Symbian doomed by Nokia-Microsoft deal

Symbian doomed by Nokia-Microsoft deal

Summary: Turns out I was right about Nokia adopting Microsoft's Windows Phone 7 operating system, and right about some of the reasons. However, I was wrong about Symbian.

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TOPICS: Tech Industry
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Turns out I was right about Nokia adopting Microsoft's Windows Phone 7 operating system, and right about some of the reasons. However, I was wrong about Symbian. Nokia's chief executive Stephen Elop is splitting the company to have separate divisions for Mobile Phones and Smart Devices, each with its own profit-and-loss responsibility. Putting Symbian into Smart Devices (and not, as I'd expected, Mobile Phones) means that Symbian will be phased out. However, MeeGo has been reprieved as an insurance policy.

This is not to say that Symbian will soon be discontinued, and Nokia expects to sell another 150 million Symbian phones. In fact, at meetings with press and analysts held in London this morning, Elop said there would be "fresh new innovation in Symbian," and new handsets, depending on "the rate at which Windows Phone 7 comes down the price continuum."

However, the word "harvest" cropped up a few times. The plan involves slashing Symbian R&D to as close to zero as possible, and raking in the money from the installed base of about 1.3bn Symbian phone users. In a perfect world, the decline in Symbian sales would be slightly slower than the growth in WP7 sales. Much of the previous R&D budget would therefore turn into profit, since most of the software R&D will now be done by Microsoft.

As for Qt, Elop said: "We are not proposing a 'put Qt on Windows Phone' strategy." This met with some ire when Nokia posted its Letter to Developers about Today’s News. But it's not being killed off. Qt will continue on the MeeGo platform, which Nokia will use to try to create the next "disruptive" system.

Stephen Elop from Nokia and Steve Ballmer from Microsoft on stage in London Stephen Elop from Nokia and Steve Ballmer from Microsoft on stage in London

Nokia's Mobile Phones division will also continue with the low-end mobiles and cheap feature phones that make up about half its business. This division's task will be to get the next billion users online, mostly via proxy server systems.

Elop has, as expected, negotiated a sweetheart deal with Microsoft. It will pay royalties for WP7, but Microsoft will kick back "substantial" sums in "sales and marketing support". Nokia will also have a "substantial influence on the future of Windows Mobile phone". This will ensure support for Nokia technologies, and enable it to provide "differentiation". As Elop said, "this is not your mother's OEM deal with Microsoft".

So, why WP7 instead of Android? Previously, I'd argued that adopting Android would put it behind its biggest rival. This is not Apple or RIM but Samsung. (On Gartner's numbers, Nokia shifted 461.3 million phones in 2010. Samsung was in second place, selling 281.1m phones.) Nokia would be a late starter in Android, whereas Samsung already has a lot of software expertise, hardware manufacturing skills, operator relationships and customer mindshare.

Elop also came up with other reasons why Microsoft was a better fit. Nokia would have never got any sort of joint development out of Google, and it would never have got the support for Ovi, Navteq and other properties that Nokia is getting with this deal. Microsoft may sometimes do partnerships badly, but more than 90% of its revenues come via partners. Google doesn't really do partnerships at all.

Then there's the American market, where Nokia is particularly weak and Microsoft is relatively strong, and vice versa. Elop said: "It gives them a faster path to global markets. It will give us a faster path to the US market."

On paper, then, Nokia and Microsoft look like a good fit. Microsoft gets the one and only phone giant willing to put Windows Phone 7 first -- which isn't true of Samsung, LG or, now, HTC. Nokia gets a preferential and (presumably) profitable deal for an advanced operating system, plus co-operation that it could never have got from Google.

Whether it will work or not remains to be seen, because as Elop said: "no one can override the consumer."

But even if the project fails, Nokia deserves some credit for its courage. As Elop said: "Google was a valid option but that felt a little bit too much like giving up and not enough like fighting back." Nokia, Microsoft and most mobile network operators are not yet ready to see the phone market split between only two major players, Apple and Google.

