GLOBAL – On Sunday 13th of February, Nokia CEO Stephen Elop and EVP of smart devices Jo Harlow hosted a press conference to speak about the events of the Friday before, to clear up some misconceptions on the partnership between Nokia and Microsoft. Stephen talked about ecosystems and developers while Jo talked about Symbian and Nokia Windows Phone launch dates, plus plenty more. We’ve taken a look through the videos of the press conference, to break down what was said.
The video was split into two to make it easier to upload, so be careful to use the correct timestamp below with the right video. Although we’ve listened carefully to the videos and tried to capture what was said, these aren’t actual quotes, so don’t treat them as such. Here’s some key moments to watch out for.
01:03 I’ll talk about the dynamics and the nature of the deal and the relationship that has been established between Nokia and Microsoft. To give a bit more colour to the background of what lead to this. Also give you a sense of the overall strategic balance that’s being struck in this relationship.
1:37 Clearly, we were assessing three different paths forward for the company. There was the largely internal option, taking advantage of MeeGo and Symbian, and the need to build a third ecosystem, somewhat on our own but with the help of others. And as we have already talked about there were issues in that area, that caused us to continue to look at our second and third options. The second option, clearly was to make a decision to pursue Android and to place a significant bet on the Android ecosystem. The third choice we had was to enter into a partnership with Microsoft to build jointly an ecosystem around Windows Phone.
02:25 If you think about the results of a decision to go Android, what would that mean to the whole mobile industry? If you combine the current market share of Android, with the market share that Nokia could deliver to Android over the next couple of years, it’s a very large number. One could believe the mobile industry thereafter would be some form of duopoly, Apple and Android – and some smaller players – with Nokia contributing substantially to the Android ecosystem.
03:49 A decision to go Windows Phone creates a very different dynamic. By moving in the direction of Windows Phone and partnering with Microsoft we create an environment where Windows Phone is a challenger, where we’ve created a three horse race. For Microsoft, the consideration that Nokia – of going in that direction – had value, significant value.
04:53 We obviously made the decision to go Microsoft Windows Phone. We made the decision for a whole variety of reasons but I think to truly understand it, you need to understand a bit more to see how Microsoft viewed this opportunity to ensure that there are three ecosystems and not only two excluding them.
05:27 The beginning of the framework of the deal is something called an OEM deal, and there’s a general balance in the construct of an OEM deal, Essentially we pay Microsoft royalties for the use of their software and for the fact they are developing that software, and fulfilling obligations to us and to others to deliver a great product with us. So we pay them money for that. And of course the balance of that transaction is that we are able to reduce our operating expenses, were paying them but we are not internally also developing a software platform ourselves. So you see the balance in that part of the transaction.
06:15 Now it has been questioned by some of the analysts, does Nokia understand the significant OpEx reductions that ought to go along with this transaction? And the short answer to that question is that absolutely we do, and within the weeks and months ahead, that will become apparent.
07:00 What is Nokia contributing to this partnership? We are contributing a number of things. We are contributing a variety of services, of capabilities that will be used by Windows Phone manufactures including Nokia. So were contributing the capabilities of Ovi Maps, Ovi Store around new advertising opportunities related to local services.
08:16 What is the contribution from Microsoft in the other direction. Clearly, they are too contributing services, things like Bing for search, advertising capabilities, Xbox and so forth. So they’re contributing those types of things. They also, and this is a very important thing to recognise in the balance of the transaction, they are contributing a dependancy. We are clearly dependant on Windows Phone as we go forward, but they are now placing a very significant bet on Nokia for the delivery of the location based services.
09:05 We’re contributing these services and in exchange we’re also receiving a new source of revenue, a new and additional way for Nokia to make money and that is related to advertising. We have not have had an advertising source of revenue, yet clearly in the world the Business models are evolving such that advertising has become very important.
09:35 For all the unique elements that Nokia is contributing, including the swing factor, including the decision to make Windows Phone a challenger, Microsoft is contributing to Nokia a substantial monetary value towards Nokia because we are contributing all of these things.
09:57 During our investor briefing there was a slide where we had a single line with a little green check mark saying “marketing and other investments” or something like that from Microsoft to Nokia. I think some people interpreted that as something that was measured in Millions as most marketing transfers of value are, in fact when you look at all of the value were contributing and the unique nature of what we are bringing to the table as part of this transaction in fact the value transfer to Nokia is measured in the Bs not the Ms.
