The Smartphone Wars: Elop’s Burning Platform

Wall Street Journal’s TechEurope is running the full text of an astonishingly candid memo by the CEO of Nokia. Read the whole thing, in which Elop says Nokia’s performance and strategy over the last few years has been a disaster and it’s time to jump off the burning platform before the company is consumed by flames.

I think we can deduce three things from this memo. First, Elop’s appreciation of how bad a fix Nokia is in is complete. Second, he’s going to jump Nokia to WP7 or Android when the promised strategy announcement happens in two days from now. And third, there are some subtle pro-Android clues in there.

If this memo does nothing else, it proves that Elop is not afraid to look facts in the eye and propose drastic remedies for a near-terminal situation. I cannot recall ever hearing in my lifetime a CEO’s assessment of his own corporation that is so shockingly blunt about the trouble it is in. The degree of candor here is really quite admirable, and does more than any other evidence I’ve seen to suggest Elop has the leadership ability to navigate Nokia out of its slump.

It’s clear from the memo that Elop is preparing his company to change their flagship smartphone OS. You can’t get more obvious than ‘We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.’

The available alternatives are Android or WP7. Apple’s iOS is right out because Nokia needs to be able to sell cheap on a huge range of handsets. RIM and WebOS are tied to one company each. MeeGo’s been tried and failed. There are no other realistic contenders.

I think we’re being given some subtle clues that it will be Android.

Microsoft can dream all it wants of creating a third force in the smartphone OS market, but the brute economic fact it can’t make go away is that it can only price-compete with Android by selling every copy of WP7 at a loss, forever. Google can write off its Android NRE because Android is a feeder to a robust ad business – they did exactly what I taught them to in ’99 and found a secondary market to monetize. Microsoft doesn’t have the same option.

This fact has stark implications for a Microsoft/Nokia tie-up. Because, basically, Nokia can’t afford to pay license fees to Microsoft. Consider what HTC and Samsung would do, playing Nokia’s volume-production game against Nokia with an OS that is already clobbering the living shit out of WP7 in market perception and has a lower bill-of-materials feed-through to consumer pricing.

If Microsoft wants to use Nokia to grab market share, they’re going to have to subsidize Nokia to the tune of billions of dollars in foregone license revenue to get it. And where would the returns to Microsoft come from? I don’t see any strategic gain here, nor revenue enhancement for their core businesses.

Elop has shown by writing this memo that he’s not stupid. He has to have figured out that WP7 would put Nokia at a serious competitive disadvantage absent huge subsidies, and that if huge subsidies were in the deal they wouldn’t be sustainable for Microsoft.

That’s the business logic. Now let’s look back at the text of the memo.

Android and Apple’s are the only competing smartphone platforms mentioned by name. RIM gets no mention, Microsoft gets no mention. There’s no groundwork being laid here to justify moving to either of the latter. If Elop were contemplating WP7 seriously, I’d have expected the memo to include at least some attempt to spin WP7′s truly godawful performance in its first quarter.

(Reminder: WP7 is selling so badly that Microsoft won’t utter a sales figure and lost 1.5% market share this last quarter, according to comScore. One of my commenters turned up a report that they’re seeing 50-80% returns on WP7 devices, and other sources report WP7′s being outsold by Windows Mobile. A firm foundation for future success this is not.)

164 thoughts on “The Smartphone Wars: Elop’s Burning Platform

  1. It’s full of good sense, but isn’t the sense of desperation in the memo going to put Nokia at a disadvantage with external sources?

    I don’t infer that Nokie will go with WP7 or Android, only that they are going to put all their weight behind one OS.

  2. >isn’t the sense of desperation in the memo going to put Nokia at a disadvantage with external sources?

    Hm. Good point – it might weaken Nokia’s negotiating position with respect to any external OS supplier. Well, if that supplier hadn’t figured out how desperate Nokia has to be already, which has been difficult to miss fir a while now.

    Frankly I think what you’ve pointed out is another pro-Android clue. Walking into negotiations with Microsoft visibly dripping blood like this is not something I’d expect any Microsoft alumnus to do.

  3. Actually, there’s a very subtle clue in that memo that Nokia will be shifting to using Android:

    On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. … Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

    If Nokia needs to raise the their competitive edge, any other move is counter productive. I know we all agree that using WP7 would be Nokia’s death knell (no market penetration); but so is begging Apple for an iOS license. (Why would Apple entertain direct competition, and why would Nokia compete directly against their vendor in that fashion?) There’s no scenario that could put a rosy tint back on Nokia’s future, for a credit analyst, except for the shift to selling Android based phones.

  4. I hope you are right about your conclusions; we will find out soon. I agree with most of what you read into it, but instead read it as saying iOS with Apple and Android with Chinese companies are the enemies, and Symbian and MeeGo were their failures. I expect from reading it he wants a not mentioned in the memo surprise champion that will pull them out of the freezing waters and create a viable ecosystem of developers for them. I sincerely hope your interpretation is correct.

  5. Bummer…I was enjoying the Maemo/MeeGo ride.

    I wonder if this disaster will become propagandized FUD against OSS?

  6. >I wonder if this disaster will become propagandized FUD against OSS?

    Don’t see how it could. Elop says open-source Android just grabbed share leadership from them and is very frank that this is the main source of pressure on Nokia. How can you turn this into an anti-open-source story?

  7. @ Dan
    >I wonder if this disaster will become propagandized FUD against OSS?

    Probably. It would be very easy to spin. “Android, so open it’s your only choice.”, “Free to choose, as long as you choose android” etc etc etc

  8. >If Nokia needs to raise the their competitive edge, any other move is counter productive.

    Well, I agree. But the question is whether Nokia thinks the analysts will see it that way. There’s a possible world in which Nokia thinks analysts are so hypnotized by Microsoft’s past competitive success that they’d interpret a tie-up with Microsoft as a reassuring sign.

    The fact that you and I rationally judge that would be nuts, and that a Microsoft/Nokia alliance would be failure mating with failure, is not very relevant. What is relevant is WP7′s way-beyond-dismal performance in its first quarter. Nokia also has to weigh the strong possibility that after two disasters in twelve months (remember Kin?) Microsoft has about blown its credibility as a smartphone player.

  9. “…How can you turn this into an anti-open-source story? “

    Well…I wouldn’t…but I can almost hear the ‘usual suspects’ snarking :

    Sure, Open Source can work – if you’ve got the financial backing of Google to support it…is your company as big as Google? Do you really want to place your company’s fortune on unaccountable people? Remember what happened to Nokia when they tried that? “

  10. Yep, it wouldn’t be fair to create an anti-FOSS propaganda because of this. It only means that the company backing Android has managed to make it a lot more successful, and Nokia probably cannot afford the risk of using and promoting “new” OS.

  11. @ esr
    >How can you turn this into an anti-open-source story?

    Come on, you can’t see it? All it takes is a couple veiled references to the bad old days of microsoft. You yourself view the choice of Android as inevitable and the only sane choice, much akin to the old days of choosing Windows vs [other OS].

    And as much as you can argue that the open source of Android means no lock in, ask yourself how much that matters to the consumer (remember your previous discussion on Developer vs User rights) and whether a non-google approved Android without the google apps and app store would be successful.

  12. Until now Nokia has been under a rock, telling investors that everything will be okay. Elop has clarified to laid out some of the key issues that we have all been saying, thinking for the last three to four years.

    To call Elop ineffective is short sighted since it took this company a while to get to where it is. Should he not be able to make improvement during the next 12-18 months then he is a failure. Otherwise, let’s give him a chance to see what his plan is before shooting it down.

  13. @tmoney…

    To be honest, I hoped that Meego could to provide some competition. After all, they are also backed by “big brand” names.

  14. >To call Elop ineffective is short sighted

    I haven’t done that, nor has any commenter to my knowledge. Indeed, I’m rather more impressed with him than I was yesterday; it takes a lot of character to write something like the “Burning Platform” memo.

  15. >All it takes is a couple veiled references to the bad old days of microsoft.

    Nah. CyanogenMOD conclusively refutes that line of argument just by existing.

  16. >To be honest, I hoped that Meego could to provide some competition.

    Would have been nice. But MeeGo’s looking pretty toasty. You could pin your hopes on WebOS, but I wouldn’t advise getting too invested there.

  17. You could pin your hopes on WebOS, but I wouldn’t advise getting too invested there.

    Let’s see after HP’s big announcement. Have you ever tinkered with a WebOS device? I’ve got an unlocked Pre 2, and it’s really, really nice. A hair buggy, and not a whole lot of applications, and way too small of a screen, but the OS handles multitasking way better than any other mobile OS, from a UI perspective. The thing Palm always lacked was capital for execution. HP can provide them that. I’m not saying they are going to do well at all, but I think we’ll know pretty sure in about 6 months.

    I really hope RIM goes under soon, personally. They suck so hard. The rumored desperation move of installing Dalvik to run Android apps on their upcoming OS upgrade is credible, but won’t gain them anything. Why would anyone want to use a Blackberry to run Android apps when Android has a better experience overall?

  18. The way I see it, Nokia’s pretty much done for whichever option they choose. Windows? they’ll go down like the Zune. Android? Welcome to obscurity; why would anyone pick a Nokia android phone over a brand X android phone that costs ten bucks less? WebOS? Too little, too late.

    I hope Elop got himself a very nice golden parachute, because he’s not going to make squat on performance. He’s no Lew Gerstner.

  19. > it takes a lot of character to write something like the “Burning Platform” memo.

    So it does, but being able to spot a problem and being able to solve it are two very different things. If Nokia still had the talent that they did about a decade ago, they could hunker down and write a new platform that tops iOS in some significant ways, but those people are long gone.

  20. >If Microsoft wants to use Nokia to grab market share, they’re going to have to subsidize Nokia to the tune of billions of dollars in foregone
    > license revenue to get it. And where would the returns to Microsoft come from? I don’t see any strategic gain here, nor revenue
    > enhancement for their core businesses.

    I do. As Elop said, this is about ecosystems. If Microsoft succeeds in having WP7 on a large number of handsets, this can help Microsoft grow their ecosystem. Mobile or otherwise. This is no different from how Google has grown an/their ecosystem by making Android available for free. Microsoft would benefit from huge distribution and I think it would make good business sense for them to do so at the cost of foregoing mere licensing fees for an OS that isn’t doing well anyway.

