Paul Thurott: Nokia is circling the drain. Surface Phone only hope.

[Winfonejunkie]

Paul thurrot is a delusional blowhard. Anyone who takes his opinion on anything with more than a grain of salt is fooling themselves. I knew when he boldly proclaimed the HTC 8X as the premium Windows Phone that he officially jumped the shark. And his book Windows 8 secrets (which I unfortunately purchased) is crap as well.

Hopefully if we all ignore him he will go away.

 

[brmiller1976]

Will RIM survive from now until then? Who knows.

RIM generated $900 million in the "terrible" Q3. Nokia, in contrast, is floating junk bonds for cash. Spinning either, too positively, is foolish.

But right now, RIM is financially outperforming Nokia. That's undeniable.

 

[brmiller1976]

The remainder of your post, I ignored due to personal attacks. If you wish to discuss ideas, I'm here. But have some respect.

 

[dogfish54]

RIM generated $900 million in the "terrible" Q3. Nokia, in contrast, is floating junk bonds for cash. Spinning either, too positively, is foolish.

But right now, RIM is financially outperforming Nokia. That's undeniable.

This is not about RIM. Nokia is certainly not doing well financially but still have a lot of cash and a product that's in high demand. Nokia is building Lumia sales, it's about the future, not the past.

 

[WanderingTraveler]

I hate to say this...but I don't think Nokia can survive without making an Android phone.

Actually, considering that Microsoft is giving Nokia $1,000,000,000 a month, I think you should word it like this:

I hate to say this...but I don't think Nokia can survive making Android phones.

Take note that only Samsung is truly successful when it comes to Android.

 

[dogfish54]

Actually, considering that Microsoft is giving Nokia $1,000,000,000 a month, I think you should word it like this:

I am going to sound like a broken record, but let me clear this up:

* Nokia receives a platform support payment from Microsoft of $250million every 3 months, which works out to $1 billion per year.
* Nokia agrees to buy 'about' $250million worth of windows phone licenses every 3 months at a minimum (the same $1 billion a year), so unless Windows phone is successful, Nokia is getting a bunch of shelfware, not real money from Microsoft. Just as important, Microsoft isn't getting a lot of money from Nokia.
* Nokia contributes mapping and other IP as part of the deal.

The reason I think that Microsoft are pushing HTC so hard is that they agreed to essentially give away Windows phone licenses to Nokia up to a certain limit. This was a great deal for Nokia and Microsoft at the time, but Microsoft will make money from other OEM's. The Nokia deal is locked and signed. Microsoft want more licensees that will pay real money for the software.

The REAL challenge that Microsoft seems to be missing is that the Windows phone pie is small right now, and splitting it three ways is going to leave some hungry. Windows phone can't support one OEM right now, certainly not three.

 

[brmiller1976]

This is not about RIM. Nokia is certainly not doing well financially but still have a lot of cash and a product that's in high demand. Nokia is building Lumia sales, it's about the future, not the past.

Nokia is doing poorly, and that's a problem. Time to acknowledge that fact, and that leads to an understanding about why Paul is concerned about a strategy that almost entirely revolves around Nokia. It's a legitimate concern.

 

[AngryNil]

You challenge OP to name the best-selling keyboard-based phone... that would be the BlackBerry 7 lineup. And even though it's long-in-the-tooth, RIM sold more BlackBerry phones in this past quarter alone than Nokia has sold Windows Phones since the beginning of its support for them.

If you believe a BlackBerry-style device is the future, go ahead. You'll just be terribly wrong. Similar form factors running Android have flopped, and it's no coincidence that the first BB10 device will be all-touch. The BlackBerry form factor is no longer a requirement, and I think you'll find very few who have used modern all-touch smartphones and still lust for the BlackBerry keyboard. Going for the BB form factor is skating to where the puck was, catering to "legacy" users who are afraid to try new things. Microsoft should also start making Symbian devices because they once were the market leader.

The 3GS was almost four years ago. Time has marched on.

People have not marched on and pockets have not marched on. There are plenty of 3GS users in the world right today, and the width is not a problem. It's an excuse for people who have no intention to buy the 920 in the first place. The 8X is similarly thick by today's standards, yet Paul Thurrott says it's "incredibly thin". Load of bullocks. I find absolutely no issue with the 920's width and I'm carrying an 11mm thick Omnia 7 into 2013 with no problems whatsoever. It's not a legitimate issue that a phone is 2-3mm thicker, unless you exclusively wear women's skinny jeans nowadays.

 

[brmiller1976]

If you believe a BlackBerry-style device is the future, go ahead. You'll just be terribly wrong.

There's a difference between "believing it is the future" and believing it has a place in the future.

