Two years later , Elops strategy panning out.

JustToClarify

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I had no idea that Samsung only payed $10 in royalty fees. What about the other vendors who are struggling? Is it the same for them also? I'm asking because I really don't know and didn't find it in my quick 2min google search, lol.

By 2011 Samsung already laid the foundation for what galaxy is today. The galaxy sII was a pretty big deal, the biggest issues with it were the naming schemes for different providers (ie galaxy rocket). Nokia would've had to start from scratch just like they did with windows phone, except the software would look (visually) just like every other android phone out there, at least that's what Nokia argues. Let's not forget that the year of android was 2012 thanks to Samsung.

It's $10 or so, +/- a few dollars.

The interface doesn't have to look like other Android phones, Nokia could make something similat to Sense but allow for it to be disabled.

The point is that 95% of Symbian users switched to Android when Nokia announced stopping support for it, and 95% of those would stay at Nokia if they went Android, this way they have lost huge customer base they will never recover IMHO. Imagine Ferrari was in trouble and they had to choose between continuing making supercars(with different characteristics but still supercars) or going pickup route. Not hard to conclude that noone would buy their pickups for such prices.

I think Samsung is just about the only one that makes any real money on Android (in addition to Google). That said, if Nokia had gone down the Android-road, I do think Nokia would've done pretty well just like it does in the WP-field. Naturally Nokia wouldn't have overthrown Samsung, but I feel Nokia could've been the only real competitor to Nokia in Android phones. That said, I'm happy Nokia didn't go that road.

Naturally it's not all victory regardless, but that's not due to WP. I come from the city where Nokia's mobile phone business started: Salo, Finland. The local factory has been discontinued and some 2000 jobs lost from my city (in a city of 25000 thats pretty much), including my job :D

wait wait, you think that Nokia could have been only competitor to Samsung(fairly good estimation) yet you are happy Nokia didn't go that road?! Are you mad on them because they fired you so you wish them all the worst or..?

Actually, except 620 all of them have Super Sensitive touch ^_^ and as for the OIS, we don't want people to keep complaining about the phone's weight all the time, do we? Even the 620 with it's 5MP takes gorgeous pictures.

Hmm for some reason I thought that 820 doesn't have super sensitive screen like 920 and future lesser phones like 720&620 wouldn't have it too. But I'm not following lumia line closely so yes I was wrong there. Pictures that 620 makes are nothing special really, they are fairly good and that is all, still nothing close to Nokia N8 which has better camera(than any lumia anyway) + xenon and better build quality for lower price. It's not WP8 though so no comparo.
 

Coreldan

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wait wait, you think that Nokia could have been only competitor to Samsung(fairly good estimation) yet you are happy Nokia didn't go that road?! Are you mad on them because they fired you so you wish them all the worst or..?

I don't have enough business knowledge to know whether Nokia could've really made any better buck going android, but why I'm happy Nokia didn't go down that road is mostly cos I don't want to use Android, but I want to use Nokia.
 

JustToClarify

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Nokia would still have freedom to produce phones with other OSes, at one time Samsung was producing Android, WP, Symbian, Bada simultaneously. Android worked the best and they are now riding that wave.

Nokia doesn't have that freedom now, unfortunately. They could produce Symbian, Meego and Android at the same time(and WP too) and see what happens, but they ditched everything to go WP-exclusive and the result is that they are going to disappear sooner than later. Which will please some people and some companies...
 

Trappiste

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Nokia would still have freedom to produce phones with other OSes, at one time Samsung was producing Android, WP, Symbian, Bada simultaneously. Android worked the best and they are now riding that wave.

Nokia doesn't have that freedom now, unfortunately. They could produce Symbian, Meego and Android at the same time(and WP too) and see what happens, but they ditched everything to go WP-exclusive and the result is that they are going to disappear sooner than later. Which will please some people and some companies...

If they dropped WP and went Asha and basic phones only plus kept their network business, Nokia would quickly become quite protitable. WP is killing the company. Everything else is profitable for them.

Nokia's problem is WP. People just do not want it. L720 camera and build quality alone would be differentiators in the mid-price Android arena, not to mention the software bundles. But on WP, these things do not quite help when the word Windows scares > 90% of byers off.
 

johninsj

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If the stock can get over $8 a share, then his strategy will have panned out (and I can sell, finally.) Otherwise, not so much. I still think Nokia as a company should consider making some Android handsets too. They need to ship product and generate revenue.
 

a5cent

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over 8?! It's 3.5 and falling...

