11 ms·

Nokia Projects Disastrous Losses as Shares Plunge 17%

53 points by ytNumbers 15y ago

r00fus 15y ago
"No one could have predicted..." Classic head-in-the-sand, barely-reactive executive "leadership". Is this what Microsoft and the Nokia BoD planned when they hired Elop, who scrapped Meego and their N9 (now N900 running WP7) and wiped out their entire existing "burning platform" revenue stream from Symbian? This was all planned - it's not a disaster. The problem is, the plans may have been too successful.
- ticks 15y ago
  When you say planned, do you mean for Microsoft to eventually purchase Nokia on the cheap, or to simply obliterate them?
  - AJ007 15y ago
    May be the plan was just "get a competitor out of the way." Whether they end up buying them or putting them out of business and purchasing all their patents doesn't matter. Though, hopefully for Microsoft, someone else doesn't beat them out on the latter.
  - vladd 15y ago
    Simply obliterating them kills Windows Phone for good, I cannot imagine M$ wanting such things.
  - r00fus 15y ago
    The plan was to obliterate Symbian and replace it with Windows Phone. Symbian probably died faster than they planned.
  - moylan 15y ago
    i thought it was to buy nokias patents at a knock down price later.
hkmurakami 15y ago
"Shipments of Symbian devices are declining faster than we anticipated" Why management thought that consumers considering a Nokia smartphone (perhaps generously?) over a bevy of competitors would pull the trigger instead of waiting until a Windows8 phone is ready.
- nextparadigms 15y ago
  Why would Windows Phone 8 make any difference? I don't think announcing they will go WP7 is what killed their Symbian market. It would've died anyway. They've lost more than half their market share in China last year alone. Android has a market share of almost 70% in China now: http://www.reuters.com/article/2012/04/10/net-us-android-apple-idUSBRE8390AK20120410 http://www.reuters.com/article/2012/04/10/net-us-android-app...
  - pagekalisedown 15y ago
    Seems like they hitched their wagon to the wrong horse going with WP7 over Android.
    - kooshball 15y ago
      Your logic seems a little off there. Just because Andriod has gained a huge market share in China does not imply Nokia would have sold a lot of phones if they have gone with Andriod.
      - redthrowaway 15y ago
        I don't think his claim was predicated on the success of Android in China, but rather upon the general success of OEMs shipping Android phones. It has users and an ecosystem which WP7, interesting though it is, can't claim. Many people would have lept at a Nokia smartphone running Android, given the consumer goodwill they've built up over the years. Few seem willing to do so for Nokias running WP7. Android was a proven platform with wide adoption when they announced their support for WP7; their decision to hitch their wagon to MS can only be seen as a grave mistake. Maybe things will turn around, but it doesn't look likely at this point.
mtkd 15y ago
The full impact of a recession for a couple of quarters is usually not felt until several years later. What we're seeing with Nokia, BestBuy etc. is the companies that didn't adapt facing extinction. It should be happening to more - but they're being propped up artificially - that can't be sustained indefinitely. If you think the valuation for Instagram was wild - look at their metric trends against these monoliths. "but Instagram don't make anything" - in the western world we don't really need to consume physical products so much any more - I've got 5+ TVs in the house and 3 fridges - our consumption is moving to non-physical products.
- deleted 15y ago
  [deleted]
- loverobots 15y ago
  Nokia did adapt, it made one hell of a move backed by lots of Microsoft and AT&T cash for promotions and had /has a special relationship with Microsoft. Their native OS was no where near ready and being another Android phone maker wasn't appealing (Other than Samsung, is anyone else making money on Android?). Sometimes, it just doesn't work out.
  - huggyface 15y ago
    Other than Samsung, is anyone else making money on Android? HTC? Somehow the myth that HTC is losing money has become a meme, when actually HTC is doing gangbusters, just not as handsomely as they did before Samsung started soaking up Apple-like profits. I suspect HTC will do quite well on the backs of the One X and One S. Motorola would have long been a gravestone if not for Android. So would have SE and LG. Most reviews of the last Symbian phone saw it as a quickly evolving, credible device. Elop seemed to give up right when it was coming to fruition.
