Categories

Platform sunk (cost): What is the value of a quarter billion Symbian users?

In the quarterly smartphone summary published here, I noted the significant acceleration of Android sales at the expense of “other” and Windows Mobile/Phone. Some share was also lost to Symbian. This might be seen as justification for the “platform jump” that Nokia undertook.

In a second discussion, I published the history and life cycles of the smartphone platforms, identifying 10 platforms (out of 16) still in the market. This challenged the view that it was a two horse race today and that it will become no more than a three horse race in the future.

Questions came up about the “quality” of these platforms. Clearly some are barely viable while some are thriving. To explain the value of a platform, one metric we can use is the cumulative sales which allows us to derive the installed base.

The following charts do just that.

This first chart shows the cumulative total of units sold since Q2 2007. This is the sum of all smartphones sold in the last 3.5 years. There are some interesting patterns here, but right now we want to focus on the installed base.

3.5 years of cumulative sales is an upper bound on the installed base. We can get a better estimate the phones in use by subtracting from the base phones older than 2.5 years. This is shown in the second chart below:

As of the last quarter, Nokia’s Symbian is likely to have 200 million in use. Apple may have about 85 million iPhones in use (this excludes iPod touch and iPads) and Android about 75 million. RIM is around 95 million and Windows Mobile less than 40 million.

What’s interesting is that of these installed bases, the largest is the one that’s just been abandoned, and the smallest was chosen as its replacement. Even that’s not quite fair since Windows Mobile is not a valid replacement. It’s Windows Phone that was chosen and that probably has an installed base of about 1 million [Unlike the measurement of units shipped, Microsoft reported two million licenses were sold to OEMs who had to build those into phones which would be shipped to carriers and distributors. One million may be a generous estimate.]

The bottom line is that there are about 5 Windows Phone users for every 1000 Symbian users. In other words, Nokia jumped from the “burning” 200 million user Symbian platform to the “ice cold” 1 million user Windows Phone platform.

The disposal of such a large installed base must count among the largest divestitures in technology history and, when coupled with the adoption of the least-tested alternative as a replacement, elevates platform risk-taking to a new level. It may seem bold, but there is a fine line between courage and recklessness.

I’ll do my own “dive” into the possible justification for this in a future posting.

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

    Great article, as always.

    How about adding to your graph of cumulative units shipped: cumulative apps downloaded – after all it is a key differentiator of smartphones from featurephones. (and to have some more fun add cumulative profit too)

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

      That would be interesting with recent reports showing Ovi Store as generating more revenue than Android Marketplace.

      • Famousringo

        With all the mobile ad revenues, it's hard to know how much a platform's software market is worth. Ignoring ad revenues no doubt skews against Google.

        Just for added complication, there are a growing list of independent app stores selling to all platforms (even to iOS users who hack their devices).

        Given this lack of information, I'd hesitate to draw too many conclusions on the value of these ecosystems.

      • Hamranhansenhansen

        There are alternate app stores for any iOS device, featuring apps that are written to the open standard HTML5 API. They install from any server and run locally on the device. They are just not that popular because App Store is so popular.

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

    Keep the analysis coming, but when you frame it this way it's almost too depressing — I'd hate to be a Symbian developer reading this! Of course I guess the hope is that 1 + 1 is greater than 2 (two turkeys?) and so I would frame this debate, from a developer's perspective, as one about which features and capabilities from each OS to retain. For me, it's simple: combine the mass market breadth of Symbian with the XBOX Live features of Windows Phone. A lot easier said than done, though…

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

      Its not a bad thing to be a Symbian developer (just looking at the numbers and ignoring platform fragmentation and tool issues). But, it doesn't pain as bad a picture as some would want it to be.

      @Horace: this analysis is right down the line of where some thinking and writing that I've had today has gone. I'll have to borrow your projections here as it will definitely make the argument that many developers – whether or not that like the platform – missed a ripe opportunity. I wonder if they will miss that there's still one depending on software/services niche and audience.

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

      I think most Symbian developers have known for some time that the writing was on the wall for that platform. That's why we were all shifting to Qt so that you could transition from Symbian with Qt to Maemo and MeeGo with Qt.

      Unfortunately Elop killed that strategy.

      • Steko

        Elop didn't kill the strategy, QT and MeeGo being crap killed the strategy.

  • iosweekly

    Jeepers!

