Seeking Alpha

Nokia (NOK) is today due to unveil the latest phone that will supposedly turn around its...

Nokia (NOK) is today due to unveil the latest phone that will supposedly turn around its fortunes and make the company great again - the Lumia 1020. The device's most notable feature is a 41 mega pixel camera using the company's PureView technology, which will give it a high-resolution 3x zoom. If the camera is the element Nokia is banking on for success, it might be problematic that Samsung (SSNLF.PK) has launched the Galaxy S4 Zoom, a camera-phone with a 10x optical zoom.
Comments (43)
  • Tasos Galanopoulos
    , contributor
    Comments (114) | Send Message
     
    A camera with a form factor of a phone from Nokia vs the phone with a form factor of a camera from Samsung. The latter is bordering on gimmickry. Try holding that to your ear in public, does it come with a cable to hang it from your neck too? Nokia is releasing the superior device and Samsung is whacking a phone on one of it's existing cameras in a 'me too' approach, just so that there is a something to compare the new Lumia to.
    11 Jul 2013, 05:36 AM Reply Like
  • Doug Dallam
    , contributor
    Comments (8000) | Send Message
     
    idx,

     

    You nailed it. Next time you see someone using that Samsung, ask them why they are talking into a brick?
    11 Jul 2013, 01:15 PM Reply Like
  • edelsteijn
    , contributor
    Comments (68) | Send Message
     
    I'm curious what the Nokia offer will be.

     

    Video quality is crucial +capabilities in the dark!
    And the dimensions/weight; especially the thickness.

     

    Samsung S4 zoom:
    Dimensions 125.5 x 63.5 x 15.4 mm (4.94 x 2.5 x 0.61 in)
    Weight 208 g (7.34 oz)

     

    Nokia Lumia 1020:
    ?
    11 Jul 2013, 05:37 AM Reply Like
  • Delphinus
    , contributor
    Comments (136) | Send Message
     
    The 1020 is not only about the camera. Nokia's frontrunner position on the hardware side (and for instance also concerning HERE) combined with MSFT´s upcoming 8.1 launch on the software side will hopefully create enough buzz/attention on the crucial but difficult American market to lift WP market share to a two digit level in late 2013. If not, I'm afraid that app producers will continue to show little interest in building apps for WP, which in my view would mean that WP and Nokia would slowly but surely fade away.
    11 Jul 2013, 05:43 AM Reply Like
  • Zankudo
    , contributor
    Comments (224) | Send Message
     
    You need glasses or maybe to clean the windows. Plenty of apps for WP. Overwhelming technology. A wide variety of phones. And the American market can go fish. Uber-spying and the Kardashians. What else do you need to know.
    11 Jul 2013, 07:43 AM Reply Like
  • Jack Baker
    , contributor
    Comments (895) | Send Message
     
    Delphinus,

     

    Nokia has already faded away. They squandered their hold of their market share just as BBRY did. They are both finished and it will be a slower bleed to the end for NOK. The future is smart phones and NOK is WAY behind the curve. For them to team up with another loser (MSFT) that missed the smart mobile movement on the OS is ridiculous, but not surprising. It is highly unlikely that they will increase share in the American market. AAPL owns that market. AAPL's market share just went over 50% in June to its highest levels ever. Americans do not buy the Samsung propaganda smear campaign of paid celebrity and college kid bashers and attack ads on T.V. The ecosystem is very mature in America. Americans have learned that they prefer a stable, secure, intuitive, reliable, user friendly ecosystem with the best app universe and a world class retail infrastructure and world class customer service to the "me too" group of OEM's using fragmented, buggy, malware ridden OS's. That is why 90% of all AAPL customers say they will buy another iphone and 50% of Samsung users say they will buy something else the next time.
    11 Jul 2013, 07:47 AM Reply Like
  • Delphinus
    , contributor
    Comments (136) | Send Message
     
    @Jack

     

    "It is highly unlikely that they will increase share in the American market. AAPL owns that market."

