Could this gamble be game changer in 2015?

IDC released 2014Q3 report on smartphone OS market. It shows Microsoft Windows firmly in the 3rd place in 2014.

People may have forgotten how and from where it rose to this position, but future business historians will remember this as another successful strategy maneuver from Microsoft.

Techcrunch in a recent article observed that Microsoft went public in March, 1986, barely 5 months after it released Windows OS [Nov, 1985].

In the S-1, Mircosoft's IPO document, Microsoft's future valuation of Windows software is fascinating!

"In November 1985, Microsoft began shipping Microsoft Windows, a graphical operating environment which runs on the Microsoft MS-DOS operating system. As an extension of MS-DOS, Microsoft Windows manages such hardware as the keyboard, screen, and printer. This product allows new applications programs to present themselves in a standard and graphical manner that is independent of video or other output devices. Microsoft is encouraging independent software developers to create applications programs which will take advantage of Microsoft Windows graphical user interface features. Lotus Development recently announced its intent to pursue the development of applications products that will run on Windows. Microsoft’s own new applications software will be based on Microsoft Windows. It is too early in the life of Microsoft Windows to determine what level of acceptance it will attain in the marketplace."

Well one hardly needs anything to be said further to that statement today. Windows not only redefined PC market, Microsoft ensured that Windows' success is leveraged across all emerging computing platform markets, Server, Gaming Console and so on. Before Apple's second wave of growth, people never saw any serious threat to Windows for any foreseeable future.

Unfortunately, Windows never was a serious choice in embedded OS market. Microsoft also appeared to be hesitant, if not reluctant, player in smaller platform segment. Partly to that, all ventures [windows CE for example] from Microsoft in mobile segment were seen as weak, if not tentative. Mobile Phone market was largely proprietary and with Nokia leading the pack, no one saw any incentive to break the status quo.  That hesitation turned into a strategy blind-spot soon when Apple turned the table with iPhone. Microsoft needed something very badly to cover the lost space. For quite some time, beside Apple, there was no serious dominating player in the smartphone market.

Then Google brought Android and Samsung brought Android-based Galaxy series of phones. Android started changing the smartphone market in the same way Linux did to the PC market earlier. Microsoft did not appear to have any play. Some people even started writing eulogy for Microsoft.

Obvious reasons were

1. Linux is eating into Microsoft's PC OS market share.
2. VMware started almost monopolizing the server virtualization market
3. Cloud was fast becoming credible alternative to private data centre for the  enterprises.
4. iPhone and iPad redefined smartphone and tablet market and Microsoft's mobile OS had no play at all.

With slow PC/Laptop growth and exponential smartphone growth, Microsoft needed a serious game changer in the smartphone segment. When no one thought of any future for Microsoft, Microsoft almost created coup-d'etat with Nokia. Fast devaluation of Nokia's valuation and Elop's crucial decision of adopting windows for Nokia phone gave Windows the life-saving chance that it needed so badly.

IDC's recent report seem to indicate that the strategy maneuver has worked for Microsoft. Gartner's press release also indicate the same trend. Microsoft is back to OS game. Below charts from Gartner speak for themselves:

Table1
Worldwide Device Shipments by Operating System in Mature Markets (Thousands of Units)

Operating System	2013	2014	2015
Android	266,701	313,529	337,791
IOS/Mac OS	157,273	167,787	182,564
Windows	138,312	141,977	149,128
Others	100,633	48,130	29,352
Total	662,920	671,424	698,835

Shipments include mobile phones, ultramobiles (including tablets) and PCs

Source: Gartner (October 2014) 

Table 2
Worldwide Device Shipments by Operating System in Emerging Markets (Thousands of Units)

Operating System	2013	2014	2015
Android	632,517	928,135	1,117,860
Windows	187,474	194,091	221,804
IOS/Mac OS	78,928	95,304	112,647
Others	772,562	520,605	383,914
Total	1,671,480	1,738,135	1,836,225

Shipments include mobile phones, ultramobiles (including tablets) and PCs

Source: Gartner (October 2014)

Cost for the gamble

Leaving the development cost of windows 8, let's just look at the cost Microsoft incurred in acquiring Nokia phones:

Microsoft paid to Nokia: $7.2 billion

Adoption cost: $1 billion out of the Nokia operation

Microsoft posted an operating loss of $692 million this July. It claims to stop losses by June, 2016. 