    What a trojan horse Elop has been…Still, it might work – although if I was nokia I would have insisted that it become the exclusive windows phone 7 provider to avoid becoming a commodity player.

  • SVE

    That's so crazy – it just might work! (or not)

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

    How much profit is Nokia making from handset sales compared to the amount it is making from technology royalties? from Telco equipment? i.e. Should Nokia stop making handsets?

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

      Last year Nokia made about 2 billion EUR profit. I think they may have actually lost money in equipment though they were expecting to break even soon. Nokia Siemens Networks merger has been expensive, plus they bought Motorola's network business last year.
      http://www.nokia.com/about-nokia/financials/quart

  • http://www.noisetech-software.com/Home.html Steven Noyes

    What is more interesting is the value added to developers for each platform. iOS offers, by far, the most value for developers. What is interesting is the second, third and fourth place finishers. For 2010, RIM's App World took second, Nokia's Ovi Store took third and Android's Market Place came in fourth.

    I suspect that at the end of 2011, the order will be:
    iOS
    RIM
    WP7
    Ovi
    Android

    We will see in 10 months or so.

  • Pingback: UniversoTek » ¿Que es… disparate, contradicción? Symbian vs Windows Phone()

  • Baron95

    First, you obviously need to add the "compatible companion devices" for each platform (e.g. iPodTouch, iPad), as these add value to the ecosystem.

    Second, you need to at least have a chart with Average Selling Price factored in. Is it better to sell 100 Symbian phones with a $140 ASP or 30 iPhones with a $700 ASP?

    Third, add the post sale revenue for each device in downloaded/served "items" (music, apps, videos, ads) from the ecosystem. Is it better to sell 100 symbian phones that never download anything and barely used the Web, or 30 iPhones that download 50 apps, 100 songs, 20 videos and view 10,000 ads per year?

    That is what matters. Unit count does not matter if some devices are used as truly smart devices on large/unlimited data plans, while others (notably Symbian) are really pre-paid jungle phones.

    • unhinged

      That depends what you're measuring. The argument of the article is that the largest installed base of devices is essentially being abandoned in the hope that the newest, smallest, least proven platform will result in more profit for Nokia: essentially, that having the most users does not correlate strongly with making the most money.

      All of your points are valid for a comprehensive comparison, and I assume that Nokia (or at least its new CEO) have performed such an analysis and are using that as justification for the change. It really is astonishing how these events are predicted by the asymmetric competition theory that Horace has been explaining here.

  • Rob Scott

    I guess Stephen Elop does not read asymco, and that is just sad. If he was reading asymco he could have avoided the disaster that is his strategy. You have argued here that there is more to business than market share, arguing that Nokia was still growing its units, that its share of growth was rather comparable to other companies e.g. Apple. Had Elop been reading these pages he wouldn’t have written the memo he wrote, which truth be told is full of lies and misunderstandings of his own business.

    Symbian is still the biggest platform not only in terms of installed base but also new customers added to the platform and that has been true each quarter for the last many years.
    Symbian is enjoying near or double digit growth, with its share of growth comparable to its peers in the industry.
    Symbian’s app store, the Ovi store is the third most successful app store in the world, more successful than the Android Market.

    In short the Nokia platform is not burning! If anything it is thriving. There was no need to change platform, worse switching to a non-existent platform that is in many ways catching up to the platform they are discontinuing.

    Apple was in a similar position to Nokia with the iPod. The iPod wasn’t growing. Cell phones with music capabilities were substituting the iPod for the majority of users, thus delaying sales and some would argue cannibalizing the iPod sales completely.

    The iPhone was going to add to these problems for the iPod, substitute or cannibalize its sales.

    Apple didn’t discontinue the iPod. They continued the iPod OS and added iOS as another option, a more advanced option. In time the sales mix changed from classic iPod OS to now 50% of sales coming from the iPod touch.

    No lying memos about burning platforms were written. Apple didn’t discontinue the iPod OS, if anything they are enhancing it, adding touch for an example. The iPod unit sales are shrinking (+/-7%) but revenue is growing and Apple has been able to maintain its market share.

    What Apple did for the iPod is what Nokia should have done for Symbian.
    Keep developing Symbian and selling it, business as usual. Introduce WP and based on performance increase or decrease its contribution to the product mix. No memos needed and certainly no “bold” move to make.

    Apple is successful because they have tons of common sense, which some leaders obviously lack.

