It’s way too early to judge Nokia’s performance

Just over a year ago, Nokia was doomed.

I think people are forgetting this.

Let’s remember just how bad it was: The management was broadly clueless. Many of the company’s most talented employees could see the problems facing the company but were powerless to do anything about it. The market had been rightly hammering Nokia for a long time and the death spiral was quickly approaching. Remember the abomination that was the Nokia N97? Remember the Western reaction to the Nokia N8? The company had dug it’s own grave and the market was crucifying them. All this despite the fact the company was shipping millions of handsets a day. I remember clearly just how bad things were. Silicon Valley and the collective media world have moved way beyond frustration, passed ‘laughing stock’ stage and into ‘delete’ stage. Just over a year ago, the wider Valley community was actively working to kill Nokia, to prevent them from doing anything. I remember, for example, one leading developer who simply refused to develop for the platform. The CEO wouldn’t take any money from Nokia. He wouldn’t license the API. He wouldn’t let them do anything. He actually told me didn’t think the company deserved to live. (I’m paraphrasing because there were a lot more expletives).

Anyone who thinks Nokia’s current strategy isn’t working needs to take a step back.

There was no choice. Remember the ridicule. Remember the downright disbelief of the market — they couldn’t understand why Nokia couldn’t deliver anything remotely touching the iPhone. Or why they couldn’t do it on time. And make it look decent. And function without asking you stupid questions from yesteryear like “are you sure you want to connect to the internet”.

Of course we all knew Nokia was capable. It just wasn’t able to deliver at that point.

And time was running out.

Investors were getting really shirty.

I was doing presentation after presentation to boardrooms filled with institutional investors trying to wrap their minds around why Nokia’s N97 was apparently their best work (in comparison to the sensational handsets at the time — Android/iOS).

The market was getting so frustrated that all sorts of dire warnings, downgrade threats and whatnot began to fill the airwaves.

The market demanded sweeping change. There was no alternative.

Well, actually, there was.

Nokia had two choices:

1. Swap to Android or Windows
2. Die

It would have been a slow, painful death. The market simply wasn’t going to accept anything other than Choice #1 or death.

The company got itself into the position of having zero alternatives. It brought itself to the brink.

A year has passed now. The company’s managed to change strategy, get some handsets out, modify it’s culture and start again.

But let’s be clear: The fact the company is still actually trading is a bonus. Things were THAT bad last year. The company wasn’t actually dead but the wall was rapidly approaching at 500mph.

I think it’s too early to call for a change of strategy.

I’d very much welcome Nokia putting a lot of money into a next-next generation smartphone operating system.

But right now I’d like them to continue working toward make a success of Windows Phone and keep evolving their pitch.

This time last year, many of us didn’t even think the company would have delivered a single Windows Phone handset. The prospect of actually having Nokia Windows Phones in the hands of a few million folk within 14 months was quite a pipe dream!

So I was expecting Nokia to take a massive hit in revenue for quite a while. I think everybody was. It was the logical conclusion of their announcement. They were going to take a huge hit anyway. I was expecting 2011 to be a wipeout, 2012 to be the mostly same (if they event got a handset out to market) and perhaps a bit of good news by 2013.

I see good news from Nokia all the time.

The manner in which they reacted to the Lumia 900 bug was simply brilliant. Many have described it as a public relations coup. I agree. (Read: BGR: “Nokia appeases angry mob, gains life-long loyalists“). The lightning fast reaction — in a critical marketplace for the company — illustrates to me that there’s some really smart folk in control.

At MWC the Nokia teams were energised, focused, utterly delighted to show off their wares. If the people I was watching dancing along to the Lumia music every few minutes are just a little bit representative of the company’s wider corporate culture, that can only be good news.

But we can’t expect miracles overnight. We shouldn’t. Come 2013 and 2014 though, expectations will be high.

We’ll need to get the next version of Windows Phone out the door I think before we begin to see some mind-blowing stuff from Nokia.

Changing strategy to favour Symbian or MeeGo will only put the company back another year or so. For those really keen to see MeeGo (or it’s descendants) triumph over the market, I think there’s an opportunity there. I’d love to see Nokia change the dominant mobile paradigm once more. However right now the company needs to play the game with Windows Phone.

So, steady as she goes. Keep up the energy, keep up the innovation, let’s see what you can do Nokia.

