Editorial | Surface Phone: the MS Contingency Plan

[andrelamont]

I am a nokia ******, I am a WP ******. I have always developed (by choice) on the windows platform. My first phone was a nokia 2210 with custom red faceplate. I was super-duper-quadlooper excited about nokia making WP as it may me think of a lot of memories with my 3310.


I love my WP and have no pland to switch. Even if MS left the mobile space I would still buy used WP phones.

I have followed several ex Microsoft employee and Nokia employeees for over a year now and have just exsorbed their comments. Filtering out the rants from solid information (no need to throw out the baby with the bath water)

I am not a writer but that's please excuse the sentence fragments and poor grammar as I write code all day and comment in broken english

I WILL supply links, sources and references to my editorial as I think its vital and add some measure of credibility to my thinking. If you see something that needs links right away please let me know. If I can't find it I will let you know



This editorial has everything to do with up and coming phones...and more specifically a Surface Phone from MS. I have links for all my points but it make take awhile to embed them

Overview | Quick Summary
It makes perfect sense for MS to produce a surface phone in light of the fact that Stephen Elop tenure at Nokia maybe short lived. He may not make it till fall 2013. The next CEO of Nokia will have to take an objective look at Nokia and would make choices that may not be in the best interest of MS. I believe that MS is aware of this. MS cannot wait until this happens but must be proactive in getting ready for that inevitable day. I call this minimizing their dependency on Nokia which may go into a different direction in the future.

Secondly,for the future of MS, it has to be a major player in the mobile arena as it will be revenue generator as PC sales diminish over time.



stop reading now unless you want to torture yourself










Nokia's Current Status
In 2009, Nokia sales were trending down ( 19% from 2008). Market share decreased from 40% to 37% and they saw based upon 2008 & 2009 sales where they were headed. So they brought in a new CEO Stephen Elop to change the direction of the company. After arriving at Nokia he drew some conclusion, Nokia's problems were ecosystems based and not execution based (time to market). So he looked at all the mobile ecosystem available and decided that Nokia future would should be with the MS's WP operating system versus keeping MeeGo and not adopting Android. I personally like the idea of using WP as the primary OS as Android was crowded. Even a former disgruntle Nokia executive Lee Williams had to agree that this was the right choice saying

"I did not, and still do not see any benefits to Nokia embracing Android," he tells me.

There are lots of problem with Android from Nokia's perspective, according to Williams -- not least the fact Google's own business aims are in conflict with Nokia's need to establish a distinctive software ecosystem of its own.

"Android is a less capable offering than a few options that still exist within Nokia," argues Williams. "It's certainly not what I would refer to as an open system. More than that, I think that Nokia has little opportunity to differentiate here in the near term, and the Android platform is so highly fragmented that returns on investment become difficult at best for an ecosystem participant.

Stephen Elop's failure as a CEO was not picking WP but having the all or nothing approach. As WP customer, I love the laser like focus on WP! As a shareholder of Nokia, the plan was too risky. The plan had to be perfectly executed or else the hoard of cash $18billion had would soon disappear ($12.4 as of March 2012). The biggest risk with the all or nothing approach is....the revenue stream. Where would Nokia receive revenue while they ramped up their WP offering? Elop did not adequately gauge this risk. A wiser choice would have been to continue offering the same products they had been (even though sales were trending down ) offering to have income/profits coming in and WHEN WP became a dominate player...cut off all the products. This approach has risk but much less than diving all in.

At the top of 2010, Elop sent the famous burning platform memo that was done with good intention but it effectively Osborned all of Nokia products. He should have known better that memo would leak out! So in Feb 2010, he told customers (indirectly) that they were ditching their current product line (and customers were scared away from buying their current products...i.e the definition of osborne effect ) and WP wasn't ready. I repeat, he told customers indirectly that their current products were no good...yet he had no product to replace it...a recipe for disaster! Hence, Nokia revenue and profits took a MAJOR hit. It's like quitting your day job to start your own business and not having a salary to support you. Your saving could only carry you so far. If executed perfectly, you could quit your day job and start a small business but there are tremendous risks involved...big RISKS, such as running out of savings and losing cars and homes. (note to self, start small business on the side until sales trends justifies telling your boss to shove it)

From his announcement in Feb/2010 to Oct/2011 Nokia had no WP to sell to generate any revenue and their stock took a hit because of lots revenue! Get this, it took them 20 months to produce the first WP after the burning memo. Nokia's biggest problem up until then was time to market. They would announce a product and it would take them months to produce it (see N7, N8) and this corporate culture continued with the WP phones.