How do the Microsoft shareholders look at this? This Business Today report says, Microsoft shares hit new 14-year highs just after quarterly result announcement, and were up by 1.1 per cent at $45.33.

Microsoft is charting new territory

Microsoft recently launched Lumia 535. They dropped Nokia logo in the new phone. Not sure how many are observant that Microsoft is charting a new path here.  More than 91% of Windows mobile phone sales bring revenue directly to Microsoft. In a recent report, IDC projects that Windows Phone will account for $7.8 billion (about 2%) of the $382.9 billion in revenue expected to be generated by the smartphone market in 2014. Although windows share in smartphone market is not high, the fact that almost all windows phone sales happen from Microsoft now, this gamble has already created success for Microsoft. Here Microsoft is charting Apple path [hardware + software] unlike what they did in 1985. Although Microsoft has treaded complete hardware and software path before with Xbox, smartphone market is likely to pose a lot harder challenge since there are too many dominant players and market is too nuanced already. But if there is anything to cheer about, it is that Windows has moved from PC-only market to PC plus Tablet plus smartphone market.

Finally, Nokia and Elop story reached logical end

Two and half years ago, when Stephen Elop was brought in to lead Nokia, many asked the question openly if Elop was the trojan horse for Microsoft. Though Elop publicly denied that charge at that time, Nokia's journey for last two and half years with him at the helm, has however reached the conclusion that many feared with announcement that Microsoft is buying Nokia mobile business at $7.2 billion and Stephen Elop returning to Microsoft. With Steve Ballmer's announcement of retirement, people are making simple arithmetic with Stephen Elop. We, humans, are good in drawing sweeping conclusion based on only 2-3 data points and this is also no exception to that rule. Truth, as often is found to lie somewhere in between.
The legacy of Elop in Nokia is hardly anything to be jealous about. Since he came on board, Nokia's valuation came down by 85%, the market space where Nokia was world leader, saw Nokia receding ground to Samsung and other OEMs. The smartphone space which was the key element driving Nokia to cannibalize Symbiosis and embrace Windows OS, decidedly went with Apple's iOS and Google's Android. Now did anyone know for sure that these were going to happen when Elop came on board?
Social psychologists use the term Fundamental Attribution Error to our natural bias to attribute personal disposition instead of situational artifacts as a cause of certain eventuality. We feel higher satisfaction if we can find someone to hold responsible for an event that we do not like. So we feel doubly eager to attribute Nokia's ill-fate to Elop. Psychologists also tell us that that bias changes when one is involved and is answerable for the course of event. In the scenario where the person is involved, it is often observed that he/she attributes the cause of events to the situational changes instead of his/her own decisions. That means, Stephen Elop will attribute the cause of the present state of Nokia to the changing situations!
Rational minds would ask, "Was the decision taken only by Elop? Would Nokia board agree to allow Elop to take the decision if they knew they had better alternatives [other than going windows way] two and half years back?"
 Given that the board members had access to all the information that Elop had, it is reasonable to assume that each member individually vetted all the different options in their personal capacity before agreeing to Elop's solution. What Elop most likely have done at that time is that he influenced these members in evaluating the potentials and risks that each option provided. He might have been successful in creating fear for future failure in sticking to existing course. He might have projected the value of Windows and Microsoft alliance much higher than it actually was. But ownership of the course steering lies with all the executive members of Nokia board.
Once the decision was taken, it was clear which path Nokia is heading. Mounting accumulated losses, market pressure, competition from Apple, Samsung and other Android-based smartphone OEMs took Nokia further away from its root and towards further grip of Microsoft.
But did Elop think that bringing Nokia mobile to Microsoft could make him a strong candidate for Ballmer's successor? Even if he did, how much could he bet that course of events will take the shape the way it happened when he took the plunge 2.5 years back? Nobody realistically could be sure. At most, he could do is play his cards the way he played and hope things will eventually take him to the coveted post that he might have been eying for.
Now how does this change for Microsoft? Would this bring the hardware success that eluded Microsoft and Ballmer all along? Well, fact is Nokia Lumia series with windows 8 has become a success. It is capturing market quite fast, providing a credible alternative to Android based smartphones, even at lower cost point. Merger in fact positions Lumia at stronger ground with control on both smartphone hardware and OS. It will give Lumia leverage to bring price of smartphone further down and present a credible competition to Android-based low cost phones in all emerging markets where the real smartphone battle has to be fought and won.
It will also help Microsoft to boost its advertising business where the battle with Google is being fought, by making advertisement more personalized for the users by integrating smartphone's on-device data with skydrive [Microsoft Cloud] and Outlook [Microsoft email]. But for this to work, Microsoft's existing strong culture of internal competition [and therefore wastage of creative bandwidth in political rivalry] must change and find a way to work like collaborative set of engineering/business functions. Lumia hardware engineering must be allowed to function independently of Windows software division for them to build on each other's strength. But if this strategy succeeds, Microsoft will have evolved itself for the new generation of users and move to a new position of strength.
So, good luck to Mr. Elop and RIP Nokia mobile [that's a bit hurtful for someone who always used Nokia handsets]!
The next news to watch is who is going to buy Blackberry/RIM!

