Why Microsoft is right to be pissed at Nokia over the “Burning Platforms” Windows Phone deal

Ever since the “Burning Platforms” deal between Nokia and Microsoft was announced on Feb. 11th 2011, there was a consensus: Microsoft is the big winner in this partnership.

It was  obvious. By February 2011 Windows Phone 7 was already a failure. Sales of the new devices were extremely low, and the new OS wasn’t going anywhere for at least a year, maybe two. Microsoft desperately needed to do something radical to become relevant in mobile again.

Nokia, on the other hand, was still the largest mobile phone and smartphone maker in the world. They just launched the next generation of Symbian devices, significantly boosting smartphone unit margins and profitability. Yes, Nokia already started losing the market share, but in Q4 2010 they still  grew smartphone unit volumes and prices. And they were still shipping almost as much smartphones as  two closest competitors – Apple and RIM – combined. Samsung was a distant third. Nokia also had the next generation Meego platform to replace aging Symbian in the works for summer launch.

From the outside it looked like Nokia brought a lot more than Microsoft to this deal. One of the world’s best known brands, best in class logistics and manufacturing chain, strongest carrier relations and worldwide distribution – all working exclusively for the new Microsoft OS.

It gave an instant credibility boost for the fledgling Windows Phone.

Playing on its strengths, Nokia was able to negotiate concessions no other OEM was ever able to get from Microsoft. “Platform support” payments to the tune of 250 million US$ a quarter, access to Windows Phone code base from the earliest days of development, ability to influence and shape WP roadmap by including Nokia’s preferred features and API’s. Nokia also got the rights to include any exclusive things into Windows Phone code, to the point of fragmenting the platform, if they chose so. And, it seems, some rights to block Windows Phone features they object to, even if Microsoft decides to make the smartphone themselves.

All in exchange for a promise that Nokia will convert a significant fraction of Symbian sales to Windows Phone. That “flip a switch ship millions of units”  magic of glory years. I don’t know how implicit or explicit that promise was, but I am pretty sure it was there.

Now look at the “Burning Platforms” deal from Microsoft’s perspective today.

They’ve paid about $1 billion to Nokia. They gave Finns a say in Windows Phone future development no other OEM ever had. They opened the possibility for platform fragmentation and restricted themselves from doing some competitive things Nokia objects to.  There was also a rumor that Microsoft dropped dual-core capabilities from WP 7.5 Mango simply because Nokia couldn’t make its Lumias work with the latest Qualcomm chips, in time for launch. Whether that rumor is true or not, it is no wonder no other Windows Phone OEM, except HTC, even tried with WP Mango after Nokia deal was announced. Why would they?

And what did Microsoft get in return?

  • a short-term boost in Windows Phone credibility, which disappeared the moment Q1 2012 Lumia numbers came in;
  • somewhat increased developer interest. But it wouldn’t make much difference going forward whether they have 100K or 50K apps in WP Marketplace today, compared to 600K+ in Apple’s App Store and Google’s Play Store;
  • a license (on what probably are very good terms) to Navteq maps. They are not free for Microsoft
  • 10 million Lumias shipped in 11 months. Which is a pitiful number and make very little difference to Microsoft’s standing in smartphone market, or even the future of Windows Phone 8
  • oh, and let’s not forget the sales channels clogged with unsold first generation Lumias. Which might seriously screw up WP8 launch sales and momentum for everyone

Fans like to point how much Nokia lost and sacrificed to go exclusively Windows Phone. Killing off Symbian earlier than expected, abandoning Meego, dropping Meltemi; crashing market share and smartphone volumes, billions in loses, tens of thousands fired employees, etc;, etc; etc; The list is endless. And all of it because of the deal, half-baked WP 7.5 Mango OS, and the time it took to get WP8 ready.

But that does not really matter from Microsoft’s point of view.

Nokia’s pain and troubles are purely self-inflicted. They knew more or less everything there was to know about Mango, they knew how long it will take to ship Windows Phone 8, they even knew that WP 7.5 and WP8 will not be compatible. Nokia knew all this before the deal with Microsoft was announced and signed. And they decided to go all the way in, offering platform exclusivity and huge potential sales to Microsoft in exchange for better contract terms and concessions. Only those implicitly or explicitly promised sales never materialized. The “flip a switch magic ship millions” was gone, wasted on N97 and other disasters.

Microsoft thought they were getting a prize stud with “Burning Platforms” deal. Instead they got a dud.

Ballmer&Co. must be feeling not too happy about  Nokia right now. Which is why 4+ months ago they might have started working on their own Plan B – a Surface branded Micorosoft’s Windows Phone. If true – it  happened right about the time when global Q1 2012 and early AT&T Lumia sales numbers came in.

