[JustToClarify]

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

[a5cent]

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.

[JustToClarify]

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 horizont

[a5cent]

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.

[a5cent]

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.

[zipro]

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

[inteller]

tanked massively? can we use more extreme hyperbole because I don't think we have enough around here.

[alaskanjackson]

http://twitpic.com/cb2gi8

Just saw this graph on adoption rates for various technology. Its seems WP adoption is better than or equal to competitors? I understand the market is bigger now. But to call WP a failure is shortsighted at best?

[zipro]

tanked massively? can we use more extreme hyperbole because I don't think we have enough around here.

Windows Phone market share shrank in Q4 2012 | BGR

[alaskanjackson]

In the US. The US is 5% of the worlds population. The growth and Nokias future is in the other 95% of the world.

[JustToClarify]

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]

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

Windows Phone market share shrank in Q4 2012 | BGR

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]

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]

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]

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?

[vlad0]

As far as Elop's plan.. all I can see at this point is that without Nokia, WP's market share will be around 1% .. and I am not sure how Microsoft would have made the other OEMs concentrate on WP enough to bring that up in the same time Nokia is doing so right now.

HTC and Samsung are both concentrated on android, Sony and LG are not interested, and then imagine Nokia doing their own thing at the same time.. it might have been andro (I wouldn't even touch their phones if that was the case), or whatever, but they will be a strong competitor against WP... after all, they were the ones who kept Windows Mobile at bay in late 90s early 00s, and they spent billions doing it..

Here is a good article about it: http://www.theregister.co.uk/2011/02...osoft_history/

One of the major reasons for buying Symbian was to keep Microsoft and their OEMs away... but then Apple and Google came along and they were caught off guard. The Symbian project did work tho, its was a huge commercial success (which I doubt WP can replicate), and it managed to keep Microsoft's market share very low.

Its all a bit ironic.. isn't it..

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.

The whole point of the Phase 1 system is to get rid of the need for movable optics, they are not ideal for mobile phones. They take too much room, leaving less space for a bigger sensor, they are heavy, they break.. phones are supposed to be durable.

Nokia tried the moving lens approach with the N93/N93i a long, long time ago and decided that this is not the way.

As far as the software required to support the system, yes.. Symbian would be easier due to its modular nature, and it being an real-time OS, but that doesn't mean that they can't change the way the system work (get rid of the extra DSP?) and make it work on Windows NT. I am sure that there are ways to do it.. its obviously not easy since its been couple of years now.. but I am sure that they will get it out.

They are lucky because that system is so far ahead of its time, that they can afford to be slow and still be ahead when they finally get it to WP..

[JustToClarify]

As far as Elop's plan.. all I can see at this point is that without Nokia, WP's market share will be around 1% .. and I am not sure how Microsoft would have made the other OEMs concentrate on WP enough to bring that up in the same time Nokia is doing so right now.

I completely understand it's a helluva deal for MS, I just can't see what has Nokia got positive here going WP exclusive in comparison with multiOS portfolio. They could do Symbian/Android/Meego/WP without any problems and see what works out the best. That way they would retain >90% of their customers and probably get some more who would like to try Nokia with Android.

The whole point of the Phase 1 system is to get rid of the need for movable optics, they are not ideal for mobile phones. They take too much room, leaving less space for a bigger sensor, they are heavy, they break.. phones are supposed to be durable.

yeah that's why I pointed out it's probably going to be some kind of smartcamera like Samsung Galaxy, Nokia has teased a huge zoomo capabilities in their promotive video so I guess they will combine optical + cropping zoom

Nokia tried the moving lens approach with the N93/N93i a long, long time ago and decided that this is not the way.

Yeah, such "phone" would sell in maaybe 10000 pcs. which would not cover even production&transport costs let alone R&D and marketing. N93i didn't sell well even when Symbian held majority of the market share and WP now has barely 3%...

As far as the software required to support the system, yes.. Symbian would be easier due to its modular nature, and it being an real-time OS, but that doesn't mean that they can't change the way the system work (get rid of the extra DSP?) and make it work on Windows NT. I am sure that there are ways to do it.. its obviously not easy since its been couple of years now.. but I am sure that they will get it out.

They are lucky because that system is so far ahead of its time, that they can afford to be slow and still be ahead when they finally get it to WP..

I have yet to see the viable approach here.

[zipro]

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?

