SECOND BOYCOTT CAUSED BY SKYPE
Then there is the second boycott. I reported on this blog that the carriers have revolted against Microsoft after it bought Skype one year ago, and carriers put all Windows based smartphones into sales boycott. That has since been independently verified by various US based news outlets from California to Boston to New York City. We got a final confirmation from Nokia CEO Stephen Elop
, who admitted to the Nokia Shareholders Meeting that carriers don't like Skype 'of course' and that some carriers have taken the step to even refuse to sell any Windows Phone based smartphones, explicitly because Microsoft owns Skype. He even explains to Nokia shareholders the revenue loss logic behind that reasoning, and is so well known, Elop uses the words 'of course'. Read the full Elop quote and see the video
And this was not just hitting Nokia Lumia smartphone sales, it was hitting all brands of smartphones running Windows. Elop explained further that for more than a year, Microsoft had tried to negotiate with the carriers to get some resolution about the Skype issue - with kind threats like 'Skype will come in any case' (unhelpful) and that after a year of such 'persuasion' there were exactly zero carriers who had taken Microsoft's offer.
Understand, this isn’t about which smartphone has or doesn't have Skype on it (we've had Skype on many smartphones for years) and the current Lumia line doesn't come with Skype on it. This is about Microsoft now owning the hated Skype and being able to bankroll the biggest threat to the existence of mobile operators/carriers. I have explained why carriers hate Skype
- and why Microsoft ownership of Skype is the issue
, not whether some smartphone has it or not.
So this Second Boycott is not about Nokia, it is aimed at Microsoft. However, any manufacturer who makes Windows phones will be hurt by it, including Nokia obviously. Elop openly admits this problem to Nokia shareholders. The same was echoed by Dell when they said they are quitting Windows and also by HTC with explaining why they were shifting from Windows Phone to Android. LG and SonyEricsson had echoed similar themes a to why they were shifting away from Windows - who wants to make phones that the stores refuse to sell? They happily sell Android.
Because of the Anti-Microsoft boycott, the Windows Phone partnership has seen LG, SonyEricsson and Dell quit Windows Phone totally (in favor of Android) and HTC and Samsung reduce their Windows offering in favor of more Android. Before the Anti-Microsoft boycott, Microsoft's combined Windows market share of Windows Mobile and Windows Phone was 3%. That collapsed to under 1% by the time Nokia's first Lumia phones launched. And again, this is not my conjecture, this was verified by Nokia CEO talking to the Nokia shareholders saying the carriers hate Skype and because of Microsoft’s owning Skype
, are now reluctant to sell Windows based smartphones. This was before Skype was integrated into the Windows smartphones.
The anti-Microsoft boycott, boycott number 2, is real. This is a systematic problem with Windows and Microsoft. It cannot be fixed with a new operating system or some pretty new tiles on new phones. This problem is real today, and it will only get worse with Windows 8
, when Skype is fully integrated to the PC, tablets (and smartphones). I am not saying there won’t be sales of Windows 8 based smartphones - but am saying that since there is already a crippling sales boycott in place after one year of Microsoft 'negotiations' (aka threats and bullying), this problem will be far worse in Windows 8.THIRD BOYCOTT NOW DUE TO NO UPGRADE
Now we get the Windows 8 news. No upgrade for any current Windows Phone based smartphones by any manufacturer to Windows 8. The total Nokia Lumia line is instantly Osborned, this time, by Ballmer. Anyone who bought a Lumia will seem a fool to knowledgeable friends. The carriers who sold Lumia (and Samsung, HTC and other Windows Phone handsets) will be blamed for selling an obsolete product - there will be record returns and complaints, especially from those who are on two year contracts. Those customers will demand to be released from those contracts.
This means that the current stock of all four Lumia phones is instantly undesirable. What we thought when Nokia profitability and average prices were falling, will be far worse
. Now these obsolete phones have to be sold for pennies on the dollar. The carriers will demand to return their existing stock and refuse to accept delivery of placed orders. The mere transport costs of handling the returns will add massively to Nokia's costs, now, in late Q2, and into Q3. This means further big losses beyond the profit warning.
Any carrier/operator or handset retailer who has Nokia Lumia in stock, will try to return it to Nokia. If not, they will sell it at huge discounts. That means that in all markets where Lumia is sold, the prices collapse. That hurts all Nokia brand sales, including Symbian and MeeGo based smartphones and including featurephones. Who is willing to pay 100 dollars for a mid-priced Nokia branded featurephone/cameraphone if there is a brand new Nokia Lumia for 25 dollars in the basket in the same store, on fire sale. All Nokia prices are now collapsing in all markets where Lumia had launched - bearing in mind that a collapsing Lumia price in your competitor store, will hurt your sales even if you do not offer Lumia yourself.
