Flops mission is complete.
Blamer sends his thanks.
The Finnish Prime Minister Jyrki Katainen has ruled out any government rescue package for ailing Nokia, saying the company is on its own. If any Finnish company is too big to fail, it would have been Nokia. At its height, the company was responsible for a quarter of all Finnish exports and accounted for nearly 5 per cent of …
OK - this is what I don't get.
Elop might be (or might not be ) incompetent, but what does Microsoft have to gain by destroying Nokia? I can see they have much to lose if Nokia die, because they are actually trying to market Windows Phone, unlike HTC and Samsung who are clearly only interested in Android.
Is it so that they can bankrupt them and get their patents on the cheap? But why would any liquidator not sell them to the highest bidder?
Is it so Microsoft could get rid of Symbian and MeeGo? Don't make me laugh. The one was dying and the other didn't exist at the point of Elop's takeover.
And why would Elop risk serious jail time by deliberately ruining a company he was running? I mean, he was extremely rich before taking over Nokia. Why would he risk it all by deliberately ruining them? So he could cackle in an evil manner?
If someone can explain - using facts and logic - how Microsoft stand to gain by Nokia's demise, I'll be glad to hear it.
1. Symbian, sold 110 million handsets in 2010 - biggest marketshare.
2. ip, symbian has a lot .
Elop merged Macromedia and adobe about 12 years ago, hes a merger man and nothing else.
Everyone seems to forget symbian had the biggest market share and thats what Microsoft wanted destroy by 4 x $250 million cheques and wp7 wp7.5 wp 7.8 and wp 8,
I've always wondered a bit about that as well. The man has been a walking corporate disaster since the first time he ever took charge of a company, years before he worked for Microsoft.
(Hint, he didn't do too well there either!)
I think it's mainly because of his Gung-ho for Microsoft attitude while he worked there, right before he Katrina'd into Nokia, that raised eyebrows when he gave his infamous "Burning platform" speech.
I'm assuming that in person he's one hell of a charismatic dude, and projects a blinding aura of confidence, because there's no way in Tophet that anyone that's ever looked objectively at his record would even remotely consider him as leader of their company.
For a while I also had this bad feeling about Elop having a Microsoft mission for Nokia.
To day I simply think the guy is totally worthless to run any company at all.
Too bad, but one has to remember that Nokia fell a sleep long before Elop pulled the helm out of the ship.
"Projects a blinding aura of confidence" usually means "surrounded by a close-knit band of flattering sycophants". Look who were the top Nokia execs whom Stephen Elop had kicked out, and who he brought in.
Competent, experienced people out, inexperienced cronies in.
Happens in politics, happens in the business world too.
Because when the share price is right down MS will be able to pick up all the patents (and maybe any hardware infrastructure) cheap.
Seriously, I doubt Eflop meant to do this, after all it was nearly too late when he joined. Still, I believe he did put the last nail in the coffin by going MS.
I'm very sad about Nokia. I was a big Nokia fan for many, many years, but their lack of impetus and finally their dropping of the new version of Symbian and Meego (both of which, IMO, could have been winners) just before they were ready to go, pis$ed me right off. I defected to Android, and it looks like that's where I'll be staying for the foreseeable future.
When Nokia did the Microsoft deal, Elop could have insisted on a route to WP8, I really can't understand how Nokia could invest in the Lumia lineup without assurances. Not just Elop, the whole board and senior management team bear responsibility.
Even if creating a Lumia to WP8 upgrade path was technically impossible (which I dispute), there was still a get out clause:
Microsoft could have announced WP8 for a new generation of premium phones with WP7.8 the preferred option for current generation/budget handsets. Developers given clear guidance to develop for WP7 for maximum market share, with WP8 reserved for applications using the new hardware features in the medium term. SDK and marketplace revisions oriented toward the new dual model.
Instead as part of the Microsoft Windows 8 convergence strategy, developers are being encouraged to move to WP8 with the likely result that Lumia users will find most of the new apps in the Windows marketplace unavailable to phones tha are otherwise perfectly capable of running the apps. Anyone who has bought into the newish Lumia 900 on 2 year contract can justifiably feel aggrieved. Anyone buying now who isn't fully informed its an end of line product is being conned.
