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Spillikins #98. Nokia holds negotiations with Microsoft about an alliance

Last week Google Maps for Android was upgraded to version 5.0. Many cities now have 3D pictures of buildings, but Moscow will not get it any time soon. Among its advantages is an option to work offline. I have already mentioned in Spillikins No 95 the implications of this phenomenon for the market and why OVI Maps will become less attractive from this day on. Owners of Android phones can easily make an upgrade, while others will have to wait a little longer.

Symbian continues it decline – delays of E7 and layoffs

In September when Nokia E7 was announced I discussed with several Nokia employees when this model will hit the shelves. They unanimously mentioned the first quarter of 2011 with February to be a target month. During the announcement another date (December 2010) was named out of the blue. I explained it to myself by limited shipments to selected markets similarly to Nokia N8, when it had to be delayed, but then Nokia introduced it to the market despite the defects. On that occasion the manufacturer made a triumphant start of sales in 5 cities of the world on the last date in September. Formally, the deadline was met.

Why E7 was delayed? Official position of Nokia expressed in the Reuters interview is the following: "To ensure the best possible user experience on the E7 we have decided to begin shipping it in early 2011".

I would like to remind you that in terms of software Nokia E7 has no difference from Nokia N8/C7/C6-01. Additional apps cannot be taken into account. It has the same hardware, the slider mechanism works well, materials are properly selected and generally everything seems fine. The problem is that the boards in all Symbian^3 handsets have defects, which leads to the end of the road for many phones and they cannot be repaired. Nokia is fighting with this issue, but they cannot change the manufacturing process for current models straight away, so the new models have to be delayed. Nokia E7 is a niche offering without high sales prospects anyway.

An attempt to save turned to be fatal for Nokia. The Finnish company even had to raise the price of Nokia N8 by 10% to cover the cost of repairs. The defects were admitted, but Nokia labeled them as insignificant. In Nokia C7 the defect has not been recognized yet. In both cases service centers did not received instructions to replace the phones and they try hard to resurrect the defected samples. Unlucky souls who faced this issue will have to visit service centers until their models die completely.

PR campaign of Nokia resembles a feast in time of plague. Win 21 Nokia C7 handsets on Facebook or get a phone for you and your friends. Unfortunately, the company started shielding itself not by real actions, but by loud statements. Another similar example is that in Beijing Nokia representatives spoke a lot about their Symbian plans during International Mobile Internet Conference 2010. It sounded very soothing for long suffering Nokia fans. For example, they promised that Symbian^3 will get a key update in the first quarter of 2011 with a new browser and 50 new features. I managed to get hold of the new update (If you remember 4 desktops in the standby mode, then we speak about this kind of innovation here). I cannot be impartial as Nokia acts inappropriately these days. All changes do not offer any breakthrough in user experience and the company will play catch-up games again (the browser is still losing out to that of iOS).

The best is yet to come. Do you remember how around 1800 employees were laid off by Nokia worldwide? They were predominantly Symbian developers. The company thought it was not enough and decided to fire 800 more engineers in Finland. These are the people who created Symbian^3. Can you believe that the speed of development for Symbian can go up together with the quality of apps and the number of features? So far Nokia has been regularly failing to meet deadlines. The decreased workforce can only worsen the situation. Is it difficult to understand? I think not, but ne management has a different agenda.

Look at the current situation at Nokia. The company hasn't offered top and image solutions from 8000 series for a long time. Though extremely popular in the past they were displaced by Apple and Samsung models. Even if Nokia launches a new S-series model, it will not sell well now, despite possible bouts of nostalgia.

In the low cost segment Nokia also loses out to Chinese companies, local producers and Samsung. Which entry level model from Nokia can boast high sales now? It is definitely Nokia 1280. Samsung offers E1081T with color screen, better build and superior overall features, while its price is the same. A color screen is not vital in this niche, but Nokia should be worried.

