Nokia Finally Faces the Hard Truth

[Centurion]

I mean if you take a look at Android and the iPhone as it is, their UI's are basically the same and there has been and probably won't be any drive to improve that UI ever.

You're right. The user interfaces won't evolve that much. The war between the operating systems will be on a different front: Apps, apps, apps, apps. Nowadays it's not the spec sheet, or features listed on a phone that sell it but apps. I see no point in buying an uber expensive phone or tablet if all there is to do with it is browsing the net and watching youtube clips. Which ever platform can foster the best apps will lead, and currently Apple is the leader by a huge margin.

I simply love it that I can browse the app store on my iPod touch, download free or paid quality apps at a convenience. The best peace of mind is that I know that the apps is 100% optimised for my device. Everything flows, is aesthetically pleasing and works! The latter is the key. Everything just works. With Android certain apps are buggy, they crash or are plain crap because they are made by an open source fanatic. This is why the iPad 2 will likely be my tablet of choice in the next 3-4 months. But I've heard and read great things about WP7 and its growing number of quality apps. Disappointing MS is intent on shoving Win7 tablets down consumer's throats and refuse to port WP7 to tablet. I'm hoping this will change. My dream would be a WP7 tablet that features fun games, usable apps but also productive ones like MS Office!

 

[Potential]

Am I the only one who thinks that 99% of the Apps in these so called AppStores are entirely useless and quite rubbish, especially compared to the polished apps that come with the phone. The only decent app on my iPhone is Things, the rest are a few average games and some utilities I use once in a blue moon. The iPad is the same, apart from Things and the iWork and iBook selection from Apple, most of the developer's applications are rubbish. Just my two cents worth.

 

[Michael]

Am I the only one who thinks that 99% of the Apps in these so called AppStores are entirely useless and quite rubbish, especially compared to the polished apps that come with the phone. The only decent app on my iPhone is Things, the rest are a few average games and some utilities I use once in a blue moon. The iPad is the same, apart from Things and the iWork and iBook selection from Apple, most of the developer's applications are rubbish. Just my two cents worth.

I wouldn't say 99%. I personally have an iPhone and not all of the apps are useless. There are a few that I do use pretty frequently. Also, Apple has cut down on useless apps like farting apps, etc.

One thing I think, since some of you have mentioned and begun talking about it, is that the industry is going to focus more on the userinterface and the details. I love my iPhone and in my opinion I still think has the best user experience and performs the best. However, to me, the iOS is looking a little bit outdated and I think that it is about time that Apple updates it. I would think, assuming on how Apple works, that an updated iOS will come around with the iPhone 5 later this summer. For example, I think they need to improve on their notification system and it seems clear that they are aware of this considering they have looked into companies that make better notification systems. Second, it think they should improve on the small things like the weather that gives more detail instead of a picture of what is going on and the temperature.

All in all, and going back to the main focus of this thread, I think that Nokia did the right thing in selecting Window Mobile. I think Windows Phone 7 is probably one of the best user interfaces out there, despite the fact that it needs some improvements. Competition is good.

 

[Centurion]

that an updated iOS will come around with the iPhone 5 later this summer. For example, I think they need to improve on their notification system and it seems clear that they are aware of this considering they have looked into companies that make better notification systems.

Good point. iOS is a dinosaur when it comes to multitasking and notification. If we know Apple right they'll address this when they have developed a polished a well functioning solution. Hopefully we'll see this with the iPad 2 which would benefit most from an overhaul.

 

[LaArtist]

Nokia sold their soul.. just wait and see..

 

[bmer]

The reasoning given by Elop for this deal is feeble. Microsoft is the clear, and possibly the sole winner in this deal.

To understand why this switch to Windows Phones makes no sense, you have to know Nokia's previous strategy. In a highly simplified form, Nokia's mobile phone strategy before yesterday was like this:

S40 was to be (and still is) the platform for Nokia's most basic phones (a.k.a. dumbphones) for the developing countries.

Symbian was going to be their OS in low-to mid-end smartphones.

MeeGo was meant to be Nokia's high-end device OS. MeeGo phones would've competed with iPhone and top-of-the-line Android phones.

Because Nokia would have two different smartphone OS's (one for low- to mid-end and one for high-end phones) to avoid developers having double the work, they made a brilliant decision that both Symbian and MeeGo would support the Qt framework. This way all apps would work on both platforms.
As a sign of the high expectations for MeeGo, even AMD joined in late last year despite MeeGo's other main developer being Intel, AMD's arch rival.

It's general knowledge in the mobile business that it takes at least 12 months to make a new model based on a completely new platform. MeeGo's development was well underway and was even recently accelerated. The first devices were expected in the first half of this year. With the development so close to release and a large community and industry-wide support behind it, it didn't make any sense to switch to either Android or WP7.

Then suddenly comes Mr. Elop with a new strategy that basically deals a death blow to all these efforts. He told us there will be a TWO-YEAR(!!!) transition period before Windows Phone completely replaces Symbian. And of course WP7 won't support Qt, so everything developed for Symbian/MeeGo won't work on it. How on earth does he think he can convince people that it's better for Nokia to abandon their own OS development and to lose market share for another two years while waiting for something that isn't even necessarily going to be enough to challenge Apple and Google?