From a financial standpoint Nokia should have continued to sell the N9, a new N10 and new N12 until sales of WP justified cutting off all other product lines. I am sure there were problems with resource allocation where they did not have the man power or $$ to fund multiple products...but this approach would have still allowed them to bring in some profits AND keep their cash hoard.

Imagine McDonalds fries and burgers sales were trending down b/c of consumers wanting healthier food and some McDonald exec told customer that they were no longer going to sell the unhealthy fries and cheeseburgers as they were bad for them, Yet had no health alternative foods ready to sell. The revenue stream would tank as fries and burgers produce revenue and profits no matter how bad they were! When the market proved that healthy foods were revenue generators then they could ditch the fries/burgers...but not before!

There are lawsuits pending from shareholders of Nokia and even the most balanced shareholder of Nokia has to judge Elop on the results. If the 920 doesn't take off then his vision or plan has to be questioned and new CEO with a new vision must be put into place. This makes me nervous as a WP fan, but the CEO of Nokia must execute.

LUMIA 800 & Retail Shelving Problems
When Elop took over, some senior employees left the company or he directly replaced them with his choices. The problem with this approach is that these Senior employees took their knowledge, expertise and carrier relationships with them.

Let's take the US out of the equations with their 4 primary carriers. There are over 150+ carriers worldwide and Nokia lost a lot of relationships with these carriers when Elop brought his team over. The carriers did not want to stock Nokia Lumia 800 offerings. For 2 reasons....fear over Skype integrations and Microsoft.

In the Q2 2012 shareholder meetings, Stephen Elop admitted that retail sales staff were reluctant to sell the Lumia phones and he hasn't figured out how to overcome that problem. If carriers will not sell your phone...that phone line is doomed. This has happened to the 900 and 800 series of phones.

During this same shareholder meeting Elop, was stomped as to what to do with carriers not wanting to sell the lumia phones because of Skype integration and he replied

" If the operator doesn't want us, it doesn't want us. We will appeal to them with other arguments. We have more to offer to them. It is a good point to start the discussion from Skype."

Charlie Kindle, who used to be the Program Manager for WP admitted that MS carrier relationships were bad BEFORE WP and got even worse with WP7 saying MS poisoned those relationship in 2011. That's why I thought it was interesting that after Nokia September 5 press conference that Charlie Kindle had this comment after Nokia had no price or carrier information

"Lack of price means lack of seriousness by carriers."

If a carrier is serious about an OEM phone they will negotiate like they are serious.

Now before we easily dismiss Charlie as some ex microsoftie he did work with the carriers as his day job. I repeat...this was his J-O-B. So he knows about the negotiating that goes on behind the scenes and when he talks about pricing...it's not the $199.99 price you and I see...it's about the OEM pricing and how much the carriers are willing to cover.

Take the average smartphone, brand new it cost $199 + ETF (early termination fee) of $375 that means the carrier has $575 (worst case scenario) to pay to the OEM from the consumer. If the OEM charges less than $575 the carriers can make profit. If they charge more than that it, it cost them. This is why Sprint is in the hole with iPhone because their OEM price is $649,$749 and $849
Carriers will put up with this price because the iPhone is a subscriber switching phone..i.e people will switch to their carrier to get an iPhone (not sure if this is the case anymore in 2012 like it was in 2007). Other than that, carriers don't want to lose money and even want to make money by selling phones cheaper. This is what OEM and carriers argue about behind the scenes...not the $99 or $200 you and I see.

Nokia struggles in this area as they believe they are still a premium brand and their products are premium products but retailers disagree and so some retailer just don't push or gasp..even sell them. Hal Berenson another ex Microsoftie, repeats the same thing.

Microsoft's problems are with marketing and carriers

Nokia's were known for their imaging and reviews showed that the Lumia 800 did not have the differentiator(sp?) that Elop talked about so much. Their N8 offering had a 12mp camera with the more powerful XENON flash. Yet the Lumia 800 took several steps backwards from the N8 and the Carl Zeiss lens did show up in the real world.

Nokia wanted to price the 800 the same as the dual core, high res screen offering of iPhone and Galaxy phones and their familiar OS with their 100,000+ apps. So retailers (around the world) did not show case the Lumia 800. No shelf space means no sales. In the US carriers in the US flat out didn't want the device which meant poor sales in another region.

