Nokia's Stephen Elop: We over-invested in Windows Phone to gain traction for OS

Stephen Elop may not be CEO of Nokia anymore but he is still the company's Executive Vice President for Devices & Services while that division waits for the completed sale to Microsoft in early 2014. As such, he was front and center during last week's Nokia World event and is still speaking for the company in interviews.

In a new chat with the Indian website The Hindu, Elop admitted that the company had not been profitable since they made the decision to move to Windows Phone, but that was a deliberate choice. He stated:

When you are starting something new, you have to over-invest, you have to put the money into it. But if you go back, lets say five quarters ago to now … you can see a clear trajectory of increased sales building up. This is part of the reason that Microsoft is excited to do what they are doing, because this is at a time when the trajectory is heading in exactly the correct direction. We made a conscious decision as to how much would we invest, that we would over-invest, with the intent of building that momentum. And that’s exactly what we are seeing, so we were pleased to do that.

So if the momentum for Windows Phone is going up, then why sell the Devices and Services division to Microsoft now? Elop stated that ultimately it was trying to give Nokia shareholders more value, adding, " ... because of this transaction, the share prices have gone up by quite a bit — more than just the value of the transaction."

He also commented about the branding issue, stating that Microsoft will own the Lumia and Asha brands after the deal is completed but added there are still some decisions to be made "as to what combination of words and brands will be used for smartphones" when Microsoft starts selling Windows Phone devices on their own.

Source: The Hindu via WMPoweruser | Image via Nokia

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Instagram and Vine are on the way alongside other apps. Rdio recently released an updated app for WP8. Things are looking good for WP.

Nokia should have gone Android. I think they would have had better chance with Android than they did with WP. Nokia is very famous in Asia and with Android low cost phone. They would have been just fine. Going with WP cost them the entire division.

Elop went to Nokia for one thing only to bring Nokia's share market to the ground so that Microsoft can buy it out. It's that Simple.

What about companies that have been releasing Android devices for years like HTC, Sony, and LG? The truth is, there's only room for 1 big Android player and it's Samsung.

rfirth said,
That Android strategy is really working well for companies not named Samsung... like HTC...

Then you don't know Nokia. They are a well known brand in Asia more than those other companies. Most people would likely to pick Nokia than they would HTC or LG.

The title isn't misleading, they did over invest to gain traction for the OS... You just assumed he meant it in a negative manner.

SierraSonic said,
The title isn't misleading, they did over invest to gain traction for the OS... You just assumed he meant it in a negative manner.

Of course. The fact that people don't understand why this was a good thing is just mind boggling. LOL

Lord Method Man said,
The title implies its a quote that Elop made, it isn't.
Here let me quote him. "We made a conscious decision as to how much would we invest, that we would over-invest, with the intent of building that momentum. And that's exactly what we are seeing, so we were pleased to do that."

Now think about that sentence and compare it to the title. To me that sounds an awful lot like the title, but just in case you still dont get it, know how I wrote a quote instead of making a general statement in what he said... I used these little guys "", as they help you discover what is and isn't a quote.

Agree with other posts, this article is way too misleading, especially for John that usually knows better.

The title does not reflect the conversation or the actual statement made:
"When you are starting something new, you have to over-invest"

Mobius Enigma said,
Agree with other posts, this article is way too misleading, especially for John that usually knows better.

The title does not reflect the conversation or the actual statement made:
"When you are starting something new, you have to over-invest"

If you launch a new product, start a new company, etc. etc. you, supposedly, have a business plan that includes an "investment" to found the operation. Using the word "over investing" imply that you miscalculate.

Not if you use a proper quotation where he says over-investing is part of new product class launches. That means you accept a lower short term ROI, probably mostly from marketing and discounting, in order to establish the product.

Spicoli said,
Not if you use a proper quotation where he says over-investing is part of new product class launches. That means you accept a lower short term ROI, probably mostly from marketing and discounting, in order to establish the product.

If I launch a new product I can allot to marketing etc. etc. a "higher", "above standard internal parameters" funds. The use of "Over investing" means either that Elop used the wrong terms or, worse, there was a miscalculation.

As for the ROI, it is as well included in a Business Plan and you can module as you prefer or better fit your strategy adjusting the details of your amortization schedule.

Fritzly said,

If you launch a new product, start a new company, etc. etc. you, supposedly, have a business plan that includes an "investment" to found the operation. Using the word "over investing" imply that you miscalculate.

This just isn't true.

I have been a part of many business and product ventures, and it is common to 'over-invest' when moving in a new direction. These are common terms, along with 'saturate', 'mature', 'over-plan',' bombard', etc.

I don't know his actual intent, but it is very common to set up more than estimated or required funds and resources to get a new product out or address a new strategy.

It also is used when investing in a long term asset that part of the initial investment will be consumed to create/increase the asset.

Go look up the actual term, and in relation to business. Also notice how often it is used in planning.
http://dictionary.reference.com/browse/over+invest

Mobius Enigma said,

This just isn't true.