NOK is incredibly volatile, meaning the market has no idea where NOK is headed. Just two months ago NOK was at 4.8. ... if it can get a tad above 5.0, then hitting 8.0 is almost certain. It isn't unrealistic. NOK has hovered around 3.5 for a while now... not falling, although GS4 might push it lower. It will climb fast if the next financial reports show Blackberry isn't recovering.
 

a5cent

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I just can't see it climbing if they don't bite another few percents of the market... and how without new devices on the horizon
1)
But Nokia does have new Lumias on the horizon. EOS, Catwalk and Laser.

2)
NOK is only in dangerous territory below $2, because it then becomes a takeover candidate for hedge funds (the idea would be to dismantle the company and sell its parts for a sum total above the purchasing price). As it is now, the fluctuations in stock price aren't really a reflection of Nokia's success or strategy at all. Many investors transferred their money from NOK to BBRY because they felt BBRY may rally faster (which so far hasn't really happened), and some abandoned the stock because they were unhappy that Nokia decided against a dividend payout. There isn't much else to it.

3)
As long as Nokia can maintain their current sales volumes, they will survive. However, the goal is not just to survive, but to make a profit. For that Nokia will need to raise not just market share, but also their average sales prices. IMHO Nokia hasn't done as well as they could have, but I'm sceptical they would have achieved any breakout success even if they had executed perfectly. I think Nokia has done okay, and with the coming refresh at the high-end, they will have done everything anyone could expect of them. At this point, I think the ball is in Microsoft's court.

One more thing:
Err from what I know Samsung pays $10 or so per device for those royalties, Nokia pays 5 times more per license...that's a significant difference.
I had no idea that Samsung only payed $10 in royalty fees. What about the other vendors who are struggling? Is it the same for them also? I'm asking because I really don't know and didn't find it in my quick 2min google search, lol.
Microsoft doesn't sell WP licenses at a fixed price. The cost for a WP license depends on the cost of the device, but even for the most expensive devices like the 920, the licensing cost is far below the $50 price point you've suggested. Based on Nokia's reporting, the price for a WP license ranges between $10 and $32. Not more.

Furthermore, the WP license also includes "legal insurance". It guarantees that Apple can't take you to court over OS IP infringements. Should any other company attempt as much, then Microsoft will take up the fight in your place. You need only ask Samsung how much that legal insurance would have been worth during their fights with Apple... it cost Samsung billions.

I won't go into any more details here, but there are actually two scenarios in which the cost of a WP license compares favourably to the presumably "free" Android:
•If you are selling devices in low volumes (which is currently true of all WP manufactures).
•If you are selling less expensive low-end devices.

My point is that you are right. The cost structure for a WP device is quite different from that of an Android device. However, you are also wrong in the sense that the difference can't be placed squarely and solely on the shoulders of WP licensing fees. It's a lot more complicated than that.
 
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a5cent

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This is Elop's plan for Nokia, to be an IOS/Androidish hybrid. a TRUE third ecosystem with truly innovative software/hardware that is distinctively Nokia.
Personally I think its a damn good one.

Thanks for the write-up!

I agree that the strategy is good, although I would argue this is actually Microsoft's strategy. Nokia is simply the only manufacturer, that decide to align their hardware strategy with Microsoft's original vision for the OS.
 

JustToClarify

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1)
But Nokia does have new Lumias on the horizon. EOS, Catwalk and Laser.
.

Umm EOS most probably will not be a phone at all(for reasons mentioned here : Why Nokia 808 had to use Symbian... ) still should rock digital camera world if it's true that it will have 41 MP sensor combined with moving optics(=real zoom). But market for such devices is not huge, Galaxy Camera and Nikon S800c are not doing well.

Catwalk&Laser will IMHO not present anything new in mobile world which would shake the market, prolly aluminium body and maaybe xenon and that would be it. The thing is that smartphone buyers want numbers, and WP is limited to 720p resolution when all big names go with 1080p. Except Apple which can allow itself that comfort, but Nokia can't. I know there is no visible difference between 720 and 1080 but I can not decide what market will want.

2)
NOK is only in dangerous territory below $2, because it then becomes a takeover candidate for hedge funds (the idea would be to dismantle the company and sell its parts for a sum total above the purchasing price). As it is now, the fluctuations in stock price aren't really a reflection of Nokia's success or strategy at all. Many investors transferred their money from NOK to BBRY because they felt BBRY may rally faster (which so far hasn't really happened), and some abandoned the stock because they were unhappy that Nokia decided against a dividend payout. There isn't much else to it.
.

OK I am not that good in market analysis and I see you have a lot more experience than me. I saw at the middle of January they got close to $5 and were on a constant raise but then something happened and since then it's in a constant fall(3.45 now). I don't know if their financial report has to do something with that or something else is in question.