Smartphone beyond 2013

If you are checking this blog for some time, I would guess that you are aware of tremendous growth of smartphone as a market segment and probably are curious like me about what the future holds for this nice little device that have become indispensable part of our daily existence. I would bet that there are many among us who almost wear the device 24x7, well may be I should exclude the time when we sleep. The point is remaining connected all the time has become a necessary aspect of our life so much so, many would feel extreme mental trauma at the mere thought of losing the device. For handset vendors this is a place that anyone would dream to be in.

Monthly smartphone OS market-share chart: source comScore research

Billions of customers, Trillions of opportunities to know the users and create avenues to make money. Apple showed the way to others about how to create revenue opportunities by not only selling device but from everyday use of the phone. Google and Microsoft are in the race now. At present device selling earns most revenue for Apple but eventually as the evolution of device reaches mature stage, it will be the apps and other cloud services that Apple provide that become larger revenue avenue for Apple. Google and Microsoft are preparing themselves for those days and chances are high that Google and Microsoft's revenue share will be higher than Apple's, since there will be more smartphones that will use Android [and Windows likely] than iOS. For a quick reference on relative market growth so far for smartphone OS like Android, iOS, Windows, see the latest chart from comScore.

Does this mean that future innovations in smartphones are going to to be driven by OS vendors?

To answer the question, let us look at Nokia's published mobile strategy after their OS strategy shifted to Windows OS. It says clearly that while Nokia will depend on Microsoft for OS, Nokia's R&D will focus more on Services (Cloud-aware Apps development) and Mobile Phone hardware platform to deliver an enriching experience to the users. The strategy is somewhat similar to what Samsung is following of late, though Samsung is focusing more on phone platform at present. In fact Nokia ans Samsung are telling us that the hardware platform is going to dominate the innovation space for smartphone in the near future. We will see, faster and more powerful processor [Qualcomm's 1 GHz snapdragon processor already found popularity], powerful graphics processors, sleek form factor, brighter and sharper display, flexible touch screen, sharper camera, faster data with LTE and next-generation Wi-Fi, more sensors to gather data about user's surrounding and emotional presence. Though there will not be perpetual energy source, battery life between two recharges will increase 10 times in next couple of years given that two large market segments viz automobile and smartphone/tablets are pushing the battery technology for faster innovation.

Google Glas

But real winners will be those who will combine all these components into an encompassing whole delivering an experience so rich that users will identify herself/himself with the phone. Wearable phones may be more available with the advent of Google Glass but some believe that differentiating smartphone innovations are going to be more service-oriented after the initial phase. Quoting CNET, Mark Rolston, the creative director for Frog Design, thinks that smartphones are just about out of evolutionary advances. Sure, form factors and materials might alter as manufacturers grasp for differentiating design, but in terms of innovative leaps, Rolston says, "we're at the end of gross innovation for smartphones." CNET observes, Rolston and other future thinkers who study the mobile space conclude, smartphones will become increasingly impactful in interacting with our surrounding world, but more as one smaller piece of a much large, interconnected puzzle abuzz with data transfer and information.Your activity will be captured and analyzed from second to second. Relevant information will be distilled by powerful analytics engine running on compute cloud and feed it back to your phone which will guide you in dealing with your surroundings in real-time basis. Gaming for example, definitely will be lot more richer and many of your usual chores of the day will be gamified. Gamification deals about changing a certain experience in a way that is more fun, more entertaining for the users. If you are marathon enthusiast, a typical gaming app will track your progress, provide real-time feedback, feed you about marathon events in your locality, help you to define targets and guide you progress towards them, help you to identify your competitions and show you in real-time how well or badly you are faring against them. The idea is to help you live in your personalized world as much as possible and future smartphone/tablets would be the gadgets to deliver that experience.