Think the only way Nokia can resurrect the Lumia brand is to announce a dual strategy quickly side by side with Microsoft who can apologize for confusion and let those responsible for screwing Nokia go to show they mean it. Otherwise its a long cold summer and fall in Finland.
I've not been an Elop basher before but at this point if he can't do something, about time he was fired without handshake.
but what does Microsoft have to gain by destroying Nokia
Microsoft destroyed MeeGo and Symbian, with the former in February 2011 moving towards becoming a credible operating system for Nokia that scaled from the phone to the desktop and everywhere in between, with the support of Intel and China Mobile. The latter, Symbian, was being redeveloped with the updated UI that it sorely needed and that has been very well received. Both of these operating systems would have utilised the same Qt development framework, which is much loved by developers. It was essential - for Microsoft - that both these threats were extinguished as soon as possible.
Even if Nokia now crumbles (which may or may not be part of the plan, but seems inevitable anyway) Microsoft will have achieved a great deal by taking out what would have been the biggest threat to their mobile software business (MeeGo/Symbian/Qt) after iOS and Android.
Nokia were a huge, HUGE, supporter of Linux and open source technologies - all of that has been killed stone dead, thanks to Microsoft. It has been a major success for Balmer.
And once Nokia is no more (and Microsoft has acquired all the IP) there will still be plenty of OEMs around the planet to entice into using Windows Phone software, as the only viable alternative is now Android, which Microsoft has already got stitched up with the Android Tax.
Nokia is expendable, period.
They were a means to an end, to give WP some credibility, but their long term survival wasn't important nor essential to Microsoft - on the contrary, they are the one most likely to now benefit when it all goes tits up in Finland.
And now that Nokia has shared all of its experience with Microsoft, if Nomura are to be believed then Microsoft will be making their own phone.
Nokia: Sendo Redux?
Nobody has explained why Nokia would sell MS their patents and other IP on the cheap. It's just a baseless assertion. And the idea that MS would go out of it's way to kill Symbian and MeeGo strains credulity. They would kill iOS and Android in a heartbeat, but not a dying OS or a non-existant one.
> Nobody has explained why Nokia would sell MS their patents and other IP on the cheap
Nobody has explained why Nokia would bin their entire product line and hitch their wagon to an essentially inknown product from a software vendor with a very chequered history in the consumer marketplace.
But they did.
Elop is very clearly a Microsoft fanboy, even if he isn't a plant. Why would he not go cap-in-hand to Ballmer when he starts running out of money? As long as that happens before an official bankruptcy, MS is quids in...
Q "but what does Microsoft have to gain by destroying Nokia?"
A "Microsoft destroyed MeeGo and Symbian"
I don't dispute the reality, that MeeGo and Symbian are now gone, but I dispute Microsoft's need to destroy them. Both were dead men walking anyway, against the iOS and Android market domination reality. Pointing at sales units of Symbian to justify how well it was doing is exactly the same behaviour that got Nokia into such trouble - you are ignoring the inevitability of Nokia's independent OS's decline. In terms of competing ecosystems, Symbian and any follow up were dead men walking against iOS and Android
You even reference this by disagreeing with yourself:
"It was essential - for Microsoft - that both these threats were extinguished as soon as possible"
"Microsoft will have achieved a great deal by taking out what would have been the biggest threat to their mobile software business (MeeGo/Symbian/Qt) ***AFTER*** iOS and Android"
I added the *** and whatnot, to emphasise the disagreement. Anyway, the point is that iOS and Android are the threats to Microsoft, and Symbian and MeeGo did not even count as long term threats, let alone immediate threats that required extinguishing.
Also, if Nokia (or important parts of it) are for sale, why is it somehow an automatic sale to Microsoft? Do Microsoft have automatic first dibs? There are other companies around, with tonnes of cash, who might be interested.
The point you're not getting is that Microsoft aims to be #3 in mobile software - that's a place that is still up for grabs and where MeeGo/Symbian/Qt (imagine Qt as the ecosystem/platform, not MeeGo or Symbian per se) and you can see that Nokia had a credible chance of taking that third place with its own platforms that Microsoft wanted/needed.
