MWC 2011 The first non-Finnish president of Nokia confirmed that he’s not a plant for Microsoft and that he intends to sell his MS shares. This is after a heckler asked CEO Stephen Elop: "Are you a Trojan Horse?" after the Canadian's keynote speech at Mobile World Congress. Elop was then questioned about his share-holdings in both Microsoft and Nokia.
He countered he had been divesting himself of shares he held in Microsoft when the negotiations had started and, as this was having a material effect on the value of both companies, he had to halt his sales for regulatory reasons. Similarly he was not allowed to buy Nokia shares beyond those granted to him as part of his package. He promised that once the regulatory hurdles were cleared he would sell the rest of his Microsoft holding and buy into Nokia as a statement of faith.
Elop said that he sees the solid, long-term deal between MS and his new employer as making an MS takeover of Nokia less likely. He said the partnership gives Microsoft the smartphone space they want without having to get involved in mass-market phones and science experiments for the future. Such projects have been declared as the other major direction for Nokia.
Elop made no bones about the scale of the shake-up, which he says is worth billions of dollars to Nokia’s bottom line. Much of it coming in cost savings by a significant scaling down of the Nokia software side. “Does, Nokia understand the significant OPEX reductions necessary?", he asked. "Absolutely”.
But the cull of senior management isn’t going to continue. It might not have been as great as was predicted but don’t expect there to be further tranches of executive exits.
A major part of the decision to go Windows rather than Android was Nokia’s role in the “swing factor”, Elop said. Long and serious consideration was given to the Google platform with detailed discussions with both Microsoft and Google. Part of the rationale was the “effect on the mobile industry”, said the CEO. Elop said that going with Google would have created a duopoly of Apple and Google. Teaming up with Microsoft turns it into a “three-horse race”.
RIM, it seems is not a nag to worry about. No mention has been made of the technical merits of any of the platforms – burning or not.
That effect on the industry is exactly what the mobile operators want. They have become increasingly worried about the value they consider theirs being sucked into the pockets of Apple and Google. In closed rooms they had already decided supporting Microsoft and Nokia – separately or together – was the solution to this problem. The ability to sell Microsoft and Nokia applications and content through the operator portal – driven from a central Nokia/Microsoft-run database – is exactly what they want. Developers can submit their applications to one and propagate through all the routes to market. A significant part of this element of the deal is Nokia’s operator billing relationship, which allows consumers to pay for downloads through their phone bill on around 100 operators.
As much as consumers might want the latest shiny Apple or Google phone, it’s the difference between “customers” and “consumers” that matters. Consumers are individuals, people who pay a phone bill. Customers are companies who buy handsets in bulk to re-sell, the ones who send out the bills. Customers buy 80 per cent of the mid- to high-end handsets in the world and keeping them happy is a new battle for Nokia, which five years ago was in the position Apple is in today. Customers have to take the product consumers want. This isn’t about Microsoft and Nokia against Apple and Google but about Microsoft, Nokia and most of the major networks against Apple and Google.
In many of the emerging markets consumers have more sway, and phones are bought SIM-free.
Nokia will have new low end phones for them, with S30 and S40 becoming more feature rich and something new coming in below.
Before we see the first Nokia Windows Phone 7 – no date announced but with a lot of pressure to make it this year – there is a lot of housekeeping to take care of. We’ll see new, faster Symbian phones with UI improvements including a new look and feel. Developer support which had been scattered around the world will be centralised. This is portrayed as being better for developers rather than a lowering of costs.
As the platforms burn, QT is toast. There will be an installed base of 250 million Symbian phones running QT, but that’s not a good enough reason to fragment Windows Phone by adding a QT fork.
Microsoft might be Nokia’s new BFF, but last year it was Intel they were jumping into bed with. The product of that might well contain Intel rather than ARM DNA. There will be one MeeGo product this year and after that it is a wait-and-see. One spokesman said it depends on how the one product does. If it is a hit like the N900 there may be more, he said. If it is “nice, but I don’t want one”, like the N810, there won’t be any more. He wouldn’t be drawn on the processor.
MeeGo was devised as an entry into the mobile space for the Intel Atom, with ARM-based versions paving the way. It would be cruel if the only MeeGo device to ship was ARM-based.
Building phones that Americans like has always been a struggle for European manufacturers. The Windows Phone news has, however, been received very well by Nokia’s US sales force. Perhaps it is not Elop who is the Trojan horse but Windows Mobile, allowing Nokia to break into the US. ®