The Smartphone Wars: Tomi Ahonen carpet-bombs Stephen Elop

The best strategic analysis of Nokia’s parlous position I’ve ever seen comes to us from ex-Nokia-executive and longtime company-watcher Tomi Ahonen: The Sun Tzu of Nokisoftian Microkia. It’s thorough, entertainingly written, and includes some instructive diversions into military history.

It’s long and really can’t be summarized well – you need to plow through Ahonen’s detailed analyses of things like the impact of Microsoft’s Skype purchase on Nokia’s carrier relationships to understand how royally Elop has screwed the pooch.

I see only one thing that I think Ahonen gets wrong. I think he is too complacent about what the actual medium-term prospects for Symbian were at the time Elop took the helm at Nokia; he understimates the speed of transition to smartphones and overestimates the stickiness of Symbian as a platform under that pressure.

Thus, I think Ahonen’s evaluation that Elop’s “Burning Platforms” memo wasn’t diagnosing a real problem is incorrect. On everything else, though, his indictment of Elop seems dead on target. He persuades me that Elop’s later blunders (beginning with tying Nokia to the Windows phone) were even larger and stupider than I thought at the time.

This essay changes my mind about something significant. I thought at the time of the Burning Platforms memo that Nokia’s best move would have been to ride the Android tide, that MeeGo was a noble but doomed effort that could never have gained any traction. Ahonen does a good job of arguing that Nokia had the marketing reach and good carrier relationships needed to make MeeGo seriously competitive. This, in retrospect, makes Nokia’s cancellation of MeeGo seem like even more of a tragic blunder than it did at the time.

Yes, I know that some Nokia alumni have just launched a MeeGo startup aimed at making it competitive on smartphones. I wish them every bit of luck, but they don’t have the co-factors for success that Ahonen ably describes, so I cannot think much of their chances.

Finally…who knew Ahonen was so well-versed in military history? That’s something I know more than a little about myself, and I’m here to certify that where my knowledge overlaps with his I find his command of facts excellent, and his judgment sound and incisive. Thus, I’m going to go read up on the Battle of Suomussalmi sometime soon.

153 thoughts on “The Smartphone Wars: Tomi Ahonen carpet-bombs Stephen Elop

  1. ESR – There’s a cut/paste error in the link to “The Sun Tzu of …”.

  2. URL is invalid. should not be “tertaininglyhttp://communities…”

  3. I was going to say you misspelled perilous as parlous. But you didn’t, and I learned a new word. :-)

  4. I agree with Jessica Boxer. Of course, the two words are synonyms, so I don’t know why I’d chuse* one or the other.

    * if it’s good enough for the US Constitution, it’s good enough for me.

  5. Yeah, the initial chart with Nokia v. Apple v. Samsung is rather misleading because it doesn’t include Android sales from non-Samsung players like HTC. Nokia did indeed have a real problem with multiple competitors ramping up on the network effects that Nokia was not in a position to compete with, imho.

  6. His name is Tomi, not Timo. (Although I almost wish Timo was an evil twin that is less verbose, capable of writing, and more intelligent.)

  7. @Jonathan Abbey
    If Nokia had gone Andriid, their current situation could hardly have been worse.

    What is puzling me, though, is what board members planned this sale of Nokia’s future to MS?

    It is obvious to me that Elop was hired to complete the conversion to WinPhone.

  8. “If Nokia had gone Andriid, their current situation could hardly have been worse.”

    Of course it could be. Microsoft is providing a second subsidy on top of what carriers might provide to the tune of about $250 per device (before paying the $20-30 OS license fee).

  9. I’ve had Korean friends who were quite justifiably proud of Yi Sun-sin. The Battle of Hansan Island was impressively decisive. The Battle of Myeongnyang seems almost inconceivable. He was literally the only thing preventing conquest of Korea (and possibly Ming China as well) by a newly unified Japan.

  10. OT, sort of, but also about Windows 8, the Nokia Killer

    Aldi PC becomes first retail PC with UEFI Secure Boot
    http://www.h-online.com/open/news/item/Aldi-PC-becomes-first-retail-PC-with-UEFI-Secure-Boot-1635893.html

    The system is based on MSI’s MS 7800 motherboard (an OEM product designed for Medion) which only allows Secure Boot to be activated once both an administrator and a user password have been set. Both of these have to meet certain minimum requirements, such as the inclusion of both upper- and lower-case letters. As sold, the systems have Secure Boot disabled by default and no keys are loaded or passwords set.

    (emphasis mine)

  11. 1. I can never hear someone from the USA talking about Symbian and believe they don’t have a biased opinion of it. It’s just impossible. It basically did not exist in the USA. How could anyone there have any respect for it?

    2. “So I cannot think much of their chances.” Chances of what? Of at least getting to seel some 10.000 units, of actually managing to subsist as a small niche company, of managing to subsist as a sizable niche company, or of actually “taking a share of the market”, become” the third ecosystem”?

    What does Jolla “have” to do? Attempt global domination, or just subsist as an independent state, like Finland did? Do they have to “grow in order not to die”? Is it completely impossible for anyone to ever create a hardware-selling business that does not have to be a total blockbuster in order to subsist?

  12. @Tim F
    “Of course it could be. Microsoft is providing a second subsidy on top of what carriers might provide to the tune of about $250 per device (before paying the $20-30 OS license fee).”

    You do believe in money, do you? But you cannot buy market share. At least, MS has consistently failed to do so.

    It is inconceivable to me that Nokia would have succeeded in producing an Android phone that would sell as bad as the Lumia has. Or any consumer phone that would have sold as bad.

    I bet that the Lumia with Symbian (801T), which is only available in China, will sell better than the Lumia with WinPhone in total. Even the N9, which is incompatible with everything else sold better wherever it was available than the Lumia. And the Lumia was practically given away, sometimes with an XBox.

    People seem to love Windows as much as a visit to the dentist. (I remember Jack Nicholson)

  13. And to see how popular Android is becoming, see the link. As I wrote, with Android, Nokia had a fighting chance against Samsung et al. Even with MeeGo (whatever) or Meltemi they had a chance. With MS & WinPhone, this is just a repeat of Kin and Sendo.

    Update: Open Source Android Console Fully Funded with $1 Million
    http://www.escapistmagazine.com/news/view/118375-Update-Open-Source-Android-Console-Fully-Funded-with-1-Million

    Ouya wants to shake all that up by offering a completely open source console with an Android backbone and a stylish design for $99. Games on the Ouya console will be free to play, and Ouya will provide a free development kit to anyone who wants one. The plan even encourages hacking, allowing the curious to take apart the box and tinker to their heart’s content.

  14. >>“If Nokia had gone Andriid, their current situation could hardly have been worse.”

    >Of course it could be. Microsoft is providing a second subsidy on top of what carriers might provide to the tune of about $250 per device (before paying the $20-30 OS license fee).

    Considering the relative sales numbers, the Microsoft deal was still probably worse than going Android would have been. And considering the time wasted that their engineers could have been working with Android, now it is definitely worse. People always need to remember not just immediate costs, but opportunity costs and foregone benefits as well.

  15. “Yes, I know that some Nokia alumni have just launched a MeeGo startup aimed at making it competitive on smartphones. I wish them every bit of luck, but they don’t have the co-factors for success that Ahonen ably describes, so I cannot think much of their chances.”

    I’m thinking they’re trying to gather up and retain MeeGo talent in hopes of returning to a post-Elop Nokia and becoming saviors.

  16. >How could anyone there have any respect for [Symbian]?

    Some of us do pay attention to events outside the U.S.’s borders,

    >Chances of what?

    Of being anything more than a tiny niche player.

    >Do they have to “grow in order not to die”?

    Yes, because markets with strong positive externalities are like that.

  17. @billswift
    “People always need to remember not just immediate costs, but opportunity costs and foregone benefits as well.”

    Quarterly profits rule!

    A company like Nokia did not become the leader of the mobile business by looking at only the next quarterly profits. But it has been brought down in less than two years by focusing on cash payouts by MS.

  18. @H.
    “I’m thinking they’re trying to gather up and retain MeeGo talent in hopes of returning to a post-Elop Nokia and becoming saviors.”

    Tomi hints in his blog post(s) that he hopes there will be an opportunity to gather some of the shards and talents of Nokia to start a new industrial company. The problem is that Elop has done everything a CEO can possible do to prevent such a restart. There not only is no Plan B. Elop has made sure there never ever can be a Plan B again for Nokia.

    The board of Nokia fits perfectly in Barbara Tuchman’s “March of Folly”.

  19. I still think Elop was sent in by microsoft in order for ms to have a phone company.
    The fact that his actions weren’t sane are irrelevant if his brief was to get a large company to use windows phone.
    He didn’t care about anything except getting nokia to be 100% ms as soon as possible and to make that publicly known in order to boost windows phone credibility.
    This whole deal was a ms marketing ploy. Nokia was sacrificed so that windows phone would appear as a safe future bet for other players to take on.

