I think this blog needs to be written. I think many things are now more clear. We must acknowledge that MeeGo did not die Friday 11th of February (when I wrote my stunned first review of the new alliance), or the week before with the burning platforms memo. If anything Stephen Elop had been pouring gasoline to the platform fires all last year, making sure there would be no MeeGo. Make no mistake - when Elop was hired in September - that is when MeeGo was killed - and that decision was made by the Nokia Board. But it is not that simple.



Stephen Elop hiring was not about killing MeeGo. It was about a Nokia in severe crisis, its then-current CEO, Olli-Pekka Kallasvuo (OPK) effectively already fired. Nokia was on the same trajectory as previous giant rivals Motorola and SonyEricsson (and also LG) and Palm in pure smartphones - Nokias profits had vanished - and look, Motorola lost 9 out of 10 customers in recovering - and even then it sold part of its assets and split into two. Palm was sold to HP. Nokia Board knew that the trajectory Nokia was on, in the summer of 2010, was a certain road to death. That the Board could not obviously accept.



THREE CHOICES



I do not know any of this, I am making guesses from the public record what we have seen since. We do know Stephen Elop was announced on September 10, 2010. We started to hear rumors that Nokia was hunting for a new CEO in July. I said on this blog at the time that I didn't think it was that bad, but I could see that it was likely that the Board would fire OPK. This was before we found out that OPK had been boosting market share artificially at the cost of profits to the company in a price war it was destined not to win. So the rumor mill was probably quite right around July the process was well under way, and by early September, the Board made its choice and named Stephen Elop to be the new CEO.



This was an ungent and absolutely necessary choice for Nokia. Their current CEO was no longer welcome to run the company and in these very troubled and turbulent times, the company needed a new CEO. And a new CEO, with a new vision for the company. What the Board would not accept, was for a classic Finnish long-term Nokia guy to come and say, I'll do exactly what we've been doing in the past. That, to the Board in the summer of 2010 - was not sustainable. There had to be drastic changes.



The problem is - what kind of changes? I would guess - I do not know - that there was a professional headhunter company brought in - with a mandate to find the candidate from the outside who would be of high calibre to run a Nokia-sized company - but one with North American credentials (to appease the US shareholders - remember the shareholders were in revolt at this time last summer). I would also think, from working with headhunters from time to time - that they did their work diligently, and found two competent North America -based candidates as finalists (one of whom was Stephen Elop obviously) and that the Board probably considered as a third finalist, the best candidate from inside the company - and its fair to guess this was Anssi Vanjoki - who in all fairness should have gone through the same process with the headhunters ie psychological tests etc.



At least there must have been two - you don't bring the Board a choice of 'take it or leave it' - but I think the intelligent choice is two solid outsiders who have run big organizations before, both from North America - and one Nokia insider. What can we figure out? Nokia was in crisis. Cuts had to be made. No candidate for CEO could walk into the Boardroom and say, "I'll save this company, turn it from making losses to making profits - using magic - and nobody is fired, nobody is hurt, no divisions or units will be cut, and no products or ares will be eliminated." That is not competent analysis of where Nokia was in the summer of 2010.



What can we guess from Anssi Vanjoki - he very probably promised he'd keep MeeGo and Symbian, and their complex strategy and organization with Qt and Ovi and all the software related staff that this requires. And then Anssi must have said he'd cut something else. We don't know what. But look at Stephen Elop, right when he started, he fired 1,800 people and he's now firing what, thousands. So he had a 'mandate' to make deep cuts that ran 5,000 people at least (maybe many more). This was all discussed in the final negotiations with the Board in deciding on the new CEO - and in approving his plan for rescuing Nokia.



Make no mistake about it, if Anssi had walked into the Board Room and said, "We need no cuts" - he would not have been taken seriously. He had to cut somewhere, we don't know what he said.



But I think its more relevant to consider 'the third guy', Mr X (or Mrs X haha). Look what all was draining Nokia in 2010. The NokiaSiemens Networking unit was a drain on profits making losses most recent quarters. This is a third of Nokia's revenues and a lot of staff - and Nokia has been making these networking industry acquisitions (or attempts at them) not just Siemens networking, but Nortel and now Motorola's networking unit. This is clearly a dear and loved element of Nokia's 'core' competence that the Board seems to love. But at least one of the three rivals must have suggested killing off NSN (and also cutting Nokia' size down by a third in the process. Leaner, and more profitable, but yes, much smaller).