    For Nokia this would make sense if all they ever aspire to do is to sell handsets, but it is a death sentence if they ever hope to build any sort of ecosystem or (mobile internet) services.

    If Nokia goes for WP7, Microsoft stand to gain a lot. I’m unsure exactly what Nokia would gain other than becoming beholden to Microsoft. I would think that there is much more money in owning the services ecosystem than just cranking out hardware.

    As for Nokia, they would be better off by trying to figure out how they can be part of the Android ecosystem.

  21. If I remember well from the bad-old days during the diaspora of Jobs, all the analysts had only a single song: Apple should follow the herd and make MS Windows computers.

    I think they will react the same today: If you do not follow the herd you are a risk. If, or anybody else for that matter, Apple had followed the advice of the analysts, they would be gone.

    So I think the analysts want Nokia to follow the herd and adopt Android. Whether Nokia will do that, and if that would really be their best bet is not relevant. They do have a history and brand name of churning out new and cheap phones with incredible speed. But can they still do that?

  22. I can think of one way to fix the WP7 cost issue. A quick googling shows that Nokia’s market cap is roughly equal to Microsoft’s war chest.

    Sure, it is a very, very expensive tie-two-bricks together scenario, but it would be a whole lot of fun to watch everyone react.

  23. My wild assed guess:

    1) Nokia uses Android
    2) Nokia has historically sold phones for people who intend to keep them for two to three years; largely this is due to Nokia being a hardware company.

    Nokia is going to try to become the Dell of smartphones.

    I suspect that they have something up their sleeve, like MS Exchange integration, to make them appeal to corporate customers, and just enough of a focus on “non-hipster hardware design” to get past the anti-Apple bias at most corporate shops.

    It doesn’t have to be Exchange integration; it does have to be something that will grab market share from RIM. Nokia needs an environment where they can be protected from a 6-9 month product upgrade cycle, and corporate buying is that.

  24. Actually I hear tell Nokia and Microsoft are going to announce a strategic alliance forthwith. This probably means WP7 on Nokia hardware. Do you realize how much office furniture would be heaved in Microsoft’s boardroom if they were getting ready to partner with Nokia, and Nokia suddenly jumped ship to Android?

    If Microsoft wants to use Nokia to grab market share, they’re going to have to subsidize Nokia to the tune of billions of dollars in foregone license revenue to get it.

    Not a problem. The marginal cost of cranking out a fresh copy of Windows or Windows Phone is very close to zero, as I’m sure you know. Remember netbooks? The open source fan’s argument was that Windows licensing fees were such a large chunk of the cost of the netbook itself that Linux made far more economic sense. Yet now all netbooks are Windows machines. Microsoft simply dropped the license fee for Windows on netbooks until it made economic sense again.

    Microsoft could buy its way into dominance of the smartphone market. It may not be as easy for smartphones as it was for netbooks, but a little difficulty never slowed them down before. Remember, in the 90s they had OS/2 to compete with but by subsidizing developers they bought an ecosystem for Windows 95 that was second to none. Which brings me to the second leg of this hypothetical strategy: if enough mobile devs end up wearing hats made of money for targeting Windows Phone, then Android is under credible threat of being marginalized. Money hats + best-of-breed tools (Visual Studio) + .NET runtime = the ingredients for a juggernaut of a developer ecosystem.

    The biggest obstacle I see to Microsoft securing key strategic deals that will give it control over the smartphone market is Steve Ballmer. He is pushy and aggressive, but doesn’t know how to close the deals that matter like Gates did. So while Microsft could do these things and not be out of character at all, what I think will happen is that they will partner with Nokia to deiiver a line of expensive Euro-styled Windows 7 smartphones — and both companies will watch the Android onslaught from the sidelines.

  25. >Have you ever tinkered with a WebOS device?

    No. A friend whose judgment I trust in such matters has a lot of WebOS experience says (1) WebOS is really, really, sweet, and (2) there’s no hope it will win.

  26. >Welcome to obscurity; why would anyone pick a Nokia android phone over a brand X android phone that costs ten bucks less?

    I think your premise is false. Nokia is very, very good at shipping hardware that’s cheap and (for its class) elegant. I agree that their future doesn’t look bright under any scenario, but I nevertheless think you somewhat underestimate their ability to compete against HTC et all. They might well fail as an Android OEM but it would be after a long, game fight.

  27. Oh! Forgot to mention — Microsoft will have to uncripple the Windows Phone runtime too and add things like support for real sockets. But a) that shouldn’t be too hard; b) the massive gains in developer goodwill they’d get make it something they can’t afford not to do.

  28. @Jeff Read:

    Microsoft simply dropped the license fee for Windows on netbooks until it made economic sense again.

    While that’s probably essentially correct, the devil is in the details. For both historical and common-sense business reasons, most netbook manufacturers with any market share are also notebook/laptop/desktop manufacturers. Buying Microsoft for netbooks makes economic sense now, not just because the cost of Windows on netbooks dropped, but because the cost of not using Windows on netbooks is artificially inflated — by Microsoft.

    They’re trying the same thing in the phone space. Didn’t HTC or somebody pay them some extortion money?

    In any case, it may be that Microsoft thinks that if they just keep the patent machine running, they can get money for every phone sold that doesn’t run Microsoft software, which, of course, reduces the differential cost for those phones that are running Microsoft software, perhaps below zero.

  29. >Actually I hear tell Nokia and Microsoft are going to announce a strategic alliance forthwith.

    They already did, once, in 2009. Microsoft promised mobile Office apps. It never happened.

    All speculation on what a ‘juggernaut’ the alliance might be founders on a couple of facts: (a) No discernible advantage in it for Nokia, and (b) the two companies don’t have a history of executing together well.

  30. MeeGo’s been tried and failed. There are no other realistic contenders. – Really i must have missed the meego phone

  31. @esr
    “All speculation on what a ‘juggernaut’ the alliance might be founders on a couple of facts”

    Personally, I suspect that MS are is such a dire state of fear that they will pay whatever is needed to get WP7 in the market.

    Any amount, whether it makes sense or not.

  32. @Winter:
    > Personally, I suspect that MS are is such a dire state of fear that they will pay whatever is needed to get WP7 in the market.
    > Any amount, whether it makes sense or not.

    I wouldn’t be surprised if you are correct. Microsoft has the cash and it wouldn’t be the first time some desperate company tried to buy their way into a market. Microsoft may see it has a do-or-die survival necessity and they might be correct.

    Hopefully Nokia is smarter than to fall into their clutches.

  33. Who is the audience of the memo? Internal staff? I think it is prep for asking them do something they would normally never be willing to do. I don’t see Android as being that leap. (You can still develop it in house much like MeeGo.) I do see WP7 being that kind of leap. Again, I hope I am wrong.

  34. Wild-Ass Guess — Nokia goes with WP7 — Microsoft forgoes licensing fees & makes money like Google through search ad revenues (Bing). If Google can do it, why not Microsoft? And it vastly increases Bing’s market share.

  35. What, I don’t understand: Elop is talking about ecosystems in a way that means: Nokia needs to build it’s own ecosystem and not just selling devices. How is that working with android?

  36. >Nokia needs to build it’s own ecosystem and not just selling devices. How is that working with android?

    Well, what Elop actually says is “build, catalyse, or join”. He’s carefully left himself the option to “join” here.

    And for good reason; Nokia doesn’t have time to ‘build’ an ecosystem. They lost 5% share in the last quarter alone, and brand collapses have a way of accelerating as costumers and retailers conclude the brand has no future. The “join” option is surely Android, not WP7 with a pitiful “ecosystem” of under 6K apps and developers staying away in droves.

    I think “catalyze” is the Microsoft option and unpacks to a scenario in which the Nokia alliance gives WP7 enough cred for app developers to start taking it seriously. In fact I think that one word “catalyse” is basically the only pro-Microsoft hint in the entire memo.

  37. >Elop has recognized that the digital lifestyle market is about ecosystems, not customer lockin.

    Nah, didn’t miss it, actually thought it was too obvious to be worth making.

    I think your analysis is correct, but I think you may be missing some implications. Ecosystems in this sense are huge things; my bud Doc Searls would say they consist of a lot of different conversations. They have much more inertia than individual products and are more difficult to control without compromising their ability to generate value. You can’t just whistle one up on command, and to the extent Elop understands this it’s going to constrain Nokia’s business moves a lot.

    Does Elop think a Microsoft/Mokia alliance can call a flourishing ecosystem into being? Just possibly he does. But to make the alliance work, that ecosystem would have to somehow plausibly promise to hit a higher-growth curve than Android’s – otherwise developers and customers will rationally choose to ignore it and back the horse that’s already hammering Nokia’s market share.

    I truly don’t see how it can be done. That’s not Android boosterism talking, I can’t imagine how I’d do it in Elop and Balmer’s shoes. (And take that seriously, because I’ve successfully played the ecosystem strategy game myself!) Android got traction against Apple by open-source disruption from below, but there’s no way that can be repeated with a codebase that has closed source and per-copy licensing baked into any plausible business plan for it.

  38. >It appears MeeGo’s coffin was just completed:

    Hardly a surprise at this point. Alas, MeeGo, we hardly knew ye!

    (I’m not being even a little snarky here. I liked the idea of MeeGo. I thought it was doomed from the word go, but I liked it.)

  39. Last I knew, Nokia had 1800 people working on Symbian and 200 people working on Maemo. Wanna bet that they get replaced by 50 people working on Android? The “burning platform memo” is going to be the justification for dismissing them.

  40. @est
    I think the question is how much would it cost MS to subsidize a 15% marketshare for WP7. And will they pay that to keep up the apearance of a continued PC monopoly.

    MS have historically paid $1B/year in legal fines to protect their monopoly by illegal means.

    MS could also spend $1B/year on phone subsidies.

  41. Eric,

    I agree that Nokia cannot afford to take a chance on ‘catalyzing’ an ecosystem in partnership with Microsoft. They might be stupid enough to try, they might even be lucky enough to make it happen, but the most likely outcome of that choice is to beggar one or both of the companies trying. Creating ‘closed’ ecosystems is a fool’s game.

    True, Apple has a relatively closed ecosystem, but they are a unique case and they built it on an existing (albeit smaller) ecosystem grown around their media players. Trying to duplicate Apple’s success is damn near impossible; as you say, ecosystems are huge things.

