6 ms·

Nokia admits it rejected Android; eyes "billions" in revenue from WP7 deal

34 points by adolfoabegg 16y ago

chris_j 16y ago
It's not entirely clear what Elop means by "value transfer". My initial reading was that Microsoft would just be writing a big fat cheque to Nokia in exchange for Nokia using WP7. It sounds like it's actually something slightly more subtle but I wonder what it will boil down to.
- neworbit 16y ago
  It means "we can cut staff and save billions"
nazgulnarsil 16y ago
three viable ecosystems is better for consumers than two. it also forces more competition to be dev friendly since apps are a large part of each player's strategy.
- ekidd 16y ago
  I'm not entirely sure that 3 ecosystems will work out to the benefit of users. With just two platforms, there's a decent chance that top-selling apps will eventually be ported to both. But with 3 platforms, you'll see a lot more market fragmentation and picking of winners. Witness the Wii/XBox 360/PlayStation 3 mess. And because Windows 7 Mobile allegedly runs a dodgy version IE 7, we can't make portable applications using HTML 5, either. So we're really looking at something like 1985, when developers had to pick between DOS, the Apple IIe, the Mac, and the remnants of the 8-bit microcomputer market. In this market, the correct strategy was to support a single platform and hope that it won. Ironically, Microsoft ported Excel to a huge number of operating systems, and they were eaten alive by Lotus. They've never made the mistake of fragmenting their efforts again.
  - darklajid 16y ago
    Agreed. I love choice, but fragmentation is definitely an issue. On a sidenote: This "there are two, now with WP7 there are three contesters" is (by accident? intentionally?) completely ignoring HP/Web OS. So maybe we're talking "4 ecosystems" now, supporting your point even further.
    - stcredzero 16y ago
      Is even the Android ecosystem even viable? Or is it just "a platform we should also port to for completeness?"
  - nazgulnarsil 16y ago
    I'm sorry I fail to see how the wii/360/ps3 situation is a mess. the market is big enough for three players, hell it's big enough for several more given that games are bigger than movies.
credo 16y ago
>>"A decision to swing to Android would have tilted the mobile ecosystem in the direction of a duopoly, but we wanted to create a challenger," he said. It looks like he didn't explain why they wanted to create a "challenger". imo having three dominant players is better than having two dominant players. However, it would have been great to get Elop's thoughts on what benefits Nokia would get from creating a "challenger" and why a "duopoly" was not good for Nokia.
- ZeroGravitas 16y ago
  I think the Nokia decision was the right one for Nokia, but the given reasons are BS. Basically Nokia could have ended the smartphone war by joining with Android. But ironically, that makes them more valuable to Microsoft. This is just the same as Microsoft paying people to build apps for WP7, paying Verizon to use Bing, or paying devs not to release games on PS3 but on a massive, multi-billion dollar scale. It's a bit tragic when the greatest value your company can offer is to be paid to not join the dominant ecosystem in exchange for a cut of a desperate monopolist's war chest, but that's why you need to bring outsiders with no emotional attachment to your products in to do it. So basically he wanted to "create a challenger" because Microsoft would pay them handsomely to do so. And if it doesn't work out, it's not like Android is going anywhere, so they've got a Plan B. (Though to be honest I think they're currently splitting the company into two pieces, the bit that will wring any remaining revenue from Symbian then close, and the bit that Microsoft will buy once they've sacked anyone Microsoft doesn't need. Microsoft will then try the PlaysForSure -> Zune thing again.)
  - chalst 16y ago
    that makes them more valuable to Microsoft ... because Microsoft would pay them handsomely to do so So why did Nokia not get a better deal from Microsoft? The drop in Nokia's shares wasn't because they went for WP7, it's because they didn't get any kind of exclusivity deal.
    - rst 16y ago
      I'm not really sure we know what kind of deal they got; a lot depends on how those "billions of dollars" of payments are structured. For instance, the maps licensing deal: does this mean that Nokia will be getting royalties (for the mapping software) on sales of other manufacturers' handsets? If so, they haven't got an exclusive, but they do have a favored position. EDIT: if it's just advertising services, on the other hand, which is all Elop explicitly mentioned, then this does look pretty raw.
Toucan 16y ago
"Nokia was unable to give a firm timeframe on when its first WP7 phone would appear but it is hopeful for a launch before year end." I find this very telling. As far as I can tell, Google made the first public announcement of the Open Handset Alliance in November 2007 and HTC released the first handset in October 2008. Nokia and Microsoft who should both have more experience and resources specific to the mobile industry than HTC and Google did in 2007 are "hopeful" to even meet this timescale, let alone beat it. In a year, Nokia will have even further to catch up. I'll admit I may be underestimating the difficulty of getting a new device to market, but it seems to indicate an aversion to risk-taking which may set Nokia even further back than they need to be.
- jlgosse 16y ago
  Agreed. By the end of the year (early next year), we're going to have Android devices with 2, 3 and maybe 4-cores, as well as a version of Android that no one could guess at right now (2.4, 2.5, 3.0, 3.1, 4.0 maybe?). Apple is going to be the same way. I can't imagine Apple not announcing new iPhone(s) and a new iPad this year in order to compete, so anyone who isn't rocking new hardware by the end of the year is going to get left behind. I'm looking specifically at Nokia and RIM, whose current phones are so outdated that it'd be embarrassing NOT to release something spectacular this year.
  - nextparadigms 16y ago
    RIM has already "leaked" most of their planned high-end phones for this year, and none of them look spectacular.
jeffb 16y ago
