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Why Nokia Is Toast
CWmike writes "It's hard to remember now, but there was a time when Finland was at the center of the cell phone universe. No more. Nokia is being killed by complexity. Along comes Microsoft with Windows Phone 7, delivering more complexity. My view is that Microsoft doesn't matter, writes Mike Elgan. Although Windows Phone 7 is a way better operating system than Symbian, Nokia's problem isn't Symbian, and the solution isn't Windows Phone 7. Nokia's problem is that it follows the losing strategies of the other losers in the market, and rejects the only two known winning strategies. There are way too many Nokia phones. This causes either choice paralysis, sending buyers screaming to Apple for relief, or buyer's remorse. Nokia should take the advice Steve Jobs gave to Nike CEO Mark Parker: 'Just get rid of the crappy stuff and focus on the good stuff.'" And maybe Nokia isn't toast at all:
reader high_rolla points out an interesting bit of speculation that the Nokia-Microsoft pact is part of a grand plan "to become the exclusive manufacturer of hardware for MS phones and tablets."
At one stage I was a Nokia user, then went over to Sony-E and am wondering about Blackberry, not liking the idea of a phone in my iPod, Windows in a mobile or the stuff that Sony-E is now coming out with.
John_Chalisque
toast!
I am very sucseptible to "let's have another drink"
If MS not even essentially buying a company in a coup where, conveniently for MS, an ex-Microsoftie replaces their former boss will assist MS in competing with Google and Apple, and instead ends up killing the company, MS has failed in the mobile industry like few others. If that won't cause Ballmer to have to leave, I don't know if anything will.
Despite all the evil MS may represent, I'm sure MS don't want to kill Nokia. They clearly want to use them as a leverage for WP7 market penetration. However, the Nokia shareholders seem to be less than impressed to go from an independent company - to be designing and packaging hardware. What has Nokia stock dropped by by now? Last I heard was -14% with many leaving the company. I'm not surprised - I'd feel the same if I went from being a software developer to someone writing marketing material and trying to think up designs for someone elses product, and even have to tell everyone that it's the best software ever, after having dropped my own.
It's humiliation, that's all it is. Pure humiliation for Nokia...
Beware: In C++, your friends can see your privates!
Preemptive conclusions?
"No wireless. Less space than a nomad. Lame."
He loves it when a plan comes together
I'd be shocked if Nokia were "toast". They're still one of the biggest handset makers in the world, and their name recognition alone is worth billions in the market. And while guys like Steve Jobs are going "simplify!", there are millions of customers going "Really? This is all you've got? Where are all the choices?". Just because Apple's strategy is good for Apple doesn't mean it'll be good for Nokia, just like Mercedes isn't going to pursue the same strategy as Ford. They're both still going to make a lot of money.
Life is hard, and the world is cruel
It pains me to say this is the a correct business move for both companies. Combined they have a much better chance of standing out in the crowd (other android-phone makers). Many will hate it, many will love it. A new Apple has been born.
"I'm taking this loop off." - Jack O'Neill
Nokia better come up with some exotic hardware that no one else can produce and tie WP7 tightly to it (so it's reliance on their hardware) if they want to do this exclusive thing.
Else they are completely at the mercy of MS, where MS can dump them for another hardware manufacturer and they can't drop WP7 without losing their customer base who has invested heavy in WP7 applications.
Both the "Nokia is dead" and "Nokia will thrive" articles say the same thing. They only differ in whether or not the authors think Nokia will follow the strategy.
The first article says that Nokia should ditch everything and release 1 really nice WP7 phone. This article says its their only chance, but they won't do it because it is against everything Nokia has ever stood for.
The second article says they will become the exclusive WP7 shop. Maybe they'll have more than 1 phone, but they'll be the only WP7 game in town, and they'll make really nice integrated phones that provide a slick experience (ala Apple). This is exactly what the first article says they should do, article #2 just says he thinks they will be smart enough to take this route.