Another obvious candidate is the basic phones unit. It would be a fair analysis to say, that the future of all mobile phone handsets was smartphones - and the basic phones were going to be commoditized within a few years, and their profit margin is far less than that of smartphones - why not sell the dumbphones unit for example to the Chinese. Do this, and keep Nokia's smartphones alive. But this would cut another third of Nokia's total revenues (like removing NSN).



What of the operating systems. I could see Mr X suggesting that Symbian was failing and MeeGo was dead-on-arrival - that the obvious solution is to kill both - and go immediately to Android. We saw this suggestion all through last year, it would seem very likely that one of the three candidates - and obviously not Anssi - would suggest this. Elop in that was was the lesser of two evils perhaps.



But there are more issues than that. What of Nokia's headquarters. If one or two of the candidates suggested moving Nokia HQ to America - we do not know what Anssi said, but remember, Anssi was the Finn and any North American CEO would have been more welcome to US investors - Anssi may have suggested as one solution for hiring another Finn to run Nokia - to move the HQ to the US.



DEATH OF MEEGO



The Board was not making a choice in September of whether to kill or not to kill MeeGo. They had a far bigger choice to make, and that was the commercial viability of Nokia, which had recently been run badly - one might say ruined - by OPK's management. The Board had to select a CEO. At one extreme they had Anssi Vanjoki, a guy who very likely would have done the 'least dramatic' changes to the company. As a long-term Nokian, he would have tried to minimize layoffs and tried to keep most of what is core to Nokia. he would have had some dramatic solutions and painful cuts yes, but I'd be pretty sure his idea of how much to cut, was probably the smallest of the three. However, he might have eliminated a whole unit of Nokia like NSN or basic phones and very possibly moved the HQ to the USA.



Then there is Mr X who was most likely a 'more extreme' candidate than Stephen Elop, who probably said, lets kill Symbian and MeeGo immediately, and ALSO make some other cuts - eliminate the expensive handset design in Finland, move all the production from Finland to China etc - maybe even suggesting to subcontract much of Nokia's smartphone business like Apple does to Foxconn. We don't know, but its pretty sure to assume, considering honestly - how 'mild' Stephen Elop's remedies have been so far - for a company as much in distress as Nokia was last summer - and considering what kind of solutions many suggest for Nokia - that Stephen Elop was indeed the 'milder' of the two outsiders. More drastic than Anssi, but not the extreme choice.



I do not know, I am guessing, but I am pretty sure that one of the tree CEO's would have eliminated NSN (and that was not Elop). One of the three would have moved the HQ out of Finland (and that was not Elop). An obvious solution if abandoning MeeGo would be to also kill off Symbian (which Elop did not do). And very likely a candidate would suggest killing off the low cost handset business, and perhaps even to move out of Finland most of the design work in handsets (neither of which Elop has done).



HIRING A CEO



Then there are all the other things that come to a hiring decision. How is the personal relationship between the candidate and the Chairman (Jorma Ollila). What kind of compensation package is involved. What kind of management style issues are involved. How is that person's reputation in the industry and especially talking to investors (a vital element in the summer of 2010 with the Nokia shareholder revolt). How good are relationships with industry giants. Certainly, the investors would not be happy to see Anssi Vanjoki as the choice, as he'd be seen as yet another Finn. The decision would not be made on 'either the Finnish guy or the Canadian guy' but rather, these all are factors that would be considered as a package.



The board saw probably three very highly qualified candidates - who had three very differing views on how to save the company. No matter how the Board felt about any one issue (networks, basic phones, smartphones, Symbian, MeeGo, Finnish/American, number of people to be fired, subcontracting phones, factories in Finland, HQ move to America etc) - they made their choice most of all, on who seemed to be the most competent CEO. Remember, the Board was faced with replacing what they felt was an incompetent CEO when Nokia was bleeding. And they knew Nokia needed a big change. And there was no time to tell the headhunters - none of these are good, take another 3 months, find us another two candidates..