     

    In that case funny why the AAPL stock is nose-diving the way it is...
    11 Jul 2013, 08:31 AM Reply Like
  • Delphinus
    , contributor
    Comments (136) | Send Message
     
    @Zankudo

     

    Don't be overoptimistic. You´re wrong when trying to paint a rosy picture concerning WP and apps. More and more apps are entering into our everyday life and facilitating it. As long as WP has a negligable market share app developers will not see the point in covering that small part of the market. It goes without saying that this would be negative for both MSFT and Nokia. However, for reasons given in other comments I have made I'm hopeful that WP and Nokia will gain market share in US and elsewhere.
    11 Jul 2013, 08:50 AM Reply Like
  • Delphinus
    , contributor
    Comments (136) | Send Message
     
    @Jack

     

    "Nokia has already faded away."

     

    I guess that's why the Nokia stock lately has performed so well
    11 Jul 2013, 08:52 AM Reply Like
  • toraji
    , contributor
    Comments (787) | Send Message
     
    Jack......

     

    just one thing...that zombies video Nokia produced has a lot of truth to it ;)

     

    http://bit.ly/13DeET3
    11 Jul 2013, 09:08 AM Reply Like
  • HarryPothead
    , contributor
    Comments (259) | Send Message
     
    Another American who feels that the US represents the entire world...lol.

     

    Keep watching your Apple shares plummet while I make $ with Nokia.
    11 Jul 2013, 10:43 AM Reply Like
  • Doug Dallam
    , contributor
    Comments (8000) | Send Message
     
    Del,

     

    You're logic is flawed int hat the 1020 will not make or break Nokia. It's a high end niche device.
    11 Jul 2013, 01:16 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (8000) | Send Message
     
    Jack,

     

    Yeah, MS is a loser company. Short it then and put your money where your mouth is.
    11 Jul 2013, 01:17 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (8000) | Send Message
     
    Del

     

    TD Ameritrade already has an app for their ToS platform.
    11 Jul 2013, 01:18 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (8000) | Send Message
     
    Harry

     

    lol. Yep and I can attest to that being an American. Go Nokie go go Nokie!
    11 Jul 2013, 01:19 PM Reply Like
  • Jack Baker
    , contributor
    Comments (895) | Send Message
     
    Delphinus,

     

    1.) Because its not all about the U.S. market.

     

    2.) Because there has been a well orchestration hatchet job on AAPL over the past 9 months in the financial media and by talking Wall Street heads that have a financial interest in bringing AAPL down with their poorly researched theses and specious arguments. This will all come to an end quite soon as September is right around the corner and AAPL will crush the fiscal q4 13 and the first two quarters of 2014.
    11 Jul 2013, 02:28 PM Reply Like
  • Randal James
    , contributor
    Comments (2752) | Send Message
     
    Jack, Jack, Jack...

     

    Never try to justify what happened to your stock by bringing up conspiracy theories. Soon it will be Scientologists or the little green men from Roswell, New Mexico.

     

    Apple introduced a remarkable string of products - each catapulted the company higher and higher into the stratosphere of tech giants. These were often so dramatically good that Apple was able to charge an arm and a leg for them, earning outsized profits. They became, briefly, the most valuable company in the world.

     

    It was those outsized profits that attract competition because businesses of all kinds and nationalities love profits and will go to great lengths to copy/create/steal them.

     

    So other companies got into the music business (AMZN) and manufacturers got into the phone business (Samsung) and they all put a straw into the big milkshake, which was OK as long as the milkshake kept growing but... it sort of leveled off. This isn't Forbesian journalism, this is just fact.

     

    Samsung is pretty nimble and they introduced a blizzard of phones, some of which might be *free* with a new contract in countries where that practice is common. These may not have been up to Apple's high standards, but they were much better than many customers had been used to. They were better than the RAZR phones that Apple took share from years ago. And they were free or cheap, which never described an Apple product. So SS took part of your milkshake away from you.