It makes even less sense when you know that Symbian never was technologically dated, for example, it has had multitasking for years now. It was the UI that was criticized. Symbian as an OS is extremely efficient in power consumption and getting the most performance out of even less powerful CPUs. Therefore it was more than adequate for low- to mid-end smartphones like Nokia intended. Furthermore, Symbian was going to get a thorough UI update later this year.

Following this decision Nokia will lose all of the benefits provided by their existing userbase. In addition Elop truly delivered a kick on the face of Nokia's developers and their partner Intel.

 

[Gene]

The reasoning given by Elop for this deal is feeble. Microsoft is the clear, and possibly the sole winner in this deal.

To understand why this switch to Windows Phones makes no sense, you have to know Nokia's previous strategy. In a highly simplified form, Nokia's mobile phone strategy before yesterday was like this:

S40 was to be (and still is) the platform for Nokia's most basic phones (a.k.a. dumbphones) for the developing countries.

Symbian was going to be their OS in low-to mid-end smartphones.

MeeGo was meant to be Nokia's high-end device OS. MeeGo phones would've competed with iPhone and top-of-the-line Android phones.

Because Nokia would have two different smartphone OS's (one for low- to mid-end and one for high-end phones) to avoid developers having double the work, they made a brilliant decision that both Symbian and MeeGo would support the Qt framework. This way all apps would work on both platforms.
As a sign of the high expectations for MeeGo, even AMD joined in late last year despite MeeGo's other main developer being Intel, AMD's arch rival.

It's general knowledge in the mobile business that it takes at least 12 months to make a new model based on a completely new platform. MeeGo's development was well underway and was even recently accelerated. The first devices were expected in the first half of this year. With the development so close to release and a large community and industry-wide support behind it, it didn't make any sense to switch to either Android or WP7.

Then suddenly comes Mr. Elop with a new strategy that basically deals a death blow to all these efforts. He told us there will be a TWO-YEAR(!!!) transition period before Windows Phone completely replaces Symbian. And of course WP7 won't support Qt, so everything developed for Symbian/MeeGo won't work on it. How on earth does he think he can convince people that it's better for Nokia to abandon their own OS development and to lose market share for another two years while waiting for something that isn't even necessarily going to be enough to challenge Apple and Google?

It makes even less sense when you know that Symbian never was technologically dated, for example, it has had multitasking for years now. It was the UI that was criticized. Symbian as an OS is extremely efficient in power consumption and getting the most performance out of even less powerful CPUs. Therefore it was more than adequate for low- to mid-end smartphones like Nokia intended. Furthermore, Symbian was going to get a thorough UI update later this year.

Following this decision Nokia will lose all of the benefits provided by their existing userbase. In addition Elop truly delivered a kick on the face of Nokia's developers and their partner Intel.

Elop was employed to turn Nokia around - that is what he is trying to do. The strategy Nokia had (as described above) simply wasn't working, as witnessed by the past few years. Whether the alliance with Microsoft will work is anyone's guess, but he's doing something.

FYI, the two year transition period is a transition period to completely use WP7, and do away with Symbian. Current rumours are that they will have phones by 2012. Heck, there's even rumours that there will be prototypes tomorrow at Nokia's MWC keynote. Who knows.

Everyone on the internet is an expert armchair analyst and has their opinions on what they would do or how intelligent/stupid Elop is. Fact is that we as armchair analysts don't have the facts/figures/statistics and most of all we're not paid the big bucks to make the hard decisions. Just wait and see. I mean heck, back in 2007 I thought the iPhone was going to be a flop - but I was wrong. How I see it is, we have two big players with what the market see's has two weak products (one because the software is weak and one because the hardware is weak). Join the two forces together and you have one strong player. Add another major smartphone player into the mix, and you only have a winning formula for the consumer. I don't think anyone can complain about that.

 

[bmer]

Elop was employed to turn Nokia around - that is what he is trying to do. The strategy Nokia had (as described above) simply wasn't working, as witnessed by the past few years. Whether the alliance with Microsoft will work is anyone's guess, but he's doing something.

How can you say the strategy wasn't working when he didn't even give it a chance? All the important decision were made in fall/late last year. So he didn't wait for the market reaction to MeeGo and as said the significant Qt decision was made late last year, too recently to judge the results. Neither did he let Symbian have it's thorough UI update (which is so extensive that it was previously known as a completely new version called Symbian^4) before they decided to kill it.

In any case, a company like Nokia, the market leader, shouldn't bet it's whole future on such an uncertain and risky strategy.

FYI, the two year transition period is a transition period to completely use WP7, and do away with Symbian. Current rumours are that they will have phones by 2012. Heck, there's even rumours that there will be prototypes tomorrow at Nokia's MWC keynote. Who knows.

Yes, it's a transition period which means Symbian's fate is already decided. That's despite the fact that three new Symbian^3 based phones (N8, C7 & C6-01) outsold a dozen WP7 phones by more than 3 to 1(!). That's 5 million sold Symbian^3 devices and 1.5 million WP7 devices.