Further Clicks: 

Stuff Article: http://www.stuff.tv/news/phone/imho/this-is-the-smartphone-of-the-future
Concept phone: http://itechfuture.com/concept-of-a-smartphone-morephone/
CNET news article: http://www.cnet.com/8301-17918_1-57578982-85/smartphone-innovation-where-were-going-next-smartphones-unlocked/
Google glass page at Google+: https://plus.google.com/+projectglass/posts 

Nokia and Huawei in Mobile World Congress

Mobile World Congress, being held in Barcelona from 24th Feb till today [check this page for the latest report from BBC], is decidedly one of the most prestigious and sought after annual congregation for both technologists and Industrialists across the world. Every leading vendor brings its latest inventions here be it a technology proof or a product, to make its presence known to the world. While there were different themes, I was particularly interested in how the leading vendors are positioning their products in respect to LTE (4G) and more curiously how they factor emerging markets like India and China in their strategy. 

As for LTE adoption is concerned, MWC, 2013 has very little to showcase. LTE still is a high-speed data service for the most handset vendors. I instead tried to find what Nokia people are talking about.

Nokia, as always, an interesting component in cellular wireless Industry.  Not the least because of the way it brought itself down from its unique leadership position in the worldwide handset market with windows strategy. In the changed market scenario, when most of its competitors from GSM days [before 3G], like Motorola, Sony-Ericsson have given up the race for the leading handset makers, Nokia still is trying its best to remain relevant. As per the recent survey, the top two positions in the handset vendors table are well-secured by Apple and Samsung. The top two OS in the race for smartphone OS are clearly Android and iOS. The dominance of Android and iOS is so overwhelming [check Apple and Google duopoly] that Blackberry positions itself aspiring for No.3 positions [CEO Thorsten Heins famously told reporters at the company's BlackBerry Jam developer event that BlackBerry 10 has a "clear shot at being the Number three platform in the market."- source: Neowin.]. Nokia's Windows-phone strategy is at best a limping response to the challenge, albeit slowly pulling some revenues for Nokia.

 So I was curious what Mr. Elop would say in the MWC. Mr. Elop predictably sounded both ambitious and optimistic in numbers of interviews with virtually all media representatives in MWC. You can watch him below in the Bloomberg interview [courtesy Bloomberg] 

Mr. Elop thinks Lumia strategy has started to pay dividends and his winning strategy is to make Lumia platform accessible to low-cost mobile market such as India. He appears to have claimed that Nokia  would be the first in the market to make advanced features, that are only available in high-end smartphones, also available for cost-conscious customers. He mentioned about Nokia's Asha series of phone in India in one such interview.      

 Anyone who has been following the industry may beg to disagree with him. Fact is it was Samsung who first adopted the strategy of creating one platform for all its phones and tablets and then executed it to finesse. Once Samsung Galaxy proven itself as a good competition for high-end smartphone and tablet segment, Samsung aggressively pursued cost-conscious market by launching numbers of low-end galaxy-based phones, delivering popular features like wireless LAN, Facebook app, dual-SIM, touch phone to multitudes of India at affordable price [Trust me Samsung did not pay me to write this!]. Nokia's Asha was at best a delayed response to Samsung. The question is whether same strategy with Lumia will deliver bigger success for Nokia. There is no doubt that notwithstanding the loss of reputation of Nokia as the most sturdy phone maker in last two years, Nokia still is a force in the Indian handset market.

Huawei Ascend P2: courtesy PC Advisor

  I, however, was particularly intrigued the way Huawei has been slowly becoming a serious brand in the handset market and cranking up newer products. In fact Huawei claimed to have brought out world's fastest smartphone with the launch of Ascend P2 which is its latest LTE-based Android smartphone making it position against both Samsung Galaxy and Nokia Lumia. [ you can read complete review from PC advisor here]. Silently Huawei has got its new LTE chipsets as well as brought out a new platform over Android following Samsung. Huawei in fact has been pushing its low-cost CDMA phones to India for quite some time and if one has to go by the buzz, people like them; they are cheap, light, sturdy and provide nice UI. I would expect Huawei to be lot more aggressive in Indian market when LTE takes the dominant position in India.