"he also talked up the significant “value transfer” in financial terms that would come Nokia’s way as a result of reduced operating expenses and new revenue streams such as access to Microsoft’s search and advertising capabilities." Wouldn't these two "value transfers" have occurred with Google? Nokia's operating expenses might have been reduced even further if they'd gone with Android (free) instead of WP7 (which they are paying to use). Wouldn't Nokia have gained access to Google's search and advertising capabilities if they'd gone with Android? I don't know if Google or Microsoft is better for Nokia, but this article doesn't make it sound like Elop had any convincing reasons for his decision. It sounds like Nokia agreed to give Microsoft money (WP7 fees), but they haven't actually agreed on anything concrete that Microsoft will give Nokia yet?
- apetrovic 16y ago
  > Nokia's operating expenses might have been reduced even further if they'd gone with Android (free) instead of WP7 (which they are paying to use). MS fee is what? $10 per phone, probably less for Nokia? But, do anyone actually think that Android is free? Sure, it can be free if you're some cheap Chinese factory that just slaps the latest commit from Android repository on their handset, but key Google applications aren't open sourced, and to get them you need to make a deal with Google ("Google experience" apps, support, etc), which I doubt is free. On top of that, if Nokia wants to differentiate itself from said Chinese manufacturer, they need to build some custom UI on top of stock Android (which probably everyone will hate, but that's the way of doing things in Android world). And to support that UI on couple of future Android releases in timely fashion for each handset, to avoid angry mob with obsolete phones mere months after the purchase (SonyEricsson, I'm looking at you). Developers time aren't free, and Nokia is notoriously bad at making software, just look at their Symbian record.
  - sethg 16y ago
    Also, if some cheap Chinese manufacturer slaps the latest Android commit on their handset, Google makes money, because that phone is going to run Google searches and show Google ads.
Tichy 16y ago
They did it out of the goodness of their hearts, because it is better for the world if there isn't a duopoly? Yeah right...
teyc 16y ago
I spent some time today looking at youtube videos of Nokia's Symbian OS, and also looking through the shopping catalog. It just makes me reminisce the fact that Nokia makes good reliable phones. In contrast Hua Wei phones I saw don't have the same build quality. The Nokia wall papers are tastefully selected, but the standard Nokia fonts are looking a bit tired. I mean even Motif was good looking in its days, but human nature demands that these be refreshed regularly. Nokia would have done just as well selling Android or refreshing it's Symbian OS. Anyone care to explain what is wrong with Symbian? I own an Android now, but I would have bought a Nokia android if it was available. By the way, there is a long write up on what's wrong with Symbian and Nokia back in July 2010 by a Symbian-Guru.com editor as he decided to move to Android instead. http://www.symbian-guru.com/welcome/2010/07/symbian-guru-com-is-over.html http://www.symbian-guru.com/welcome/2010/07/symbian-guru-com...
- hessenwolf 16y ago
  I totally would have bought a Nokia android. WTF is a 'Samsung' anyway? Opportunity missed, and now I would happily buy a samsung again.
  - joelhaasnoot 16y ago
    Not sure about that. My significant other constantly complains about my phone, and I have to admit my Samsung Android phone is not rock solid. Yes, I'm running a 3rd party version of the OS, but the Samsung version was slow, buggy and two versions of Android behind. She switched from Android (ok, it was Samsung's first Android phone, and was pretty awful) to Nokia/Symbian and was very happy.
yaix 16y ago
> to sell any personal shares he still owned in Microsoft as soon as he was allowed. This is hilarious. The Nokia CEO inked a contract with his ex-employer MS that benefits MS hugely while still owning shares of MS. Um... what?! If it smells like a duck, and walks like a duck, and quacks like a duck... oh, well.
DavidBishop 16y ago
Honestly, it was a brilliant move by both Microsoft and Nokia. Microsoft dropped to 3% of the global market share for smartphones and Nokia's 2/3 market share dominance was nearly cut in half http://blog.cedowin.com/2011/01/mobile-future-taking-market-share-from.html http://blog.cedowin.com/2011/01/mobile-future-taking-market-.... Additionally, Android overtook the #1 sales spot in Q4 globally, (depending on who you get your numbers from). Nokia could have gone with Android, but why? There are already Android phones. Why be another number? The key to success is not to do what everyone else is doing but to do something different and find your niche. Microsoft touts itself as the "business" solution. This partnership of high quality hardware and business-minded software will set Nokia/Microsoft apart.
- axod 16y ago
  2 failing companies teaming up doesn't equal success in my book. Nokia could have started making great hardware again like they used to. They could have put Android on it, and done what HTC does. Unfortunately they haven't made a good phone in a long while.
- nextparadigms 16y ago
  Would you say the same thing to a PC manufacturer after Windows 95 came out? Like it or not, Android is already the "Windows" of the phone industry. Going with another OS, that ust happens to have the Windows name on it, but with a much smaller market and momentum, is a catastrophic mistake. What if this is going to be true a few years from now and Nokia fails with WP7 because the Android ecosystem assimilates everything. Will they still be able to go to Android? They'll be destroyed by then, and it will be way too late too switch. At least by going Android now, they would have a fighting chance, and would just need to become a competitive company again, which they haven't been for a while, even in hardware. Yes, the N8 looked pretty good, and the camera was nice, but that's about it.
brudgers 16y ago
One issue with Android which seems to have escaped mentioned is Oracle's lawsuit over Dalvik and concerns about how vigorously Google will ultimately defend the suit given the role Dalvik plays in their revenue model. Two years ago, adopting Android would not have come with the baggage that it does today.