The Lumia 900 faced the same rejection (again think big picture...around the world) and even in the US AT&T rejected the 900 initially as it didn't have LTE. Nokia didn't have LTE b/c WP7 didn't support it. This required MS to scramble and add LTE support. Software issues was one of the causes for the delay for the Lumia 900 (HTC Titan II LTE enabled came out 2 months later than the original HTC Titan as it finally got LTE software support that was needed )

Skeptics among operators say the sleek, neon-coloured phones are overpriced for what is not an innovative product, cite a lack of marketing dollars put behind the phones, and image problems caused by glitches in the battery and software of the early models.

*note. Nokia is doing the same thing again with pricing their phones 920/820 near the same level as iPhone 5 and SIII while HTC is pricing theirs below the market leaders and this is causing problems for the carriers where they don't want to eat the cost but actually make...a profit.

Carriers don't want to eat the cost of selling a phone that is not perceived to be a technically equal to the market leaders so they don't want to sell a product that automatically puts them in the red. HTC understands this and quickly got 150+ carriers on board with offering while Nokia continues to struggle. In the US, There is still no announcements of carriers nor pricing...my guess, they are are still negotiating as of Oct 2nd.

HTC 8x
As an example, did it ever strike you as it being odd that on HTC release conference that they were publically able to state that had 150 carriers lined up in over 50 countries? Contrast that with silence from Nokia

LUMIA 900
The Lumia 900 was a desperate move on Elops part (opinion) and it should have came out in Nov/2011 not April 2012. Months had passed since the burning memo and the US still did not have a phone for sale ( 800 was a non starter ) So as CEO, Elop allowed the 900 to enter the market and this was doomed from the start. I say doomed because of the time to market problem. Tech savy consumers knew about the Apollo feature set in Jan 2012, Competitors had more advanced HW coming out SII,HTC One, iPhone 5 leaks were coming out so release a HW disadvantaged, SW disadvantage phone, MS had not properly advertised their OS up to that point, so releasing a phone in April 2012 was poor timing. It was simply release to late and besides the wow color factor. The camera was not Nokia wow. The iphone 4s still had a better camera.

BTW: I am a proud owner of a cyan Lumia 900
Lets work backwards for a moment:

• Sept 5th/2012 Nokia announced the Lumia 920 and from all reports the hardware was ready to go, but the software was not.
• June 2012, MS publicly announced that WP7 and WP8 were not going to be compatible forward/backward
• Jan 2012, video leaked w/Senior vice president and Windows Phone manager Joe Belfiore talking to partners at Nokia about WP8 features
• Nov, 2011 Samsung Focus S was introduced
• OEM were introducing dual core in Q4 2010,
• In 2009-2010, MS knew they were going to reboot Windows Phone as Steven Sinofsky did not like the current model and wanted a single kernel across the platform. Plus he did not like .NET
• Two large development teams were created @MS one for WP7 and WP8. WP7 was a stop gap until they could fulfill the requirements for WP8. MS could not allow another 2 years to go by with a mobile OS so I can understand the stop gap.
• It takes about 18-24 month for a phone to be developed from scratch. If reusing an existing design the time to market can be cut

So the question is when did Nokia know about WP8 and WP7 not being compatible (updated: answered in reply below)? We can say yes before June 2012 and I would say even before CES 2012 as the last new HW from Samsung/HTC came out in Q4 2011 as they new these were going to be the last of the WP7 compatible phones. So why did Elop release the 900 even though he knew it would be incompatible with WP8 and they had a replacement already in the 920?

Sales...they had to stop the blood. He bet the ship on WP8 and needed some sales or revenue to come in. I don't blame him if I were him (now as a customer sure I would blame him but as CEO...) He had to take the gamble and see if the 900 would take off. At&t promised hero status marketing even though it did not have hero status HW or software so they tried. Thats why the phone came out at $100 on contract and HE (gasped) even refunded $100 for early user of the phone because of quality problems (software i think) So the profits Nokia might have made on the phone were given given back to At&T as Nokia was in a panic state. They needed to get customers.

*Nokia will layoff 13,000 employee in 2013 to save money
*Nokia has to sell its HQ building and lease the building back to save money


Elops plan may work out and get more than 3.7million phone sales in 90 days with WP8, but what if it doesn't work out? Wouldn't that pragmatic approach be to diversify your portfolio? Wouldnt you at least think about a new leader?

