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Stephen Elop's ecosystem messages

Yesterday I made my predictions on Nokia’s new platform strategy. They should  be treated as pure guesswork, but they are informed guesses. I based them on public information.

That information comes in the form of statements from Nokia’s CEO at the earnings call. I made a table of all the statements that dealt with platform decisions and my interpretations of those statements.

You may do your own interpretation, but to me there is significant evidence here to support my predictions.

What Elop Said My interpretation
In certain markets where there’s a greater preponderance of competing platform devices, we have some competitiveness problems We have problems in the US
Broadly the conversation about operating system and positioning of relative operating systems in different places is something that we’ll reserve for the February 11th meeting, Different markets require different operating systems
The general comment I’d like to make though is that in today’s world it is the case that given the different price performance characteristics of different chipsets, we get into situations, where the best experiences are not necessarily delivered by systems that are capable of delivering the highest end experiences. We have to be very mindful at what level of the price curve we deliver what type of device with what operating system. Different price points require different operating systems
When I think about geographies, the area, I’ve mentioned this indirectly during my comments, but I’ll be more precise in answering your question and that is clearly, there is a pattern of disappointments in the United States. A pattern there where efforts have been made, competitiveness, challenges exist and we very much need to address those We have problems in the US. We’re going to address these.
That’s why I characterize very clearly in the framework for the decision making ahead, that whatever the strategy is that we outline on February 11th, we very clearly will be ensuring that it gives us the opportunity to reopen doors in markets such as the US and some others where we have not recently been present We are going to enter the US with this platform
With respect to the question of ecosystems and so forth, it’s important to note, in my opening comments, I referenced the fact that there are today different ecosystems and different patterns at play Different OS for different markets
If you like the high-end ecosystems where there is particular rate of momentum and share gain taking place. At the same time, the dynamics at the very low end of market which itself is an ecosystem of sorts, is very different with very different demands and expectations High end and low end require different OS
I’ll just offer that observation that today broadly in the world without any specific comment on us or our competitors, there are multiple ecosystem patterns that need to be considered More on the need for multiple OS
I’d also point out that very critical in whatever combination of ecosystem or ecosystems or whatever our strategy outlines, the need to maintain sustainable differentiation between ecosystems and within the ecosystem relative to our competitors in that ecosystem is a top priority. In everything we consider, that’s something that will be very much on our mind. What we chose gives us some degree of differentiation–It’s possible concessions were negotiated
With respect to comparisons to other ecosystem shifts and things like that, the real thing that one must focus on is the quality of products in the market, the momentum that one already has Symbian is not going to disappear
As we’ve described the Symbian momentum that we have today; a consideration of shift of ecosystem, certainly you have to consider that potential of market share changes Symbian will lose share
With respect to the ecosystem comment, without getting into specifics of different options and things like that in detail, what I will say is that the word catalyze is to imply that there is a wide variety of participants in our world, and that includes competitors, it includes operators, other technology firms and so forth who in many respects have a common interest relative to the potential strength of other ecosystems and how they may develop over time Partner is a tech firm that has common interest — i.e. market entry
The catalyst of an ecosystem could be considered as making sure the right conditions are formed in the right companies, work in such a way that alternatives emerge in a marketplace that may not exist today Looking at growing the market for the partner– Microsoft
We made a decision to not proceed as people have thought we would proceed This is not going to be business as usual
You’ll see that pattern of decision making from us in terms of being very crisp about what constitutes great experiences and ensuring that that is what we are delivering to our customers. This is a marketing-led effort. We’re going to stay on message and not waffle on about technology
  • http://twitter.com/dutchtender @dutchtender

    spot on post. Don't disagree with a thing you wrote. He clearly is saying that Symbian or Meego are not the answer in the USA. He clearly is saying that he intends to be in the USA. I believe he has cut a great deal with msft and will make it seem like he got the better of them when he announces on Feb 11. I think investors are going to like the news when it is presented. After they react with positive enthusiasm is when it might be a good time to sell the stock.

  • http://twitter.com/judsontwit @judsontwit

    Heavy forbid they just not talk until they announce a product.

    Do companies actually enjoy playing this sort of rhetoric chess? Or do they feel compelled to say *anything*, and massive deviations from straightforward honest just naturally result from it?

