Nokia sold Microsoft its production lines, and licensed its patents. Starting in 2016 Nokia can reenter the cell phone market again. Basically Nokia gutted its legacy capital, and is taking a two year break and reevaluating what direction it should orient itself.
Nokia and Microsoft could not have made a more mutually beneficial deal. Microsoft gets a thriving hardware division NOW, and Nokia gets cash and the ability to reboot itself with no short term risk.
My point is, Nokia DOES need a change of strategy and tech, they will just be taking at least two years to blow bucketloads of cash on R&D, instead of worrying about short term end-consumer sales. Personally I'm kind of excited to see what Nokia comes up with. (Everyone seems to also be forgetting that Microsoft only purchased the mobile device business. Nokia's most profitable sector was its Nokia/Siemens Networks, which it still owns. They also kept their Patents and Mapping software. Microsoft get's a 10 year license with the option to upgrade to a perpetual one. Nokia is going to make a TON of money off one of the worlds largest companies, and Microsoft gets cheap intellectual property. Win/Win.) The sky is their limit.
That said, I'm still emotionally bummed at what happened to Nokia in the last few years, and don't think it was inevitable that this had to happen to Nokia.
Content should be first. Search, maps, news, video editing, messaging (basically everything Apple isn't that google, microsoft, and yahoo are.)
With a top tier software services stack, and exclusive content, it's a lot easier to convince people to latch onto your hardware platform.
Besides, Nokia had great reputation as a quality brand. Some of their phones were unbreakable. They've lost their reputation since their deal with MS.
So Nokia then came out with the N97 and it was clear that they did not have the ability anymore to design software or pick a strategy. Their 'app store' switched from MoSH to Ovi and it just simply did not work. All the while Android and iOS were moving very fast. People were very unhappy with the N97 flagship and the rest of the offerings were not very clear. They had dozens of models. E series was supposed to be the business series and N series for "media". It was confusing marketing. From 2009-2012 they were losing double digit marketshare every year. Even strongholds like India and Asia were starting to view Nokia as a company that lost their direction. So yes people did have fond memories of their unbreakable candybar phones but they also associated Nokia with the old days of phones as they could not produce a modern, coherent UI. (until MeeGo where it was too late)
All of a sudden, a year later, the Lumia 1020 seems like a "fresh, new" idea. When in fact, Nokia has been marketing this EXACT SAME IDEA for over a year. For better or for worse, the "Windows Phone" brand turns heads. Lumia1020 is sticking with people a lot more than "PureView 808"
As much as I love the close to open source atmosphere and very good UI of the N9, Elop is right. Android turned making phones into a commodity. The only place where money can be made is by providing an ecosystem. Customers demand an ecosystem too. Nokia was losing market share so fast that as Elop said they were on a "burning platform". I am not sure they had the might anymore to create a MeeGo/Maemo ecosystem in time to save them.
I really wish that Nokia would have continued MeeGo development but I understand the decision to can it too. Nokia for many years was offering contradictory statements and making half assed partnerships. So they had to say we are going all in and all of our resources are behind Windows Phone. Developers got burnt several times. Even with Maemo they suddenly partnered with Intel's mobile OS and had to spend a year porting stuff with no apparent gain to customers. So I wish Jolla well, but Nokia did what they had to do.
I agree with that. Having an ecosystem is the root of value in mobile device companies. Elop was correct to identify an ecosystem as the most important thing. Where it gets controversial is the subsequent MSFT decision, which could be interpreted as saying "Now that we have determined ecosystems are the most valuable thing a company can have, we are torching ours and outsourcing that part of the company to Microsoft"
The more logical thing would have been "now that we have determined ecosystems are the most valuable thing a company can have, we are all-in with Qt and MeeGo."
Of course, it ultimately boils down to whether Elop and Nokia's leadership had more faith in Microsoft than in themselves to build that ecosystem. In terms of execution, neither company had been firing on all cylinders for quite some time...
Best phone and OS according to who? The same folks who cheered on the OpenMoko? As Elop said, the market has turned from a battle of devices into a war of ecosystems. Meego would've ended up like BB10 running on QNX(remember how many folks on here salivated about a QNX based mobile OS?), critically appreciated but with no apps and sales.
Nokia recently became the fourth largest OEM in the US market. http://pocketnow.com/2013/11/01/nokia-smartphone-sales I doubt that given Nokia never really had a brand in the US for smartphones, it could've done so without Microsoft's support.
Meego was good enough that Jolla picked it up, and Intel spun it into Tizen. At the time of the N9 unveiling, it was better than Android.
Speaking of ecosystems, fast forward a few years, if Nokia had indeed attempted to push Meego and failed, Android would have been the logical choice. Now they're settling for scraps with Windows Phone, when they were once THE leader worldwide in smartphones...
Edit - by the way, Nokia was the smartphone market share leader as recently as 2011... In fact, it was during Elop's tenure that Nokia lost most of its market share, although they were on the way out for awhile before then. But had Meego had better traction, it could have been very different. Nokia had an ecosystem, and had mindshare...
Also, Meego Harmattan (released with the N9) got pretty stellar reviews all round. See for your self:
http://www.theverge.com/2011/10/22/2506376/nokia-n9-review
http://www.engadget.com/2011/10/22/nokia-n9-review/
http://www.gsmarena.com/nokia_n9-review-659.php
Every review lauds the software, and laments the fact that it was doomed by Elop.