Any carrier or operator or retailer who had signed up to Lumia but hasn't yet started its sales, will immediately stop and refuse delivery. The biggest carriers/operators will try to muscle all kinds of concessions and refunds from Nokia further damaging Nokia's profitability.
Am I imagining things? No. This is the immediate response from T-Mobile
(as per TamsPPC): Because there is no upgrade to Windows 8, while T-Mobile had originally committed to sell the Lumia 900 in Germany and even advertised it already, it will not do so. No Lumia 900 to be sold by T-Mo in Germany. Note, T-Mobile is Germany's biggest operator/carrier and Germany is the headquarters for the T-Mobile group, one of the world's 20 largest mobile carrier/operator groups. If this is what T-Mo does and announces in public, you can bet it ain't the only one.WHEN YOU HAVE 3 ALTERNATIVES
And now, we see Stephen Elop and his 'management style'. What did Motorola or LG do when Windows Mobile sales tanked? What did HTC and Samsung do when Windows Phone did not sell well? What did Dell and Sony do when they noticed Windows Phone had a carrier boycott? All of these smartphone makers had an alternative, in every case at least Android. All of them - of course - shifted away from the platform that was having problems in retail, and shifted to the platform(s) that didn't have a problem.
And Elop has three smartphone options. He can right now sell tons of smartphones on Symbian - like China Mobile, the world's largest mobile operator/carrier (that is, about seven times AT&T). They said no to Lumia, they have the equivalent to the Lumia 800, as the Nokia 801T, which runs on Symbian - and has a 4 inch touch screen, 8 mp camera, WiFi, 3G, NFC (and TV tuner). If your customers don't want the 800 Lumia, give them the 801T. Or the 808 PureView, running Symbian.
And not just that, what of MeeGo? It isn’t obsolete and Osborned by Microsoft. The smart CEO would immediately react to the Microsoft announcement by recommitting to MeeGo - the most loved OS ever made by Nokia. The N9 running MeeGo is the only smartphone ever made by Nokia that has consistently been rated as good as or better than the iPhone. The N9 won the D&AD Award for Design beating not just the Lumias, but the iPad 2. Who wins a design award ahead of Apple? And what dimwitted CEO doesn't celebrate this award by flooding the world market with this superb device?
And what about its sister smartphone, the N950, also running MeeGo, also not Osborned? Why not launch the N950 now, while there is still interest in the MeeGo OS, and, as a gimmick, promise to bring Android compatibility to MeeGo (they are both running the same Linux base) so most Android apps will be compatible with these two MeeGo devices? If the Nokia CEO was really concerned about Nokia's best interests, that is what he'd do now, when Microsoft is pulling the rug out from underneath the Windows Phone platform.
Any sensible CEO over at Sony or LG or Samsung or HTC or Dell would have no qualms about doing that. In fact they have all done that. Why is Elop afraid? Because he is beholden to Microsoft, he was never honestly pursuing Nokia's best interest after all.
And that third option for Nokia is Meltemi. Elop just announced that he is firing the Meltemi staff
. He hasn't done it yet, only announced. This Microsoft bombshell now destroys pretty much all of Nokia's plans to expand Lumia to low-cost smartphone markets and poisons carrier relationships - and there is still time to reverse the decision to fire the Meltemi staff - the Meltemi OS is nearly finished! Why not finish it now, rush those low-cost smartphones to the market (use the Lumia 610 model, for example, but issue it with the new Meltemi software) and Nokia would have a low-cost OS option where Windows 8 is not fit. There is still time. Any sensible CEO would do that, once being burned by Microsoft.
At this stage, if the retail channel refuses to sell the smartphones running Windows, then it’s time to say thanks and switch. For RIM it would be a long and costly shift away from the Blackberry OS, because there is nothing else. If they wanted to switch, say to Android, it would take 18 months. But at Nokia they have two alternate OS platforms currently in production! Why not sell those phones now, everywhere? And as Windows is clearly a pointless platform, end that development path. Who cares what the costs of breaking that deal is? Clearly, Microsoft doesn't care one bit about its 'strategic partner' Nokia's interests. Let them sue you, pay back the 750 million dollars of marketing support and escape the dead end of the Windows path. As I wrote previously, the Windows path is a Certain Road to Death
. That was before this deliberate Osborning of the Lumia line by Microsoft.
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