34 points by adolfoabegg 16y ago

It's not entirely clear what Elop means by "value transfer". My initial reading was that Microsoft would just be writing a big fat cheque to Nokia in exchange for Nokia using WP7. It sounds like it's actually something slightly more subtle but I wonder what it will boil down to.

neworbit 16y ago
It means "we can cut staff and save billions"

nazgulnarsil 16y ago

three viable ecosystems is better for consumers than two. it also forces more competition to be dev friendly since apps are a large part of each player's strategy.

ekidd 16y ago
I'm not entirely sure that 3 ecosystems will work out to the benefit of users. With just two platforms, there's a decent chance that top-selling apps will eventually be ported to both. But with 3 platforms, you'll see a lot more market fragmentation and picking of winners. Witness the Wii/XBox 360/PlayStation 3 mess. And because Windows 7 Mobile allegedly runs a dodgy version IE 7, we can't make portable applications using HTML 5, either. So we're really looking at something like 1985, when developers had to pick between DOS, the Apple IIe, the Mac, and the remnants of the 8-bit microcomputer market. In this market, the correct strategy was to support a single platform and hope that it won. Ironically, Microsoft ported Excel to a huge number of operating systems, and they were eaten alive by Lotus. They've never made the mistake of fragmenting their efforts again.
- darklajid 16y ago
  Agreed. I love choice, but fragmentation is definitely an issue. On a sidenote: This "there are two, now with WP7 there are three contesters" is (by accident? intentionally?) completely ignoring HP/Web OS. So maybe we're talking "4 ecosystems" now, supporting your point even further.
  - stcredzero 16y ago
    Is even the Android ecosystem even viable? Or is it just "a platform we should also port to for completeness?"
- nazgulnarsil 16y ago
  I'm sorry I fail to see how the wii/360/ps3 situation is a mess. the market is big enough for three players, hell it's big enough for several more given that games are bigger than movies.

credo 16y ago

>>"A decision to swing to Android would have tilted the mobile ecosystem in the direction of a duopoly, but we wanted to create a challenger," he said. It looks like he didn't explain why they wanted to create a "challenger". imo having three dominant players is better than having two dominant players. However, it would have been great to get Elop's thoughts on what benefits Nokia would get from creating a "challenger" and why a "duopoly" was not good for Nokia.