Frankly, "the future" is a VERY wide variety of devices with all sorts of form factors -- the user will pick what he likes best. Some people will want "phablets" with huge 7" screens. Others will want thin, light, compact phones with 3.5" screens. Others will want sliders, or phones with keyboards, or square phones, or phones that focus on messaging, or phones that focus on web, or phones that focus on apps. Some will want Facebook phones, or Linux phones. Some will want phones with super-cameras and won't mind the weight.

And yes, millions and millions and millions of people will want phones with hardware keyboards.

As I keep challenging the Apple people who first invented this "only losers want hardware keyboards" meme -- if touch keyboards are better, why doesn't Apple and every other vendor ship laptops and desktops with non-mechanical, flat touch keyboards?

Exactly.

People have not marched on and pockets have not marched on.

If Windows Phone sells as many phones in 2013 as RIM sold "obsolete keyboard phones" in 2012 -- 28 million -- it will have had an outstanding year. One market's "pocket" is another's "mainstream."

There are plenty of 3GS users in the world right today

Sure, and I know people still running Mac OS 9 as well, on their Blue and White G3s.

Should Samsung target the Apple design language from the 1990s as "competitive?" Of course not.

It's an excuse for people who have no intention to buy the 920 in the first place.

No, it's a REASON that consumers have for not really liking the 920, which is not a "god phone."

You know, plenty of Apple people used similar reasoning about the iPhone's design shortcomings, and consumers said "OK, I'll just buy something else." Samsung came along with the S III, and the rest is history.

The 8X is similarly thick by today's standards

,

Not true. As anybody who has owned both will tell you, the 8X is a totally different ownership and user experience in terms of hardware aesthetics. It feels thinner, lighter, more pocketable and lighter weight.

It's not a legitimate issue that a phone is 2-3mm thicker, unless you exclusively wear women's skinny jeans nowadays.

So anybody who wear's women's jeans -- such as women -- shouldn't buy a Lumia 920? That's excluding 50.2% of the general population right there. You're off to a great start. /eyeroll

 

[brmiller1976]

PS -- Telling end users that their concerns are "illegitimate," and they should just shut up and buy your product, leads to two things:

1) The end user saying "screw you" (or something stronger);
2) The competition running to the end user and saying "you want thin and light? Here you go!"

In general, giving the customer what they want is a great strategy. "Explaining" to them why their wants are "illegitimate" leads to them passing you by for something else.

This is a lesson that many companies (particularly in automotive) took decades to learn. The trouble is, Nokia doesn't have decades -- or even years -- to get it right. They've got to execute right, right now.

 

[bilzkh]

I don't think Lumia 920 is or ever was considered Nokia's key move for Windows Phone. Margin with premium handsets are simply too difficult to achieve when your product isn't disturbing the status-quo, i.e. iPhone 5 and Galaxy S2/S3. Given how the Lumia 710 and 610 are the most prolific Windows Phone handsets, and how the Lumia 800 is beginning to make in-roads thanks to heavily discounted pricing, it's clear that Nokia's best hope is in the mid and entry-levels of the global market. At some point Nokia must have realized this, and have probably kept the Lumia 920 as a margin unit for the comparatively few willing to pay as much for a WP device, but have focused their true efforts on handsets such as the Lumia 620, 510, 505, etc. Sure, they might have underestimated demand for the 920, but the increase there was probably marginal, and I doubt they're losing hair about the 920.

They are definitely concerned as to how well their lower-end offerings are going to fare, especially the 620, and if there was a time to claw your way back, it is now by disturbing the lower-end smartphone market (which is mostly made up of low-spec'd Android devices). Lower-end handsets have made up Nokia's bread and butter, even in terms of Windows Phone (i.e. Lumia 610/710/discounted 800), they need to expand on their strengths. And to be frank, Nokia's most threatening competition here is RIM with BlackBerry, but thankfully Windows Phone 7.x and WP8 are solid offerings (versus BB7 and BB10, respectively). But I think the market here is huge, and there's probably room for both Nokia and RIM to thrive if they execute and deliver near-flawlessly, a trait both seem to lack at the moment.

I own a Lumia 920, but I would love a second phone to change things up a bit time to time... Lumia 620 is on my list, but I would love a mid-range BB10 device. Personally, I don't think the Google/Apple duopoly is good for consumers, there are many of us who want something different from this fate, and right now MSFT, Nokia, RIM and Amazon can change things for the better.

 

[thegoodfight]

RIM generated $900 million in the "terrible" Q3. Nokia, in contrast, is floating junk bonds for cash. Spinning either, too positively, is foolish.

But right now, RIM is financially outperforming Nokia. That's undeniable.

RIM also had an adjusted net loss. That money RIM "generated" will quickly disappear, as per RIM's CEO himself saying they will burn through all of that money and more for marketing and inventory build-up of the first BB10 device. If that Z10 device fails to sell well, RIM is in deep trouble.