Here's Nokia's own graph depicting how they plan to phase out Symbian:

Everyone on the internet is an expert armchair analyst and has their opinions on what they would do or how intelligent/stupid Elop is. Fact is that we as armchair analysts don't have the facts/figures/statistics and most of all we're not paid the big bucks to make the hard decisions. Just wait and see. I mean heck, back in 2007 I thought the iPhone was going to be a flop - but I was wrong. How I see it is, we have two big players with what the market see's has two weak products (one because the software is weak and one because the hardware is weak). Join the two forces together and you have one strong player. Add another major smartphone player into the mix, and you only have a winning formula for the consumer. I don't think anyone can complain about that.

For the sake of Nokia's future I hope you are right even though I personally think this was a catastrophic decision that will have far-reaching consequencies.

 

[Centurion]

How can you say the strategy wasn't working when he didn't even give it a chance?

Nokia's board had given the previous CEO and management plenty of time to work on Symbian, Megoo and adapt. Out of all cellphone manufacturers, Nokia is the only one that doesn't have a contemporary smartphone on the market. Samsung, HTC and LG all adapted and changed for the better. Even HP who isn't a cellphone manufacturer got the memo, bought Palm and is now ready to challenge with products that Nokia are nowhere near to bring to market.

Fact is, the iPhone came out in 2007. Almost three and a half years away and Nokia hasn't caught up. I've been following Nokia and its competitors finances for the past 12 months and with every quarter Nokia is bleeding market share of massive percentage numbers. Despite this the previous management has been downplaying figures by stating that Nokia still remains the biggest cellphone manufacturer in the world. Sure they have been, but that's for dumb phones with very low profit margin. The company's revenue have been high but on a flip side profit figures have been appallingly low, and even less than Apple's profit figures of 4-6 billion per quarter. Nokia has during the past months been a rapidly sinking ship.

Nokia's board had no option but to intervene and appoint a CEO who isn't chronically slow. Elops is result driven but most importantly he lives in the real world and has acknowledged the seriousness of Nokia's situation. The previous management has had 3 years to adapt to Apple but have refused to evolve Nokia with the times.

They've had their chance and the time is up.

 

[Gene]

For the sake of Nokia's future I hope you are right even though I personally think this was a catastrophic decision that will have far-reaching consequencies.

Here's the thing, and I mean it with all due respect to you and other commenters on the matter all over the internet:

You're not a CEO of a multi-billion dollar telecommunications firm. Nor do you (as far as I know) have any access to the resources and details, both in terms of marketing and financially, that the current CEO has. Therefore how can you objectively determine it is catastrophic decision?

I would very much doubt, despite what all the conspiracy theorists may think, that Elop would risk destroying his career and his livelihood if he truely didn't believe that this would succeed in bringing Nokia back into the smartphone wars. Sure some might consider it selling out to Microsoft and/or moving away from Nokias original mantra - but businesses change - Nokia knows this all too well given it started out as a tyre manufacturer (from what I'm told).

I don't think any person wants to have the stigma of destroying a multi-billion dollar company.

EDIT: Here's a well written article that might help you understand: http://www.slashgear.com/why-nokias-ceo-chose-microsoft-12132974/ and there's one saying that really comes to mind when talking about this alliance and thats: "My enemy's enemy is my friend".

PS: I love when people say Qt is better than what Microsoft can offer, particularly when those people have never coded in their life. By no means am I pissing on Qt, because it has its advantages, but from personal experience, Microsoft provides one of the best integrated development environments for its languages.

 

[bmer]

Nokia's board had given the previous CEO and management plenty of time to work on Symbian, Megoo and adapt.

The MeeGo project has existed for exactly a year now but Elop never gave it a chance to show its potential. As I said, the Qt decision was made late last year (in late October) and Symbian^3 was launched in September. Elop said he started the talks with Ballmer already in November, less than two months after he was appointed the new CEO. It almost seems that he never actually had any other other aim than to hook up with Microsoft.

Fact is, the iPhone came out in 2007. Almost three and a half years away and Nokia hasn't caught up. I've been following Nokia and its competitors finances for the past 12 months and with every quarter Nokia is bleeding market share of massive percentage numbers. Despite this the previous management has been downplaying figures by stating that Nokia still remains the biggest cellphone manufacturer in the world. Sure they have been, but that's for dumb phones with very low profit margin. The company's revenue have been high but on a flip side profit figures have been appallingly low, and even less than Apple's profit figures of 4-6 billion per quarter. Nokia has during the past months been a rapidly sinking ship.

Nokia's board had no option but to intervene and appoint a CEO who isn't chronically slow. Elops is result driven but most importantly he lives in the real world and has acknowledged the seriousness of Nokia's situation. The previous management has had 3 years to adapt to Apple but have refused to evolve Nokia with the times.

They've had their chance and the time is up.

Nobody is saying that Nokia didn't make mistakes or that Kallasvuo was the right man to lead Nokia. In fact I personally thought he was the wrong man from the start. Why? Because many members of Ollila's so called dream team left Nokia after Kallasvuo was named the CEO.
My point is, Nokia needed change and a thorough one at that, but is becoming almost fully dependent on Microsoft on such insuffiecient grounds the right choice? I for one don't think so.