ZeroGravitas 16y ago
I think the Nokia decision was the right one for Nokia, but the given reasons are BS. Basically Nokia could have ended the smartphone war by joining with Android. But ironically, that makes them more valuable to Microsoft. This is just the same as Microsoft paying people to build apps for WP7, paying Verizon to use Bing, or paying devs not to release games on PS3 but on a massive, multi-billion dollar scale. It's a bit tragic when the greatest value your company can offer is to be paid to not join the dominant ecosystem in exchange for a cut of a desperate monopolist's war chest, but that's why you need to bring outsiders with no emotional attachment to your products in to do it. So basically he wanted to "create a challenger" because Microsoft would pay them handsomely to do so. And if it doesn't work out, it's not like Android is going anywhere, so they've got a Plan B. (Though to be honest I think they're currently splitting the company into two pieces, the bit that will wring any remaining revenue from Symbian then close, and the bit that Microsoft will buy once they've sacked anyone Microsoft doesn't need. Microsoft will then try the PlaysForSure -> Zune thing again.)
- chalst 16y ago
  that makes them more valuable to Microsoft ... because Microsoft would pay them handsomely to do so So why did Nokia not get a better deal from Microsoft? The drop in Nokia's shares wasn't because they went for WP7, it's because they didn't get any kind of exclusivity deal.
  - rst 16y ago
    I'm not really sure we know what kind of deal they got; a lot depends on how those "billions of dollars" of payments are structured. For instance, the maps licensing deal: does this mean that Nokia will be getting royalties (for the mapping software) on sales of other manufacturers' handsets? If so, they haven't got an exclusive, but they do have a favored position. EDIT: if it's just advertising services, on the other hand, which is all Elop explicitly mentioned, then this does look pretty raw.

Toucan 16y ago

"Nokia was unable to give a firm timeframe on when its first WP7 phone would appear but it is hopeful for a launch before year end." I find this very telling. As far as I can tell, Google made the first public announcement of the Open Handset Alliance in November 2007 and HTC released the first handset in October 2008. Nokia and Microsoft who should both have more experience and resources specific to the mobile industry than HTC and Google did in 2007 are "hopeful" to even meet this timescale, let alone beat it. In a year, Nokia will have even further to catch up. I'll admit I may be underestimating the difficulty of getting a new device to market, but it seems to indicate an aversion to risk-taking which may set Nokia even further back than they need to be.

jlgosse 16y ago
Agreed. By the end of the year (early next year), we're going to have Android devices with 2, 3 and maybe 4-cores, as well as a version of Android that no one could guess at right now (2.4, 2.5, 3.0, 3.1, 4.0 maybe?). Apple is going to be the same way. I can't imagine Apple not announcing new iPhone(s) and a new iPad this year in order to compete, so anyone who isn't rocking new hardware by the end of the year is going to get left behind. I'm looking specifically at Nokia and RIM, whose current phones are so outdated that it'd be embarrassing NOT to release something spectacular this year.
- nextparadigms 16y ago
  RIM has already "leaked" most of their planned high-end phones for this year, and none of them look spectacular.

jeffb 16y ago

"he also talked up the significant “value transfer” in financial terms that would come Nokia’s way as a result of reduced operating expenses and new revenue streams such as access to Microsoft’s search and advertising capabilities." Wouldn't these two "value transfers" have occurred with Google? Nokia's operating expenses might have been reduced even further if they'd gone with Android (free) instead of WP7 (which they are paying to use). Wouldn't Nokia have gained access to Google's search and advertising capabilities if they'd gone with Android? I don't know if Google or Microsoft is better for Nokia, but this article doesn't make it sound like Elop had any convincing reasons for his decision. It sounds like Nokia agreed to give Microsoft money (WP7 fees), but they haven't actually agreed on anything concrete that Microsoft will give Nokia yet?

apetrovic 16y ago
> Nokia's operating expenses might have been reduced even further if they'd gone with Android (free) instead of WP7 (which they are paying to use). MS fee is what? $10 per phone, probably less for Nokia? But, do anyone actually think that Android is free? Sure, it can be free if you're some cheap Chinese factory that just slaps the latest commit from Android repository on their handset, but key Google applications aren't open sourced, and to get them you need to make a deal with Google ("Google experience" apps, support, etc), which I doubt is free. On top of that, if Nokia wants to differentiate itself from said Chinese manufacturer, they need to build some custom UI on top of stock Android (which probably everyone will hate, but that's the way of doing things in Android world). And to support that UI on couple of future Android releases in timely fashion for each handset, to avoid angry mob with obsolete phones mere months after the purchase (SonyEricsson, I'm looking at you). Developers time aren't free, and Nokia is notoriously bad at making software, just look at their Symbian record.
- sethg 16y ago
  Also, if some cheap Chinese manufacturer slaps the latest Android commit on their handset, Google makes money, because that phone is going to run Google searches and show Google ads.