Considering what all Stephen Elop has done, and especially what all he has not done - he is actually quite a mild pussycat in terms of an outsider North American CEO to come to fix Nokia. In all honesty, the only unit he's killed is MeeGo. He's made staff cuts in two stages and they've been relatively modest. This is not without pain - but no such change would be. The point we have to understand, the Board in September, did not decide only on MeeGo. They knew, if they took the Canadian Microsoft guy, they would sign the end of MeeGo - but we do not know what were the other choices that the other two candidates were suggesting Nokia would have to take - but we do know this - those two candidates proposed worse choices (to the Board's view of Nokia) than what Stephen Elop did.



Nokia was facing a crisis in the summer of 2010 - and painful cuts had to be made. MeeGo is a casualty of that painful choice. So please do not think that MeeGo died last week with the burning platforms memo - no, the platform fires were fuelled by Stephen Elop all last Autumn - one of his first acts as new CEO was to move MeeGo launch to 2011. Remember, MeeGo was almost ready - it had shipped in final beta to developers in July. This means in Nokia terms, it is within a few months of production. Nokia had been promising a MeeGo device by end of 2011 and that was as we now know, the recently killed N9-00. MeeGo and N9-00 were both killed by Stephen Elop - but their death sentence was signed off by the Board in September, when they decided to take Stephen Elop as the new CEO. Do not blame him now for those decisions, the decision to end MeeGo was part of the plan that Elop gave to the Board before he was signed. The Board knew what it was getting in September 2010.



WHY MICROSOFT



We do know now, that there were negotiations with Microsoft already in November, and that Nokia had told the Finnish government of a new round of layoffs now before this announcement this past Friday. Steve Ballmer was booked well in advance to be by Stephen Elop's side at the Nokia day. These issues did not emerge overnight. But lets now examine the Microsoft choice. And before we go further, its quite possible that Elop said to the Board something like "I am not wedded to Microsoft. Let me bring two proposals to the Board, one from Google Android, the other from Microsoft - and you can decided and I will abide by your decision." That would have been a reasonably safe bet for Elop, first, in that Google didn't have much to gain from adding Nokia to its family - as Google saw in the Autumn of 2010 that its Android trajectory would within less than a year pass Symbian anyway, and Nokia could not shift immediately from Symbian to Google, so Google would not really gain that much. They would see Nokia as more 'desperate' and Google knew that Nokia needed Google far more than Google needed Nokia. Plus Google knew that if Nokia would come in, Nokia would ask for special treatment as the biggest and that would upset a dozen Android makers who just recently got rid of Nokia in the Symbian split-up. Elop could fairly expect, that Google's effort to 'woo' Nokia, would be half-hearted and lukewarm.



Meanwhile Microsoft needed Nokia as its army of Windows Mobile handset providers had dwindled with the shift to Phone 7 and the smartphone world was running away from Microsoft. Microsoft could very easily promise Nokia 'best customer status' and all kinds of concessions. Microsoft could cross-license some Nokia software (Navteq maps for example, something Google didn't need with Google maps) to sweeten the deal. And in the final analysis, if the two offers were very close - Nokia Board would then go with the company where 'we' (as in Nokia) had the 'inside guy' (as in 'our' CEO, Elop) who knew the 'terrain' ie knew Microsoft better than anyone might know Google.



But thats speculation. Here is how, if I was Stephen Elop, and had to sell the Microsoft deal to Nokia, here is how I would have played it. I would have told a short story:



THE THREE LITTLE PIGS



I'd tell the story of three companies in the PC industry: IBM, Hewlett-Packard and Microsoft. How at one point both IBM and HP used the Microsoft operating system. IBM was the giant at the time, similar to Nokia today. And then, at one point IBM decided, it wanted to create its own OS for its PC. It broke with Microsoft, developed its own OS, tried to find a market for it, didn't have the apps, and found it incredibly expensive, made its IBM personal computers more expensive and hurt its bottom line. Over time, IBM had to come back to Microsoft and eventually sold its whole PC unit to Lenovo and quit the PC business altogether. Meanwhile, Hewlett-Pacard did what it does best, it made high quality personal computers, never dabbled with operating systems, and grew soon to be bigger than IBM and today towers over its rivals and are twice as big as Microsoft. HP became the biggest company in the IT industry by revenues (and twice the size of Nokia). Meanwhile Microsoft stuck to making great software to anyone who wanted it.



