Brutal truth about Lumia: Windows Phone strategy doomed for beleaguered Nokia

“The facts get ever worse about the Microsoft Windows Phone strategy for Nokia and its Lumia line of smartphones,” Tomi Ahonen writes for Communities Dominate Brands. “We have just seen the brand new market share numbers from the UK by Kantar Worldpanel. And first, here is the ‘logic’ of the Windows Phone strategy for Nokia. The assumption was, that while Symbian sales saw a gradual erosion of market share (a couple of points of market share per year lost), if new CEO Stephen Elop stepped in while Nokia was still on top, and quickly changed the operating system away from the declining Symbian to another (could have been Nokia’s own Linux based and open source MeeGo or Google’s also Linux based and also open source Android or the proprietary and very closed Microsoft Windows Phone), he could stop the bleeding and stabilize the Nokia smartphone market share.”

“I wrote on this blog a year ago, that I expect[ed] year 2012 to see a 1 to 1 conversion, as Symbian declines, the Windows Phone (ie Lumia) smartphones by Nokia will replace them. For every Symbian lost there will be 1 for 1 a Windows Phone gain by Nokia,” Ahonen writes. “That was a reasonable assumption. That is now proven not to be true. Nokia lost one third of its last remaining loyal customer base, when trying to force them to take Lumia smartphones over the past five months.”

Ahonen writes, “So also, we have very interesting views to Microsoft. Its not that Nokia somehow needed Microsoft to survive, clearly the Microsoft strategy is suffocating Nokia and killing its customer relationship. But look at Microsoft in the past year and a half, according to the Kantar numbers. Look how massively Microsoft is collapsing without Nokia. It really is true, that Nokia is Microsoft’s last gasp in mobile and without Nokia Microsoft would have been eliminated from the game by now.”

Read more in the full article here.

[Thanks to MacDailyNews Readers “Dale S.” and “Wingsy” for the heads up.]

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Lumia a loser: Brokerage firm slashes sales estimates on Nokia’s flagship Windows Phone – December 16, 2011
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Beleaguered Nokia shares fall on anemic ‘Lumia’ Windows Phone sales – November 22, 2011
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How Microsoft’s Windows Phone ’07 can beat Apple’s iPhone in market share – April 9, 2011

37 Comments

  1. My Goodness!

    “….It really is true, that Nokia is Microsoft’s last gasp in mobile and without Nokia Microsoft would have been eliminated from the game by now.”

    THAT is brutal reality. And so true.

    The “Death Rattle” is almost here.

  2. > “For every Symbian lost there will be 1 for 1 a Windows Phone gain by Nokia,” Ahonen writes. “That was a
    reasonable assumption.”

    How is that a reasonable assumption? If Nokia makes a drastic OS change to Windows Phone, there is nothing keeping the customer from making a drastic change to the well-established iPhone or Android. The Nokia Windows Phone becomes just another (less desirable) choice.

    1. What Consumers Think When buying a Phone:

      Cost of unit / Contracts / Terms of Use.
      Functionality / Reliability / Flexibility / Security.

      I believe those are the considerations in order of priorities for most who buy a phone.

      However in Asia the game is completely different. These consumers hold a much larger and broader market potential. A phone in these areas is regarded as a higher necessity value to life to these people, more so then a a pair of running shoes. So long they can afford the phone. A phone is regarded as the ultimate freedom. Their is this true need for a cheaper cellphone option from Apple. Cheaper does not need to mean poor workmanship. Sadly, Android and Samsung’s low cost cheap useless junk fits this type of market. Does Apple wish to contend here? I am not sure.

      If Apple cares enough to enter this sector of the market; it needs to keep that promise, “the computer for the rest of us” yet in terms of a phone for the rest of us the iPhone is not really it – not for them. Unless an iPhone4s is sold for 1000 yen.

      Apple can not expect that market to buy old discounted phones at such high prices. The iPhone3Gs is not the answer here, it is seen as a soon to be obsolete phone lacking upgradability and support from Apple. And it does not fit the situations for the carriers in Asia either without modifications adding cost to the phone..

      Nor can Apple hope to wait it out for the the iPhone4s to arrive to the same status the iPhone3s is in now. Supply discounted older models or refurbished products is no solution. This market is different and Apple does need to offer a different phone.

      I could see Apple solving this with a high quality-simplified-phone.
      Basic functionality of a Smartphone – a camera, open sim and open terms of use, no contracts. Perhaps with basic Siri services, like on board voice controls to set alarms and calendars, saving and calling contacts – perhaps voice texting to win it over all. They love texting.

      The question is will Apple enter this arena?
      And if so, will we see a new super-simlified-smart phone.