They were in the middle of changing their whole manufacturing process. Moved everything to China, closed everything in Finland. This move was irrational for several reasons:

1. Other companies are pulling out of China because the Chinese companies aren't capable of producing high-quality items. For that, you need innovative and happy employees. Still, Nokia decided to off-shore everything to China.

2. They did so at a time when they knew they'd have to deliver a large number of Lumias in order to survive. Moving production to another country involves a reorganization of the supply chain. That takes years in the best case. Nokia ended up with a screwed-up production process with problems in the supply-chain. That's no surprise really as it initially happens to many companies that decide to off-shore their production.

To make it short: you don't move your production to China half a year before the most important product launch of your company's history. Nokia paid the price - they ended up not meeting demand because their product wasn't available.

Sent from my Nexus 4 using Tapatalk 2

[benrp]

I am finding the speculation on Nokia's share price interesting (perhaps because I've got an order pending). I must say Nokias stocks appear to be good value. Its hard to see the price going much bellow its current levels (Sure it went bellow $2 last year but I think Nokia's proved some success with the L920 last year) but the potential is huge. Once the next Lumina flagship rumours start up the price will surely rise back to pre mwc levels. If Nokia has fixed its supply issues by then sales will naturally rise, if it has an amazing camera and looks stunning plus keeps with the innovation in the 920 Nokia could have a hit on its hands. They have strong R&D and are building a brand in Lumia and are pushing hard with marketing. This is a fast moving market always changing, so theres no reason Nokia can't do what Samsung has. It was only a year ago Nokia's stock price was over $5 and over $15 three years ago, and things weren't great then. If Nokia continues innovating as it has shown it has, $8-$10 seems reasonable but on the off chance they become a market leader like Samsung has become $30+ can't be ruled out.

[JustToClarify]

If Nokia continues innovating as it has shown it has, $8-$10 seems reasonable but on the off chance they become a market leader like Samsung has become $30+ can't be ruled out.

that's a very big if

[gandhule]

I forget where I read this article in which elop said that mobile world is becoming a battle of ecosystem. Taking his remark into consideration, I think the mobile world now is on phase 1. Whoever have more mature ecosystem (read: app store) will lead the market. We are now looking at Apple and Google leading the pack because they had more extensive app lineup than any other competitor.

This is not going to stop. At some point, consumer will feel slightly bored by the smartphone experience and look for new one. That is why Apple and Google push new inventions like iWatch and Google Glass, to keep the consumer tied to the ecosystem. On this front, Microsoft actually has a winning recipe by having xbox and PC experience, which has been used by millions of people.

In the end, it will come down to the one who is able to provide better, seamless experience on home-mobile activity and entertainment, and that would be phase 2. It's a very sad reality that microsoft had just started the process on integrating their platform when they should have done it long before. I bet Elop saw this opportunity. Once MS done integrating their work-play software, device, and service, to their mobile OS, it will be hard not to be compelled by Windows Phone.

[JustToClarify]

the thing is they will throw a lot of money until it gets traction

[johninsj]

Windows Phone market share shrank in Q4 2012 | BGR

Boy Genius... yeah, that guy is totally non-biased.

[Cosmin Reti]

Wp8 and Nokia need to lauch their products world wide if they want to make any market share or money. After 5 month we got the first lumia 920 on Vodafone on Romania wich is the largest country in East Europe UE. Being not a rich country we would expect to see also cheaper models like 620, 520 etc... no sign of them. Also Microsoft launched 5 month ago Surface, I have a small computer shop selling PC and I am a dealer for MS software. I have yet to see a tablet running Windows 8, no matter RT or Pro. Really poor way to sell hardware or software, that's why windows 8 in all forms didn't get traction. Look at Samsung S4, will be released on 133 countries, 165 carriers on the same time, for sure will sell 20 mil phone in 2 weeks, bravo to them.

[vlad0]

Look at Samsung S4, will be released on 133 countries, 165 carriers on the same time, for sure will sell 20 mil phone in 2 weeks, bravo to them.

It seems like Samsung has a great mass production line, and they can pump out lots of units very quickly. Also, they make a lot of the components themselves, which helps a lot as well.. that is why they are so competitive when it comes to pricing. All in all Samsung are in a very good position, better than anyone else, and they are taking full advantage of it.. as they should.

Microsoft and Nokia seem to be concentrated on the US market for now.. that is their priority no.1, and.. there are plenty of 920s around.