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Android Businesses Cellphones Handhelds Microsoft

Why Nokia Is Toast 475

CWmike writes "It's hard to remember now, but there was a time when Finland was at the center of the cell phone universe. No more. Nokia is being killed by complexity. Along comes Microsoft with Windows Phone 7, delivering more complexity. My view is that Microsoft doesn't matter, writes Mike Elgan. Although Windows Phone 7 is a way better operating system than Symbian, Nokia's problem isn't Symbian, and the solution isn't Windows Phone 7. Nokia's problem is that it follows the losing strategies of the other losers in the market, and rejects the only two known winning strategies. There are way too many Nokia phones. This causes either choice paralysis, sending buyers screaming to Apple for relief, or buyer's remorse. Nokia should take the advice Steve Jobs gave to Nike CEO Mark Parker: 'Just get rid of the crappy stuff and focus on the good stuff.'" And maybe Nokia isn't toast at all: reader high_rolla points out an interesting bit of speculation that the Nokia-Microsoft pact is part of a grand plan "to become the exclusive manufacturer of hardware for MS phones and tablets."
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Why Nokia Is Toast

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  • At one stage I was a Nokia user, then went over to Sony-E and am wondering about Blackberry, not liking the idea of a phone in my iPod, Windows in a mobile or the stuff that Sony-E is now coming out with.
  • by cyberfin ( 1454265 ) on Sunday February 13, 2011 @02:08PM (#35193102)
    It pains me to say this is the a correct business move for both companies. Combined they have a much better chance of standing out in the crowd (other android-phone makers). Many will hate it, many will love it. A new Apple has been born.
  • by Andy Smith ( 55346 ) on Sunday February 13, 2011 @02:09PM (#35193112)

    On behalf of everyone who is developing software for Android smartphones or iPhone/iPad, I would like to thank Microsoft and Nokia for their support.

    I first heard about Microsoft and Nokia joining forces when someone told me the vaguest details, and I assumed Microsoft would be adopting Nokia's Symbian operating system for their phones. That would have made sense. You see, despite the appalling sales figures for Windows phones, the truth of the matter is that the devices themselves have been superb, and the current version of Windows Mobile is actually very good -- it's just that nobody outside the business world buys Windows phones anymore because Microsoft isn't cool. People want cool. It doesn't matter that Windows Mobile is good if it isn't cool. No cool = no sale.

    Of course my assumption was wrong. It's Symbian that is being ditched, and now Nokia phones will use a Microsoft operating system. Which isn't going to make much difference to Microsoft, but it's going to neuter Nokia's attempts to become any kind of relevant player in the smartphone market.

    So it's just Android and iOS now. Hurrah! Well done Nokia -- you just achieved one of the most epic fails in computing history. You had a cool brand, and you've thrown it away.

  • Exclusive ... (Score:4, Insightful)

    by Zelgadiss ( 213127 ) on Sunday February 13, 2011 @02:09PM (#35193114)

    Nokia better come up with some exotic hardware that no one else can produce and tie WP7 tightly to it (so it's reliance on their hardware) if they want to do this exclusive thing.

    Else they are completely at the mercy of MS, where MS can dump them for another hardware manufacturer and they can't drop WP7 without losing their customer base who has invested heavy in WP7 applications.

  • by sznupi ( 719324 ) on Sunday February 13, 2011 @02:10PM (#35193124) Homepage
    Indeed, look at top handsets in top20 countries of this report []. Just look at them; beyond some probably fairly atypical (but vocal and visible) place. Curious way of being "toast"...

    Who knows... at the very least, this deal means a lot of Winmob7 phones pretty soon. With Nokia most likely dominating - other phone makers brought, what, just ~2 million of them onto the market till now? Now they might even shun the platform, they don't depend on it & so it's easy for them, if it appears like Nokia might be getting a preferential treatment (at the least keeping Ovi Maps to themselves, and certainly deals with carriers / mobile payments). Last year Nokia sold over 100 million Symbian phones, and growing... and since now they say there are plans for just ~150 million more, that means a pretty quick switchover. With, all things said, a pretty decent OS, and which will certainly have all the "required" apps - plus IMHO a very real chance to rapidly pick up steam in mobile gaming. Then there are hundreds of millions of people still loyal to Nokia, many will want to upgrade from their "feature phones", and since Winmob7 is supposed to be now spread across a spectrum of handsets at different price points...
    The "leaked" handset [] (yeah, "who knows?") doesn't look half bad, too...

