Nokia is doing so badly with WP8 even Microsoft doesn't want them. What does that tell you about their current strategy?
I've always believed, and I still think it would be true - if Nokia would adopt Android, they could probably even beat Samsung. It would've certainly been true if they did it 2-3 years ago, before Samsung got a chance to become the king of smartphones, but I think it can still happen if they do it now, and wait 2-3 years for it to happen. Obviously it won't happen overnight, but at least they have a shot at it with Android.
They'll never do it with WP8. The math just doesn't add up. They'll always be limited by the WP ecosystem and the WP market share. Samsung has 30% of the smartphone market, which is about 40% of the Android market share.
Nokia will have at most 50% of the WP market share. It only has more now because the market is very tiny, but that would change if WP market grew. That means that for Nokia to beat Samsung, WP will need to get to 60% of the smartphone market share, and it means beating Android in market share. WP will never get that much market share, and even the most optimistic (and I believe, unrealistic) predictions by research firms put WP at 20% - 5 years from now.
So if Nokia wants to stop being more than a niche smartphone player in the future, they'll have no choice but to at least also adopt Android. It's the right strategy for the Nokia board to pick. They just seem to be very stubborn about it, just like they were too stubborn to fire the Nokia CEO before Elop, for 4 years after the iPhone launched. The Nokia board needs to smarten up if they don't want to make an almost fatal mistake once again. Or the shareholders need to overhaul the board. One of the two needs to happen.
So if Nokia wants to stop being more than a niche smartphone player in the future, they'll have no choice but to at least also adopt Android. It's the right strategy for the Nokia board to pick.
This is exactly the same thing that everyone was saying about Apple in 1996. Apple's board had to decide between several OS alternatives to replace the failed homegrown Copland project. There were BeOS and NextStep that could be bought outright, and they also considered licensing Solaris or Windows NT.
A lot of observers were saying:
"Microsoft has won. If Apple wants to be in the computer business, they have to adopt Windows. It's the right strategy for the Apple board to pick."
Would Apple be around today if they had decided on Windows NT instead of NextStep? Not likely. The obvious popular choice is often not the right one -- it's "skating to where the puck was".
I think that's not a valid analogy. First, the last time I checked, Apple is still a niche player in the global computer market. Their current success is not because of their position in the computer market, but because of their current position in the MP3-Player (iPod) and smartphone markets.
And second, because Nokia is not betting on their own OS (as Apple did), but in someone else's OS. That means a different kind of pressure from their investors, and a real submission to another company. And they put all their eggs in the same basket. They did that in order to have something really different to offer (they were afraid to compete without a real differentiating element, and not just a different launcher). But that strategy is not working and Microsoft is trying really hard to get other brands to use their OS.
So, if MS is not putting all their eggs in the same basket, why should Nokia do it anyway? Just staying on the same road, knowing that there's a cliff ahead, in hopes that something will happen... may not be the best strategy. Even if they really believe that Windows Phone is the future, they could use another line of smartphones, with a different OS (even using stock Android could be considered a differentiating element...) just to get some cash that gives them some air (especially from their investors).
I think that's not a valid analogy. First, the last time I checked, Apple is still a niche player in the global computer market. Their current success is not because of their position in the computer market, but because of their current position in the MP3-Player (iPod) and smartphone markets.
But this niche market saved Apple from bankruptcy. Had they not gotten NextStep, they would have been bankrupt.
The Microsoft investment and their promise to port/maintain Office for Mac OS were what bought Apple enough time to come up with new product categories like the iPod.
There's a difference between choosing to control your own destiny (Apple and NeXT) and choosing between different masters (Nokia and Android vs Windows Phone). I think it's obvious that Android would have been a better master 2-3 years ago and there are plenty of reasons to think the same holds true today.
Would a path where Nokia tried to stay in control of their destiny have been superior to both? I think so (and I have my ideas about what that would have looked like), but that's a separate question.
Unfortunately Nokia have not merely gone for the lowest market-share/mind-share mobile OS (which could work out for them, I guess), Elop has gutted everything else about their industrial design and manufacturing (which is what Nokia really did well) and turned them into just another box-shifter of generic parts chucked together in a generic form-factor by the same factory in China that all the other generic flat rectangles are made in. Nokia have abandoned everything they used to do well.
Sony make a bunch of colourful phones - and as far as the physical design, the Lumias seem to be even more fragile than the double-glass iPhones. Perhaps we just get dud ones in my neck of the woods.
There is a big difference between customer loyalty on a desktop vs a smart phone. Most people rely on specific software they like and use on their laptop/desktop PC to do their job, in the case of Apple DTP back in the 90's was a huge advantage for them. If I am forced to swap my smartphone, far less of a big deal.
