I promised to dig to the Elop Effect. Let’s start with the facts.

  • There is a phenomenon called Osborne Effect. It’s in brief “unintended consequence of the announcement of a future product ahead of its availability and its impact upon the sales of the current product“. [1] Now this is a fact I’m not denying.
    And Nokia announced Windows Phone strategy 2011 and told it will replace Symbian and MeeGo with Windows Phone, whilst not having a single Windows Phone to sell at the moment. That is a fact too.
  • Then there is the case with Gerald Ratner, results of which are sometimes called “Ratner Effect”. In brief it’s a case of high-level manager publicly stating his/her company producing low-quality, thus destroying the brand image. [2] This is a fact.
    And there is a memo, widely attributed to Stephen Elop, that has gotten a name of “burning platform memo”. That memo describes Nokia – market leader at the time – being inferior to its rivals. This is a fact too.
  • Furthermore, Stephen Elop himself has acknowledged that the announcement made in February 2011 hurt Symbian sales.
  • And as a last fact, Nokia has lost roughly 71 percent of its market share since 2010 Q4. A fact I’m not denying either.

These are the facts. I’m not denying here the fact that Nokia has crashed in all possible measurements since February 2011. I’m addressing the claim that “Elop Effect” – term introduced by Tomi Ahonen – caused Nokia’s current collapse. In Tomi Ahonen’s claim “Just before the Elop Effect, at the end of Q4 of last year, Nokia’s market share was 29%. Now, the latest quarter for which we have data, Q3 of 2011, Nokia’s market share has crashed to 14%. Yes. In a very real sense, Nokia has voluntarily gifted away more than half of its market!” [3]

This is now something I challenge. I don’t believe a second that the current state of Nokia could be attributed to February 2011 events alone. I don’t fight the facts – obviously February 2011 events contribute here. Mr. Elop himself admitted it. But I don’t buy that they caused this.


  • Osborne was not killed by Osborne Effect alone. It only made worse the fact that Executive model from Osborne Computer was priced higher and had smaller display than lower-priced Kaypro computer with larger display. The Kaypro computer had already begun to cut into sales of the Osborne 1 but inventories of the Osborne 1 cleared out, and customers switched almost entirely to the Kaypro.
    Naturally, Osborne effect contributed to this.
  • Ratner was not killed by Ratner Effect. It was killed by the fact that products were – in fact – total crap. When Ratner himself said that, he bursted the bubble and brand image was gone. And with brand gone, there was nothing supporting the business.
    Naturally, Ratner effect contributed to this – big time.

Those two companies would have faced destruction sooner or later but the process was speeded up by aforementioned “effects”. So let’s just be rational and assume for a moment that “Elop Effect” does not exist. (Fair enough, some damage happened during 2011 Q1 from the announcement, but it’s not THE REASON behind this massacre). If this was true, these three facts should be present:

  1. There was a decline that started before 2011 Q1, preferably so early in 2010 that Elop was not yet in charge.
    Yes, this is mandatory. If the decline starts from 2011 Q1, it means automatically that the loss is a result of “Elop Effect”.
  2. That decline needs to match the trend we have seen during full 2011 and 2012 first quarter.
    Small changes are allowed as Elop himself said the announcement hurted Symbian sales, but changes need to be modest and can’t be the main reason for collapse.
  3. The decline needs to have been noticed and reported by someone with at least as much credibility as Tomi Ahonen.
    I need this. I’m an engineer. I don’t fight BS from well-known market analyst with my own opinions. We need a professional to help.

That said, I think we have a solid case of calling Elop effect FUD if these three criteria are filled.


Mr. Ahonen of course says that Nokia was on rise at end of 2010 and Microsoft announcement killed that rise on February 11th 2011. Here are his thoughts from his recent blog:

Nokia Symbian smartphone sales by units sold grew not just a little, they grew 7% in just one quarter. In most well-established businesses to grow 7% in one year is considered good. What of revenues? The smartphone unit grew revenues not just a little, they grew by 22% in just one quarter. The average sales price – which traditionally for Nokia had been falling by 7% per quarter, as Nokia pursued the mass market low-cost smartphone customers – reversed the decline and grew not just a little, they jumped up by a Nokia-record of 14% (effectively 21% reversal from trend, enormous leap in one quarter) and best of all, the profits? The Nokia Symbian smartphone unit profits jumped grew not just a little – Nokia smartphone unit profits grew by a Nokia record leap in any one quarter of 65% !!!!!” [4]

That’s his analysis on 2010 Q4. Fine. Next let’s hear the man more as Tomi Ahonen tells us his view on how “Elop Effect” destroyed Nokia’s Market share:

