Nokia: still burning

Microsoft's decision not to support current smartphone hardware in Windows Phone 8 is a big blow to the struggling Nokia. By Duncan McLeod.

Microsoft dealt a blow to its partner Nokia late last week when it said current Windows Phone devices would not get upgraded to the latest version of the operating system. In the process, the US software giant may have shot itself in the foot.

Nokia CEO Stephen Elop could be forgiven for thinking he’s jumped from one “burning platform” — his metaphor for the outdated Symbian operating system which the company has been hanging on to for too long — right onto another.

Microsoft’s announcement last week that current Windows Phone handsets, including the new Nokia flagship Lumia 900, which was launched in SA this month, won’t get the upcoming version of Windows Phone 8 couldn’t have come at a worse time.

Nokia’s share price is in the toilet. It’s trading down by more than 60% this year and by more than 90% in the past five years. On Monday, it touched lows that were last seen in 1996.

Microsoft’s decision not to support the update on current hardware is surprising, especially given that the US software maker needs the Finnish company to succeed for Windows Phone to make it as a platform. Yet Microsoft has now caused a giant problem for its struggling partner. It’s a decision that will hurt Nokia, at least in the short term. Any tech-savvy consumer — and that’s arguably the most important market the Lumia devices need to reach — is going to think twice now about a Windows Phone product, at least until devices running the new version of the software are released later this year or early in 2013.

It’s no exaggeration to say the future of Nokia, which once led the world in both feature phones and smartphones, is on the line. Elop, a former Microsoft executive, had pinned Nokia’s future on Windows Phone. And now — to use a different metaphor — Microsoft has pulled the rug, at least partially, from under it in a fiercely competitive market. Yes, Microsoft will develop Windows Phone 7.8, with some of the visual elements of version 8, for current devices — including the Lumia 900 — but most power users won’t be happy with second best.

Not surprisingly, Nokia’s share price continues to tumble. On Monday, it tanked by nearly 8%, pushing its market capitalisation down to US$8bn, making the company worth just 1,5% of Apple. And Apple is the firm it has to match up to in the most profitable segment of the market, smartphones.

Then, of course, there is Microsoft’s curious decision to develop its own brand of tablet computers, called Surface, for Windows 8. From the video demonstrations I’ve seen, the Surface machines look great. But the move has caused unhappiness among at least some of the company’s PC partners, with Acer, in particular, slamming the move. A top executive at Acer, the world’s fourth-largest PC maker, warned that Microsoft would fail if it tried to take on Apple at its own game in hardware. Some analysts have said that Microsoft has “Apple envy”.

The decision to build the Surface tablets raises further concerns about Nokia’s future role in the Microsoft ecosystem, too. It had been expected that the software maker would have worked closely with the Finnish firm to develop a flagship tablet powered by Windows 8. That now seems far less likely, with Microsoft flogging its own machines.

I wrote in this column earlier this year that it was unlikely that Nokia jumped off a burning platform only to drown in the cold Baltic Sea. Instead, the worry now must be that it’s going to be undermined by the very company on which it’s pinning its future.  — (c) 2012 NewsCentral Media

Share this article

  • http://twitter.com/scuddapah Srikanth Cuddapah

    this dude is trying to look alike jobs. This turd Sold me a phone (lumia 900) for 100 bucks and with no upgrade path. Let this compnay burn to ashes

  • babbeloo

    I don’t agree with this analyses. All smartphones get outdated after one year. Consumers are fine with this. The WP7.5 and soon WP 7.8 OS is a fast and excellent OS. Right now it belongs amongst the best performancing OS in the market. Considering their low price, Nokia Lumia phones are a bargain and offer great value. Not to mention the raving reviews of Nokia’s pureview 808 camera phone.

  • sean mcmahon

    Agree babbeloo.  Nokia’s 808 is awesome.
     
    It’s time for Nokia to dump Windows/ lumia and move back to Symbian – 808.  Partnering with microsoft has been a complete disaster for nokia.  Who knows what is going on at the top but it is definitely time to abandon windows.  Go Symbian!

  • Greg Mahlknecht

    There seems to be a general misconception in the tech reporting world that MS threw Nokia under the bus in a surprise move.  You can be sure that Nokia knew this upgrade news for months, if not from the time they entered the partnership.  Nokia is important enough to Windows Phone to have them included in the planning and execution of the Windows 8 roll-out.   Apple showed its hand at WWDC with iOS6, and I’m betting MS and Nokia both breathed a sigh of relief because it’s clear that from a technical level, WP8 leapfrogs iOS6, and WP8 has enough compelling features to keep it fighting toe-to-toe with its biggest rivals.

    All signs are pointing to a combined WP8/Win8 release in October along with the appropriate hardware, and I think with the Lumia name having gained massive amounts of positive press and the promise of some really unique devices (a WP8 with the game-changing Pureview camera from the Nokia 808) they probably thought they could take the pain of the possibility of 3 months of depressed WP8 sales.   The albatross around Nokia’s neck continues to be the dying Symbian platform, not the WP8 upgrade issue.

    Let’s face it, the vast majority of the market doesn’t care about the lack of WP7->WP8 upgrade path.   Android’s awful track record in this regard has proven time and again that although we as geeks get rabid about upgrades (I’m REALLY bitter about the fact my Galaxy tab 10.1 still hasn’t officially got ICS yet), users buy a phone for what it is at the time, not what it might be in the future.