    Only the Windows logo is a bit disturbing / too bad it's still MS... ;/

    Plus, it's a company which succesfully reinvneted, reorganized itself numerous times... this shift is even quite minor in comparison.
  • by amorsen ( 7485 ) <> on Sunday February 13, 2011 @02:18PM (#35193188)

    Nevertheless it IS impossible to pick a Nokia phone unless you happen to be a Nokia phone expert. Now that people are starting to buy handsets instead of just being grateful for whatever crap the phone company threw at them, this is becoming a problem.

    Getting down to two models is a challenge though; there is still a large market for "in-between" phones which have decent battery life and small size but still a reasonable amount of features. The Slashdot market may be divided between "I don't need no stinking texting" and "no can-opener? lame!", but the rest of the world is less black and white.

  • by presidenteloco ( 659168 ) on Sunday February 13, 2011 @02:18PM (#35193194)

    Microsoft today most reminds me of a coral reef in the Caribbean.
    Still standing there, huge, menacing, misshapen and barnacle-encrusted.
    But dead. The environment has changed around it and it can't adapt.

    Nokia is a huge ship battered by the storm coming in toward the reef
    for shelter.

    What do you think is going to happen?

  • Qt (Score:5, Insightful)

    by jelizondo ( 183861 ) <> on Sunday February 13, 2011 @02:19PM (#35193198)

    Funny timing, I'm uninstalling Qt and Symbian as I write...

    I think Nokia has fumbled too long between Symbian and Meego and now Qt; one can't get a clear sense of where they are going and thus, as a developer I must move to greener pastures.

    Goodbye Nokia! Hello Android!

  • by raftpeople ( 844215 ) on Sunday February 13, 2011 @02:20PM (#35193206)
    Nokia isn't leading, Apple and Android are doing very well, RIM still has solid market share and MS is going to fight like hell for WP7. There isn't room for 5 players and even 4 is a stretch. It doesn't matter what happened in the past, Nokia was in a weak position and needed to do something. Bottom line is that the stage is set for the phone OS players and Nokia is not one of them, so they have to change where they fit into the eco-system.
  • by ColdWetDog ( 752185 ) on Sunday February 13, 2011 @02:23PM (#35193228) Homepage

    A new Apple has been born.

    Ah yes, the old Citrullus colocynthis []

    Just desserts.

  • by sznupi ( 719324 ) on Sunday February 13, 2011 @02:42PM (#35193304) Homepage
    It's fascinating how easily people can forget Xbox...
  • by Znork ( 31774 ) on Sunday February 13, 2011 @02:48PM (#35193346)
    "They're still one of the biggest handset makers in the world"

    The interesting thing is that the leadership at Nokia seems to have forgotten about that part of their business. With the hardware requirements of WP, Nokia is going to go from 30-something percent to, if they're lucky, mid-to-high single digit marketshare, unless they're planning to sell their handsets at a significant loss. Their margin will be pitiful.

    They seem quite desperate to get into the segment of 'cool' smartphones to obtain the margins of other players, yet miss the fact that their main customer segment won't have that money even if they have a product, and the customers they're after wouldn't consider a WP based device 'cool' if it came with its own liquid nitrogen system.

    A strategy worthy of that other Steve who seems unable to do anything but try to emulate whomever he considers cool guy of the week.

    Just because you're caught on a burning platform doesn't mean sticking a shotgun in your mouth and blowing your head off is the best way to move forward.
  • by Weezul ( 52464 ) on Sunday February 13, 2011 @03:28PM (#35193654)

    In memoriam : Microsoft's previous strategic mobile partners. [] lol

    Nokia has been amazing at undercutting all other phone manufactures's prices on the low end, yielding amazing sales in poor countries. Yet, now we're seeing Chinese companies who'll basically just copy all Nokia's products, and produce phone even more cheaply using almost slave labor, which'll obliterate into Nokia razor thin margins.

    We're entering a time when Nokia's western low-end phones will run Symbian while other low-end phone remain simply feature phones because Symbian requires less resources than Android, iOS, Blackberry, WP7, etc. I donno how long that bright period will last of course, well maybe it'll depend most upon the marketing for Android, iPhone, Blackberry, etc.

    In smart phones, Nokia could've easily run with MeeGo plus Andoird apps [], giving themselves the largest app selection plus differentiation. It's dubious however that WP7 will deliver either the developers given that Apple and Android own the market currently, or the users, given that Android delivers all the choices you mentioned.

  • by SmallFurryCreature ( 593017 ) on Sunday February 13, 2011 @03:29PM (#35193666) Journal

    To become the one and only maker of MS hardware? That is a position NOBODY wants, EVEN Foxconn is NOT that stupid. Because that is exactly what Nokia would become, a mere factory stamping out goods at FINNISH prices. Look at how nice it is to become the sole supplier for a certain Redmond based company when it comes to graphic chips... Nvidia, oh oops ATI. Loyaltie? MS knows none.