    In contrast, Apple's simple "We do not comment on future products" or Microsoft's "We never comment on speculation" are almost like breaths of fresh air.

    • asymco

      Actually this was my biggest question. Why did he tip his hand this way at this time? Perhaps it was an effort to keep the stock from tanking. If so, it worked.

      • Hamranhansenhansen

        He was speaking as if to a dog. Reassuringly, soothing tones, the words don't really matter.

      • http://twitter.com/judsontwit @judsontwit

        I'm not sure how. Assuming the market reads the same conclusion between his lines that you do, it only means that Nokia will now be beholden to another company for a software platform, and repackage their ecosystem in their best executed asset, Nokia's hardware.

        The big winner in that scheme seems to be Another Company. Would Nokia really consider it a victory to become the new Motorola of Windows Phones?

    • r00tabega

      If they actually said what they meant, people/investors might take it at face value…
      This is a way of "signaling" while leaving wiggle room if things don't work out as planned.

      • http://twitter.com/NotRahmEmanuel @NotRahmEmanuel

        Exactly. cf: plausible denial. It sounds silly and makes for poor reading, but for those in Mr. Elop's pay-range, covering your backside is the prime directive.

    • http://twitter.com/dutchtender @dutchtender

      he has to say something. it's the elephant in the room. it also can bee seen as a trial balloon. It worked to keep the nokia stock price "rising". So now we know what the market wants. It wants nokia to approach USA and high end with fresh ideas and new OS. that's valuable information for Elop.

  • Steven Noyes

    Nice post. This reminds of an old game that the Motley Fool used to play: What the Fed said. Great game.

  • davel

    I don't understand this.

    If you have a high and a low end product in the phone market and you find it necessary provide 2 OS platforms. You should not need more than that. Ideally it should be one, but perhaps because of architecture it is required to have 2 distinct code bases.

    Anything more than that unnecessarily complicates your business.

    Apple for example has iOS for mobile and then MacOSX for pc's. As we noticed they are in the process of merging them because they are really just branches of MacOSX that for a short period needed to split.

    Nokia is stupid for having this strategy and this is symptomatic of why although they are huge in phones they are bleeding market share and relevance like GM in cars from the 70's forward.

    • Hamranhansenhansen

      No, Apple's 2 operating systems are:

      • iPod OS at the low-end on iPod nano, shuffle, and classic
      • OS X at the high-end on everything else.

      OS X has 2 distinct user interfaces — Mac OS and iOS, mouse and touch respectively — and it has 2 distinct native application interfaces — Cocoa (App Kit) and CocoaTouch (UI Kit), for Mac apps and iOS apps respectively — but it is very clearly just one operating system. The kernel on your Mac and iPhone is xnu, you are looking at CoreGraphics in both places, listening to CoreAudio, the media is always QuickTime, Web views are always WebKit, etc. etc. Mac OS and iOS are already merged because they both run atop the same OS X core operating system. It's a body with 2 heads. Yes, they are starting to look more alike, but it's very unlikely there will ever be just one head. Running Xcode and BBEdit and Apache and Photoshop and AppleScript on Mac OS is a feature, while on iOS, not running them is a feature. Running Apogee pro audio drivers in the kernel is a feature on the Mac, that's how music gets made, but Apple has already said, it's standardized class compliant consumer audio only on iOS. Nobody is installing drivers into the kernel on an iOS device.

      If you think of iPod nano as Apple's feature phone, then iPod OS is Apple's Symbian. These are low-end, minimalist devices. So Nokia needs its own OS X for high-end, general purpose computer devices, or it has to adopt someone else's.

      When Nokia hired a guy from Microsoft as CEO, I remember thinking, "did we just see Microsoft take over Nokia?" It reminded me of when Steve Jobs became CEO of Apple in 1997 and over the next few years it became apparent that NeXT had purchased Apple for -$435 million. The Microsoft equivalent would be to license their OS, not sell, like NeXT.

      Nokia may now want to become Microsoft's "mobile HP". Talk about setting your goals low! If so, then I think it just speeds up the iPodization of the phone market: 75% Apple, 10% Samsung, 15% everyone else. A Nokia Zune phone looks good for the same market share that Zune has always enjoyed.

      • http://twitter.com/aegisdesign @aegisdesign

        I'm not sure why Elop gets labelled as the Microsoft guy. He wasn't there long enough for his bum to warm his executive seat.

