Skype killing Windows Phone: Nokia responds

Skype killing Windows Phone: Nokia responds

Summary: Nokia responds to a recent article about Nokia's partnership with Microsoft and how it is hurting Lumia sales. The transcript and video of CEO Elop's comments are included here.

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Nokia has responded to a recent ZDNet Mobile News article that pointed out the partnership with Microsoft, the owner of Skype, is causing trouble with the carriers affecting sales of the Lumia phones. In that article Nokia watcher Tomi Ahonen used comments by Nokia CEO Stephen Elop to gather he was claiming sales were lost due to the Skype deal.

“Nonetheless, Elop clearly admits that there is a reseller problem relating explicitly to Skype. He furthermore admits, the Skype issue has resulted in some carriers actually refusing to carry Lumia. I was on this blog immediately when news broke that Microsoft had bought Skype, that this would kill all Microsoft ambitions in mobile.”

Doug Dawson, head of PR at Nokia, has responded to me, pointing to a transcript (and video) of Elop's actual statement regarding Skype. The video is below followed by the transcript to allow readers to see what was actually said.

Rather than state that the Microsoft partnership (and owner of Skype) is causing carriers to pass on the Lumia, Elop is admitting it's causing problems that require additional negotiation with carriers. In his recorded comments it seems Nokia is telling carriers that perhaps they can use Skype to get additional revenue from Lumia buyers.

Stephen Elop: So, thank you for your question about Skype. Indeed, Microsoft did buy the Skype company as part of the ecosystem that comes with Windows Phone and Windows and so forth, so that’s quite correct. The feedback from operators is they don’t like Skype, of course, because for those operators who have a traditional wire-line business, traditional telephone business, it could take away from revenues.

And, so what MSFT has done – and we’ve been part of these conversations as well with operators – is as you correctly say, if operator doesn’t want Skype installed on a Windows Phone from Nokia or any other company, then the operator can make that decision.

Now, you’re right: it can be circumvented. But of course it’s on all Android devices, it’s on iPhone devices, it’s on iPad, it’s on all of those devices. So in fact what we’re doing with the operators is turning it around into an advantage. Instead of them just complaining about Skype on Android or Skype on iPhone, with Microsoft and Nokia, we can have a conversation that says “ok there, is this Skype thing, is there a different type of partnership we can do that recognizes that voice over IP like Skype is coming no matter what, but maybe we can do something creative that generates incremental revenue for you.” Some operators are looking at bundling Lumia, Skype and their own services with higher-bandwidth allotments to actually charge the consumer more and generate more revenue for them. So by actually controlling the Skype asset, we can begin a conversation about how we can have a better Skype-based relationship, which was impossible for operators to do before. So it’s actually quite a bit more advanced than whether operators like or don’t like Skype; they actually want to engage in a conversation about what does this mean and how could we do something that we couldn’t do before. Thank you.

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Topics: Operating Systems, Windows, Telcos, Software, Banking, Nokia, Mobility, Microsoft, Collaboration, Social Enterprise

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38 comments
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  • Sounds Positive!

    So it seems like Microsoft is a bigger player in the mobile market than most think. Sometimes it's the pull you have with partners, and carriers that determine how significant you are, not just the amount of devices sold.

    But, do you guys not hear the work that MS is doing everyday in the mobile market? It's going to take time, but the big moves MS is making now is going to push MS, and WindowsPhone, far in the near future. It's inevitable whether we like it or not. Luckily WindowsPhone is modern, smooth, intuitive, and has a selection of great hardware that will just keep getting better, and better.

    With the addition of BB10, and WP8, the Smartphone race is about to change drastically. Open your eyes, and your mind! Times change, and a new UI is long overdue..... The other side to this is that popular products get old, overrated, uninspiring, un fashionable, and not cool! This is happening now.
    rodneyej
    • yes because MS spending billions has taken Bing to the forefront of search?

      Lol,
      I think the idea that MS are throwing billions on it means it will happen is forgetting recent history.
      How long did MS try for a popular tablet before Apple showed them how it was done?
      As I said before, how much money has MS lost paying people to use Bing (be it users or companies like Yahoo) and it's still a minority search engine despite being the default engine on the Internets most common web browser?

      MS laughed at the Iphone and Ipad... they are not laughing now.. Their foresight has been woeful in recent years.. so their spending tons of money on something does not guarantee carries will jump on board long term.
      frankieh
    • So Skype ISN'T killing Windows Phones?

      Well then, it must be because no-one (except the drooling fanboys on here) likes them. Maybe because they are overrated, uninspiring, unfashionable, and uncool right out of the gate. MS always excels at [i]those[/i] points!
      rahbm
  • So Strange

    So basically Elops' comments were taken out of context, twisted and used to damage Windows Phone. Weird.