From what I understand, it's not entirely stubbornness. The exclusivity agreement they made with Microsoft has significant penalties if they pull out - starting with paying back all of Microsoft's "platform support" payments (over USD 1 billion at this point, IIRC), but not ending there, I believe.
That was probably the biggest mistake 2 years ago - not just making the wrong choice (which is fixable), but walling off the best alternatives.
Was this agreement signed by the current, ex-MSFT CEO? In that case, I honestly wonder if there's going to be a shareholder lawsuit against management or board of directors oversight on making such a fatal deal.
Even if such a suit would have little merit, I wouldn't be surprised to see one. Maybe the fact that it'd a Finnish company makes it less likely? But they are listed in US markets...
Yeah. What a ridiculously one-sided deal. Heads I win, tails you lose.
If Nokia had done well, Microsoft would have acquired them for an artificially low price. Now that they have crashed, Microsoft is free to walk away. Nokia can't get out of the deal without making ruinous repayments to Microsoft. Meanwhile, MS is developing its own hardware, which will compete directly with Nokia. In the long term, who knows? They might even perhaps to scupper the whole Windows Phone project, like Windows CE before it.
As I said at the time, the absolute best case scenario for Nokia under their current course is to become another white-box OEM for Windows, operating on razor-thin profit margins. And we all know how Microsoft treats its OEMs.
Probably the best thing they could do now is go declare chapter 11 (or whatever the Finnish equivalent is) and sell the component businesses. NAVTEQ ought to be worth a lot-- after all, TeleAtlas went for several billion a few years ago. Bankruptcy might give them a chance to get out from some of these pound-me-in-the-butt contract terms, too. At this point, the company is probably worth more broken up than whole.
The plan you suggest is beyond ridiculous. Nokia has a totally decent net cash balance compared to their revenue. Their actual operations range from slightly non-profitable to slightly profitable. No company in a position like that would (could?) declare bankruptcy just to escape a relatively minor contractual liability.
So spin off the profitable parts and restructure the non-profitable ones. Or, I don't know, keep riding the failure train right off the side of the cliff. Whichever is easier.
Because Nokia is such a vital part of the Finnish business and economic ecosystem, I wonder how feasible it is to actually enter bankruptcy. As we have seen in the past with US companies, it's not always a pure business decision with these things (also, management always, always has an incentive to drag their feet in the ground and keep collecting paychecks).
Before starting at Nokia, Elop worked for Microsoft from January 2008 to September 2010 as the head of the Business Division, responsible for the Microsoft Office line of products, and as a member of the company's senior leadership team. During his time at Microsoft, the Business Division released Office 2010.[15]
You are always on a MS bashing diatribe. Interesting thing I noticed.
Well if they go Android, they have to include Google Maps to make their phone a viable contender to Galaxy series. And that directly undermines their HERE maps business, and navteq data source.
Besides, How do you explain HTC's slide, Sony's non existence, LG's mere presence among Android vendors?
"I've always believed, and I still think it would be true - if Nokia would adopt Android, they could probably even beat Samsung."
How is his belief a reality? Even the conjecture that he uses to advance Android over WP in following paragraphs, still does not hold truth. Nokia will still have to fight all the vendors, Samsung at forefront, to gain space.
The difference is that Nokia is still very good at hardware and industrial design, while many of these companies are not (though they're learning quickly).
And Nokia also has still some value in their brand from the feature phone era, even if it eroding rapidly. They're now at position 19 of global brands, and dropping fast.
Which is not that surprising given that none of the other manufacturers is forced to take WP8 seriously. Sure, they'll happily release some devices alongside their Android offering, probably reusing a lot of the hardware and industrial design.
For company like HTC it doesn't really matter which third-party OS wins. But at the same time, because Android is selling better they're better of focusing more efforts there.
While that might be good for Nokia (I am not personally convinced), it brings nothing to the consumers except another shiny vehicle for Google's OS.
Even with being open-source Android is almost impossible to use securely and privately. From Google to every minor app developer everyone is trying to syphon data.
One can install CM, but the permission system is still broken and the moment you install gapps over it one cannot even save contacts locally any more. I could go on, but my conclusion was that it's not worth the bother to try and get Android to be more respectful of one's information, it is designed to do the opposite.
So, no thanks from me. The market needs fresh ideas, not the same semi-open OS with a nicer Nokia camera.
Comments
Nokia is doing so badly with WP8 even Microsoft doesn't want them. What does that tell you about their current strategy?
I've always believed, and I still think it would be true - if Nokia would adopt Android, they could probably even beat Samsung. It would've certainly been true if they did it 2-3 years ago, before Samsung got a chance to become the king of smartphones, but I think it can still happen if they do it now, and wait 2-3 years for it to happen. Obviously it won't happen overnight, but at least they have a shot at it with Android.