      1. I agree mostly with your comment, however, you forget one important thing….

        Many people here do not have the means to buy a smartphone. Take Thailand as an example. Average worker-income is 6000 baht/month while an iPhone 4 cost around 22000 Baht without contract.

        Now, many people do have an expensive smartphone, but how do they pay for that?

        The answer is: Trade-in, 2nd hand phone business is a very large market here. People trade in their old phone, pay some extra and go up the next level.

        So there is a very large market for the last-year model. People will buy it. They trade in their old Nokia, pay extra and want to get into the Apple game.
        The phones are typically loaded with games and other stuff that’s installed at the shop, they do not (mostly) even have an apple id…all they care about is to have that iPhone and the applications on it.

        If they want something new or different, they will go back to that shop and ask for it.

        So you can imagine that there’s a very different market here when it comes to applications. Illegal in most cases and/or jailbroken at the store..

  3. Microsoft won’t be eliminated any time soon, because Microsoft makes too much money from Windows and Office to drop out of the mobile game yet.

    But Microsoft will simply be completely irrelevant, with such low sales numbers that no developers will want to waste their time developing apps for the platform. So no consumers will buy it, because they can’t get any apps for it.

    Sound familiar, Microsoft?

    1. That does not quite make sense. A phone that uses Siri would need higher performance hardware, not “low-cost.” And Apple is marketing Siri as a high-end feature of the best iPhone. Putting it on a low-end phone would cheapen its value. Eventually, every computing device from Apple may have a form of Siri, but that’s not going to happen in the “Windows 8” timeframe.

      I previously thought Apple would create a separate low-end phone, that has a “fixed” set of features. It would be the ultimate “feature phone.” It would have a set of built-in apps (for things most people do with phones these days), but would NOT be expandable with additional Apple and third-party apps from the App Store. So what the phone has when you buy it is what it will have for its lifetime. It would have a touchscreen (perhaps a smaller one), and act kind of like a “real” iPhone, in the same way an iPod nano uses its touchscreen to act kind of like an iOS device (without being an iOS device).

      By limiting its functionality to a known set of features, Apple can optimize hardware performance and use lower-cost components. An Apple TV costs only $99 because what it can be asked to do is known and limited, so Apple can use lower-cost hardware components that precisely matches (and not exceed) those performance needs. To support third-party apps and software upgrades, Apple must use higher-cost components (including higher storage capacity), because the performance requirements are not precisely defined and limited.

      But now (after the iPhone 3GS continued as the “free” option), I think Apple will just continue previous generation models as the lower-cost options, instead of creating a separate low-end phone. The iPhone 4 is a great phone, and could continue in the line-up for many years.

  4. And I like this part of the article which also touches on deal breaker bugs in the Windows Phone OS causing people to lose everything to reset and the loss of Bluetooth as a way to transfer files. Meaning they did not understand their user base:

    “Last year, it was possible to see a path where the Nokia and Microsoft partnership might, against all odds, succeed in the long run. That was hoping against hope. But since then, Nokia and Microsoft have both torpedoed any conceivable path to success on this strategy. Now the facts are irrefutable, from the design, to the severe limitations of the operating system itself, to the badly destroyed carrier relationships and poisoned reseller channel, to now the facts and stats. The Microsoft strategy for Nokia is a certain road to death. The Lumia smartphones will doom Nokia. The Windows Phone OS is never going to be the third ecosystem. The sooner the Nokia Board see the facts, and make the right decision, the sooner Nokia can start onto the road to recovery. But before that – obviously – CEO Stephen Elop must be fired, now!”

  5. My free advice to struggling corporations:
    When your ship is sinking, DO NOT fasten yourself to an anchor.
    Poor Nokia! They may last longer than RIM, but only if Microsoft keeps throwing money at them in a futile attempt to duplicate their XBox strategy.

  6. Kinda sad to read this.

    For once, Microsoft did something original with their software. I’d like to see that rewarded. Definitely much more palatable than the copycat known as Android.

    1. You mean, like Palm did with theirs? Having something original is only a fraction of what’s needed.

      Microsoft’s messing around with multiple phone OSs cost them years, and this was the too-late result. Desperation is not a sound business strategy.

      1. Well, unlike Palm, Microsoft isn’t on their death bed. From what I’ve read, Windows Phone 7 is mush more polished than WebOS, and the hardware is decent. WebOS never had decent hardware, so it never had a chance.

  7. M$ will be successful. They’ll sell thousands of phones to their own employees who MUST buy them and use them at work. Stevie B will probably purchase thousands more to give away to the needy (certainly not nerdy) people. 🙂

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