What Now? Microsoft Throws Nokia Under the Bus

SO WHAT HAPPENS

I was the most accurate forecaster of how badly the Elop Effect would damage Nokia sales last year. I hit the end-of-year market share and this Q1 market share within one percentage point. Since then, I also gave my forecast for 2012's Nokia market shares by quarter. That has now again been destroyed, so I will have to revise (and thus downgrade) my forecasts for 2012. But yes, I predicted Nokia would end in Q4 of 2012 with 3% market share in smartphones (it was 33% when Elop took over less than two years ago). Now that number will need to be downgraded. I will return with those numbers as soon as I have them.

If you thought you knew how bad Nokia would be this year - with globally collapsing sales, two reseller boycotts, one directly hitting Nokia due to the Elop Effect, and the other aimed at Microsoft but hitting Nokia's new Windows and Lumia strategy - and that together pushed Nokia's smartphone unit from strong profits to big losses last year, and bigger losses now - that all got worse. Now there are THREE boycotts hitting Nokia: one on all things Nokia (due to Burning Platforms and Elop Effect). One due to Microsoft’s buying of Skype. And now, the third, courtesy of Ballmer's Osborning of the Lumia line with no upgrade to Windows 8.

Nokia smartphone market share was collapsing. The speed of collapse is increasing. Nokia's handset unit is generating a loss. Those losses will now get bigger. Nokia's market share was in freefall in smartphones and dumbphones. That was before Elop's emergency measures of 'increasing sales by reducing sales' and means Nokia's market shares will shrink even faster. The Nokia brand is badly burned by the past year, and this latest Lumia upgrade disaster burns Nokia's brand even more, causing even more of traditionally loyal Nokia carrier partners to bail.

The Lumia line is now dead and cannot be resurrected. Even if Nokia were to try to reuse the Lumia line with Windows 8, it would be badly damaged branding, and Nokia is better off creating a totally new brand. The most expensive handset launch of all time has been a total fiasco, mismanaged from day one by incompetent CEO Stephen Elop. The Lumia handsets will be laughingstocks and sit in discount bins in stores, polluting the Nokia brand.

I can see why there are rumors of Microsoft branded smartphones, following the Microsoft tablet. These rumors further support the idea that Microsoft itself sees the Nokia project as having failed. Which somewhat intelligent CEO of any carrier or operator will ever trust Stephen Elop, or Microsoft, or Steve Ballmer ever again? Why would they ever allow Windows Phone based smartphones to jeopardize their customer relationships? Especially when there is a highly desirable Android alternative, and the iPhone, and soon, this autumn, the Tizen OS from Intel and Samsung, with already four handset suppliers committed to it. The Windows dream of smartphones is now dying and money thrown by Nokia into this bottomless pit is money wasted.

We should have learned from the past disasters of 'partnering' with Microsoft in mobile, like Sendo, Motorola, Palm, Nortel, LG etc. Yes, Nokia is a dead man walking.

I did not think the bad news for Nokia could get any worse, but again, last week, it did.

About the Author
Tomi T Ahonen is a nine-time bestselling author of hardcover telecoms/tech books who has also released a series of multiple eBooks starting in 2009. An independent consultant and motivational speaker in the converging areas of mobile telecoms, internet, media, advertising, credit and banking, social networking and virtual reality, Tomi is based in Hong Kong. Mr Ahonen is credited as the father of several of the industry's most used theories, tools and concepts, and a founding member of several industry groups. Tomi Ahonen has been quoted in over 300 press articles starting with the Wall Street Journal, Financial Times, Business Week, Economist, etc and is regularly seen on TV; he writes several columns and articles to industry press every year. He blogs daily, twitters, and has profiles on Facebook and LinkedIn.