As for Nokia, they did achieve an underlying profit for Q3. Adjusted for restructuring write-down costs, Nokia did achieve a 78 million Euro profit in Q3. Plus, Nokia's cash and assets position is much, much stronger than RIM's. Nokia has more cash and more assets to survive than RIM does. Speaking of which, Nokia recently signed a fat licensing agreement with RIM, with a big one-time payment, and on-going royalty payments.

Have a look for yourself:
http://www.results.nokia.com/results/Nokia_results2012Q3e.pdf

Hahaha, to say RIM is "financially" outperforming Nokia is laughable. RIM had a bigger adjusted net loss, compared with Nokia's adjusted net profit in Q3.

The remainder of your post, I ignored due to personal attacks. If you wish to discuss ideas, I'm here. But have some respect.

Ah yes, the age old tactic, getting personal, or pretending that the rest of my post was a personal attack.

My point about your blatant LIE about RIM Q3 sales versus total Lumia sales still stands. All my other points still stand, but please feel free to refute me. If you wish to ignore it, up to you.

Your strong support of RIM on these forums, along with your simultaneous condemnation of many of Microsoft's and Nokia's choices make many of your posts borderline-trolling, here on a WP forum. Your focus on hating on Nokia specifically borders on obsession.

Nokia is doing poorly, and that's a problem. Time to acknowledge that fact, and that leads to an understanding about why Paul is concerned about a strategy that almost entirely revolves around Nokia. It's a legitimate concern.

Most of Nokia's "losses" are accounting-related restructuring write-downs. Nokia is quite stable financially and will only grow from here on out. Time to acknowledge the fact that you are nearly as delusional as Thurrott.

From here on out I am simply going to ignore you, as that would be a very wise decision.

 

[brmiller1976]

Given how the Lumia 710 and 610 are the most prolific Windows Phone handsets, and how the Lumia 800 is beginning to make in-roads thanks to heavily discounted pricing, it's clear that Nokia's best hope is in the mid and entry-levels of the global market.

The trouble is that the 710, 610 and 800 are all dead-end phones. I'd advise ANYBODY against buying one, since future support (especially vis-?-vis apps) is going to be awful.

The 710 only sold well because it was the "default Nokia handset" for carriers like T-Mobile who were longtime Nokia loyalists but got screwed out of better handsets like the 800 and 910. It was the default handset for Symbian people who wanted to come back.

The 610 was gimped even by WP7 standards.

And the 800 is likely just old unsold inventory being sold at blowout prices (and likely a loss).

Ultimately, Windows Phone needs a mid-range platform to compete with, and that's something like the 8X. It needs to be firmly established, on all the carriers, EASY TO BUY, well-marketed and recognizable. It needs mainstream weight, thickness, screen size, pricing, and feature set. And it needs to have a reason to buy it other than propellerhead stuff about aperture or meaningless buzzwords like "PureMotion XL+ Superfine Ultraresolution MAXX."

 

[smoledman]

Nokia stock is at a 7-month high, what more does he want? Does he write this crap as pure link-bait?

 

[brmiller1976]

Stock prices don't indicate much, other than speculation in stock price.

Atari stock soared from 50 cents a share to $12 a share when the Jaguar launched. They were only selling $4 million to $10 million per quarter... down 95% from a few years earlier when they made the ridiculous decision to end their computer business, but the stock was flying high for months (until it became clear Jaguar wouldn't catch on).

Sales, cash flow and profitability -- in that order -- are the important things.

 

[smoledman]

Stock prices don't indicate much, other than speculation in stock price.

Atari stock soared from 50 cents a share to $12 a share when the Jaguar launched. They were only selling $4 million to $10 million per quarter... down 95% from a few years earlier when they made the ridiculous decision to end their computer business, but the stock was flying high for months (until it became clear Jaguar wouldn't catch on).

Sales, cash flow and profitability -- in that order -- are the important things.

Until we get the quarter report next month, Thurtott has NO basis for saying Nokia is circling the drain. For him to post this article NOW is pure link-bait.

 

[bilzkh]

The trouble is that the 710, 610 and 800 are all dead-end phones. I'd advise ANYBODY against buying one, since future support (especially vis-?-vis apps) is going to be awful.

The 710 only sold well because it was the "default Nokia handset" for carriers like T-Mobile who were longtime Nokia loyalists but got screwed out of better handsets like the 800 and 910. It was the default handset for Symbian people who wanted to come back.

The 610 was gimped even by WP7 standards.

And the 800 is likely just old unsold inventory being sold at blowout prices (and likely a loss).