    Of course, I’m being paranoid and have no facts to back this up. But it was my first thought as soon as the move was announced and I’ve not seen anything to make me think I was wrong.
    (I didn’t think nokia would be sacrificed like this, I just thought “oh, microsoft want nokia to sell windows phones, damn, now I can’t buy nokia anymore”).

  20. > I still think Elop was sent in by microsoft in order for ms to have a phone company.

    If that’s the case, the evidence only goes to show just how poorly Microsoft understands the phone market. One would think that they’ve had plenty of opportunities to learn the hard way, but apparently they can’t see the light.

    Elop has said that he and his team considered each of MeeGo, Android and WP without prejudice, and decided that MeeGo development was not far enough along. That has always sounded like BS to me, and if what Ahonen says about the deals with China Mobile and NTT Docomo is true, MeeGo did have reasonably good chance of becoming a major platform. That makes it seem clear that Elop was out to switch Nokia to WP and to kill other operating systems from day one.

    (Btw, the verbosity of Ahonen – sheesh. You could cut the text down to a third without even losing the detours and the bits of military history, never mind the “dudettes” and “hahas” that make me slightly embarrassed to be a Finn.)

  21. @Jim T
    “Of course, I’m being paranoid and have no facts to back this up.”

    If we assume all players acted rational, incompetent and immoral but rational, this is the simplest explanation. Every other explanation I saw was much more complex or expected the players to act irrational.

    Note that this “plot” required other players inside Nokia to be in on the deal. Some stockholders and board members would have to collude with MS.

    Coincidentally, “Dodge & Cox, Capital Group, and JP Morgan each of them own over 5% of Nokia just in time for last vote for Nokia BoD”
    http://communities-dominate.blogs.com/brands/2012/07/the-sun-tzu-of-nokisoftian-microkia-mirror-mirror-on-the-wall-whose-the-baddest-of-them-all-waterloo.html?cid=6a00e0097e337c883301676857d1f9970b#comment-6a00e0097e337c883301676857d1f9970b

    Simplest story:
    - MS desperately, desperately, needs a convincing partner to produce WinPhones.
    - MS is willing to spend billions above and below board to bribe or buy a partner.
    - MS cannot buy out Nokia outright (legal and credibility reasons)
    - MS colludes with US investors and Nokia board members.
    - MS offers $1B above board to Nokia and $??? below board to selected investors.
    - Nokia board hires Elop to do the work.
    - MS and Elop are completely incompetent and destroy Nokia without selling WinPhones

    Note that this type of “investment deals” were recorded when MS channeled money to SCO to finance its court case against IBM. MS incompetence has destroyed partners in- and outside the mobile phone industry before. MS are renowned for rather paying the fine than stop doing illegal deals.

  22. @Winter – You might be analysing the situation rationally and coming to opinions as the result of detailed analysis, but I’m being paranoid.

    If they look the same, don’t be fooled. It’s a coincidence.

    To continue my paranoid streak, MS are not interested in the phone market. They’re there to head off android and iPhone from becoming defacto full-on computing devices a-la ESR’s excellent previous description which I can’t be bother to find.

    If they’re incompetent, it’s because becoming the #1 seller isn’t their aim – they just want to be in the same space as android and iphone and hope that their desktop weight will pull them in front once people start plugging their phones into their monitors and keyboards at work instead of opening the laptop.

    It’s hard to see it not working. Actually, it’s easier to see it not working with metro – an entirely new platform, so the legacy apps that would have pulled them in by default won’t run on these phones. So they’re relying on developer weight from .Net, not legacy apps. Still a strong play. And of course there’s the javascript play, which is interesting.

  23. @Jim T.
    “To continue my paranoid streak, MS are not interested in the phone market. They’re there to head off android and iPhone from becoming defacto full-on computing devices a-la ESR’s excellent previous description which I can’t be bother to find.”

    Yes and No.

    MS would be entirely happy if there are no Smartphones anymore. Just as they happily killed off netbooks. However, they understand that there is no way they can kill off smartphones, nor can they stop smartphones becoming personal computing devices.

    The only option left for MS is to get a foothold in the Smartphone/Tablet market. Just enough to remain relevant and protect their Windows desktop business.

    This is pure desperation. The current board of MS are fighting for their existence. If they cannot make a credible strategy this year, they are all out.

    MS lost their one chance in mobile phones: Nokia. Now they are heading into tablets as their last ditch attempt.

    MS will try to keep the stockholders at peace by betting on the festive season sales of their “super-duper Surface tablet”. Expect Surface tablets at giveaway prices (XBox added for free). In the end. this will fail, like everything they did outside the desktop market.

    I expect MS to start divesting business units before the end of the year. Ballmer will go too. They might ride it out until January, but I doubt it.

  24. Sigh… I was one of the few who bought a Nokia 770, their 4.1″ Maemo tablet that shipped (1995!) over a year before the first generation iPod touch, the start of Apple’s gazillion-dollar iFrob empire. I bought it on a lark, but used it much more than I expected to despite the near-lack of useful apps other than the web browser. If management had had the vision to polish that…

    The Ouya is interesting. If I was them (and I may not understand their business plan), I would throw a few tens of thousands of that Kickstarter money around to get Freeciv and Battle for Wesnoth ported over to Android.

  25. Oops, you’re right, 2005 (thought that seemed wrong). But, yes, still just over a year ahead of the 1rst generation iPod touch.

  26. On the topic of “grow or die”, I still think there’s a third option, but it’s difficult. To maintain a steady state, you still have to keep developing new products and improving your platform, which takes a lot of effort, and more importantly, people. But the problem is that if one product cycle you end up with no great products, you start losing money instantly. Most companies in this situation panic and start laying off people, which completely messes up the development of the next round of products, making them late and lower quality. Thus, the company basically cuts off its own future. Even if there’s no panic to please the stock market with layoffs, you still need to have enough money in the bank to ride out a missed product cycle and keep working on the next big thing.

  27. It’s sad state of affairs that the same community that can’t raise enough money to improve accessibility on Linux based OS, a mere 20.000 US, is throwing money away on this garbage console with its pseudo “open source” description and being so orgasmically happy about it.

    And you thought that Apple fanboyism was bad!

    You have to be either dishonest or have a completely distorted view of what “open source” is.

    Their choice of processor, tegra 3, is also an example of mediocrity. This processor is used on new Android tablets and is almost universally hated. besides it’s produced by nvidia which has a long history of refusal to collaborate with the Linux community.

  28. Poor Finn. Microsoft is afraid of Linux. So that is the mission of The horse.

  29. who knew Ahonen was so well-versed in military history? That’s something I know more than a little about myself, and I’m here to certify that where my knowledge overlaps with his I find his command of facts excellent, and his judgment sound and incisive.

    While I’m a big fan of the Finns but a Finn declaring that the Battle of Suomussalm to be the height of military prowess is not much of a surprise. It’s certainly a military classic but really? Suomussalm over Cannae or Narva? But I guess 8000 swedes beating the crap out of 40,000 russians is par for the course which probably doesn’t say much when the Finns do it too…

    Nor did I find his command of the facts to be all that excellent if he thinks that Suomussalm was the most lopsided victory in the annals of war and Siilasvuo the greatest military battle commander evar. Hell, just sticking with Scandinavian military history I would pick Narva over Suomussalm and certainly Charles XII over Siilasvuo. And Gustavus over Charles when it comes to Swedish warrior kings. Man, what European history might be like if Gustavus Adolphus had not died although I know that in reality Sweden never possessed the resources required for long term empire. Still, if either had been able to hold on to Silesia rather than died at an inopportune moment in history…

    For a single battle I’d probably pick Rorke’s Drift. 139 vs 4-5000 zulus as far more impressive.
    Maybe Agincourt…6,000 vs 12,000 to 36,000 depending on which estimates you prefer so at the high end it was 6-1 odds against Henry and the scale of victory (in terms of dead or captured nobility) was far more decisive.

    But arguing against a Finn about war, especially to bring up a Swede is one of those “classic blunders” like “never get involved in a land war in Asia” or “going against as Sicilian when death is on the line”.

    And Ahonen analysis of Nokia’s strategic position in 2010 is dubious at best. Yah, the tactical numbers look good but strategically they were in a deep hole and logistically Apple was beating the crap out of the industry. Elop’s public burning platform assessment may have been a mistake but it was pretty much on the money.

  30. To put it in perspective it would be like me calling the Battle of Derne (60 marines + 400 mercs vs 4000 Ottoman infantry and cav) the most lopsided victory in military history and Eaton the greatest military tactician evar cause I’m ‘merican and we’re the best at war evar.

    Yah, the marines have a nifty line in their song and all but in the grand scheme of things not all THAT big a deal for US military history even if it was a 1st. Neither was Suomussalm except the Finns don’t have quite the same body of history to draw from.

  31. @Jim T:
    >I still think Elop was sent in by microsoft in order for ms to have a phone company.

    I’m dead certain that Elop is a Microsoft plant. I’m not so certain what Microsoft hoped to gain from it. But Elop’s directly previous employment at MS and the way all of his actions have benefited MS at the expense of Nokia make it almost impossible for me to imagine a scenario where he isn’t a plant.