 

[Gene]

The MeeGo project has existed for exactly a year now but Elop never gave it a chance to show its potential. As I said, the Qt decision was made late last year (in late October) and Symbian^3 was launched in September. Elop said he started the talks with Ballmer already in November, less than two months after he was appointed the new CEO. It almost seems that he never actually had any other other aim than to hook up with Microsoft.

Nobody is saying that Nokia didn't make mistakes or that Kallasvuo was the right man to lead Nokia. In fact I personally thought he was the wrong man from the start. Why? Because many members of Ollila's so called dream team left Nokia after Kallasvuo was named the CEO.
My point is, Nokia needed change and a thorough one at that, but is becoming almost fully dependent on Microsoft on such insuffiecient grounds the right choice? I for one don't think so.

You should've applied for the Nokia CEO position when it was up for grabs. It was fair game before Elop stepped in and then you could've called the shots!

Alas, its too late now and you had your chance...

 

[bmer]

BTW I recommend reading Tomi Ahonen's blog. He's a former Nokia exec and currently a mobile industry consultant who also holds lectures about mobile business at Oxford. He has a relaxed writing style but is particularly skilled with the numbers.

Here's his first analysis on the Microsoft deal:

First Analysis of Nokia-Microsoft Alliance - Wow this is good for Microsoft

Ok. I am in shock. I was pretty sure (not completely sure, but pretty sure) that this could not happen. For the first time ever, a technology brand that was leading in the market, abandoned its platform and selected one of the smallest rivals. Even with Mr Stephen Elop's background from Microsoft, I could not see this coming. But it did. I need to get over it. And provide some value to you, my readers. Lets do the quick analysis of this partnership.

CONGRATS MICROSOFT

Lets start with the obvious. Microsoft wins massively. One of the biggest wins in history. The whole PC industry is singing in chorus that the future of the PC is mobile. Microsoft which built its massive and profitable empire on the PC, was never able to do so in mobile (their peak market share was about 12%, and they currently have 3% but that includes the about-to-be extinct Windows Mobile. Microsoft's new OS, the one Nokia will adopt, called Phone7 has only 1.5% in Q4. Nokia had 33% for the whole year; Who is the winner here?).

But the PC industry went from stand-alone apps to the web. And Microsoft lost in that battle, having only a modest slice of the internet business. Now all internet giants say the internet is heading to mobile. And Microsoft is right back in that game, to fight as one of the biggest, in the mobile internet race as well. This is nothing but massive good news at Redmond and Stephen Elop's Swiss bank account no doubt has a huge bonus coming to it, haha.. (I am kidding - Micrsoft is one of those companies who likes to sue everybody, I am kidding I am kidding!)

NO NO NO-KIA

Nokia? Like I wrote in my stunned state, this is the beginning of the end. Nokia which for a decade said: the future of mobile phone handsets would go like the PC industry, to software and services. Because of that, Nokia had built a huge competent force in its software and services side, and bought full ownership of Symbian, the world's most used smartphone OS platform - and had already a near-completed replacement OS for Symbian, called MeeGo (developed with Intel). Now they abandon all that, and take onboard a brand new OS developed by Microsoft that has a miniscule market share, miniscule development community etc. This is not - mind you - that Microsoft Windows Mobile which in the past at one point was the second most widely used OS for smartphones (in the age before the iPhone haha). No, that has been killed.

Anyway. Nokia now announces their partnership with Microsoft. They also say they will continue to support Symbian for a couple of years, and make 150 million more Symbian devices. And they will still support MeeGo as an open source OS and wil release at least one MeeGo device this year.

So? Nokia will support THREE operating systems? All the costs and confusion that this creates? If it wasn't confusing enough to support two? And who in their right mind now bothers to learn to develop for Symbian's updates and newer versions? When Nokia itself is going from Symbian to Microsoft? Obviously any smart developer who wants to develop for Nokia will do so on the Microsoft OS, not Symbian. And MeeGo? What a kick in the face of Nokia's last-year partner, Intel? This is really painful news for Intel.

Nokia's Symbian developers will feel betrayed, its internal Symbian related staff demoralized. Nokia's MeeGo team will feel gutted. This is all good for the plans to turn Nokia into a software or 'internet' style company... After doing it for a decade, the thanks they get from top management is - actually we'll go buy the Microsoft version, thank you guys. Many of the rest of Nokia staff will feel that management has gone mad and the brightest will see the writing on the wall and cautiously start to send out their CV's to the offices of Google, Apple, Samsung, RIM. (And they will ask their families, do we want to live in Canada or California or Korea?). Gosh, I thought Anssi Vanjoki departure was devastating news for Nokia when Stephen Elop came but I couldn't see this haha..

But back to three operating systems - that means more costs and confusion. If you thought that Nokia's 'execution' was a problem before - just watch it do delays like a pro this year - like someone... who should I think of, someone who really knows how to deliver software on time? hmmm.. MICROSOFT !

This is the same Microsoft that stopped having annual release numbers (years in the software version Windows 95, Windows 98 etc) because they could not release new software BY YEAR ! If you thought Nokia delays with N8 were bad, that was only delayed by a couple of quarters. Microsoft can't even commit to releases by year. But yeah, Tomi, keep cool, try to analyze this rationally, ok?