11:15 and that is one of the critical reasons of why we will both succeed together.
11: 30 I’m now going to invite on stage Jo Harlow, who is responsible now for our smart devices efforts. There have been a lot of questions about the transition and how quickly will you work with Microsoft.
EVP of Smart devices Jo Harlow takes to the stage.
00:11 It’s our opinion and the opinion of many others that Windows Phone is an exciting, contemporary and modern UI and platform. We are the partner who will bring innovation in design and hardware to make great mobile products with MP. And we’ve already started, we’ve had teams working together in some interesting places like Reykjavik for example. And our technical teams are working together next week to solidify the timing of the first Nokia Windows Phone product. So that means I cannot today tell you exactly when is that time, but my boss has told me he that would be much happier if that time was in 2011. So stephen, of course I aim to please
01:18 One of the things that we also saw is that people got excited about some early concept renderings that got out over the last couple of days, you might’ve seen these. I want to share with you one more, because it helps to give you some insight into what can come out of a collaboration between Nokia’s design team and the Microsoft Windows Phone design team that’s already begun. I’m really looking forward to sharing with you more of this great collaboration in the weeks to come.
02:10 Symbian is a franchise platform. So what means is that we will be making significant short term investments in the Symbian platform so that we and our customers can harvest the value that the Symbian platform offers. So what does that mean, what kind of investments are we going to make? First of all, we will be making investments in a series of devices that will be launched in the months to come and beyond. We will also be investing in the hardware platform in terms of GHz plus processing capability as well as significant improvements in graphic speed.
03:03 In addition to that we will making investments in UI improvements that will give a whole new fresh look and feel to the Symbian UI, making it more accessible to even more consumers. And those improvements will be delivered via a series of software releases and updates in the upcoming weeks and months.
03:30 These investments are what gives us the confidence that we will be able to ship volumes of Symbian devices in the coming months and years, in addition it gives us the ability to carefully manage the transition between Symbian and Windows Phone.
Stephen back to you.
04:32 There are easily of a quarter of billion symbian devices that are either existing or in the future that will have the Qt framework as part of what we ship. That is a huge opportunity for developers and one that we’ll be continuing to encourage for many months quarters and years ahead. So that is a big opportunity.
04:53 It is also the case that the MeeGo device that will ship this year will also take advantage the Qt framework, so there’s an opportunity to work with it there as well.
05:05 What about Qt on Windows Phone? Our initial response is no, that’s not the plan. And here’s the reason behind that. If we on the Windows Phone platform encourage -essentially- a forking, a divergence of dev platforms between what is natively is provided on the Windows Phone platform and Qt, then we create the environment where potentially we could confuse the developers, the consumers, and even create an environment where Windows Phone can advance slower than the competition because we’re carrying two development platforms instead of one.
06:53 MeeGo will be part of the consideration and part of the exploration that we pursue going forward. We still have some work to do to define next steps in this area.
07:05 But we have been in consultation with Intel, including myself talking with Mr Otellini on multiple occasions, through our decision making process including immediately after we made our final decision to go Windows Phone as that took place just Thursday night of last week. So we made sure Intel was aware of our decision making process, we’ve been in consultation with the them and they were certainly aware of our decision.
07:58 The leadership of Nokia. As many of you have written I seem to be quite open and transparent about these questions, and I’d like to be in that frame of mind on this topic as well.
08:10 So it is the case, that as I entered Nokia and worked literally every single day with all the senior leaders of Nokia, I had to go through a process of assessment. And you’ve seen the results of that assessment, you’ve seen the results that a number of promising executives have been elevated in their roles to the senior levels of the Nokia leadership team.
08:33 That includes Jo, in the area of smart devices, it includes Rich Green as our Chief Technology Officer taking a step up, it includes Louise Pentland, it includes the hiring of Jerri DeVard as our Chief Marketing Officer, it includes the hiring of a Senior Vice President of North America sales and operations, that was announced on Friday.
09:43 We are operating now in an environment with a clear strategy, we are operating now in a context of my leadership and so it is in the context of myself and our strategy that I am able to assess the future success of these executives.
10:07 So all of these executives now have a clear mission, are clear supporters of our strategy going forward and now together we march forward to deliver and execute on a strategy we laid out on Friday. But we are all accountable for the successful delivery of the results associated with that strategy.
10:34 We’re going to open up now for questions.
We’ll cover the questions in a separate post in the coming days.