    Blogs =/= Crediable News

    Bloggers =/= Journalist
    clcrockett
    • Not all THAT weird.

      It is what all you drooling fanboys and MS shills do all the time.
      rahbm
  • Once again, its the carriers

    Carriers couldn't stop MS from making and distributing Skype on iOS and Android, until MS released their own phone OS, now they have a "bargining chip".

    Microsoft, Apple, Google should just buy their own networks and screw Verizon, ect.
    William Farrel
    • Yes!

      Actually, this is what apple is doing! They are going to bundle up phones and plans through their own carrier. It's coming, and it would be a great idea for WindowsPhone to. Not sure how Android would work.. Who cares.. Lol!
      rodneyej
    • Live Free Or Disconnect!

      Carriers are going to go down kicking and screaming, clinging to the business models of the past. I see little hope for them now. Their brands are all but destroyed. We're a few hairs away from not needing them any more, and none of us would hesitate a second to cut the cord.
      scH4MMER
    • Carriers are just a telecom mafia and look after eacho other's business.

      It should be clear by now that carriers are the problem not the solution or innovation. They are what's most hindering to mobile tech progress and all that it would go with it. With ever more powerful smartphones, with a growing infrastructure that could leverage many innovative ideas to lower the cost of wireless communication including what companies like republic wireless or Keywifi, and more, making those ideas non-profit driven, but partecipatory and shared. That way the community of wireless and wifi users would share their resources turning them into part of an infrastructure that will become the network itself.

      Carriers are aware of alternatives and they know their unsustainable business model is absolutely atavistic and survives only becaise the majority of people are noe savvy enough to represent a massive market-hurting potential. Also they own still exclusivity on physical network both wired and wireless and wouldn't let any independent 3rd party enter the game to disrupt their thightly controlled highly profitable business model.

      The current network service is pretty crappy when it comes to call quality... Skype could allow much higher quality and become a threat by making people realize how sub par their cell voice service is. Once subscribers will start to value voice quality on calls, then the cat will be out of the bag for all carriers who will have to start deliverying and will no longer be able to offer crappy service for top dollar figures.

      When 3G came out all data were on 3G and voice was managed on older 2G etwork... this is still true since 4G is not deployed and available to the point that 3G can be dedicated to voice only. Even if that was the cases carriers would not use the larger bandwidth of 3G to offer HD voice services, but they will jam in 3G badwidth more voice users than they could do before and they'd start selling cellphones to toddlers if they'll be allowed to. I am not being harsh on carriers, I just know that's how they work. Also the low quality of voice is kept as is because according to studies people tend to talk longer when the signal quality is higher... that would increase network load for voice which represents a tiny fraction of profitability since now the name of the game is charging for data hogs. There's more money to be made on data than voice traffic. If it was the other way around you would see the raise of HS voice paired with unlimited data plans... that is not nor won't be the case ;)

      Then there is the insanity of pushing ever faster speeds where carriers make subscribers pay through their nose for handset with 4G capability (yes I am referring also to the expensive mandatory data plans too in the case of subsidized phones). The overcharging for 4G it's unjustified at the handset level other than it's priced like that because is a "novelty" in US and it's a mostly a marketing gimmick because when considering increased speed what's that good for when carriers will charge an arm and a leg for data usage and there are no longer unlimited data plans? All that's available are expensive few GB/mo plans which one can now burn through at faster rate to reach overages even faster than ever before! So where is the advantage driving a ferrari on the autobahn when all you're given is just a 2~4 gal. of gas and to drive further you'll need to sell your house? (so if you rent you are sheer out of luck ;P)

      Not to mention that they continue to scam money out keeping voice, SMS, email and data as separate service... there is no such thing as a difference between voice and data service... it's all digital data! And they keep making a killing on that scam.

      New smartphones can shoot at 1080p then if you want to upload your videos to any service where they can be stored or shared from, then you better wait to get back home and use your internet connection, because with the average 2~4 GB allowances on $50+/mo. that's barely enough to transfer 2~4 hours of HD recorded video at most... after which you would of course be left with no data service unless paying overages. That's a great business model for carriers, not wireless subscribers.

      They will cry poverty each step of the way claiming they have invested so much in new infrastructure and service, where in reality it's been a fraction of what they've overcharged people for services that remain unjustifieably separated only for the purpose of create the perception that they actually are different and it's OK ti be charged for SMS voice and data service separately.