The 'partnership' with Microsoft is very dangerous on many levels. On the one hand, this is Microsoft, the company previously known as the evil empire. How did it gain that wonderful nick-name? From all sorts of dirty tricks and lawsuits. Do you remember how Micrsoft got into smartphones? You're too young to remember. When Microsoft announced it was coming to smartphones, they selected UK based Sendo, as their launch customer and handset maker - then when the first Sendo handset was almost ready for launch - Microsoft pulled them from the deal, sued them silly, and went with Taiwanese HTC. The lawsuits ran for years, Sendo argued that Microsoft had stolen their ideas, not delivered on any software promises, were delayed on all schedules, and then gave Sendo's proprietary handset and market knowledge to HTC. Nice. The lawsuit was finally settled years later. But this is 'normal' for Microsoft. (For anyone planning to remain at Nokia, in all your dealings with Microsoft - do play wisely, keep all evidence, assume there will be lawsuits and you need to be prepared. You heard it here first. Microsoft loves suing people).

How well did its partnership with HTC go? HTC is the company that manufactured more than half of all smartphones on the Windows Mobile OS with more than a dozen other handset makers doing far less than half. HTC was so disgusted by Microsoft by the end, that they announced loudly they were switching to Android the moment that became available - to the point, HTC said they would not even use the next (which turned out to be last) version of Windows Mobile. Thats Microsoft partership for you. Motorola, another early Windows Mobile client, was so fed up with Microsoft's games, they said no Phone 7 smartphones ever! Moto said they only do Android. Samsung, LG, SonyEricsson and HTC give lip-service to Microsoft, all putting most of their effort to Android where they have a friendly OS provider (as in 'do no evil' haha).

Lets be real here. Microsoft can be a tough partner to work with, and do expect that each Phone 7 OS version will come with delays and bugs. If you thought your recent Nokia smartphones were not as reliable as they were in the past - that will get far worse, when Nokia uses the chronically buggy Microsoft OS platform and tries to integrate between the two. But thats just my view, haha. Who knows maybe in this new decade, Microsoft will turn into a pussycat?

END OF THE DREAM OF NOKIA THE SOFTWARE COMPANY

Ok. The good news is that Nokia can stop pretending to be a software company. They can focus on being an efficient box-mover, like say... Dell. Thats the ticket. Microsoft made all the big profits on personal computer operating systems and office suite software used by Dell computers, Dell made the thin profits moving boxes, where Moore's Law made each newer edition of the box ever slimmer in profits. Sure, this was a bold move by Nokia, but I'd say a boneheaded one.

Does Nokia gain a superior OS out of Microsoft? No. Phone 7 won't even be able to run all the features that current Nokia premium phones have. So right from the start, this means moving Nokia abilities down a notch.

But competitive advantage? Differentiation. Well, who else is committed to Phone 7? Lets see - Samsung, LG and SonyEricsson. So whatever Microsoft is developing, Nokia cannot even have any significant advantage - on its premium phones - that Samsung, LG and SonyEricsson don't know about. They gain all the delays of Microsoft while gaining also the eyes and ears of most of their biggest competitors to see all the development. When before, on both Symbian and MeeGo Nokia would have had their development to themselves. Yeah, moronic move.

Now the really silly part is to bleed all that profit in those three OS platforms. I will not be the first to say this, nor the last, but Nokia needs to kill off its OS platforms more quickly than that. Its now a journey into futility. Nobody believes in Nokia OS platforms anymore, they are the walking dead. Why develop them? Why maintain them? They now are only a drain. And those colleagues at Symbian and MeeGo units - shift away as soon as you can, you will soon be as modern as those who know how to program in Pascal, Fortran and Cobol haha. (like me, I'm that old, seriously, my last programming language was the original C, not even C+ haha).

Which brings me to Microsoft again. Can you see the parallels? This is like Microsoft who owned DOS (that was overwhelmingly bigger than the Mac OS), and was about to switch to Windows (which would be equally much bigger than Mac OS years later) - and six months before Windows was to launch - and 90% of its development was complete - suddenly abandon it, and go with Macitosh OS instead.. I said on this blog a few days ago, that a change away from MeeGo and Symbian would be a decision by a psycopath, and I said it in jest because I could not see it happening. I am certain this move by Nokia will be seen as one of the classic biggest blunders in technology history (for Nokia) and definitely one of the all-time greatest heists and triumphs by Microsoft.

So, all Nokia R&D and product development guys need to be retrained for Microsoft abilities, tools and methods. This is not learning new, this is unlearning the past, and re-learning the same but by the vocabulary, methodology etc of another company. That is a huge internal training effort, huge, for what? Will definitely be costly, and there will be very many times a Nokia contact, internal or external, will now see as the automated reply 'I am not available now, I am in training' haha.. Yeah, Nokia is moving to internet speed exactly how? This means the whole organization is mummified for at least what, 18 months? All processes will now be made slower and in the end, will they be any faster when they have to often consult with their Microsoft partners on issues (rather than internal Nokia colleagues). Yeah.. Look up Sony and Ericsson, how long it took for those two partners to understand each other. Or check Alcatel and Lucent. And this can very well end belly-up, see Daimler and Chrysler. It will not make Nokia a more responsive and modern company. At least not for the next 18 months, maybe longer. And the end result won't be something faster it was today. Not with this partnership.