MeeGo had the backing of not just Intel and a raft of other hardware and vehicle manufacturers, but also operators such as China Mobile with 650mn subscribers. When Nokia bailed on MeeGo, China Mobile were so pissed they refused to stock the Lumia in China, leaving Nokia to deal with the smallest of the Chinese operators.
With the reach of Nokia in terms of devices, the hardware and operator support, it's pretty easy to see that Nokia could get their Qt platform on to hundreds of millions of devices in pretty short order. In fact, Qt IS on tens of millions of devices already (Belle, N9) - probably an order of magnitude more devices than are running Windows Phone right now, and that's without Nokia even trying (and indeed, having already killed the entire platform).
The point is, that Nokia were easily capable of preventing Microsoft from gaining traction with Windows Phone and taking that #3 spot for themselves, so converting Nokia to be Windows Phone exclusive made a lot more sense to Microsoft than just getting them on board as a hardware manufacturer.
Destroying the Nokia platforms was most likely the primary objective as it leaves the way clear(er) for Microsoft to grab that #3 spot - getting them on board to also make devices was just gravy, but won't be necessary for much longer now that Windows Phone has a better chance of success.
Well you would want to weaken Nokia to make it a takeover target. There is no way in hell that the European regulators (possibly even the Americans either) would have approved the takeover by MS of Nokia in Feb 2011 (when Elop killed Symbian). It would've taken years to clear. Nokia just had too large a market share in too many spaces to let anyone merge with it, it was simply too big to swallow. The Nokia takeover of Symbian was previously defeated by regulators and only just scraped through in 2008/9 buy lots of assurances that the OS would be open sourced.
Elop set about changing that. I suspect that he was more sucessful than he imagined. He had to take Nokia off number one slot for smartphones, done; number one mobile OS, done; and number one all phone vendor, done (just). Now anyone looking to enquire about purchsing Nokia will be seen as a saviour and with the backing of the Finnish government, positively encouraged into a buy-out. To those of us on the inside, this was and still is entirely predictable.
The lower Nokia shares go, the cheaper it is for Microsoft to buy Nokia.
Microsoft has shown recently that they are going the Apple way of developing their own hardware (and Google might also go that way with their recent acquisition of Motorola). Buying Nokia would go a long way towards that goal.
@Anonymous Coward 101
You don't get it do you?
Microsoft's original plan was to destroy Nokia from within, drive Nokia's share price to hell, then snap up Nokia's remainders for pennies. In other words, Microsoft wants Nokia to be its OEM bitch. Or 'exclusive hardware partner', if you prefer a more tactful term.
Yeah, and the patents bonanza is a good loot too.
Nokia will not be sold to the highest bidder, because:
1) Trojan horse Stephen Elop will make sure that Nokia is sold to no one else but Microsoft.
2) No other company (Samsung?) wants to get drawn into a bidding war with Microsoft.
3) The Nokia board will be helpless to do anything about it (I'm quite sure the Finnish folks never read the fine print when they decided on the 'strategic partnership' with Microsoft.)
4) Nokia will be in no power or position to negotiate with others, or negotiate better terms with Microsoft.
5) Elop won't be jailed because the Finnish govt is impotent. The Finnish govt had also recently declared that no company is 'too big to fail', not even Nokia.
Any way you look at it, it is clear that Nokia is royally screwed.
Flops chances of success in turning around Nokia are similar to Tony Blair's mission as Middle east peace envoy < 0. They would probably get seriously beaten (if not killed) if they dared to show their faces to average Joe on the street.. Both had a chance to do something but so dissappointinly chose the wrong path..
Probably because the only long term they have now is "get as much out of MS as possible" and for that they need Elop. It's so bad even the Finn's themselves are avoiding buying Nokia, that's a bit like the French being told to buy something American instead of French.
The nail in the coffin is WP8, Nokia has to convince the world to keep buying the Lumias even though it's an EOL product with no future app support (yeah, who's going to develop for WP7.5 when WP8 comes out?), they lost a lot of loyal fans because of that decision... I'm one of them (from the 6210, even the N900 and, yeah, a Lumia).
> the only long term they have now is "get as much out of MS as possible"
You think so?
I reckon a complete about-turn would give them a survivable future. Get a few Androids out for cashflow, then run Symbian & Meego (or similar) for a bit of market value.