     

    That's when Apple stopped being the biggest company in the world and came back to earth, so to speak.

     

    But what apple needs to break free from the yoke of ordinariness is The Next Big Thing. Apple's success comes from innovation, not from managing mature products in hotly contested markets. The reason for that is simple: Apple's high margins do not protect it from competitors who WILL discover how to make something just as good and sell it for less. Say hello to Samsung, the new king of phones (at least for now) and Nokia, who is envious of that position.

     

    Apple isn't going to crush anything with this coming quarter's numbers and their current products. There are no bogeymen holding the stock down. What you and the markets are waiting for is what does Apple want to do with all its talent for marketing and discovering? Find that mojo once again and you will see Apple with the same eyes as a few years ago. Personally, I believe it can happen because Apple can afford to make it happen.

     

    Many Apple fans believe this stuff is easy and the next product launch this fall will probably include The Next Big Thing. Is it the Watch? Something so cool it can entirely sync your car? No one knows. Sadly, big ideas are more common that great ideas, so be prepared to wait.
    11 Jul 2013, 03:18 PM Reply Like
  • Delphinus
    , contributor
    Comments (136) | Send Message
     
    @dwalldallam

     

    I don't know from where you got that my opinion is that the 1020 will make or break Nokia. It certainly isn't. However, what I do believe is that the 1020 takes smartphone photography to a new level and that there is a good chance that this will be an eye-opener for those who still doubt Nokia's capacity to lead the hardware development in the smartphone market.

     

    Concerning devices let's also not forget the Asha family. Competition is very tough in this market segment so expectations on the market are not on the high side. However, I would not be surprised if it shows that the competitiveness of Asha phones is being under-estimated.
    11 Jul 2013, 03:48 PM Reply Like
  • Jack Baker
    , contributor
    Comments (895) | Send Message
     
    Randal, Randal, Randal...

     

    You too have been swayed by a biased media to believe the "Samsung is the new king of phones." Maybe you have been reading the paid college bloggers or celebrity bloggers that are on Samsung's slush fund payroll. Or maybe you have been listening to business journalist working for traditional networks that find AAPL's unique positioning to roll-out a pay for content T.V. model to be a great threat to their business, so every news item on AAPL is spun negatively.

     

    The truth is that AAPL does not need any new product categories to continue to be a great company and a great stock for many years to come. Here's some stats for you to consider:

     

    1.) AAPL makes 72% of all global smart phone profits
    2.) AAPL makes 91% of all global tablet profits
    3.) 88% of all global mobile ecommerce is done on an ipad (not including the iphone)
    4.) 75% of all global mobile search is done on an AAPL device
    5.) AAPL has 600 million itunes customers with cc info.
    6.) 50 billion apps have been downloaded from the Apple's app store.
    7.) 2.5 billion apps are downloaded monthly and growing fast.
    8.) Apple has virtually no viruses in its ecosystem
    9.) Android has 120,000 malicious viruses in its ecosystem and they are growing at a exponential rate.
    10.) AAPL customers are fiercely loyal with 85% of them saying their next phone will be an iphone. (50% of all Samsung phone owners say they will buy something else at renewal)
    11.) All AAPL phones can run the most current OS. 71% of Android phones are running Gingerbread, an Android OS that is two generations old.
    12.) AAPL paid app developers 7 billion dollars in 2012 to develope for an ecosystem that is much easier to develop for that the fragmented, disjointed, overstretched android ecosystem.
    13.) AAPL has a flypaper sticky ecosystem with world class customer support and a world class retail store infrastructure.