  32. > Ahonen’s analysis of Nokia’s strategic position in 2010 is dubious at best.

    I think his biggest mistake is ignoring the fact that the iPhone is essentially a different class of device compared to nearly all of the gadgets that are included in Ahonen’s 2010 numbers for “Nokia smartphones”. Sure, Nokia probably did have each of the features of the iPhone in some primitive form in one device or another long before the iPhone, but that’s hardly relevant to Nokia’s problems in 2010.

  33. @Nigel
    > Suomussalm

    That’s Suomussalmi with an ‘i’. ‘Suomu’ = scale, as in the skin of a fish; ‘salmi’ = strait. The municipality is named after a strait in lake Kiantajärvi. I just learned from the Finnish-language Wikipedia, that the first president of Finland, K. J. Ståhlberg (in office 1919-1925) was born in Suomussalmi.

  34. I’m intrigued by Ahonen’s obsession with Skype. This a token of the Bellhead (or Scandinavian equivalent thereof) mindset that surely constrains the rest of his analysis. I don’t doubt that telco execs dislike Skype, mistrust M$, and might well have reacted to their merger with anger. Even the most obtuse of those, however, must know by now that horse has departed the ranch. Once you have data and user-chosen apps on the handset, VOIP and messaging clients appear forthwith. You could kill Skype (and Google Talk… why don’t carriers hate Android?) completely dead, and a federated-rather-than-hosted service would replace them, but only if users failed to just jump to straight SIP clients. Sure there are some complications now. Just like the Linux desktop, we’ll get there eventually. Libertarians might not like open systems, but customers sure as hell do, when it means they don’t have to pay the SMS tax.

    Some of us are used to thinking of M$ as an irredeemable villain, and of course they’re bad actors in this narrative, but I can’t help thinking that mobile has exposed them as a paper tiger. M$ have known mobile was coming for a long time, and they’ve been well aware of the differences between that and their accustomed platform. In that time a mismanaged handset manufacturer and a search/advertising service, to name two examples which don’t include their traditional fruity rival, have each developed multiple deployable marketable mobile platforms several of which outsell their Windows “competitors” by orders of magnitude. In that time Microsoft have produced a couple of unusable unsaleable knockoffs of their core decade-old PC OS. What the hell do they do all day? Are they still a software company?

  35. @Jim T:
    >I still think Elop was sent in by microsoft in order for ms to have a phone company.

    I think that was the third thing on Elop’s todo list, which probably went as follows:

    1.) Kill Meego and all of Nokia’s other Linux projects. (Given what Ahonen writes in his blog, Nokia’s connections would have made Meego an international winner, and they could have easily gone Android if not.)

    2.) Make sure that Nokia never releases a phone that can truly substitute for a computer. (That is, you plug in a keyboard/mouse and an HDMI screen, then the UI changes to something mouse-able.) This is the true Windows-Killer.

    3.) Build Windows phones.

  36. @john: It’s sad state of affairs…

    What are you suggesting? That the millions of us who don’t care about “accessibility”, whatever the hell that is, should subsidize the few dozen people who do? Ha! You require the coercive power of the state. You’re going to need a lobbyist to get that done, and they probably cost more than $20k.

  37. @mikko sorry :) Just to be clear I’m not dissing Finnish sisu or minimizing Finnish accomplishments in the Winter War.

  38. John said: It’s sad state of affairs that the same community that can’t raise enough money to improve accessibility on Linux based OS, a mere 20.000 US, is throwing money away on this garbage console with its pseudo “open source” description and being so orgasmically happy about it.

    Communities aren’t here to “improve accessibility” because you think that would be nice.

    They’re here to do what they want.

    And they want a low-performance phone/tablet-y console for their money a lot more than they want no-direct-reward for “improve accessibility”, it turns out. How dare they!

    (Full disclosure: I’m not an open-source fanatic, I didn’t fund that console thing, and I think it will be a spectacular failure in the marketplace – I just don’t think the problem is “they should have funded some accessibility thing instead”. It’s their money and their motives – which motives are both not yours, and not obliged to be any at all.)

    (The other problem with this analysis is that there is not one “community” that is “the same” here; Gamers who think that that thing looks cool and wanta $99 Minecraft-on-my-TV box are just as interested in it as “open source” fanatics, and even the latter don’t necessarily care about accessibility enough to think they should give their money out to get someone else to promise to make it go.

    And why should they, any more than they should care about any other thing?

    There is no “the open source community” [or whatever preferred term] in any sense relevant to your critique. In the broad sense of “everyone who cares about open source stuff somehow”, they’re not isomorphic with either set you demand. And narrower senses are even less isomorphic or relevant.

    There’s no community, and it therefore doesn’t owe you or anyone the motives or actions you want from it.)

  39. Not caring about accessibility could mean an ADA violation, especially if the computer in question is meant for public use at a “place of public accommodation” (for example a hotel or cybercafe workstation, a vending kiosk, etc.)

    It is more noble, useful, and advantageous to open source to address accessibility concerns than to provide another cheaply made geek toy that won’t even be up to the task of high-performance gaming (because of limitations in the underlying Android operating system).

  40. @Nigel
    > Just to be clear I’m not dissing Finnish sisu or minimizing Finnish accomplishments in the Winter War.

    Feel free to diss all you want. I usually have low-level depression where my sisu is supposed to be (a typically Finnish state of mind, I’d say), and Finns are generally quite thoroughly steeped in the myth of the Winter War, so anything you might write here won’t change the opinions of too many of them, I’m afraid. (I never heard a word about the war from my two grandfathers who were there, though. One was a medic, and as far as anyone knows, he never talked about that stuff with anyone except a select few other veterans.)

  41. Hmmm, ex-Microsoft guy becomes head of successful company, switches to Windows-based strategy, drives company into the ground. Gosh, that movie seems familiar for some reason. Oh, yeah! The same thing happened at Silicon Graphics. Once is an accident, twice coincidence…

  42. @mikko The few WWII vets I knew never spoke much about it either. We don’t have a sufficient common frame of reference with those that lived then. I asked my dad once and he said it’s mostly a story about friends you woke up with in the morning not being there in the evening. It was stuff I should be thankful not to understand. My ex-father in law pretty much said the same thing in fewer words.

    There’s quite a bit of military mythology in the US as well but it serves a purpose. Every independent nation needs warriors to stay that way.

  43. > Hmmm, ex-Microsoft guy becomes head of successful company, switches to Windows-based strategy, drives company into the ground. Gosh, that movie seems familiar for some reason. Oh, yeah! The same thing happened at Silicon Graphics. Once is an accident, twice coincidence…

    Tomi Ahonen seems to be suggesting that the primary target was meego which is from Microsoft’s point of view even more threatening that android, because meego is designed to potentially support a variety of form factors – which is to say, desktops as well as phones.

  44. @Jess

    In that time Microsoft have produced a couple of unusable unsaleable knockoffs of their core decade-old PC OS. What the hell do they do all day? Are they still a software company?

    Oh, that’s an easy one to answer…

    Their employees all busy trying to stab each other in the back in order to keep their jobs due to Microsoft’s stack ranking system.

    Microsoft’s Downfall: Inside the Executive E-mails and Cannibalistic Culture That Felled a Tech Giant

  45. The good news is that Nokia’s share price is so low that anyone can buy them. Maybe Google will be spending some money soon?

  46. I couldn’t read the whole thing, but I did notice something missing: RIM/Blackberry. Ahonen claims Nokia was dominating the smartphone market over Apple/Samsung, but he doesn’t even mention RIM.

    And his sales figures don’t seem to match the numbers I’ve seen in the past. What smartphone was Nokia selling so much of? Something with Symbian on it? But even Ahonen doesn’t seem to argue that Symbian was a dominant platform that Nokia should have driven ahead.

  47. The good news is that Nokia’s share price is so low that anyone can buy them. Maybe Google will be spending some money soon?

    Eh. What would that add that they don’t have from Motorola already? I mean, sure, maybe the patents, but . . .

    Incidentally, I keep waiting for IBM to swoop in and buy RIM for BES/BIS/BBM, then release Android and iPhone apps.

  48. [quote]
    The good news is that Nokia’s share price is so low that anyone can buy them. Maybe Google will be spending some money soon?
    [/quote]

    Two problems with this plan:
    1. It appears that most of the leading engineering staff has already left Nokia/was fired.
    2. This also seems to be a rather sure way to trigger DoJ into launching some anti-trust action against Google.

  49. Tomi Ahonen wrote that Elop seriously mis-quoted Sun Tzu as writing “First you must believe in yourself”.

    I see that this American-specific motivational rubbish poison goes up to the top.

    I have read an article in Scientific American some time ago, that this “believe in yourself” self-promotion at first pseudo-psychological advice doesn’t actually help, but it seriously hinders. Why oh why this stupid piece of rubbish persists… why not “you are the captain of your destiny”, i.e. you are responsible for what happens to you – this actually helps.