Story sounds very nice and is based on the truth. The obvious - obvious - question that the Nokia Board would then put to Stephen Elop - is the question yelling to be asked - what of Apple? And Stephen Elop would have his prepared reply - yes, Apple survives - but it struggled all along in making personal computers - and by mid 1990s it became unprofitable as a PC maker and would eventually have to align its Macitosh OS - to accept Microsoft's software! Ie Apple had to become Microsoft-compatible itself. Its all about the apps and Microsoft's big platform had all the apps, that is what wins in operating systems. Apple came back on the strength of the iPod - music is apps - and iPhone - more apps - and iPad - eve more apps. And Apple defeated giants along the way, like Sony in music players and - he would tgen apologize - and is defeating Nokia in smartphones as we speak (and the iPad was the roaring success of the tech stories obviously in July and August when these discussions were ongoing).



And then deliver the killer line he had been waiting to express - the only company to defeat Apple is Microsoft. We know how to do it, we did it overwhelmingly in the PC operating systems, the Mac was first, but Windows came and we made Windows 1.0 and 2.0 and 3.0 and eventually we won - why, because Apple's core competence is desirable technology, but Microsoft's core competence is software. Apple is very good at software, but Microsoft is the master at it. We know operating systems and their application environment, we win that war. If you, Nokia want to beat Apple, you do what you do best - make the best phones ever, and let us do the software part of operating systems - the part that is draining Nokia now and killing profitability and causing all the delays to such great phones as the N8...



He would probably in very mild terms say, that Nokia tried to battle Apple once, with Symbian - and lost. And Nokia tried a second time - with Maemo - and lost. Then to say, the definition of madness is to try the same thing and expect to win. That if Nokia had deep pockets of profitability, it could indeed go on with these attempts and perhaps some day, Nokia might win, but Nokia did not have the luxury of time. It was time to end the pretense of being as good at the software, and concentrate on the hardware side of the business - both in handsets and in networks.



I think this type of discussion was had between Elop and the Board about Microsoft. And he's have plenty of evidence, showing that Microsoft is not afraid to ditch the old Windows Mobile OS, knowing it is not viable against Apple and Google - which is the cheaper and faster way to respond than what Nokia was trying with two operating systems, Symbian and MeeGo, and a clumsy Qt based 'migration path' for them. No, Microsoft is in it to win it, and then show some beta version samples of Phone 7 (which started to ship a few months later, so he would have easily had access to a late version of it).



He didn't need to prove to the Board that Phone 7 was better than MeeGo. He didn't need to prove to the Board that Microsoft was better than Google. All he needed to prove to the Board, that partnering with Microsoft - would solve the enormous drain on profits that the Nokia software strategy had become, and give a compelling story that Nokia would retain a competitive OS in Microsoft - and one, that could if history would repeat, actually one day defeat Apple - something that most Nokia insiders would never say of the MeeGo project haha.. So his solution would need to convince the Board, that Nokia could continue as a great smartphone maker, with a world-class OS partner.



And Microsoft was one of really only two viable alternate operating systems, it was going to be down to either Google Android or Microsoft Phone 7. That was very clear in all rumors and what the tech bloggers and analysts and investors seemed to be desiring. Nokia's Board would be well excused for believing, that if they dump Symbian and MeeGo for Microsoft's OS, they would be rewarded by Wall Street, that this would be seen as a good move. That the Nokia stock price would shoot up dramatically (while it seems the opposite happened, at least in the short run..). But we have to be honest, before Friday the 11th, the guess at most sites was that the investors would welcome a move for Nokia away from Symbian and MeeGo to 'either' of Android or Phone 7. That was a fair assumption to put into the equation when the Board was deciding in the summer of 2010.



ALSO SOMEONE WILL HAVE PAINTED A TIME-LINE



And definitely one of the CEO candidates must have made the obvious time-related observation, however true or untrue it might be - that Nokia's profitability has been in decline almost exactly in synch, with the proportion its handset unit has migrated phones from dumbphones to smartphones! Think about it - the Symbian purchase, the slow painful bureaucratic Symbian development issues, the ever increasing delays - look at N8 - the delays had been growing progressively worse at Nokia the more it went from doing a couple of smartphones to becoming a smartphone company. Meanwhile its biggest rivals, RIM and Apple both report high profitability - with making competing smartphones! Nokia's Board definitely knew, that for Nokia, making software and the battle for the OS wars, was far more costly - draining precious profits - than for its rivals who seemed to know how to do it. Part of that was the huge baggage that Symbian brought, obivously, a decade of legacy software and what Nokia bought was the amalgamation of the wishes of a dozen rivals, many of whom were not even in the phones business anymore but whose early requirements and requests still lingered in some Symbian software code. We know fully well it was a bloated system and could not be as competitive as the newest operating systems like that from Apple or Google (and quite arguably, the new one from Microsoft).