This is obviously an uphill battle - Nokia having lost so much traction, kudos, and staff over the last little while - but does *anyone* think they're going to make a go of Windows Phone?
That would never clear the regulators in a million years. Google owning both Motorola and Nokia?
Get outta here...
For good reason too. Outside of their feverish fan's wet dreams, Google's current monopolistic grip over the Web and smartphones already raises hard concerns.
Compared to Microsoft, they're saints by comparison. Not saying they aren't a company with a bottom line, same as any others. Just that Google appears to have gotten extremely huge by being good at what they do, rather than being the troll under the bridge that everybody has to use.
However I did say "or a consortium". In either case, keeping Nokia out of Microsoft's grubby fingers would be amusing, since it seems that's been their plan ever since Elop took the top spot, and probably some considerable time beforehand.
With the exception of its patent portfolio, is Nokia worth anything to anyone other than Microsoft? The company has tied its future so tightly to Windows Phone that turning it round to manufacture - say - Android handsets would surely be such a massive task that it could founder before anything came to market.
I wouldn't be surprised if Microsoft took a large equity stake in Nokia real soon now, if only to keep those lovely patents close to hand and avoid the company slipping away.
I am never going to buy a Windows phone from Nokia, or anyone else for that matter. My last Nokia phone that I buy might be Nokia 701 Symbian. But I am still considering that options. Since my current phones are rather new.
Too bad that there are not many 3G phones that support 850/900/1700/1900/2100 as Nokia N8/700/701 does. I want nothing less.
Sad story about Nokia. But this is what you get when you hire a Microsoft office pencil pusher to work in your company. The lesson. Do not deal with Microsoft unless you want your company to go the bankrupt way.
"But this is what you get when you hire a Microsoft office pencil pusher to work in your company".....
right, because everything was going so swimmingly before Elop turned up, right?
Volume matters to a certain extent, but ultimately it's all about profit.
At least with WP they have a *chance* to differentiate themselves. Becoming yet another android player would've meant fighting for whatever scraps Samsung didn't want.
And as for keeping things in-house? Well RIM's showing how well that's going...
Well, they would be if they jumped in now.
They had their chance and blew it. Nokia could be stomping all over Samsung by now, with a brand name that is well renowned for phones, not televisions. As is, they've gone into suicide mode and Samsung are just saying "lol, thx Nokia".
"Nokia could be stomping all over Samsung by now, with a brand name that is well renowned for phones, not televisions"
I think HTC are proof that it's not as simple as that. You can make a good phone but it's not enough.
Samsung came to dominate in TVs by subidising their marketing and development with massive profits from other areas of their business. They flooded the UK market with TVs that were merely as good as the competition, but cheaper and somehow cooler (marketing), and seized huge market share which they later leveraged for dominance with newer products that were genuinely better (development). This was an incredibly aggressive strategy and it was built on revenue streams from radically difference sources like superconductors.
There's no guarantee that Nokia could have competed and therefore be "stomping" all over Samsung now. They just don't have the resources of Samsung to sustain a protracted and bloody battle for market share. (That's why markets tend to monopolies, a well-established and fundamental flaw with capitalism)
The os itself is designed to be customizable by vendors and user in insane levels. There are Nokia launchers made by hobbyists which are so perfect that you can't figure device running Android. Even a windows phone launcher exist.
Actually, lets say google lost all "look and feel" cases. There is nothing they can do as os design allows third party screen lockers, launchers and keyboards.
By the way guess where all symbian techie users and advanced developers are? Android.
Exactly, so tell me, then, why did the Microsoft "office pencil pusher" so magnificently destroy all possibility of both volume and profitability back in Feb 2011 by pissing on his own platforms with nothing to replace them with? It's true that Symbian sales were slowing, but it's also true they dropped off a cliff post Feb11. Even Elop now admits he made a mistake by not anticipating how much damage he would cause to sales with his "memo".
And now it's happened again, but this time Microsoft has done it to Nokia by announcing that all of Nokia's current stock is obsolete, EOL, worthless. And Nokia knew this when they signed on for WP7.
What fool will now buy a Nokia device running Windows Phone 7? And when is WP8 going to launch, December? So that's Q3 and Q4 down the toilet, possibly even Q1/2013 if Nokia don't get a device to market on WP8 launch day (assuming Nokia even last that long).