What plan does Nokia have left, just wait to WP9? Give their phones away? I am not sure aand maybe MS is not sure either.

MS most favored CEO partner may be on his way out and MS needs a backup plan just in case the NEXT CEO looks at things differently.



Microsoft's Future
MS has to be a player in the mobile space as its critical to its future. Leaving their future to Samsung and HTC (who are heavy players in the Android space) is introducing a lot of risks into their future plans. They have to succeed or their future is dependent on selling Windows, Servers software and Office.

MS has seen the revenue from their mobile offering and there is not enough profit in this arena. Look at the expenses involved with WP...now look at the amount of revenue they generate from licensing their mobile OS compare to the revenue and profit from selling windows. I have heard (no hard proof) that mobile OS sells for $15/copy and desktop $85/copy. In terms of profits that's huge! Combine with a low market share (4%) and that's not a lot. At one point in 2010, MS was selling 1million copies of Windows 7/day! @$85/copy....that's $85millon/day!

Contrast that with Nokia having a 87% share of WP (Q2 2012 according to Kantar Worldpanel) and Lumia only selling 3.7 million copies means that only 4.25million copies of WP were sold in all of Q2 (90 days)

So my quick math tells me @ $15/copy X 4.25 million means they had revenues of $0.063billion for 90 days of sales. That's a lot to me or even a sports athlete but compared to the revenues from the Window division (Q2 2012 $4,740 billion) Dare I mention that's revenue...not profit! so out of the $63mil they have to pay for advertising (they gave Nokia $0.250 billion last qtr), salaries, licensing, research and development.


Now take a look at a different model. The low end iPhone cost $649 dollars. According to iSupply, it cost Apple $207 ( BOM and manufacturing ) for a difference of $442. Now lets take 1/2 (generous) of that amount to pay for R&D, salaries and advertisement and you still have $220 of pure profit from each iPhone and you can see why Apple generates massive profits each quarter.

Is it hard to fathom MS being envious of the margins Apple makes on each phone ($442 vs $15 ) and thinking it would be nice to get some of that? When you look at it this way, even if WP grabbed 30% of the market it still would not generate the revenue it would need to grow as the volume is just not there. But if it made HW it could generate the type of revenue it would need to continue to be a tech giant. Yes I know it's not a simple as that (ask dell, palm, HP and cough...Zune Hardware...Kin Phone ) but with $50billion in cash reserve wouldn't it be worth it to invest in the future of MS

 

[andrelamont]

Found on this very site

Samsung will be looking at leaving Windows Phone and will cease innovating for the platform from 2013 onwards

Samsung leaving Windows Phone from 2013? [Rumor] | wpcentral | Windows Phone News, Forums, and Reviews

Not saying it is true or false...but if its is true, does the Surface Phone make sense now?

Again just reading the tea leaves and I don't have any inside information...just a guy the reads a lot of phone related articles, asks a lot of questions...and loves WP phones


...also, one bit of information w/regards to the timing of Lumia 900 release. All the OEM involved in WP7 development as far back as 2009 knew that WP7 would never run WP8. No such promises were ever made. The chipsets used in WP7 were completely incompatible with the NT kernel and this information was known.

 

[theefman]

...also, one bit of information w/regards to the timing of Lumia 900 release. All the OEM involved in WP7 development as far back as 2009 knew that WP7 would never run WP8. No such promises were ever made. The chipsets used in WP7 were completely incompatible with the NT kernel and this information was known.

Do you have any facts at all to back up the statements you state as fact, especially this one?

 

[SnailUK]

As i said in another Surface thread, what if the surface phone isn't a phone at all, but a skype device.

Microsoft own Skype now, they've got an OS that would work on a skype device, and they are permanently fighting with carriers to get updates on their devices, surely a skype phones makes perfect sense.

Like an ipad, you just need to buy a data sim card (which work out cheaper than phone sim cards), and in one fell swoop, you've got all the advantages of a smartphone, without the carrier control.

Personally it really works for me. I hardly use my "phone", its more of a internet device with phone functionality. If theres some way of routing calls to my "phone number" to skype, then i'm sold.

No more call/text bundles, no more carrier update issues, and it puts Microsoft in a strong position to subsidise devices themselves.

 

[SnailUK]

Do you have any facts at all to back up the statements you state as fact, especially this one?

Surely its only logical, otherwise at some point someone would have said "of course you'll get updated to WP8".

We've known about WP8 coming for at least a year, and no OEM has ever officially said anything about upgrades. So surely they knew it was at least a high probability of WP7 not upgrading to WP8.