    - loverobots 15y ago
      You are right on HTC, they still made a respectable profit last quarter ($150mm.) A couple of their earnings warnings must have started the meme, I fell for it http://news.cnet.com/8301-1035_3-57410404-94/htc-earnings-sales-felled-by-heavy-smartphone-competition/ http://news.cnet.com/8301-1035_3-57410404-94/htc-earnings-sa... It remains to be seen if earnings hold up though, as they are essentially just another phone make for Google. Elop could have done a few Android lines to hold the decline while working on the Symbian at the same time, I agree. But then any promotion and development would have been borne by Nokia. Granted they'd own Symbian but it's worth would have been questionable (see WebOS as one possibility.) If it doesn't work people will question the wisdom but, IMO, going with Windows was a good bet given the circumstances. I am rooting for them and for lots of Android and WebOS forks. I like Nokia, I like their products and the fact that they did a totally new design for Lumnia, when cloning is fashionable today. If you look around Youtube you will see videos of their phone surviving falls, run over by cars, submerging in water etc.
bnolsen 15y ago
"Nokia's challenges have been exacerbated by rampant competition - notably from Apple and Samsung who are extracting a disproportionate amount of margin from the industry at present," Disproportionately high or low ? I guess what they are saying is that smartphone profitability is falling due to lower margins. MS/Nokia are in huge trouble, especialy after seeing that report that google makes almost no money off smartphones. It seems the only way for Nokia/MS to really compete with google is to also make no money. Sounds like Nokia is now in the wrong business.
- excuse-me 15y ago
  "competition" - that's the solution then. Once RIM have managed to destroy themselves in the corporate world you are left with the choice of buy Microsoft MSFT's only hope in mobile, and their only reason for going there is to be the standard business solution - the only one that works with MS-exchange, MS-domain-emperor(or whatever it's called today) and MS-office cloud. Once you ensure that corporates/government only allow MS mobile devices onto their networks you have a pretty nice market sewn up. And one that doesn't care about price and buys new kit regularly The only tricky bit is persuading all those corporate and government customers that they haven't had a perfectly workable blackberry solution for years, and that they shouldn't save money by allowing workers to use their own iPhones.
  - Duff 15y ago
    You're thinking in terms of a 2005 business model. Even government organizations are buying lots of iPhones, even though Apple is an obnoxious vendor for those organizations to deal with. Microsoft sells stuff these days by bundling product licensing. So unless Apple does something really dumb, you're not going to see enterprises mandating anything Microsoft mobile other than ActiveSync anytime soon.
    - AutoCorrect 15y ago
      ehh, Microsoft will fall back on the old tried and true: Change apis for each successive version of Exchange, and make minor api changes during patches - just enough to cause Apple products to work inconsistently, and make sure Windows Phone X stays up to date with the changes. Corporations are too stupid as a group to see what's being done to them, so they will drop Apple like yesterday's news and join the Microsoft death-cult.
forgottenpaswrd 15y ago
I said it before, and I have not changed my opinion: In the Microsoft -Nokia agreement Microsoft wins disproportionately and Nokia loses even if it wins. If Nokia wins e.g with tablets, other companies will use Windows, if it loses stock price goes down and Microsoft buys it(now officially) for cheap. Elop looked and looks like a MS insider designed for the transition from Nokia to Microsoft subsidiary. Funny how Samsumg and Apple margins are "disproportionate" when Nokia used to carry those margins with their high quality phones.
- buu700 15y ago
  Microsoft buys it(now officially) I wonder what the implications would be for Qt and KDE. I know Microsoft has made some Linux commits in the past (in regards to its own interests), but I can't imagine how it would justify actively developing a product which has no place on Windows Phone (yet?) and only serves to weaken Windows' stranglehold on the desktop.
  - JoshTriplett 15y ago
    Take a look at the KDE Free Qt Foundation: http://www.kde.org/community/whatiskde/kdefreeqtfoundation.php http://www.kde.org/community/whatiskde/kdefreeqtfoundation.p...
    - buu700 15y ago