Indian Mobile market is one of the most attractive segment for the handset vendors; almost all of them agree that ignoring 250+ million strong customer base in India would be a strategic suicide. Fortunately beside being cost-competitive, vendors hardly need any large customization to their phones unlike Chinese or Japanese market. All that the Indian consumers want are proven technology and a sturdy and nice-looking phone. As far as LTE is concerned, as I mentioned in my last post, the technology  needs another year to mature to replace the 2G for voice. So Apple, Blackberry and Nokia can afford to be slow with LTE -based product release but there is no doubt that in about two years when 4G replaces both 2G and 3G, chinese Huawei and ZTE will figure prominently in world-wide handset vendors table.
My previous posts on Nokia handset strategy:

• 2012 post on Nokia's business performance
• 2011 February post on Nokia's new mobile OS strategy
• Nokia at the inflection point

Next disruption after smartphone

In Feb, 2011 I wrote in this blog, "it appears that soon smartphone by itself will be considered as a separate segment, decoupled from GSM/CDMA/3G and soon 4G handset market. People's expectation and usage of these device are going to drive this transformation where iPad-like device and smartphone will merge to create one single smart-mobile-device segment." I thought it would be interesting to do a reality check.
First, on smartphone, Gartner's May 2012 report says, “Smartphone sales are becoming of paramount importance at a worldwide level. For example, smartphone volumes contributed to approximately 43.9 per cent of overall sales for Samsung as opposed to 16 per cent for Nokia”  Gartner provided a table on comparative positions of different Smartphone OS in the report which shows Android's global dominance in 2012 and loss of market share for both Nokia and Microsoft.

Gartner Table :
Worldwide Smartphone Sales to End Users by Operating System in 1Q12 (Thousands of Units)

Operating System	1Q12 Units	1Q12 Market Share (%)	1Q11 Units	1Q11 Market Share (%)
Android	81,067.4	56.1	36,350.1	36.4
iOS	33,120.5	22.9	16,883.2	16.9
Symbian	12,466.9	8.6	27,598.5	27.7
Research In Motion	9,939.3	6.9	13,004.0	13.0
Bada	3,842.2	2.7	1,862.2	1.9
Microsoft	2,712.5	1.9	2,582.1	2.6
Others	1,242.9	0.9	1,495.0	1.5
Total	144,391.7	100.0	99,775.0	100.0

Source: Gartner (May 2012)

So, I appear to be on track this far. How about iPad and iPad like devices? Let's again go back to Gartner. Gartner says, "Apple's iOS continues to be the dominant media tablet operating system (OS), as it is projected to account for 61.4 percent of worldwide media tablet sales to end users in 2012."
Gartner's projection for this segment:

Worldwide Sales of Media Tablets to End Users by OS (Thousands of Units)

OS	2011	2012	2013	2016
iOS	39,998	72,988	99,553	169,652
Android	17,292	37,878	61,684	137,657
Microsoft	0	4,863	14,547	43,648
QNX	807	2,643	6,036	17,836
Other Operating Systems	1,919	510	637	464
Total Market	60,017	118,883	182,457	369,258

Source: Gartner (April 2012)

Although there is clear dominance of Apple in this segment, Android tablets are forecast to account for 31.9 percent of media tablet sales in 2012, as per Gartner. Gartner dutifully adds that once Windows 8 is realeased, it will become a game changer in this segment. Apple, however, will continue to dominate the segment for entire forecast period.
Numbers always make a very strong case, however they rarely tell the full story.
Will the consumers keep buying both smartphone and tablets? If they do, how will they use these two device differently? Tablets for reading document, watching media but smartphones for rich communication, or so does it appear.
But how strongly can one hold on to that argument? At the end, it is just the screensize that makes the difference, doesn't it? Both smartphones and tablets at present, are primarily touch-screen based. Communication protocol stacks are available on both the devices as part of the OS [Operating System], although may not be enabled. So why would you carry two devices if one single device can provide both viewability of iPad or Amazon Kindle and rich communication capabilities of a smartphone? In fact, if you had options you are likely to consider little larger screen size for tablet, especially for watching HD media content. What if the screen were foldable? That would let us spread out the screen when we need and fold it neatly to fit into smaller dimensions of smartphones when we do not need. That way smartphone could double as media tablet.
There is another option too! Thanks to large scale proliferation of 3D content, people are getting comfortable to wear special glasses. What if we could have a special viewing glass for display device? That glass would convert the smartphone to media device. Fact is however futuristic they sound, the technology is almost within our grasp. We already have OLED display that is as flexible and hundred times as thin as human hair. Called spintronics OLED, they promise to be more efficient and brighter compared to present OLEDs Within a year or two, these devices will replace all exisitng display devices on tablets or smartphones.
Thanks to continuous miniaturization of processors, multi-core CPUs already are finding their ways to smartphones, which means computing bandwidth will never be a bottleneck for these devices. One can expect to watch 3D media content over these mobile devices in very near future. If there is anything, the question is how fast will be the transition of these technologies. Given that almost entire electronics manufacturing of the world is getting concentrated in China and its neighbours, it is very likely that technology replication will be rapid bringing down the overall adoption cost dramatically for the entire handset industry. One in fact can expect that the technology upgrade will be viral pushing the latest of technology changes to the cheapest of the devices.
So it is quite apparent that display device will bring the next disruption to this segment. When it will, it is expected to sweep all the three segments of smartphones, tablets and laptops converting them to a single unified huge segment of mobile devices. It is too be seen who will ride that wave of disruption. Will it be a chinese player, this time?