@jackschofield

Press releases

Nokia: Nokia outlines new strategy, introduces new leadership, operational structure

Microsoft: Nokia and Microsoft Announce Plans for a Broad Strategic Partnership to Build a New Global Mobile Ecosystem

Topic: Tech Industry

Jack Schofield

About Jack Schofield

Jack Schofield spent the 1970s editing photography magazines before becoming editor of an early UK computer magazine, Practical Computing. In 1983, he started writing a weekly computer column for the Guardian, and joined the staff to launch the newspaper's weekly computer supplement in 1985. This section launched the Guardian’s first website and, in 2001, its first real blog. When the printed section was dropped after 25 years and a couple of reincarnations, he felt it was a time for a change....

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  • Did you think Elop was really reprieving the Meego strategy? After one phone he said Nokia would ask that team to switch focus to innovation of future devices and future platforms - which sounded like one lap and change cars to me...
    M
    Simon Bisson and Mary Branscombe
  • Looks like the decision was taken months ago with Elop's appointment. The best you can say is at least they knew they had a problem, and both MS and Nokia picked the least worse option. But it won't work.
    Meegone
  • It's the perfect merger: the O/S manufacturer that was too late to the party and the hardware manufacturer that's too late to the party.

    Really, what's not to like!
    BrownieBoy-4ea41
  • @Mary
    > Did you think Elop was really reprieving the Meego strategy?

    Not my best phrasing, but he didn't kill it. MeeGo development investment is being slashed, and he said that the CTO team that will look after MeeGo will prepare for the next disruptive development. That *might* involve changing cars, but not *necessarily*. What would they change to?
    Jack Schofield
  • @Jack
    What people seem to be missing is that with the Qt development platform and MeeGo, Nokia was poised to have their own excellent product available to market quicker than this car crash collision with a serially failed mobile platform developer. Not only that but with the iPad the game has changed and a tablet/slate/pad OS is also needed - something that MeeGo provided but Windows Phone 7 did not. They have a great cross-platform development toolkit in Qt but MS aren't even allow that on WP7. So with Nokia giving up on Ovi and orphaning Qt and the developer community who in their right mind would develop for Symbian or MeeGo?! So how are they expecting to sell 150 million more Symbian phones when if "ecosystems" are the key - apps more like - Symbian is a dead one. A dreadful decision for Nokia, Finland (all the job losses) and Europe. Not the mention the future MeeGo could have as home automation and in-car platform. The choice wasn't just WP7 or Android (Ovi store has 4 times as many apps as WP7). Couldn't be worse. Compare this to the announcement by HP this week showing what can be done with a modern OS that can be used across platforms.
    bam-alam
  • @bam-alam
    > What people seem to be missing is that with the Qt development
    > platform and MeeGo, Nokia was poised to have their own excellent
    > product available to market quicker than this car crash collision with
    > a serially failed mobile platform developer

    That's absolutely wrong according to what Nokia is saying both officially and unofficially. If you were right, Nokia wouldn't be doing a deal for Windows Phone 7.

    The reality, I'm told, is that MeeGo's APIs are changing every month, the UI is incomplete, it doesn't have essential apps, there is no viable Windows dev system, and it is long way from being either a usable or a marketable product. (No doubt we'll get some idea when a MeeGo phone appears....)

    Otherwise, your opinions are not shared by the Nokia board.

    > Couldn't be worse. Compare this to the announcement by HP this week showing
    > what can be done with a modern OS that can be used across platforms.

    Nokia could presumably have bought either QNX (went to RIM) or WebOS (Palm went to HP). Since it didn't, Elop found he had a reducing number of options.
    Jack Schofield
  • @Jack
    You say:
    [block]The reality, I'm told, is that MeeGo's APIs are changing every month, the UI is incomplete[/block]
    They are getting the product right - most of the changes to the API are additions that will be used over the lifetime of this excellent product. Work on the UI to complete it is minimal compared to the rehash that will be required if they are to customize the WP7 interface if they are allowed to as Elop said they are. Admittedly the look of the handset widgets needs work but if necessary get outside graphic designers to work on it and at least none of the skins currently on offer are plain squares. As per Ruperts blog on this deal getting MeeGo right is much better for Nokias long term margin than not owning the software when you have a jewel like Ovi maps. Go to the Nokia dev website and see the few lines of code it takes to link to Ovi maps for instance and see the power of Nokias offering.