I have been a part of many business and product ventures, and it is common to 'over-invest' when moving in a new direction. These are common terms, along with 'saturate', 'mature', 'over-plan',' bombard', etc.

I don't know his actual intent, but it is very common to set up more than estimated or required funds and resources to get a new product out or address a new strategy.

It also is used when investing in a long term asset that part of the initial investment will be consumed to create/increase the asset.

Go look up the actual term, and in relation to business. Also notice how often it is used in planning.
http://dictionary.reference.com/browse/over+invest

I have been and I am an Executive and I never used or heard of the term "Over invest' in a positive term:

Setting up more that the assumed, expected amount is indeed a common, and safe practice, but I would never call it "Over investing".

Quote
over-

a prefixal use of over, preposition, adverb, or adjective, occurring in various senses in compounds ( overboard; overcoat; overhang; overlap; overlord; overrun; overthrow ), and especially employed, with the sense of “over the limit,” “to excess,” “too much,” “too,” to form verbs, adjectives, adverbs, and nouns ( overact; overcapitalize; overcrowd; overfull; overmuch; oversupply; overweight ), and many others, mostly self-explanatory: a hyphen, which is commonly absent from old or well-established formations, is sometimes used in new coinages or in any words whose component parts it may be desirable to set off distinctly.

Fritzly said,

I have been and I am an Executive and I never used or heard of the term "Over invest' in a positive term:

Setting up more that the assumed, expected amount is indeed a common, and safe practice, but I would never call it "Over investing".

Quote
over-

a prefixal use of over, preposition, adverb, or adjective, occurring in various senses in compounds ( overboard; overcoat; overhang; overlap; overlord; overrun; overthrow ), and especially employed, with the sense of “over the limit,” “to excess,” “too much,” “too,” to form verbs, adjectives, adverbs, and nouns ( overact; overcapitalize; overcrowd; overfull; overmuch; oversupply; overweight ), and many others, mostly self-explanatory: a hyphen, which is commonly absent from old or well-established formations, is sometimes used in new coinages or in any words whose component parts it may be desirable to set off distinctly.

Seriously?

Just because you never used the term in your company, it is wrong?

I was a COO at 20, a CEO of my own company at 22, and have been a part of ten ancillary companies over the past 20 years. Trust me, this is a COMMON term, especially in larger companies.

Again, go look up the usage of the term with regard to investments and assets; not the etymology of the prefix 'over'.

Ok?

Mobius Enigma said,

Seriously?

Just because you never used the term in your company, it is wrong?

I was a COO at 20, a CEO of my own company at 22, and have been a part of ten ancillary companies over the past 20 years. Trust me, this is a COMMON term, especially in larger companies.

Again, go look up the usage of the term with regard to investments and assets; not the etymology of the prefix 'over'.

Ok?

Not really....
Go and lookup how the term "overinvesting" is used:

http://www.bing.com/search?q=E...=&first=9&FORM=PORE

Spicoli said,
It's very bad form to make something appear as a quote when it isn't.

How else will they drive clicks and comments full of "OMG NOKIA SHULD GONE ANDROID!!1! ELOP = FLOP, WINBLOWS SUX!1!!"

Spicoli said,
It's very bad form to make something appear as a quote when it isn't. And JamesWeb is the most handsome guy on Neowin.
I agree. And thank you!

Spicoli said,
No, that's false. The financials clearly show sharply dropping sales in Symbian based "feature" phones as the main problem. That position pre-dates Elop.

Never mind them. People wants fruits as soon as they plants them

Spicoli said,
No, that's false. The financials clearly show sharply dropping sales in Symbian based "feature" phones as the main problem. That position pre-dates Elop.

Misleading. Symbian sales dropped slightly, but Nokia still made record revenues and profits. Symbian sales took a nose dive only after Elop released his burning platforms memo, and Osborned all future Symbian and Linux based smartphones.

Sadly for him (and Microsoft), they did not translate to sales of the microsoft OS based phones and left the whole company in jeopardy.

recursive said,

Misleading. Symbian sales dropped slightly, but Nokia still made record revenues and profits. Symbian sales took a nose dive only after Elop released his burning platforms memo, and Osborned all future Symbian and Linux based smartphones.

Sadly for him (and Microsoft), they did not translate to sales of the microsoft OS based phones and left the whole company in jeopardy.

You are making rather crude assumptions.

There is NO evidence that they would have done any better with ANY other OS. Symbian was dated and could not stand on its own and would have taken more investment in development than it took to reorganize and build for WP.

Even if they went with Android, there is no evidence they would have had any chance and ended up like every other Android OEM that isn't Samsung.

HTC and others shoved ahead with Android, and many of them are hurting more and in a far worse position than Nokia.

recursive said,

Misleading. Symbian sales dropped slightly, but Nokia still made record revenues and profits. Symbian sales took a nose dive only after Elop released his burning platforms memo, and Osborned all future Symbian and Linux based smartphones.

Sadly for him (and Microsoft), they did not translate to sales of the microsoft OS based phones and left the whole company in jeopardy.