Nokia in 2012: a luminous end of a glorious past?

Recently I walked into a local cellular phone shop and asked for a not too inexpensive but sturdy phone set. The salesman asked me if I am looking for a smartphone. I said that I have nothing particularly against smartphone as long as it is stable and inexpensive. Fact is I have personal allergy to all these marketing terms especially when everyone knows that there is nothing smart in a smartphone. The salesman gave me too sets, one Samsung 'Guru' that cost around Rs 1800 and another Samsung Galaxy SII, that costs around Rs 17000. Being a majorly Nokia user so far, I was a little hesitant. "No Nokia set?", I asked.
He said, "Sir, we do have Nokia set but my honest advise is that you do not buy Nokia. The Nokia phones are not like those in past, quality dropped drastically."
"Even for the basic sets?"
"Yes, Sir, even for the basic sets, we get so many complaints every month these days that we warn customers upfront; after that, of course it is their choice if they still like to buy Nokia set".

Yesterday, a friend of mine called me and told that he needed to replace his old handset with a new one and asked me if I had any suggestion for him. I told him, quite unconsciously that he should consider samsung or Sony-Erisson or blackberry models but not Nokia.
But I am sure I was not the exception. Nokia clearly lost its customer loyalty drastically in last few months. It is said that problems do not visit alone. If the customers and shoppers complain about detoriating quality of Nokia phones, the market is exceptionally pessimistic about Nokia's future. Rating agencies like Moody, S&P have downgraded Nokia's credit rating to junk status.
For last one year, we have been witnessing the impact of Nokia's CEO's landmark direction change and one does not need to go too far to sense how well Nokia is doing. Internet is abuzz with reports about how Lumia turned out to be a dud, how Nokia lost 52% of market share in just few months, how Mr. Elop, the ex-Microsoft Nokia CEO has wasted billions of dollar (e.g. in Lumia campaign) and made Nokia taste loss in last quarter by taking successive wrong decisions. Now it is debatable if Nokia would have fared better had Mr. Elop not taken those bold decisions. Fact is symbian was a dying elephant albeit 57% Phones in the market had symbian OS when Mr. Elop took over. People blame that, between 2003 and 2008, 'rather than spend its resources on building a next-generation software ecosystem—an OS that depended on novel interfaces and sensors, that allowed for outside development, that offered a brilliant user experience—the company “managed down” its cash by paying huge dividends and buying back its shares." During that period, Nokia spent 27 billion euros in dividend and share buy-back - a clear sign of organization trading long term engineering future with short-term stock appreciation. Were Mr. Elop's manoeuvre successful, Nokia could truly turn around and challenge iPhone dominance riding high on Lumia and Microsoft WP7.

Summary of the present situation

1. Nokia wanted to cannibalise Symbian with Microsoft OS but market cannibalised Nokia smartphones with Samsung and others. Android proved to be much stronger market force than WP7.
2. Nokia's deteriorating engineering focus had its toll in the low-end basic phone category too; customers are moving to alternatives to Nokia sets. People expect mobile phones to be lot sturdier than PC. Call-drops due to poor quality of handset cost customers money and fact is Samsung low-end phones are lot more stable compared to present Nokia models.
3. While Apple, Samsung, HTC have successfully established themselves in the tablet space, Nokia missed the bus altogether.
4. Nokia's network division, once a very strong market force is also struggling against Chinese competition from Huawei and ZTE, even after merging with Siemens Network.