    [block]it doesn't have essential apps, there is no viable Windows dev system, and it is long way from being either a usable or a marketable product. (No doubt we'll get some idea when a MeeGo phone appears....) [/block]
    The missing apps would be a lot quicker to create than changing the Ovi Maps interface to .Net/Silverlight/WAML. It does have a viable Windows dev system. See:
    http://qt.nokia.com/downloads#qt-creator
    Qt is cross-platform remember. Linux is only used to develop the OS itself - Windows can quite happily be used to develop apps. You can use Visual Studio or Eclipse if the excellent Qt Creator is not to the developers liking. Qt Mobility includes a simulator so you can test the ARM code on a x86 PC. And licensing is not an issue because Qt is distributed on the phone itself (a la N900 and newer versions of Symbian). Note that MS have buried new versions of Silverlight for the PC desktop and it only applies to WP7 so not much portability there.

    And what does Nokia do for an iPad competitor which MeeGo offered? Surely you are not taking Ballmers idea of Win7 for that seriously?
    bam-alam
  • @bam-alam

    In your opinion, but clearly not in Nokia's opinion, and it's their company....

    > And what does Nokia do for an iPad competitor which MeeGo offered?
    > Surely you are not taking Ballmers idea of Win7 for that seriously?

    Windows 7 tablets so have some advantages for businesses. Otherwise, I have no view until I see what they come up with.

    However, Microsoft Surface 2, which runs on Windows 7, looks stonkingly good. (Surface 1.0 wasn't bad either.) The handwriting recognition and voice recognition in Windows 7 is extremely good. Recentish products show that Microsoft is capable of doing exceptional work, and unlike some phobic people round here, I'm willing to judge the results on merit rather than preconception.
    Jack Schofield
  • > Windows 7 tablets do have some advantages for businesses. Otherwise,
    > I have no view until I see what they come up with.

    Windows 7 does not have the necessary *touch* interface that tablets use - handwriting recognition is for the stylus type interface that was a failure over 8 years ago (Tablet XP) - the market has chosen onscreen keyboards. There are few Windows 7 touch applications and the developer interface is clunky and with few examples. This is why at MWC they are showing plenty of tablets but none of them so far are Win7.

    For businesses the RIM PlayBook for example will be out long before we see a proper MS tablet (one with proper power management and hence long battery life) and don't write off HPs traction with WebOS - if they ever properly back up the developer like the way Nokia were doing.

    As for MeeGo tablets there is a demonstration of a real Intel MeeGo tablet on another article on your site (from MWC) which shows real innovation.

    Having developed for MS Surface 1 - released at the same time as the iPhone 1 and we are only now getting Surface 2! - I can say that it has proven unreliable in practice and our customer is removing them. They only developed one hardware platform and didn't push it or develop the software - it was fun going to various business MS resellers and trying to buy them and most didn't even come back. Its just saying their track record in this area is abysmal. Windows Phone 7 was slow to develop (no copy and paste even now) and doesn't have traction despite Ballmers view of a "third" force - RIM have better product offerings for business right now.

    I am also willing to judge on merit but my opinions are based on real experience which includes the past behaviour of MS, the ease of use of the MeeGo dev tools and the readiness of MeeGo. It just does not leverage what Nokia had to work with. I had no problem in them getting Windows Phone 7 to market it is just their exclusive bet on it because it will be too late for them and there is little chance of them making a compelling offering in time.
    bam-alam
  • @bam-alam
    > Windows Phone 7 was slow to develop (no copy and paste even now)

    Don't agree, and it's getting copy and paste faster than the iPhone did.

    > the ease of use of the MeeGo dev tools and the readiness of MeeGo.

    As mentioned, you're welcome to your opinion, but I'm reporting Nokia.
    Jack Schofield
  • @Jack
    As well as reporting Nokia I'd be interested in your opinion - where you think Nokia is with a product for the increasingly important tablet market after this deal because MS have no product for this sector?
    bam-alam
  • @bam-alam
    > where you think Nokia is with a product for the increasingly important tablet
    > market after this deal because MS have no product for this sector?