Their internal contacts will now need external Microsoft contacts (most of whom are in the USA, time zone hassles etc). All good stuff that will help in profitability exactly how?

BUT IT OPENS US MARKET

Will this help sell in the USA? No. The mobile phone handset business is not like the PC business. Having Microsoft as the operating system will not sell any more handsets in America than Symbian, because the bottleneck was not the operating system, it was Nokia's poisoned carrier relationships in America. What Nokia needs to do, is restore good relationships with the carriers. Then it doesn't matter which OS the phone has. To prove my point - Google's Nexus One, on the amazing Android OS which at the start of last year was the hottest thing going - and defeated both Apple and RIM - and at the time the Nexus One was a highly rated 'iPhone killer' but suddenly, US carriers decided not to subsidise the Nexus One, and Google killed the phone in 2 months. It was not the desirable OS, it was carrier relationship.

Exhibit 2 - Microsoft's own phones, its first ever, the Kin phones. They were to release on US carriers, suddenly the carriers didn't give the subsidies that the Kin phones needed, it did so fast that Kin was killed in 6 weeks - the fastest death in mobile phone history. It was not the desirable OS - not even Microsoft branded OS - it was carrier relationship.

Need more? Exhibit 3 - Palm. The last Palm-branded phone, using WebOS, was greeted as the best phone on the market by many analysts, as good as, some said better, than the iPhone. It didn't get carrier deals on the four networks - Palm died. Again, not the OS that decided, it was carrier relationship.

Having a great OS - whether Android, or Microsoft, or Palm - was no guarantee of US success. It is completely up to the carrier relationship - and nothing else (in the USA). The handset business is not like the PC business. Premium smartphone handsets in the USA are sold with subsidy, and unless Nokia gets subsidies from the carriers, the OS is irrelevant. And the OS itself, is irrelevant to getting the subsidy, else Nexus One and Kin would have been runaway sales hits by now, in the USA.

But who am I to advise Nokia haha.. Like I wrote before, they don't listen to me haha.

So, Stephen Elop becomes Steve Ballmer's whipping boy? Pretty interesting. And I was thinking we were seeing the opportunity for a new Steve Jobs to step on the stage today. How wrong I was haha..

What does this mean to Nokia's internal problems? What problems does this fix? Nokia's problems were in execution - so say most analysts, not just me - and now they introduce a THIRD - THIRD operating system. Will this help or hurt Nokia. Hmmm.... Samsung recently found that supporting many operating systems was costly, they cut down. SonyEricsson found recently that supporting many operating systems was costly, they cut down. Motorola found recently that supporting many operating systems was costly, they cut down. Nokia bravely goes the other way. Last year they supported one OS, this year they will support three. This will not help Nokia profitability.

So Nokia abandons its own OS platforms. This is 'smart', I am sure. Not that in the PC world it was the OS provider who made most profits and the box-movers made the slim profits. Hmmm.. So Apple? They jealously guard their right to make the OS? So RIM feels their competitive edge comes from making their own hardware, their own OS and having their own software, solving the end-to-end. Hmmm Google? They not only like making the OS in Android, they also want to make handsets, so badly, they have launched Nexus phones - TWICE. And the world's biggest computer maker, HP, which is twice as big as Nokia in global sales revenue - and have been a tiny smartphone maker for a decade - recently decided they want to own their own OS, and bought Palm and now have just announced their first new Palm WebOS based smartphones. You'd think HP had seen enough of the pain of being a slave of Microsoft, to want to do this. So much that they outbid HTC who wanted Palm too.

Oh yeah, of the five biggest smartphone makers, Nokia is now the only one who doesn't make its own OS anymore (yes yes, I know they still will support Symbian and MeeGo but they have effectively announced their termination today).

INDUSTRY CHANGED TODAY

Winners? Microsoft is by far the biggest winner out of this. This is massive for them. They were a side-show. Now Steve Ballmer has his weapon to stay on center stage.

Samsung. They now become the biggest handset maker who controls its own destiny with their OS bada. I am upgrading bada's trajectory and expect them to remain bigger than Microsoft - because Nokia obviously will split their handsets to 3 operating systems, so while Microsoft grows strongly, it won't match bada's trajectory (as Nokia's low-cost phones, where most of Nokia's smartphone volume is, are on Symbian).

When bada becomes the second biggest OS (Android will now rocket to number 1 within weeks haha), it will be when it passes Symbian. I'd say that happens in 2012. Microsoft-Nokia will be playing catch-up to bada. This is very big news at Samsung.

Then Google. They know that Google can run rings around Microsoft in development speed and they have the army of giant handset makers to overpower the Macrobureaucracy now known as Microkia. The Android market share will be bigger than all Nokia OS's and all Microsoft OS's combined before the end of the year.

The Android community will cheer and celebrate. They will so overpower the industry, they will celebrate every statistic and lead, and watch how Microsoft lingers in single digits and eventually climbs to low double-digits.