The pattern here is obvious. The more Nokia would shift from featurephones to smartphones the profit margin would shrink. Whether that is a true 'causal relation' is pretty irrelevant at this point - the argument would have been made, that Nokia is 'not equipped to win' in a pure smartphones-war, its software baggage and strategy and staff costs and methods are not suited to do software competitively. Not that Nokia could 'not do software' but just that it was horribly slow and costly at doing it. I am sure that message was highlighted last summer when we saw how quickly Google was doing ever newer, and ever better versions of its own OS, Android. Nokia Board would feel gutted about it, but they could see the numbers - Nokia was not competitive in the software side of the battle.



Again, readers, this is all pure conjecture. I have not one bit of evidence that the above happened - but I think it is very likely to have happened. Clearly the Board approved the death of MeeGo when Elop was hired. Elop delayed the pending MeeGo launch from October 2010 to sometime in 2011, which was announced in public on October 22, but was probably internally communicated to the stunned MeeGo team on October 5. That was the day MeeGo's project leader, Ari Jaaksi suddenly resigned 'for personal reasons'. Elop also killed the N9-00 Meego handset project which was first reported in January to have been killed. MeeGo is now being turned from a mass market operational OS project, to a 'hobby' project where Nokia will bring one handset to it (expect it to be a mild and simple version of N9-00) sometime towards the end of the year, just to fulfill its obligation.



This was not done as response to 'burning platforms' haha. It Stephen Elop did indeed discover a fire on the oil rig platform that is Nokia, he was not looking to shut the fire, it was Stephen Elop's own actions that poured gasoline to those burning flames - he wanted MeeGo out of the way - imagine the outrage, if MeeGo had been released on schedule in October 2010, the first handset released for the best Q4 Christmas sales period, and as this would have been significantly newer a phone, ie a better handset than the N8 - and on the better software, it could have easily outsold Microsoft's Phone 7 haha.. that would have been a horrible PR nightmare, why kill the new 'great'' MeeGo OS and replace it with Microsoft's 'worse' Phone 7 OS. That would have created huge outcries. But Stephen Elop knew what he needed to do, and to bring in Microsoft, he had to kill off MeeGo right away, so we never saw what it could do.



And again, don't blame Elop for this - he had a plan to save Nokia, he offered that plan to the Board, and all three plans by the three CEO candidates had painful cuts. This was to the Board the least painful option. At least Elop would commit to Symbian for two more years, etc..



COURAGEOUS PLAN



Now, the crazy part is of course Microsoft and its reputation recently, especially in adventures in mobile. I mentioned in my blog posting on Friday, that Nokia may regret this, if history is any guide, look at Microsoft relationships with handset maker partners, Sendo, HTC and Motorola. There is far more to recently Microsoft 'partnerships' that tend to end up very badly for the 'company other than Microsoft' and Microsoft is quite happy to abandon its 'strategic' partners at the drop of the hat, and send in the army of attorneys to mop up the damage. They are far far more profitable than Nokia (I believe, Microsoft has been far more profitable than Nokia 'ever' was) and they can afford their army of lawyers. Asymco ie Horace Dediu wrote an eye-opening blog last week that chronicled the history of recent Microsoft adventures in partnerships. Lets hope for the sake of Nokia, that history will not repeat itself, but go read his account of history, it is frightening for this partnership.



Consider here are a few of Microsoft's partnerships in telecoms in the past decade and how Horace summrizes them. In 2000 Ericsson ("culminated in losses and Ericsson going to Android"). 2001 Sendo ("after litigating with Microsoft went bankrupt"). Motorola 2003 ("launched series of phones using Microsoft, hit the rocks in profitability, and now relies exclusively on Android"). Palm in 2005 ("shipped a few MS phones, and an acquition later is now part of HP, making its own OS"), Nortel 2006 ("Nortel declared bankruptcy two years later"). LG 2009 ("made a few Microsoft devices, but abandoned the platform, moved to Android losing all their profits"). There are no sunny stories of Microsoft alliances in mobile. And please go read his article, there is much more, read at Asymco.