  50. It seems that Microsoft just paid like a billion of dollars to wipe out Android’s strongest possible Global market competitor.
    Patent tax money well spent.

  51. To all those entertaining theories that MS intentionally destroyed Nokia to achieve some nefarious end. You might benefit from (re-)reading

    THE BASIC LAWS OF HUMAN STUPIDITY, by by Carlo M. Cipolla.

    I have very good experiences with the explanatory power of this essay with respect to MS’ actions in the mobile telecom market. Or many other markets and companies.

  52. I think a good candidate for a “reason 20″ in the article would be how badly Nokia screwed developers who invisted time and money learning how to develop using Qt. Developers like myself would never again think about going anywhere near Nokia!

  53. @ EFraim:

    2. This also seems to be a rather sure way to trigger DoJ into launching some anti-trust action against Google.

    That might be true. I can see a couple of ways around it. For example, Google could buy Nokia, sell the rest of the company, and keep the patents. The DOJ might be OK with that approach and Google would never, ever have to worry about having patent trouble in the cellular area ever again. Google could also buy a big minority stake in Nokia which allowed them to tie anything that looked advantageous to MS up in court for a very long time. Lastly, another Linux-friendly company might purchase Nokia.

    The really important thing, now that we’re clearly in the end-game, is to keep the Nokia patents out of Microsoft’s hands.

  54. Lawand,

    Qt is still being actively developed, actively supported, and is still the best cross-platform GUI library in existence.

    Though you should really, actually follow Eric’s advice and decompose your app into a user-unfriendly nucleus and a user-friendly GUI wrapper, then write different wrappers for each OS you plan on targeting. The reason is because the Mac community will rip you a new one for not conforming to Apple’s UI standards in painstaking detail, and Windows users will simply be confused by widgets that work subtly differently.

    But Qt (unlike, say, Gtk or Swing) actually does a fair job of abstracting and wrapping actual native widgets. So if you’re targeting Windows and Linux, you should be okay with Qt 90% of the time.

  55. In a new (somewhat shorter) blogpost, Tomi gets into the marketshare numbers:
    Yes, it was even worse than the worst nightmare!

    Why Did Ballmer Throw Nokia Now Under the Bus? Lets Dig Windows Phone & Lumia Insights from Kantar Stats
    http://communities-dominate.blogs.com/brands/2012/07/why-did-ballmer-throw-nokia-now-under-the-bus-lets-dig-windows-phone-lumia-insights-from-kantar-stat.html

    But seriously, if Nokia now brings 3.2% market share to the table and that would be traded at 4 lost to every 1 gained Windows customer, why would Ballmer even want Nokia? His gain – in the best markets for this partnership mind you, not globally where it would be worse – would be a paltry 0.6%. And Nokia would cost well in excess of 10 Billion dollars to buy in a competitive bidding war, I think. Not worth it. Totally not worth it for Microsoft. Just let the mobile dream die, Ballmer, and focus on the desktop.

  56. Ahonen writes in his later post:

    “[...] if Ballmer believed that Nokia can climb out of this with Microsoft, he’d let the Lumia series be upgraded to Windows Phone 8. But no.”

    Is that really only about “letting” the current Lumias to be upgraded? Supposedly WP8 has hardware requirements that the current handsets don’t meet. Of course, you could argue that specifying such requirements in the first place is a mistake, even if it’s a technical decision.

  57. “… why not “you are the captain of your destiny”, i.e. you are responsible for what happens to you – this actually helps.”

    …because, then, if things aren’t going too well for you, you are the one to blame. People don’t want to hear that sort of thing; they’d rather blame someone else.

  58. >what do you think of the comparison of nielson’s marketshare #s vs comscore?

    I don’t know how to compare them. I don’t have enough information about how their methodologies are different.

  59. I dunno, I find his entire analysis bullshit. Symbian share was going to crater regardless of any memo and things certainly didn’t look all that rosy in 2010. It was a dead platform and everyone knew it by the end of 2010. Android and iOS was miles ahead of Symbian and Symbian was too crufty to fix. Symbian share falling off a cliff was totally expected.

    AND IT WAS PREDICTED BY AHONEN IN JAN 2011…before any possible Elop effect and before Elop announced the WP strategy. Symbian share was already in a nose dive.

    We have just received Nokia Q4 quarterly results for 2010. I wrote a blog about the numbers. Here are the big picture facts. For the first half of the year 2010, Nokia grew rougly as fast as the industry. It ended year 2009 with 39% market share in smartphones. At the end of Q2 it had 39% market share. Then in Q3 and Q4, suddenly – catastrophically – Nokia growth slowed to anemic, for the first time for as long as I can remember, Nokia’s quarterly growth was the slowest of any of the biggest 6 smartphone makers, and far slower than the industry. Nokia’s market share crashed to 33% after Q3 and down to (about) 28% after Q4. In six months, Nokia destroyed 11 points of market share – it abandoned one quarter of its total market – in half a year! This reminds me of the disasterous suicide-ride that Motorola embarked upon, but even in its worst period, never did Motorola lose a quarter of its market share in any six month period. I don’t mean this is the end for Nokia, but the signs are very dangerous, if two quarters have already gone like this, the cause is no freak accounting error or component shortage, it is a major systematic problem that has to be corrected immediately before Nokia finds itself ranked 3rd or 5th or – like Motorola which went from 2nd to 9th in all mobile phones (smartphones and dumbphones combined) in only 4 years. Right now the Nokia market share is not in decline, it is in a dive. That is why I am writing this blog.

    http://communities-dominate.blogs.com/brands/2011/01/undesirable-at-any-price-what-happened-to-nokia-who-invented-the-smartphone.html

    So his premise that everything in Nokialand was hunky dory in 2010 and Elop single handedly destroyed the company is bogus. Not to mention that the whole Osborne effect thing is kind of a myth.

  60. Nigel, I don’t think he says that everything was hunky dory with Nokia but his thesis seems to be that the solutions were not to kill off Nokia development paths that had important partners. His thesis was that Meego was going to be a more successful product than Windows Phone, would have had important partners like China telcom and NTT pushing it instead of resisting/rejecting like Windows Phone.

  61. @phil:

    I think that Nielsen and comscore usually track pretty well. Nielsen’s numbers are a bit confusing, though — sometimes they refer to June and sometimes to the quarter, and sometimes they are completely ambiguous.

    One nice thing about Nielsen is that they give you information on recent acquirers. Unfortunately, they don’t give you (unless you pay) information on what the acquired phone replaces.

    According to these Nielsen figures, both the installed Android base and the current Android sales are each approximately 50% higher than the corresponding Apple numbers.

  62. First symptom of very bad times for MS after they lost their bid for the mobile phone market:

    Microsoft makes unspecified number of job cuts
    http://www.google.com/hostednews/afp/article/ALeqM5jPrxzutUb9ABBkj6dMXfK06r-hvQ?docId=CNG.622fa57b805f7d4da81ad0558bf8b482.71

    Microsoft said Thursday it was cutting an unspecified number of jobs in marketing and advertising as part of a move to “align” its operations to key priorities.

    “Like any company, Microsoft continually evaluates its operations and works to align the business to key priorities. I can assure you we’re thinking about the exciting new opportunities that Windows 8, Xbox and Skype present for our advertising and marketing partners.”

    How many times have these been uttered as famous last words by a CEO?

  63. @Patrick Maupin
    “According to these Nielsen figures, both the installed Android base and the current Android sales are each approximately 50% higher than the corresponding Apple numbers.”

    Yep. Still no sign of @esr’s predicted “disruptive collapse” for iOS. And no sign that the magic 50% # for android matters. The past trends continue.

    Nielson’s #s:
    iPhone -> 34.3%
    Android -> 51.8%

    Recent Acquirers:
    iPhone -> 36.3%
    Android -> 54.6%

  64. @SPQR

    His thesis was that Meego was going to be a more successful product than Windows Phone, would have had important partners like China telcom and NTT pushing it instead of resisting/rejecting like Windows Phone.

    They should have renamed Meego as “Windows Phone” and sold the hell out of it.

  65. > Finally…who knew Ahonen was so well-versed in military history?

    Finland has a 1100km land border with Russia. This means that Finland is one of the few remaining western countries with full conscription. As the military is relatively good at picking out the better skilled and motivated, most Finnish males (and increasingly, the females) in leadership positions have officer training.

    As an example, Linus is a second lieutenant in reserve. Ever wondered where he learned his talent for verbal abuse? Now you know.

    As for picking Suomussalmi as the most lopsided victory ever… Ahonen clearly has a healthy streak of nationalism. While Suomussalmi is clearly a deserved victory, and still studied worldwide as a prime example of “defeat in detail”, the Soviets had quite a bit going against them that isn’t apparent from the raw numbers. The whole expedition was dictated from above, by people completely oblivious about the real conditions in Northern Finland. They might have just as well taken their mechanized army through Alaska. In the end, the Finns had freedom of movement, the Soviets didn’t, and the Finnish commander was smart enough to understand that he could use this to turn the 1-4 odds into a long series of 10-1 odds.