They'll never do it with WP8. The math just doesn't add up. They'll always be limited by the WP ecosystem and the WP market share. Samsung has 30% of the smartphone market, which is about 40% of the Android market share.
Nokia will have at most 50% of the WP market share. It only has more now because the market is very tiny, but that would change if WP market grew. That means that for Nokia to beat Samsung, WP will need to get to 60% of the smartphone market share, and it means beating Android in market share. WP will never get that much market share, and even the most optimistic (and I believe, unrealistic) predictions by research firms put WP at 20% - 5 years from now.
So if Nokia wants to stop being more than a niche smartphone player in the future, they'll have no choice but to at least also adopt Android. It's the right strategy for the Nokia board to pick. They just seem to be very stubborn about it, just like they were too stubborn to fire the Nokia CEO before Elop, for 4 years after the iPhone launched. The Nokia board needs to smarten up if they don't want to make an almost fatal mistake once again. Or the shareholders need to overhaul the board. One of the two needs to happen.
So if Nokia wants to stop being more than a niche smartphone player in the future, they'll have no choice but to at least also adopt Android. It's the right strategy for the Nokia board to pick.
This is exactly the same thing that everyone was saying about Apple in 1996. Apple's board had to decide between several OS alternatives to replace the failed homegrown Copland project. There were BeOS and NextStep that could be bought outright, and they also considered licensing Solaris or Windows NT.
A lot of observers were saying:
"Microsoft has won. If Apple wants to be in the computer business, they have to adopt Windows. It's the right strategy for the Apple board to pick."
Would Apple be around today if they had decided on Windows NT instead of NextStep? Not likely. The obvious popular choice is often not the right one -- it's "skating to where the puck was".
I think that's not a valid analogy. First, the last time I checked, Apple is still a niche player in the global computer market. Their current success is not because of their position in the computer market, but because of their current position in the MP3-Player (iPod) and smartphone markets.
And second, because Nokia is not betting on their own OS (as Apple did), but in someone else's OS. That means a different kind of pressure from their investors, and a real submission to another company. And they put all their eggs in the same basket. They did that in order to have something really different to offer (they were afraid to compete without a real differentiating element, and not just a different launcher). But that strategy is not working and Microsoft is trying really hard to get other brands to use their OS.
So, if MS is not putting all their eggs in the same basket, why should Nokia do it anyway? Just staying on the same road, knowing that there's a cliff ahead, in hopes that something will happen... may not be the best strategy. Even if they really believe that Windows Phone is the future, they could use another line of smartphones, with a different OS (even using stock Android could be considered a differentiating element...) just to get some cash that gives them some air (especially from their investors).
The Microsoft investment and their promise to port/maintain Office for Mac OS were what bought Apple enough time to come up with new product categories like the iPod.
They also suck up a lot of the "profits" in the PC market. So even if their marketshare is 5%, their profit share is like 30%.
There's a difference between choosing to control your own destiny (Apple and NeXT) and choosing between different masters (Nokia and Android vs Windows Phone). I think it's obvious that Android would have been a better master 2-3 years ago and there are plenty of reasons to think the same holds true today.
Would a path where Nokia tried to stay in control of their destiny have been superior to both? I think so (and I have my ideas about what that would have looked like), but that's a separate question.
Unfortunately Nokia have not merely gone for the lowest market-share/mind-share mobile OS (which could work out for them, I guess), Elop has gutted everything else about their industrial design and manufacturing (which is what Nokia really did well) and turned them into just another box-shifter of generic parts chucked together in a generic form-factor by the same factory in China that all the other generic flat rectangles are made in. Nokia have abandoned everything they used to do well.
Seriously? Most people seem to think that physical design and build quality is the only thing that Nokia still does really well.
The colorful Lumia range is certainly very different from the generic black rectangles that other smartphone manufacturers put out.
Sony make a bunch of colourful phones - and as far as the physical design, the Lumias seem to be even more fragile than the double-glass iPhones. Perhaps we just get dud ones in my neck of the woods.
There is a big difference between customer loyalty on a desktop vs a smart phone. Most people rely on specific software they like and use on their laptop/desktop PC to do their job, in the case of Apple DTP back in the 90's was a huge advantage for them. If I am forced to swap my smartphone, far less of a big deal.
From what I understand, it's not entirely stubbornness. The exclusivity agreement they made with Microsoft has significant penalties if they pull out - starting with paying back all of Microsoft's "platform support" payments (over USD 1 billion at this point, IIRC), but not ending there, I believe.
That was probably the biggest mistake 2 years ago - not just making the wrong choice (which is fixable), but walling off the best alternatives.