     

    By comparison, the market trades Facebook at 24 times forward earning on the "hope" that Facebook will find a way to monetize their 1 billion users (without cc info currently). AAPL trades at a 6 p/e less cash (a 66% discount to the S & P) and has 600,000,000 itunes customers who have already purchased something and have provided AAPL with their CC info. Lay on top of the potential to sell additional media content to 600 million people AAPL's hardware business and you have AAPL selling at a ridiculous valuation. If AAPL were selling at a market multiple right now it would be over 1,000. If AAPL stopped growing completely and just continued to print 40 billion in earning each year it would still be worth a market multiple. Any incremental growth over and above that and AAPL should sell at a premium to the market. So, why you think a new product category is essential to their success it beyond me. Would it help? Of course. Is it essential to the companies success? No. People already in the AAPL ecosystem aren't going anywhere. And, AAPL still sells three iphones for every Galaxy sold. All AAPL "needs" is good product refreshes. Everything else is icing on the cake.
    17 Jul 2013, 12:31 PM Reply Like
  • Randal James
    , contributor
    Comments (2752) | Send Message
     
    Jack,

     

    I wish you the very best of luck with your investment(s). It is ALWAYS good to have a sense of certainty. I have been absolutely correct and woefully wrong on mine over time and we learn from each.
    17 Jul 2013, 12:51 PM Reply Like
  • Leont68
    , contributor
    Comments (1365) | Send Message
     
    one of the 2 phone you mentioned will most likely be smartphone of the year 2014.

     

    @edel, the 1020 specs are

     

    Size:
    130.4 x 71.4 x 10.4 mm
    Weight:
    158 grams
    11 Jul 2013, 05:52 AM Reply Like
  • Leont68
    , contributor
    Comments (1365) | Send Message
     
    @ SA editor What really matters is the size of the Sensor not how much the optical zoom is. 41mp vs 16mp

     

    here is a example of what the 1020 is capable off http://bit.ly/1dlAdpW

     

    another thing that the 1020 has is called pixel oversampling

     

    "Pixel oversampling combines many pixels to create a single (super) pixel. When this happens, you keep virtually all the detail, but filter away visual noise from the image. The speckled, grainy look you tend to
    get in low-lighting conditions is greatly reduced. And in good light, visual noise is virtually non-existent. Which means the images you can take are more natural and beautiful than ever. They are purer, perhaps
    a more accurate representation of the original subject than has ever been achieved before."
    11 Jul 2013, 06:44 AM Reply Like
  • edelsteijn
    , contributor
    Comments (68) | Send Message
     
    Thanks!

     

    The Samsung is too heavy and way too thick to me.

     

    Also the Nokia specs of the photoquality in the dark is saying enough to me. I already was looking forward to this new Nokia but the 1020 will be my next smartphone!
    11 Jul 2013, 07:14 AM Reply Like
  • Leont68
    , contributor
    Comments (1365) | Send Message
     
    @Edel yeah 1020 http://bit.ly/188OXbb

     

    vs

     

    s4 zoom http://bit.ly/188OZjc
    11 Jul 2013, 07:21 AM Reply Like
  • zigazaga
    , contributor
    Comments (147) | Send Message
     
    Well, perhaps this oversampling can to some extent justify the insane resolution of 41mp. Most phones already create oversize files by default - way too big for their intended use - pictures of pets, friends and family members to put on facebook. You only need a 1.8 megapixel file to fill the typical 1680x1050 monitor - which is already overkill because, let's face it, do you really want to see every mole, wart, pore and hair on your drunken friends' shiny nose? Or are they going to produce prints the size of a house? To have them wrapped around the Empire State Building!? Also consider the storage, ink, paper, battery and bandwidth requirements, especially when travelling to less technologically advanced countries. Yes, in a few exceptional situations one may wish to crop a face in a crowd or zoom into some detail - but most consumers will never need or bother with this - or film videos in extremely low light for that matter. Furthermore, even super-expensive pro SLR lenses don't justify that kind of megapixel definition so I wonder what kind of revolutionary optics this model will use.
    11 Jul 2013, 08:16 AM Reply Like
  • Randal James
    , contributor
    Comments (2752) | Send Message
     
    zig

     

    The problem, zig, is that most people are really crappy about composing photos. So the three friends meeting in the margarita bar are all together but with 20 strangers inadvertently grouped in. And it is sort of dark, so you can tell who is who, but that LED flash just didn't do the trick.