  66. OT: On the subject of “Heavy Weather and Bad Juju”, I see that the Mississippi had major floods last year and is now in an extreme drought that has largely shut down shipping.

    Now I’m just waiting for the AGW proponents to figure out how to blame both flooding and droughts on their favorite hobby horse.

    —————–

    “A year after historic flooding brought the Mississippi River up to record levels, the severe drought hitting the central U.S. has caused water levels along parts of the waterway to plummet, disrupting barge traffic from Cairo, Ill., to Natchez, Miss.

    “In some places, the water level is about 50 feet below what it was during the flood’s peak.

    “At this time of year, the river is normally low, but less snow than normal in the upper Midwest this winter, a lack of major tropical storms coming to the lower Mississippi River region from the Gulf of Mexico, and the recent baking heat have combined to cause reservoirs and creeks that feed major rivers to shrink, said Marcelo Garcia, a river hydrology expert and professor at the University of Illinois at Urbana-Champaign.

    “‘Even if it started to rain a lot now, it would take a long time to catch up’ to normal river levels, he said.

    “Since major rain is not forecast any time soon, Mr. Garcia said he expected the low water levels to get worse.”

    http://online.wsj.com/article/SB10001424052702303292204577519294147139420.html?KEYWORDS=mississippi

  67. @tuna-fish I was about to say that all of scandinavia had conscription but it looks like Sweden stopped that in 2010. Finland, Norway and Denmark still do, and of course Russia.

    There are some interesting dynamics in militaries with conscription. I’m also not sure that I’d go as far as to assert that the military is all that adept to identify better skilled and motivated as opposed to just those better promotable based on whatever criteria at hand (family connections, political purity, etc). In the better militaries, and I’d lump Finland in there, that might be true…kinda…sorta.

    I’m still of the opinion that Ahonen is pretentiously clueless when it comes to either the military or military history for all that he bashes Elop for the same failing.

  68. Samsung is next?

    No. Samsung just hedges its bets. They’ve made Windows Phone 7 phones and will be making Windows Phone 8 phones, too. They’ve also got a hand in Tizen. Making a Windows RT tablet in addition to their Android line is just another hedge.

    Nokia was the only company stupid enough to go all-in on Microsoft.

  69. @Robert
    And do not forget that MS will pay anyone who produces WinPhones/tablets handsomely.

    Nokia got ~$1B

  70. I was about to say that all of scandinavia had conscription but it looks like Sweden stopped that in 2010. Finland, Norway and Denmark still do, and of course Russia.

    There are some interesting dynamics in militaries with conscription. I’m also not sure that I’d go as far as to assert that the military is all that adept to identify better skilled and motivated as opposed to just those better promotable based on whatever criteria at hand (family connections, political purity, etc). In the better militaries, and I’d lump Finland in there, that might be true…kinda…sorta.

    I’m still of the opinion that Ahonen is pretentiously clueless when it comes to either the military or military history for all that he bashes Elop for the same failing.

    That’s very true about interesting (if not good) dynamics in militaries with conscription. Which is largely why Russia itself is looking to end conscription and move to a more professional force http://www.strategypage.com/htmw/htlead/articles/20120704.aspx. They want to reform the awful internal culture of their military in order to build a force that’s actually effective.

    Ahonen does get carried away, but in terms of military affairs I find that his failings are easily explained by nationalism and some hyperbole, which are common enough.

  71. > Ahonen does get carried away, but in terms of military affairs I find that his failings are easily explained by nationalism and some hyperbole, which are common enough.

    Really interesting to hear someone from the US take that position.

  72. @Greg
    “They want to reform the awful internal culture of their military in order to build a force that’s actually effective.”

    That depends on what the desired effect was?

    I have heard people describe the conscription army in Russia (and former Soviet Union) as an instrument to beat young men into submission. Conscripted men should learn they are nothing but serfs and there is no law nor custom to protect them against their masters.

    It goes some way to explain why Russian grass roots movements are mostly run by women.

    Obviously, this aim does interfere with creating an army effective in fighting wars.

  73. Another explanation for Russia having full conscription is that it may still be the only to get the potato harvest in. The Soviets turned out the army to dig potatoes at harvest time.

  74. > I have heard people describe the conscription army in Russia (and former Soviet Union) as an instrument to beat young men into submission.

    Arguably that has backfired in Russia a long time ago. Quite a few of the young men are not just beaten into submission, but to death. So many young men avoid the conscription that the army has great trouble filling its ranks.

    There’s more or less constant talk in Finland, too, about moving to a professional army, although it’s not a political possibility yet. Conscription and “independent” defense are still pretty much fixed tenets of the liturgy. of most politicians and parties. A professional army is also frequently seen as a step towards NATO membership, which is currently opposed by the majority of the people. (Finland already is a member of NATO in all but name, participating in a NATO operation in Afghanistan, having converted most weapons systems to NATO-compatibility etc. etc.)

    The Finnish Defence Forces have recently been complaining that the number of dropouts is increasing, and this story gets presented as an indication that young Finnish men are out of shape mentally and physically and not fit enough to complete the service. More likely a good number of them are just not willing to put up with the still relatively old-fashioned training that doesn’t seem meaningful to them (to put it mildly).

  75. I think you are focussing too much on the actual sale of handsets and too little on the marketplaces. In the marketplaces (Nokia Publish, Google Play, Appstore), the operators haul in 30% of sale price with essentially no investment. It is a gold mine! With the Appstore and Google play, you will be quickly and efficiently served. With Nokia Publish you will have endless troubles. I’m involved with a company publishing language courses and we want stuff like English for Russians to be available worldwide. However, Nokia Publish restricts this to Russia and a few neighbouring countries. The fact that Russians in London or New York would actually find a course in English useful does not seem to occur to the people at Nokia. We have been fighting their QA process for over 6 months.

    In contrast, we launched on Google Play in less than a week. It works perfectly worldwide.

  76. “Another explanation for Russia having full conscription is that it may still be the only to get the potato harvest in.”

    Most Russian youths don’t volunteer for the army because of the overwhelming possiblity that you will be sent to a place like Chechnya or Siberia.

  77. Another explanation for Russia having full conscription is that it may still be the only to get the potato harvest in. The Soviets turned out the army to dig potatoes at harvest time.

    One would hope that Russia’s transition to a market economy would reduce the dependency on slave labor for national survival.

  78. Most Russian youths don’t volunteer for the army because of the overwhelming possiblity that you will be sent to a place like Chechnya or Siberia.

    @LS Isn’t it both amazing and humbling that American youth still volunteer for the army despite the overwhelming possibility that you get sent to a war zone? The armed forces of the United States and her allies have been fighting for a decade.

    http://www.defense.gov/releases/release.aspx?releaseid=14973

    @Lars Up yours. If we Americans are arrogant about our military it’s because it’s well deserved.

  79. @LS @Nigel
    “Most Russian youths don’t volunteer for the army because of the overwhelming possiblity that you will be sent to a place like Chechnya or Siberia.”

    No need to contemplate participating in drug trafficking and war crimes. The “beating of conscripts into submission” in Russia was neither metaphorical not an exaggeration:

    http://en.wikipedia.org/wiki/Dedovshchina

    http://www.rferl.org/content/article/1055451.html

    http://news.bbc.co.uk/2/hi/europe/3756866.stm

    If you have ever seen one of the movies of such abuse, you never ever want to come near an army barrack again.

  80. Life after Microsoft.

    MeeGo Startup Jolla Signs Deal With China’s D.Phone
    http://www.pcmag.com/article2/0,2817,2407191,00.asp

    Mobile company Jolla signed its first sales deal today, with D.Phone, China’s largest smartphone retail chain.

    The newly formed Finnish company, comprised of ex-Nokia employees and MeeGo developers, will have its devices featured in D.Phone’s 2,000 stores.

  81. Ah, Winter, you beat me to here with that link. Adds a bit of credibility to the Ahonen assertion that Nokia’s MeeGo would have audience in China.

  82. “No need to contemplate participating in drug trafficking and war crimes. The “beating of conscripts into submission” in Russia was neither metaphorical not an exaggeration”

    @Winter: Yeah, nothing ever changes. My paternal grandfather fled from Russia to avoid conscription into the czar’s army. In those days, that meant 25 years of service – all active duty.

  83. @nigel> Up yours. If we Americans are arrogant about our military it’s because it’s well deserved.

    What makes you think I’m American?

  84. @Patrick> “Analyst consensus is that Samsung sold over 1.5 times the number of smartphones that Apple did last quarter:”

    Hmm, now we’re polling analysts? Isn’t that one layer of indirection too many?

    “The latest data from Kantar Worldpanel ComTech shows that for the first time Android has taken at least half of smartphone sales in Great Britain, Germany, France, Italy, Spain, US and Australia.”

    http://www.kantarworldpanel.com/kwp_ftp/global/comtech/Kantar_Worldpanel_ComTech_Smartphone_OS_barometer_11_7_12.pdf

    The same report shows that Android has contracted 6.8% (yr/yr) in the US market, with iOS gaining 8.7% during the same period, largely due to the 4S and availability on additional carriers (mostly Sprint).