I think you can envision a successful strategy that would have included Windows Phone, potentially even as the only platform they offered, but Elop killed off everything else in a very visible way before WP was really ready. When it became the only offering, they alienated existing customers and left them with no obvious migration path.
WP sales have started to recover, but IIRC they're still lagging behind what Symbian was doing at the time Elop took over. Conceptually WP may have been a reasonable long term choice, but there were certainly ways to get there that didn't cost them so many existing customers so quickly.
Q3 2010 (when Elop took over): 110.4 million Nokias sold Q3 2013: 64.4 million Nokias sold
Parsing your statement, if when you said "no one was buying Nokia phones" you means "no one [in developed economies] was buying [Nokia high end smartphones]" you'd then be correct.
Pedantic reply is pedantic :)
Don't get me wrong, I am not a Symbian fanboy and I think Nokia held onto it for too long, but the notion that "no one was buying Nokia phones" is not the whole story. It probably resonates with the average HN reader, who is relatively young, lives in the US and carries an iPhone or Android device. It probably also accurately represents where the Symbian market was going long term. But it's not the whole story.
Well that sounds really sustainable.
Wow, that would be very useful. Should we reboot Blackberry to it's 2008 culture, Microsoft to 1996, Yahoo to 1999?
I think Nokia will help Microsoft to compete with Apple in the field of smartphones, especially with custom-designed hardware and exclusive OS.
Amazon.com has a focus on retail. They sell stuff and the Kindle (including Kindle Fire) line is just a medium to get it to the customer. If FedEx and others kicked the bucket tomorrow and Amazon felt UPS was too strong as a vendor, they'd probably start their own logistics department. If they felt Comcast was too dominant, they'd probably want to do something about that as well.
Google's focus is arguably its services (which it uses to push ads). Apple is stubbornly a devices (hardware) company.
However, it is unclear what Microsoft's angle is here. Do they want to make money selling software through OEMs? It doesn't seem like they want to push prices of hardware down. They make too much money off of enterprise software to cut that arm off. Online services does not make enough money to let it completely cannibalize the software licensing cash cow yet.
I am glad I don't run Microsoft. I would be lost.
And I guess it's pretty much the same strategy as Apple is following, especially now Apple has made Mavericks and several Mac OS apps free of charge.
[0]: http://www.microsoft.com/investor/reports/ar13/shareholder-l...
BlackBerry and Nokia are still producing very good phones. But they failed to jump the app train. Blackberry may survive since the new OS supports Android apps. Nokia should work on this as well.
There are rumors that Nokia is still working on an Android Lumia.
So we can safely say and Android Lumia won't happen.
But ofcourse rumors are just that: rumors ;)
1. Microsoft's activist shareholders tanking the deal, perhaps by pointing out that buying Nokia's factories and the whole legacy handset business including Series 30 and Asha is pretty crazy.
2. Nokia's board concluding that, now that they are rid of Elop, could reboot Nokia themselves: spin Jolla back in, and start selling Sailfish and Android smartphones.
They actually do. If you were to check their quarterly reports you'd see they have plenty of cash...
End of fiscal 2010, they had $16.4 billion in cash.
Today they have $12 billion in cash. With zero long term liabilities.
They have drastically more money than they would need to remake their business and target Android.
If it didn't work, that might be the last shot they get at it however.
Sell the smartphone division, aka Windows Phone division, to Microsoft. You get rid of Elop and still scavenge a portion of the money poured into WP. Then start a new smartphone division leveraging Android. On the employees front most of your best former designers and engineers are still local just working for Jolla or Intel. Buy Jolla for the hardware designer then partner with Intel and get help on the engineering front. Hype the hardware at some consumer electronics conference and try hiring back the few of your best engineers which stayed and were included in the Microsoft deal.
Boom, you now have Daniel's untested and high risk plan for an Android Nokia. Please vote for me as the next Nokia CEO.
Nokia has Android ready to go on existing devices. Bringing up Android isn't rocket surgery. You would have to ask the Jolla people how much it would cost to put Sailfish on existing devices. I bet their answer would be under $10M.
In other words, claims that Nokia had to "focus" on one OS due to costs were bunk then and they are bunk now. Lots of newcomer OS are hitting the market and the costs to try them are low enough that many OEMs will sell Tizen and Firefox OS devices just to test market acceptance. Nobody will spend so much they bet the farm.
Nokia may have used Android to force Microsoft into a buyout, but I doubt they were going to seriously pursue it, for one big reason: that would have entailed compulsorily licensing Google Maps, which is a direct competitor to their own mapping division. You may think that doesn't sound so bad, but consider this:
1) It dilutes the billions they paid for Navteq.
2) As the SkyHook lawsuits have shown us(IIRC) Google demands all location data produced by Android devices to improve their own geo services. As such, Nokia would have ended up building devices that end up improving a competing service.
3) Considering the mapping division is one of only three divisions Nokia held on to, it's undoubtedly important to them long term. I am not sure, in their eyes, the pros of having an Android phone out there would have outweighed the cons of improving a competing mapping service.
Microsoft bought itself another Kin.
Nokia isn't an old friend of yours. There's nothing to "save". Raise your billions and hire some of their designers if you like the work that they do.
To be fair, there's a lot of intellectual property at stake.
2) There's a lot of intellectual property
3) There's a global brand
4) I think it's safe to assume there are a lot of excellent people that still work for Nokia
There's a lot to be "saved." Whether Nokia could be turned around on its own is another matter.
