in the decade and more I've been using their phones (6210 and onward, starting 2000) they've mostly been pretty decent phones too, software included. In fact the whole "user experience" thing (before it was called UX).

The 6600 (from 2003) was a bit of a disappointment, but they recovered again afterwards. My E71 still does what I need from a phone with benefits, it also runs TomTom Mobile (unsupported but it mostly works) and Nokia Maps and even Google Maps. Can't get Symbian VNC working again, but that was only for fun anyway so I haven't tried all that hard.

Transferring those skills beyond Symbian (maybe to Android) would have been a good plan. But someone had other plans...

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kb

Re: android......if only....

Riiight...lets just drive a stake through the magical thinking that Android could save Nokia, shall we? This is about crackberry but the math applies equally to Nokia and shows the odds that Android could have saved Nokia? Virtually zip.

http://www.zdnet.com/should-blackberry-have-gone-android-the-answer-is-no-and-these-numbers-show-why-7000019409/

As to WHY Nokia went the way thy did the answer is simple...bad management. Like Palm before them when they had the lead instead of continuing to build upon what they had and reach for new markets they simply kept pushing the snooze button and making the same device over and over AND OVER until they were as out of date as an 8-track player.

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Anonymous Coward

Re: android......if only....

"If only they had switched to android. Nokia do make nice hardware."

No money to be made there really - the Android market is saturated.

Windows Phone is far more suited to high value markets like enterprises and high end handsets than Android is and was therefore the better long term choice...

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Anonymous Coward

Re: android......if only....

If you want to know why Nokia/Symbian failed - look at the Xpressmusic 5800, put it next to an iPhone of the same time.

Technically it should have been a better phone, but the build quality was rubbish, the materials used to build it were rubbish, it had a resistive touchscreen as soft as butter, Symbian (despite what people remember) was at the end of its capabilities, it needed a total overhaul. The iPhone was smart, the software slick, iOS was at the start of its life, the whole package oozed quality (and I don't like iPhones). Nokia just seemed to presume that if you bulid it people will come, and they stopped coming. That was when I stopped buying Nokia.

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Re: android......if only....

> Windows Phone is far more suited to high value markets like enterprises and high end handsets than Android is and was therefore the better long term choice...

Unfortunately, in spite of $billions from Microsoft, they had to be sold at a loss in order to get any market share at all. The 'long term choice' turned out to be a short term disaster requiring even more $billions from MS to take it over and make even more losses.

WP7 certainly was _not_ suited to 'high value' as it was based on CE and was the last of the 90s era devices. The high end of the Lumia range may be 'high value' but are not distinctive enough from the 'bargain binned' low priced models. All WP phones look the same on the screen (deliberately), all Lumia are bright colors (or possibly anonymous black).

If the top end looks just like last year's model in the bargain bin then it has no 'bragging rights' (which is why most new phones are bought anyway).

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Ahem...

"Those surprising gizmos just wouldn’t be mobile phones."

That's a big assumption. There isn't anything stopping them making phones again in two years time. I forgot where it was said but I'm sure someone can fill in that information.

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Re: Ahem...

The all new Nokia smartwatch, oh and it can make phone calls too....

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Nokia was good while

it lasted but such a shame they will be bye-bye in 2 or 3 years time

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Bronze badge

Considering that Nokia hasn't always made phones and has dramatically switched their business interests in the past, I can't say I'm surprised. Nokia made monumental mistakes as El Reg has documented, and having the phone division go Windows allowed them to get rid of the business and allowed the former MeeGo (which is still a damn stupid name, Sailfish is a much better one) developers to truly innovate as Jolla is demonstrating. To be fair, Symbian was a dead end, Android still isn't at all as good as it could be on phones and as bad at updating (at least in the US) as Nokia already was with their feature phones they probably would have made the landfill Android manufacturers look good at keeping their shit updated, Apple won't license iOS, so Windows was the most ready and least bad in a very bad situation. Had Canonical had their Ubuntu phone OS ready, chances are Nokia would have gone for that instead, but they didn't. Its a shame, it really is, but Nokia only has their management to blame for their failure.