At least in Canada, the Lumia 710 managed to make its way to several carriers, among them Rogers (first) followed by Wind, Mobilicity and Videotron, the latter three are not large, nor capable of taking huge risks. For its time it was basically as good as any high-end Windows Phone (retaining the same internals, resolution, etc). Enthusiasts will (and should) shun it, but in comparison to the devices I've seen regular people use here, the 710 is a solid device, one that probably offers more support than the one-off Android units rolled out by OEMs every week (and with the most use). There's a market for the 610/710/discounted 800s, it isn't us, it's those people looking to buy their next day-to-day phone on the cheap, and such people could care less about whether the phone has today's latest/best specs. Even now I'd say the 710 is up there with a number of current Android offerings in that range around the world.

Ultimately, Windows Phone needs a mid-range platform to compete with, and that's something like the 8X. It needs to be firmly established, on all the carriers, EASY TO BUY, well-marketed and recognizable. It needs mainstream weight, thickness, screen size, pricing, and feature set. And it needs to have a reason to buy it other than propellerhead stuff about aperture or meaningless buzzwords like "PureMotion XL+ Superfine Ultraresolution MAXX."

I agree, but this device is probably best as a Microsoft phone, one that is fully equipped (i.e. includes a free mapping and turn-by-turn solution) and is supported with value-added enhancements, apps, etc.

 

[dogfish54]

There's a market for the 610/710/discounted 800s, it isn't us, it's those people looking to buy their next day-to-day phone on the cheap, and such people could care less about whether the phone has today's latest/best specs. Even now I'd say the 710 is up there with a number of current Android offerings in that range around the world.
.

@bilzkh- Agreed - my guess is that new Lumia 710/800/610 buyers don't really care about apps at all and just want the basics, web browser, facebook, camera, turn-by-turn nav etc. For these people, it's a GREAT deal. Is there any of those that suck on WP7.5/7.8?? The answer is a matter of opinion, but my answer is 'definitely not'. The same profile of people buying the 710 are also buying low-end android devices ... they also don't care or know about all the apps.

 

[bilzkh]

@bilzkh- Agreed - my guess is that new Lumia 710/800/610 buyers don't really care about apps at all and just want the basics, web browser, facebook, camera, turn-by-turn nav etc. For these people, it's a GREAT deal. Is there any of those that suck on WP7.5/7.8?? The answer is a matter of opinion, but my answer is 'definitely not'. The same profile of people buying the 710 are also buying low-end android devices ... they also don't care or know about all the apps.

Exactly, and those are most of the people I've seen use a Windows Phone, which isn't a bad thing. Globally this is a burgeoning market, one where Windows Phone (and Nokia especially) offer a compelling and competitive end-product and experience. From my experience in the Arab Gulf and South Asia, many recognize Nokia as a brand, and may even appreciate it for quality and prestige. If Nokia can offer competitively priced and well-equipped (i.e. with appropriate language, pre-loaded maps, region-specific apps, etc) devices at the sub $150 and $100 range, they'll be in a position to claw back smartphone market-share.

I think MSFT should consider making Windows Phone 7.x free to the OEMs so as to allow Nokia to more competitively price their offerings against Android competitors (and give OEMs an alternative to Android in the lower-end segment). Sure, MSFT will miss out on direct profits, but it may gain from the number of handsets that will eventually use its services (Bing), and cut into Google's revenue. Of course, here I am talking about users who have web-access.

 

[Luminatic]

Wow, a lot has been going on in this thread. I will just write a few things regarding some stuff that has been posted without qouting anyone: (Important! I offer personal opinion, not facts)

- I personally do not trust opinions from people that come across as stubborn when people challenge them. They tend to be too wrapped up in their own opinion to make their reports balanced, neutral and realistic. I see PT as such a person, so basically, I take his opinions with a huge bucketload of salt.

- Most women don't carry their phones in their trouser pockets. That's what handbags are for.

- In some parts of the world, BB doesn't sell many phones except to some people. Just look at Europe except the UK. You won't see many BB's in France, Germany, Austria, Spain and so on.

- same goes, though, for Nokia Smartphones

- It remains to be seen if Nokia will manage a turnaround. My gut feeling tells me they will be successful in some markets in time because they differenate themselves enough from the pack. At the same time, I admit I could be wrong as I, like all analysts and clairvoyants, do not possess a time machine to travel to the future and find proof for my words.

btw, as an example, gut feeling was right when I predicted that Swiss banks will get into trouble for helping people avoid taxes, and even though I was rather alone with that opinion when it was formed in by mind, history has proven me right. Just an example for not having to be a specialist to have an opinion that could turn out to be correct. As long as ones thoughts are helped by common sense and the known facts are used by a cool head instead of being clouded by anger or greed, the chances of firming opinions that whitstand the test of time are good.