     

    So at home we turn up the brightness and make everything look like it was done under a KGB investigator's lamps with all the true colors burned off and to bring it closer we crop until everyone appears to have honeycomb-constructed skin because of the loss of definition. The oversampling, for these common problems, an amateur's friend. A serious flash - ditto. Image stabilization for that zoomed picture of Mt. Rainier brought in closer than its 100 miles from Seattle.

     

    Since we probably can't make everyday photographers better, we ought to give them a camera that takes better pictures than their skill would otherwise deliver. And if it is just a bit heavier than a Galaxy 4, at least you only have one device vs. 2. One cord and charger instead of "Honey, have you seen the cord for the camera?"

     

    As for your comment about living in countries where the bandwidth is so choked that sending files is difficult, I guess Nokia will have to forego those rich markets with this model - not to worry, there is an entire other line of products specifically aimed there.
    11 Jul 2013, 09:30 AM Reply Like
  • zigazaga
    , contributor
    Comments (147) | Send Message
     
    Hmmm, Randal... I see perfectly reasonable snapshots of every imaginable person, pet and landmark all the time everywhere - the incompetent amateurs are clearly managing well enough without 61 mp. And those who can't understand composition, will also be very unlikely to crop and adjust their images beyond some "funky weird colours" setting, if at all. I'm sure there will be a big marketing push from MSFT and only time will tell etc. but at this moment I don't see the charts reflecting the NOK holders' enthusiasm.

     

    As for countries with low bandwidth - firstly - that's where a typical consumer would be taking most of their holiday snaps. Secondly, from personal experience - in India and, I believe, most other "developing" countries, NOK still dominate the market for "cheap and cheerful" while Samsung cater for the "more fancy" stuff. A typical shop will only have the two brands with maybe some chinese handset thrown in, and AAPL, of course, remains the unreachable aspiration in gadgetry everywhere.

     

    Bandwidth IS still a major issue on most of this planet. I'd resent to have to jump on a bike in search of a decent connection all night to find my account closed at a horrendous loss, just because someone was uploading 61mp images of hairs on an elephant's a$$, while I tried to set an order next door in some coconut shack and it didn't register with the trading platform due to congestion. Not as far-fetched as it seems - I'm sure you've heard these kind of stories before.
    11 Jul 2013, 12:18 PM Reply Like
  • Randal James
    , contributor
    Comments (2752) | Send Message
     
    Zigazaga

     

    There were questions following the live launch of the 1020 from several reporters in the audience. One from the Middle East and another from Europe wondering about the worldwide release of the phone and would the features all be available. Telefonica, which sells throughout Europe and into Central and South America will get a modified version of the 1020 - details available when they launch later this year.

     

    Elop characterised the 1020 as their new 'flagship' model and it does have features that are not supported by the infrastructure in developing markets. The same is true for iPhone 5 or the newest Samsung models. But each leap forward in phone technology allows for modifications to cascade to even the basic phones with improvements and a better experience. The 920 series phones, for instance, will probably improve quite a bit with lesser tweaks filtering down to the simplest of devices. Do recall that at this level we're talking about phones that retail for $40.