Honestly, if Elop had waited until Feb 2012 to announce Nokia were going "all in" with Microsoft and Windows Phone 8, things wouldn't be anywhere near as bad as they are now - Nokia would be in much better shape, financially.
Even better, if Nokia had just agreed to support Windows Phone along with their own current platforms they wouldn't be in the financial shit they now find themselves in, and also wouldn't be enslaved to Microsoft.
Taking the route they did, they've not only lost their financial security but also their technological independence, and quite possibly their existence, and for what? A pittance from Microsoft, and a whole boatload of promises that will never be realised.
Evidence? See graph here.
The trend was undeniably downwards in Q3/2010 and Q4/2010 (it actually picked up a little in the final quarter with decent seasonal sales), but nowhere near as fast it became in Q1/2011. The decline in Q4/2010 accelerates sharply during Q1/2011 - I wonder what happened in Q1/2011? Oh yes, that's right, in the middle of that quarter the CEO took a dump on his own platform. Customers aren't stupid (though Nokia clearly thought they were) and sales fell off a cliff - not in Q4/2010, but in Q1/2011.
You might say that sales were always going to fall off a cliff anyway - but there is no way to know this, the evidence doesn't suggest this, and it's more likely the steady decline would have continued at about the same rate, maybe at most a little more rapidly, but certainly not cliff falling fast without the additional impetus required to actively turn customers away from Symbian.
The only rational explanation for the sudden and massive decline in Symbian sales during and after Q1/2011 can only be the cause/feffect following the Burning Memo debacle, where the CEO told all his customers that the platform they had invested in was, frankly, shit.
If you think there is any other justification for the rapid drop in sales during that period you're a blinkered idiot - even Elop knows (and has essentially admitted) that his memo had an unforeseen and massively detrimental effect on Symbian sales and plunged the company unnecessarily into the red, a mistake (assuming it even was a genuine mistake and not intentional) that Nokia is unlikely to recover from.
"It's true that Symbian sales were slowing, but it's also true they dropped off a cliff post Feb11."
Market share was dropping off a cliff in the six months previous to Feb11. Unit sales of Nokia smartphones increased, but only because smartphone sales in general were exploding. When the smartphone market only increased by a small percentage in the first quarter of 2011, Nokia smartphone sales would have utterly collapsed anyway.
Symbian market share was being eroded due to competition (mainly from Android), but sales of Symbian were still decent and only went into decline (and steep decline at that) after the Feb11 announcement. There is no doubt that the Feb 11 announcement hastened the decline of Symbian far more so than if the announcement hadn't been made - even Elop now admits that it was a major mistake to dump Symbian in Feb 11 when it was still the main cash cow for Nokia.
If he hadn't been such a fool then, Nokia wouldn't be in such financial dire straits now.
I don't recognise your figures... the Q on Q smartphone market share decline was consistently in the 2-3% ballpark and actually lifted in two quarters with the notably with the N8 launch. From Q1 to Q4 2011 the decline was 24% from 36% to 12% (or a 66 percent loss of share)... that's a cliff edge.
>>Microsoft has recoded the platform so that it shares kernel features with Windows 8, which is good for integration but bad news for smartphone vendors, since upgrading existing handsets is impossible.
Is this just bad reporting... why does changing the kernel automatically mean handsets can't be upgraded? Surely if people can hack their iPad to run Android or get Win98 running on a phone, getting WP8 onto WP7.5 hardware is possible?
WP7 rules mandated a single core processor, amongst other silly restrictions on screen resolution and size.
WP8 mandates multi core CPUs, with a couple more options for screen resolution and size.
Therefore, WP7 phones will never run WP8, no matter how much you might want them to. As with Android and iThings, unofficial hacks simply do not count. Your WP7 phone will never run WP8, specifically because of Microsoft-imposed restrictions.
Don't believe me? Type "will wp7 handsets run wp8?" into your favourite search engine and have a good look around.
Let me say this again:
Unofficial hacks do not count.
It does not matter than you can hack Android into an iPhone, Apple will never make an Android device unless something seriously tits-up happens at Cupertino.
