Only Android can refloat Nokia's sinking ship

Only Android can refloat Nokia's sinking ship

Summary: Nokia suffers a massive operating loss, and its share price has fallen over 80 percent since February 2011. Only Android can now save the company.


Finnish handset maker Nokia has suffered a massive Q2 operating loss totaling over $1 billion, a fourfold increase over the loss the company suffered in 2011.

Nokia has been in trouble for a long time, but the company's shares have lost around 80 percent of their value since February 2011 when the company chose to drop its Symbian platform in favor of the Microsoft's Windows Phone platform.

The problem with Nokia is not the hardware -- the company makes some of the most solid and reliable handsets available today -- the problem is the operating system. Choosing Microsoft's was a massive gamble, especially given that no other company had managed to take the platform mainstream.

European carriers have already said that Nokia's flagship Lumia handset would be much easier to sell if it ran Android rather than Microsoft's Windows Phone platform.

"No one comes into the store and asks for a Windows phone," said an executive in charge of mobile devices for one European operator. "If the Lumia with the same hardware came with Android in it and not Windows, it would be much easier to sell," he added.

And things look bleak for Windows Phone. Yesterday, market research firm Strategy Analytics predicted that 123 million smartphones would be sold in the U.S. during 2012, but Windows Phone would power only 4 percent of those, or less than 5 million. 

"Microsoft is making a determined push to crack the United States because it is the most valuable and influential smartphone market in the world. However, Microsoft's U.S. smartphone market share remains relatively niche at present and breaking the stranglehold of leaders Android and Apple will not be easy," Strategy Analytics analyst Neil Mawston said.

Unless Microsoft is either going to continue bailing Nokia out, or is looking for the company to hit rock bottom before making a move to buy it, then Nokia really needs to figure out how it can kick-start smartphone sales. The quickest and easiest way for the company to do that would be to embrace Google's Android platform. It's clear that its partnership with Microsoft it not paying off and has taken a floundering, yet overall promising, company and driven it into the dirt.

It's unclear at present whether there exists a space for a third player in the mobile operating system market space. RIM's BlackBerry is floundering and Microsoft's Windows Phone is spinning its wheels. The market is owned by Google's Android platform and Apple's iOS , and the only route open to Nokia is to embrace the open source platform, or die a painful death -- clinging onto the hope that Windows Phone will go big.

Microsoft has some interesting stuff on the way with the upcoming Windows Phone 8 platform, but at the same time, the Redmond giant has also rendered every existing Windows Phone device obsolete by announcing that the new release won't be compatible with the current hardware offerings. Upsetting the existing customer base -- no matter how small it may well be -- doesn't bode well for the platform.

Back in February of 2011, Nokia CEO Stephen Elop told employees that the company was "standing on a burning platform" and that it was time to "take a bold and brave step" and jump off.

Unfortunately for Nokia, it seems that the sea was burning too.

Image source: Nokia.

Topics: Nokia, Android, Microsoft, Mobile OS, Mobility, Operating Systems, Smartphones, Tech Industry

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.


Log in or register to join the discussion
  • RE (seriously; what blog requires comment titles!?)

    I really do love Windows Phone 7; but it's niche status is keeping me from purchasing one. It's hard enough to get mainstream (iOS) apps on Android, let alone Windows Phone. Microsoft is going to need to find some way to get as many Windows phones into consumers hands as possible; even operate at a loss, just to give the platform some momentum.
    Shane Gowland
    • Native code will sure help.

      Currently, most game (esp. Games) have to be re-written from the ground up to support Windows Phone 7.5.

      Windows Phone 8 will support native codes which makes porting apps much easier.
    • Android Will Not Help Nokia, Quite the Contrary

      Lumia is considered a success for Nokia. Nokia owns a 30% market share in mobile phones. Nokia's problem is making money selling their goods and services. That's a business problem not phone OS.

      What Nokia pays to MS is probably next to nothing. The Lumia now sells for $50 at AT&T ($400 without data plan). This may indicate Nokia's licensing cost per unit is very likely a single digit number. Why some think a Mobile OS license would be any where near the cost of a Windows 7 license is beyond my comprehension.

      MS is very quiet regarding WP fees. This may be to avoid drawing attention to anti-trust interests. The cost of WP OS to Nokia is more than offset by the technical assistance Nokia gets from MS. This equates to better than free.

      Nokia is a unique MS WP OEM by not offering an Android. MS may be levying patent licensing fees on OEMs that also sell Android. It certainly makes Nokia a preferred OEM that will get the corresponding preferential treatment.