In the end – it is now beyond obvious that Feb. 11th was a mistake for both Nokia and Microsoft. It is hard to imagine anything else Nokia could have done back in early 2011, that would have made current situation worse. Microsoft also didn’t get even half of what it expected from the deal.

But MSFT is at least executing and producing software more or less on schedule. It is Nokia who has over-promised and under-delivered.

Author: Stasys Bielinis

While I like to play with the latest gadgets, I am even more interested in broad technology trends. With mobile now taking over the world - following the latest technology news, looking for insights, sharing and discussing them with passionate audience - it's hard to imagine a better place for me to be. You can find me on Twitter as @UVStaska'

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  • http://post404.com/ Randall “texrat” Arnold

    I think the situation is actually 180 degrees reversed. NOKIA should be pissed at Microsoft. I don’t think MS has held up *their* end of the bargain.

  • http://www.staska.net Staska

    Why?

  • http://www.allaboutsymbian.com Rafe Blandford

    I think you’re off base on the expectation level for Lumia shipments (which you’ve mentioned in a few other articles), which kinds of invalidates this analysis. I can see that targets have been missed, but its no where near what you seem to suggest.

    Would say 15 million Lumia sales really make the current position that much different? Where’s the idea the Symbain to Lumia was going to be 1:1 (or even close to that). Looking at the product range (price) it is clear that’s not going to happen, nor were (or are they) selling into all the same markets. And that’s not even considering the difficulties in moving from one to the other, which clearly will have an impact.
    I think it’s also short term thinking. The Nokia-Microsoft contract was multi-year (and that’s ignoring the extension clauses). Both knew going in what was probably going to happen in the first 18-24 months. Both did due diligence.

  • http://post404.com/ Randall “texrat” Arnold

    Numerous reasons, but I’ll focus on a couple:

    - here in the US, Microsoft hasn’t really promoted Windows Phone well. And I’m being kind. They promised a media blitz that never happened. Their efforts have been lame at best. They should be all over the teen to twenty-something Xbox-fanatic demographic and I have seen *nothing* there– and believe me, I’m looking. Hard. (I am currently a Nokia Developer Champion trying to whip up WP enthusiasm in Texas)

    - regarding that WP 7.5 to 8 “lack of compatibility”: it’s a crock. Just as Microsoft Windows can be applied to myriad PC and laptop configurations, the same could have been done for WP 8. That’s what Hardware Abstraction Layers (old tech by now) are for. The fact that Microsoft hedged on this topic earlier tells me that this is more political than technical, and that they very likely burned Nokia with it. Sorry, I can’t accept that Nokia willingly went down a development path that would orphan the first gen Lumias. Too much was at stake. I believe Microsoft crapped on Nokia as they have other partners.

    I could add more bullets bolstering my perception on this issue, but given the fact that this is mostly an opinion exchange I’ll beg off. ;)

    But I will say I can’t defend Nokia wholesale. I’m STILL irked at the Burning Platform Memo Debacle and abandonment of MeeGo/Meltemi. Grrr…

  • ballmer

    Wasting billion on Nokia to try to make a miracle in uplifting Windows Phone to relevance should be least of MS problems. Windows Phone based on CE was a disaster will RT change anything?

    The UI might have to change.. if sales dont start going soon. Nokia might actually do it first.

    Windows 8 PCs on desktop will not fly. Tablets wont either

  • http://www.staska.net Staska

    Well, it’s all a matter of degree, isn’t it?

    I am not saying they should have replaced Symbian 1:1 or even close to that. The level of initial S^3 sales – 5 million first quarter (maybe even only 2-3 mil – since they only shipped Lumia for half of Q4 2011) and growing fast from there – would have sufficed. It is about momentum out of the gate.
    I think there was a lot of that “flip a switch ship millions” mentality Lee Williams talked about in Crave/C-Net interview. When those millions didn’t happen the whole thing came off the rails.
    Targets were missed by a lot, IMO. Hence the Q1 profit warning, then Q2 warning/restructuring, firing of head of sales. Such things don’t happen two quarters in a row if you miss targets a little.
    Part of that, of course, was much faster then expected Symbian decline. But a big part must have been Lumia underperformance.

    And there are lots of signs that Nokia/MSFT relations are cooling. MSFT allowing Samsung to announce WP phone before Nokia. HTC “signature” WP devices. Ballmer getting on stage at HTC launch – making that event in effect almost equal to Sept. 5th, Microsoft’s own smartphone (if true). And in response – Elop’s reitaration that Nokia cand fragment WP if they choose so, or his quip that Nokia may rights to hinder features of Microsoft’s smartphone. All these are a very strong indications that tensions are rising fast in MSFT/Nokia partnership

  • http://www.staska.net Staska

    Well, regarding media blitz in U.S. – that probably never happened because Microsoft saw Q1 2012 Lumia numbers and decided that it ain’t worth it, even with AT&T on board. There were tons and tons of advertising across Europe for WP in November, December and January

    We’ll have to agree to disagree on compatibility thing :)

  • http://www.staska.net Staska

    The Metro UI might well become the case of MIcrosofts ambitions overreaching the capabilities, and become their undoing. It may indeed bee too different from what users are used to. The jury is still out – but we’ll know soon enough.