  • carman58

    Really nice even handed piece Ewan, well done :)

  • Grabin

    “The market demanded sweeping change. There was no alternative. (…) Nokia had two choices: 1. Swap to Android or Windows 2. Die”, and yet you were cheering for Nokia’s Ovi Store back then, remember? 

    http://www.mobileindustryreview.com/2011/04/nokias-ovi-store-put-that-in-your-pipe-and-smoke-it-doubters.html

    For years, you’ve believed Nokia’s turnaround is just around the corner, and Apple’s success is overblown. Why?

    NOK’s closing price a year ago? 8.71 
    NOK’s closing price today? 4.23

    AAPL’s closing price a year ago? 336.13AAPL’s closing price today? 622.77
    Food for thought, no?

  • http://www.mobileindustryreview.com Ewan

    The Ovi Store was a great, great move, it really was. Much of the rest of the execution wasn’t unfortunately.

  • http://twitter.com/jamesburland James Burland

    It’s nice to see some positive writing about Nokia this week. It’s been extremely tough for everyone at Nokia and I personally believe that Nokia is still capable of greatness.

    However, I do think it’s important to be realistic. In the cold harsh light of day, it’s utterly obvious that the fate of Nokia is now bound almost entirely to the fate of Windows Phone and by extension the fate of Microsoft. This leads to 3 important questions… Can Microsoft be trusted to: A) Not shaft its partners? B) Compete effectively against Google and Apple in any arena other than enterprise applications? C) Grow the Windows Phone ecosystem fast enough for Nokia to stay afloat?

    Honestly, my answer to all three questions would be ‘no, probably not’. I want Microsoft to succeed as having 3 strong competitors in the computing space with make it stronger overall, but past performance leaves me feeling doubtful about its chances.

  • http://www.mobileindustryreview.com Ewan

    James, thanks for taking the time to comment — I agree. You make some good points about Microsoft too. Their strategy has shifted over the years. However I think both they and Nokia — and many (not all!) of their carrier partners recognise the situation they find themselves in.

    A good indication of the focus at Nokia is how they handled the Lumia 900 bug issue. In years gone by it would have taken Nokia and AT&T weeks to do anything about it. In fact I reckon AT&T would have simply said, “Oh ok return them and have an iPhone/Android/whatever” and been done with it. The machinations required to actually deliver a $100 credit to all 900 owners via AT&T’s own billing system? That’ll have involved folk at the highest levels of both companies. It can only be good news that they were both playing together rather than against each other — at least, as far as we can see with this outcome.

  • Stoli89

    Nice to see a sane post about Nokia these days. I agree with your opinion and would only add that a low cost Linux/Qt replacement(Meltemi) for S40 in 2012/2013 would be very welcome news, indeed.

  • http://www.mobileindustryreview.com Ewan

    Good points!

  • nacho

    Great piece Ewan! So, do you think there’s hope for Blackberry? 

  • http://www.mobileindustryreview.com Ewan

    I do!

  • http://twitter.com/allen_cross Allen Cross

    All of this (somewhat guarded) happy talk misses the larger issue: When will the Lumia 900′s data-access glitch be corrected?

    No matter how pleasantly out-of-character this response is for the principals, nor the delightful level of cooperation evinced in quickly arranging the rebate, nor even how much good will we presume has been bought with it. If Nokia don’t correct the basic flaw, double-quick, then buyers will revolt…and this will become an unmitigated PR disaster.

  • http://twitter.com/allen_cross Allen Cross

    > “it’s utterly obvious that the fate of Nokia is now bound almost entirely
    > to the fate of Windows Phone and by extension the fate of Microsoft.”

    You think? Any concerns about Microsoft were ‘utterly obvious’ way back in February of 2011, when Mr. Elop announced the deal. Immediate reaction within the tech sector was stunned incredulity at the mere suggestion of two such hidebound, monolithic companies joining forces and by this simple act seeing vast improvement in their famously glacial (and ridiculously expensive) pace of development.

    So, yes, it’s reasonable to fret over Microsoft’s long-standing issues with RTM schedules. Still, have I missed the memo where we crowned Nokia as new on-time champions? Ewan writes, “The prospect of actually having Nokia Windows Phones in the hands of a few million folk within 14 months was quite a pipe dream!” To which I say, “Keep puffing…unless handsets made by 3rd-party (Compal) count as ‘Nokia’.”

    But for those Nokia fans who prefer to focus our concern on MS, try these: What’s become of the vaunted “special consideration” Nokia was to be given in the design process? And why have MS gone radio-silent over WP8 development? Is it because they know their manifold technical issues — Silverlight, CE kernel and Compact .NET — will mean all current Lumia models are obsolete by year’s end?

  • http://www.mobileindustryreview.com Ewan

    I thought they’d fixed it already

  • http://www.allaboutsymbian.com Rafe Blandford

    I also think people should consider it is actually Microsoft that needs Nokia more than vice versa (I’m talking longer term strategy here). If Microsoft can’t make mobile work with Nokia then they make it work with anyone else… and then think about what that implies for the future of Microsoft.

    Of course Nokia really needs the Microsoft alliance to work too, but you can see alternative pathways (though the company would be a shell of its former self).

    Anyone who talks about Microsoft and partners also need to take into account the current PC market. That was done with partners. You can argue about the weighting of the various relationships, but they’ve got a track record is this area that’s arguably better than Google of Apple in some ways (think long term ecosystem building, not just the last few years). Put it this way – Wintel yesterday, Winokia tomorrow (a stretch of course, but you get the point)?

  • Panagiotis Katirtzidis

    Couldn’t agree more! And we already see Nokia back on the innovation with ‘PureView’! Let’s wait for Windows Phone 8 and what the Nokia handsets and the OS will look like!

  • http://www.mobileindustryreview.com Ewan

    Bring it on!

  • http://twitter.com/allen_cross Allen Cross

    Far as I’m aware, it was some time after I posed that when Nokia announced an update covering phones from ‘most’ operators.:

    http://conversations.nokia.com/2012/04/14/update-your-nokia-lumia-900-now/

    Happily, this news came several days ahead of Nokia’s self-imposed deadline (16 April). But it remains to be seen how long they’ll need to provide a comprehensive patch, plus whether this one really solves the reported data-connection issues.

  • http://twitter.com/allen_cross Allen Cross

    I take your point about MS needing to ‘make mobile work’, but it’s a leap to suggest this proves Nokia the less needy.

    Sure, Nokia can fall back on many years of technical expertise, famously tight control over suppliers and long-standing relationships in just about every corner of the globe. But given the tone and trend of their recent news (forgetting about WP… HQ layoffs, plant & store closings, retailers’ mutiny, quarterly losses, falling PPU, dwindling cash, low-low shares), any such confidence could be seriously misplaced. I’m not alone in suggesting those old laurels no longer offer quite so much cushioning as they once did.

    Meanwhile, Microsoft are sitting on $51 billion, nearly all of it coming in from traditional desktop customers. (Dying or not, that business model still generates big bucks.) And when presented with a high barrier-to-entry in some hot new market, MS have shown a stubborn willingness to heave bales of cash at the problem until they gain a toehold. Tho’ a Nokia partnership was *clearly* their best shot in mobile, I can think of at least three other phone makers who might welcome a wealthy confederate, or even a buyer.

    Which reminds me: I’d be careful making bold claims about Microsoft’s ‘arguably better track record than Google or Apple’ (with their strategic partners). Tho’ known mainly for it’s phenomenal success, the Wintel deal stands out in two other, equally critical ways: (1) It was demonstrably unethical and illegal; (2) It was one of perhaps only two MS deals to profit *both* principals. Intel aside, Redmond’s minions have left in their wake an unprecedented trail of corporate death and destruction…especially in mobile.:

    http://www.asymco.com/2011/02/11/in-memoriam-microsofts-previous-strategic-mobile-partners/

  • http://www.allaboutsymbian.com Rafe Blandford

    Should have been clearer – I wouldn’t in any way dispute Nokia is in the poorer position currently (by a long long way). I was thinking more about the future, especially with regards to the time when the decision was made.

    I do agree there are other mobile companies that Microsoft could buy, but if its not working with Nokia I don’t think it would work with any one else whoo Microsoft can realistically buy or partner with. Nokia might be able to go another route if Windows Phone were to fail. The issue would be financial (i.e. no money) rather than anything else (at least in theory). Ultimately you could probably argue convincingly both companies are basically done if they can’t make it work with each other (at least in their current forms).

    Yes Microsoft does have a better track record. The entire PC industry rests on what they did. Not always directly, but that’s half the point of ecosystems. An interesting though experiment is to imagine a world without a) Microsoft b) Apple c) Google etc. products / services. Obviously this is theoretical, since others would fill the voids left behind, but it does let you appreciate the relative importance of each.

    Yes it’s fair to say Microsoft do have anti-trust violations in the past, but they were punished. I don’t think Microsoft is the same company that it was a decade ago (not saying its good, just don’t really see much difference between it Apple, Google, Amazon, Facebook etc – all act in their own self interest, driven by market forces).

  • http://www.mobileindustryreview.com Ewan

    The company’s marketshare was going into free fall anyway…

Powered by WordPress. Designed by Woo Themes

Real Time Web Analytics

Clicky