I always thought that the best possible winning strategy would be an Android Phone with a completely redone UI using their QT Resource. Allowing them to both get the Android market love, and differentiate themselves with QT Slickness. Ah well...
I disagree. Even though Nokia has different models they all have been consistent in the user interface. If I had been a user of a relatively cheaper model, I will feel completely at home when I upgrade to a better model. With their different models, buyers are given some choices. Pick your own combination of features and the price. How can that be a bad thing?
Qt should be fine, too much heavyweight software uses it, and in worst case scenario - it's LGPL, ex-Trolltech people could pick it up.
... but considering main negotiator, it's not surprising they most likely didn't (though I'm not sure how workable it would be anyway, considering Metro UI...)
Still, sad - Nokia was in great position to say "want us to use winmob7? Allow Qt"
One that hath name thou can not otter
That list is interesting in that apart from the top handful there's not a lot of money there. What happened to all the "Microsoft Millionaires"? Did they all cash out?
There's currently an unveiling going on covering Sony Ericsson's new products , seems to be Android phones loaded with Gingerbread, the "PlayStation Phone" included.
I find that Symbian does all I need and I am happy with it. I do not want a pocket computer, just a phone that has a few extras. If I want more I open my laptop. I am not sure which direction I will go in next as for me, the N97 is the most suitable phone but if it has Windows stuck on it, it will not even come close to meeting my needs. I do use GPS and am often out of cell range, therefore I do not want to need Google maps etc. I can use Nokia Maps in the mountains, far from the nearest cell and it has got me out of trouble a couple of times (I am a 4x4 nut). I like good music on my phone and a backup camera, that is all. After this merger, I will probably buy a real GPS for the truck and a dumbphone. I cannot see any reason to buy a load of stuff I do not want. I think Sony sound OK for me now; good music and a decent dumbphone.
I love stacking my barbecues in the shed at the end of summer - you can't beat a bit of grill on grill action.
Microsoft today most reminds me of a coral reef in the Caribbean.
Still standing there, huge, menacing, misshapen and barnacle-encrusted.
But dead. The environment has changed around it and it can't adapt.
Nokia is a huge ship battered by the storm coming in toward the reef
for shelter.
What do you think is going to happen?
Where are we going and why are we in a handbasket?
Funny timing, I'm uninstalling Qt and Symbian as I write...
I think Nokia has fumbled too long between Symbian and Meego and now Qt; one can't get a clear sense of where they are going and thus, as a developer I must move to greener pastures.
Goodbye Nokia! Hello Android!
Be very, very careful what you put into that head, because you will never, ever get it out. - Cardinal Wolsey
Nokia isn't leading, Apple and Android are doing very well, RIM still has solid market share and MS is going to fight like hell for WP7. There isn't room for 5 players and even 4 is a stretch. It doesn't matter what happened in the past, Nokia was in a weak position and needed to do something. Bottom line is that the stage is set for the phone OS players and Nokia is not one of them, so they have to change where they fit into the eco-system.
In the low end Nokia is going to get eaten alive by cheap Chinese phones. They won't be great phones, but they will be dirt cheap and will sell by the truckload in the developing world.
In the high end, Nokia has to compete with companies like Apple and HTC. On one hand, Apple is super focused and dumps all their resources into a very small number of products and owns the ecosystem. On the other hand, HTC is small and nimble and willing to take chances. Compare this with Nokia -- which is a slow, conservative, giant and doesn't stand a chance against these smaller companies when it comes to innovation.
What's left for them?
I think Nokia brought in a former Microsoftie to run their company because they knew they were going to be licensing WP7. I'm sure they are getting a crazy good deal and plenty of promises from Microsoft. It's probably the biggest gamble that Nokia was willing to make and I think it's only going to prolong their descent into irrelevance.
While I agree that in general, the minimalist strategy works well for Apple, I'm not sure that Nokia could pull it off. Let's look at what Apple used to build the iPhone brand before there even was an iPhone.