      Yep, I'm familiar with that, but licensing isn't what I'm concerned about (LGPL is pretty permissive as-is; this agreement was mostly relevant in the days of Trolltech when Qt was GPL/commercial). My main concern is that, despite the open governance, to my knowledge the development and direction of Qt is still primarily driven by employees of Nokia. I'm sure Qt would still do a fine job of existing and evolving under the leadership of KDE contributors, but it would nevertheless be a major blow to the framework to see so much talent whisked away at this critical time.
HTelrunya 15y ago
1. Android would be short term profits. Let's just take Chinese market. China has 70% Android. Now, I am coming to the market and building a new Android phone. It's awesome and everything but how do I stand apart from HTC, Samsung, Moto and low cost options like ZTE? Imagine a Lumia running Android. Would I be able to beat HTC and Moto and Samsung with that? 2. I guess we will start seeing the Nokia MS partnership success going forward when Nokia really has a chance of adding value to MS products. I agree that Nokia took on the insane task of reviving themselves as well as MS. But if they can get some sort of adoption with WP7, they can continue to survive and add value to the ecosystem going forward with WP8. They have to continue on life support until their true strategy kicks in to place.
- Tuna-Fish 15y ago
  > I guess we will start seeing the Nokia MS partnership success going forward when Nokia really has a chance of adding value to MS products. I doubt that. The biggest change was that the mobile devices turned from devices (that people buy and use, but rarely get 3rd-party software for) into platforms (that people buy to have access to 3rd-party software). The big difference is that there are not that much positive externalities for market share for devices, but positive network effects absolutely determine the platform market. That's why Windows rules the desktop, and that is why Android will do so in the handset. I predict that all competitors will effectively be dead in 2 years, and only Android and iOS remain.
- AutoCorrect 15y ago
  what's funny is that MS is probably making more off the Android market than the WinPhone market - all they have to do is threaten a patent lawsuit, and suddenly they're making a couple of dollars for every Android phone a vendor makes.
- gareim 15y ago
  The argument against Android has always been that manufacturers using it have no power over their users. By that, I mean that customers could pick up another brand and it would still be Android. I remember reading some tech sites opinions on the Nokia-WP7 strategy and how the benefit was that it would give Nokia that edge that separates it from being just another manufacturer. But if Nokia is successful and WP dominates, what's to stop everyone else from using WP as well? I guess skinning it, which is one of Nokia's rights in the Nokia-Microsoft deal, but that's like what HTC is doing with Sense and Samsung with TouchWiz. It's not as if a skin will really give you an edge. The only real way to have won is to have your own OS and to be in control it. Meego might have worked better for Nokia than WP7 long-term since Nokia could influence the direction Meego was going in.
asmithmd1 15y ago
Did anyone else see how they executed on the launch of the new product that if not successful the company will die: http://www.forbes.com/sites/ericsavitz/2012/04/09/the-very-strange-easter-sunday-launch-of-the-nokia-lumia-900/ http://www.forbes.com/sites/ericsavitz/2012/04/09/the-very-s... Most stores closed on Easter Sunday and recordings talking about the iPhone 4S. I would say Nokia is done.
- deleted 15y ago
  [deleted]
  - daliusd 15y ago
    People are already doing that with their iPads. I'm not sure if there is need for that.
joejohnson 15y ago
I wonder how much of this is related to the bug and subsequent price drop for the Lumia 900. I was hoping for this phone to become a successful competitor to Android in the lower-end smartphone market.
nextstep 15y ago
This will make Nokia even cheaper when Microsoft decides to buy them. This whole scenario reminds me of an old editorial cartoon which lampooned two companies (HP maybe?) as two sinking ships tossing a rope to each other.
sekou 15y ago
I don't know how much market share Apple has in India or the more prosperous African countries, but without selling any kind of low-priced/low-tech phone Apple doesn't compete at all with Nokia or Samsung in that market segment. I wonder if Nokia is talking about lower sales specifically in the smartphone segment or lower sales due to "competition" in other segments as well.