    My point, and the real question, is this: is Nokia able to change enough to participate in an open ecosystem? It goes against everything in their corporate culture. Myself, I think this is the reason Elop is talking about choosing between a burning platform and the sea — do you go with the certainty of a death you know or do you pick the outside chance of survival that comes with a greater chance of a death you don’t understand? Elop is telling the company the simple facts: jump or die. No time to look for alternatives that seem more like the platform you know.

    Memos like that are how history is made.

  42. Hi,

    There’s a major flaw here – Nokia’s flagship OS, for me, is the one they’ve been putting on their best products – and that’s the Symbian based S60. I warrant that Elop will put a stake through the heart of Symbian, pick an alternative for the “quick fix” to get viable & compelling phones on the market (I tend towards Android over Windows 7 myself), and either continue MeeGo as a skunkworks project (which is basically what it was up until last year) or kill it.

    The difficulty of MeeGo has been that it’s been developed as a proprietary product using open components. In some sense, they’re getting the worst of both worlds – no support & traction from suppliers, and missing the polish you’d expect from a commercial product, but without the broad co-developer community pulling in the same direction.

    Anyway – let’s wait & see. I am not convinced MeeGo on cellphones is dead. Maybe WebOS for Nokia?

  43. >Nah. CyanogenMOD conclusively refutes that line of argument just by existing.

    How so? No one ships Cyanogen, and while the “Google Apps” are allowed to be “backed up and installed”, Cyanogen themselves can’t ship them, meaning as a manufacturer, you have to ship Google Android to get the android market place. No manufacturer is going to succeed selling “Real” android phones with instructions to their users to then install “off brand Android” for the same reason that no manufacturer is going to succeed selling windows laptops with instructions on how to install Linux. No, a bit of spin and FUD will make the choice of using Android look to manufacturers like the choice of using Windows in the 90′s. “Sure you can do something else, but you’re on your own, and you’d be crazy to”

    Never underestimate the power of a good FUD campaign.

  44. > “Two turkeys do not make an eagle.”

    Definitely looks like WP7 then. Which should be very interesting, as it will lead to a real three-way battle. Apple fanboys may start criticizing WP7 if it looks to become a credible threat, as opposed to the current party line of “I personally wouldn’t use it, but it looks cool and is obviously way better than Android”.

  45. WP7 is selling so badly that Microsoft won’t utter a sales figure

    Thats not totally true.

    They’ve released the same kind of “sales figure” that the galaxy tab gave. Numbers shipped to stores. These are kind of telling in and of themselves. 1500k for the first 5-7 weeks, 500k for the next 5 weeks. A naive estimate would suggest that if the second 5 weeks was restocking then they’ve sold 500k but i wouldn’t put any stock in that figure whatsoever.

  46. Definitely looks like WP7 then.

    Yes, “turkey” is definately a good word to describe WP7.

  47. Here is a write up of the new HP WebOS phones. I’m thinking Nokia could make a killing producing ‘feature phones’ in a form factor similar to the Veer running Android. A 500-600Mhz processor, 256-512MB RAM and a microSD card slot coupled with a ‘hip’ enough design. It would be ideal at the feature phone replacement and would allow people to easily ‘step-up’ to a full sized Android phone, without data or app loss.

  48. Hmmm…further research reveals that there is already a J2ME emulator for Android, which is an upgrade path for the 77% of Nokia phones running J2ME. The other half of that equation is an S60 (Symbian) emulator for Android. There is an Android Emulator for the Nokia 5800, interestingly enough.

  49. @Georgi

    I followed that link, and read some of that guy’s earlier blog posts, from 1-2 years ago. He is pretty bad at reasoning out the consequences of trends in the mobile market.

    My guess? He has a lot of savings or business interests tied to Nokia. He is in complete denial about what is happening in the mobile market space.

  50. Georgi: That guy appears to make a critical mistake in thinking that there will be some sort of viable non-smartphone market in the future. That’s silly; if there was going to be a viable non-smartphone market, we would not be having this discussion in the first place because they would not be facing Doom. Why are we talking about them in tones of Doom? Precisely because there will not be any such thing as a non-smart-phone in 2014. Even the cheapest pieces of garbage will be able to hobble along on one version of Android or another at performance levels only slightly worse than the best phones of today. The rest of the hardware will probably be inferior to the best phones of today (worse touch screens, worse screens, worse cameras, worse antennas), but none of their customers will care much.

    There’s some other nits I could pick too but that one is enough to invalidate the entire line of logic I saw.

  51. Precisely because there will not be any such thing as a non-smart-phone in 2014.

    I think “no such thing as” is probably a little too far. Particularly for 2014. Unless there are some incredible improvements in battery technology in the next 3 years (certainly order of magnitude more than in the last 5 years), there’ll be a market for “this phone does nothing but take GSM/CDMA calls” just because you can charge the thing once a week.

    The rest of the hardware will probably be inferior to the best phones of today (worse touch screens, worse screens, worse cameras, worse antennas), but none of their customers will care much.

    Customers will care about worse touch screens if it means the thing becomes difficult to use and the biggest complaint against all smartphones is that their battery life is crap (for people who are use to the afforementioned week of power).

    Having said that, the market for dumb phones will certainly go from the 80%(rough estimate, certainly overwhelming majority) it currently is straight to single digits, do not pass go, do not collect $200. The reason that spells doom for Nokia is that they’re geared to supply and support that 80%. Single digits won’t maintain that infrastructure.

  52. How about MeeGo with a Dalvik plugin? Could that ‘catalyze’ things?

    I know, I know, I’m living on dreamware and pixie dust…but I dearly love my Maemo N900… ;)

  53. “Having said that, the market for dumb phones will certainly go from the 80%(rough estimate, certainly overwhelming majority) it currently is straight to single digits, do not pass go, do not collect $200.”

    That would be “no market”, as I meant it. Nothing resembling the Nokia of today can survive in that environment. Though I’m sure the name will end up on something.

    It’s also quite possible that there will in fact be no market for phones as you describe them. In order to be able to profitably sell something, you must be able to find enough buyers who are willing to pay enough to at least make up your fixed costs, and it takes more than mere technological possibility for that to work. Right now, you can’t walk into your favorite computer store and buy a new 128MB stick of RAM anymore. Of course it is physically possible to manufacture them, but at my favorite computer store the 256MB sticks are already $15; you can’t recover your fixed costs that way. ($15 is a bit of a ripoff anyhow, for $4 more you can have the 512MB.) 2014 is a bit of an aggressive prediction but with the development rate on the phone side lately, only a little bit.

    I’ll concede that market may not be quite dead in 2014, but 2016, almost certainly. By then, cell phone companies won’t even be able to economically offer them to you; for $0 more they’ll subsidize you an Android phone. Heck, they’ll push it into your hands because even the off chance that three months in you’ll give in and buy some 5G data will be worth the subsidy risk to them. (That’s assuming they have no-data plans; this exact logic and the fact the cell companies can’t afford to leave the money of price-conscious people on the table would suggest that by this time next year low-level Androids will be available without the forced data plans you see today. Just having a slick, painless upgrade-to-data-plan button will make it worth it to them.)

  54. That would be “no market”, as I meant it. Nothing resembling the Nokia of today can survive in that environment. Though I’m sure the name will end up on something.

    ON that point we agree. Nokia would need to do a major restructure/downsize to survive on that market. I think “no market” is an overstatement since thats effectively the same market as MacOS survived on. Note that i’m making the assumption(i think fairly justified) that Nokia would consume the entirety of the dumb phone space in this but-for world.

    But realistically we’re not going to see that. Even if this time they say “we’re going to revitalise symbian” come next year or the year after (still a year before 2014) they’ll announce a smartphone based on something else. The writing is on the wall that train wreck is heading towards, it won’t take that much longer before even the most short sighted board to see it.

  55. I’ll concede that market may not be quite dead in 2014, but 2016, almost certainly. By then, cell phone companies won’t even be able to economically offer them to you; for $0 more they’ll subsidize you an Android phone.

    There are people who will spend money on extra battery life and don’t need the extra function. Unless a lot of smart people are very wrong or technology changes a lot, smartphones are never going to compete with dumb phones for endurance. That is the feature that dumb phones will survive for.

  56. @est: “I think the question is how much would it cost MS to subsidize a 15% marketshare for WP7. And will they pay that to keep up the apearance of a continued PC monopoly.”

    But how do they monetize it? Even Microsoft can’t pay to support market share forever. The continued PC monopoly is generating less and less revenue over time.

    @PXLated: “Wild-Ass Guess — Nokia goes with WP7 — Microsoft forgoes licensing fees & makes money like Google through search ad revenues (Bing). If Google can do it, why not Microsoft? And it vastly increases Bing’s market share.”

    Hmm, Microsoft reinvents itself as Google? I could conceivably seem them trying this, and it certainly addresses the revenue issue, but I can’t see them succeeding. Microsoft has the wrong corporate culture to pull this off. At a minimum, they’d have to get rid of Ballmer and put somebody in who could persuade users that the New Microsoft isn’t evil. And what argument could they possibly make to claim that the Bing experience is better than the Google alternative?

  57. Why not just make the Nokia hardware able to run multiple OS’s?

    Set it up at the Kisok for either Symbian or Android or W7. Or if they’re really feeling frisky, Multiboot.

  58. tmoney: Google’s only stick to control Android is the Google Android Market. Consider that there’s already an Amazon Android Market.

  59. Dave Neary has put his finger on the problem with Maemo — it’s never been community developed even though it’s built from open source parts, and some pieces are open source. Other parts are not open source and that prevents forking, and preventing forking stops the open source effect. I have little hope for Maemo and less for Meego (which is even more of the same).

  60. Nokia is very, very good at shipping hardware that’s cheap and (for its class) elegant.

    …like that matters to anyone who settles for an Android device?

    It’s like trying to make decent hardware to run Windows. People who want quality buy Apple. Once you’re out of that category, price alone makes the difference, and all the Android vendors have ahead of them is a rehash of the Dell-Gateway race to the bottom.

  61. @Cathy
    “So, as I read the rest of the post, I couldn’t help thinking that what was being proposed therein was to use (easy) technology to address (or avoid addressing) the very hard social problems. ”

    They did exactly this with Hotmail, MSN, XBox, and the Netbook installs of Windows.

    MS make some $1B a month in NET profits. And that is only MS Windows and MS Office. All other products are struggling to get in the black. Most never ever were profitable. Bing search have been discredited time and again as a search platform and its ad serve business could not keep up with the market. The latest spat about Bing using Google to rank their searches will not have helped.