1.) OSX. Apple's penultimate desktop operating system, gain billions of fans for it's tight design and nearly flawless execution. When Apple merged it into the x86 platform it removed much of the pricing barrier that was keeping people off of Apple and wooed many more customers.
2.) iTunes - At the height of the digital music revolution, Apple introduces the ultimate music software to go with it's ultimate desktop OS.
3.) iPod - Right along with iTunes, completes the musical vertical integration pyramid, design is revised several times, paving the way for the iPhone's form-factor.
All of the above led directly into the iPhone. Looking back at it it's almost obvious that this is where they were going, although none of us could see it at the time.
Now, what to Microsoft and Nokia have? Well, Microsoft has a desktop OS, but has said little to nothing about integration. No solid music apps beyond Windows Media Player, and that's just a mess. Nokia? Well, they have plenty of phones, but no design ethos or personality. Basically, both MS and Nokia have the same "scattershot" approach to business. They try to take a little from every area, resulting in generally mediocre products with a few bright spots. Not a winning strategy.
right now, of the non-Apple and Google players, I think that HP is positioned best with RIM a close second. If HP can seriously deliver both on the consumer and business ends, they will knock RIM out (particularly if they can deliver the kind of centrally-controlled enterprise handset encryption that RIM specializes in). Regardless, the Nokia-MS merger isn't likely to make much of a difference, even IF they take the advice offered in TFA. They just don't have the right pieces in place or the right corporate attitude.
Official Heretic from the "Church of Global Warming". Proven right thanks to whistle blowers. AGW = Flat Earth Theory
By saying "being taken over by Microsoft" you are implying that this was Microsoft's move. I think it was the other way around. Nokia is screwed, they know that, and decided a while ago to dump their software and license WP7. The best way to do accomplish this is to hire somebody from Microsoft who knows and understands Microsoft. I'm certain they are getting a better deal and preferential treatment than any other WP7 licensee.
http://techcrunch.com/2011/02/09/nokia-microsoft/
Cite? Nokia's low-end phones are still produced in the company's own factories and in places like Romania and South Korea. Indeed, the company has called "Chinese slave-labor garbage" their major competitor in the low-end market.
In memoriam : Microsoft's previous strategic mobile partners. lol
Nokia has been amazing at undercutting all other phone manufactures's prices on the low end, yielding amazing sales in poor countries. Yet, now we're seeing Chinese companies who'll basically just copy all Nokia's products, and produce phone even more cheaply using almost slave labor, which'll obliterate into Nokia razor thin margins.
We're entering a time when Nokia's western low-end phones will run Symbian while other low-end phone remain simply feature phones because Symbian requires less resources than Android, iOS, Blackberry, WP7, etc. I donno how long that bright period will last of course, well maybe it'll depend most upon the marketing for Android, iPhone, Blackberry, etc.
In smart phones, Nokia could've easily run with MeeGo plus Andoird apps, giving themselves the largest app selection plus differentiation. It's dubious however that WP7 will deliver either the developers given that Apple and Android own the market currently, or the users, given that Android delivers all the choices you mentioned.
The Christian religion has been and still is the principal enemy of moral progress in the world. -- Bertrand Russell
To become the one and only maker of MS hardware? That is a position NOBODY wants, EVEN Foxconn is NOT that stupid. Because that is exactly what Nokia would become, a mere factory stamping out goods at FINNISH prices. Look at how nice it is to become the sole supplier for a certain Redmond based company when it comes to graphic chips... Nvidia, oh oops ATI. Loyaltie? MS knows none.
Have people really forgotten WHY Symbian came into existence? Do they not know WHY no other phone makers WANTS to be a MS only shop? Because the phone makers like most in IT KNOW what it means to be a MS lapdog and sought to escape it.
What kind of deranged mind thinks that ANY company would of its own choice consider becoming the next Dell to be desirable? Oh and that is NOT the Dell of the desktops where MS software is the near absolute ruler but the Dell of Windows ME, Bob, Vista! Dell by the way that is outsold by Apple which does NOT sell MS Windows.