53 points by ytNumbers 15y ago

"No one could have predicted..." Classic head-in-the-sand, barely-reactive executive "leadership". Is this what Microsoft and the Nokia BoD planned when they hired Elop, who scrapped Meego and their N9 (now N900 running WP7) and wiped out their entire existing "burning platform" revenue stream from Symbian? This was all planned - it's not a disaster. The problem is, the plans may have been too successful.

ticks 15y ago
When you say planned, do you mean for Microsoft to eventually purchase Nokia on the cheap, or to simply obliterate them?
- AJ007 15y ago
  May be the plan was just "get a competitor out of the way." Whether they end up buying them or putting them out of business and purchasing all their patents doesn't matter. Though, hopefully for Microsoft, someone else doesn't beat them out on the latter.
- vladd 15y ago
  Simply obliterating them kills Windows Phone for good, I cannot imagine M$ wanting such things.
- r00fus 15y ago
  The plan was to obliterate Symbian and replace it with Windows Phone. Symbian probably died faster than they planned.
- moylan 15y ago
  i thought it was to buy nokias patents at a knock down price later.

hkmurakami 15y ago

"Shipments of Symbian devices are declining faster than we anticipated" Why management thought that consumers considering a Nokia smartphone (perhaps generously?) over a bevy of competitors would pull the trigger instead of waiting until a Windows8 phone is ready.

nextparadigms 15y ago
Why would Windows Phone 8 make any difference? I don't think announcing they will go WP7 is what killed their Symbian market. It would've died anyway. They've lost more than half their market share in China last year alone. Android has a market share of almost 70% in China now: http://www.reuters.com/article/2012/04/10/net-us-android-apple-idUSBRE8390AK20120410 http://www.reuters.com/article/2012/04/10/net-us-android-app...
- pagekalisedown 15y ago
  Seems like they hitched their wagon to the wrong horse going with WP7 over Android.
  - kooshball 15y ago
    Your logic seems a little off there. Just because Andriod has gained a huge market share in China does not imply Nokia would have sold a lot of phones if they have gone with Andriod.
    - redthrowaway 15y ago
      I don't think his claim was predicated on the success of Android in China, but rather upon the general success of OEMs shipping Android phones. It has users and an ecosystem which WP7, interesting though it is, can't claim. Many people would have lept at a Nokia smartphone running Android, given the consumer goodwill they've built up over the years. Few seem willing to do so for Nokias running WP7. Android was a proven platform with wide adoption when they announced their support for WP7; their decision to hitch their wagon to MS can only be seen as a grave mistake. Maybe things will turn around, but it doesn't look likely at this point.

mtkd 15y ago

The full impact of a recession for a couple of quarters is usually not felt until several years later. What we're seeing with Nokia, BestBuy etc. is the companies that didn't adapt facing extinction. It should be happening to more - but they're being propped up artificially - that can't be sustained indefinitely. If you think the valuation for Instagram was wild - look at their metric trends against these monoliths. "but Instagram don't make anything" - in the western world we don't really need to consume physical products so much any more - I've got 5+ TVs in the house and 3 fridges - our consumption is moving to non-physical products.