It does not matter than Linux can be hacked into a toaster, Kenwood will not be making Linux Toasters any time soon (or will they?).
It does not matter if WP8 can be hacked into a WP7 device. Microsoft will not be providing upgrades, ever. Their own hardware rules forbid it. WP7 is single core only, WP8 is multi core only. WP7 devices will never, ever, be upgraded to WP8 without a massive change of minds at Microkia HQ.
Sure WP8 has minimum requirements because of hardware rules but only because Microsoft decided on the rules (ok, maybe it was not intentional earlier in project just that new kernel etc. turned out not to be capable enough on what is equivalent to XP early generation hardware - just saying, no reason to think thats why).
Like many in the business I was not expecting WP8 to be an upgrade to WP7, the real surprise for me with the announcement this week was the fact that there was not even an attempt to avoid leaving the Nokia Lumia brand high and dry despite the fact that the Lumia campaign in the US started just months ago. Lots of ways they could have eased the pain technically or by product positioning instead of what possibly counts as the worst Microsoft mobile screwup since announching the Kin.
In 21St century, one doesn't expect a government to save a company but look to other things like social peace, defense and regulation.
Another things governments do is espionage and counter espionage. Just get rid of "bond" image. These days, everything is finance. By the way, you don't prison or assassinate your evil guys. You just do planned, small leaks.
Nokia symbian share was high, it was at absurd, undeserved levels so it was leveling down. Meego? Did anyone except google fans and media who is fed by google see future in Android? People were asking what was wrong with Java micro. It was looking that pathetic and see what has it become.
Nokia could have kept qt plan, don't be such ignorant, nobody cares what kernel it run as long as there its an unified API covers everything. Apple can switch to windows nt tomorrow and nobody using iphone would notice. That is how large API works.
Publicly giving up symbian and meego. That made everyone suspicious as there was no need.
It was surely obvious to most that him going to Nokia was only going to end in tears, unemployment and a cheap set of patents and production and design capability in house for Microsoft no?
Sure, we're still waiting for the outright buyout but I can't see it not coming, in some form.
I think the only question is will the new phones they produce be called Nokia phones, Nokia Microsoft phones or just Microsoft phones with the Nokia name snuffed out?
What do Google, MS, Apple, Facebook, + the rest of 95% biggest tech companies all have in common? They all would LOVE to see any NON-American company fail bigtime. Think about deal btw Apple and Nokia re patents uuse. Nokia, with their superior products and innovation (read: not having marketing as their prime focus), was able to wash the floor with Motorola and other players for a long time. They literally invented the whole mobile market as we know it. Just think what they would like to do to someone like Samsung, who have easier access to cheap labour and less respect for (c) compared to someone like Nokia...
It would be a travesty to pour public money into a company that seems determined to run itself full-speed into the ground.
If a company is failing it's usually because something is deeply wrong with it. In this case its the leadership. Just let them go. Maybe the clever tech folk can start something else.
>company that seems determined to run itself full-speed into the ground.
Sadly this appears to actually be the case. Remember "resistive touchscreens are better" with the N7? It actually became a legitimate party-piece to show off just how shit the N7's "better" screen was. If I were looking for a saboteur, I'd start by looking for the plank that made that decision.
You need to think like a Finn, when it comes to screens. You live in a country that dark half the year and where even in the south it is regularly 20 degrees below zero in the winter. Do you really want to take your gloves off to make that phone call or would you prefer to use a stylus? Not saying its right, just that from that perspective resitive screens are better. (The plank that made that decision was one of the first to go when Elop joined.)
But sadly where 'your' company loses its mind there's only so much you can do. Investors tend to have confidence in anything that smacks of 'leadership' and dissenting voices are only causing trouble. I knew what was in store for and I left on Feb 10 2011... no, no coincidence that it was the day bfeore the MS deal was announced.
Ok, very plausible.
One bit I don't get, how does this fit in with MS doing their damndest to shoot themselves in foot with their W8/Metro path (particularly on the desktop)?
They're betting the farm on Metro, yet by killing off Nokia are they not also severely damaging WP at the same time and just making their sales job for WP/Metro even more difficult?
Interested to hear others' thoughts.
I think you misread the situation. MS is trying to emulate Apple, so they need to catch up on a few years of development in a hurry. Going fast means cutting corners, so they rather focus on W8 than wasting efforts on the old system.