It would be as if HP be loosing out in desktop sales and go all for the massive Linux desktop market to save its fortunes... might work... but not bloody likely.
Windows Mobile 7 is not some price that is hard to get either. Everyone phone maker out there can make a WM7 phone. MS is going to chance this when it has so much trouble getting any of its phones to markets already? It is a bottom feeder. The consumers have said countless times they simple do not want MS software on their phone. This is after all their Xth attempt at it, people have made their choice.
To be clear, Nokia used to have a higher market share then MS ever had. So it is trading what made it unique for a smaller market share?
Oh but maybe with WM7 it will create some great phones? Unlikely because it has failed to do so before. Nothing stopped Nokia from making the next or indeed the first iPhone itself. What both Apple and Google have shown is just how silly easy it is to create a new phone + OS and make it in the market. For that matter, so has Rim. Nokia didn't fail because it didn't have access to MS software, its competitors didn't and did very well despite OR because of it?
And here is the real irony: PC makers believe that unless their hardware comes with MS software it just don't sell. Apple doesn't count in this bit of logic. See the swift end of linux on the netbooks.
But on the mobile phone, this just ain't true. The OS makes VERY little difference in peoples choice. Even if it did, the sales figures clearly show that putting Windows on it will just chase people away.
Nokia had to either re-invent itself, possible with Linux as a base OR become one of the many hardware makers using an existing OS... and it did the latter with the least selling OS.
A brilliant move? Maybe for some MS stock owning CEO, but I think Nokia's slide to the bottom will only be hastened by this move. We shall see within the year.
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
The #1 reason Nokia is toast is that Elop is still CEO, after what did last friday. The rest is secondary.
It's about Maemo, the last, best hope of the true linux phone.
I Browse at +4 Flamebait
Open Source Sysadmin
If this quote is accurate...
Elop doesn't know what the fuck he's doing. He needs to steer the company back towards growth and away from the rocky shoals of loss.
Taking on Android is like trying to stop a train by standing on the tracks and putting your hands out and asking nicely to stop. Android's going places because the OS is usable and free.
Non impediti ratione cogitationus.
Yeah, after all, Nokia once made rubber boots! OK, not exactly sports shoes, but not exactly phones either. :-)
The Tao of math: The numbers you can count are not the real numbers.
"eyeballs" aren't revenue unless you're in the cornea business.
And they don't have "control" of the living room, they just have alot of video game consoles which seem to be made at a loss. What exactly is the X360 doing for Microsoft?
It's not like everybody is using the Microsoft Video Store, and getting all their TV from the Ballmer Network, and Microsoft isn't getting money for every TV program they watch. (And neither is Google or Apple, despite their desire---the most successful is NetFlix, because they offer a simpler product and are good at it).
What phone "tie" to X360 is there and would make sense? The hardware & software is completely different.
Why do you want to access your video game remotely from your phone?
The best upside is that by working with Nokia they'll make Windows Phone 7 better as it will have better software design for real hardware.
Instead of grandiose "control of eyeballs", let's have Microsoft make a phone which doesn't really suck. That's plenty hard for them already.
There are way too many Nokia phones. This causes either choice paralysis, sending buyers screaming to Apple for relief, or buyer's remorse.
Judging by Android's "problem" of having way too many phones, I doubt that's really the issue. I don't see Android users running to Apple for "relief".
No the problem is that the Nokia devices are outdated. Having too many phones has nothing to do with it, the issue is that all the phones are boring. People want flashy. People want apps.
That's probably not an example at all, IIRC Windows version of Skype doesn't use Qt...
;) ...just a few from memory.
OTOH: Mathematica, Maya, Google Earth, Last.fm desktop player, VLC, Scribus, Psi, Lyx, VirtualBox, most of KDE obviously
One that hath name thou can not otter
No. Some people just want a phone. And cheaply.
