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."
In that case, MS has failed beyond belief (Score:3, Interesting)
If MS not even essentially buying a company in a coup where, conveniently for MS, an ex-Microsoftie replaces their former boss [appleoutsider.com] will assist MS in competing with Google and Apple, and instead ends up killing the company, MS has failed in the mobile industry like few others. If that won't cause Ballmer to have to leave, I don't know if anything will.
Despite all the evil MS may represent, I'm sure MS don't want to kill Nokia. They clearly want to use them as a leverage for WP7 market penetration. However, the Nokia shareholders seem to be less than impressed to go from an independent company - to be designing and packaging hardware. What has Nokia stock dropped by by now? Last I heard was -14% with many leaving the company. I'm not surprised - I'd feel the same if I went from being a software developer to someone writing marketing material and trying to think up designs for someone elses product, and even have to tell everyone that it's the best software ever, after having dropped my own.
It's humiliation, that's all it is. Pure humiliation for Nokia...
m$'s 8th largest individual shareholder is happy (Score:5, Interesting)
He loves it when a plan comes together [dailyfinance.com]
This is way over the top (Score:5, Interesting)
I'd be shocked if Nokia were "toast". They're still one of the biggest handset makers in the world, and their name recognition alone is worth billions in the market. And while guys like Steve Jobs are going "simplify!", there are millions of customers going "Really? This is all you've got? Where are all the choices?". Just because Apple's strategy is good for Apple doesn't mean it'll be good for Nokia, just like Mercedes isn't going to pursue the same strategy as Ford. They're both still going to make a lot of money.
Re:Sadly... (Score:4, Interesting)
Still, sad - Nokia was in great position to say "want us to use winmob7? Allow Qt"
Minimalist strategy not enough. (Score:3, Interesting)
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.
Re:As much as I wanted Nokia to adopt Android... (Score:4, Interesting)
Ten times better than no chance is still no chance.
Nokia could have saved itself by going with an Android + MeeGo strategy.
Microsoft's phone efforts are DOA. It doesn't even matter anymore whether they are technically any good; WP has the stink of failure attached to it. And that stink won't disappear by hooking up with a failing phone company.
Re:A Microsoft Nokia bad-analogy award (Score:1, Interesting)
The Xbox.... Xbox.... Is that the device which cost Microsoft's entertainment division over a billion in losses? Maybe it's a good thing people ARE forgetting about it?
And even now, teeny-tiny Nintendo is still outselling it 2 to 1.
Re:A Microsoft Nokia bad-analogy award (Score:4, Interesting)
are they making a profit yet from R&D?
I bet some people within Microsoft are trying to forgot XBOX and cant.
Re:This is way over the top (Score:5, Interesting)
Because they got a stupid North American as a CEO who thinks his home base is the world. Only in NA is Nokia an also-ran. Because nowhere else is it normal to get the phone for "free" with your contract. Contracts which are preposterous in the first place.
Because nowhere else are consumers ignorant enough and regulators lazy enough to allow that. So outside of NA, your iPhone is wayyy too expensive for what it is. Except if you are an asshole yuppie urbanite that is. Only is you care more about your phone looking "cool" (that is bough last month, or so) instead of having really good reception/battery life, will you buy the phones which are popular in NA.
So based on the bizarre, twisted, wrong NA market, the CEO changes a strategy which is _working_ (ovi store is growing tremendously -- well was until Friday -- and Qt allowed development on the entire line of phones). He pisses off his entire dev base hoping to get a new one, presumably. Because replacing a world-class API (Qt) which is truly portable with a WP-only API which can only work on hi-power-low-battery-duration devices is _stupid_. Telling devs "you know those 500 000 000 devices you targeted? They're gone" is not good. And WP phone devs are probably not going to be so eager to replace their just-shafted colleagues... I guess he doesn't even understand why the stock of his company plunged 15% in a day...
Because investors realised that the man knows nothing, and is more than just clueless: he is actively and destructively stupid.
Re:As much as I wanted Nokia to adopt Android... (Score:5, Interesting)
Re:In that case, MS has failed beyond belief (Score:4, Interesting)
Nokia could have done other things: (1)Push Meego. (2)Push Symbian. (3)Adopt Android. (4)Develop their own OS.
(1) Tried, it's not ready enough yet.
(2) That platform is a zombie walking around asking for more brains... I mean, R&D budget millions to gobble.
(3) Join the race to the bottom, compete in services with Google who happen to control your platform. Feel the fragmentation.
(4) What? Create another R&D sinkhole, while MeeGo is still around? Just what Nokia needs now.
Re:A Microsoft Nokia bad-analogy award (Score:3, Interesting)
And even now, teeny-tiny Nintendo is still outselling it 2 to 1
Nintendo isn't teeny-tiny.
It's a company with 4,000 employess and $16 billion a year in revenues.
The $150 Kinect controller had sales of 8 million units over the holidays. That is not bad for an accessory that sells for about $50-$100 less than a Wii bundle.
Re:A Microsoft Nokia bad-analogy award (Score:4, Interesting)
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.
So what about the XBox? It's a phenomenal success in console terms (given the console business model). Just look at the commercial services available through XBox Live. And Kinect has been doing brilliantly, a device that hackers are loving just as much as gamers.
Also WP7 has only been on the market for a matter of months so it's too early to come to a conclusion on that yet, Windows Mobile (which is of course in no way related to WP7) was a failure, but then again it was never meant to compete in this environment, it's over a decade old.
Then there's the enterprise software like Exchange and Sharepoint.
Sure MS aren't in the consumer gadget business, but that doesn't make them dead.
How this deal serves MS... patents? (Score:5, Interesting)
Could it be that with Nokia dependent on MS for phone software, the biggest holder of smartphone related patents is no longer a threat to Microsoft? Apple and Microsoft have some kind of patent sharing deal, which is good for Microsoft, but does Apple no good against Nokia's phone patents.
And Google's pretty much on their own. Maybe Motorola's got some protection to offer Android, but I personally don't like the idea of an emboldened Microsoft waving bullshit UI patents as a threat to Android with nobody left to countersue.