      Add the value of PR, marketing, and advertising assistance Nokia gets from MS, and Nokia is essentially being paid to not to support Android.

      I expect a year from now many of you putting down MS will be saying "Oh, NOW I get it". I do not know why you will say that yet, I just suspect that MS has some surprises in store for us that will coincide with the release of Win 8 and the Surface.

      BTW I am not and never have been a fan of MS. I cannot deny MS has a history of coming from behind and dominating a market. The future of MS is at stake here, expect them to pull out the stops.

      There is a reason Gartner predicts Windows Phone will eventually (2016) eclipse iPhone. Predicting markets is what Gartner does and they have been doing it very well for over 30 years.

      Gartner has a long established relationship with MS. Gartner is privy to to inside info, so they know more about long range plans of MS than you or I. I suspect MS has grand plans as signaled by a $40 upgrade price to Win 8. The Surface tablet also fits into this scheme somewhere.

      I have owned an iPhone and currently own an Android. My next phone will be a Windows Phone and very likely a Nokia. My needs in a phone are simple. I just want one that works well. Based on my experience, the one thing the my Samsung Galaxy has over the iPhone is I can remove the battery when it hangs.

      That said, and the point being, Nokia would be very foolish to move into Android. Nokia was the Number One supplier of mobile devices. They did not get in to that position by being foolish.

      The media is stuck on reporting the huge losses Nokia is racking up. Nokia is in the process of transitioning to mobile. Nokia has been around for 150 years and has accumulated a lot of dead wood over the years. They are dumping semiconductors, TV, cable, security, automotive, and other divisions causing their cash hemorrhaging. As a large corporation, they move slow. The expenses of investments, global trade policies, litigation, etc. are in addition to the cost of their mobile restructuring. Their loses are NOT coming from Lumia.

      Nokia is very likely a lot more knowledgeable about the mobile market than the author of this dumb ass Nokia Android theory.

      Nokia is betting their future on Windows Phone. Is it possible they may know more than us?

      Expect a different landscape in the mobile market in the next few years. Be patient. The mobile market is a relativity new emerging market. Big wheels move slow. MS and Nokia are very big wheels. With wheels big enough to crush Apple. I am not saying they will, that's Gartner's job. I just agree with Gartner based solely on MS's track record.

      Note to the hit and run losers that post here. If you do not agree, do not just state I am wrong. Explain why you think I am wrong and propose a better idea. Quit wasting electrons with your useless posts.
      • Microsoft Is Paying Nokia

        While looking at Nokia's financial report I found this statement:

        "The total amount of the platform support payments is expected to slightly exceed the total amount of the minimum software royalty commitments."

        What this means is MS is kicking back (i.e. platform support payments) more than Nokia is paying in royalties.

        Sweet deal.
        • ehhhh

          How are they still haemorrhaging money then ???
          • @garyc2011

            Nokia Siemens Networks, a telecom infrastructure division is responsible for the bulk of their losses.
      • right...

        You have to be one of those people who Owen wp7 and are sad that your device cannot update to wp8. All you writes sounds like you already Owen a wp7 device and are respecting a miracle, I say m$ is getting what they deserve.
        • @atmancloud

          If your reading comprehension was better you would have noticed I stated I currently own an Android.

          I have had the Android for 20 months now. It is still running 2.1 with no hope for an upgrade.

          I do not know what WP8 will do that WP7 does not and do not really care.

          I need to be able to answer phone calls, send and receive text, and access the Internet. I assume WP7 can do that fairly well. My current Android / Galaxy does not do that very well.

          That is why my next phone will be WP7.
          • Why wait for a upgrade to the OS...

            when you can upgrade the hardware. Mobile phones has become cheap consumer goods. When there is a newer model, chuck the old one! Who in their right mind will hang on to an old smart phone device if you can get a new device with new software, cheaper, better and faster!
            If you still run on Android 2.1, root it or turf it!
            Once you experience to difference between Android 2.1 and 4.x, you will quickly forget about the joke that is the MS/Nokia partnership.
            Johan Safari
          • Same thing is applicable between WP7 and WP8 devices, since...

            why "hang on to an old smart phone device if you can get a new device with new software, cheaper, better and faster!"

            If the device can be had for "free", then, why would people be worried about their old WP7 devices?
          • @adornoe

            This is about whether Android could save Nokia. I do not see how your post relates to the subject.

            But I will oblige. If smartphones were free you could possibly have a point. But the reality is they are not free. iPhone 4S is currently $650. Galaxy III, $550. Lumia $400. Hardly free. Sure there are plans that reduce the price The "free" older, cheaper, slower do not apply as they would negate your flawed point of view.
          • Patrickgood1: Follow along...