    My point is – that Nokia knew all that going in, and wasn’t able to deliver what they promised

  • http://post404.com/ Randall “texrat” Arnold

    Electing not to do a US media blitz due to initial low sales numbers would be ironic, stupid and self-defeating

  • http://www.staska.net Staska

    Agreed. I think that when initial sales stumbled so badly and Q1 numbers came in – both Nokia and MSFT just gave up on 7.5, hoping to coast somehow to WP8 launch and start anew

  • http://twitter.com/bryanilee2 Bryan Lee

    Yes, quite a bit off base. Some reports said that Lumia sales were “above expectations” (they never seem to say whose expectations, of course).

    “10 million Lumias shipped in 11 months. Which is a pitiful number and
    make very little difference to Microsoft’s standing in smartphone
    market, or even the future of Windows Phone 8″

    The latest comScore or IDC report showed that Windows Phone grew the most percentagewise over one year in terms of # of units. More than Android which was the only other one that was close. Now granted they started from small numbers, but still that could hardly be considered “pitiful”.

    Also, it’s worth noting that when Windows Phone was first released it was a bit behind Android and iOS and playing catchup. While Mango was a great improvement, it was still perceived as not quite being caught up with the competition just yet. Now with Windows Phone 8 coming (and a little help from Apple Maps), perhaps the perception will change.

  • http://post404.com/ Randall “texrat” Arnold

    Ah, that does seem to be the case.

  • Walt French

    1. I wouldn’t blame Nokia for WP8′s inability to run on multi-core CPUs. That is absolutely a core OS function, not a question of getting a device-specific driver to work.

    2. Fragmentation is a rich man’s problem. Microsoft’s phone business is in the gutter. The potential for fragmentation will maybe NEVER be an issue. This cost Microsoft nothing.

    3. No other OEM signed on to the OS: WHAT OS? In the 7.5 timeframe, it was fairly obvious that WP8 would demand more resources than a WP7 phone offered; i.e., the WP7-capable devices would not run WP8 (and WP8 devices would not run WP7.x). A company would have to offer a device that was EOL’d almost immediately, one that had zero upgrade path.

    4. Driving out the competition? Samsung subsequently signed up as some sort of a “special partner” for WP8 phones, and Microsoft has pulled some wonderful stunts in pulling the rug out from under its tablet OEMs. You yourself have rumored a Microsoft-branded phone to compete with Nokia. I won’t comment on how it’s good or not for Microsoft, but one can hardly blame the NOK/MSFT deal for all Microsoft’s issues with OEMs. Rather, Microsoft strategy seems in an utter shambles.

  • http://twitter.com/JayMontano Jay Montano

    Who announced the first WP7.5 device? Was that already a sign of relationships cooling too?

  • Maxt

    If Nokia could have kept most of the Symbian sales until their Lumia launch, then they could halve “flipped” the the next Symbian sales to Lumia over the course of 2012. However the burning platform memo caused an instant crash in Symbian sales. By the the time Lumia was launched, there wasn’t really that many Symbian sales left to flip over to Lumia.