  85. @SPQR
    “Ahonen in a video discussing the mobile industry.”

    Nice to hear someone talk sense about the mobile market.

    A nice story is at 20:30:
    Nokia brought out the Lumia on AT&T in the Easter weekend. People could not buy it in the shops due to all the shops being closed. So those who wanted to buy it, bought it a Amazon. Where it became the top seller. That fact was spread out over the internet: Lumia best selling phone on Amazon. Then follows a story about customers hating Lumia phones. They are to be had for bargain prices at eBay, with nobody taking.

  86. It seems Google’s Nexus 7 tablet can indeed be sold:

    Amazon doesn’t have it.

    I guess they smell a Kindle Fire killer and aren’t going to let Google have their way that easy.

  87. I think Tomi’s message is clearly coming across:

    Nokia forced to cut price of ‘flagship’ Lumia 900 by 50%
    http://www.dnaindia.com/money/report_nokia-forced-to-cut-price-of-flagship-lumia-900-by-50pct_1716186

    Featuring a 4.3-inch screen, 1.4-gigahertz processor and 8-megapixel camera, the Lumia 900 uses largely untried software from Microsoft Corp.

    Nokia took a further hit when Microsoft said current phones would be unable to run its new Windows 8 software, rendering them obsolete.

  88. MS is starting to divest, a small step, but a first step nonetheless:

    Microsoft to launch online news service after MSNBC.com sale
    http://www.scotsman.com/business/media-and-leisure/microsoft-to-launch-online-news-service-after-msnbc-com-sale-1-2415197

    Microsoft has sold its 50 per cent stake in the MSNBC.com website for an estimated $300 million (£192m) and is set to launch its own online news service later this year.

    The deal ends a 16-year joint venture between the software giant and NBC Universal, the US media group that is majority owned by Comcast.

  89. Probably not, as Elop is working hard to kill off any source of alternate strategic initiatives.

  90. If they cut bait NOW and go back to their MeeGo strategy — maybe.

    But that probably won’t happen in time. Stephen Elop loves his money hats. Time will tell what the board has to say, but my guess is they’ll be pissed, but too slow in firing Elop to prevent Nokia from becoming a niche player or IP shell corp.

  91. “So is Nokia still salvageable?”

    Not as a whole. Maybe parts can be saved and prosper. Like Jolla.

    Better question:
    “So is MS still salvageable?”

    Not as a player in mobile. The way Windows Phone had destroyed the $10B market leader in mobile phones in just 18 months will send shock waves through the industry. Windows Phone is a dying business. See how MS is moving to tablets for salvation.

    Neither as the king of Personal Computing. That is moving to mobile phones/tablets, where MS is lost.

  92. @Winter Then may the Gods have mercy on them. IMHO, M$ marketing have spectacularly fucked up their tablet strategy.

  93. @Winter
    If the gods choose to be just rather than merciful, expect a meteor to fall on Redmond any day now.

  94. “Update: Nielsen has spoken up on how its figures have been used, saying it does not support multiplying its numbers with those of Comscore, as they measure subtly different elements of the market. They added that they therefore “do not feel the 300,000 number is accurate”.”

    http://www.neowin.net/news/nokia-may-have-only-sold-330k-phones-in-the-us

    That said, the Q2 results aren’t likely to be very pretty. We’ll know tomorrow.

  95. An amusing story, but about design patents rather than utility and from the UK. I especially like the part about having to post on Apple’s website that Samsung’s tablets were not infringing.

  96. On whether Nokia is salvageable — sure. The company still has billions (probably) in cash and short term investments on hand, its patent portfolio, new phone hardware designs in the pipeline and under supplier contracts, and brand recognition. Looks like a perfectly good position to launch Android phones from — how hard could it really be for Nokia to get Android running on the hardware it has coming up, when they already have access to all the proprietary hardware info?

    Maybe the Android phones would flop, but there’s no obvious reason they must.

  97. @Nigel
    “That said, the Q2 results aren’t likely to be very pretty. We’ll know tomorrow.”

    Considering that MS seem to have given up on WinPhone, I think these numbers will be horrible.

  98. Nokia numbers are out:
    Q2 2012: 4 million Lumia phones shipped [sic]. Total world Smartphone sales in Q1 were 144M. So, the Lumia will have a market share of ~2.8%. WinPhone not much more.
    http://www.email-marketing-reports.com/wireless-mobile/smartphone-statistics.htm

    Nokia results 2012Q2
    http://www.results.nokia.com/results/Nokia_results2012Q2e.pdf

    We shipped four million Lumia Smartphones in Q2, and we plan to provide updates to current Lumia products over time, well beyond the launch of Windows Phone 8. We believe the Windows Phone 8 launch will be an important catalyst for Lumia. During the quarter, we demonstrated stability in our feature phone business, and enhanced our competitiveness with the introduction of our first full touch Asha devices. In Location & Commerce, our business with auto-industry customers continued to grow, and we made good progress establishing our location-based platform with businesses like Yahoo!, Flickr, and Bing. We continued to strengthen our patent portfolio and filed more patents in the first half of 2012 than any previous six month period since 2007. And, we are encouraged that Nokia Siemens Networks returned to underlying operating profitability through strong execution of its focused strategy.

    emphasis mine

  99. > The company still has billions (probably) in cash

    ?€4.2 billion according to the Q2 numbers. Nokia received €400 million from Microsoft as a payment for patent licences, which made the cash figures look better than expected.

  100. Off-topic, but Nokia Siemens Networks was profitable in Q2, against expectations. They posted a €27 million profit when the expectation was a €65 million loss.

  101. 4M Lumias isn’t as bad as some folks thought I think.

    Net loss of €1.41 billion is pretty dire but with €4.2 billion in the bank they can survive past the launch of WP8. I think some of the staff cuts are still in the process of getting done. I would also expect some Nokia patents to be sold to MS for a premium as well as additional marketing help from MS for their WP8 launch.

    Share price was up a little pre-market.

    Next qtr will suck too. They better hit one out of the park with WP8 in Q4. I can’t imagine they can do worse given that they have more than 1 carrier for WP8. They can’t afford to be late and they have to be a premium launch phone.

  102. > I think some of the staff cuts are still in the process of getting done.

    If you’re talking about the cut of 10 000 people announced in June, the implementation of that has only just begun. In Finland, Nokia hadn’t even completed the previous, much smaller batch of layoffs that was started in February, when they made they made the announcement in June. Then there’s Accenture, which has been gradually getting rid of the developers that Nokia offloaded to them in 2011.

  103. @nigel
    “They better hit one out of the park with WP8 in Q4.”

    Well over 650 million Smartphones are expected to be sold in 2012. Even if Lumia sales double every quarter in 2012, Nokia will have sold only 30 million Smartphones in 2012. That is less than 5% market share under unrealistic assumptions. More likely, they may be happy to keep up the 4M/Q. And that is more like 2.5% market share. Essentially, noise.

    And we would have to assume that almost all of the 4 million Lumia phones shipped in Q2 are actually sold in Q2. Tomi makes a point of the high return rates of Lumias in, eg, Russia. If they are not sold, but many are indeed returned (30%?), the sales in Q3 will to a large extend be done with the handsets shipped in Q2.

    If their is a light at the end of the tunnel for Nokia, it is an incoming express train.

  104. @winter Global market share is unimportant to both Nokia and Elop for 2012 or 2013. Getting out the red is. What is “noise” to you is unimportant to them and Nokia employees and shareholders.

    Profit is important and if WP8 can turn a profit for Nokia that’s going to be a lot more than Android has done for Moto, HTC, et al. LG is finally back in the black…after 6 qtrs in the red.

    The real winners of the mobile phone wars thus far has been Apple and Samsung. Every other major phone maker in 2007 has cratered regardless of what mobile OS they picked.

  105. All this wrangling over market share oranges may come to naught: Every distinguishing characteristic of a modern smartphone is now Apple’s protected IP. Meaning that it could soon become illegal to sell any Android or Windows phone in the USA. (I doubt the EU would let that one stand.)

    What is certain, however, is that Apple “fanbois” were right to point out that the smartphone industry as it is today exists and thrives almost solely because of Apple’s innovations, which were then copied by other firms.

    Steve Jobs’s deathbed wish was that Android be completely destroyed because it was based on stolen technology. Apple is closer than ever to victory on that point.

  106. Nigel writes: “Global market share is unimportant to both Nokia and Elop for 2012 or 2013. Getting out the red is. What is “noise” to you is unimportant to them and Nokia employees and shareholders. “

    Perhaps that is what their concern is, but as you point out above they have cash reserves. So I think their focus ought to be the reverse, which is rebuilding market share going forward rather than a quarter’s P/L.

  107. €4.2 billion isn’t that much in the scheme of things…and given their junk status very difficult for them to get more without selling patents to MS. They need to get out of the red more than they need to chase share. LG has gotten out of the red despite lower revenues and fewer handsets sold.