Last 6 Quarters Market Share: 29% – 24% – 16% – 14% – 13% – 8%
Nokia is dying before our eyes. One year ago at this time, Nokia was still the world’s largest smartphone maker and highly profitable. Just before the Elop Effect ie 15 months ago the last quarter for which we had the data, Nokia was literally bigger than Apple and Samsung combined, with a massive 29% market share, growing unit sales, growing revenues, growing average prices and massively growing profits, under its new leadership of Stephen Elop. Since then we had the Elop Effect and even Stephen Elop admitted to the Nokia Shareholders’ Meeting now two weeks ago, that yes, his Burning Platforms memo did hurt Symbian sales. How badly? Symbian sold 35% of all smartphones sold in the world in the last quarter before his moronic memo. Today? Symbian sells 5.4% of all smartphones in the world!” [5]

(For the records, that’s Market shares as follows:)
29% Q4 2010
24% Q1 2011
16% Q2 2011
14% Q3 2011
13% Q4 2011
8% Q1 2012

This, my readers, is The Elop Effect as Tomi Ahonen puts it.


I had my three-bullet checklist that would proof Tomi Ahonen indeed is making false claims and trying to blame Elop for something that is not result of February 2011 events. All I need is a credible analysis from pre-February era. And look and behold! I have found analysis on exactly same 2010 Q4 results, made January 27th, 2011 – over 2 WEEKS before Microsoft/Nokia Alliance and therefore it is IMMUNE to any possible effects from the new strategy. (Personally, I also feel this one was written with analysis in mind, not with burning rage as Mr. Ahonen’s recent posts):

Here are the big picture facts. For the first half of the year 2010, Nokia grew rougly as fast as the industry. It ended year 2009 with 39% market share in smartphones. At the end of Q2 it had 39% market share. Then in Q3 and Q4, suddenly – catastrophically – Nokia growth slowed to anemic, for the first time for as long as I can remember, Nokia’s quarterly growth was the slowest of any of the biggest 6 smartphone makers, and far slower than the industry. Nokia’s market share crashed to 33% after Q3 and down to (about) 28% after Q4. In six months, Nokia destroyed 11 points of market share – it abandoned one quarter of its total market – in half a year! This reminds me of the disasterous suicide-ride that Motorola embarked upon, but even in its worst period, never did Motorola lose a quarter of its market share in any six month period. I don’t mean this is the end for Nokia, but the signs are very dangerous, if two quarters have already gone like this, the cause is no freak accounting error or component shortage, it is a major systematic problem that has to be corrected immediately before Nokia finds itself ranked 3rd or 5th or – like Motorola which went from 2nd to 9th in all mobile phones (smartphones and dumbphones combined) in only 4 years. Right now the Nokia market share is not in decline, it is in a dive.

As said, this analysis was made at end of January 2011, before any Elop effect could have taken place. See how different view? Also we have a round-down for the Q4. This one says 28%, Previous quote from Tomi Ahonen says 29%. Let’s keep that in mind as it (among other things we just read) makes me wonder if Tomi Ahonen intentionally misreads Nokia’s results for 2010. Also, note the prediction? “has to be corrected immediately before Nokia finds itself ranked 3rd or 5th or – like Motorola which went from 2nd to 9th in all mobile phones (smartphones and dumbphones combined) in only 4 years.” This is BEFORE February 2011 and implies Nokia is heading to the trajectory Tomi Ahonen claims Elop Effect brought it to. But my source continues:

So lets go back a little. In the year 2006 Nokia produced more than half of all smartphones sold on the planet, was by far the biggest total handset maker in the world and was making tons of profits along the way. It had astronomical customer satisfaction and loyalty, and Nokia’s phones were all known for great usability. Nokia also was known for incredibly reliable phones (a dog ate one, it emerged ‘through’ the dog later, and was fully functional still, if perhaps a bit smelly, that kind of stories). And inspite of this, Nokia also sold some of the ultra-cheapest Africa phones on the planet. Then a funny thing happened in January 2007, when a computer maker called Apple decided to release their first-ever mobile phone. A phone so astonishing that even this Nokia-friendly blog claimed it was the first truly transformational phone, that we would measure time in ‘Before iPhone and After iPhone‘”

But the world for Nokia did change utterly totally completely. It was the end of the good old days.