 

[andrelamont]

Do you have any facts at all to back up the statements you state as fact, especially this one?

Great question theefman!
I asked Charlie Kindel this question and his response was

I think all involved knew in 2009 that WP7 phones would never run WP8. No one ever promised they would.
source

Earlier in the conversation he said

The WP7->WP8 issue is more complicated than that. The chips picked by WP7 in '09 are incompat with the NT kernel.

The chipsets used in the WP7 phones were qualcomm S2...MS did not get Windows to run on arm chipsets 'publicly' until Jan 2011
source
The snapdragon S3 chipset was not even available until Q3/Q4 of 2010 so a Jan 2011 showing makes sense

Again, I am using kindel as a source because he was a Program Manager on the WP7 team and left after mango was released(? need to review timeline) His website is here
cek.log : Geeky rants, raves, and random thoughts from Charlie Kindel...

He's not a bitter ex-microsoftie and you can tell he still is passionate about WP.


Added:
I also have to draw upon my own personal experience as a SW guy who wrote software for hardware and there were times when we had to just bite the bullet and let our customers know that their HW would not support our latest greatest software. We had to let General Motor, Nestle, Budweiser and etc know well in advance (like 12-18months) what our software roadmap was. This allowed them to plan better for hardware they would buy for their factories. The keyword is here is...it allowed them to plan. You don't want the General Motors of the world to purchase components when the component won't work with our software. They don't like that and its not fair

 

[a5cent]

Hey andrelamont. Good writeup! Well done! I can confirm everything you stated, with two minor exceptions:

All the OEM involved in WP7 development as far back as 2009 knew that WP7 would never run WP8. No such promises were ever made. The chipsets used in WP7 were completely incompatible with the NT kernel and this information was known.

Do you have any facts at all to back up the statements you state as fact, especially this one?

I believe everything in your paragraph to be true except the last sentence:

> The chipsets used in WP7 were completely incompatible with the NT kernel

I know for a fact that this is not true. I doubt a Microsoft employee would have said such a thing either. Unfortunately, I can't provide publicly accessible documentation to back that up with, so make of it what you will. Well, if it was technically possible, then why didn't WP8 come to WP7 hardware you ask? That can be attributed to Microsoft's goal of minimizing fragmentation along as many axis as possible... in this case device fragmentation. Charlie Kindle also has a good post on that subject.

In 2009, Nokia sales were trending down ( 19% from 2008). Market share decreased from 40% to 37% and they saw based upon 2008 & 2009 sales where they were headed. So they brought in a new CEO Stephen Elop to change the direction of the company. After arriving at Nokia he drew some conclusion, Nokia's problems were ecosystems based and not execution based (time to market). So he looked at all the mobile ecosystem available and decided that Nokia future would should be with the MS's WP operating system versus keeping MeeGo and not adopting Android.

The goal of adopting WP was formed well before Elop showed up at Nokia (not 100% decided on but deemed worth following). That goal was actually one of the reasons why Elop was chosen for the position.

 

[snowmutt]

Wow.

Excellent write up. Excellent follow up posts. While a lot of this information I had heard, surely didn't put it all in one place.

There are some assumptions and open ended ideas in there, but I will not argue them now. Simply put: Nokia and WP need sales. Everything else falls into place if WP8 sells well at launch and the second generation sell well into next Summer.

Otherwise, it gets real ugly real fast.

 

[andrelamont]

Hey andrelamont. Good writeup! Well done! I can confirm everything you stated, with two minor exceptions:

I believe everything in your paragraph to be true except the last sentence:

> The chipsets used in WP7 were completely incompatible with the NT kernel

I know for a fact that this is not true. I doubt a Microsoft employee would have said such a thing either. Unfortunately, I can't provide publicly accessible documentation to back that up with, so make of it what you will. Well, if it was technically possible, then why didn't WP8 come to WP7 hardware you ask? That can be attributed to Microsoft's goal of minimizing fragmentation along as many axis as possible... in this case device fragmentation. Charlie Kindle also has a good post on that subject.

The goal of adopting WP was formed well before Elop showed up at Nokia (not 100% decided on but deemed worth following). That goal was actually one of the reasons why Elop was chosen for the position.

Hmmm...the incompatible comment came from Charlie..

I written tons of software in my life but never at the OS level. I have never written any firmware either! I would guess (help here) that OS would have to have several general abstract software layers to minimize impact on different chip architecture? Is this the reason why you said it it could have been compatible if they wanted too?