  108. @nigel
    Nokias profit on Lumia are paid in total by MS. MS is most definitely not in this business to make a decent profit on some paltry 10 million handsets. MS need 15% marketshare to stay relevant even as an also ran.

    MS need 100M handsets sold (not shipped) in the next 12 months. Or, 50M until January.

  109. @Jeff> All this wrangling over market share oranges may come to naught

    Jeff, Jeff. Don’t needlessly enrage the Android fanbois. They’re already like a cat on a hot four-cornered roof trying to negotiate the minefield of android’s market share reversing (and just after the lauded 50%, too), the ever-worsening legal landscape for Android, all while Samsung and the rest of the Android OEMs wait for the other shoe to drop with Google’s acquisition of Motorola Mobility.

    Marissa Mayer is gone to Yahoo! now. Who’s with me in betting that she’s going to get even more cozy with Apple/iOS and push Yahoo! in a new “machine intelligence” direction? (Her degrees are focused on AI.)

    Yes, APPL announces results next Tuesday, and yes, they’ll be off a bit. The whole world knows that the new iPhone will be LTE, and out for Q4.

    Anyway, patience, baby. Patience.

  110. @winter Why not 500M handsets if you’re making up numbers?

    MS has already decided that strategically it is more important to have an iOS/OSX like common core between desktop and mobile by replacing the WP7 CE kernel with the WP8 NT kernel than it is to gain share in 2012.

    Given they are so late to the game and there’s minimal traction with WP7 at the moment that’s probably the right call if they wanted to kill WinCE but didn’t have the time to do so with WP7. If there were more WP7 handsets out there they might have stayed with the current architecture. But there isn’t and everyone knows that WP8 is due out late 2012. WP sales for the remainder of 2012 until the launch of WP8 will be anemic.

    MS isn’t trying to get 50M WP handsets by Jan. Nor do they expect 15% market share any time soon. Nokia may not have the money to survive until WP8 gains traction but MS does.

  111. >Nokia may not have the money to survive until WP8 gains traction but MS does.

    “until WP8 gains traction”

    Heh.

    There’s no winning scenario for Microsoft anymore. Who’s going to partner with them in mobile now that they’ve flushed Nokia down the toilet? Without partners, they can only fling at being an imitation Apple, all evil and no seduction.

  112. @nigel
    So you agree that MS will have not more than a token presence in the mobile phone space? If they manage even that.

    But mobile phones are the future of personal computing. This means MS will lose their grip on the consumer. Goodby 80% margin and big profits. Goodby Balllmer and Bing, MSN and the rest of the empire. What will be left in 5 years?

  113. @esr
    MS had to write off $6.2B and made their first ever quarterly loss.

    http://www.channelnewsasia.com/stories/afp_world_business/view/1214616/1/.html

    That sounds a lot like our banking crisis. That too is about writing off assets. Given the ridiculous amounts of money MS spend on acquiring companies it then cannot run profitably, there is more to come.

    Ballmer flees into tablets, but there is little chance MS will make a hit in the end-of-year season. Quote from MiniMicrosoft:

    Expected Surface unit sells in next year? Availability? (And if you’ve used Win8 on ARM, which are the preferred deities we should be praying to make it actually fast and fluid?)

    http://minimsft.blogspot.nl/2012/07/microsoft-fy12q4-results-plus-that-lost.html
    (emphasis mine)

    Note that MS have lost the best and brightest years ago. Their internal culture seems to be toxic, e.g., due to their stack ranking system
    http://stevegall.wetpaint.com/page/Human+Resource+Management

    Without good people, where can MS go to make great products? Nowhere, and it shows in their WinPhone.

  114. If anyone is interested, here are Tomi’s thought about the latest Nokia results. The title says it all:

    Nokia Q2 Results: Bad bad and will be even more bad
    http://communities-dominate.blogs.com/brands/2012/07/nokia-q2-results-bad-bad-and-will-be-even-more-bad.html

    Lumia was designed to be US consumer-friendly. It is on two networks, carriers. Last month I did some price/sales modelling and estimated Lumia 710 sales on T-Mobile at 290,000. Now how has AT&T managed with the more expensive Lumia 900, adding definitely not more than 310,000. That is your ‘success’ right there. And now, after the Lumia series is Osborned by Steve Ballmer not letting the Nokia smartphones be upgraded to Windows Phone 8, we see the prices slashed (and some carriers already refusing to sell any more Lumia like T-Mobile Germany which cancelled the Lumia 900 launch altogether).

    Well. But globally Nokia doubled Lumia sales (shipments) in one quarter, from 2 million to 4 million. And that migtht seem good, if you are growing organically from a clean slate, like say Apple did early with the iPhone. But Nokia is not a newcomer to smartphones. It is migrating its massive existing loyal customer base of smartphone users from Symbian to Windows Phone (Symbian’s installed base – that is yes, customers currently using a Symbian based smartphone was – get this – 300 million at the start of this year. That is the customer base we are dealing with). How’s that going?

  115. > So you agree that MS will have not more than a token presence in the mobile phone space? If they manage even that.

    Why would MS bother to hold on to a token presence? They’re all about market share.

  116. @Mikko
    “They’re all about market share.”

    My point entirely. MS will abandon the mobile phone market when they can do it without crashing their share prices. That is, after they fired Ballmer and shed Bing, Skype, etc.

  117. @esr

    There’s no winning scenario for Microsoft anymore. Who’s going to partner with them in mobile now that they’ve flushed Nokia down the toilet? Without partners, they can only fling at being an imitation Apple, all evil and no seduction.

    I’m not certain that they flushed Nokia down the toilet as much as Nokia was unable to execute in getting good handsets out there fast enough to gain traction. Given that MS has a reference design or at least reference specs for the hardware they really needed to get the Lumias out sooner.

    WP7 really needed killer hardware that wasn’t just a variant of an existing Android phone. And as weird a phone as the 808 is that should have been a WP7 device. So in my mind there were two things that screwed up WP7….Microsoft’s inflexibility and lack of agility when it came to hardware specs and Nokia’s inability to get WP7 phones to market fast enough.

    Thus spending the time to reset to WP8 and the NT kernel is something they can afford to do. 2012 is largely shot anyway.

    Plus if they have to go down the Apple route MS can afford to do so. They do have several years of successful CE development (XBox) and the can find manufacturing partners. They have their own brand awareness via XBox to counterbalance the Kin and Zune.

    Eh…and if they fail, they fail. Both Apple and Google are US tech companies so I don’t much care who wins out of that group.

  118. But mobile phones are the future of personal computing. This means MS will lose their grip on the consumer. Goodby 80% margin and big profits. Goodby Balllmer and Bing, MSN and the rest of the empire. What will be left in 5 years?

    I do not believe that mobile phones are the future of personal computing. I believe that tablets are.

    Mobile phones are too limited to replace PCs. There are too many power, space and thermal constraints with the form factor.

    Tablets, at least the 10″ variety, are large enough for content creation. 5-7″ a good size for personal content consumption (web pages, movies, email).

    Besides, IBM is still around. Many folks like you predicted that they would disappear due to losing control of the PC. The need for PC computing will continue to exist just like the need for big iron continues to exist. Photoshop on a tablet for some light editing/preview/touch up in the field is great but not a viable workflow for high end work.

    As Jobs stated…like the need for trucks vs cars.

  119. @mikko

    Why would MS bother to hold on to a token presence? They’re all about market share.

    Ultimately MS is about profit.

    And even from the perspective of market share, as long as the effort to maintain WP8 is profitable then a token presence is viable to complete the ecosystem.

    I didn’t answer Winter…yes, MS will have token smartphone market share through 2012 and 2013. Past that is wild conjecture.

  120. @nigel
    “Ultimately MS is about profit.”

    But their profits depend largely on their monopoly status. If they lose their monopoly status, most of their profits will evaporate.

    Modern Smartphone can handle most of the computational needs of people. If “docking” to screen+keyboard becomes easy, that will be most of their needs.

  121. Nigel, I’m finding your attempt to cast the MS dumping of the WP7 phone O/S lineage as a good move to be more than a little surreal. Just how many successive versions of the Windows phone S/W have been failures so far? I’m truly losing count.

    Ballmer screwed over Nokia in multiple ways, from the POV of other phone manufacturers. The Osborneing of the Lumia re: Win8 was only one. The Skype purchase was another. The result is that phone manufacturers are going to be far more suspicious than they were before (and they should have been completely frightened of Microsoft before – their poor relations with hardware vendors are legendary in the business).

  122. > If they lose their monopoly status, most of their profits will evaporate.

    In the consumer space, yes. (But this is obvious. Apple’s dominance of the consumer space is also obvious to all who don’t seethe with rage at the concept.) What is less obvious is what Microsoft will do about it, so here is a prediction:

    Microsoft will soon retreat into the Enterprise market (as IBM did before it).