Now I have to note here that I’m quoting a person who seems to be the total opposite of Tomi Ahonen. Tomi Ahonen said very clearly that “There is no truth to the myth that it was the iPhone that killed Nokia’s smartphones.” [6] Actually, he even said that “While the iPhone 2G was slick and sexy and slim, and obviously had a far bigger screen and was touch-screen – the Nokia was years ahead on almost anything else you might want in a smarpthone. The N95 had 3G, the N95 had GPS, the N95 had a 5 megapixel camera, the N95 had MMS, the N95 shot video, the N95 was a true smartphone (yes, the original iPhone 2G was not classified a smartphone, it was only a featurephone as you could not install apps to it), the N95 had a huge app store with what back then was by far the world’s biggest library of thousands of apps on Symbian, the N95 did multitasking, had a LED flash, etc etc etc.” [7]
My source here begs to differ. And let’s remember that we are having a peek back in time. This text was written when Nokia was not doing Windows Phone. Nokia was not having Lumia’s, it was selling a flagship product called N8 (and more of that in a moment). This text is before 2011 Q1 results. This Text is before strategy change. This writer did not know about MS/Nokia alliance. He saw 2010 Q4 results and said that (in his words) market share was not in decline, it was in dive. And then we get analysis on why. A good one. No “Elop Effect” needed. So let’s give the man here a chance to continue. He just became my personal hero:

Nokia was not really facing ‘full competition’ up to 2006. Motorola was a weak rival, they were drastically lost in the transition from 1G to 2G, and they had their brief hurrah moment with the Razr, which they could not carry further and fizzled away. Several of Nokia’s traditional rivals, Siemens, Philips, Panasonic – quit the handset business. In Smartphones the biggest rivals to Nokia came from North America – where smartphones were still considered only to be business phones – hence RIM, Palm were the main offering. And then there was the little HTC out of Taiwan with the quirky Microsoft Windows Mobile OS. Of Nokia’s ‘real rivals’ Samsung, Motorola, LG and SonyEricsson – all made smartphones primarily on the Symbian operating system where Nokia was biggest co-owner, so Nokia would never be ‘blind-sighted’ by rivals doing something wild and weird – like Apple managed with its bizarre touch-screen phone.

At the ‘customer satisfaction’ end, where Nokia was head and shoulders above all rivals in 2006, after Apple came onto the scene, today clearly the world’s highest loyalty is with the iPhone. Nokia lost the corner where it used to rule as the best phone at usability. The worst part is that its ‘partners’ all abandoned Symbian and went to support Google’s Android – so Nokia smartphones are not even ‘second best’ in that category, being stuck using the obsolescent Symbian OS, which no matter how much you may love Nokia, is not up to par in terms of usability compared to iPhones or Androids. Yes, Symbian is getting better, but this is a race of catch-up, and Nokia has to also prepare MeeGo its new OS, which is the only one that can hope to fight for the future. Nokia is not fighting on even terms for customer love, it is losing that fight. We saw it in the UK customer satisfaction survey last year, when even those Nokia current owners who did say, that they wanted their next phone to be also a Nokia – were not willing to recommend Nokia to friends – they were, in effect, ashamed to own Nokias. This is not a recipe for market success in loyalty. Nokia has just about lost this front, of the war already. Compare that to Apple owners – who will stick their brand new iPhone in front of the noses of anyone, to show how incredibly cool and clever their latest iPhone is. That is the difference. While Apple owners proudly display their iPhones, Nokia owners hide their gadgets in shame.. If Nokia had been managing to make a come-back, then in Q4 they should have sold Nokia N8 models in comparable numbers to Samsung Galaxies and iPhones and HTCs – they did not. Not even close.

I admit this made me breathless. Tomi Ahonen clearly said “Nokia Q4 2010 sales growth was driven in strong part by the very warm reception of Nokia’s N8 smartphone (a widely aclaimed award-winning touch screen smartphone with a superior camera. The N8 kept being among bestselling smartphones in many of Nokia’s best markets still one year later, winning accolates as late as January 2012).” [4] not to mention the UK customer rejection he has said to be result of WP strategy: “From September, after Lumia launched for Christmas, Nokia has now lost another third – another THIRD – of its existing customer base, going from 6.7% just on Symbian, to 4.6% market share” [8] This guy gives us UK issue in BEFORE Microsoft alliance. And says Nokia is not even second best compared to iPhone and Android. Wow. As said – personal hero. More to come:

Take the N8. It would have been a hot phone in early Q2, before the iPhone 4, if facing off against the iPhone 3GS and very early Android devices. But it got onto store shelves for Q4, by that time there was the ‘Retina Display’ iPhone 4, and the magnificent Galaxy 2 series of Samsung phones, and vastly upgraded Blackberries and HTCs and Motorolas etc. The N8 could have been a contender half a year earlier, but was not shipped in time. Nokia was not fast enough, or – its rivals had learned to become faster than Nokia, whichever way you want to see it. Now what of the truly hot new phones? Apple created the phone in 2010 that had the sharpest screen ever produced (not Nokia). Among the major brands, Sharp created the world’s first phone with a 3D display (not Nokia). And Samsung’s Galaxy Beam was launched in 2010 as the first phone with built-in Pico Projector (not Nokia).