Was this agreement signed by the current, ex-MSFT CEO? In that case, I honestly wonder if there's going to be a shareholder lawsuit against management or board of directors oversight on making such a fatal deal.
Even if such a suit would have little merit, I wouldn't be surprised to see one. Maybe the fact that it'd a Finnish company makes it less likely? But they are listed in US markets...
Yeah. What a ridiculously one-sided deal. Heads I win, tails you lose.
If Nokia had done well, Microsoft would have acquired them for an artificially low price. Now that they have crashed, Microsoft is free to walk away. Nokia can't get out of the deal without making ruinous repayments to Microsoft. Meanwhile, MS is developing its own hardware, which will compete directly with Nokia. In the long term, who knows? They might even perhaps to scupper the whole Windows Phone project, like Windows CE before it.
As I said at the time, the absolute best case scenario for Nokia under their current course is to become another white-box OEM for Windows, operating on razor-thin profit margins. And we all know how Microsoft treats its OEMs.
Probably the best thing they could do now is go declare chapter 11 (or whatever the Finnish equivalent is) and sell the component businesses. NAVTEQ ought to be worth a lot-- after all, TeleAtlas went for several billion a few years ago. Bankruptcy might give them a chance to get out from some of these pound-me-in-the-butt contract terms, too. At this point, the company is probably worth more broken up than whole.
The plan you suggest is beyond ridiculous. Nokia has a totally decent net cash balance compared to their revenue. Their actual operations range from slightly non-profitable to slightly profitable. No company in a position like that would (could?) declare bankruptcy just to escape a relatively minor contractual liability.
So spin off the profitable parts and restructure the non-profitable ones. Or, I don't know, keep riding the failure train right off the side of the cliff. Whichever is easier.
Strangely, this kind of thing is what happens to most of Microsoft's business partners.
Also strangely, businesses never seem to learn and keep making the same mistake.
Because Nokia is such a vital part of the Finnish business and economic ecosystem, I wonder how feasible it is to actually enter bankruptcy. As we have seen in the past with US companies, it's not always a pure business decision with these things (also, management always, always has an incentive to drag their feet in the ground and keep collecting paychecks).
Their own CEO is former MS , that explains a lot.
Before starting at Nokia, Elop worked for Microsoft from January 2008 to September 2010 as the head of the Business Division, responsible for the Microsoft Office line of products, and as a member of the company's senior leadership team. During his time at Microsoft, the Business Division released Office 2010.[15]
https://en.wikipedia.org/wiki/Stephen_Elop
You are always on a MS bashing diatribe. Interesting thing I noticed.
Well if they go Android, they have to include Google Maps to make their phone a viable contender to Galaxy series. And that directly undermines their HERE maps business, and navteq data source.
Besides, How do you explain HTC's slide, Sony's non existence, LG's mere presence among Android vendors?
To be fair, it's not as if MS is hitting home runs with their Windows Phone devices. What the OP is doing is just discussing reality, here and now.
"I've always believed, and I still think it would be true - if Nokia would adopt Android, they could probably even beat Samsung."
How is his belief a reality? Even the conjecture that he uses to advance Android over WP in following paragraphs, still does not hold truth. Nokia will still have to fight all the vendors, Samsung at forefront, to gain space.
The difference is that Nokia is still very good at hardware and industrial design, while many of these companies are not (though they're learning quickly).
And Nokia also has still some value in their brand from the feature phone era, even if it eroding rapidly. They're now at position 19 of global brands, and dropping fast.
http://www.mainstreet.com/article/smart-spending/biggest-glo... http://www.interbrand.com/nl/best-global-brands/2012/Nokia
It currently has 83.3%
http://blog.adduplex.com/2013/06/adduplex-windows-phone-stat...
Which is not that surprising given that none of the other manufacturers is forced to take WP8 seriously. Sure, they'll happily release some devices alongside their Android offering, probably reusing a lot of the hardware and industrial design.
For company like HTC it doesn't really matter which third-party OS wins. But at the same time, because Android is selling better they're better of focusing more efforts there.
2-3 years ago definitely, now: not a chance. They fired all their linux talent and burned their brand.
While that might be good for Nokia (I am not personally convinced), it brings nothing to the consumers except another shiny vehicle for Google's OS.
Even with being open-source Android is almost impossible to use securely and privately. From Google to every minor app developer everyone is trying to syphon data. One can install CM, but the permission system is still broken and the moment you install gapps over it one cannot even save contacts locally any more. I could go on, but my conclusion was that it's not worth the bother to try and get Android to be more respectful of one's information, it is designed to do the opposite.
So, no thanks from me. The market needs fresh ideas, not the same semi-open OS with a nicer Nokia camera.
With iOS 7 now copying the clean look of WP8, there's one reason less to use WP8.
I'd love to see a Nokia Nexus phone!