  • http://pulse.yahoo.com/_RSK4Z4DM6PNE6K3JIDAMURONCU Arun

    Yet another of your asinine hate filled garbage. But nice comedy though.
    “a short-term boost in Windows Phone credibility, which disappeared the moment Q1 2012 Lumia numbers came in;” How exactly? Only two phones went on sale in that quarter and 2 million phones were sold, double than previous quarter.”
    “somewhat increased developer interest. But it wouldn’t make much difference going forward whether they have 100K or 50K apps in WP Marketplace today, compared to 600K+ in Apple’s App Store and Google’s Play Store;” Somewhat? From under 20k they went over 100k, even blackberry with it’s older play store could not touch that. And what do you expect? Microsoft should have got 600k+ apps in just one year? What was the app store count after 2 years of the platform launch? Play store?
    “a license (on what probably are very good terms) to Navteq maps. They are not free for Microsoft”
    And care to explain about what happened to Apple maps recently sir? How does it matter if the maps are free or not?
    “10 million Lumias shipped in 11 months. Which is a pitiful number and make very little difference to Microsoft’s standing in smartphone market, or even the future of Windows Phone 8″ – Self made figure, no mention of an estimate or a guess, let alone a credible source or analyst figure. You fail badly here, Nokia announced 1 million phones in q1 (2 months), 2 million in q2 (3 months) and 4 million in q3 (3 months). So the official figure is 7 million in 8 months. Where did you get the remaining 4 million in 3 months? Nokia have not released quarterly results yet and no analyst has predicted this. Also you say it makes little difference to Microsoft, let me tell you before Nokia joined in, they were selling like 1 million every quarter. Their sales have doubled and quadrupled in the past two quarters. What do you expect? 20 million sales overnight? Samsung did not get them, neither did Apple.
    “oh, and let’s not forget the sales channels clogged with unsold first generation Lumias. Which might seriously screw up WP8 launch sales and momentum for everyone” – Very very trusted source there….Eldar Murtazin! Everybody knows his credibiity just like yours. The same guy who said Windows Phone 7 apps do not run on 8. He follows one mantra, pile up all the lies you can! A simple fact will prove how invalid that ‘report’ was, Eldar says Nokia sales were low everywhere including Finland in January. Sad part is poor Eldar does not know Lumia sales went on sale in Finland in February! And yeah they topped charts too. Just check official reports of carriers by Elisa and DNA.
    Eldar and you dear Author are not the only ones in this planet who dump garbage on Windows Phone and Nokia, there are two others too, One is Tomi Ahonen a big time hater, another is ex-Nokia guy Stephen from Into mobile who was ultimately kicked out of the site and has now found Asylum in ‘Android Authority’ :)
    So my dear author, if you keep ignoring the truth, you will continue to lose credibility among readers. And one thing is for sure, slowly Windows Phone is gaining traction, something you know but pretend to deny. I feel sad for your future though :)

  • http://www.staska.net Staska

    They still sold at least 18 million of Symbian phones in Q4 2011 – the same quarter Lumia launched

  • http://www.staska.net Staska

    Let’s not get too picky. I’m not talking about one single event/thing. It’s quite a few of them coming together that makes a pattern.

    Or maybe they are just coincidences happening in close proximity, who knows :)

  • http://www.staska.net Staska

    1. Yes, I admit that WP7.5 is just a rumor, as I said. Though sounds quite plausible to me. No DC support in late 2011 for a new incremental OS release always looked strange to me

    2. For Microsoft to even contemplate a possibility of allowing fragmentation by some 3d party OEM is is a huge deal. All other stuff Nokia got access to/influence over – is unprecedented. Never ever happened in all MSFT history

    3/4 I think that in addition to poor initial sales, Nokia deal was the key reason other OEM’s were so ho-hum and put so little effort into Mango and now are so lukewarm about WP8. Well, HTC excepted, of course – but with their Android position deteriorating so fast – that hardly had a choice

    And, I think, Nokia’s failure to deliver is the biggest reason why MSFT is now working on their own smartphone.

  • Sander van der Wal

    If Nokia was doing fine, they would not have talked to Microsoft at all about licensing Windows Phone. So Nokia talking to Microsoft about licensing immediately gave away the fact that Nokia was in trouble.

    Nokia had released the Symbian Source code in feb 2010. Which means that Microsoft was able to assess the exact state of Symbian development. That would have been a matter of downloading the code and examining it.

    Further, Maemo and MeeGo development was done in the open too, them being Open Source projects. Microsoft was therefore able to keep track of those projects too.

    So when Elop saw that MeeGo would not be ready in time (that BusinessWeek article), I believe that Ballmer had already seen that chart. Not because Elop had mailed it to him as his role as Microsoft spy, but because somebody at Microsoft would have been preparing those charts from the same public bugs database.

  • http://twitter.com/LA_Banker LA_Banker

    Um, the fact that they started from small numbers does, in fact, render your whole point about percentage growth moot.

  • http://twitter.com/snookasnoo Idon’t Know

    Shipped not sold. Like Google, Microsoft reports shipped when many devices are sitting in warehouses or in the bargain bin.
    Apple only reports sold to actual people.
    Windows Phone is dead already.

  • http://twitter.com/snookasnoo Idon’t Know

    Ballmer

  • http://twitter.com/snookasnoo Idon’t Know

    Shipped. Not sold. Most are still sitting in warehouses.

  • Walt French

    @Staska wrote, “For Microsoft to even contemplate a possibility of allowing fragmentation by some 3d party OEM is is a huge deal.”

    I don’t doubt this one iota. But this is Microsoft of the 1990s, the one that had 98% share of the technology world. And it’s the reason why they’re the #3 tech company today, quite possibly soon #4.

    They need to get it into their heads: times have changed and Microsoft’s strategies of yore will only drive them further into the dust.