    If MS feel that their PC monopoly is threatened by mobile phones running non-MS OS’, then they will be willing to lose $1B a year on phone subsidies indefinitely. This is a monopoly, and monopolies are economical wasteful and decrease the efficiency of the market. MS has been proving these assertions time an again during the last 2-3 decades.

    And MS are right. Whatever OS will dominate the Smartphone market will dominate the tablet market and ultimately all of mobile computing. In the end, say in less than 5 year, the OS that dominates the Smartphone market will take over the personal computing market. So if MS loses the Smartphone market, they will lose their PC monopoly, and thus their 80% margin $1B/month franchise for printing money. And then they will start to break up in 2012.

  62. @Some Guy
    “all the Android vendors have ahead of them is a rehash of the Dell-Gateway race to the bottom.”

    That is called progress. If there is no race to the bottom on price, then their is no efficient market. Only an oligo- or monopoly can prefent such progress.

  63. I’m betting Nokia goes with WP7. Microsoft’s main play here is *not* to make money on ads like Google, it is to make money on apps (like Apple) and to make money on apps and dev tools (like Microsoft).

    For much of Microsoft’s history the Windows OS was break-even at best, not a significant money maker. The company made the bulk of its profits selling apps, especially Office. From Microsoft’s point of view, Windows was just the platform that helps end-users run Office and developers run Studio. Most of the development costs for WP7 are already incurred – “sunk costs are sunk costs” – so Microsoft only has to consider the ongoing development costs to maintain and upgrade WP7 specific to meet Nokia’s needs. Microsoft would like to control the *only* App Store for their platform and charge a commission on app sales, earning 100% of the return on apps developed in-house and ~30% of the return on apps developed by the development community, plus income from the developers in the form of support agreements and dev tool sales. That’s a business model they’re comfortable with. Microsoft would be willing to license the OS at its marginal cost to achieve that…if they can get significant uptake.

    Nokia, meanwhile, wants to differentiate itself in software. They have a lot of experience producing UIs that are simple and intuitive – they don’t want to produce phones that look like everybody else’s.

    Nokia’s buy-in makes it less likely Microsoft’s platform will just fold up and disappear like the Kin or the Zune or FairPlay – it gives them a little more credibility with developers. Not a *lot*, but a little.

    Nokia gets to seem relevant again, Microsoft gets to seem like it has momentum. It probably won’t work – it’s a Hail Mary pass – but that’s the way it should shake out.

  64. @Jeff
    >Yet now all netbooks are Windows machines. Microsoft simply dropped the license fee for Windows on netbooks until it made economic sense again.

    Oops, I think I’ve missed something there! Once again there’s your consumer on the train to crapville…

  65. I’ve been chewing this over, trying to think of the potential upside and downside.

    I get the impression that the name “NOKIA” stamped on the case might be exactly what Microsoft needs to get consumers to swallow the WP7 shit sandwich. Contrariwise, the uptake of adopting WP7 might give Nokia a nice publicity and marketplace boost…particularly if Microsoft pours some rocket fuel into the engine.

    Licensing costs can be dealt with; M$ could afford to give Nokia a nice “friends and family” discount (literally!) here. And I wouldn’t be surprised if there’ve been a few M$ hackers working on porting WP7 to some existing Nokia hardware, just to have a proof-of-concept fait accompli that would help Elop make up his mind. Perhaps subsidizing Nokia isn’t good for Microsoft…but perhaps Ballmer thinks it is. Or perhaps he knows that WP7 is surely screwed without something big…which might prompt him to roll the dice and hope for a natural 20.

    The Slashdot conspiracy-theory crowd is gonna squawk…but, let’s face it, M$ has pretty much lost that crowd forever at this point.

    The hell of it is, Nokia might get a bigger boost by adopting Android…and that nameplate would do at least as much to “legitimize” Android in the marketplace as it would do for WP7. But they must be worried about those Chinese handset makers that have already adopted Android and are months ahead of them in adapting to it at this point, and could probably undercut them on price till time T equals plus infinity.

    Bottom line? What Nokia should do is go full-throttle Android. What they will probably do, though, is hold their noses, mutter “perkele,” and go WP7.

  66. Nokia is very, very good at shipping hardware that’s cheap and (for its class) elegant.

    …like that matters to anyone who settles for an Android device?

    It’s like trying to make decent hardware to run Windows. People who want quality buy Apple. Once you’re out of that category, price alone makes the difference, and all the Android vendors have ahead of them is a rehash of the Dell-Gateway race to the bottom.

    Wow… would you like a side order of excluded middle with your whine?

    There is a middle ground between a gray box with a talking hole and something that looks like you’d pay 10 million dollars to leave it in your garage. In particular, the galaxy S is a sleek and stylish phone. And before the iPhone, Motorola was responsible for the insanely stylish RAZR.

    Unless of course your definition of stylish is “something made by Apple”…

  67. I’m with Winter here.

    Microsoft must be _desperate_. The writing is on the wall with regards to traditional desktop pc’s. With android moving onto tablets, the microsoft desktop infrastructure is only going to get less and less relevant. Microsoft _must_ do whatever it takes to stay relevant, buying that relevancy if necessary.

    Steve Elop may not be stupid, but he is a microsoft guy. He’ll have ties and sources with them as well as a general mentality that agrees with their way of working. To raise the game to conspiracy theory: for all I know, microsoft sent him in deliberately to move nokia onto the wp7 platform, justifying it with the company’s dire prospects.

    Catalyse is the keyword here. I think it’s a strange word to put in without thought. Nokia are a great company to catalyze the windows market, already having a lot of respect for producing quality products (from the old days). A strategic tie in makes perfect sense.

    Esr – I really hope you’re right and I’m wrong.

  68. >Esr – I really hope you’re right and I’m wrong.

    Well, I’ve shown my logic. I agree that one word “catalyse” sticks out rather suspiciously – if not for it, I’d consider a move to Android near certain.

    I should be clear that I don’t think Nokia going to WP7 would be any kind of existential threat to Android. Indeed, if Nokia and Microsoft do tie up tomorrow I think there will be champagne corks popping at HTC, Samsung, and Huawei. It’s always nice when a competitor opts to seriously wound itself.

  69. >I get the impression that the name “NOKIA” stamped on the case might be exactly what Microsoft needs to get consumers to swallow the WP7 shit sandwich.

    It night help outside the U.S. and Canada, maybe. Nokia doesn’t have any brand strength to speak of here. Indeed, their failure to crack the North American market was one reason for the ritual sacrifice of the previous CEO.

    WP7′s dismal sales performance so far means that if Nokia jumps to WP7 it’s still not going to have an entree in North America. Risk piled on risk.

  70. Hmm.

    While doing a bit of research for some of the innovations that Nokia have brought to mobiles over the years, I came up with one gem that makes me wonder if Nokia might be going WM7 because they have it and MS over a bit of a barrel. What i came to was Linked Internet UI which sounds an awful lot like what the “Mobile Social Platform” feature of WM7 was supposed to be about (assuming it made it in). Insert vague patent threat theories here.

    An argument against it that I can see is that they’ve actually published about it, which makes patent registration tricksy.

    Food for thought anyway…

  71. Anyone choosing to ship a product based on WP7 is basically shooting themselves in the head. If Nokia makes this mistake, I plan to load up on one-year puts.

  72. >Wow… would you like a side order of excluded middle with your whine?
    >Unless of course your definition of stylish is “something made by Apple”…

    JonB, do you imagine that something like this makes you sound clever?

    I don’t buy products because they’re stylish, I buy them because they suit my needs. As i’ve said many times, if and when I see a better product than I already have, I switch. I really liked my Sony-Ericsson phone, but it went in a drawer when I got my first iPhone. I really wish that Google had topped the iPhone, but they didn’t, because they were shooting too low.

  73. >JonB, do you imagine that something like this makes you sound clever?

    Just about exactly as clever as your remark about “settling” for Android.

    Some of us think Android is superior, possessing features and qualities we value that iOS lacks. You are of course free to disagree. But as long as you make snotty remarks about “settling” for Android, you’ll get back cracks about cheese with that whine – and the comeback will be justified.

  74. >Some of us think Android is superior,

    More like, you really wish it was, because it fits your political positions.

    > possessing features and qualities we value that iOS lacks.

    Such as?

  75. >…like that matters to anyone who settles for an Android device?
    >
    >It’s like trying to make decent hardware to run Windows. People who want quality buy Apple. Once you’re out of that category, price >alone makes the difference, and all the Android vendors have ahead of them is a rehash of the Dell-Gateway race to the bottom.

    It’s worse than that. Your original premise, that “people who want quality buy Apple” is false. It’s always been possible to buy hardware at least as good as Apple’s, in the wider PC market. Many people do so. In fact these days Apple *depends* on that wider PC market for components to cherry-pick; Apple is in fact a parasite on that same market, whose breadth of choices was created by the competition you deride as a “race to the bottom”. The ONLY unique things Apple brings to the hardware market are chassis designs (some of which are comically suicidal and functionally useless but look cool enough to be in museums- an Apple speciality) and ridiculous crippled mice.

  76. >Such as?

    It doesn’t matter. Other people have different scales of values than you do. If you claim they’re merely “settling”, you have no grounds to object when they fling equally snotty belittlements back at you.

    This truth has nothing to do with the relative merits of OSs and everything to do with not being a jerk.

  77. Oh, and as for settling for Android, that’s obviously been the case for Verizon customers, or they wouldn’t have been setting sales records when the iPhone became available on their network.

  78. If you suppose that WP7 at Nokia has been the plan for Microsoft for some time, and Elop was part of that plan, then I think Microsoft’s actions make a lot more sense. Rushing the product out on a certain deadline, even without copy and paste. Stuffing the sales channel with phones that will not sell for decent numbers as long as they are not looked at too closely….

    My prediction: Nokia goes with WP7. They really tank in about 18 months time – Elop is ousted not long after, and eventually returns to Microsoft or a Microsoft affiliated company. Whole new rounds of patent suits against Android come from Nokia and a number of odd patent trolls nobody has heard of before. Small scandal at Microsoft when some of the Asian phone manufacturers leak just how much Microsoft has been stuffing the sales channel with WP7 phones, and the strong-arming they received to license and create such phones in the first place.

  79. >>Such as?

    >It doesn’t matter.