    The Business Division is now by far the largest Microsoft division in terms of revenue. Servers & Tools surpassed the Windows Division this past quarter. The last time that happened was the tail end of the Vista nightmare. I’ll say it again, for emphasis: Microsoft’s two biggest businesses are now, and will continue to be their enterprise businesses.

    Windows 8 is due out at the end of the year, and the Windows Division revenue numbers will jump as a result. Microsoft saw a huge revenue (and profit) spike when Windows 7 was released, then it immediately dropped and plateaued. It was back to the revenue grind and the profit stagnation. Windows 8 will be no different.

    Everything that is not Enterprise focused at Microsoft will be jettisoned as time allows, if not by Balmer, then by his replacement.

  123. @SPQR

    I might argue that because multiple successive versions of Windows phone S/W has failed indicates that it is time for a change of architecture and team…

    It strikes me that the OSX/iOS model of the same kernel and architecture for both desktop and mobile to be cleaner if you can get the performance and footprint desired on mobile. That Apple was successful with iOS indicates that current mobile devices have sufficient CPU, memory and storage capability to do so.

    So is it a good move to kill WinCE and move to Windows NT in 2012? Not as good as it might have been in 2008. Certainly if the Windows Mobile team had been agile enough and able to ship WinPhone 7 in Feb 2009 rather than WinMo 6.5 and retained greater share I would go along with the notion that allowing the Windows Mobile team to control the entire mobile stack (and their own destiny) made sense and moving to WinNT, depending on the core Windows kernel team and clobbering the installed base for the sake of architectural purity silly.

    But the fact is in 2012 WP7 has no traction, the installed base is essentially zero and if you were ever going to do this refactoring, now is the time.

    The lost time is sunk cost. Do you think it would be a better technical decision today to continue to move ahead with WinCE on Windows Phone if all the tablets are WinNT based?

    As far as screwing Nokia goes…eh…it was a bad move for Nokia to announce going WP in Feb 2011 but not have any devices shipping until November in the first place. The Lumia 900 should have shipped when the N9 did.

    I think Skype will be a non-issue moving forward with US carriers given the new pricing structures. New Verizon customers end up on the “Share Everything” plan that includes unlimited voice and texts. So there’s no need to attempt to sidestep voice minute usage via skype and is in fact a negative.

  124. @nigel
    MS were either unwilling to accept ARM as a real platform, or they could not scale down NT to fit on 2007 ARM.

    I guess the latter. There seem to have been made truely horrible architectual decision i n the NT kernel.

  125. Everyone wants to respond to the Skype point by arguing that it is to the carriers’ advantage to dump their revenue model. However, oddly, I don’t think that the carriers view it as the phone manufacturers place to dictate the revenue model to them.

    And as Ahonen alluded to in his rants, the rest of the world’s mobile carriers are even less interested in Microsoft’s opinion of how their revenue models should work, and farther away from changing the revenue factor from voice to data usage.

    So the response about revenue models is simply not a rebuttal of the real fact that Microsoft pissed off a lot of carriers by buying Skype.

  126. > farther away from changing the revenue factor from voice to data usage.

    Is this true of NTT Docomo? According to Ahonen, they, too, completely refused WP.

  127. And the war against Elop goes on:

    Digging Deeper into Nokia Q2 Results – and exactly how many ‘awesome’ sales was AT&T and China…
    http://communities-dominate.blogs.com/brands/2012/07/digging-deeper-into-nokia-q2-results-and-exactly-how-many-awesome-sales-was-att-and-china.html

    By those extremely ‘AT&T-friendly’ assumptions, out of the 600,000 total North America sales of Nokia handsets, only 320,000 would be on AT&T. This is THE BEST case possible. The reality will be less. And if you think, that 320,000 smartphone sales on AT&T is somehow ‘a success’ I have a bridge to sell you haha…

    AT&T did exactly what all other carriers/operators did, who said they want the third ecosystem etc. They took happily the Microsoft Dollars and Nokia Euros and used the money for big extravagant marketing, and then ignored Lumia – and sold Android and iPhones !!! Exactly like European and Asian operators/carriers did before.

    …..

    Windows Phone is not viable as an OS. It is being force-fed to unsuspecting customers, who end up hating it. If you’ve heard Nokia spinning a story about a Nielsen survey of Lumia owners loving it, and 95% saying they would recommend Lumia to their friends, that sounds very suspicious, doesn’t it? It sounds like those communist Eastern European ‘elections’ where the President always got 95% or more of the total vote haha.. So whats the story in Balamory? The Nielsen ‘survey’ is a PAID study by Nokia !!! It is utterly biased and non-credible. There is one other study, a genuinely unbiased neutral survey of the same issue, by Yankee Group – which found the total opposite – 41% of specifically American Lumia owners rated it such utter rubbish smartphone, that they gave it a rating of 1 (worst) on a scale of 5 to 1. Four out of ten Lumia owners in America right now, rate their smartphone the worst thing they’ve ever seen.

  128. Meanwhile, piracy is such a problem on Android that at least one developer said “fuck it” and released their app for free. Which is great for publicity but sucks for revenue. Piracy is negligible on iOS but as high as 90% or higher on Android. Google has a solution to the problem in Jellybean — four years too late, with no hope for the installed base of old Android devices that will never be upgraded.

    Devs who want to make money will target iOS.

  129. You and Mr. Gemmell have just declared that iOS can’t possibly win in the long run, that the world will be dominated by Android.

    You see, it’s completely standard economic theory that the demand for a product increases as the price of its compliments decreases. The cheaper apps are for Android, the more demand there will be for Android. The more expensive apps are for iOS, the less demand there will be for iOS. If iOS’s ecosystem structure means iOS apps will cost more than Android apps, then the ascendancy of Android is utterly assured.

    And it’s not like this is pure theory. People pirated the hell out of PC software, too, including DOS (and then Windows) itself. Doesn’t seem to have stopped the PC manufacturers from making a lot of money, the PC from becoming dominant, or even Microsoft making money (decrying the piracy all the while). The iPod mostly played pirated music; didn’t stop Apple from selling a lot of iPods, the iPod becoming a dominant music player, or even Apple (and the record companies that did deals with Apple) from making money through iTunes. (How well have music players that didn’t support pirated music fare, by the way?)

  130. Tommi on iPhone sales:

    Apple iPhone Q2 Sales fall to 26M, market share falls to 16%, but this is normal sales pattern</strong
    http://communities-dominate.blogs.com/brands/2012/07/apple-iphone-q2-sales-fall-to-26m-market-share-falls-to-16-but-this-is-normal-sales-pattern.html

    Samsung is the clearly visible reason why the iPhone is under pressure. The other reason is more subtle, but many carriers/operators with handset subsidies have been working to extend the time span of their contracts. AT&T in the USA for example has pushed its average contract length up by 2 months.

  131. After having missed every single prediction he ever made, Florian M. is now trying to prolong his title as worst patent “analyst” in the world with a new “Everything Linux will die” prediction!

    Samsung $2.5b Apple damages could be tripled
    http://www.slashgear.com/samsung-2-5b-apple-damages-could-be-tripled-24239998/

    As the patent and court case writer you may well know by now [Florian M.] points out, the outcome of this case is based in a big way on how its seen that Samsung and/or Apple infringed on one-another’s portfolios. One example of this, as Mueller writes, is that “Apple argues that Samsung infringed willfully. As a result, some components of that overall figure could be tripled.”

    Note that Groklaw put up a page which annotates FM’s past writings against his current claims and outcomes. He is one of those fortune tellers who hate it when his past predictions are brought back into the light, as he shows in his own blog.
    http://www.groklaw.net/article.php?story=20120724125504129

  132. @Patrick

    Nice quote:

    Apple has a history of deferring to carriers when it is interested in broader distribution for its devices. When Apple replied to the 2009 FCC inquiry as to its relationship with AT&T, Apple stated:

    “There is a provision in Apple’s agreement with AT&T that obligates Apple not to include functionality in any Apple phone that enables a customer to use AT&T’s cellular network service to originate or terminate a VoIP session without obtaining AT&T’s permission. Apple honors this obligation, in addition to respecting AT&T’s customer Terms of Service, which, for example, prohibit an AT&T customer from using AT&T’s cellular service to redirect a TV signal to an iPhone.”

  133. One last relevant addition on imminent troubles for Windows 8:

    Gabe Newell: Windows 8 is a ‘catastrophe’ for PC biz
    Why Microsoft MUST listen to the Half-Life billionaire
    http://www.theregister.co.uk/2012/07/26/gabe_newell_windows_8/

    That said Windows 8 does change things for OEMs on a number of fronts: it sees Microsoft exert control over the hardware like never before by wielding UEFI secure boot, while Windows 8 on ARM hardware rules out x86 makers who are alien to ARM architectures. Also, Microsoft has floated its Surface tablet-cum-laptop, a reference design it wants PC makers to follow and that it will manufacture and sell direct itself as an added incentive to make PC manufacturers fall into line.

    The whole ethos of Windows 8 goes against what has been Windows’s success for decades: it might be closed-source code, but you were pretty much welcome to put it on any PC hardware you wanted.

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