            My post was in response to Johan Safari's post. If you had read his post before you read my response, then you would understand the context of my comments.

            So, go ahead and re-read his comments, and then mine, and you'll understand how my comments relate to his comments. Perhaps you should direct your chastising to Johan Safari.
          • You've been eligible to upgrade for months

            "I have had the Android for 20 months now"

            On any carrier you've been eligible to upgrade for months. I call BS
          • @Johan Safari

            The thing is, I find the current version I own to work so poorly that it should never have been released.

            I started out as a Telecom Engineer where the quality levels required a failure rate better than 1 failure in 100,000 units. That is the way telecom products should work.

            There is no way I will every purchase another Android. It does not matter if they become more reliable and actually work the way I expect. I will not do repeat business with a company that would release a product as poorly designed as Android 2.1. So I will never know the difference between 2.1 and 4.x.
          • omg

            dude, half the posts on this topic are yours

            you need to seriously get laid or something man

          • been there

            I've seen ICS and it is nice, but in no way has it made me forget Windows Phone 7.
          • Wait a sec...

            "I need to be able to answer phone calls, send and receive text, and access the Internet. I assume WP7 can do that fairly well. My current Android / Galaxy does not do that very well."

            If my Galaxy 5 (I said 5, not S, and this 5 one is shit, man) can do that fairly well, I'm absolutely sure your Galaxy might as well do that. Or you're doing something wrong.
            Peterson Silva
          • @Peterson Silva

            I have the Galaxy S. It is fairly common where the phone does not ring on an incoming call. The screen lights up with a missed call icon. No ring, no vibrate. If I am on a call and I hang up the current call quite often the phone cannot be answered. If I put the current call on hold I can always answer. Many times when I take the ringing phone out of my pocket the "window shade" comes down and it cannot be put back up preventing me from answering the call. I created a windows app that sends and receives text messages via a GPRS modem. The GMS spec allows messages to be sent every 2.5 - 6 seconds max. At that rate the Android cannot keep up receiving messages at 10 messages per minute. It will crash. have to remove the battery. I do a fair amount of mobile web app testing. A web app with 100 jQuery Mobile widgets may render slow on the iPhone crashes the Android.
          • Bullllssshhhhhhhhh

            My first Android phone was a Samsung Vibrant. I absolutely love this phone. Since then, I've had a total of 4 more Android phones. The problem you talked about, I have not encountered at all. Neither my phones nor any of my friends (all of my friends have Android phones from every company except Huawei) has had that problem. So, I'm sorry to say dude, but I call BS of you. I'm guessing you bought a WP phone and you're now trying to defend it. If the problems you talk about are true, then why is Android still around? And if your problems ARE true, then that means you have a hardware problem. Don't go around making stuff up dude.
          • @yellowfaceboul

            Yes good question, why would I lie.

            Well you are dead wrong on me ever owning a WP phone. As previously stated my next phone may very well be a WP. I usually refer to my mobile as my AT&T Android. That is because some of the problems could be attributed to AT&T. There is no definitive way to know if the problems are the phone or AT&T.

            AT&T suck in nearly everything they do. although I have one definite fact where I can prove the Android is weak. That is receiving SMS Text messages. I wrote an SMS Windows App that works with a GPRS modem I use for texting from the PC. The GSM spec allows 10 messages per minute. It varies depending on the cell tower. I can send between 15-20 per minute. In testing I would send 10,000 message overnight to an AT&T iPhone and AT&T Android. The iPhone could always keep up and the Android could not. Some mornings the Android would still be receiving messages for an hour or two after all the messages were transmitted and half the time it would crash.

            When testing the keyword response I would send single character "keywords" to the GPRS modem. Half of the responding messages send in reply to the keyword would be a few characters and the other half 160 characters.

            I would send keywords a fast as possible. so messages are being constantly being sent and received. The iPhone could last about 50 or so message before it would crash but the Android would crash after 10-20 messages.

            The Android is very deficient when receiving messages. The is no technical reason the phone cannot keep up with 15 messages per minute. My GPRS app takes about 80 milliseconds to read the message from the flash, store it in the database and clear the incoming message location. That's over 700 messages per minute. The timing from the GPRS modem's serial port monitor show the precise timing at

            I am not saying everyone's Android sucks, I am saying mine sucks so bad I will not get another. I'm not saying WP will be any better but the only way to find out is to try.

            I do not appreciate being called a liar. You were wrong that I owned a WP and you were wrong saying I made up the story. In my book that makes you an A #1 asshole.