It is interesting that all the present predicament of Nokia are hinged on single failure: its successive unsuccessful attempts to secure its platform strategy.

Is this the end of  a Glorious past?

Many argue that from where Nokia stands today, it is very difficult for it to get itself out of the mud and only viable option left is buyout by Microsoft. Although Nokia's past and stack of IP would be valuable asset for Microsoft, it is very likely that a direct buyout would bring the combined net worth further down, effectively eroding the value of Nokia to zero. A better path would be if Microsoft lets Nokia find its survival path rather than direct buy-out.
But then Nokia needs to change in many front. It must figure out its strategy for low-end phones where stability and robustness count higher than features. On the high-end segment, it has to open itself for multi-platform strategy like HTC and Samsung rather than firing all guns on Lumia. That should help Nokia to find its competitiveness against Samsung and HTC.  But above all, Nokia must find one software that its engineering should focus wholeheartedly.  Something like a platform-independent Nokia mobile software that can work seemlessly on both Android and Microsoft Windows. Alongwith that a great developer SDK could be a game changer. It could help Nokia to capture large unorganised app ecosystem making the Nokia Mobile software the de-facto platform for mobile app development. That would help Nokia to integrate tablets into its product portfolio like Apple and Samsung. On the technology front, using its strength in wireless technologies, Nokia could focus to bring the first stable 4G (LTE) smartphone that can seemlessly transition from 3G and 2G networks.
But then that would take time and lot of patience from the market. Question is if Nokia has so much time!
 Last year we witnessed Motorola going down the same trajectory ending with Google's buyout. Will 2012 witness fall of another hero of Telecom yesteryear? Negativity brings more negativity but gratification of 'I told you so' is too pale to such a loss if that happens.
A company that in its more than 150 years of history changed its core business 17 times to remain relevant and successful, if turns itself to such an end, it is not only painful, it is demeaning too.

Nokia Mobile Strategy: news is out

As forecasted, Nokia announced their new Mobile platform strategy on 11th Feb and proved my prediction wrong! These are the salient points of the new strategy:

1. Nokia will tie up with Microsoft to use Windows  mobile platform as the new primary Nokia smartphone platform
2. They will continue to use symbian and expect to sell 100 million more units.
3. Meego, the vaunted new platform is expected to become open source mobile OS project.

Details can be read in the Nokia news bulletin
In the hindsight, the decision looks consistent. There are couple of points that I missed to reckon earlier. Tie-up with Google was not going to be win-win for Nokia. Android has proved to be disruptive and Google wants to bring down the Total Cost of Ownership for Smartphones by giving Android free. They are not expecting revenue from selling their OS, they are creating future revenue channel of mobile advertising. They have lot to gain from the tie-up while Nokia has lot to lose. On the other hand windows is not an open source OS, Microsoft wants to earn money from selling their OS and Nokia's revenue source is entirely from selling smartphone. In other words Nokia and Windows are from old business school: earning revenue by selling product. in the scenario of Google's disruptive strategy, both, Nokia and Microsoft have lot to gain by working together. Contrast this with HTC and Motorola approach: they are selling both Android-based and Windows-based smartphones.
Question is this: smartphone volume market is growing and is already quite large in all emerging markets. This market is more price-conscious and more socially active. Can Nokia address that market without joining Android bandwagon?
Well, this time I am going to wait and watch!

Update from 2012

It's more than a year since the Nokia took that strategic turn to move to Windows. People as expected, have started to evaluate what that decision gave to Nokia. I have few very interesting  articles from an ex-Nokia executive to add here:
http://communities-dominate.blogs.com/brands/2012/03/the-ceo-insane-how-to-rescue-nokia.html
http://communities-dominate.blogs.com/brands/2012/03/brutal-truth-about-lumia-cannot-sustain-even-1-to-1-replacement-of-symbian-windows-phone-strategy-do.html

Fact is Samsung Galaxy [android] has won the market hugely and Nokia Lumia does not figure in the 'to-have' list of average smartphone buyers, neither the Nokia stores are particularly interested to demo it for you even today. So, I guess people decided already but as I said, let's not judge. Let us wait and watch how Nokia CEO manoeuvres from here. Will he finally abandon Microsoft OS? Will he promote both Meego and Microsoft OS? Or will he pull the magic from his sleaves to make Lumia a winner? If one follows his rant about Nokia Sales, it does not look like he has abandoned Microsoft OS as yet.