    Go back and read Jobs’s complaints about how, when Apple had a technology monopoly, it got taken over by marketing types who were clueless about making technology work.

    Not to hate on Ballmer, but how many businesses will Microsoft run into the ground before their cash cow dries up?

  • Walt French

    Yes. But doing a full media blitz for a product that was soon to be obsoleted, as WP7.5 was, would likewise have been a terrible mistake.

    News of the last week suggesting that several core WP8 functions (including power management) are raggedy, are tragic for Nokia and Microsoft’s other partners, especially its tablet partners. Maybe 5 years ago Microsoft could’ve been forgiven for assuming Apple would just go for the cutesy designer stuff, and they could fool around with diddly projects like Kin, instead of building the foundation for a world-class phone, tablet and 21st century desktop.

    Maybe. But here they are, making the same mistake 5 years later, against a competitor that has been running a marathon at sprint speed.

  • http://post404.com/ Randall “texrat” Arnold

    Good points.

  • http://www.staska.net Staska

    “From under 20k they went over 100k…”

    So from October to February – in 4 months MSFT went from 0 to 20K apps in
    appstore. Or about 5K apps a month. From Feb. 2011 till June 2012 – in another
    ~16 months they went to 100K, or, put another way – added 80K apps. That’s again
    a rate of the same 5K a month. Not much of a Nokia effect I’d say….

    “How does it matter if the maps are free or not?”

    It doesn’t. It’s there just to counter MSFT/Elop hater claims that Nokia
    somehow gifted all its location assets to Microsoft

    Yes. 10 million Lumia’s in 11 months is my estimate, and my mistake not
    explicitly stating it up there. Can be more can be less, but that’s what I
    believe it is. We’ll know for sure next week. Re: 7 million in 8 months – that
    is the wrong number too. Nokia shipped 1 million Lumias up to Jan.20 2012. Some
    of them were in Q4, some in Q1. The most popular estimate is 600K in Q4, 400K in
    Q1 before Jan. 20. Then Nokia included Q1 Lumias from 1mil in Q2 2 million
    number. Then it shipped 4 mil in Q2. So a total is 4mil +2 mil + something less
    then 1 mil by Jul. 1st 2012 = less than 7mil. Nokia mentioned 7 mil on Sept. 5th – but there’s no
    way to know when they reached that number.

    And no, I didn’t expect 20 million Lumias overnight. But I did expect
    something comparable to Symbian^3 launch numbers at the start and then growing
    fast from there.

    Re: Eldar as a source. Yes – he sounds too negative about Nokia quite often
    nowadays. But, overall – he’s been more right about a lot of things then he was
    wrong. And, having watched both Eldar’s predictions and Nokia for years – I
    think I’m pretty good a picking which is which – not without occasional mistake,
    of course.

    In this case – Nokia’s product planing mistakes and overestimation of
    Lumia demand is a proven fact, not an estimate or prediction. Nokia itself
    admitted to Lumia related inventory writedowns in their Q2 earnings report/CC.
    Which is a huge deal/mistake for a product line as new and as heavily promoted
    as Lumia. The only question is – how big a mistake it was – and here I find
    Eldar’s estimates highly credible.

    Interesting that you’ve put me into the same company with Tomi Ahonen, when
    Tomi actually banned me from his blog for calling out his bullshit: http://www.staska.net/2011/07/07/telling-me-to-fk-off-calling-skype-boycott-qs-utter-rubish%E2%80%9D-deleting-all-my-comments-tomiahonen-thank-you/

    Believe me, I am a long time Nokia fan, and WP fan since the fall of 2010 when I
    got to try the first WP device. And I’m looking hard for any silver lining, any
    indication that things are turning around for them. I just can’t find anything,
    Seeing all the same old platitudes promising the success just around the corner,
    I saw at WP7 launch and WP7.5/Lumia launches. And idiocies like Sept 5th
    announcement: http://www.unwiredview.com/2012/08/30/wp8-launch-on-oct-29th-new-lumias-announced-on-sept-5th-nokia-is-there-any-method-to-this-madness/

    But, I guess, everyone who has been talking crap about Nokia since 2009,
    saying how it was getting disrupted by Android and iOS: http://www.unwiredview.com/2011/06/22/how-nokia-was-disrupted-part-1/

    … predicting Symbian^3,
    first Lumia and overall Nokia WP strategy failures is just Nokia hater to you,
    ignoring the obvious truth with prejudice and losing all credibility.

    It doesn’t
    matter how right they were over the last 3 years at least. Or will it really really really be different this time?

    Why?