    Have people really forgotten WHY Symbian came into existence? Do they not know WHY no other phone makers WANTS to be a MS only shop? Because the phone makers like most in IT KNOW what it means to be a MS lapdog and sought to escape it.

    What kind of deranged mind thinks that ANY company would of its own choice consider becoming the next Dell to be desirable? Oh and that is NOT the Dell of the desktops where MS software is the near absolute ruler but the Dell of Windows ME, Bob, Vista! Dell by the way that is outsold by Apple which does NOT sell MS Windows.

    It would be as if HP be loosing out in desktop sales and go all for the massive Linux desktop market to save its fortunes... might work... but not bloody likely.

    Windows Mobile 7 is not some price that is hard to get either. Everyone phone maker out there can make a WM7 phone. MS is going to chance this when it has so much trouble getting any of its phones to markets already? It is a bottom feeder. The consumers have said countless times they simple do not want MS software on their phone. This is after all their Xth attempt at it, people have made their choice.

    To be clear, Nokia used to have a higher market share then MS ever had. So it is trading what made it unique for a smaller market share?

    Oh but maybe with WM7 it will create some great phones? Unlikely because it has failed to do so before. Nothing stopped Nokia from making the next or indeed the first iPhone itself. What both Apple and Google have shown is just how silly easy it is to create a new phone + OS and make it in the market. For that matter, so has Rim. Nokia didn't fail because it didn't have access to MS software, its competitors didn't and did very well despite OR because of it?

    And here is the real irony: PC makers believe that unless their hardware comes with MS software it just don't sell. Apple doesn't count in this bit of logic. See the swift end of linux on the netbooks.

    But on the mobile phone, this just ain't true. The OS makes VERY little difference in peoples choice. Even if it did, the sales figures clearly show that putting Windows on it will just chase people away.

    Nokia had to either re-invent itself, possible with Linux as a base OR become one of the many hardware makers using an existing OS... and it did the latter with the least selling OS.

    A brilliant move? Maybe for some MS stock owning CEO, but I think Nokia's slide to the bottom will only be hastened by this move. We shall see within the year.

  • Wrong reason (Score:5, Insightful)

    by gmuslera ( 3436 ) on Sunday February 13, 2011 @03:42PM (#35193760) Homepage Journal
    The #1 reason Nokia is toast is that Elop is still CEO, after what did last friday. The rest is secondary.
  • by UnknowingFool ( 672806 ) on Sunday February 13, 2011 @03:44PM (#35193778)

    Despite all the evil MS may represent, I'm sure MS don't want to kill Nokia.

    Like most companies, MS is only really interested in how the Nokia deal serves them. They really don't have Nokia's best interests in mind. When they get all they can out of the deal, they'll screw over Nokia like so many of their former "partners". I'm guessing that is what the investors are reacting to at the moment. Nokia could have done other things: (1)Push Meego. (2)Push Symbian. (3)Adopt Android. (4)Develop their own OS. But instead they went the choice with the fewest benefits.

    There are many that would argue that going with Android would have made Nokia another "me too" phone manufacturer and less distinctive. I would argue how is going with MS any better. MS has already put some massive restrictions on WP7 so that one phone model really isn't very distinctive from another model in terms of UI. With Android, Nokia would have more the ability to customize it to their own purposes.

  • by 21mhz ( 443080 ) on Sunday February 13, 2011 @03:59PM (#35193860) Journal

    S40 is not going anywhere, I don't get why some people understood otherwise?
    For people who want to stay on S40 dumbphones, they are going to continue putting up new ones.
    There was no migration path up-market even between Nokia devices, so that point is moot.

  • Nokia is fucked. (Score:5, Insightful)

    by RyuuzakiTetsuya ( 195424 ) <taiki.cox@net> on Sunday February 13, 2011 @03:59PM (#35193862)

    If this quote is accurate... []

    Elop doesn't know what the fuck he's doing. He needs to steer the company back towards growth and away from the rocky shoals of loss.

    Taking on Android is like trying to stop a train by standing on the tracks and putting your hands out and asking nicely to stop. Android's going places because the OS is usable and free.

  • by Anonymous Coward on Sunday February 13, 2011 @04:04PM (#35193892)

    While I agree that in general, the minimalist strategy works well for Apple, I'm not sure that Nokia could pull it off. Let's look at what Apple used to build the iPhone brand before there even was an iPhone.

    1.) OSX. Apple's penultimate desktop operating system, gain billions of fans for it's tight design and nearly flawless execution. When Apple merged it into the x86 platform it removed much of the pricing barrier that was keeping people off of Apple and wooed many more customers.

    2.) iTunes - At the height of the digital music revolution, Apple introduces the ultimate music software to go with it's ultimate desktop OS.