How is it that Android can run on different chipsets?


I find it fascinating that Nokia had made up their mind about WP BEFORE Stephen Elop got there!! Tomi Ahonen paints a much different picture

 

[andrelamont]

Wow.

Excellent write up. Excellent follow up posts. While a lot of this information I had heard, surely didn't put it all in one place.

There are some assumptions and open ended ideas in there, but I will not argue them now. Simply put: Nokia and WP need sales. Everything else falls into place if WP8 sells well at launch and the second generation sell well into next Summer.

Otherwise, it gets real ugly real fast.

snowmutt,

I don't mind being questioned as I've been factually wrong about million times. I don't see it as arguing but holding a conversation. So please talk!

 

[a5cent]

Hmmm...the incompatible comment came from Charlie..
I written tons of software in my life but never at the OS level. I have never written any firmware either! I would guess (help here) that OS would have to have several general abstract software layers to minimize impact on different chip architecture? Is this the reason why you said it it could have been compatible if they wanted too?

How is it that Android can run on different chipsets?

Hey andrelamont

I'll try to answer your questions, while also addressing this statement attributed to Charlie Kindle (hold on, it's a long ride):

"The chips picked by WP7 in '09 are incompatible with the NT kernel."

If that is really what Charlie told you, then I don't know what to make of it. Strictly speaking, that statement is true of course: The NT kernel isn't automatically/effortlessly compatible with the chipsets in WP7 devices. Someone must first put in the effort to make it so! Could it be that the statement is taken out of context, or possibly Charlie wasn't understanding your question correctly? I don't know.

Unfortunately, I have no way of proving to you that the statement is incorrect. Ultimately, my word against Charlies will be a hard sell. Making my position even worse, is the fact that Microsoft is completely content allowing everyone to believe that bringing the NT kernel (and thus WP8) to WP7 devices was technically impossible. I assume Microsoft finds that much simpler than publicly stating:

"we could have updated WP7 devices with WP8, but we didn't want to because <insert very good reason here, that almost nobody will understand>"

Despite the nonexistence of anything official, I can still give you a few clues and things to consider (maybe you can hookup with Charlie again afterwards):

1)
As you already hinted at, Microsoft had Windows NT running on ARM chipsets long before January 2011. Take a look at this official video posted by Microsoft research, demonstrating Windows NT running on the very first Tegra chipset in June of 2009 (the project team working on this dubbed it Experiment 19)!

2)
The chipset running Windows NT in the aforementioned video is nVidia's Tegra APX 2500, which is built around an original CPU architecture design licensed from ARM under this name:

ARM11 MPCore CPU architecture (supports the ARMv6 instruction set)

Basically, it is the supported instruction set which determines whether or not a CPU architecture can run any specific OS. In this case, the video proves the ARMv6 instruction set will suffice to run the Windows NT kernel.

Now! Note that this ARM CPU was actually the precursor to the ARM CPU's used in the 1st generation WP7 devices! Again, this is the precursor to what ended up in the 1st generation WP7 devices and it was already capable of running Windows NT! The argument "the chipset picked in '09 is incompatible with the NT kernel" sounds very strange to me, when the precursor to that chipset from '08 could already run it.

3)
Also note, that on the ARM11's specification page, the Cortex-A5 is listed as a related product (see related products tab).

The reason the Cortex-A5 is listed as a related product, is because ARM developed it as the follow-on product to the ARM11. It's the natural upgrade path. You can go look at the Cortex-A5 specifications page, where ARM explicitly states that the CPU will run anything that runs on an ARM11, although the OS will need to be recompiled (applications run unaltered).

Now, consider that the original Cortex-A5 CPU design is actually used in some of the WP7 devices like the Lumia 610 (based on the MSM7227A). No matter how you slice it, at least the Lumia 610 handset would have had absolutely no problem running the exact same version of Windows NT that was demonstrated in that video from 2008! The CPU was explicitly designed by ARM to do so.

4)
For most other handsets, the line of reasoning gets a bit trickier, because the CPUs they incorporate aren't based on the original Cortex-A5 architecture from ARM. Instead, they are based on the Snapdragon architecture from Qualcomm. However, both of these architectures support the exact same ARMv7 instruction set.

Note that the ARMv7 instruction set is a superset of the ARMv6 instruction set on which the Windows NT kernel was already running in 2008.