  • Claude Bucher

    a couple things to set straight…

    what ruined NOKIA is the “burning platform” memo about Symbian.
    without that consumers would have continued buying NOKIA devices and m$ hopes to surreptitiously gain traction might have realized themselves while consumers went on buying NOKIA, even with a different OS, possibly even with m$ software.
    after NOKIA’s image was irreversibly damaged by said memo, no matter what software they come with, NOKIA devices unfortunately don’t sell anymore.

    blaming m$ failure to sell (m-)any devices in the mobile phone market on NOKIA is like blaming the messenger.
    the message is that consumers don’t care about the crap from the NW anymore and that m$ was able to monopolize the PC market because there was no competition.
    this obviously is not the case here, thus nobody cares to buy m$ devices.

    as soon as the transition from computer to mobile will be completed, m$ will soon go bankrupt.

  • http://www.staska.net Staska

    Well, I am no expert in open source releases. But, just looking at the timeline…

    I don’t know what Nokia released in February 2010, probably S60/S^1 code or even earlier version. But in April 2010 OPK admitted publicly that they are rewriting Symbian code from scratch for S^3 release. Code for which never made it into open source.

    Same goes for Meego – while open source part was open – the best part Swipe UI and other key things that went into N9 were never open sourced. Or made available to anyone outside Nokia.

    So, I believe, you are mistaken about the insight MSFT had into Nokia inside workings just from reading their code

  • http://www.staska.net Staska

    Well, I don’t doubt MSFT is run by marketers.

    You only need to llok at the decision to withhold WP8 SDK release for month, just for the chance of keeping some WP8 features secret to create buzz or surprise or smth….

    But, again, Nokia and, especially Elop, knew all that going into the deal.

    It does not change the fact that it is Nokia who is srewed up and is under performing. Nothing’s changed about WP since late 2010

  • http://www.staska.net Staska

    I wouldn’t read too much into Intel’s battery driver stuff for x86 PCs and tablets. It’s just Intel talking shit, lashing out at MSFT for loosing its privileged WinTel spot to ARM.

    It does not matter what Intel says. x86 partners have nowhere to go for x86 devices. And ARM stuff is the whole different game.

    And Intel should better start focusing on producing really competitive low power chips for mobile

  • http://www.staska.net Staska

    “what ruined NOKIA is the “burning platform” memo about Symbian.”

    You are way overestimating “Burning platforms” memo effect: http://www.staska.net/2011/07/25/symbian3-resurgence-myth-how-nokia-q4-2010-results-show-smartphone-sales-collapse-well-in-progress/

    And, even if you are right – then it was all Nokia’s fault anyway. Nobody told Elop to do BP in Feb 2011. Simply stating that Nokia is getting seriously behind WP would have been enough.

    But BP didn’t kill Nokia sales. What killed them was Nokia’s arrogance of screwing with operators years after they stopped producing highly desirable phones. There was a time when Nokia could get operators to commit to buy and move tons of crappy devices just for a chance of getting enough N95s .

    But then N97 came along, then 16 mnths without any other worthy flagship. And then all Nokia could come up with was N8…. And then carriers felt empowered enough by Android and iPhone to say FU to Nokia in early 2011.

    As for “transition from computer to mobile will be completed” and MSFT is dead – maybe. But the jury is still out whether that transition will happen at all. Mobile will get most important. But PC isn’t going anywhere soon too. Just as newspapers and radio stayed long after TV became mainstream

  • Maxt

    Almost all the Symbian sales in western Europe died after memo. Western Europe is where most high end Symbian phones like N97 sold before. Most of the 18 million sales in Q4 2011 was from Asia of lower priced Symbian phones that were not in the same price range as Lumia.

    And by the time the cheaper Lumia 610 was available, the lower priced Symbian sales had also crashed to cheap Androids.

  • http://www.staska.net Staska

    Nicely shifting goalposts. First it was Symbian sales crashing. Now it’s low priced Symbians in Asia.

    It would be even nicer if you could add some facts to your shifting theories. Maybe they won’t have to shift so much then.

    Here are some hard facts:

    There was no huge drop in smartphone average selling price between Q4 2010 and 2011. The price declined from EUR 154 to 140, or only 9%.

    Nokia does not break down smartphones by the region, but they do break down all mobile sales (smartphones+dumbphones):

    They sold 25.3M at 75EUR ASP of them in Q4 2011 in Europe compared to 34.7M at 37EUR ASP in Asia pacific and 14.7M at EUR 68 ASP in China.

    Based on these numbers, could you come up with any scenario that makes your Symbian sales collapsing in Europe and mainly coming from cheapest Symbians in Asia, plausible?

  • fluxman

    What do you think Nokia could have done better, while working within the constraints of WP 7.5? How do you think Nokia could have sold more phones? WP 7.5, while a huge improvement over the first version, was still missing some features and the app marketplace was lacking significant name-brand apps. That clearly handicapped the platform from being adopted on a wider scale. Blame Nokia for going all in with Windows Phone, but they brought the best-of-class Windows Phones to market. If consumers don’t buy it, who or what is really at fault?