        I'd imagine as ex-CEO of Macromedia he'd have more loyalty to Flash than to WP7.

      • Nalini Kumar Muppala

        Probably because, Mr. Elop was the public face of Microsoft's partnership with Nokia (August 2009), much before he became CEO of Nokia (in September 2010)

      • davel

        Thank you for this very nice clarification.

        Yes. There is a system running half the ipod universe. But it seems to me the future is the touch which is the iphone without the phone. I fully expect at some point that all ipods are a variation of the touch. Perhaps not because they wont have the hardware to support sucn a rich OS.

        Your other points about the various architectual constructs of the macintosh os are well taken. I am not as familiar as you are regarding the differences in which elements are used for which services, buy your description is my general understanding of how things work.

        For the purposes of this discussion i am ignoring all applications so wont even comment on that.

        Things like webkit are irrelevant.. They could change tomorrow and the OS are the same. This I suspect you understand.

        I generally agree with your characterization of a body with 2 heads. Although from what I have read about iOS it seems that Apple may have done more surgery than just pointer vs finger as the generic interface. I am not sure how deep that goes into the OS, but it seems they did some surgery to MacOSX to make it fit on a mobile device that is not covered in your description above.

        So yes I will agree that the iPod has an OS that is separate and distinct from the NextStep based of iOS/MacOSX. But that vein is becoming more irrelevant to Apple every day. 1/2 of all music players are iOS based and as Horace has pointed out iOS is the lion's share of Apple's revenues.

        I do not know if in 3 years time there will be a separate interface for Macintosh machines. I know on my laptop I want to touch and interact with my machine and forget I am not on a touch device. I suspect that will happen as it is so much more natural than the WIMP interface.

    • http://twitter.com/aegisdesign @aegisdesign

      Nokia's need for another OS for the USA has nothing to do with technical qualities of the OSs it already has.

      It's all about what the carriers want and the services they have to marry to and marketing to USAians that can't/won't get their head around another OS, especially one not from a big USAian company.

      Apple's ability to cut down MacOSX to make iOS is partly a result of the iPhone being higher end than most Nokia phones. Also, MacOSX has been jetisoning high end features for years so if at some point the two merge then it's only because Apple don't do low end phones or high end computers. I think they merge the two at their peril personally as I don't think the two paradigms mix that well.

      • http://twitter.com/NotRahmEmanuel @NotRahmEmanuel

        @aegisdesign wrote:

        "It's all about what the carriers want and the services they have to marry to and marketing to USAians that can't/won't get their head around another OS, especially one not from a big USAian company."

        I think it's more than overt parochialism on the part of US carriers. Fact is, Symbian simply compares poorly to both iOS and Android. And I don't mean in my opinion, alone, but also in the eyes of average users, whether trying them at the phones store or just swapping handsets at the local pub. For maybe the first time ever, even loyal Symbian users find themselves sorely tempted by the competing platforms. I've sen it happen, many times: give them a chance to see the difference first-hand and they will tend to sell themselves.

        Here's an example: I watch a UK podcast from a tech writer. And, by his own admission, he loves Nokia products – strictly on the merits, of course! – and specializes in Symbian reportage. In fact, for around 15 years he's maintained the (de facto) canonical database of Symbian apps. Well, he runs a casual 'mobile club' that meets monthly; he includes video of these meet-ups on his podcasts. From those videos, I know that the club's members went from 95% (longtime) Symbian owners to 95% Android, in approximately six months.

        Why the sudden interest in non-Nokia phones? For one thing, it's obvious that iOS and (in particular) Android are evolving – and improving – faster than Nokia's OS. Plus, Android offers the consumer unprecedented variety, with an astonishing array of handsets sold by multiple manufacturers and carriers. That means they can have real choice, not just in brand-names but also colors, styles, and pricing…and that comes atop Android's built-in personalization features, like wallpaper, themes, and widgets.

        Anyway, thought you might like to read an alternate take on the matter.

      • http://twitter.com/aegisdesign @aegisdesign

        It's the first time I've heard of a geekup in Reading being indicative of global market trends but I do get your point. Geeks have a habit of always wanting something new to play with but I do wonder how many tried Android after Nokia's misguided years which kind of ran from post the E71/N95 to today's S^3 handsets. If I was given the choice of Android 2.x v S60 5th Edition on devices with not enough RAM and awful UI, I'd have probably picked Android too.

        However, the desire to compare one OS to another is not really the issue. Nokia's smartphones come in at different pricing levels yet the US carriers pretty much charge the same for any smartphone with very little differentiation in service.

        For example, we've got the quite excellent ZTE Blade in the UK for sub £100 PAYG but there's loads of 'Who are ZTE?' in the US Apple forums just now when it was announced that ZTE sold more handsets than Apple last quarter. It's another handset that doesn't fit into the US carrier model.

        I'm still surprised Nokia don't have the N8 in the USA though and that's surely just because of the bad press Symbian gets there on the whole. There are exceptions like Anandtech's review but the flippant 'tech' blogs like Engadget and Gizmodo have mostly savaged Symbian.

    • handleym

      "But it seems to me the future is the touch which is the iphone without the phone. "

      What is the win for Apple in this?

      There is a demand (based on form factors) for iPod devices that are small, light, with long battery life, and which do their one primary job (playing audio) well. Pushing more functionality into iPods at the expense of these features will not sell more iPods, it will drive users to buy alternatives that better match what they want.
      This is already (IMHO) happening — have you seen the price for iPod nano 1st gen on eBay? Remarkably high, in my opinion — and jumped from about $60 to a current $100 after the announcement of the iPod nano touch, which seems to be universally loathed — the touch interface is much more finicky than the control wheel interface, especially in situations like exercise or when performing errands which is where people want to use a nano.
      Prices are similar (and climbing ever higher) with subsequent gen nanos up to the 5th gen.

      All this becomes even worse if the nano is running not just the touch UI but the actual full OS. That means much higher material costs for Apple, along with a larger device that has much worse battery life. Or it means a drastic forking of iOS/MacOS, with all the fun that that implies for developers now trying to keep three versions of the OS largely in sync. And to what purpose — no-one cares what OS is running on nanos, and no-one is interested in running iOS apps on them.

      So I'd say Apple has two paths ahead of them:

      One is to force a UI and capabilities into a place where it isn't wanted and doesn't belong — this was the Windows Mobile path, and one would hope that Apple has learned something from its conspicuous lack of success.

      The other is to tell the idiots who are constantly preaching "convergence", the apostles of the one uber device that does a hundred things badly and nothing well, to STFU, and go back to selling iPod Touchs to people who want a large fully featured audio player, and traditional style nanos to those who specifically want a light easy-to-operate (easy not in terms of IQ but in terms of finger manipulation when you are busy) audio/video player to those who specifically want that.
      This might mean a climb-down from the nano touch for the 7th gen nano, which would be immensely humiliating (although you could call it the "nano classic" and sell it alongside the touch nano rather than replacing it); but it could also mean just listening to the complaints of existing users and actually really addressing them — if necessary by making touch functionality differ from iOS devices.

      Regardless of how it's done, the problem is NOT solved by either ignoring it or, even worse, moving iOS to the nano. That's like imaging that the problem with Win Mobile phones was that they weren't running a powerful enough version of Windows, and the solution was to give them 64-bit processors.
      And ceding this space to someone who IS willing to make this sort of compact, easy-to-use, long -lived device is exceptionally dumb, because Apple will find these alternative devices acting like iOS in reverse — "oh, to use your device I have to use Windows to sync to it (or an Android netbook)? Well, that's a hassle, but I guess I can try them, maybe they're not so bad?".

  • MattRichman

    I wonder if Elop is simply executing the plans Microsoft had in mind for him to? Maybe him leaving Microsoft was part of a grander plan?

    Just food for thought.

    • Guest

      If Elop's departure (from MS) was part of the grand plan for MS to move WP7 into Nokia's hardware, then some from Nokia board should be screaming. Why not marry Nokia hardware with WebOS.

      • MattRichman

        If Elop's departure was part of a grand plan than I doubt Elop would have told the board about it.

        Is that type of thing illegal?

        I also don't think HP is licensing WebOS.

      • Hamranhansenhansen

        Because HP owns WebOS, not Nokia.

      • http://twitter.com/aegisdesign @aegisdesign

        …because WebOS is irrelevant as an OS and as an ecosystem.

    • CndnRschr

      He never really left Microsoft. He's been seconded to bring in a new licensee/dependent. The question is whether these two old dogs can still breed.

      • MattRichman

        He never really left Microsoft? He's the CEO of Nokia.

        Please explain what you mean, because I really don't understand it.

      • CndnRschr

        Actually spoken in jest… But he likely still has Redmond blood running through his veins. When executives move from one company to another they typically avoid their former employer like the plague (to distance themselves and show loyalty to their new board) or bridge the cultures. Given the possibility of Nokia – for the first time in its history – contemplating an interaction with Microsoft after competing with them (WinMo) for many years suggests the latter. One could argue that the Nokia board saw this as a strategic advantage and that Elop was selected in part due to this. Who is wagging who's tail here?

      • MattRichman

        That's a good point. I really wouldn't be surprised if there's some link there.

      • http://twitter.com/aegisdesign @aegisdesign

        Elop, when he was at Microsoft, was responsible for a deal bringing Microsoft software to Nokia handsets although for the life of me I can't find any of it now in the current S^3 handsets. IIRC the E72 had a Microsoft Communicator or something like that. At the time they were talking about office software on Nokias.

        He wasn't at Microsoft long btw. Before that he had Macromedia/Adobe blood.

      • Hamranhansenhansen

        The point is that Nokia with an ex-Microsoft CEO is now more likely to license Microsoft software. Microsoft is a software company with no hardware; Nokia a hardware company with no software. Nokia hired a guy with Microsoft experience because they wanted to be more like Microsoft, either by building their own software, or by licensing it from Microsoft. Soon we will know which. Signs point to the latter.

        When Palm hired Jon Rubenstein from Apple, the idea was to make Palm devices more Apple-like, not less.

  • CndnRschr

    It's easy to dismiss this in thinking that since the USA is a dead market for Nokia right now, the risk in releasing a WP7 phone is reduced – it is just a trial balloon. There is risk, though, in the mixed message this sends to the Meego partners and developers. More importantly, this is a fundamental risk to Nokia. Think back to 1995. Apple was in a desperate mess as an OS and PC maker. It licensed its OS to others and that caused an even greater mess. Here, we have Nokia licensing in an OS even though it, like Apple, is an integrated company (vertical integration). What Nokia would evolve into is a sort of hybrid where it has its in-house OS(s) for some markets and an out-sourced OS for others. This creates a disconnect in the company. It makes little sense to have two independent hardware divisions, one of which has its own insider operating system. Samsung is trying this too with Bada. Presumably, its an insurance move for them (a bit like Apple keeping OS X on Intel on the backburner through the PPC years). But Samsung's model is diversified and coherent with licensing. Nokia is going to have to re-engineer its thinking and rewire its strategies. Such a major change in philosophy is difficult to pull off, let alone predict outcome. Nokia isn't betting the shop, but it is a fairly profound move that you can bet a lot of people in Espoo must be losing a lot of sleep over.

    • MattRichman

      Samsung's worse, actually. They use Windows Phone 7, Android, and Bada.

      • CndnRschr

        My point was that Samsung is used to licensing in its operating systems (Android and WP7) and has Bada as its fledgling internal experiment. Nokia was built on developing its own OSs and is now contemplating licensing in. Very different impact on the respective business models.

    • Hamranhansenhansen

      One thing that made Microsoft successful is you could depend on DOS/Windows being around forever, even if Microsoft had to screw somebody over or break the law to keep it going, because they had already done that and gotten away with it. So you could invest in Microsoft solutions, you could build your business on their software. Contrast that with Nokia's commitment to Meego, or even Symbian. For Nokia, software is an inconvenience. That is why they are headed for the tar pit. Software is EVERYTHING today. If you offer me a choice of Android on an iPhone or iOS on a Samsung Galaxy, I will take iOS every time. That is what I'm buying when I buy an iPhone.

      If Nokia wants to compete with Apple, they need to become a software company. They should write "Nokia OS" at the top of a whiteboard and get started. But it's hard for a company to reimagine itself like that. Look at Sony.

      • http://twitter.com/aegisdesign @aegisdesign

        I think they did that a few years ago when they bought Trolltech for Qt. That's their nascent software company. The OS is largely second fiddle to developer tools.

  • ytrobit

    "We made a decision to not proceed as people have thought we would proceed."

    I guess this is why Vanjoki left, and Elop came in. It would be a terrific shame if Nokia capitulated and went with WP7 or Android.

    Even given Elop's former life, I can't see the value in WP7. They've only shipped 2 million, it's not really gaining traction, and it's something Nokia could catch with Symbian/Meego whenever they get that out. Android would give them freer reign over hardware design and an Ovi Appstore.

    But I really hope they don't capitulate. It'd be the end of an era.

  • CndnRschr

    I agree. WIth Android they could contemplate competing at the low end where most of their sales and rock solid reputation lay. That's where smartphone growth will emerge. Is WP7 a better candidate than Android when every dollar counts? Are consumers with limited incomes more likely to want an advertizing supported (free) ecosystem or Microsoft's (decidedly not free, albeit cheaper than Apple) ecosystem?

  • GeorgeS

    Elop should be told in no uncertain terms to NEVER talk to the press or the public. He cannot make a simple declarative statement. He sounds like an engineer+accountant+attorney, all rolled into one.

    • Tatil

      Attorney or accountant I get, but where is the engineer out of these statements? He does not say anything technical. :) Actually, some of his quotes sound like they were formed by using the word "ecosystem" and filling the rest by random word combinations. If you have something to say, say it. He sounds like the captain of a rudderless ship.

    • Hamranhansenhansen

      That is Microsoft talk. People in Redmond listened to him and said "great speech!"

    • r.d

      In order to be an engineer speak there
      has to be hmmmm, aaa, several pause in sentences,
      and general inability to lie without body language twitch, etc.

      Just listen to Google's new CEO speak and you will know
      him to be an engineer.

  • Kristian

    In Nokia they have never understood to shut up. They talk way too much. Apple never talks about anything. They talk only when they really have something to say.

  • Yuri

    If Nokia decides to create hardware with WP7 or Android they absolutely must announce that Qt will be supported on those devices. Maybe not immediately, in half or one year, but it must be supported, otherwise it will send a message of uncertainty for their own ecosystem, which given their currently perceived state could be devastating.

    One can say that Samsung is doing fine with such a strategy. They are doing fine, but I am not sure Bada is doing well as a development platform. Looking at the latest product announcements from Samsung it does look like they may cannibalize their midrange Bada segment with Android devices.

    I can see Nokia succeeding with Android – they won't depend on Google to add support for Qt and Ovi Store. Also, Android has a far greater market traction than WP7.

    • minimoog

      Qt is supported on Windows CE, which is base of WP7.

      • Yuri

        I am not saying Qt cannot be supported on WP7 (given enough commitment on Nokia's and Microsoft's sides). But if we go into the technical details it seems to me easier to port Qt on Android rather than WP7.

        First of all, both WP7 and Android pose a similar challenge to Qt in having their application / UI logic coded on a VM-based platform. (I am not very familiar with WP7, but this is what I can deduce from this article – http://blogs.msdn.com/b/abhinaba/archive/2010/03/…. This means that you can't wrap the platform UI with the Qt API. Instead the Qt stack must operate independently of the platform stack and emulate the platform look and feel. Now if you look here – http://doc.qt.nokia.com/4.7/qt-embedded.html – you'll see that on Linux Qt does not rely on the native GUI stack at all, while on Windows CE / Mobile it does. On top of that Qt relies on OpenGL ES for 3D, which is already supported on Linux. Then, as I said in another comment, you have all the other drivers already available for Linux…

        The bottom line is that given enough time, resources, and willingness for cooperation Qt can be ported to either platform. With Android however, Nokia will need much less time and cooperation to achieve that.

      • Yuri

        The first link got messed up. Here it is again: http://blogs.msdn.com/b/abhinaba/archive/2010/03/

  • Yuri

    Another technical aspect, which works in favor of Android is that both MeeGo and Android are based on the Linux kernel. This will allow Nokia to reuse the drivers they've developed for MeeGo on Android and will also make it a lot easier to port Qt.

  • RobDK

    I guess the basic problem for Nokia is that, even after 4 years since the iPhone’s introduction, they have yet to develop a coherent top end ecosystem strategy, let alone bring anything to market!

    The consequence is rapidly falling margins and profitability, which again reduce necessary R&D.

    It is pretty clear that Elop’s 11th Feb presentation will be make or brake for Nokia, and that some of the outcomes will be a humiliating bitter pill to swallow for Nokia management, employees and supporters.

    • http://twitter.com/aegisdesign @aegisdesign

      Did you cut and paste that from the last article comment thread?

      Profits, margins and ASP are all UP from Q3 so your assertion is incorrect.

  • http://twitter.com/mjs1 @mjs1

    It will be interesting to see if Nokia's announcement will include Operator partnerships as part of any new platform/ecosystem strategy or exclude them (particularly for the US).

    As yet, the US Operator – Nokia partnerships have not worked.
    Nokia's typical approach to try and heavily customise the device offerings to the Operators requirements and then have exclusive devices per network has failed in the US. (It also failed for Palm / Sprint on the exclusivity front).

    However the Operators assist the success of the device/platform by deciding which devices to take to market and heavily promote for the 6-12 month window of sales. (AT&T for the iPhone and Motorola Droid on Verizon being two well known examples).
    I'm speculating here, but the N900 seemed to be marketed as a geek smartphone so it was niche and the US Operators ignored S^3 devices after a couple of promotional attempts as it compared unfavourably to other full touch-based OS's (iOS, Android) in the smartphone segment.

    A tricky balancing act for Nokia …

  • Fred

    Unfortunately, most executives in large corporations don’t talk straight. They don’t speak plain English. They speak crypto to cover their ass and their stock.

    Thanks to the code breakers (Horace), we get clarity.

    I would not be surprised to see Nokia keep Android as an option in reserve, in case WP7 falls flat (LG’s experience). Android has early mover advantage momentum, allows flexibility, and is tiered because of several versions. Nokia has the scale to wage battle within the Android ecosystem.

    In the battle for smartphone OS critical mass, the Apple iOS ecosystem will dominate the high end segment. Android will take the mid and low tiers. All other OSs will be relegated to niche status or slide down the negative side of the network effect (the weak get weaker).

    WP7 and RIM’s QXN are late to the party; they may suffer from late mover disadvantage. WP7 and QXN may need to survive in enterprise segment (niche), where network and corporate security is job number one for IT managers and where MFST and RIM have existing relationships and embedded technologies (Exchange and BES).

  • KenC

    Love the quote breakdown, and love the discussion.

    I guess the conversation really comes down to Android or WP7. And, as I've written a few times in the past couple days, I am more and more convinced after reading and listening to Elop talk that it will be WP7. While Android is doing fantastically well, does Nokia want to be just another Android OEM, one that has to catch up to HTC and Samsung? Or would Nokia rather be Microsoft's equal partner, favored OEM, at the very beginning of WP7's ascent, where the ecosystem is just showing signs of life, where Microsoft will throw hundreds of millions to support its growth, where Microsoft will subsidize Nokia's handsets. I know which choice I would prefer.

    • KenC

      I forgot to add, that Nokia as Microsoft's preferred OEM, will customize WP7, with their own Navteq maps, OVI etc.

      And, the "common interest" quote clearly points at Microsoft, as they are starting to feel another PlaysForSure experience coming where their current OEMs don't succeed against the competition. This time, instead of having to pull a Zune, they can partner with an equal, with a "common interest", Nokia. There's no way that "common interest" implies Google.

      Also, don't forget WP7's four OEMs have a greater vested interest in their Android handsets than their WP7s. That must chafe Ballmer.

  • WaltFrench

    It was my impression that Nokia's lack of traction in the US was primarily due to its not getting along with US carriers, as virtually all US phones are specified and purchased by the carriers and only then stuck on their shelves. You can count the exception on the thumb of your left hand, Apple. (Has Google actually sold enough Nexii to match rounding error on "Other" ?) Some chatter about a busted T-Mo/Nokia deal reinforces Nokia's difficulty (ineptitude?) here.

    Without disputing one word of Horace's excellent decoding, I wouldn't characterize this tectonic shift as “marketing led” so much as “business partnering.” Paying Middleman Ballmer, as it were, to introduce your products to Middleman Verizon-Etc, who will tell Americans that they want the Nokia device. Google has no interest in a Special Arrangement with Nokia; Apple could hardly be interested in the polar opposite culture, and nobody else has anything resembling the “ecosystem” that Nokia says they need for the US.

    There's of course another very important perspective here: Microsoft's. MSFT has been very quiet about the commercial success of WP7, despite analysts' calling it "mostly complete" to compete in the Smartphone Wars. Per Jean-Louis Gassée's characterization of Microsoft's May Phone Re-org as “Ballmer Opens the Second Envelope,” Microsoft could be incented to sell off its Crown Turds, projects like Kin/WP7, Entertainment and Online having been incredible sinkholes for cash (Kinect's recent blaze of popularity notwithstanding). For Microsoft's face-saving, this could be positioned as a joint venture.

    I actually think that Microsoft needs Nokia (or some other dedicated partner who won't always be going home to Android) more than vice-versa, since as others note, there are many technically-fine OS candidates.

  • Carlos

    I don't understand this. N8 alone has sell about twice than all WP7 together. What has Nokia to win adopting it? Maybe some popularity in US, but the WP7 has sold poorly, so this popularity will be very few.

    And, what has MS to win with this kind of deal? It would send a message to all the other WP7 partners that they are second-hand citizens and will loose them. Do you really think that Samsung or HTC will be happy being unable to customize their WP7 offerings while Nokia can?

    • patternmaker

      I believe Elop's speech was a marketing ploy.

      Now they get more publicity to their Meego launch because everyone is expecting Nokia to launch also WP7 or Android phone. And they are not going to launch a WP7 phone – or Android phone.

      The stunt may even continue. They may give more hints that they are looking for other ecosystems also. They may say "maybe.. next month.. who knows?" and everyone is looking at them again. So they ride on the wave of Android and WP7. It's free and they don't lose anything.

      If I'm right I believe the new marketing whizz of Nokia, Jerri Devard, is behind of all this.

      • http://twitter.com/aegisdesign @aegisdesign

        That would create an 'Osborne effect' where consumers wait for Nokia's WP7/Android handset instead of buying the existing phones and developers left guessing putting their plans on hold until Nokia get off the fence and announce.

        As it is, there's a minor effect happening now with Qt 4.7.1 not shipping yet delaying launch of apps that use QML and this mess over ecosystems which will probably amount to nothing as suicidal as is being called for.

  • http://twitter.com/aegisdesign @aegisdesign

    Casting the 'joining an ecosystem' wider. How about that ecosystem being Nintendo? Nokia failed with it's Ngage ecosystem, some would say because they just launched it too early before playing games on your phone was a decent experience.

    That would work pretty well for both Nokia and Nintendo. Nokia has some gaming but generally it's slim pickings. Nintendo is getting hammered by Apple in that space.

    • http://twitter.com/Knijert @Knijert

      I've always wondered why Nokia didn't buy Nintendo years ago. In one big sweep you have a coherent gaming ecosystem. Moreover, you can put your OS'es on other devices too (just like Apple has its iPod and iPad), for instance Symbian on the portable devices, and Maemo/Meego on the consoles. That way you expand you OS ecosystem too, making it more attractive for developers.

  • Steven

    This is very similar to Gruber's translations of corporate-speak. Not quite as entertaining, but equally informative.

  • Steven

    Its interesting that Apple chooses to stay on the high end, which simplifies things greatly. Could you even imagine Steve Jobs engaging in this kind of jibberish?

  • Fred

    What is an ecosystem in mobile computing? A cadre of high quality third-party application developers, top notch mashable services (APIs), supportive owners or gatekeepers of data and applications services. Mobile access to an Internet of applications – mobile computing with intelligent interfaces accessing the cloud of semantic service applications.

    • asymco

      It's interesting that Elop used the word Platform once, Operating System three times and Ecosystem 15 times. The three words may seem interchangeable but not entirely. Platform is a business model concept, OS is a technology concept and Ecosystem is a marketing concept.

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  • Jo Bloggs

    IMO Nokia would have had a reasonable chance of recovering with Maemo, less of a chance with Meego as it seems to have become a vapourware cauldron, but going with WP7 will finish them (excuse the unintended pun) even if it takes a while to happen. Shame, I would probably eventually have got round to buying a Maemo (or possibly even a Meego) phone from Nokia. I wouldn't touch WP7 with a barge pole.

  • Mark

    Nokia needs to stop stealing IP from IDCC. If they don't come to an agreement with IDCC and the CAFC ruling goes against them (which it will according to observers at the hearing) , their phones will be banned from sale in the US. In my opinion, they would be getting what they deserve. They are a dishonest company an I for one will NEVER buy a phone from them.

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