The instruction set is the set of instructions that a CPU understands. CPU's that understand the same instructions can do the same things (although not necessarily equally fast). Snapdragon and Cortex-A5 are two different CPU architectures, that support the exact same instruction set. All of us are already familiar with this from AMD and Intel. AMD and Intel both design their own CPU architectures, but their CPU's support the same instruction set (somewhat simplified but it shall do for now). That is why we can install the exact same Windows OS on either an Intel or an AMD based PC. Both work fine, because both CPU architectures understand the same instructions.

Provided two CPU architectures support the same instruction set, it is highly unlikely that you can't get the same OS running correctly on both. There would almost have to be a bug in one of the CPU designs, but I think it is safe to rule that out, since Android device manufacturers have absolutely no problem getting Android to run on a whole hord of differing CPU architectures. Android is fine with all of them, because they all support the ARMv7 instruction set. There is NO technical reason Microsoft couldn't do this just as easily with Windows NT (although it would be a bad idea). Again, every single CPU ever integrated into a WP device supports that exact same ARMv7 instruction set.

You can also think of it this way: All the Snapdragon S4 processors going into our WP8 devices support nothing beyond the ARMv7 instruction set either... nothing more... nothing less... every single last one. Hence, there are no instructions that these CPUs understand which the CPUs in our current WP7 devices don't. Sure, they are faster, but that is it.

5)
Finally, there are still many people who claim that WP7 hardware is just too slow to run the "full Windows NT kernel". I have no idea what hole people are pulling that argument out of, but you read it all over the place.

Comically, Microsoft themselves stated years ago that this just isn't true. In fact, Experiment 19 proved the exact opposite. Already in the commentary to that very first video I linked to from 2008, Microsoft explicity states:

The prototype system on the right proved that the Windows NT system could achieve better performance than Windows CE (on which WP7 is based) on identical hardware.

I find it fascinating that Nokia had made up their mind about WP BEFORE Stephen Elop got there!! Tomi Ahonen paints a much different picture

Careful now, I didn't say they made up their mind. I said it was being strongly considered. Unfortunately, I really have nothing at all to back this statement up with. All I can say is this:

Typically, it is the board of directors who define company strategy. The CEO's job is to execute that strategy. If the CEO is unwilling or unable to execute that strategy, it is the board of directors job to replace that CEO with someone who can.

Make of it what you will.

 

[andrelamont]

whoa! way to wake me up in the morning!

Careful now, I didn't say they made up their mind

duly noted! and my mistake.

If this was a court room lets just say you would have won decisively...with facts to back it up! kudos!

Those were charlies words and lets just say that maybe he misunderstood the question or was uninformed. I have worked with plenty of senior PM and some of them didn't care enough to know the technical reasons behind decision so we would just tell them that it won't work ( even though it could but massive code changes would be required which we knew mgmt would never approve )

I definitely appreciate your expertise and corrections...and I have some more corrections to make.

UPDATE:
I reported earlier, that one of the reasons why Lumia were suffering in marketplace was because of Skype integration. This may or may not be an issue but it appears that Tomi T Ahonen has twisted the numbers and facts and more importantly his source were never documented. I had been reading his blog for over a year now and took somethings as facts. I need to do a better job of filtering out the good and bad.




Return On Investments
Refresher: MS / Nokia Deal in Feb/2011
As part of the MS/Nokia deal, MS was to give Nokia $250million dollar each quarter that Nokia started selling Lumia. So Q4 paying nokia $250million dollars each quarter. 4 quarters haved passed so MS has paid Nokia $1 billion dollars for being a WP exclusive and what did they get in return....7 million lumia shipped to retailers! There has to be at least one devils advocate in MS that questions if they are getting a good return on their investment. The low sales and quarterly payoff is an issue

 

[brmiller1976]

A Surface Phone would just be "another choice." That said, it would be one where Microsoft can do exactly what they think should be done, rather than what an OEM thinks should be done, so it could be a powerful tool.

For example, if Nokia sticks with its carrier exclusive model and other major carriers are deprived of a high-end device with more than 16 GB of RAM, Microsoft could offer Surface Phone to the spurned carriers to preserve and grow share on them.