3)
As long as Nokia can maintain their current sales volumes, they will survive. However, the goal is not just to survive, but to make a profit. For that Nokia will need to raise not just market share, but also their average sales prices. IMHO Nokia hasn't done as well as they could have, but I'm sceptical they would have achieved any breakout success even if they had executed perfectly. I think Nokia has done okay, and with the coming refresh at the high-end, they will have done everything anyone could expect of them. At this point, I think the ball is in Microsoft's court.

The problem is what I have said above, the refresh would not be enough I'm scared. And I am also not sure that MS is going to rework their kernel to enable it support technicalities that market demands.

One more thing:

Microsoft doesn't sell WP licenses at a fixed price. The cost for a WP license depends on the cost of the device, but even for the most expensive devices like the 920, the licensing cost is far below the $50 price point you've suggested. Based on Nokia's reporting, the price for a WP license ranges between $10 and $32. Not more.

Furthermore, the WP license also includes "legal insurance". It guarantees that Apple can't take you to court over OS IP infringements. Should any other company attempt as much, then Microsoft will take up the fight in your place. You need only ask Samsung how much that legal assurance would have been worth during their fights with Apple... it cost Samsung billions.

I won't go into any more details here, but there are actually two scenarios in which the cost of a WP license compares favourably to the presumably "free" Android:
•If you are selling devices in low volumes (which is currently true of all WP manufactures).
•If you are selling less expensive low-end devices.

My point is that you are right. The cost structure for a WP device is quite different from that of an Android device. However, you are also wrong in the sense that the difference can't be placed squarely and solely on the shoulders of WP licensing fees. It's a lot more complicated than that.

Ah OK then, I know I have read somewhere they are paying $50 or so and here is the link I've found, however that was before WP8 devices hit the market so I guess you are right here.

Nokia paying Microsoft $60 per Windows Phone royalty - 20 Jul 2012 - Computing News
 

a5cent

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Except that the WP8 marketshare has tanked massively since the new Lumias have been introduced.

Quoting BGR is more likely to get you laughed at than anything else. In this case BGR is just quoting ComScore, so they can't screw up too badly, but even then they admit to the following:

"ComScore’s latest findings do contradict recent research from Strategy Analytics showing that Microsoft last quarter had overtaken BlackBerry"

Lets take a closer look. The BGR article you quoted is based on ComScore's December 2012 report:
Sept-12
Dec-12
Point Change
Microsoft
3.6%
2.9%
-0.7%

In ComScore's January 2013 report however, things look a little different:
Oct-12
Jan-13
Point Change
Microsoft
3.2%
3.1%
-0.1%

I'll let you make sense of that. Without knowing exactly how ComScore measures market share, it is hard to interpret these numbers. However, the general consensus is that ComScore lumps all versions of WM and WP together, which doesn't really make much sense. That is why many think ComScore's "WP" market share loss numbers are exaggerated, due to the last remnants of WM disappearing. My personal reading of these numbers is that WP is keeping up with market growth, which means WP manufacturers are selling more devices, but not cutting into Apple's or Android's market share.

Finally, if Microsoft's market share was at 2.9% in December 2012 and at 3.1% in January 2013, that would mean WP actually gained market share (which is what many sites actually reported for January)!. Either way, and whatever happened, your statement that market share "tanked massively" is quite exaggerated. Less drama and more substance wouldn't hurt.
 

a5cent

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Umm EOS most probably will not be a phone at all (for reasons mentioned here : Why Nokia 808 had to use Symbian... )
I read the article. IMHO, the author is stretching for rather esoteric arguments why a WP based 808 is impossible. I don't buy a single one of them. There are a few threads on this forum that discuss how an EOS device might work, like this one. There are actually a few approaches Nokia could take.

The thing is that smartphone buyers want numbers, and WP is limited to 720p resolution when all big names go with 1080p. Except Apple which can allow itself that comfort, but Nokia can't. I know there is no visible difference between 720 and 1080 but I can not decide what market will want.
I would actually argue the opposite, namely that WP can't afford to play Android's game, but I won't get into that lengthy debate here. Yes, this does leave WP at a spec-sheet disadvantage, but the companies behind WP will have to find a way to market themselves around that problem. The good news is, that the geeks who are unsophisticated enough to make their purchasing decisions based solely on meaningless spec-sheet numbers, are also easy to market to. You just need to dangle the right carrot. I think the app problem is the far more serious issue than the spec-sheet war.

I saw at the middle of January they got close to $5 and were on a constant raise but then something happened and since then it's in a constant fall(3.45 now).
Yep, that was the dividend payout I mentioned. Ever since then, NOK has been in a self sustaining downward spiral. Not to say it can't change, but so far the price has always met resistance around 3.5. It's recently been lower than 3.45 just to go back up to 3.6... basically, it's just investors jumping in or out, based on how they interpret the technicals at any particular moment. No vision... no understanding of the consumer tech market... no real forecasting...