In fact Nokia has the only strong point today represented by candybars (2730, 6303, 6700 and so on), which was always the priority for the company, while Korean manufacturers were traditionally lagging behind. Nokia decided to beat the competition in the segment of touchscreen models. All investment goes there at the expense of S40 and candybars. Poor sales of Touch and Type (X3-02 and C3-01) show that the market was not impressed by these hybrid models (keypad plus small touchscreen). We cannot expect success here.

The worst thing is that Nokia dedicates too much time to sensor models. I think they should concentrate on what they can do well and move from there. It is silly to overtake rivals, who are better equipped in particular market segment.

During the same event in China Nokia promised to introduce a 1 GHz processor in 2011. It will be used in one model only! Similar processors became the norm in 2010, while next year will herald the introduction of dual core solutions. It's a pity, but Nokia will use the technology only in the middle of 2012.

New management has a rescue plan! It is not MeeGo, which is still being offered in a package of nice PR sound bite. A product on MeeGo has been ready for half a year in terms of hardware, while the developers have a lot of things to complete.

During the last month Nokia and Microsoft started discussing possible cooperation. This two way dialogue was initiated by new Nokia management. It is not only an issue of technological cooperation, but the whole range of Windows Phone models under Nokia brand will be sold through its channels. It's a desperate measure for both companies. This is their only solution to stop an all conquering Android. For example, we will soon get a €90 Android model in Russia. This low cost solution with the QVGA screen will be promoted by one of the leading mobile carriers. The handset will not be on top of the world, but the price will do the trick. It is only the beginning and the second quarter of 2011 will see the introduction of many similar handsets.

Joining forces with Microsoft is a bad idea. Nokia had a strong developers team, which the company somehow decided to disband. The suggested alliance shows the weakness of Nokia. They look desperate and cannot control the situation. I remember the phrase of Nokia vice president about the merger of Siemens Mobile and BenQ: "If you add one hen to another you will not get n eagle ". The same phrase is apt for this moment better than ever. Alliances cannot help Nokia. They should just start working and forget about PR propaganda, alliances against Android and Samsung. Customers need good products to enjoy. Unfortunately, the story of Nokia starts resembling a downward spiral. The speed of downfall is increasing day by day.

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Sony Ericsson continues to struggle

SE is a prime example of another once iconic manufacturer, which is dramatically losing its market share. We have already discussed the portfolio of Sony Ericsson for the nearest future and its sales forecast. Last week gave another example how the company tries to save and maximize the profit, while the quality suffers.

In June SE unveiled an accessible touchscreen model Yendo, which had to enjoy good sales. It was created by Sagem to be sold as a Sony Ericsson model. Software was developed by SE, but somehow a promising model turned out to be the slowest handset I came across for years. Sony Ericsson criticized Sagem, but the French company explained that engineers of the former made them save on components (memory, processor, etc.) and this outcome was inevitable. It is a typical situation for Sony Ericsson. Weak hardware required the genius of developers to turn the product into a successful one. Unsurprisingly, nothing of the kind happened and even Sony Ericsson decided not to sell Yendo under the circumstances (several models were launched in a similar way as they are build on А200). According to the official information the phone will go on sale in February. I think the hardware components will have to be changed. I am not sure that Sony Ericsson found new developers to create such a miracle, which was impossible earlier. In February the market will not be impressed with this model despite a lower price. Once again money went down the drain. Even the scarce resources Sony Ericsson still has are not allocated wisely. Last week a gossip was spread in Asia that SE may sell its brand name and leave the market. I think it is premature, but in 2011 the company will suffer further shrinking of its market share and the only solution to save the jobs will be to sell the company. It is too early to say, but I think not many would like to buy it. In the absence of demand supply will not be provided.

Have a good week! Cheers from the sunny Tashkent!

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Spillikins #98. Nokia holds negotiations with Microsoft about an alliance

Contents:

Symbian continues it decline – delays of E7 and layoffs

Sony Ericsson continues to struggle

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