     

    He did not claim - or need to - that this was an entirely new phone system. It is, quite simply, the first marriage of a really good digital camera with a really good phone. Not significant to me but perhaps for others is this has a sound recording system that matches the awesomeness of the optics. The cost is the same as for an Apple with similar 32GB memory. Maybe that isn't the package you would be looking for when making your personal decision. Nokia's hunch, with which I concur, is for millions of users, it will be.
    11 Jul 2013, 12:54 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (8000) | Send Message
     
    ed

     

    They should have called the Samsung phone: "Now Introducing the new Samsung phone, THE BRICK."
    11 Jul 2013, 01:21 PM Reply Like
  • Doug Dallam
    , contributor
    Comments (8000) | Send Message
     
    zig

     

    Mostly true, but the Nikon 3600 USD 38MP camera is a nice thing to have for pro photographers. More room to crop.
    11 Jul 2013, 01:23 PM Reply Like
  • robmx
    , contributor
    Comments (115) | Send Message
     
    Wait a minute you must have the dimensions wrong. Isn't the Nokia supposed to be the brick? The weight and dimensions of the S4 listed above more resemble a brick to me. Thicker and heavier.

     

    I wonder if the pundits will notice that? Probably not.
    11 Jul 2013, 06:24 AM Reply Like
  • The Aristos
    , contributor
    Comments (58) | Send Message
     
    That Samsung phone is horrendous. Plain and simple.
    11 Jul 2013, 09:20 AM Reply Like
  • lklein
    , contributor
    Comments (29) | Send Message
     
    It's not about the hardware, it's about the SW. As I type this on my Vista OS laptop, I promise to never buy anything microsoft again....
    I will never trust Microsoft again. Everytime they come out with a new OS you can hear everyone hold their breath....I'm not going to commit my apps to run on that OS - EVER.
    Fool me once shame on you, fool me twice..
    11 Jul 2013, 10:40 AM Reply Like
  • zigazaga
    , contributor
    Comments (147) | Send Message
     
    Iklein - i too am switching from MSFT to Apple - the essential difference between AAPL and most everyone else is, in my opinion, this - when geeks are allowed to make design decisions, they design products for their own ilk - pedantic mathematically-minded boffins who embrace complexity and whose favourite pastime is endlessly fiddling with buttons and tweaking numerous complicated settings and forever fixing and fine tuning their gear. This mindset comes across as perverse to "ordinary" human beings and AAPL is the only one who understand that the consumer actually prefers simplicity, quality and elegance and the artist/designer should make design decisions - not the supposedly super-intelligent "left brain" programmer/geek who is ever so overrepresented on internet forums - commonly observed praising windows, writing viruses and playing ultra violent games.
    11 Jul 2013, 11:23 AM Reply Like
  • lklein
    , contributor
    Comments (29) | Send Message
     
    What I fail to understand in all these articles touting the superior Nokia hardware - then why not make an Android phone? If the HW is so jaw dropping awsome - why not make it for 60% of the market instead of 6% of the market. GO head up with Samsung, why not. No one is daring to say Windows is better than Android, or Apple OS. Anyone notice HP is NOT making a Windows tablet - they are going with Android. THATS WHERE THE MARKET IS. The days of HW and Microsoft defining a market are long gone. Thats what is so frustrating with Nokia's strategy.
    12 Jul 2013, 09:52 AM Reply Like
  • Leont68
    , contributor
    Comments (1365) | Send Message
     
    It is what it is. Pureview 41 will be a nokia exclusive and only on windows. If ios and android people want it they will have to switch :P

     

    imo If nokia would have worked with google given the track record of Google, they would most likely have copied the software part of pureview , incorporated it into android and released it under the open source license.
    12 Jul 2013, 01:19 PM Reply Like
  • Randal James
    , contributor
    Comments (2752) | Send Message
     
    Iklein

     

    Nokia is about halfway through a five year agreement with Microsoft to build Windows phones exclusively - other than the Asha phones sold in developing markets. Microsoft is providing lots of marketing expertise and $ in promotional expense and $1B each year to assist with development expense. Some of that is offset by license fees for Windows devices sold (thought to be $20-30 per set).

     

    The significance of this is important for Nokia in that they were in a free-fall, having missed the smartphone explosion and being stuck with the Symbian Operating System (OS), which had no developer base.