    I was hoping you might be able to point out something that was better about (say), its development environment, its graphics performance, audio quality, or anything else that would give me a reason to give it another look. So far, all I’m hearing from you is cheerleading.

    >This truth has nothing to do with the relative merits of OSs

    Ah, so it’s some kind of revealed, emotional “truth”? (As opposed to any kind of objective criteria.)

  80. >It’s always been possible to buy hardware at least as good as Apple’s.

    Not lately, it hasn’t. I remember when I could buy a rock-solid HP machine to run *BSD on, and I also remember the days when Dells could be counted on to keep working for five years or more. These days, they’re just flimsy.

  81. There is one segment of the market which will stay with “dumb” phones – the no-feature phone which emulates an old touch tone phone for those who do not want to learn another user interface just to make a phone call.

    So, Some Guy, here is a market segment which thinks Apple has the lowest quality, because it’s way too complex. :)

    Yours,
    Tom

  82. Speaking of ecosystems, have any of you seen the new Google Chrome Web Store? What does it do to the Google Tablet App Store or the Android App Store if (when?) their apps also run under Chrome?

    Yours,
    Tom

  83. Some Guy,

    For laptops, the ThinkPad line is still built to wear like iron (for ordinary use, that is; they are not Toughbooks). Great Linux hardware, too. These days I wouldn’t buy anything else, because the lines from Dell (except maybe Alienware), HP, and Toshiba all suck rocks.

    For desktops, it’s been the case for more than fifteen years that you’re better off assembling from parts (or getting a knowledgeable friend to do so).

  84. @Red
    “If you suppose that WP7 at Nokia has been the plan for Microsoft for some time, and Elop was part of that plan, then I think Microsoft’s actions make a lot more sense.”

    I think Nokia was into the plan. They were the ones to hire a prominent ex-MS manager. I assume a subsidized “Work-with-MS” plan was part of the reason they hired Elop.

  85. >And what argument could they possibly make to claim that the Bing experience is better than the Google alternative?

    If they produce better search results, that’s all they need. I’m not the only person who’s noticed that the results Google is giving back has gone down hill over the last 3 or 4 years. It’s subtle, and it’s not 100% Google’s fault (spammers and scammers keeping one step ahead of the race, more pages more stuff mean more false positives) but Google’s quality has fallen. Google rose to prominence in large part because it replaced the crap results of Alta-Vista / Yahoo / Ask / whoever else with quality results. If you searched for something in Google, chances are what you wanted was in the first 10 results. These days, not so much. In fact there seems to be a sort of curve where if a search term or topic is recently in the news and common you’ll get excellent results from Google if you want current events results. If it’s a common term, but you don’t want current even hits, you’re looking at getting what you want about 15-30 pages into the results. If it’s an obscure or specialized term, you’re about 50/50 for either getting exactly what you want in one of the five results that come back, or getting a bunch of spam / key word results. If Bing can do better than this, they can take from Google. Of course, Microsoft will have to get over making Bing a giant mess of flashy things and pictures too, but it helps that Google is making their stuff more and more cluttered.

    >tmoney: Google’s only stick to control Android is the Google Android Market. Consider that there’s
    >already an Amazon Android Market.

    That’s a pretty big stick, and it also ignores the Google Apps. Again this goes back to “You can’t win by telling your customers that your phone can be better than the competitor’s as long as you go here and download this and install that.”

    The only way to make the Amazon Market work as an alternative to the real Android Market is to pre-install it, and even then, you’ve got to home that the Market will have the Apps your customers want. It won’t be enough for the Amazon market to sell “Upset Aves”, they need to have “Angry Birds”

  86. @Some Guy:

    Oh, and as for settling for Android, that’s obviously been the case for Verizon customers, or they wouldn’t have been setting sales records when the iPhone became available on their network.

    Apple’s history of selling out managed to scare everybody who really, truly had to have an iPhone into preordering one. But that’s over now. First day sales anecdotes are starting to come out, and it doesn’t seem to be surpassing Verizon or Apple’s expectations:


    Well, here at the flagship Apple Store in San Francisco, you’d have to say it’s not just cold weather that’s keeping people from lining up to buy the Verizon iPhone. Upon arriving here about five minutes (before the 7 a.m. opening of the store), there were literally more Apple Store employees, police officers and reporters–each–than people in line to buy iPhones.

    It will be interesting to see what the aggregate numbers are for the first week or so, if Verizon and Apple aren’t too embarrassed to publish them.

  87. And then there’s the report from New York City (same article):

    >Apple clearly was expecting more of a crowd this morning. As I mentioned earlier, the Apple staff way out-numbered actual Verizon iPhone 4 customers.

    I think my choice of the adjective ‘anemic’ to predict the iPhone V’s sales seems strikingly appropriate, at least so far.

  88. And the Wall Street Journal agrees – speaks of “suprisingly thin crowds”.

    Do I get to start laughing yet at the Apple fanboys who’ve been predicting the inevitable doom of Android on this sacred day at me for weeks now? No. No. I’ll wait. A miracle could occur.

    I wonder when the screams of denial will begin.

  89. > I wonder when the screams of denial will begin.

    Come on, you don’t know how this game is played? Somewhere out there is 1 store with a line of people waiting for … something. Surely it’s the iPhone V.

    News at 5.

  90. >screams of denial

    Project much?

    ESR says: Right, that’d be the first scream, right on schedule, and exactly who I expected it from.

  91. >Somewhere out there is 1 store with a line of people waiting for … something. Surely it’s the iPhone V.

    You’d think they’d know better by now. I keep calling the trends right, and they keep dismissing me as an Android-worshiper blinded by open-source zealotry. Clowns.

  92. As for potential markets for the low end, consider pay-as-you-go plans where you pay cash for the phone up front. There is a huge market there, and cost is
    the driving factor (and much more important than features in the phone). Consider:
    Kyocera Jax phone on Virgin Mobile – $10 with free shipping
    T-mobile phones least expensive phone is $30, by Nokia
    Crickey CAPTR II least expensive phone is $30.

    Since cost is the driving factor, a minimal display will probably be used. If you don’t have a display good enough for the Internet or real applications, why bother with a real processor or lots of RAM? Pretty soon you’re down to a pretty dumb phone. Sure, the low end will always keep creeping up because you don’t want to look like you’re obsolete, but 2014 is probably too optimistic as to when it is just easier to ship the current equivalent to a smartphone instead of something down-market.

  93. >Right, that’d be the first scream,

    Apparently, you and I have different definitions for the word “scream”.

    > predicting the inevitable doom of Android on this sacred day

    What I said was that today will be the high-water mark for Android. Terms like “doom” and “sacred day” are your schtick, not mine.

  94. “I think my choice of the adjective ‘anemic’ to predict the iPhone V’s sales seems strikingly appropriate, at least so far.”

    No comment from you that the iPhone blew away first day sales of any Android phone to date (in 2 hours in the middle of the night), even with the massive push Verizon gave to the Droid(s) in comparison to its weak marketing of the iPhone. What is your definition of anemic? I’m not saying that the V iPhone is going to set the world on fire and destroy Android, after all, it is a 7 month old phone and every review or article mentions the next iPhone is coming this summer.

    “Apple’s iOS is right out because Nokia needs to be able to sell cheap on a huge range of handsets. RIM and WebOS are tied to one company each.”

    Why is Apple not lumped in with the RIM and HP logic? Do you actually think that Apple would ever license iOS to another company, even if licensees were held to strict hardware requirements? Honest question. Also, why ignore Vic Gundotra’s calling Nokia a turkey? That comment pretty strongly points away from Android, leaving WP7 as the only other possible OS to license.

  95. >Do you actually think that Apple would ever license iOS to another company, even if licensees were held to strict hardware requirements?

    I’d say that the chances of Apple doing so are vanishingly small, since there really isn’t any other handset maker who has anything to bring to the table. The furthest they ever went in that direction with the iPod was letting HP resell them for a while, and that turned out to be pointless, since HP’s distribution didn’t offer anything over what Apple already had.

  96. So….serious question: how many Verizon iPhones does Verizon (and Apple, and Wal-Mart and Best Buy….) need to sell to exceed your prediction of “anemic” sales?

  97. @Some Guy:

    The whole point of something like Android is that it is ubiquitous. Oh, sure there may be a new shiny device now and again that will attract some attention, but in general there is no reason to wait in line just to be able to run the OS. So long lines provide a short-term bonus for whatever manufacturer, should they occur, but not central to the story. With Apple, the lines are the story. Hence, esr’s repeated reference to “positional goods” which some here take occasional exception to.

    Speaking of remembering things, how about this?

    http://tech.fortune.cnn.com/2011/02/05/survey-44-of-verizon-android-users-likely-to-switch-to-iphone-on-day-one/

    Whether Apple and Verizon (both of which companies seemed, ummm, overprepared for the day’s events) manage to produce what they consider acceptable sales for the rest of the week, the rest of the quarter, the rest of the year, etc., I think we can all agree that usamp hasn’t yet managed to show the superiority of their “internet panel” approach to polling.

  98. >Apparently, you and I have different definitions for the word “scream”.

    You are quite right. I was unfair. You didn’t really scream. It was more like….a petulant whine.

    I expect to hear a lot more petulant whining from you in the next eight weeks, that is if you don’t entirely slink away in embarrassment.

  99. Based on the evidence, it seems like a good rule might be:

    “Nerds will line up around the block for brand-new hardware that gets introduced by Steve Jobs.”

    As for seven-month-old hardware introduced by Verizon executives…not so much. That, you can order online or go get at leisure.

  100. > It was more like….a petulant whine.

    Heh. And you call me snotty?

    >I expect to hear a lot more petulant whining from you

    I’m sure you’ll apply whatever colorful characterizations you care to.

    > if you don’t entirely slink away in embarrassment.

    What do you think I should be embarrassed about, Eric? I state my opinions honestly, and I make predictions based on the information I have available to me.

  101. > With Apple, the lines are the story.

    No, with Apple, the quarterly reports are the story. They show a great deal more than first-day sales.

  102. iPhone on Verison killing Android? People buy Android only because it was not on Verison?

    iPhones were available on any carrier in Europe, and Android is doing fine there in head on competition.

  103. >So….serious question: how many Verizon iPhones does Verizon (and Apple, and Wal-Mart and Best Buy….) need to sell to exceed your prediction of “anemic” sales?