deleted 15y ago
[deleted]
loverobots 15y ago
Nokia did adapt, it made one hell of a move backed by lots of Microsoft and AT&T cash for promotions and had /has a special relationship with Microsoft. Their native OS was no where near ready and being another Android phone maker wasn't appealing (Other than Samsung, is anyone else making money on Android?). Sometimes, it just doesn't work out.
- huggyface 15y ago
  Other than Samsung, is anyone else making money on Android? HTC? Somehow the myth that HTC is losing money has become a meme, when actually HTC is doing gangbusters, just not as handsomely as they did before Samsung started soaking up Apple-like profits. I suspect HTC will do quite well on the backs of the One X and One S. Motorola would have long been a gravestone if not for Android. So would have SE and LG. Most reviews of the last Symbian phone saw it as a quickly evolving, credible device. Elop seemed to give up right when it was coming to fruition.
  - loverobots 15y ago
    You are right on HTC, they still made a respectable profit last quarter ($150mm.) A couple of their earnings warnings must have started the meme, I fell for it http://news.cnet.com/8301-1035_3-57410404-94/htc-earnings-sales-felled-by-heavy-smartphone-competition/ http://news.cnet.com/8301-1035_3-57410404-94/htc-earnings-sa... It remains to be seen if earnings hold up though, as they are essentially just another phone make for Google. Elop could have done a few Android lines to hold the decline while working on the Symbian at the same time, I agree. But then any promotion and development would have been borne by Nokia. Granted they'd own Symbian but it's worth would have been questionable (see WebOS as one possibility.) If it doesn't work people will question the wisdom but, IMO, going with Windows was a good bet given the circumstances. I am rooting for them and for lots of Android and WebOS forks. I like Nokia, I like their products and the fact that they did a totally new design for Lumnia, when cloning is fashionable today. If you look around Youtube you will see videos of their phone surviving falls, run over by cars, submerging in water etc.

bnolsen 15y ago

"Nokia's challenges have been exacerbated by rampant competition - notably from Apple and Samsung who are extracting a disproportionate amount of margin from the industry at present," Disproportionately high or low ? I guess what they are saying is that smartphone profitability is falling due to lower margins. MS/Nokia are in huge trouble, especialy after seeing that report that google makes almost no money off smartphones. It seems the only way for Nokia/MS to really compete with google is to also make no money. Sounds like Nokia is now in the wrong business.

excuse-me 15y ago
"competition" - that's the solution then. Once RIM have managed to destroy themselves in the corporate world you are left with the choice of buy Microsoft MSFT's only hope in mobile, and their only reason for going there is to be the standard business solution - the only one that works with MS-exchange, MS-domain-emperor(or whatever it's called today) and MS-office cloud. Once you ensure that corporates/government only allow MS mobile devices onto their networks you have a pretty nice market sewn up. And one that doesn't care about price and buys new kit regularly The only tricky bit is persuading all those corporate and government customers that they haven't had a perfectly workable blackberry solution for years, and that they shouldn't save money by allowing workers to use their own iPhones.
- Duff 15y ago
  You're thinking in terms of a 2005 business model. Even government organizations are buying lots of iPhones, even though Apple is an obnoxious vendor for those organizations to deal with. Microsoft sells stuff these days by bundling product licensing. So unless Apple does something really dumb, you're not going to see enterprises mandating anything Microsoft mobile other than ActiveSync anytime soon.
  - AutoCorrect 15y ago
    ehh, Microsoft will fall back on the old tried and true: Change apis for each successive version of Exchange, and make minor api changes during patches - just enough to cause Apple products to work inconsistently, and make sure Windows Phone X stays up to date with the changes. Corporations are too stupid as a group to see what's being done to them, so they will drop Apple like yesterday's news and join the Microsoft death-cult.

forgottenpaswrd 15y ago

I said it before, and I have not changed my opinion: In the Microsoft -Nokia agreement Microsoft wins disproportionately and Nokia loses even if it wins. If Nokia wins e.g with tablets, other companies will use Windows, if it loses stock price goes down and Microsoft buys it(now officially) for cheap. Elop looked and looks like a MS insider designed for the transition from Nokia to Microsoft subsidiary. Funny how Samsumg and Apple margins are "disproportionate" when Nokia used to carry those margins with their high quality phones.

buu700 15y ago
Microsoft buys it(now officially) I wonder what the implications would be for Qt and KDE. I know Microsoft has made some Linux commits in the past (in regards to its own interests), but I can't imagine how it would justify actively developing a product which has no place on Windows Phone (yet?) and only serves to weaken Windows' stranglehold on the desktop.
- JoshTriplett 15y ago
  Take a look at the KDE Free Qt Foundation: http://www.kde.org/community/whatiskde/kdefreeqtfoundation.php http://www.kde.org/community/whatiskde/kdefreeqtfoundation.p...
  - buu700 15y ago
    Yep, I'm familiar with that, but licensing isn't what I'm concerned about (LGPL is pretty permissive as-is; this agreement was mostly relevant in the days of Trolltech when Qt was GPL/commercial). My main concern is that, despite the open governance, to my knowledge the development and direction of Qt is still primarily driven by employees of Nokia. I'm sure Qt would still do a fine job of existing and evolving under the leadership of KDE contributors, but it would nevertheless be a major blow to the framework to see so much talent whisked away at this critical time.