The situation for MS is very enviable, they have found a partner who takes all the risk of producing and selling the hardware. So MS only carries half the risk, but is set to reap most of the reward. Once Nokia has burned all their cash, MS has to find other ways to get phones to the market, but maybe the Google model of delivering reference hardware is established by then.
Financial pedantry alert: stocks and bonds are different, so you can't "downgrade stocks to junk bond status". Moody's doesn't rate stocks, it rates companies and bonds. Moody's rating is for Nokia's debt (bonds). Thank you for taking the trouble to read this occasional message on behalf of the Campaign to Correct Common Errors in the Reporting of Finance
OK firstly Elop was not sent to Nokia by Microsoft to destroy it. That would be illegal and there is no evidence for it. That doesn’t mean that Elop didn't have an inbuilt Microsoft bias, in a 50/50 decision Microsoft V anyone else he would always come down for Microsoft.
When he was being selected for the role in Nokia, those making the decision would have considered his part in the existing Nokia Microsoft relationship. I.E. Putting MS Office on Symbian. He was unpopular in parts of Microsoft for doing this. (Note: it’s a sign of how slow software development is in Nokia that the results of this are only just about to be released, probably after the Finn’s summer break. Yes they pretty much all go on holiday at once from the end of June to the 2nd week of August.)
The main architect of Nokia’s demise was Elop’s predecessor, Olli-Pekka Kallasvuo (OPK). He was an accountant able to manage but not to lead, he had no vision and under him Nokia was complacent and completely risk averse. However poor you may think Elop’s judgment is, he is definitely a leader rather than just a manager. The other thing outsiders need to understand about Nokia is that prior to Elop, management decisions (when any were actually made) were generally up for debate by anybody involved in implementing them. It was not uncommon for a meeting to decide one thing, and then for those who should have been responsible for implementation to meet at the water cooler and decide to do things a bit differently. This culture is not entirely dead, I understand that Meltami was conceived as a very minimal OS but after some developers transferred over from Meego, it started to grow to the point it was becoming effectively a rewrite of Meego.
So let’s go back to before 2007 when the iPhone was released. Nokia at this point was complacent, it had a massive share of the Smartphone market and a massive share of the dumb and feature phone markets. The group think in Finland was that Nokia was different from every other company. It was superior and Symbian had a lock on the smart phone market that could never change. Nokia felt confident enough to dictate terms to its customers, the Operator networks (Which in the US proved its undoing). When the iPhone arrived the attitude was more indulgent than anything else. On paper, looking at the specs, the iPhone was significantly inferior to the Symbian phones. (Personally I had a N80 at the time. It ran apps, it did 3G it had 2 cameras it did MMS it had removable battery and storage, the IPhone had none of this.) The IPhone was considered a Niche product, not really a threat. Nokia ‘group think’ was convincing itself that there was nothing to worry about.
Nokia had released its first Maemo touch screen tablet 2 years before this, and another in January of that year. These were it was a Skunk works projects, management didn’t want to do any serious development on Maemo or add cellular connectivity because it could only cannibalise Symbian Market share, and the Network operators were not really interested. This was the big mistake; Nokia should have been seriously developing this into a successor for Symbian. Had the N9 been out in 2008/2009 Nokia it would have been serious competition for Android. But as I’ve mentioned there was no vision and no appetite for any risk. Once the threat from Apple and Google became clear to Nokia the strategy was not decisive. Nokia’s culture got in the way, road map decisions were made and then changed, development always stalled form the end of June over the long summer holiday and it always seemed to be September before things got back up to speed before, slowing down in December.
It’s into this situation that Elop arrived. From his perspective Nokia sales were falling, Apple and Android were gobbling up customers and because these customers were investing in the Eco systems, buying apps and add on devices it was going to be difficult to win them back. (An eco-system makes the device sticky; if you’ve spent $100 on iPhone Apps and more on an iPhone dock you’re reluctant to throw it all away for another phone.)