I am also not sure that MS is going to rework their kernel to enable it support technicalities that market demands.
Of course MS will rework the kernel to allow for hardware improvements. It just won't happen in the way it does on Android. Improvements to WP hardware will occur in larger and more meaningful "jumps". This is great for software developers, but it also insures flagship devices aren't outdated in two months as they are on Android. In theory, it should also allow for a more stable and reliable OS and app experience, but Microsoft couldn't leverage that due to WP8 being almost completely rebuilt this last cycle.

I have read somewhere they are paying $50 or so and here is the link I've found, ...
Hmm, they calculated that number on their own and didn't even bother to mention how... sounds fishy. A bit earlier, a ZTE spokesperson came right out and stated Microsoft is asking them to pay $20 to $30 per device. This was widely reported. The general consensus is that ZTE felt they were being treated unfairly, because Nokia and HTC both got better deals. That also meshes with info from Mary J Foley who mentioned that Microsoft has a tiered licensing model for WP, meaning those who sell more devices (Nokia/HTC) get better deals than those who sell less (ZTE).

Unfortunately, MS doesn't publicly disclose WP licensing costs, but based on the things people are saying who are directly affected by it, as opposed to those who attempt to calculate it based on their own guestimations, I think it is safe to say the licensing price has always been far below $50.
 

JustToClarify

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I read the article. IMHO, the author is stretching for rather esoteric arguments why a WP based 808 is impossible. I don't buy a single one of them. There are a few threads on this forum that discuss how an EOS device might work, like this one. There are actually a few approaches Nokia could take.

I haven't seen a single one feasible approach on that thread, could you be more specific?! The yellow prototype(which I doubt exists) is everything but ergonomic for a phone and camera too. Esoteric or not the arguments are based on simple facts, and I can't see it as impossible just not feasible(to keep satisfying size/weight for a phone)...at this moment at least. I would appreciate if you could provide detailed technical explanation of how it would look and work.

I would actually argue the opposite, namely that WP can't afford to play Android's game, but I won't get into that lengthy debate here. Yes, this does leave WP at a spec-sheet disadvantage, but the companies behind WP will have to find a way to market themselves around that problem. The good news is, that the geeks who are unsophisticated enough to make their purchasing decisions based solely on meaningless spec-sheet numbers, are also easy to market to. You just need to dangle the right carrot. I think the app problem is the far more serious issue than the spec-sheet war.

There are numerous WP8 applications coming daily so I guess they are going to solve that problem rather quickly. WP8 doesn't seem to be hard to code/port for(like Symbian was).

Of course MS will rework the kernel to allow for hardware improvements. It just won't happen in the way it does on Android. Improvements to WP hardware will occur in larger and more meaningful "jumps". This is great for software developers, but it also insures flagship devices aren't outdated in two months as they are on Android. In theory, it should also allow for a more stable and reliable OS and app experience, but Microsoft couldn't leverage that due to WP8 being almost completely rebuilt this last cycle.

the question is if that reworking is going to render existing devices obsolete (again)? Lumia 900 was made obsolete only a few months after going on sale as it's totally incompatible with WP8. Android devices from 2 years ago can still run almost all of newest apps. The buyers notice that and don't like it, MS really needs to make some consistency there. Nokia also doesn't help much in this situation, only a few months after pushing 820 on the market they are presenting 720 which is a lot cheaper and still more of a package IMO...such moves detract buyers from Nokia&WP.

Hmm, they calculated that number on their own and didn't even bother to mention how... sounds fishy. A bit earlier, a ZTE spokesperson came right out and stated Microsoft is asking them to pay $20 to $30 per device. This was widely reported. The general consensus is that ZTE felt they were being treated unfairly, because Nokia and HTC both got better deals. That also meshes with info from Mary J Foley who mentioned that Microsoft has a tiered licensing model for WP, meaning those who sell more devices (Nokia/HTC) get better deals than those who sell less (ZTE).

Unfortunately, MS doesn't publicly disclose WP licensing costs, but based on the things people are saying who are directly affected by it, as opposed to those who attempt to calculate it based on their own guestimations, I think it is safe to say the licensing price has always been far below $50.

It sure is and you are right here, but keeping those costs secret will always make people think there is something MS has to hide.
 

gnirkatto

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What I really do not understand, is why Nokia, now that they have a potential flagship superstar phone like the L920, were not capable to deliver sufficient numbers of devices to the field to fulfil demand. It took them months from announcement to making it widely available, and even now, you can't get it from any random dealer like Samsungs or all other brands. Even Blackberry were able to make their new device available relatively widely, just a few weeks after announcement. What's going on with Nokia? Too many factories closed?
 

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