HTelrunya 15y ago

1. Android would be short term profits. Let's just take Chinese market. China has 70% Android. Now, I am coming to the market and building a new Android phone. It's awesome and everything but how do I stand apart from HTC, Samsung, Moto and low cost options like ZTE? Imagine a Lumia running Android. Would I be able to beat HTC and Moto and Samsung with that? 2. I guess we will start seeing the Nokia MS partnership success going forward when Nokia really has a chance of adding value to MS products. I agree that Nokia took on the insane task of reviving themselves as well as MS. But if they can get some sort of adoption with WP7, they can continue to survive and add value to the ecosystem going forward with WP8. They have to continue on life support until their true strategy kicks in to place.

Tuna-Fish 15y ago
> I guess we will start seeing the Nokia MS partnership success going forward when Nokia really has a chance of adding value to MS products. I doubt that. The biggest change was that the mobile devices turned from devices (that people buy and use, but rarely get 3rd-party software for) into platforms (that people buy to have access to 3rd-party software). The big difference is that there are not that much positive externalities for market share for devices, but positive network effects absolutely determine the platform market. That's why Windows rules the desktop, and that is why Android will do so in the handset. I predict that all competitors will effectively be dead in 2 years, and only Android and iOS remain.
AutoCorrect 15y ago
what's funny is that MS is probably making more off the Android market than the WinPhone market - all they have to do is threaten a patent lawsuit, and suddenly they're making a couple of dollars for every Android phone a vendor makes.
gareim 15y ago
The argument against Android has always been that manufacturers using it have no power over their users. By that, I mean that customers could pick up another brand and it would still be Android. I remember reading some tech sites opinions on the Nokia-WP7 strategy and how the benefit was that it would give Nokia that edge that separates it from being just another manufacturer. But if Nokia is successful and WP dominates, what's to stop everyone else from using WP as well? I guess skinning it, which is one of Nokia's rights in the Nokia-Microsoft deal, but that's like what HTC is doing with Sense and Samsung with TouchWiz. It's not as if a skin will really give you an edge. The only real way to have won is to have your own OS and to be in control it. Meego might have worked better for Nokia than WP7 long-term since Nokia could influence the direction Meego was going in.

asmithmd1 15y ago

Did anyone else see how they executed on the launch of the new product that if not successful the company will die: http://www.forbes.com/sites/ericsavitz/2012/04/09/the-very-strange-easter-sunday-launch-of-the-nokia-lumia-900/ http://www.forbes.com/sites/ericsavitz/2012/04/09/the-very-s... Most stores closed on Easter Sunday and recordings talking about the iPhone 4S. I would say Nokia is done.

deleted 15y ago
[deleted]
- daliusd 15y ago
  People are already doing that with their iPads. I'm not sure if there is need for that.

joejohnson 15y ago

I wonder how much of this is related to the bug and subsequent price drop for the Lumia 900. I was hoping for this phone to become a successful competitor to Android in the lower-end smartphone market.

nextstep 15y ago

This will make Nokia even cheaper when Microsoft decides to buy them. This whole scenario reminds me of an old editorial cartoon which lampooned two companies (HP maybe?) as two sinking ships tossing a rope to each other.

sekou 15y ago

I don't know how much market share Apple has in India or the more prosperous African countries, but without selling any kind of low-priced/low-tech phone Apple doesn't compete at all with Nokia or Samsung in that market segment. I wonder if Nokia is talking about lower sales specifically in the smartphone segment or lower sales due to "competition" in other segments as well.