Hahaha what? Dropped slightly? I think you mean dropped a ton.

memo? Seriously you lack the knowledge to even understand how powerful this operating system is.
Its called Maemo and Meego. Till this day, I still own Nokia n900 and I can always get support for my device for any problem I encounter. the nokia n900 sales exceeded sales expectations by miles and it was a true geek phone that comes unlocked and 1 second away from getting it rooted.

Meego was a great success, but it was intentionally killed for the favor of Windows phone. Downfall for Nokia started here!

recursive said,

Misleading. Symbian sales dropped slightly, but Nokia still made record revenues and profits. Symbian sales took a nose dive only after Elop released his burning platforms memo, and Osborned all future Symbian and Linux based smartphones.

Sadly for him (and Microsoft), they did not translate to sales of the microsoft OS based phones and left the whole company in jeopardy.


this is a misleading and totally wrong comment. whether Elop called symbian a burning platform or not it was a dead platform at the time (even earlier), look at blackberry OS, it was a higher class OS and it could not survive. as far as Nokia adopting android I don't think there were any chance for nokia to survive with that platform. why? because Nokia's selling point was their Map and navigation system and durable keypad phones and none is making sense in android eco system because of google maps and touch screen based input.

Spicoli said,
No, that's false. The financials clearly show sharply dropping sales in Symbian based "feature" phones as the main problem. That position pre-dates Elop.

Which does not imply that the Elop' s strategy was/is the best for Nokia; on the other hand there are no questions that worked out well for him.

+Razorfold said,
There is NO evidence that they would have done any better with ANY other OS.

You cannot have evidence of an event that never happened. I agree that their success might have been questionable with Android, as Samsumg was already an established player. But Nokia had their own Meego OS that was state of the art, was loved by users (as shown by sales of N900) and would have put them in the driver's seat. But no, they had to pick an OS that had ~1% marketshare, knew it had to be rebooted again as WP8 in less than 1 year, they had no say over its course of development, they have to pay money to use on their devices, and had no ecosystem whatsoever. No sane CEO that has the best interests of a company can do that. Only a trojan who is secretly playing for the other team can do something as cold hearted as that.

trojan_market said,
Nokia's selling point was their Map and navigation system

Wrong. Nokia's selling point was their brand. People bought Nokia just because it was Nokia, not because it had Mapping software on it (which was way behind Google Maps at that time anyway).


I'll simply let the pictures do the talking on this one.

http://communities-dominate.bl...337c8833019b00344408970d-pi
http://communities-dominate.bl...337c8833019b0033ebfb970b-pi
http://communities-dominate.bl...337c8833019b0033ec69970b-pi

Rudy said,
His work was great for MS, but ultimately led to Nokia losing a lot of money

I do not understand people ignoring the fact that with Windows Phone Nokia was able to slow the bleeding (Which existed prior to the decision to commit to WP) and turn their financials around...

recursive said,

You cannot have evidence of an event that never happened. I agree that their success might have been questionable with Android, as Samsumg was already an established player. But Nokia had their own Meego OS that was state of the art, was loved by users (as shown by sales of N900) and would have put them in the driver's seat. But no, they had to pick an OS that had ~1% marketshare, knew it had to be rebooted again as WP8 in less than 1 year, they had no say over its course of development, they have to pay money to use on their devices, and had no ecosystem whatsoever. No sane CEO that has the best interests of a company can do that. Only a trojan who is secretly playing for the other team can do something as cold hearted as that.


Wrong. Nokia's selling point was their brand. People bought Nokia just because it was Nokia, not because it had Mapping software on it (which was way behind Google Maps at that time anyway).


I'll simply let the pictures do the talking on this one.

http://communities-dominate.bl...337c8833019b00344408970d-pi
http://communities-dominate.bl...337c8833019b0033ebfb970b-pi
http://communities-dominate.bl...337c8833019b0033ec69970b-pi

That chart shows stock price, which is a completely separate and distinct from the company's financials. Stock prices reflect traders' sentiment for growth and are affected by a lot of other factors that have little to do with the equity. Take a look at the quarterly reports to get a more accurate picture of how a company is performing. Market prices don't always reflect that.

Skwerl said,

That chart shows stock price, which is a completely separate and distinct from the company's financials. Stock prices reflect traders' sentiment for growth and are affected by a lot of other factors that have little to do with the equity. Take a look at the quarterly reports to get a more accurate picture of how a company is performing. Market prices don't always reflect that.

Look at pic 2 and 3 please.

So you are telling me the board of directors of a company the size of Nokia and the investors such as myself are retards, and didn't see the intentionts of this so called trojan from MS?

The choice was easy, Nokia to survive the creation of an ecosystem needed cash to burn at a rapid rated, that was exactly what MS gave them, you know 2 billion in "marketing" no cost of the licence of WP7 and WP8 and they pushed Nokia.

If they stayed with meego/maemo they had to dish the development costs, create the ecosystem and support it with their cashflow, without anyone besides them.

The options were easy MS and their money or fight in the arena of Android phones with Samsung, LG, HTC, Sony and everyone else and their mother.