    The facts are that (a) Nokia has not actually closed the door on MeeGo, though it has certainly put it on the mixed-meaphorical back burner, and (b) Nokia will know stuff about Microsoft's tablet plans that I have no way of knowing. So my opinion is that my opinion would be little if any better than guesswork.

    For what it's worth, I think Nokia is out of the tablet market for the next year or two, but that that's not a high priority problem compared to its phone business. (Basically, Elop doesn't care.) However, if its trial MeeGo phone goes well, and if it sees good developments in MeeGo, then Nokia will launch a MeeGo tablet. If not, it will look to see what Microsoft comes up with for Windows 8.

    But Elop is a very smart guy, and given his inside information from both Nokia and Microsoft, he may well have entirely different plans. There is no view without a point of view, and Elop's view is much better informed than mine.
    Jack Schofield
  • @Jack
    I wish I had your confidence that this has been thoroughly thought out by Elop and Nokia but apparently the decision was only put to vote at the board the day before it was announced and this information came out during a session at MWC where most of his other replies from Elop were "no comment" to very pertinent questions. Yep they will have discussed it before but the short term thing of something to "announce" at MWC may have driven this decision.

    MeeGo is not being backed up by resources because the only way to justify paying the MS licensing fees is to slash R&D spending. One of the very good points brought up in your blog is how badly burned the developers feel about this decision. The brave decision would have been to streamline the Nokia bureaucracy and some R&D but stick with MeeGo. There will be no push behind MeeGo in sales as it is now a "project". From your last comment you are agreeing with me that Nokia's destiny is out of their own hands, that they are dependent upon MS completely. We are unlikely to see Windows 8 before 2013. That's the next MWC where Nokia will not have a tablet to show - I agree with you that Nokia need to concentrate on handsets for now but the damage of not having a relevant product will still hurt them in a market that is worth billions.

    We have been here before with MS promises and the most relevant example is Sendo. Such a great shame for a company that could have provided the hardware for the next billion people using their existing clout. WP7 phones will not be able to compete in this vast developing market because of the MS licensing model that means that they are at a premium over Android. Also where to for the Java apps that give Nokia the edge in this "ecosystem"?

    MS would like to see Symbian, Qt, MeeGo and Ovi disappear and with this decision they have been irreparably damaged. All this for nebulous "kickbacks" - talk of "billions" is a joke that has been unfortunately believed and parroted by some credulous business commentators.
    bam-alam
  • @bam-alam
    > I wish I had your confidence that this has been thoroughly thought out by Elop and Nokia

    It has been. Too risky not to do that, legally.

    > MeeGo is not being backed up by resources because the only way
    > to justify paying the MS licensing fees is to slash R&D spending.

    Other way round. If Nokia R&D had delivered, Nokia would not need MS now....

    > that they are dependent upon MS completely

    Not completely: they still have Symbian and MeeGo.

    > We are unlikely to see Windows 8 before 2013.

    But we may see it in 2012....

    > We have been here before with MS promises and the most relevant
    > example is Sendo.

    That was a long time ago, and views differ...

    > WP7 phones will not be able to compete in this vast developing market
    > because of the MS licensing model that means that they are at a premium
    > over Android.

    All that remains to be seen. However, one of the reasons for not going Android was that Samsung and HTC are driving down margins. As Elop pointed out, there is little differentiation in the Android market so it is correspondingly harder to make a profit. Especially when you have given your rivals a head start.

    > All this for nebulous "kickbacks" - talk of "billions" is a joke that has been
    > unfortunately believed and parroted by some credulous business commentators.

    It's what Elop said, and Microsoft does have billions to spare.

    Cheers!
    Jack Schofield
  • I think we'll agree to differ. I'll refer you to Tomi T. Ahonen and his take on this as to the real billions that Nokia are likely to lose:
    http://tinyurl.com/63zny9s
    It goes through "who gains the most out of the 50 million smartphone and 14.6 Billion dollar windfall, that Nokia kindly bequeaths to its rivals this year."
    In other articles he analyses why MeeGo was killed off when it was about to produce product as well.

    Also on the newswire the fact that there will be no WP7 phone product from Nokia in 2011:
    http://tinyurl.com/5ttvbjs

    If Microsoft does have "billions to spare" will its shareholders be happy just to hand that over without taking an equity stake in Nokia?
    bam-alam
  • @Jack,

    > Elop also came up with other reasons why Microsoft was a better fit.
    > Nokia would have never got any sort of joint development out of
    > Google.... Google doesn't really do partnerships at all.