So from his perspective an Eco-System was essential, but could Nokia build the 3rd? It had QT, it had Navteq, a Store and a Music Service. What it didn’t have was scale especially in terms of developers. QT was a great asset a bridge between the old Symbian world and the new Meego world but it was yet another development framework to learn and unlike Java or .Net you had to understand memory management. Supporting and promoting the environment is costly irrespective of whether you can get people to create apps. The final straw I think was when it became clear that issue with Meego meant that it would take an extra year to release a 4G enabled version of the N9.
So Nokia could cut costs significantly by going all in with one on the existing Ecosystems, Microsoft or Google. Microsoft was less well established in Mobile but it had deep pockets and a massive developer eco-system. Google had the Mobile high ground but not quite the developer depth of Microsoft (I’m thinking Visual studio and the MSDN here.) Google didn’t need Nokia but Microsoft was prepared to pay Nokia and allow Nokia to earn revenue by filling in bits of its ecosystem (maps/location based services, operator billing). For Elop I think it was a 50/50 decision. Google, safety but playing 2nd fiddle to Google and probably Samsung and well as competing with 100’s of OEM. Microsoft risky but with potentially greater returns. As I said in a 50/50 decision Elop with go with Microsoft.
Personally, based on what little I knew, I thought he was right. However that was based on having the cash flow to last out until 2014. One of the big things that has hit Nokia recently was China declaring that it wanted 3G phones in the hands of much poorer people in China and setting a price point and spec that the network operators should use, but which only two Chinese manufactures could meet. The other thing was a significant drop in the price of low end Android phones forcing out Symbian and Series 40.
I think Nokia should have seen at least the latter one of these threats coming. If they did Elop should have been looking to get 2nd place in Android rather than 1st place in Windows. This would see Nokia as a smaller less important company but it would probably survive with enough resources to plan a fight back. (Android with Nokia’s N9 Swipe interface anybody?) However, we can all make criticisms and say how we would have done things better but we can’t see what Elop would have seen from inside back then. Personally I think that if Elop had succeeded Jorma Ollila in 2006 rather than OPK, and been able to get rid some of the senior executives then, (that have only just gone), I think Nokia would be in a significantly better position today.
Disclosure: I used to work for Nokia (not in phone development) but was made redundant. I’ve now got a cheap Android Device but was underwhelmed and switched back to the E7 Nokia allowed me to take away. I’ll probably get a Windows Phone 8 device when they come out. It would have been a Nokia because of Nokia Drive but now that that service will be available to all Windows Phone makers I’ll look at other phones as well. I’m also going to get a Windows RT tablet but I’ve no intention of installing Windows 8 in its present form on my desktop.
Can I just ask where all the Microsoft Shills are who as recently as two weeks ago were all over this site (and various other tech sites) towing the company line that -
"you don't need a Smartphone with a dual core or quad core processor. The only reason androids have them is because the OS is bloated. Windows Phone is excellent because it can do everything on a single core as it's better than android"
Now we have the announcement that Windows Phone 8 requires a dual core processor minimum and single core devices won't be getting the upgrade things have gone awfully quiet from our Redmond based chums?
It's a matter of when not if Nokia will go to the wall. It's such a shame as they used to make some fantastically designed phones with excellent build quality. Microsoft have sold them short though and now they are heavily paying the price. It's a real shame for what was a pioneering company and the country of Finland
Nokia had spent the last 18 months pushing MeeGo high end phones and Symbian Bell FP1 mid range devices it couldn't be in a worse position. I suspect it would actually be doing rather well.
An announcement now that it would be releasing Windows 8 phones and tablets alongside its current range in 2013 would only have strengthened its market position.
All in all a damn shame no matter if Elop is a crook or just incompetent.
Let's remember: the N8 was the last best Symbian effort from Nokia. And it's a dog of a phone. Utterly unreliable, eats its battery in 6 hours, erases user data and applications, crashes more than once per day. And coincidentally a short while after launch the Nokia shops were shut, the fake user support disappeared... and clearly the Finnish hucksters had run to the bank with the money leaving their user base high and dry. There was a famous blog post from a Nokia blogger twat about how he was on a junket to a Nokia conference and couldn't be assed to respond to user problem reports. That's how the Finnish hucksters operated.
Good riddance to bad rubbish. Which smartphone user would buy Nokia again?
My next phone will not be a Nokia. Lots of other people's phones will also not be Nokias. The Finnish hucksters are gone.
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