Apple wins too. Nokia always had the potential to strike back. The N97 coulda been an iPhone killer and the N8 and E7 all exhibited potential they might have been big. With MeeGo and advanced handsets, could have made an iPhone killer, look at the N900 and Maemo. It showed so much promise. I think Apple are so cocky and confident, they really weren't losing any sleep ever about Nokia, but their strategy guy would always keep an eye on them and some of their smart guys knew, if Nokia ever really put their mind to it, they coulda crushed the iPhone. Now they can sleep more easily. They know that for the premium price segment, Apple is unassailable and they know Microsoft delays and hassles well - just look at Microsoft's music player (I forget what its called, Zune?) vs the iPod. Apple see this as great, as this partnership weakens Nokia as a credible Apple rival - Apple can concentrate even more on beating Google.

Motorola - are happy they are on Android if Nokia is stuck with Microsoft. The new year is starting very well for Motorola.

LG will consider making their own OS like bada, might actually try to woo Intel into 'MeeGo part 2'

SonyEricsson is happy they are on both, they can keep an eye on Microsoft while doing most of their good phones like the PSP phone on Android

HTC is laughing but also considering seriously if they can afford to start their own OS. And since they know Microsoft the best, they are blessing the day they switched to Android.

HP could not have picked a better time to return to mobile with WebOS - there will be plenty of Symbian and MeeGo developers who are looking for opportunities. That HP announcement could not have been timed better. HP should call Intel and say they shoulda stayed with US companies and woo them.


Intel is gutted. Sorry you guys! Now go and forget about Nokia, talk to Foxconn and HTC and Sharp and other manufacturers and release your own smartphone - using MeeGo and show it can be done, haha! You have been royally scr*wed, don't worry, now you have no obligations to Nokia and you can create your own smartphones. Look at the bright side!

NTT DoCoMo had been signalling a greater interest in Android and iPhone, they will probably start to migrate to Android based phones soon, this will cut Symbian sales even more. I would be surprised if there are any Symbian handsets sold in Japan next year.

Sharp has already been going Android, this accelerates that transition (from Symbian)

And Fujitsu will do the same, I am guessing to Android rather than Phone 7, but we'll see.

RIM is also cheering. They know the Blackberry beat the pants off Microsoft in the past. But Nokia was far tougher as a rival and just last year, Nokia's QWERTY handsets outsold Blackberries for the first time. RIM loves this. This severely weakens Nokia, now is the time for RIM to really pounce on the youth/consumer market as the only really credible youth QWERTY phones, get the gaming and social networking etc stuff to your app store as fast as you can!

In sum. A brilliant long-term superb move by Microsoft. After a decade of disaster in mobile, they are right in it, and now can finally capitalize on the mobile future.

For Nokia, massive disaster, wrong on so many levels. Most of all, they have failed the confidence of their supporters, especially the developers who were promised there was a future to Symbian and a migration path to MeeGo via Qt. No. That was no migration path, that was like the Talking Heads song, a Road to Nowhere. This also immediately sets the fear in the minds of all Nokia employees who see that all promises of Nokia have no credibility. The smart ones are looking for exit strategies. This helps Nokia exactly how? Nokia was always known as a poorly paying employer who treated its staff exceptionally well. So they relied on employee loyalty. This stabs them in the back so hard, Nokia cannot be trusted to stay loyal even to its own products and promises. To go and buy in Microsoft. As Nokia staff exodus starts with the best minds, it means costly replacements - now? In this environment for smartphones? When the growth is 71% per year? When competent staff is nowhere to be found? And Nokia has to recruit to replace staff? This helps profitability? This helps competence? All new recruits in basic induction training? The contacts that you had no longer work.. All this means - more delays! Nokia will become ever more like Microsoft in bureaucracy, and more like Dell in profitability. Good move!

I do think this makes the year more interesting. We can watch Nokia struggle and its more interesting than watching a giant recover its strength and dominate. But as a former Nokia employee, and more than that, as a Finn - this makes me weep inside. Oh, PS, expect Nokia to switch their HQ to California soon, right next to Microsoft's campus, so that Stephen Elop can be at Steve Ballmer's beck and call as needed..

UPDATE - OMG, how could I have missed this? Vi Mimir who is on Twitter as @sleipne - almost immediately responded to my tweet saying that as a European, is in shock, as Nokia has just gone from an open source OS to a closed OS. This is really really bad for the industry.

 

[Centurion]

Microsoft seem to be taking over Nokia from the inside. Engadget has just reported that Nokia's new head of the United States is being sources directly from Microsoft. Another cool factoid is that Nokia's CEO, Elop ranks 8th on the list of private people with shares in Microsoft.

http://www.dailyfinance.com/company/microsoft-corporation/msft/nas/institutional-ownership

This is going to turn into one hell of a soap opera. Finland can't be happy about Microsoft planting a seed for a silent dictatorship within Nokia. This can turn out to become a marriage made in hell. It wouldn't be surprised to see MS launching a takeover bid in 3-5 years if this partnership turns out well. If it doesn't then MS will just walk away having lost little.

Someone pass me a bowl of popcorn.

 

[bmer]

You should've applied for the Nokia CEO position when it was up for grabs. It was fair game before Elop stepped in and then you could've called the shots!

Alas, its too late now and you had your chance...

Yes, I should probably sign up to Nokia's next AGM and propose myself as the new CEO.