      But this is no news, we've known for a while already that overcharging for data and pushing to consume data even faster it was where it was heading http://gigaom.com/mobile/its-official-voice-is-worthless/ Does anyone really thinks that 4G LTE was pushed because the carriers wanted to give faster service to the subscibers so they would have a higher quality of service? LOL! Sure that would be a side effect, but the real reason was to set a low threshold and have subscribers eat through data allowances quickly so carriers can either hit them with overages or make them move to more expensive data plans.
      freakqnc
      • Feh

        100,000 people go to work every day and bust their butts trying to keep all this amazing magic running, and all ou can do is treat them like monsters who are out to pick on poor wittle you. That is so sad.
        Robert Hahn
  • Perhaps...

    ... This is proof the FTC or the Dow Jones need to investigate cell carriers. If people are looking towards Skype as an alternative to the ridiculous prices we're paying now, then something is wrong.
    The one and only, Cylon Centurion
    • Exactly!!

      The real thing that make shit carrier in their shorts about Skype is they see that we don't really need carriers for our cell phones we only need internet connection so... They see in a near future some new carrier coming with Skype only smartphones...

      They just see the overview of the end of their busyness rather than see this as an opportunity... Shame on Carriers....
      EricDeBerg
  • Tell me something:

    With all the cellphone carriers being digital now, why are they allowed to differentiate between different types of digital packets, whether they be web surfing, "apps", VoIP, or voice packets? It all accounts for the same amount in bandwidth - that is, so many bytes per second. Seems to me like they are playing the "packet racket".
    Joe_Raby
  • Microsoft should buy a phone company...

    There's a rumor that Apple is going to offer cellular service... so why not Microsoft?
    metromalenyc
  • Nice.

    "Team up" they said.

    "Win-win" they said.
    Naryan
  • Skype doesn't matter for T-Mobile

    One of the best features about T-Mobile's service is built-in WiFi calling, without requiring Skype or a separate VoIP service. And it works a lot better than Skype. User's are going to make VoIP calls instead of consuming minutes if available and it makes sense. Where the network carriers make a ton of money is via international roaming (that counts going to Canada for people from the US). They charge absolutely obscene rates for calls and worse for data (Rogers charges $15 per MB!). Of course use of Skype or another VoIP scheme bypasses the networks.
    ralanburnett
  • Skype killing Windows Phone: Nokia responds

    The carriers could easily make a bundle of money off of Skype, they really shouldn't resist this opportunity. Also Skype enhances the phone which would be one more reason to buy one.
    Loverock Davidson-
  • MSFT is Going to Be a Much Bigger Player than Anyone Imagined

    Between its WP7, WOA and XBox properties, combined with Skype and only 1 or 2 high quality hardware OEMs, MSFT will make a huge impact on mobile. This doesn't even account for what can come through its proper integration with Office 365 and Lync in the enterprise. In fact, Lync will probably become Skype at one point or another, at least from a branding perspective.

    Nokia is going to bleed some more, but will pull out of their 4G dive. They have excellent industrial design, a very good sense for application development (I have a Lumia 900 and really like their apps) and will be a player in the tablet market as well (how about a WOA tablet that looks like a giant Lumia 900?).

    Buy the stock. Or wait, don't buy it until I am done buying it.
    dcristof
  • Damage control and spitting into the wind

    Sorry, folks, but I've read waaaay to many executive statements to take everything--sometimes anything--seriously.
    This is Elop doing damage control and, to his credit, he frankly admits it's a problem. The solution he's proposing--charge customers more to use Skype--would probably just push people to Google Talk or some alternative. It could actually hurt Nokia (and by extension, Microsoft) in the phone wars if they limited VOIP apps to the Microsoft-owned one that costs extra to use. MS and Nokia are too desperate for phone market share for that to happen, but admittedly they are between a rock and a hard place. They bought Skype because it is hugely popular, but they also bought something that the carriers hate. And if they carriers hate it they don't push your phone. Someone at MS may not have thought this through to the end.
    Carriers need to face the music that the Internet, as it has done again and again, is creating a single marketplace for communications technology and it is breaking down geographic fiefdoms in the process. The Internet has the capability to make everything local globally accessible, but it is brutal on divergent or multiple technologies. In one market, where the competition is only one click away, you have to be in the top 2 or 3 globally to really make money, and you have to sprint every day to stay there. The days of $200 a month long-distance bills or $2,000 bills for out-of-region calling are going. The carriers might be able to claw some of that back in higher data rates and frankly, I'd pay another $30 a month for seamless and transparent global roaming over ubiquitous IP networks. So would probably a half-billion other people.
    degrootp
    • ultimately, the carriers will lose

      the problem is, how much will it cost us consumers until they do?
      William Farrel