Find me a smart phone for under £100 on Pay-as-you-go, with a decent tariff and data rate. It just isn't out there. If there was a smartphone for that price (which I have yet to find by the way) PAYG tariffs always gouge you on the data rate.
The people who want smart phones also don't mind paying monthly. For someone like me who rarely uses their phone for anything other than, well, phoning people, it just isn't worth it.
I've had a mobile phone for nearly 10 years now, and I've still found myself unable to justify paying a monthly contract. I could certainly afford it, but why pay more to do what you're already doing for less.
Nokia do well-featured dumb phones. Like my phone, the 5310, and all the others with symbian 40 on it.
Sure, Nokia are fumbling with their smart phones, but I don't see Apple, HTC or Blackberry catering for the lower end of the market either.
It pays to be obvious, especially if you have a reputation for being subtle.
Nokia do well-featured dumb phones. Like my phone, the 5310, and all the others with symbian 40 on it.
Series 40 is not Symbian.
One that hath name thou can not otter
Could it be that with Nokia dependent on MS for phone software, the biggest holder of smartphone related patents is no longer a threat to Microsoft? Apple and Microsoft have some kind of patent sharing deal, which is good for Microsoft, but does Apple no good against Nokia's phone patents.
And Google's pretty much on their own. Maybe Motorola's got some protection to offer Android, but I personally don't like the idea of an emboldened Microsoft waving bullshit UI patents as a threat to Android with nobody left to countersue.
Posted from my Android phone. Oh, I can change this? There, that's better...
Is it? Have you got any stats?
Smartphones are taking over ranges and pricepoints that used to be dominated by dumbphones and as a result Android is surging forward in marketshare all the while Nokia is hemorrhaging. This just shows that most people will choose a smartphone over a dumbphone when given the choice.
What exactly is the X360 doing for Microsoft?
2nd Quarter, Entertainment and Devices
Revenues: $3.7 Billion Dollars. Up $1 Billion Y/Y.
Operating Profit: $637 Million Dollars.
8 million Kinect sensors sold in sixty days.
Console sales up 21%
XBox Live membership up 30%.
Microsoft's second quarter Kinects
Kinect has the potential to take the UI of "Minority Report" and the re-incarnated "Hawaii 5-0" mainstream among home users.
It can plausibly described as a breakthrough tech in robotics. Nothing this capable has ever been so cheap and its developed is being fueled and funded by the XBox 360.
The "next generation" console may not be a console - but something more like a peripheral for your OnLive gaming "app" that plugs into your Internt- enabled HDTV.
Yes, there was a $1B mistake with the early XBOX 360. That was written off and paid for a couple of years ago. But, despite that, its proving to be a successful profitable platform - being profitable since 2008.
Im not sure where you get your WII numbers - could you cite your source?
XBOX 360 currently enjoys about 30% market share compared to WII at 36% and PS3 at about 32% (cite). Thats not "two to one" - its 6 percentage points. If you look at the numbers, the WII is loosing market share rapidly. 2010 was a decent year for the Entertainment and Devices Business but revenues were down a bit. You can read the gory (and boring) details in our annual report. Dont forget that the XBOX business is a systems business - we make money many ways with the XBOX system. For example, in July 2010, this article explains that XBOX Live is a $1.2 Billion dollar business. Steam is close to that (cite).
Big companies can make costly mistakes and still thrive. Look at Intels recent $1B problem with SandyBridge. Nobody seems to be freaking out about that (will not too much anyway). There stock price hasnt even really taken a hit.
-foredecker.
Jibe!
That's the MS business model now. Why innovate, when you can litigate?
From groklaw.net:
NOKIA: Here's Why We Jumped Off The "Burning Platform" Into The Frigid North Sea
Nokia’s history of innovation in the hardware space, global hardware scale, strong history of intellectual property creation and navigation assets are second to none....
There are other mobile ecosystems. We will disrupt them.
[PJ: Hmm. I wonder if there's a connection between those two sentences. This isn't about patents, by any chance...?]