 

[a5cent]

As part of the MS/Nokia deal, MS was to give Nokia $250million dollar each quarter that Nokia started selling Lumia. So Q4 paying nokia $250million dollars each quarter. 4 quarters haved passed so MS has paid Nokia $1 billion dollars for being a WP exclusive and what did they get in return....7 million lumia shipped to retailers! There has to be at least one devils advocate in MS that questions if they are getting a good return on their investment. The low sales and quarterly payoff is an issue

Microsoft isn't paying Nokia to sell WP devices (obviously that is Microsoft's ultimate objective, but that is not how the deal was setup). IMHO Microsoft is actually making the better deal which I briefly described here.

I also read Tomi's blog every now and then... I like the numbers, but don't know what to make of his strange claims about Nokia either.

 

[sentimentGX4]

This is a spot on analysis. The truth is that WP has been unsuccessful. There is 0 incentive right now for any OEM to manufacture Windows Phone vs a phone with their own OS or Android. (Yes, there really is no incentive to manufacture Android either; but, at least Android has proven successful for one OEM.) The only supporters of Windows Phone, such as Nokia and HTC, are not performing well. This leaves Microsoft with a burning problem: What if no OEMs manufacture Windows Phone?

Contrary to what some WP naysayers, such as Paul Thurott, are idiotic enough to believe, Windows Phone is at the center of Microsoft's OS selling profit model. There is absolutely NO WAY Microsoft will ever exit the smartphone OS market while it exists. It doesn't matter how many dollars Microsoft throws into a hole. It just makes no sense.

A Surface Phone makes sense as a contingency plan in case all the OEMs abandon Windows Phone. Microsoft has the money and it is desperate enough to get WP on the market, even if it means it will have enter an unfamiliar business of manufacturing its own phones. Microsoft doesn't want to be stuck in the Windows Mobile 6.5 - WP7 position again when it had nothing on the market for months and months.

So all hail the Surface Phone, the future face of Windows Phone! If WP8 doesn't take off, we will be seeing a whole lot more of these devices.

 

[Reflexx]

Interesting analysis. But I think there are two major revenue streams that you didn't take into account, which would affect the entire business strategies of both MS and Nokia.

For MS, they get 30% of the revenue from apps sold. The amount they make from licensing the OS is minor compared to the revenue they could generate from app sales in the future. They don't need 30% market share to turn a profit.

As for Nokia, a large part of their business strategy revolves around location services. It's going to be on every WP8 handset, and Nokia generates money from that. Also keep in mind that Nokia supplies data for some major GPS makers like Garmin, and Nokia also supplies data for over 90% of automobile GPS systems.

 

[jmshub]

I mentioned this on this forum before, but I will repeat it. The fact that wp7 devices wouldn't be compatible with wp8 isn't some new, sudden scandal. I remember listening to podcasts of Windows Weekly where Paul Thurrott mentioned that this was going to be the case...this was around the time of wp7 launch. I don't remember when, I'm sorry that I can't readily find the exact episodes, but this information sticks out in my mind, and I didn't even own a smart phone back then.

Sent from my SGH-i917 using Board Express

 

[a5cent]

I mentioned this on this forum before, but I will repeat it. The fact that wp7 devices wouldn't be compatible with wp8 isn't some new, sudden scandal.

Microsoft obviously always new WP8 wasn't headed to WP7 devices. I assume the OEM's also knew, but that is just a guess. Yeah, now that you mention it, I also remember that note from Paul Thurott (it was a blog post). Most outright dismissed it... it just wasn't what people wanted to hear.

Last May I spent some time on a German WP forum attempting to explain why Microsoft wouldn't bring WP8 to WP7 devices and the reaction was similar to what Paul endured.

 

[a5cent]

For MS, they get 30% of the revenue from apps sold. The amount they make from licensing the OS is minor compared to the revenue they could generate from app sales in the future. They don't need 30% market share to turn a profit.

Yeah, I agree. They don't need 30% market share to make a profit, but I doubt just becoming profitable is good enough. Microsoft's mobile division needs the financial muscle to successfully compete with Apple and Google. That requires hundreds of billions of dollars over the next few years. That must come from somewhere, and investors probably won't tolerate that coming from Windows and Office for ever... just a hunch...

 

[Reflexx]

Yeah, I agree. They don't need 30% market share to make a profit, but I doubt just becoming profitable is good enough. Microsoft's mobile division needs the financial muscle to successfully compete with Apple and Google. That requires hundreds of billions of dollars over the next few years. That must come from somewhere, and investors probably won't tolerate that coming from Windows and Office for ever... just a hunch...

Windows Phone exists mainly to support the MS ecosystem. Just like the XBOX console exists to support LIVE and video game licensing.