    You say Nokia didn’t meet “implicitly or explicitly promised sales” or that “Microsoft also didn’t get even half of what it expected from the deal.” Unless you are privy to what was promised, or what Microsoft expected, you’re just making up stuff. Obviously, Lumia sales could have been better. But again, the main reason for poor WP sales must be identified.
    Your thesis that Microsoft started its own phone project because it was dissatisfied with Nokia’s performance selling the semi-Osborned WP7.5 Lumia handsets is pretty weak. Again, there are several reasons for WP 7.5 poor sales. None of those reasons would have been addressed by a hypothetical Microsoft-branded WP7.5 phone if they had gone that route right away instead of partnering with Nokia. See, if Microsoft is so dissatisfied with Nokia, it could have turned to other OEMs. They’ve already branded HTC’s phones as signature Windows Phones. So why the need to create their own phone? Did Microsoft identify what’s causing poor sales? Do they now think that a Microsoft phone will magically transform Windows Phone into a contender?

    And of what of the upcoming WP8 handsets? Isn’t Microsoft giving them a chance? Will Microsoft cancel its phone project if OEM WP8 handsets are successful?

    I think Microsoft is making its Windows Phone not out of dissatisfaction with Nokia, but more as part of its intentions to diversify into hardware. Regardless of how the OEM WP8 handsets fare, they’ll probably release their phone if they are indeed working on one. And then they’ll realize that it’s easier making phones than selling them.

  • http://pulse.yahoo.com/_RSK4Z4DM6PNE6K3JIDAMURONCU Arun

    “So from October to February – in 4 months MSFT went from 0 to 20K apps in
    appstore. Or about 5K apps a month. From Feb. 2011 till June 2012 – in another
    ~16 months they went to 100K, or, put another way – added 80K apps. That’s again
    a rate of the same 5K a month. Not much of a Nokia effect I’d say….”
    My apologies, the number was 8k not 20k. Source: http://www.wpcentral.com/windows-phone-marketplace-marches-8000-apps
    So 2k a month -> nearly 6k a month, big difference. Tripled and the rate kept growing.
    “It doesn’t. It’s there just to counter MSFT/Elop hater claims that Nokia
    somehow gifted all its location assets to Microsoft”
    A gift in the tech world need not be giving for free. A patent license deal could be a gift too!
    “Yes. 10 million Lumia’s in 11 months is my estimate, and my mistake not
    explicitly stating it up there. Can be more can be less, but that’s what I
    believe it is. We’ll know for sure next week. Re: 7 million in 8 months – that
    is the wrong number too. Nokia shipped 1 million Lumias up to Jan.20 2012. Some
    of them were in Q4, some in Q1. The most popular estimate is 600K in Q4, 400K in
    Q1 before Jan. 20. Then Nokia included Q1 Lumias from 1mil in Q2 2 million
    number. Then it shipped 4 mil in Q2. So a total is 4mil +2 mil + something less
    then 1 mil by Jul. 1st 2012 = less than 7mil. Nokia mentioned 7 mil on Sept. 5th – but there’s no
    way to know when they reached that number.”
    So the number is between 6-7 million. Still the same count. 10-6=4 million in three months, again. Since its your estimate, fine. My estimate would be higher considering they increased every month.
    “And no, I didn’t expect 20 million Lumias overnight. But I did expect
    something comparable to Symbian^3 launch numbers at the start and then growing
    fast from there.”
    Symbain^3 phones launched at a time when Android was still growing and it launched in a lot fo countries at a different price range. The launch of Lumias was restricted to a limited number of markets and in most of them it happened in Late December or so. However I still give it to you that there was no large bang. But slow and steady will win the race for Nokia.
    “Re: Eldar as a source. Yes – he sounds too negative about Nokia quite often
    nowadays. But, overall – he’s been more right about a lot of things then he was
    wrong. And, having watched both Eldar’s predictions and Nokia for years – I
    think I’m pretty good a picking which is which – not without occasional mistake,
    of course.
    In this case – Nokia’s product planing mistakes and overestimation of
    Lumia demand is a proven fact, not an estimate or prediction. Nokia itself
    admitted to Lumia related inventory writedowns in their Q2 earnings report/CC.
    Which is a huge deal/mistake for a product line as new and as heavily promoted
    as Lumia. The only question is – how big a mistake it was – and here I find
    Eldar’s estimates highly credible. ”
    I do not know which of Eldar’s predictions have been true. The only one that I have seen is Windows Phone 7s not upgradable to 8. Like I pointed out earlier, two of his claims were asinine. There are many more and are quite recent. There are more in that very report too, like with Samsung’s Windows Phones.
    “Interesting that you’ve put me into the same company with Tomi Ahonen, when
    Tomi actually banned me from his blog for calling out his bullshit: http://www.staska.net/2011/07/
    Believe me, I am a long time Nokia fan, and WP fan since the fall of 2010 when I
    got to try the first WP device. And I’m looking hard for any silver lining, any
    indication that things are turning around for them. I just can’t find anything,
    Seeing all the same old platitudes promising the success just around the corner,
    I saw at WP7 launch and WP7.5/Lumia launches. And idiocies like Sept 5th
    announcement: http://www.unwiredview.com/201…”
    Good to know you are a long time Nokia fan, but I’m not able to know why you are unable to see the obvious. There is something called MINDSHARE that Lumias have acheived. I’m not sure about the US but elsewhere Lumias are very much being discussed not by tech writers or analysts but by the very buyers. Here in Asia, three bands mattered most, iPhone, Galaxy and Xperia. Now it is four with Lumia. When Lumias first came in, nobody gave a damn about them, now this is not the case with people TALKING about them. I have also seen tech shows recommending the devices calling Windows Phone the “operating system of the future”, something that is very different from what was happening earlier, when the same people dissed the platform off calling it immature. Remember Android also started with mindshare first, they convinced people this is the new big thing and that set the stage for sales. Same thing is happening with Windows Phones and Lumias in particular.