    Serious answer: Enough to swing the market share numbers by…let’s see, 3% is the usual statistical noise level, so let’s say 4%. 4% in a total smartphone userbase of 65M is 2.6M units. Of actual sell-through, not just channel-stuffing.

    Judging by early reports today, they’re not going to sell 2.6M units before iPhone 5 renders the question moot around mid-year. Of course I could be wrong – there’s lots of daylight left, especially on the West Coast – but the usual pattern on these things is a sharp spike of initial sales with fall-off over the following quarter. First-day performances as lackluster is this has been so far don’t tend to be recoverable.

  104. > they’re not going to sell 2.6M units before iPhone 5 renders the question moot around mid-year.

    Well, that’s an interesting prediction. You’re claiming then, that Verizon won’t be able to sell as many iPhones in a quarter as AT&T did around three years ago?

  105. People buy the phone that fits their needs. They use their own experience and advise grazed from trusted and mixed sources to hone in what fits the bill.

    The blatant assumptions that smartphones will make up 90%+ of the mobile market within the next few years is abysmal group-think. Just because you and all of your friends _need_ a smartphone to feed your email/facebook/twitter/mobi-pron addictions does not make that a valid observation that can be extended to _the_rest_of_the_world. For my work, I need a smartphone, but I have very smart, very successful friends in high tech fields who use dumb-phones intentionally. In the 3rd world, which I spend too much time in, smart-phones are a rare luxury and rarely even seen.

    Back in the 90′s, when Nokia rose to prominence on “dumb”-phones, they did it because of the little things, the basic design polish both in hardware and software justified a few more dollars for something that just worked better. Even in a crowded Android marketplace, there is still an opportunity for Nokia to pursue the “thinkpad” market of just that extra polish, and top quality that makes it a better choice.

    HTC gained rock star status by following that design lead of making the effort to polish their products for daily usage and found a place to really shine in the smartphone market back when all of the smartphone OS’s had various defects and challenges. HTC (I think), focused on what their customers wanted to use their phones for and made an effort at making those tasks easier to do on hardware that was typically more resilient than the competition.

    iPhone rocketed to success because the Apple juggernaut actually did manage to make a smartphone that was intuitive and friendly to use for a non-technical audience.

    Android captured the ease of use innovations and broke them free of hardware and manufacturer limitations. Android continues to innovate and allows a much greater variety of hardware (think cost, quality, capability), than has previously been available. If you really want to see innovation, you need to pay attention to what is coming off the small run manufacturing lines in China, not what is being hyped at the corner cell dealer.

    To bring this back to Nokia – Nokia used to represent the premium quality before they started churning out mass bottom dollar. In the 3rd world, Nokia still has the market cornered on cheap, particularly in areas that have minimal data service, or none at all. Nokia still has an opportunity to remember how to innovate again, how to make phones that are just better in day to day usage, but they are going to have to fight very hard.

    I hope Nokia chooses Android. I hope they remember how to make lust inspiring phones. I hope Nokia returns as a competitor for high end quality. If nothing else, better competition will make for a better phone marketplace to choose from the next time my needs change and it’s time for another new phone.

  106. >Well, that’s an interesting prediction. You’re claiming then, that Verizon won’t be able to sell as many iPhones in a quarter as AT&T did around three years ago?

    As I said, not at the sales rate of today so far, with Apple employees outnumbering customers in the first-day reports.

    Of course it’s possible sales velocity will go way up after launch. But that’s not usually the pattern with hotly-anticipated consumer electronics. And, as I have pointed our repeatedly before, iPhone V is a weak product – a 3G-only device being sold into a market where the high-end customers it wants are probably demanding 4G already.

    Add that to the statistical hints from AT&T’s 4Q2010 numbers that it already saturated the iPhone market, and…yeah, I wouldn’t be surprised at aggregate sales below that number. I’ll be watching for indications that sales velocity is rising as well; expect me to call this out if it happens.

  107. > I was hoping you might be able to point out something that was better about (say), its development environment, its graphics performance, audio quality, or anything else that would give me a reason to give it another look. So far, all I’m hearing from you is cheerleading.

    Please inform me when any of the following come to pass:

    1) I can develop for any current iOS device on a non-Apple computer without resorting to massive hacks. For the record, I run Kubuntu/OpenSUSE for developing for mobile devices.
    2) I can develop for any current iOS device in a language other than c/c++/obj-c, such as perhaps Python/Ruby/Java/C#/Clojure.
    3) I can openly purchase a current iOS device which will permit me to freely modify my device without resorting to hacks or jailbreaks.

    Until then, an iPhone is of little use to me.

  108. >The blatant assumptions that smartphones will make up 90%+ of the mobile market within the next few years is abysmal group-think.

    Um, who’s making this assumption? Anyone here?

    Personally, I’ve been paying so little attention to the dumphone market that I don’t even know what its worldwide size is in megausers. Enough to supply a lot of would-be upgraders to smartphones for several years to come, for sure.

  109. > Serious answer: Enough to swing the market share numbers by…let’s see, 3% is the usual statistical noise level, so let’s say 4%. 4% in a total smartphone userbase of 65M is 2.6M units. Of actual sell-through, not just channel-stuffing.

    Righto. Thanks.

    >Well, that’s an interesting prediction. You’re claiming then, that Verizon won’t be able to sell as many iPhones in a quarter as AT&T did around three years ago?

    Of course, this quarter is half over, and there’s a whole other quarter before iPhone 5 comes out…. So there’s plenty of wiggle room for everyone to look smart.

  110. >> With Apple, the lines are the story.

    > No, with Apple, the quarterly reports are the story. They show a great deal more than first-day sales.

    You mean like the way that quarterly reports showed that Apple barely managed to hold market share in 2010 Q4?

  111. esr wrote:
    Um, who’s making this assumption? Anyone here?

    I’m making that assumption. At a certain point, it’s going to be cheaper to develop a dumphone out of Android parts. You just have to leave off the smartphone cruft. Drop the wifi, drop the camera, drop the touchscreen, use a smaller display, find a key driven UI, and now you have a dumphone.

    Only it’s really a smartphone under the covers, with all of the smartphone features papered over. Someone, somewhere is then going to realize that this is a market opportunity, and redo the UI to take advantage of smartphone features even given the limited hardware.

    Then all phones will really be smartphones, just functionally limited versions of smartphones. Because it will be cheaper to build it that way.

  112. > 2) I can develop for any current iOS device in a language other than c/c++/obj-c, such as perhaps Python/Ruby/Java/C#/Clojure.

    Apple relaxed some of their more idiotic restrictions, so you actually can use languages like C# now: http://monotouch.net/FAQ. But points 1 and 3 will be true for the foreseeable future.

  113. ESR said: Apple’s iOS is right out because Nokia needs to be able to sell cheap on a huge range of handsets

    More directly, it’s out because Apple doesn’t license it to anyone, ever, for anything.

    Nokia couldn’t use iOS even if they wanted to.

  114. I’d be surprised if Microsoft and Elop aren’t in negotiations about what it would take for Nokia to become a WP7 shop. It may be that Elop’s memo is a bargaining ploy for a better deal. We’ve seen this in the past: businesses using Linux or Open Office or some other open source software as leverage to get concessions from Microsoft. Surely there is a price, albeit quite steep, that would cause Nokia to sell out to Microsoft. It’s just a matter of getting Microsoft to that point.

  115. > Apple relaxed some of their more idiotic restrictions, so you actually can use languages like C# now: http://monotouch.net/FAQ. But points 1 and 3 will be true for the foreseeable future.

    When did that happen? AFAIK, as of iOS 4 the developer platform license agreement contained the following clauses:

    3.3.1 — Applications may only use Documented APIs in the manner prescribed by Apple and must not use or call any private APIs. Applications must be originally written in Objective-C, C, C++, or JavaScript as executed by the iOS WebKit engine, and only code written in C, C++, and Objective-C may compile and directly link against the Documented APIs (e.g., Applications that link to Documented APIs through an intermediary translation or compatibility layer or tool are prohibited).

    3.3.2 — An Application may not itself install or launch other executable code by any means, including without limitation through the use of a plug-in architecture, calling other frameworks, other APIs or otherwise. No interpreted code may be downloaded or used in an Application except for code that is interpreted and run by Apple’s Documented APIs and built-in interpreter(s).

    Seems pretty unequivocal to me.

  116. @Some guy
    You need to realize that you are comparing apples to oranges. there are several alternatives to the motorola droid. OTOH there is only 1 alternative for iOS on verizon, and there are no viable alternatives for iOS on other wireless providers.

  117. I’m assuming the dumbphone market will go away, but I explained why in my comment above; it’s an economic argument, not a groupthink argument. Even just today I saw another article about how voice isn’t something the companies can sell profitably anymore. They will press a cheap android phone into your hand for the mere chance you might buy some data from them.

    Dumbphones aren’t going away because everyone’s a geek, dumbphones are going away because you can’t economically sell a dumbphone when for $10 more (if even that) you can have something superior what would have been called a smartphone two years ago and it will be worth well more than $10 to the cell companies to ensure you have one with whatever tactics it takes. It’s not that everyone is going to drop $700 on smartphones in two years, it’s that even the “free” subsidized phone will be a low-level Android. The idea that dumbphones have a glorious and long future is IMHO the silly groupthink the-future-will-be-just-like-the-present idea.

  118. ESR sez: “It night help outside the U.S. and Canada, maybe. Nokia doesn’t have any brand strength to speak of here. Indeed, their failure to crack the North American market was one reason for the ritual sacrifice of the previous CEO.”

    Eh? Before I got an iPhone, every mobile phone I bought–3 for myself, 2 for my ex-wife, and 1 for my fiancee–was a Nokia. And I’m in Colorado. Or am I just one of those “outliers”?

  119. @Jeremy:

    I think there’s no question that smartphone features will creep down to “dumb” phones — that’s just the way of the world. But note that, even now, a dumb phone needs to be pretty darn smart — there’s a lot of software there. So, it’s not a black-and-white world; it’s really a continuum.

    “They will press a cheap android phone into your hand for the mere chance you might buy some data from them” is probably already true in many developed countries. But if the screen for a smartphone costs more than a goatherder makes in a year, does it really make sense to give him a fancy smartphone in the futile hope that you will make a profit, never mind even recoup your investment?

  120. you can’t economically sell a dumbphone when for $10 more (if even that) you can have something superior

    In my mind, theres the kicker. If you’re looking for extended battery life, you can’t have something more superior than a dumbphone.