     

    The choice AT THE TIME was to join up with a deep-pocketed firm with an ecosystem that was well-established worldwide EXCEPT in phones or, as you say, go head-to-head with Samsung and other smaller players in Android.

     

    Samsung, as you know, is a manufacturer and a big one. There is really no easy way to differentiate NOK's product from Samsung and the Koreans could probably build it cheaper as SS makes their own memory and some processor chips. SS would have the advantages of profit margin, brand recognition, product placement, momentum and scale. Nokia would get style points for being nostalgic and perhaps have design ideas that were interesting - neither of which are sustainable winning attributes.

     

    This game is very much not about Nokia but about Apple vs. Google vs. Microsoft. MSFT very much wants to keep its grip as the dominant software platform for PCs down to tablets and - ooops! - phones, which become more computer-like with each season's introductions. Yes, Android has a big share now and is seeping into tablets, as HPQ noted.

     

    It is at that point that NOK decided, rolled their dice, and went with Microsoft. And that is why, for now, you will not see any Android phones with Nokia's name on them. And perhaps never will.
    12 Jul 2013, 10:32 AM Reply Like
  • Seppo Sahrakorpi
    , contributor
    Comments (1949) | Send Message
     
    Excellent summary @randal
    12 Jul 2013, 12:14 PM Reply Like
  • toraji
    , contributor
    Comments (787) | Send Message
     
    VERY WELL PUT Randal

     

    And, lets hope they never will because then Nokia made the best decision they could have made and they start to convince the world see article below:

     

    Nokia is performing the impossible :o)

     

    http://bit.ly/158lagu
    12 Jul 2013, 02:27 PM Reply Like
  • Randal James
    , contributor
    Comments (2752) | Send Message
     
    toraji,

     

    Nice find on that article.

     

    When that woman from Forbes.com asked about AT & T being a terrible partner to launch with I about choked. It was like being at a party and someone asking a person you just met if they still cheated on their spouse. Elop handled that SO well.

     

    Personally, I cannot imagine the logistics and expense of trying to rebuild your entire product line and launch it out in 2 years or so in the 100+ countries they operate in. I'm really sorry about the phones that were always in short supply in WalMart, but if that meant sending them to a more significant opportunity in Brazil or Holland, why not? With the models out and probably not so many major overhauls planned in the future, the supply lines should be better adjusted to demand.

     

    This is a fascinating business story.
    12 Jul 2013, 02:45 PM Reply Like
  • lklein
    , contributor
    Comments (29) | Send Message
     
    @Randal,
    I haven't seen in writing where the Nokia/Microsoft partnership is exclusive. Where is this documented?

     

    Other manufacturers make windows phones - so it cetainly isn't mutually exclusive.

     

    If Nokia acutally agreed to such a deal (one way exclusive) - then they have effectively sold themselves to Microsoft, and are nothing more than a subsidiary. Why even bother?

     

    Look, all microsoft really did was advance them the licensing fees, effectively a rebate. It's not even counted as cash - is it? So, it's a zero cost effect on the balance sheet. That has NO EFFECT on cash flow - as Android OS is FREE. Actually, once Nokia payments to Mr. Softee exceed 1B a year then it's WORSE than Android. And at the scale Nokia needs to play at - we are talking billions.

     

    So, financially it makes more sense to go with Android and the 60% market share.

     

    If it is true that Nokia is stuck with a Microsoft OS, then that's one of the dumbest deals, one sided deals ever.
    15 Jul 2013, 01:55 PM Reply Like
  • Randal James
    , contributor
    Comments (2752) | Send Message
     
    Iklein,

     

    I have no proof that the limitations placed on Nokia in exchange for the $5 billion in development fees are exclusive. Let's think about that for a minute. If you were MSFT and I was Nokia, struggling to stay relevant in a smartphone world. I'm selling tens of millions of cheap phones in the developing world but missing the boat for high-end profitability... what would your terms be? Let me give you a billion a year for 5 years and if you bail halfway through, if you've used my cash to develop these devices and flip a switch inside and there will be no hard feelings?