  • Greg Mahlknecht

    From all the reviews I’ve read, the problem with the 808 is that the camera is awesome, pity about the phone and OS it’s attached to.   Personally WP8 + Pureview camera is my next device.  Don’t let me down, Nokia!

  • http://www.sadev.co.za Robert MacLean

    Sigh, Duncan, just announce it – you are a die hard Nokia fan and you are dying at the fact that Microsoft is not making Nokia the most important person for them. Every decision to “hurt” Nokia you mean, can be flipped to be seen how Microsoft is (finally) making consumers first and foremost there priority.  

    “Microsoft’s decision not to support the update on current hardware is surprising”

    No, it is not. Since the very first Phone 7 news, there has been very strong messages about hardware specs & requirements – it really is a tighly controlled ecosystem for hardware. When you think that Phone 7 & Phone 8 have vastly different requirements, it should not be surprising that the hardware is not compatible. 

    What you are proposing is that Microsoft either release a poorer OS so it can run on slow & out dated hardware or those with Phone 7 get such a bad experience that they never touch another device?! Neither good for consumers – so Microsoft took the hardline, which in the end will benefit consumers of their platform.

    Surprising is also not the case, Microsoft has made it clear for MONTHS that this would be the case, not really sure who is surprised except those who never watch any news on tech.

    “Any tech-savvy consumer … is going to think twice now about a Windows Phone product” 

    In South Africa I 100% agree, I think this will stall the sales and MTN has yet again handled the Windows Phone situation terribly.

    But applying the South African issues to Microsoft & Windows Phone decision making is a flawed logic. We have sales of only a few thounsand WP7 devices, really a small, behind the times, country here. The markets that matter have had the devices for much longer and for those markets this is less of an issue.

    It is also important to remember that Nokia got to this party over a year late – while Nokia is important, should Microsoft punish customers by holding back new stuff so Nokia has time to sell old kit?! 

    Microsoft has shipped many other WP7 devices (Samsung, HTC etc…) should they too be punished to serve just Nokia? 

    “Microsoft has pulled the rug” 

    I do not think Nokia was under any illusions of this happening, there was no rug pulling here. Nokia has agreed a long time before a single device has shipped that all WP will have their navigation software. So when Samsung sells a phone, Nokia will make money. Nokia is the reference hardware for Windows Phone 8 – as shown in the demos. Microsoft is making the partnership in the phone space stronger than ever. 

    “Microsoft’s curious decision to develop its own brand of tablet computers”

    How is this curious? Microsoft has said clearly that it because NO ONE ever builds hardware right. They called HP out by name on this for the horrid Windows 7 tablets. This doesn’t mean we can’t & won’t see other manufactorers, it just means Microsoft is making sure that they do right by their customers from day one.

    “Nokia’s share price continues to tumble” 

    Nokia is greater than just Windows Phone, what has happened to the other entry level devices they announced? Nothing. How is the brand seen compared to say iPhone? What are they doing to make the migration from Symbian to WP devices easy? Do they seem to have gone from market leader to a company with no clear plan? Are they a hardware or service company? It is not one factor – it is all of it. 

    “develop a flagship tablet powered by Windows 8″

    Completely agree – that was my gut feel too that the flagship was from Nokia. That said maybe this is a Nokia thing, they do not seem to be first to market ever with new platforms. 

  • http://www.facebook.com/people/Steven-Zahl/1670371040 Steven Zahl

    NOKIA is TOAST

  • capeleopard

    If only MS had taken a leaf out of Apple’s PR manual. Instead of saying to Lumia owners “you’re only getting 7.8″, why not tell them they’re getting 8 but with a few hardware limitations, like iPhone 4 without Siri for example? Once again, it’s not what you say, its how you say it.

  • http://www.sadev.co.za Robert MacLean

    APPLE is STRUDLE

Why TechCentral?

We know that as a prospective advertiser, you are spoilt for choice. Our job is to demonstrate why TechCentral delivers the best return for your advertising spend.

TechCentral is South Africa’s online technology news leader. We don’t say that lightly. We believe we produce the country’s best and most insightful online tech news aimed at industry professionals and those interested in the fast-changing world of technology.

We provide news, reviews and comment, without fear or favour, that is of direct relevance to our fast-expanding audience. Proportionately, we provide the largest local audience of all technology-focused online publishers.

We do not constantly regurgitate press releases to draw in search engine traffic — we believe websites that do so are doing their readers and advertisers a disservice. Nor do we sell “editorial features”, offer advertising “press offices” or rely on online bulletin-board forums of questionable value to advertisers to bolster our traffic.

TechCentral, which is edited and written by award-winning South African journalists, cares about delivering top-quality content to draw in the business and consumer readers that are of most interest to technology advertisers.

We’d like the opportunity to demonstrate the value of directing a portion of your advertising budget to TechCentral, whether your company is in the technology field or not. Numerous opportunities exist for companies interested in reaching our audience of key decision-makers in South Africa’s dynamic information and communications technology sector. We offer packages that will deliver among the best returns on investment available in the online technology news space.

For more information about advertising opportunities, and how your organisation can benefit by publicising itself on TechCentral, please call us on 011-792-0449 during office hours. Or send us an e-mail and ask for our latest rate card and brochure.