    I’m not seeing a glorious future, but it’ll be long.

  121. There is more to it than meets the eye!!

    First let’s look at Apple.. Last Quarter they sold 16.2 million Iphone…at an average cost to retailer of $625.00. That doesn’t include retail profit , Revenue from accessories, software/services and Itunes that are partially derive because of the Iphone.

    So total revenue for Q4 2010 for iphone alone is of over $10 billion with an average margin of 37%. Meaning a profit of around $3.7 billion minus a bit for R&D, Operational and Marketing (which cost are share with revenue from Ipods, Ipads , Macs n others)

    $3.7 billion profit is a lot for just a quarter. This is where everyone wants to be in. But not everyone can. Samsung with it’s galaxy s series power by Google android sold around 10 million unit for the last 6 month in 2010 for a profit of around 200 bucks a unit then they can make $2 billion dollars from android allow which then allow them to sponsor their non-Android 200+ million Handset sold.

    So Nokia wants in. They sold more than 450 Million Hand-phones but hardly any at $500-600 level. The Margin for those cheaper phones are simply too small. Plus the lower the phone the less sticky it is. But there is a giant name Apple there. They alone sold 48 million+ iphone at an average price of $600+ total of over $29 billion in revenue wit a profit of around 38% , totaling $11 billion. That don’t include Itunes, Appstore or Accesories revenues and to make matters worst they are growing at a rate of 90% without any price cut(Faster than the smartphone growth rate).

    So who were the Iphone’s direct competitor?? Well at the beginning it was WinMobile alliance, the symbian alliance, RIM and later Palm WebOS. Apple really didn’t do much and was very selective with its Carrier n Country. With better UI,Multitask and ecosystem Apple largely only targeted RIM for their Enterprises User and let their iphoneOS do most of the talking. For 2009 they sold 25 million Iphone at the price of $600,00+ and was growing 90%.

    What happen to it’s competitor? Well symbian cannot scale n became the cheapest OS smartphone and opensource itself. RIM decided to go midrange and expand globally while still maintaining its’ business customer. RIM also maintain its Keyboard only Smartphone. Win Mobile became a legacy Smartphone. while WebOs being a new generation OS loss money due to its smaller size and is later bought by HP. That leaves for some newer generation of Smartphones.

    So here are the candidate…. Meego back by Nokia& Intel, Bada by samsung, Brew by HTC ,Qnx by RIM Android by Google, Webos 3 by Palm/HP n window Phone 7 by Microsoft. WebOs was the most advance and mature because Palm was the previous giant of the old smartworld, they also had BeOs and Palm OS with them. But they invested into much money and sold too little and by 2009/2010 they had miss a cycle and had to restructured itself with HP. Windows7 Was only ready to compete with apple by the end of 2010. Bada was only good enough to compete at the low end with symbian, Android. RIM and winMobile, while QNX,Brew and Meego are only ready for 2011/2012 at Various range.

    That leave with Google android. Android was original meant to be the WinMobile killer. Google was so afraid of Microsoft would kill it’s business in Search by controlling the OS. Google lawyer manage to block Desktop search from excluding Google in the upcoming Window Vista. While Microsoft could not exclude Google in the desktop they could in mobile space and hence android was bought while at the same time forming an alliance with Apple on the Iphone space.

    But apple iphoneOs blew everything away… with its Multitouch technology. So Android change focus and start copying apple n being the Iphone Killer. With the help of a opensource community plus its CEO being in Apple Board and knowing many inner secrets to Apple success. With the help of then apple rival carrier Verizon by the end of 2009 Androids began it’s legit presence and by end of 2010 it has now bigger than the Iphone in total numbers. Android now has presence in all the the high end to mid end to even the lower low end due to its opensource nature.

    So what about Nokia? Nokia needs a new modern Os at the highest level to compete at the luxury Apple rate… Hardware is not the bigger issue. so Nokia choice are Meego, Android and WindowsPhone 7. Meego looks not to be ready for 2011 and if so only for the lowend. so Meego is out

    Windows phone 7 is very young a new with incomplete features but has big potential and is back by the number one OS Makers. It is an close system. Android is now the biggest Smartphone OS and is back by search and Ad Giant Google. It has some issue like fragmentation at all level, Being sued by Oracle for code stealing and by apple via HTC/Motorola for UI and multitouch. Also Androids is use by all level of manufacturer for high end to low end. Google android is a close system but Android itself is Opensources.

    So what are Nokia choice?? Only one choice.. Make money by selling highend Smartphone while secretly developing their own OS(Meego or another kind).

    Partnering with Google android is also risky. There are already three big player there US maker Motorola, Tawain HTC and The Big Sam…Nokias biggest rival. Plus Nokia will need to reskin android and add some added services to it. Google aslo don’t give a damn with you and you’ll have a hard time partnering third parties like Yahoo, Facebook, amazon store due to being close by Google. The partner you’ll likely get or allow are the junk one. Partnering with google android generally means you are also the enemy of the music and movie industry because of google piracy and DRM issue.(No itunes like for you google android guys). but this is a short time solution while waiting for your Os to come out.

    Partnering Microsoft with its Marketing Money at a cheap or free rate of license.
    With Microsoft helps it will be cheaper than being alone with Google. winphone 7don’t have fragmentation issue. driver are also less of an issue. Microsoft is desperate to find a willing partner and has nor problem blowing a loss of a billion or two is no problem for them. Microsoft projected of a sale of at least 20 miilion by end of 2011. If Nokia can sells about 12 million with a margin 200 dollars then that’s 2.4 billion of pure profit…with no little marketing or R&D. and as long as Google is big Nokia can make a lot of real easy Money with Microsoft money while still making 500 million other handset. Going hybrid (Winphone7 & android) might not work as Microsoft will probably object and will not give you the full marketing money and full support. But this is also a short time solution while waiting for your Os to come out.

    The last and expensive/risky choice is going alone with opensSource Android and reclaiming it back. This was probably the best choice but should have been done last year. It will cost money and is very risky and can be sue directly by Oracle, Apple and even Microsoft. but you can get better deals from better partner like Yahoo, amazon, FaceBook, Mapmakers, Movies and Music company,Browser makers Search engine and better Ad Networks.Plus you can port your legacy from symbian without fear of other androids device from having easy access to it. finally you can currate and control the quality of your platform while stealing or borrowing all the benefit from Android. make your own appstore but kick out all the Junk from android marketPlace while having new and exclusive app that is not shared back to other Android. You can throw away not only the google brand but also the android brand altogether while still benefiting from any android improvement. and maybe make some deal withe Music/Movies Guys.

    But This choice can be done in secret while still making easy money selling the close Winphon7 os or google close android Os.

  122. JonB, do you imagine that something like this makes you sound clever?

    Nope, when you’re pointing out someone else is being an idiot clever is not necessary.

  123. JonB: I want a high-quality laptop screen. I’m willing to pay a reasonable amount for it, but not $1000+ just for the screen. Several years ago, I could and did buy an IPS screen as part of a resolution upgrade without even knowing what I was doing. I went to buy a new laptop a couple of months ago, and went looking for a good screen. There were, at the time, zero good screens available. I settled for one that is at least adequate (Dell RGB-LED), but is still visibly inferior in picture quality to my previous laptop’s screen. (Since then HP offered an IPS screen, but with no economies of scale the upgrade costs what my entire laptop did.)

    I don’t think there will be enough of us, just like there aren’t enough people who want quality laptop screens to make them economically. I think you think I’m denying the existence of people who want good battery life. I don’t. I’m actually one of them, which is why I say “us”. I have a Nokia 6205 in my pocket, not a smart anything. But as someone with exotic tastes in other domains, like good laptop screens, I’m saying, I’ve seen this show before. This niche will not be sustainable in only a few years, because there won’t be enough of us. I’m already the holdout in my social circle and my social circle is relatively poor non-computer people (I most emphatically do not live in a tech hub). It isn’t enough for demand to merely exist, it has to be profitably exploitable. Ask people if they want battery life, they’ll say yes, but offer them the choice between the Nokia 6205-2 and the low-level full-Android phone and it’ll be 98% in favor of the Android.

    I will stop beating this point now, but I thought another example might be helpful. This sort of thing actually happens all the time.

  124. > More directly, it’s out because Apple doesn’t license it to anyone, ever, for anything.

    One of the reasons is so that Apple can control the hardware, which reduces their development costs and allows them to manage the cost / quality equation. Also Apple does not want to sell cheap handsets, or have the their brand associated with anything cheap. I can imagine Apple licensing iOS to Nokia, but only under a very restrictive contract which allows Apple to control price, quality and development costs. I can imagine how that would be good for Nokia – it would allow them to jump ahead of the smartphone pack. I can also imagine how it would be good for Apple by allowing the iOS ecosytem access to a larger market, especially if Nokia was allowed to do some engineering and sell phones on other carriers or for whatever high price, high quality market segments where Apple cannot reach. I can also imagine Nokia’s culture allowing this. I have a hard time imagining Apple’s culture doing so.

    Yours,
    Tom

  125. >Eh? Before I got an iPhone, every mobile phone I bought–3 for myself, 2 for my ex-wife, and 1 for my fiancee–was a Nokia. And I’m in Colorado. Or am I just one of those “outliers”?

    I guess you are. I’ve seen Nokia dumbphones in the U.S. but (a) the brand keeps failing to peg anything above statistical noise level here, and (b) that is widely known to be one of the reasons their previous CEO was sacked.

  126. @ Brian 2

    Hmm… What does that developer agreement actually state now? Is there a copy available without registering with them?

  127. Tom DeGisi wrote:
    Also Apple does not want to sell cheap handsets, or have the their brand associated with anything cheap.

    This is incorrect. If Apple is forced to produce something cheap, they will. Apple TV is now $99 (when it used to be like $250). The equivalent Roku (its primary competitor) is $79. While Apple TV is a 25% premium, you have to admit that the actual dollar cost of that premium is pretty small.

    I’m sure Roku kicked Apple’s behind for 2 years before Apple wised up, realized they were priced out of the market (which is the standalone Netflix player market), and redesigned a cheaper version of their product. But wise up they did.

    While I’m not sure if Apple will make cheaper phones, I’m willing to bet that they will make cheaper tablets. Maybe a 7″ version of their iPad without cameras at the $350-$400 price point.

  128. This is incorrect. If Apple is forced to produce something cheap, they will. Apple TV is now $99 (when it used to be like $250). The equivalent Roku (its primary competitor) is $79. While Apple TV is a 25% premium, you have to admit that the actual dollar cost of that premium is pretty small.

    I’ve only heard of Roku, but haven’t seen or used one. However, a quick google search reveals that you are incorrect: Roku devices start at $59, making Apple TV yet another product that Apple sells for a price 60% greater than its competitors.

    Based on price alone, it’s obvious that the Logitech Revue isn’t a competitor to Apple TV, or at least Logitech hasn’t priced it that way for some reason.

  129. > What does [Apple's] developer agreement actually state now?

    They entirely removed the main clause people were bothered by. The rules are still subjective and could change but for now, if you use a translation tool or compatibility layer and the functionality doesn’t suffer from this, there is no language in the agreement suggesting they’d ban on that basis. Here’s a summary of the changes:

    http://www.macgasm.net/2010/09/09/apple-updates-app-store-license-agreement/

  130. >> The equivalent Roku (its primary competitor) is $79

    > a quick google search reveals that you are incorrect: Roku devices start at $59, making Apple TV yet another product that Apple sells for a price 60% greater than its competitors.

    The phrase “the equivalent Roku” presumably refers to the $79 mid-range Roku, on the basis that supporting dual 802.11n is a significant distinguishing feature for a streaming device.

  131. @Glen Raphael

    OK. Looks like they removed the most ludicrously obnoxious restriction.

  132. @strongpoint

    Agree. Microsoft seems like the inevitable partner for Nokia. Elop is a Microsoftie. Microsoft is desperate and has lots of cash. Nokia has oodles of research $$ which makes them an intellectual property play, in my humble opinion. Perfect for Microsoft.

  133. >media sources are beginning to report that microsoft is the “winner” in the nokia sweepstakes.

    There’s nothing new here. Those same rumors have been swirling for weeks. A lot of press people and analysts are projecting what they want to be true in the absence of any real facts.

    Me, I still think the business fundamentals and the “burning platform” memo tilt towards Android. But I won’t be devastated if I’m wrong; I don’t think there would be anything but failure mating with failure in a Nokia/Microsoft tie-up.

  134. Agree. Microsoft seems like the inevitable partner for Nokia.

    Well, then we’ll see the death of both Nokia and MIcrosoft. Nokia is as much the wrong company to help Microsoft as vice versa. Microsoft needs a company with serious brand recognition, and outside of Europe, Nokia is nothing.

  135. ESR – I pulled the “death of the dumbphone” assumption from various commenters, sorry for the lack of citations.

    Dumbphones already cost $10 to make and sell for $40 in most of the unsubsidized world. Not a real sexy market. Nokia still makes some appealing phones in the $100-$200 unlocked, unlocked range, but they have a lot of competition from Samsung, Motorola and the hordes of Chinese one off shops.

    When Android fields phones in the $100 open market (unlocked, unsubsidized) things will get much more interesting. I’ve already seen a fair amount of iClones in the $150 range, so it’s going to be an interesting competition.

  136. @Morgan Greywolf

    Never seen a Roku? Wow. Roku changed my life. I dropped subscription cable about 9 months after getting my Roku box. I use my Playstation as my Netflix streaming device these days, but I must have used the Roku for a good 18 months.

    The Logitech Revue, as far as I can tell, does not understand the market. Streaming Netflix is the killer app for the living room. Google TV and the rest of the internet are mere side shows in the living room.

    Apple once thought that TV shows and movies purchased via iTunes could justify its overpriced original Apple TV product, but 2 years of getting its butt kicked by Roku and other Netflix streaming devices made them change their tune.

    The same thing is going to happen with Logitech and other Google TV products that fail to reach the $100 price point. And if you want to price yourself above $100, you’d better be a gaming console or have an integrated blu ray player, because that’s what the more expensive Netflix streaming devices are.

  137. >I’ve already seen a fair amount of iClones in the $150 range, so it’s going to be an interesting competition.

    So, a challenge of sorts for esr and other Android fans, since you mention you’ve seen this. I’ve mentioned before my aging 2G iPhone. It’s battery is long since salvageable and before I spend the money and effort on a new battery, I’ve been looking at other phones. Though it may not seem it, I’ll use any phone if it’s a good phone. I’ve held on the the original iPhone this long because it’s just that damn good of a phone (and no, I have no sunk costs in it, so I’m not justifying either). I can replace my aging iPhone with a “new” 3G one for roughly $150.

    So the challenge is, I need an Android phone that can be purchased, unsubsidized and without contract for $150 or less. It must be a GSM phone, and it must be better than the iPhone 3G. It must also be able to run at least Android 2.2 since that appears to be the standard Android for the time being. Last but not least, I need to be able to touch and use the phone before purchase. I know how a 3G works and feels, but Android phones are too inconsistent for me to spend $150 on one sight unseen. I have no qualms about buying used, so I don’t need to be able to buy it from the place I can touch it, I just need to be able to live demo it. Go for it guys, I’m willing to make the jump if I can find something since I’d rather not have a nearly 3 year old phone.

  138. >Go for it guys, I’m willing to make the jump if I can find something since I’d rather not have a nearly 3 year old phone.

    Nothing I know of meets all your requirements yet. The main blocker is your price ceiling, which won’t be breached until the next generation of Android phones built around SoC designs. Give it, eh, I’d say 5 months.

  139. Lot of people believes that the smartphone will wipe out dumb/features phone….

    That won’t damn happen….

    Just like the TV had never totally wipe out the radio,
    So will SmartPhone will never wipe out the dumbphone !

    Dream on… It don matter how cheap the TV have become!

  140. Thinking about it some more, here in the UK everyone seems to use Blackberries for work. I can really see people upgrading their RIM phones to a Nokia/WP7 device if it has good hardware design, which Nokia can do.

    I’m also wondering what Nokia’s new Mobile Phones division will do. This division is for “mass-market mobile phones” but also “will drive Nokia’s “web for the next billion” strategy”. That sounds like a recipe for Android, but that seems unlikely now.

  141. -11 and -12 will be “transition years”. This probably means there will not be a working WP7 device out this year. Symbian sales will fall off a cliff.

  142. @Rob: They’re keeping MeeGo? I’m surprised. Could it be as a bargaining chip/threat, like the Linux vs. XP dance the netbook makers played a while back?

  143. Keeping it yes, albeit as a sort of afterthought, or research project. Or back-up plan?

    “Under the new strategy, MeeGo becomes an open-source, mobile operating system project. MeeGo will place increased emphasis on longer-term market exploration of next-generation devices, platforms and user experiences. Nokia still plans to ship a MeeGo-related product later this year.”

  144. For Phone Maker the very high end is where the money is. Not a good business strategy when you sell nearly $500 million handset result in none of it is in the high end.The point of selling so many cheap phone is at least 5% or 25 million of them are at the very high end. Apple kill them there and Nokia manage less than 1% of high end smart phone.

    So it looks like Nokia took the second option… joining forces with Microsoft .
    Not a bad choice really and probably the best short term choice. It will be bad long term if they get addicted to Microsoft Cash and Learn not to ditch them. Microsoft by hook and crook want at least 20 million Win phone 7 by end of this year. so full Marketing and deveopement support there. In addittion to the highend market, US penetration and business and enterprise opportunity.

    The interesting thing is Meego has leg and should be the future of Nokia Os. So It was really good of them not to invest in opensource Android. Opensource android has too many problem. If it was really good they would adopted it as a secret/backup plan by Nokia last year. OpenSource Android had patent and copyright issue from the get go. And performance wasn’t good at the lowend. Opensources is also dictated by Google schedule and the real optimization only happens in Googles’ end. The Dalvik engines needs to go. Better do it In opensource Meego than opensource Android.

    Partnering with Google’s Android was probably the worst choice. Not only will Google neglect you. You have come up with all the money for your marketing and development. Worst still you’ll be deprive of any meaning partnership with 3rd parties because you are under Google’s terms of services. Samsung sold about 10 million highend Galaxy android but fail to make any real profit because much has went back to Marketing and development. Plus Samsung now is the second biggest Handphone Maker with nearly 250 million sold. There also a giant in other fields like memory , screen and chipmaking. Samsung is also killing other high end android maker. Way too expensive to fight Samsung and then fight the fruit Giant all alone.

    Interesting to see with Nokia going to Microsoft… how would the other Handphone maker react when they see Microsoft giving special privilege to Nokia. What will Samsung, Motorola, HTC, Dell would with their Winphone 7 partnership. Dell is as stupid as being the kitchen sink maker, that’s what you get for believing in Microsoft. At least HP was smarter with Web OS and ditch Microsoft first.

    Interesting also to see that both the giant of Highend Android maker, Samsung and HTC have their own anti-android smartphone strategy. Samsung have Bada Os which is young but doing well and HTC have their own Brew OS plus are also willing(or have done) to debone Opensource Android into their own HTC copyrighted version. Symbian will stay for tens of tens of years but for mostly the low end smartphone and most of the dumbphone. Its cheaper and more effecience than any other Os at the lowend but cannot scale up for Touch or Apps platform.

    Apple… Nokia…RIM….Samsung makes 90% of the Handphones Market profit combine. They’ll probably make sure than no Os maker makes more money or have more power than them. It is the best way to go for any good phonemaker.

  145. Nokia did, what could be a brilliant turn. Read the press release.

    Nokia split into a “Smart device” company which will milk MS. Actually, I think MS all but bought that part from Nokia.

    The other part is the mobile phone part that should bring “the web to the next billion”. That part would sell as many phones as possible, and would not develop new software. What is the cheapest way to sell great phones to surf the web? Build Android phones and load plain Android images on them.

  146. > The other part is the mobile phone part that should bring “the web to the next billion”. That part would sell as many phones as possible, and would not develop new software. What is the cheapest way to sell great phones to surf the web? Build Android phones and load plain Android images on them.

    So, how are these different from the ‘smarter’ WP7 devices? Android does everything WP7 does, with the possible exception of integration with other MS products.

    One detail to note in the press release: they’re keeping Marko Ahtisaari as the head of ‘Design’, which is expected to take care of the user experience. Some time ago a Nokia insider listed people who should go, and Ahtisaari was one of them. He’s the son of Martti Ahtisaari, a former president of Finland and a Nobel peace prize laureate. Lots of people have questioned competence of the son and asked if his appointment had more to do with his last name than product design. I guess it doesn’t matter much if the UI design is going to come from Microsoft.

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