     

    At the very least I would have included a clause that returned every centavo I had invested. Being fair, I might have returned to Nokia all the licensing fees generated from Windows phone sales.

     

    If I was a Nokia Windows customer - most of whom are very happy with their devices and the platform - the reversal to Android would be a slap in the face. Again? Can't these people decide? Does my next phone have to be an HTC or one of the tiny number of devices from Samsung?

     

    As for the cash question, during the first year, that billion $ (in real money) covered a ton of costs for integrating Windows into the newly-designed devices that were a step - or many steps - ahead of their Symbian counterparts. Sales were slight, so that cash was used for other operating costs. Year 2 was again in Nokia's favor with a portion returned to MSFT in fees, but not nearly enough to suggest it is a zero sum game. Nokia needs to sell roughly 40 million Windows phones for that to happen. As it apparently will this year. And the next and so forth.

     

    Elop says:

     

    “I’m very happy with the decision we made,” he said. “What we were worried about a couple of years ago was the very high risk that one hardware manufacturer could come to dominate Android. We had a suspicion of who it might be, because of the resources available, the vertical integration, and we were respectful of the fact that we were quite late in making that decision. Many others were in that space already.
    “Now fast forward to today and examine the Android ecosystem, and there’s a lot of good devices from many different companies, but one company has essentially now become the dominant player.”
    “Strategically that’s important for us [to be offering an alternative OS] because having a conversation with [chief executive] Ralph de la Vega at AT&T, the first step in the conversation is the recognition that we’re not Apple, we’re not Samsung/Android – used to be Android/Samsung, it’s actually about Samsung now – we’re a third alternative.
    “And as an operator he wants to negotiate with different people and keep pressure on everybody and have the best range of options, he wants that third alternative. So strategically we have an opening with AT&T and every other operator in the world – because we’ve taken that path as the third ecosystem.
    “Now, it’s hard – it’s very difficult because we are starting as a challenger, we’re having to build that credibility; but with partners like AT&T we’re gaining that traction . But it was the right decision. You look at a number of other Android providers right now and they’re in a tough spot.”

     

    I would just add that MSFT is actively promoting the brand with billions in advertising, setting up free-standing stores within Best Buy locations that will sell the phones in addition to their own MS stores and augmenting the marketing that will be done by the carriers on a worldwide basis. If MSFT was a date partner, your parents would be impressed. Considering your negativity, YOUR parents might be overjoyed.

     

    You conclude it is a dumb idea. I'm not sure whether that comes from a commonly held disdain for MSFT or whether it is just your attitude. None of your posts ever convey enthusiasm and most are leveled straight at Nokia/MSFT.

     

    In a tough economy, Nokia is one of a few mainstream phone builders making progress. Would they have done better with Android? To say yes is simply guessing.
    15 Jul 2013, 03:23 PM Reply Like
  • lklein
    , contributor
    Comments (29) | Send Message
     
    Randal,
    Thus as you state - Your entire premis is based on an assumption, a hunch.

     

    As for the kiosks, they sell the surface - now that's a hot seller sure to drag Nokia sales. It's not like they lead with the 920.

     

    But you are right, Microsoft IS spending billions and there is nothing to show for it. No movement in market share. I see the MS Stores, I want to walk up and say hi - the sales reps look so lonely - It's not like there is ever a line in front of the place...

     

    And that is the point - if it was going to work, it already would have. It's been a year. The best you have is a 40 gazillion pixel camera gimmick nobody cares about.

     

    Seriously, it as if Nokia and Microsoft are using a playbook from the 80's.

     

    One more thing - may favorite phone ever was a nokia and it irks me to no end to see such technology and leadership squandered. I hope they make it, I really do. Could care less about microsoft.

     

    Good Luck
    15 Jul 2013, 07:57 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector