What Now? Microsoft Throws Nokia Under the Bus

BUT WIN 8 IS GREAT

So you liked the Microsoft PR show about Windows 8? It’s a great OS that will make great phones and tablets and be an ecosystem with great features and apps? This is a completely and comprehensively irrelevant point. In the PC market, in the videogaming market, in the music player market, it matters how good or bad your device is. It does NOT matter in the mobile phones market. Look at the picture below. Which of these lines is Nokia running the 'obsolete' Symbian?


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The one that represents Nokia - with the 'obsolete' Symbian - is the top line (in blue). Nokia was selling more than the iPhone and all Samsung smartphones combined. Nokia was not declining - when everyone, including me the perennial Nokia optimist, admitted that iPhones and Samsung Galaxies were better smartphones than Symbian based Nokias. The reason Nokia was able to do this was not that it made 'the best smartphone’ but the carrier relationships.

Why did Palm die? It had a superb phone, the second best-rated smartphone this side of the iPhone. Palm died because it didn't have the right carrier relationships. Why did Microsoft's Kin phones die in only 6 weeks - a world record? Because the originally committed carriers suddenly refused to offer it. In the mobile handset market, it is the carriers who decide. Not who has the biggest 'ecosystem' or the most apps, best phone or best user interface. If the best phone wins, Apple would not have suddenly doubled USA sales when Verizon came onboard. In mobile, the deciding factor is carrier relations, nothing else. Look at that picture again. Nokia lead over Apple's iPhone had grown - not shrunk - in the two year period. Does that make any sense? I know it doesn't, to those who live in the USA and see only the US market where Nokia was tiny. But Nokia held 77% market share in China - the world's biggest smartphone market where Apple had a pittance and Windows didn't register on the charts. Nokia (with Symbian) was easily the biggest smartphone maker of India, Africa, Latin America etc.

(The dotted line is when Elop was hired to join Nokia and here is the second part of that slide, showing what I originally used it for, to explain the madness of the Elop Microsoft strategy:)

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FIRST OF THREE SALES BOYCOTTS

I have reported in this analysis that the Elop Effect resulted in the 'Osborning' of Nokia smartphones and also that the Burning Platforms memo destroyed resale confidence in the Nokia handset portfolio. The sales collapsed (as we can see from the above picture, strong sustained growth reverses immediately into steep decline right after the Elop Effect). I said the stores would reject selling Nokia smartphones, a hotly contested point. Since then, Nokia has repeatedly complained that its the retail channel that is the problem. Elop said so at the Shareholders Meeting. He said so again with the latest profit warning when explaining that the Lumia line is a good phone but retail stores do not support the phone sales. I call this a sales boycott. I explained why it happens. It has been confirmed by Nokia's own CEO, there is a worldwide retail sales problem, where sales retail is reluctant to sell Nokia handsets. That is what I call the First Boycott. It started first, in February of 2011, with the Elop Effect. Even Elop himself admits it openly to the Nokia shareholders meeting and admits his Burning Platforms memo did hurt Nokia smartphone sales. And looking at that graph, you see how badly it’s damaged mostly Symbian based Nokia sales since February of last year.

One, this sales retail problem is real, it was caused by Elop and he admits it. And two, the problem is systematic. Therefore, three, it cannot be fixed by cosmetic measures like a new phone handset or an update to the software or some nice apps in the app store. The problem is systematically against Nokia. Note, it does not hit other Windows based manufacturers, but it obviously hits hard at Nokia's Symbian based smartphone sales and even Nokia's featurephones.