    • noogie60

      It's also about execution.
      iOS was intuitive, stable and easy to develop for from the get go.
      Has Nokia ever proven that they were any good at software?
      Symbian, with Nokia's S60 interface and all of its descenents has always been a pig to use in terms of UI and ease of development.
      How many Symbian users were like my mother – she got hers free with her plan and after one attempt to use Ovi maps has been using purely as a dumb phone ever since.

      At the end, this is about software and Nokia has frankly never been able to execute on that – Symbian is a bloated mess compared to the its ancestor EPOC, they still hadn't gotten Qt ready after 3 years(!) , the pig that was Nokia's PC suite, etc , etc

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

        Ovi Suite 3.x is no worse than iTunes IMHO but at least you don't actually have to use Ovi Suite to sync or update software.

    • CndnRschr

      Perhaps Nokia should have taken Steve Jobs advice to Apple when he was still at NeXT – milk the Macintosh for all its worth and build the next great thing. In other words, don't simply dump your sunken costs in Symbian, its maintenance, and its current market, but profit from it while you can. In the meantime, build/acquire. That's exactly what Apple did although, of course, the Macintosh was never canned and continues to out-grow the PC market. Apple did move to the next great thing(s), but they did so without knifing the baby, which has grown to be a rather successful market in of itself.

      The only way such massive transformations in corporate culture can be made are: 1. Things are desperate and every agrees that a massive change in thinking is necessary. or 2. That an outside is brought in who is able to take a highly objective and dispassionate view, is not burdened by emotions are history, and has a mandate to execute. Elop is an outsider, but his objectivity has to be suspect given the solution. Moreover, he has not brought along the company with him by choosing to provide, in essence, an end of life date for their jobs.

  • Sander van der Wal

    I am looking forward to that future analysis. Elop said it was a battle of ecosystems. Not platforms. Everybody keeps looking at the platforms, but not the ecosystems.

    • Harvey Gartner

      He is one of the MS bunch that knows Apple's strategy is total computing experience from the most powerful desktop to the least capable handheld. The seamless interoperability of this experience comprises the ecosystem. Only Apple has it. It's what they all want. Powerful desktops, great portables and easy handhelds. One powerful kernel that is the foundation ohhf the whole shebang. All of them need to get the basic OS that they can build the entirety of their experience around. Apple has it in OSX.
      Windows doesn't have their 21st Century OS yet. HP is going to try to do it with WebOS. Google has no hope, because they want everything on the web. How any of the competitors can actually pull it together is a puzzle to me.
      Apple has been hard at work on the future of computing. The rest have been in a competition for today. The only thing they can do is see Apple delivering the future and try to copy it. None have built the necessary foundation yet.
      Apple has an ecosystem. Who else has one?
      Harvey

  • RobDK

    Nokia/Symbian may have sold many so-called smartphones, but it is clear they are not used as smartphones. Just try one of them! Terrible UI, stuttering transitions, complex many layered menus. One only have to look at net usage data, app downloads etc. Nokia is way behind iOS.

    • InterestedObserver

      Isn't at least some of that disparity because they are sold without mandatory data plans? When you have to pay by the byte, you really evaluate if you need to look at that website now or if it can wait. IMO, missing the 'data connectedness shift' was a strategic mistake in the west, but the rest of the world hasn't quite caught up yet.

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

      Symbian is on a lot of low-end smartphones, and clearly a lot of these were neither bought nor used as smartphones. Looking at the 2010 numbers for the app stores tells us, however, that this is in no way true for the entire range of Symbian phones, since the Ovi Store still managed to generate more sales volume than the Android Market.

    • Hamranhansenhansen

      Symbian being behind iOS is not the point. The point is Symbian is ahead of Windows Phone 7.

      • RobDK

        But the question is whether Symbian could survive going forward?

        Symbian has a terrible UI, appaling transitions. It just does not live up to modern expectations of a smartphone, and its future development possibilities were very low. WP7 seems to be much better in that respect for the long haul. Whether Nokia survive the 1-2 year transition, or whether they die from the Osborne Effect, is a different question!

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

        Symbian^3 transitions are fine. The S^3 UI is also getting an update this summer. It still won't be as slick as WP7 but I'd put it up there with iPhone or Android.

        Nokia mistakenly decided to keep almost an identical UI as S60 5th edition with Symbian^3. Clearly a mistake although I think this actually gets overblown in the press. Android without HTC's Sense UI is pretty awful too and Moto's Blur is IMHO worse than Symbian^3

  • n8r

    Well i switched over from Windows Mobile 6.1 to Symbian^3 and
    must say that Symbian ist lightyears ahead. I had enough from WM.
    I started to like symbian.

  • Pingback: Platform sunk (cost): What is the value of a quarter billion …()

  • AustinR

    Is there a reason why you leave the iPod Touch out of these platform comparisons? It is effectively the same device and host to all the same apps. How about a followup?

    • asymco

      I do track iOS as a platform, but whether I count all of iOS or just the iPhone depends on what I'm trying to analyze, or more accurately, from whose point of view am I arguing. This post on the value of Symbian is designed to shine a light on the platforms *as seen by Nokia* not as seen by developers or by Apple or anyone else. The crux of the discussion is whether Stephen Elop made the right decision to abandon Symbian, and if so what is the cost/benefit. The fact that iOS is under-represented in accounting of "mobile phones" is part of the framework of decision making by incumbent device vendors. I'll willing to play devil's advocate here and take their point of view for the sake of discussion, demonstrating (or not) their logic.

      If I were to think about the overall picture of mobile computing disruption, of course iOS needs to be seen as a unified multi-device market. If I were to think from Apple's point of view and their value creation and valuation, then iOS is a monster.

      It all depends on what thesis you are defending.

      Android vs. iPhone (*not* iOS) is meaningless unless you happen to be a telecom executive in which case it's the only thing you look at. It should be no wonder to the reader then that the industry is being disrupted.

  • poke

    This has to be one of the worst business decisions in history. When I read Elop's memo I thought it was fake because it looked like an analysis by somebody who had no more information than the typical tech pundit. I think he overestimated the impact of the iPhone on Nokia and overestimated Android as a platform. Nokia isn't selling to the same market as Apple. Nokia and Apple could easily co-exist for the foreseeable future. Nokia can't match iOS as a platform but, and this is the most important part, Android hasn't matched iPhone as a platform either. I think this was his biggest mistake. While the iPhone's ecosystem is extremely important for the high-end market Apple is addressing, there is as yet no equivalent ecosystem in the mid to low-end market Nokia is addressing.

    So Elop mistakenly thought he was competing with Apple. When, in fact, Nokia's own market (the mid to low-end) is still wide open. Elop conflated two different problems – iOS having a huge platform advantage and Android beginning to sell to the same mid to low-end Nokia traditionally owns – into a single intractable problem: a vastly superior platform moving in to Nokia's market. But, in reality, this problem does not exist and I think Nokia could have continued to compete by making incremental changes to Symbian to create superficial feature parity with the iPhone (as Android has) and by working on a next generation platform until such time as either Apple decided to compete at the mid to low-end (which may be never) or Android developed into a genuine platform play (which will still take some time).

    I think much of what's wrong with current analysis of the smart phone market comes from this sort of overestimation of what Android has achieved. Let's not forget that Android started life as a Blackberry clone and only adopted capacitive touch features after the iPhone was announced. Google clearly scrambled to add these features and early versions of Android were more like awkward hybrids that still required a trackball for basic tasks. Android still shows signs of its heritage in its UI quirks. Everybody talks as if it's impossible to get from an old OS to a modern iOS-style OS but that's exactly how Google did it. It's just that much of that process happened out of sight, before release. Now Android is, of course, a more modern platform on which to work. But that's the point I was trying to make earlier: Nokia only needed to obtain superficial feature parity in order to compete at the mid to low-end because there is currently no strong platform advantage there. The phones only need to function in a superficially similar way to the user in order to sell. Quite clearly, having a thriving 3rd party app market and media ecosystem, while no doubt important to Apple's retention of customers, is not what explains Android sales and wouldn't be necessary for Nokia to compete against Android.