Tichy 16y ago

They did it out of the goodness of their hearts, because it is better for the world if there isn't a duopoly? Yeah right...

teyc 16y ago

I spent some time today looking at youtube videos of Nokia's Symbian OS, and also looking through the shopping catalog. It just makes me reminisce the fact that Nokia makes good reliable phones. In contrast Hua Wei phones I saw don't have the same build quality. The Nokia wall papers are tastefully selected, but the standard Nokia fonts are looking a bit tired. I mean even Motif was good looking in its days, but human nature demands that these be refreshed regularly. Nokia would have done just as well selling Android or refreshing it's Symbian OS. Anyone care to explain what is wrong with Symbian? I own an Android now, but I would have bought a Nokia android if it was available. By the way, there is a long write up on what's wrong with Symbian and Nokia back in July 2010 by a Symbian-Guru.com editor as he decided to move to Android instead. http://www.symbian-guru.com/welcome/2010/07/symbian-guru-com-is-over.html http://www.symbian-guru.com/welcome/2010/07/symbian-guru-com...

hessenwolf 16y ago
I totally would have bought a Nokia android. WTF is a 'Samsung' anyway? Opportunity missed, and now I would happily buy a samsung again.
- joelhaasnoot 16y ago
  Not sure about that. My significant other constantly complains about my phone, and I have to admit my Samsung Android phone is not rock solid. Yes, I'm running a 3rd party version of the OS, but the Samsung version was slow, buggy and two versions of Android behind. She switched from Android (ok, it was Samsung's first Android phone, and was pretty awful) to Nokia/Symbian and was very happy.

yaix 16y ago

> to sell any personal shares he still owned in Microsoft as soon as he was allowed. This is hilarious. The Nokia CEO inked a contract with his ex-employer MS that benefits MS hugely while still owning shares of MS. Um... what?! If it smells like a duck, and walks like a duck, and quacks like a duck... oh, well.

DavidBishop 16y ago

Honestly, it was a brilliant move by both Microsoft and Nokia. Microsoft dropped to 3% of the global market share for smartphones and Nokia's 2/3 market share dominance was nearly cut in half http://blog.cedowin.com/2011/01/mobile-future-taking-market-share-from.html http://blog.cedowin.com/2011/01/mobile-future-taking-market-.... Additionally, Android overtook the #1 sales spot in Q4 globally, (depending on who you get your numbers from). Nokia could have gone with Android, but why? There are already Android phones. Why be another number? The key to success is not to do what everyone else is doing but to do something different and find your niche. Microsoft touts itself as the "business" solution. This partnership of high quality hardware and business-minded software will set Nokia/Microsoft apart.

axod 16y ago
2 failing companies teaming up doesn't equal success in my book. Nokia could have started making great hardware again like they used to. They could have put Android on it, and done what HTC does. Unfortunately they haven't made a good phone in a long while.
nextparadigms 16y ago
Would you say the same thing to a PC manufacturer after Windows 95 came out? Like it or not, Android is already the "Windows" of the phone industry. Going with another OS, that ust happens to have the Windows name on it, but with a much smaller market and momentum, is a catastrophic mistake. What if this is going to be true a few years from now and Nokia fails with WP7 because the Android ecosystem assimilates everything. Will they still be able to go to Android? They'll be destroyed by then, and it will be way too late too switch. At least by going Android now, they would have a fighting chance, and would just need to become a competitive company again, which they haven't been for a while, even in hardware. Yes, the N8 looked pretty good, and the camera was nice, but that's about it.

brudgers 16y ago

One issue with Android which seems to have escaped mentioned is Oracle's lawsuit over Dalvik and concerns about how vigorously Google will ultimately defend the suit given the role Dalvik plays in their revenue model. Two years ago, adopting Android would not have come with the baggage that it does today.