One might add the experiences with Microsoft on the PC side, that Apple has had, IBM has had and quite recently HP has had. Quite often partneships with Microsoft end in tears, and lots of court battles. As the fictional character Sir Humphrey advises the Prime Minister, in the classic BBC TV series, Yes Prime Minister (and Yes Minister) - this is a 'courageous plan' - which he means - it is disasterous. You are fool-hardy to believe this illusion that Microsoft offers as a supposed partnership. And especially after reading Asymco's blog, I am even more worried. As they say, the definition of madness is to do the same thing, and expect a different result.



IRONIC TRADE



So let me summarize the end of MeeGo this way. Bear in mind, Nokia needed to replace OPK, and it had to do so fast, and MeeGo was at best one of perhaps a dozen items on the table. With Stephen Elop's selection, MeeGo's fate was sealed. It died on that day when that CEO contract was signed. But consider this. MeeGo was within weeks of launch. This is like Sony when it had Playstation 1 as the most popular home videogaming console, and was only weeks from launching Playstation 2, it would suddenly abandon the project, and sign up with the smallest rival in videogames. Yes. when this decision was made, in September - and still today when it was formally announced on February 11, Nokia owned the world's most used smartphone OS platform and was almost twice as big as its nearest smartphone manufacturer (Apple). Nokia was weeks from launching its next OS ie MeeGo, for which Nokia had already built a functioning migration path through Qt. All this, while Nokia's Ovi store was now the second-most-used app store.



That all Nokia abandoned for not the second biggest OS platform (Google Android). Not the third biggest (Apple iOS). Not the fourth biggest (RIM Blackberry), Not the fifth biggest (Samsung bada), not even the sixth biggest selling smartphone OS platfform (Microsoft's Windows Mobile which is being terminated) but Nokia abandoned the world's most popular smarthone OS platform and its migration path, for the seventh-best-selling smartphone OS platform (Microsoft's new Phone 7) which had 1.5% market share in the fourth quarter of 2010 - vs 31% for Nokia's Symbian platform (including Japanese manufacturers also using Symbian), and 28% for Nokia itself. Nokia abandoned its giant platform and picked one of the smallest in the world. Mind you, Phone 7 is not the smallest - Palm webOS of HP did the worst in Q4 of 2010 haha.



AGAINST TREND



The one part that 'gets me' is that this is a classic strategy blunder where the industry is on a clear trend from one to another, and we find a major company who rejects the new, and clings onto the past. All major analysts agree that the phones business is being commoditized. The industry tries to move 'up' in the value chain to software, services and apps. Look at Apple, it first launched what the industry defines as a featurephone in the iPhone 2G in 2007, then added apps and the App Store for iPhone 3GS in 2008, and its first true smartphone. Apple adds smartphone functionality and apps. Nokia is taking the opposite step. Look at RIM, makes its own OS is building its app store. Look at Samsung, it understands the shift from basic phones to smartphones just like Nokia, and what does Samsung do? While it offers Android and other OS based smartphones, it launched its own OS in bada and an app environment for that.



And best of all, HP. They were in smartphones for a decade. They were selling smartphones in small numbers. But they felt they wanted Palm - the OS - so they could make a bigger entry into smartphones. I think this is the most poignant lesson of them all - the world's biggest IT and tech company, as big as Microsoft and Nokia added together, HP who had for 30 years made Microsoft-compatible PCs (also as Compaq) - feels that for the next generation of computers - pocket computers - smartphones - they feel they need to make the OS. This is the lesson from HP. But Nokia is the only one who goes the other way.



The industry is moving from handsets to software - even Microsoft's short-lived phone handset adventure proves this - they tried with Kin phones, and felt its far better to be in the software business.



So Nokia invented this direction (invented the smartphone) and pioneered it for more than a decade and now when victory is in sight - as the most successful smartphone maker ever, the first to sell 100 million smartphones per year - they abandon this path for what? To go 'back' to making just handsets. That is a regressive move, against the trend. Its like Boeing looking at jet engines, making the most successful jet airplane of all time, the Boeing 747, and then decide, no, lets go back to propeller planes.. Look at AT&T and British Telecom, they both made this mistake in the telecoms business - they owned two platforms, the old fixed landline business and the new mobile business - both sold their mobile arms and came to deeply regret that. Same for Vodafone, a pure mobile operator, when it announced a shift in strategy to fixed telecoms a few years back - another retrograde change - and what happened? Their profits got hurt badly.



