Nokia’s CEO Stephen Elop has had a hard time getting his company to jump off the ‘burning platform’ onto the Windows Phone ship, and in their haste to do something quick they made a crucial compromise.
The first Nokia handsets running Windows Phone would remain stuck on version 7 with no upgrade path to WP8, a fact, according to our sources, that the Finnish handset maker was made aware of when it signed on last year.
And in doing so, the company left itself exposed to the ‘Osborne-effect’ but this time at Redmond’s making.
The news that Nokia’s current range of Lumia smartphones won’t get the full Windows Phone 8 upgrade when it’s made available sometime this fall, was bound to upset existing customers.
And it has.
Taken to replying to customer emails Steve Jobs-style, Nokia CEO Stephen Elop is already on the backfoot having to explain to one Lumia 900 owner why, just three weeks after his purchase, his shiny new phone is not, in fact, obsolete.
But the bigger story here is that we’re seeing a return of the Osborne-effect, now unaffectionately dubbed the Elop-effect. Upsetting existing customers is something that Nokia can ill afford to do, deterring future ones is catastrophic. Especially when, by some estimates, at Nokia’s current burn rate it has less than two years of cash left in the bank and even the latest round of layoffs won’t slow that.
Having previously made Nokia’s current product line obsolete by announcing its successor prematurely — the company’s original switch from Symbian to Windows Phone — this time around Elop’s let Microsoft on stage to do it for him.
With the first Nokia Lumia to run Windows Phone 8 unlikely to ship before December (or probably later), there’s now very little reason why anybody would buy one. Or at least, that’s the story that will circulate. As a Nokia rep recently reminded me, buying decisions are influenced by people. With as little as six months left before the current Lumia range will be deemed end-of-life, potential customers will be told to steer clear.
And according to my sources, when Nokia signed up for Windows Phone 7 last year they already knew that the hardware platform, as specified by Microsoft, would soon be obsolete with no migration path to Windows Phone 8. In other words, Elop knew full well he ran the risk of being ‘Osborned’ by Microsoft.
Furthermore, by joining Microsoft’s Windows Phone ecosystem not only has Nokia lost control over timing, it has also meant an over reliance on chip maker Qualcomm for whom Windows Phone in terms of numbers is a small piece of the pie. Might that explain the original Lumia 900 bug when connecting to the Internet?
I guess that’s the price you pay for jumping off of a burning platform onto somebody else’s ship.
“They truly have burned the ships as well as the platform”, says one industry insider I spoke to. “The layoffs, project cancellations and latest management departures means there is no Plan B. No next generation Symbian. No Tizen or Meltemi. No Meego.”
In other words, it’s Redmond’s way or the highway.
And while the platform may no longer be burning, Nokia’s bank balance is and the Elop-effect continues.