    • Harvey Gartner

      Platforms or ecosystems. What are we talking about? I can walk into a house with my iPod Touch and easily connect to an AppleTV I've never seen before. Same thing with the most powerful MacPro Apple sells. That is only part of my interconnectivity within the Apple world. My ecosystem with my iPod Touch gives me things Android can never have. Seamless integration across a wide range of products. It's a rather large ecosystem to me. The platform it is based on is OSX.
      How large of a computing experience within an ecosystem can be built around a platform that is a mobile os? I think not much. Not like I've got with my touch. Nokia has a platform (WP7) that is owned by another company. How wide of an ecosystem can Nokia make? If Apple is delivering phones that connect seamlessly across all of a company's computers, how does Nokia sell in that market. A phone that automatically works with none of the other parts of that office. Oh yes, they've got techs because they're a Windows office. The techs will handle it. Google sells data scrapers. How will that work in China? Apple's next big strategic focus. Will Google's Android be welcomed with open arms there? I wonder about things like that. Can Google wage Phone wars there? What kind of battles will Google be waging in China. A war with the Chinese Gov't and regulators? Apple's there building stores. Google has gotta find a way thru the back door, don't they? Apple's going to have the highend market in China I predict. They're building lots of stores in Peking and Shanghai. Selling phones to gov't bureaucrats and world class traders. Sound like a good strategy to me. I like it a lot. Does Ballmer like his strategy in China a lot?
      If this is a war, I predict an Apple victory. Not even close.

      Platforms, ecosystems, strategies. Where is the competition? Apple is busy implementing all of these now.
      Th

      • Sander van der Wal

        Nokia wanted to be in the future top end smartphone market and mobile devices market. That was the reason they created Maemo, a platform for new high end devices, above current smartphones. Symbian was being pushed towards feature phones.

        In the past they had that market too, with the Communicator. A device you sell apps for, almost as good as UIQ.

        But they killed that brand, an when Apple came along they had nothing, and now Apple owns the high end.

      • poke

        I was using "platform" to means the appeal of the system as a platform for development and "ecosystem" to capture the wider aspect of content delivery (music, video, books, apps). What I was trying to say, in a long-winded way, is that only Apple has a significant platform (look at the Android Market, Android has not taken off as a platform for development yet) and only Apple has a significant ecosystem (content delivery on other phones is hopeless in comparison). But, for the foreseeable future, Apple is not competing on Nokia's turf. Nokia has the mid to low-end and Apple has the high-end. Apple hasn't shown any desire to be selling to the rest of the market. Apple and Nokia could co-exist for the foreseeable future.

        Android, on the other hand, has been crowding into the mid-end smart phone market and represents a significant threat to Nokia. But Android, contrary to popular belief, does not yet have a significant platform. It has everything in place but Android development and the Android Market have not exploded like Android sales have. That shows that Android adoption is NOT driven by its platform but rather by the fact that it has superficial feature parity with the iPhone – that is, it LOOKS like an iPhone enough that a consumer who for whatever reason can't buy an iPhone can buy an Android phone instead. And that is what Nokia is competing against, NOT the iPhone itself. So all Nokia needed to compete was to achieved the same superficial feature parity and to be working on building a more modern platform for developers in the future. Instead they conflated the problems presented by Android and the iPhone, and acted as if an iPhone-equivalent was stealing their market share, when that wasn't the case.

  • jack

    2.5 years is a terrible metric… while “dumb” or “feature” phones might be kept that long (doubtful), smartphones are barely kept for the length of their 2 year contract. This move is about high end users motivated by style as much as substance. A user base that buys a cheap phone every 2.5 years is not worth much.

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

    phone builders don't "own" their customer. As such, there was no divestiture. Market share is there to be "stolen". Everyone who now own a Blackberry is fair game. they could be stolen away in the blink of an eye. The installed base has no value. You can rent your installed base for a while longer if you don't "miss" a cycle. Technology is a humbling business. Apple has been humbled a number of times. Microsoft has been humbled. Nokia has been humbled. Elop had no choice but to abandon Symbian, which missed "many" cycles.

  • Harvey Gartner

    One more thing.
    I believe Android is a hobby for Brin and Page like AppleTV was for Steve Jobs. I believe it is intended to be dropped into the OpenSoftware(FOSS)? and that the users will control it eventually. I truly believe that's their intent. Am I alone here? What incentive does Google have to stick it out with Android? It costs them money. Oh they sell ads.
    They got lots of money. They got it from being on all machines. Will they be on whatever Microsoft does next. I think not, but I don't see MS's future too clearly right now. I could be surprised.
    What is Google's long term strategy for Android? I have no faith.
    Harvey

  • Rob Scott

    Pretending that the cumulative volume of units shipped with a generic OS label somehow reflects the value of the ecosystem is simplistic and overtly obtuse. A more interesting graph would be to "reset" the count each time the platform undergoes a change that requires developers to produce a new version for subsequent models. This would more accurately reflect the amount of work required on the part of a developer to address the installed base..