    3.) iPod - Right along with iTunes, completes the musical vertical integration pyramid, design is revised several times, paving the way for the iPhone's form-factor.

    All of the above led directly into the iPhone. Looking back at it it's almost obvious that this is where they were going, although none of us could see it at the time.

    Now, what to Microsoft and Nokia have? Well, Microsoft has a desktop OS, but has said little to nothing about integration. No solid music apps beyond Windows Media Player, and that's just a mess. Nokia? Well, they have plenty of phones, but no design ethos or personality. Basically, both MS and Nokia have the same "scattershot" approach to business. They try to take a little from every area, resulting in generally mediocre products with a few bright spots. Not a winning strategy.

    right now, of the non-Apple and Google players, I think that HP is positioned best with RIM a close second. If HP can seriously deliver both on the consumer and business ends, they will knock RIM out (particularly if they can deliver the kind of centrally-controlled enterprise handset encryption that RIM specializes in). Regardless, the Nokia-MS merger isn't likely to make much of a difference, even IF they take the advice offered in TFA. They just don't have the right pieces in place or the right corporate attitude.

    Jesus. Do you come up for air when brown nosing Apple?

    1) Billions of fans? The worlds population is 6.7 Bn. 30% of the worlds population is not an Apple fan or even has a bloody computer.

    2)iTunes stinks as a music app. It had some semi cool features when it first came out but talk about bloat. It certainly isn't 'ultimate'

    3) Vertical integration pyramid? Its vertical integration period. But yes this works very well with Apple products. As it does with MS and Windows Server-> Exchange ->desktop-> WP7->Etc. However vertical integration is hardly harming Android... u know the top selling smartphone O/S.

    Why do you think a phone needs a good O/S based music app? I find a lot of pple hate using their phone as a music player.

    Nokia's product mix is just very diverse which is, as you say, driving them to create mediocre products in every segment. I haven't seen much about their top end phones that compare against cheap Chinese android based phones, the ZTE Blade being a good example.

  • Re:Exclusive ... (Score:5, Insightful)

    by UnknowingFool ( 672806 ) on Sunday February 13, 2011 @04:17PM (#35193992)

    Or MS can drain Nokia of any and all exotic hardware information they need, then dump them. Remember Sendo []? MS was supposed to deliver an OS by June 2001 and Sendo would supply the hardware. By December 2002, MS had not delivered the OS and Sendo alleges that MS purposefully sabotaged the partnership to force Sendo into bankruptcy. Part of the agreements stipulated the MS would get all of Sendo's technology should they go into bankruptcy.

  • by mbkennel ( 97636 ) on Sunday February 13, 2011 @05:11PM (#35194294)

    "eyeballs" aren't revenue unless you're in the cornea business.

    And they don't have "control" of the living room, they just have alot of video game consoles which seem to be made at a loss. What exactly is the X360 doing for Microsoft?

    It's not like everybody is using the Microsoft Video Store, and getting all their TV from the Ballmer Network, and Microsoft isn't getting money for every TV program they watch. (And neither is Google or Apple, despite their desire---the most successful is NetFlix, because they offer a simpler product and are good at it).

    What phone "tie" to X360 is there and would make sense? The hardware & software is completely different.

    Why do you want to access your video game remotely from your phone?

    The best upside is that by working with Nokia they'll make Windows Phone 7 better as it will have better software design for real hardware.

    Instead of grandiose "control of eyeballs", let's have Microsoft make a phone which doesn't really suck. That's plenty hard for them already.

  • by sznupi ( 719324 ) on Sunday February 13, 2011 @06:12PM (#35194730) Homepage
    Part 3 of this report [] focuses on the EU; not exactly poor countries / Nokia still has the largest slice of the market (I wonder how it would look if iPhone models were listed separately... many Nokia handsets are also very similar)

    They rarely undercut other manufacturers BTW, people chose Nokia - for each of their devices, it was typically fairly easy to find a comparable but cheaper phone from other manufacturers. Those outsourcing everything to China are not exactly a new thing.
    (and S40 should remain for a long time on western low-end handsets)
  • by V for Vendetta ( 1204898 ) on Monday February 14, 2011 @01:10PM (#35200592)

    No. This is the NA perspective. Understand this: only in NA are phones subsidised as a norm. Therefore only in NA are the smartphones a dominant factor in the market. Because nowhere else are they affordable. Not that people are poorer in Europe: rather no one could afford the smartphones in the NA market if they weren't subsidised.

    Not true. This is the norm in Germany, too. You get a "free" phone with your contract. After two years (typical contract term), you get the offer to renew your contract, along with another new, "free" phone.

Someday somebody has got to decide whether the typewriter is the machine, or the person who operates it.