    Microsoft, on the other hand, is famed for the fair way that it treats its partners!

    Re: Nokia's supposed ability to influence and shape future versions of Windows Phone through the terms of this deal. Glynn Moody makes a great point about this: it could play out in two different ways:

    1) It's all a load of marketing piffle to make Nokia (and its share holders) feel better about the whole thing. Nokia will have *zero* input into Windows Phone and the company will become just another hardware manufacturer for Microsoft. I see no reasons why that's any better than being just another hardware manufacturer for Google/Android.

    2) Nokia *does* get to help shape Windows Phone. But where does that leave other Windows Phone handset manufacturers? Presumably, Nokia would have early access to new features and would get (or expect to get) to release their new version Windows Phone products ahead of competitors. If I'm a Windows Phone handset manufacturer, would I really want to go on playing second fiddle to Nokia in that market? I think it more likely that such manufacturers will just shut down their Windows Phone stuff entirely and concentrate on Android.
    BrownieBoy-4ea41
  • @BrownieBoy

    Thanks for raising some good points.

    > Microsoft, on the other hand, is famed for the fair way that it treats its partners!

    More than 90% of Microsoft's income comes via partners, and on the whole, it supports them pretty well. Almost none of Google's income comes from partners, and Nokia clearly realised it had more chance of a partnership with Microsoft than with Google. (So does everybody else, actually. Just get out there and actually talk to people.)

    > I see no reasons why that's any better than being just another hardware
    > manufacturer for Google/Android.

    Well, here are four reasons for starters. (1) Nokia has a relationship with Microsoft that goes far beyond anything it could get from Google, both in terms of joint development and the promotion of Nokia technologies such as Navteq. (2) Nokia would have been a late entrant to the Android business, in which its biggest rivals, Samsung and HTC, were already the leading players. (3) Google isn't offering any legal protection to its handset makers and they could end up on the bad end of lawsuits from Oracle, the ever-litigious Apple, and perhaps even Nokia-Microsoft. (4) There's a fair chance Windows Phone software will turn out to be better than Android. Although it's obvously not finished yet, it's actually pretty good. Indeed, it's unusual in that WP7 gets better as you use it! ;-)

    > If I'm a Windows Phone handset manufacturer, would I really want to go on
    > playing second fiddle to Nokia in that market? I think it more likely that such
    > manufacturers will just shut down their Windows Phone stuff entirely and
    > concentrate on Android.

    That would be good for Nokia, but how bad would it be for Microsoft? Samsung and HTC are already giving priority to Android, so Ballmer may think "OK, no great loss". On the other hand, Nokia's entry should stimulate Samsung and HTC to try harder with Windows Phone, because if they don't, the Nokia-Microsoft combo could turn into a viable force. If Android does, as expected, lead to a race to the unprofitable bottom, that would be good for Nokia and bad for them.
    Jack Schofield
  • @bam-alam
    > If Microsoft does have "billions to spare" will its shareholders be happy just
    > to hand that over without taking an equity stake in Nokia?

    Both the US DoJ and the EC still have their feet on Microsoft's windpipe, so there's really nothing useful it can do with its money. Microsoft's shareholders are going to be unhappy unless it comes up with a worthwhile new business, and a few billions to Nokia could help tip that. At least it's a better business prospect than giving $30-odd billion back to shareholders (which Microsoft already tried as a way of getting rid of cash) or offering silly money for basket cases like Yahoo.
    Jack Schofield
  • @jack. Perhaps Microsoft should charge its customers less since it's got so much money swilling about.
    The Former Moley
  • @Moley
    > Perhaps Microsoft should charge its customers less since it's got so
    > much money swilling about.

    And the reason for that would be what, exactly? Since you're a Linux fanboy, would you really want Microsoft to compete directly against the operating system that's just so good you struggle to give it away?


    Still, it might be fun if you went round all the Mac sites and posted comments about how Apple didn't need to charge such exorbitant prices now it has more than $50 billion in the bank ;-)
    Jack Schofield