I do think that this will go down as a classic blunder, where a giant make the wrong strategic move, and it pains me, that Nokia had it so well in its grasp. But we must move on. This was the record for the history, what I think happened to kill MeeGo. Now we have a new Nokia, we must move on.



IN SUM



First, we cannot blame Elop for this. He did not kill MeeGo in February 2011. He was one of the finalists for CEO, who had to propose a plan to solve Nokia's severe crisis. That involved painful cuts no matter how you looked at it. The Board approved a plan in September, where one part meant MeeGo was dead. Elop didn't kill MeeGo now. It died last September and the Board approved that plan where MeeGo would go.



Secondly, this can work. Nokia had severe problems yes, but after replacing its CEO, Nokia has been on the mend, to some degree. This is not the same Nokia we knew and loved but it is a Nokia as a handset maker and network infrastructure provider - and one that seems to be well on the way back to profits. The part that died in Nokia was the vision of the company as a software company, and its ambitions with smartphone operating systems. Symbian will live on for perhaps 5 quarters or 6 (to filfill the 150 million device promise Elop made) but it is now the walking dead. Nokia is no longer in the business of smartphone software. But they can still make awesome phones for us and now stick to making phones that are great.



Some will greet this as good news as Nokia can 'stick to its knitting' ie do what it does best. Nonetheless, this decision will inevitably move Nokia into the box-mover category. Nokia has already abandoned most of the high-ground to the iPhone and Samsung Galaxy and other premium phones. Its N8 (and E7) showed enormous promise of recapturing some of that, they are now no longer in the game. Nokia's MeeGo based N9-00 could have been a real iPhone-killer, we will never know. Nokia becamse the first of the big smartphone makers to 'throw in the towel' and shift away from its own OS to only producing 'clone' products alongside other makers. What is worse - for the next 12 months at least, likely next 18 months - we won't see a 'superphone' from Nokia on Microsoft either, so Nokia are now surrendering much of what remains of any lead, in the migration from Symbian and MeeGo to Microsoft. But that is another blog article, looking forward from this point.



We enter a brave new world. The King is Dead, Long Live the King. Symbian has ruled the roost for a decade. It made Nokia the world's biggest computer manufacturer a little over a year ago. Now a new CEO comes in, and helps guide Nokia to a new direction. Maybe this will be cloud computing, who knows. Maybe Nokia will be the most efficient pure box-mover in handsets, on slimmer profits but as a reliable device maker, like Dell was for many years in in the PC world. Certainly Microsoft which had been a peripheral bit-player comes back now with a vengeance. But the saga of Nokia's long ambition of being a 'software' company and an 'internet company' and its vision of building its ecosystem with Symbian, MeeGo, Qt and Ovi - that had its funeral on Friday the 11th of February. That was only the formal notificiation of its death - Nokia's smartphone path ended the day Stephen Elop was selected as the next CEO. Lets see if Mr Elop can redeem himself and give Nokia a bright future on his vision. We have to give him at least another year to map out his vision and steer Nokia to new waters. We will be following here on this blog. Stay tuned.



I will be writing two further pieces about the Microsoft-Nokia alliance, first looking forward to the two companies in the next blog story (probably tomorrow) and one final blog article with a detailed analysis of what this means to the rest of the mobile industry, ie the competition. Where something big also happened on Friday - we have the formal return of Hewlett-Packard to the smartphone races, with some phones on the Palm webOS platform. The world of smartphones shook quite dramatically on Friday. One giant steps aside, another steps into the ring. We'll do the analysis of all that in a second posting shortly on this blog.



UPDATE Feb 15 - I have now completed my follow-up blog, the look forward for Nokia and Microsoft. My first analysis is I believe the first published story to project market shares, Average Sales Prices, Nokia revenues etc for the year 2011. Read the full blog here When Things Get Even Worse Than You Thought.



UPDATE Feb 16 - I have now added the competitor analysis, who gains the most out of the 50 million smartphone and 14.6 Billion dollar windfall, that Nokia kindly bequaths to its rivals this year. See Noki-Soft Windfall.



PS - For those who need the numbers and analysis of the smartphones and dumbphones markets, regional market shares, average sales prices, feature sets etc - please see my TomiAhonen Phone Book 2010 that was released in December with all the very latest stats and details in 98 tables and charts.