    But, I guess, everyone who has been talking crap about Nokia since 2009,
    saying how it was getting disrupted by Android and iOS: http://www.unwiredview.com/201
    … predicting Symbian^3,
    first Lumia and overall Nokia WP strategy failures is just Nokia hater to you,
    ignoring the obvious truth with prejudice and losing all credibility.
    It doesn’t
    matter how right they were over the last 3 years at least. Or will it really really really be different this time?
    Why? ”
    I have never ignored the obvious truth, I have stated that Lumia sales have been increasing and that is the good thing and once more slow and steady will win the race. Do not compare the present strategy to symbian, symbian was first generation technology that could not compete with the new hot thing brought by iPhone and popularized by android. And considering failed strategy by Nokia, I can do better than Eldar atleast,…..some of the wrong strategies by Nokia in my opinion are:
    1. Choosing one, and the wrong carrier in the US. Everybody knows how iPhone dominates AT&T. In the month before iPhone 5 was announced, iPhone 4s took half the total sales (According to Canaccord Genuity). How can some other phone ever excel on this carrier? Verizon should have been the carrier of choice, unfortunately they were not interesed then.
    2. Again choosing the wrong carrier in the world’s largest smartphone market – China. They should have gone with China Mobile. Luckily they will be correcting the error this time.
    3. Pricing unlocked phones at premium price without considering current market value. Galaxy s2 shipped at around 600$ in most markets and by the time Lumia 900 released, the price was down to around 550$. The Lumia went on sale months later and was still priced at 600$. The worst of this case occurred in South Asia, where in fact it went on sale in September, after 920 was announced! And guess the price? 600$ again.
    4. Late release, and no simultaneous release in all key markets. I will not go much on this, as I appreciate you have an article of your own pointing these facts.
    5. Pricing of budget phones. This in my opinion was Nokia’s biggest blunder. They released just one affordable device the Lumia 610 and in many markets this went on sale for about the same price as it’s bigger cousin, 710.
    Many of my these points maybe wrong or inaccurate, but I’m confident they make more sense than Eldar.
    Sorry for the unkind words earlier, but you fail to see the clear silverlining. Maybe like with most others you will, as time passes by.

  • Stoli89

    Referencing something Lee Williams said really doesn’t help your argument. That guy was part of the team that crippled Symbian long before Elop arrived. Listening to Williams about platform strategy is akin to relying on Dick Cheney’s expertise when it comes to WMD’s.

  • Stoli89

    Agreed. It is interesting that all of these prognosticators come out from under their logs to proclaim Nokia is dead…just before the WP8 product releases. I guess their same old narratives won’t get enough clicks a month from now.

    The turnaround strategy takes years to deploy…not months. If Nokia can make this turn happen within 1H/2013, that’s excellent execution IMO.

    In the meantime, the company is honing its focus and conserving cash in areas that do not contribute to the strategy. It has the cash to see this plan through.

  • v

    mango was already finished when nokia came aboard and started working on the first umias. what you said is a total rumour

  • Luisaophie

    This feature is a deal breaker for me but hardly any wp7 phones seem to
    have it. I know the Mozart has it but it only works for missed calls
    and not emails/sms.
    https://www.facebook.com/ilovebiggboss

  • Some

    Nokia would deliver phones is MS could deliver the software (WP8). New Lumias are ready os is not.