Blaming MS for acting like a vulture and picking over the Nokia phone division's corpse is disingenuous, had Google not had designs on Motorola I'd bet quite a bit that they would have done it as well, as any sane tech company with enough money to burn seeking space in the mobile market for a platform would have done. Symbian development and by extension Nokia Management had become legendary in their ineptitude, and they killed everything that could have saved them willingly.

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Windows

Funny, my limited Finnish has two meanings for "Jolla"

It's one of the 'jo-' words. Like 'jossa' - 'in which'.

I think Jolla chose carefully. A dinghy, to rescue from the burning platform, or..

Jolla - 'by means of which', 'whereby'...

Clever. Please, any native Finns check this out.

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Anonymous Coward

The Captain of the Titanic never stepped off the deck to take command of another vessel. He paid for his mistake and went down with the ship.

Look to him as an example Mr. Elop. Take your 25 mil and just go...

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Anonymous Coward

Wait.... there's still work for Elop to do

If he can just do the same to Microsoft as the magical transformation he has wrought on Nokia, it would be poetic justice.

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Unhappy

Re: Wait.... there's still work for Elop to do

You seem to have forgotten where he came from. Wiki tells us "During the 3 years Elop was Nokia CEO, Nokia revenues fell 40%, Nokia profits fell 95%, Nokia market share collapsed in smartphones from 34% to 3.4%, Nokia's credit rating went from A to junk, Nokia's share price dropped 60% in value and Nokia's market capitalization lost 13 Billion dollars in value."

Having completed Part A, the phone business (target of the masterplan) becomes nice and cheap - especially as only one buyer is interested - so M$ save themselves several billion on the purchase.

And now, the Trojan Horse returns to the mothership with a top position, huge salary and quite probably a generous 'welcome package'.

It reads like a Jeffrey Archer story - if it wasn't true you'd never believe it.

Nokia shareholders must be delighted to have seen their investment wiped out by this chicanery.

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Re: Wait.... there's still work for Elop to do

"if it wasn't true you'd never believe it."

The telephone was ringing

That's when I handed it to Liz

She said "This isn't who it would be

If it wasn't who it is"

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Never mind

You can still buy as many Nokia snow tyres and wellington boots as you can take away.

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PaulR79 the limit on stopping them making phones is in a number of the September articles when the deal was announced, one here

http://www.zdnet.com/despite-the-microsoft-takeover-whats-left-of-nokia-can-still-make-mobile-phones-and-soon-7000020214/

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Hola Jolla

Just a thought, two years is not a long time, Jolla is filled with ex-Nokia staff and funded by who exactly? Could we see Nokia buying Jolla in two years if it turns out they are succesfull?

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Re: Could we see Nokia buying Jolla in two years...

Sure, just one small problem...

Buy it with what? As far as I can see, Nokia still haven't solved their profitability problem. We can gripe all we want to about Microsoft/Apple/Google, but at the end of the day they are raking in the bucks and can afford to buy other successful businesses. Nokia aren't and don't look to be.

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A common failing.

The problems at Nokia are common for companies in a dominant market position. Read "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail" by Clayton M Christensen for an analysis of the problem. The position of Nokia a few years ago was classic. They had lots of R&D activities focused on the future with several competing directions, a management unsure which way to turn and an existing cash cow delivering an ever-decreasing cash flow. I would expect that the sales team, under pressure to sell what they had at the time, were less than helpful in deciding which way the development should go. With a lot of experience of the old technology they probably found it hard to focus on what to build in the swamp when up to their..... Anyway, you get the drift.

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Nokia are MUPPETS

Circa 2006 a friend of mine and I offered them a system roughly equivalent to WhatsApp for J2ME phones. We were open to all sorts of business ideas from joint venture to Nokia buying our technology.

But you know what ? The answer was something like "we don't want to offend the network operators and they rely on SMS revenue. Your invention could threaten this business as a message costs 0.1 cent over TCP/IP. It's a nice idea, but we unfortunately don't want to touch it"

Plus, their J2ME runtime on the 6030 was simply shite and they did never bother to provide proper patches/updates. They even wanted MONEY for updates. Siemens and Samsung had even shittier J2ME phones, though. It looks as if Samsung has learned something, though.

All Nokia wanted was the immediate sale and then forget their product and their customers.

So, good riddance, you deserve to be garbage-collected by the free enterprise system.

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