On a more serious note, this is a radical decision that results thousands of employees being laid off as Nokia dismantles its OS development departments.

It might mean Nokia becoming the Dell of mobile phones.

Microsoft seem to be taking over Nokia from the inside. Engadget has just reported that Nokia's new head of the United States is being sources directly from Microsoft.

I already mentioned that in post #30 in this thread.

Another cool factoid is that Nokia's CEO, Elop ranks 8th on the list of private people with shares in Microsoft.

That's true but he already sold 60 % of his shares. He doesn't own a single Nokia share yet but that's because the stock market legislation forbids him buying Nokia shares or sell Microsoft shares since in such case it could be considered that he might have used unpublished insider information to his benefit.

This is going to turn into one hell of a soap opera. Finland can't be happy about Microsoft planting a seed for a silent dictatorship within Nokia. This can turn out to become a marriage made in hell. It wouldn't be surprised to see MS launching a takeover bid in 3-5 years if this partnership turns out well. If it doesn't then MS will just walk away having lost little.

Someone pass me a bowl of popcorn.

That's the biggest fear among Finns I believe. After all, Nokia accounts for 1.5 % of Finland's GDP and is also a source of National pride in Finland.

 

[Gene]

BTW I recommend reading Tomi Ahonen's blog. He's a former Nokia exec and currently a mobile industry consultant who also holds lectures about mobile business at Oxford. He has a relaxed writing style but is particularly skilled with the numbers.

Here's his first analysis on the Microsoft deal:

Okay, so I went into that article with an open mind, since I'm quite interested in this entire deal. Started reading through that article and whoever the guy, he lost credibility when he can't use punctuation correctly AND when he says the following:

"HTC is the company that manufactured more than half of all smartphones on the Windows Mobile OS with more than a dozen other handset makers doing far less than half. HTC was so disgusted by Microsoft by the end, that they announced loudly they were switching to Android the moment that became available - to the point, HTC said they would not even use the next (which turned out to be last) version of Windows Mobile."

HTC are manufacturing Windows Phone 7 devices, and according to the latest news have a number of them coming this year and have always said that Windows Phone and Android will be their core platforms. Admittedly, few WPhones have been released, but WP7 has only been out 4 months.

When it comes down to it, there isn't much we can do arguing about rights and wrongs. We can only watch and see. I for one am going to be buying myself a Nokia Windows Phone. I've been interested in WP7 since it came out, but haven't purchased one because as a rule I never buy first generation hardware. I'll also be pointing my friends and family to Nokia Windows Phone's too, and being a person who works in the IT industry, a lot of non-techy people around me tend to trust my opinion (for some bizarre reason).

 

[Centurion]

It might mean Nokia becoming the Dell of mobile phones.

That might not be that bad of fate. Nokia can succeed by focusing their effort on enterprise products and that's what I believe Microsoft wants -- Nokia phones to tie in with whatever software solutions Microsoft offers. In addition to linking Xbox, Zune with WP7. So Nokia will be the donkey doing the heavy work. Microsoft are cleverly staying out of the hardware business like IBM decided to do when they foresaw that the PC hardware market would be commoditized.

 

[bmer]

Okay, so I went into that article with an open mind, since I'm quite interested in this entire deal. Started reading through that article and whoever the guy, he lost credibility when he can't use punctuation correctly AND when he says the following:

"HTC is the company that manufactured more than half of all smartphones on the Windows Mobile OS with more than a dozen other handset makers doing far less than half. HTC was so disgusted by Microsoft by the end, that they announced loudly they were switching to Android the moment that became available - to the point, HTC said they would not even use the next (which turned out to be last) version of Windows Mobile."

HTC are manufacturing Windows Phone 7 devices, and according to the latest news have a number of them coming this year and have always said that Windows Phone and Android will be their core platforms. Admittedly, few WPhones have been released, but WP7 has only been out 4 months.

Well, he is Finnish so perhaps you can forgive him for not getting the punctuation 100 % correct.
I'm not sure where he got the claim that HTC announced they would not use Windows Mobile 6.5.3 (which I think is the last version of Windows Mobile). Anyway, I think Nokia is clearly his strongest area of expertise.

When it comes down to it, there isn't much we can do arguing about rights and wrongs. We can only watch and see.

That's (unfortunately ) true.

 

[Padi]

I'm really pissed off by this decision. Nokia really is a sinking ship, all thanks to Ollila and now they make this decision? I can predict that from now on it's Microsoft that do all the decisions for Nokia and suck all the winnings to themselves. Soon Microsoft probably buys Nokia . Why did they choose that fkin Canadian and not Vanajoki. Fkin Amerian owners
Just saying it's a good deal for Microsoft but a helluva bad one for Nokia. Well lets see what the future has to bring.

 

[Cashmere]

BTW I recommend reading Tomi Ahonen's blog. He's a former Nokia exec and currently a mobile industry consultant who also holds lectures about mobile business at Oxford. He has a relaxed writing style but is particularly skilled with the numbers.

Here's his first analysis on the Microsoft deal:

He does make some good points. I am beginning to feel that the Microkia partnership might not have been such a good idea afterall. However, I am certainly looking forward to picking up a Nokia/WP7 handset soon.