Ouch. Harsh text. Reason for sales decline for next year to come. Remember what Tomi said about N8 just few weeks ago? “a widely aclaimed award-winning touch screen smartphone with a superior camera” [4] Now THIS guy is instead totally aligned with the “burning platform memo” Tomi says is just a list of lies. I want to hear rest of this:

Nokia has lost this lead, and its N97 or its N8 or its N900 or its E7 are only ‘me too’ devices, nowhere near the real global leadership. Nokia has lost the battle in the second of the corners.
And what of the last of the three fronts, the low cost corner? ZTE and Huawei and G’Five and other Chinese and Indian manufacturers are carving up the low-cost markets. Nokia is there, but is losing the low price war. Part of it is Nokia’s brand, trying to do ‘world phones’ but these markets need their own peculiarities, like dual SIM slots for example. Samsung was there a year before Nokia doing dual SIM slots for its low-cost phones. As to low cost smartphones – yes, the ‘marketing spin story’ sounds good, that Symbian was designed to run on phones with modest technical requirements, ie weak power CPUs and low memory requirements etc, but Moore’s Law moves on, we have faster CPUs at low cost, as well as more memory at low cost. Samsung introduced its bada OS to target low cost phones – and had the most successful new OS launch ever selling over 5 million bada devices in its first half-year, and meanwhile Android – being free – is being used by the low cost manufacturers like ZTE, Lenovo, G’Five etc to sell cheap smartphones in the Emerging World markets. Nokia is fighting a three-front war, and is losing at all three.

Bada beating Symbian? Android beating Symbian? And dual SIM too! Tomi Ahonen was doing slightly different view on Dual SIM, you know? “Now, after Nokia’s phone sales have stalled, the CEO waves that red flag in front of the carriers/operators – that next Nokia will bring those very same upsetting dual SIM phones to the market (Nokia has already launched the first such phones in India).” [9]. Six months from the article I cite here Tomi Ahonen is saying there should not be Dual SIM phones and Elop is moron driving them. But my source has not finished – far from it:

Nokia made some ridiculously stupid decisions. Like releasing phone models suddenly that didn’t allow users to change the battery. What phone has an infinite battery life? What phone even in normal use has ‘too good’ battery life. Not a one. Nokia knows this, they knew that their devices will be used for all kinds of consumer entertainment, and if you start to watch some videos on the phone, its battery drains rapidly. And Nokia used to be the phone you wanted wherever electicity supply is not reliable (or available) – why, because every tiny village with a gadget store will stock some spare Nokia batteries. But suddenly some pinhead in Nokia HQ decided that ‘we need to be more like the iPhone’ even though iPhone users themselves were begging Apple to give them user-changeagble batteries – but no, Nokia suddenly got iPhone madness, and yes, we got phones where the battery is no longer changeable by the user.

Or the abandoning of the microSD card slot. This is utter madness. First Nokia is so clever and innovative, that they offer us the hot-swappable microSD slot like on the E90 Communicator – a godsend for swapping media data, whether your favorite music or the movie you want to see or you need more capacity for pictures etc. And so loyal Nokia customers buy high-capacity (relatively expensive) microSD cards. And what does Nokia do – it makes itself incompatble with previous Nokia phones! Previous PREMIUM Nokia phones. What utter madness! No problem, these customers will notice that if they like their QWERTY phones, the Blackberry will support microSD very happily. And for nice touch-screen phones, Samsung Galaxy phones support microSD.
Nokia has systematically been adopting idiotic ideas from the iPhone, which are not industry-conforming, and in particular, which will infuriate loyal Nokia owners.

Once again something we’ve heard to be happening because of Microsoft strategy. Let’s try view from Tomi Ahonen, shall we? “Lumia 800 doesn’t offer a replacable battery. Nokia has started on that dumb path already earlier under Elop with the N8 being the first Nokia smartphone that didn’t let users replace the battery.” and “There is no microSD. This ‘flagship’ phone seems like it was designed by total amateurs who were somehow utterly ignorant of the vast competence Nokia had built over the past decade.” [10]

On a presonal note, I have to hand it to Tomi Ahonen. Elop took control in September (ie end of Q3). N8 launched at early Q4. Apparently Tomi Ahonen claims Stephen Elop altered the entire product lines in just few weeks? According to Tomi Ahonen Stephen Elop is not a man – he is a superman! No wonder Tomi gives such a value for Elop Effect – it’s a super power!
But it’s time for our man to pull the fish in. As I said before, if there is no Elop Effect, there has to be continuous bad trend from 2010. Here he hands it to us:

The Q3 results were alarming but that could have been a temporary blip and Nokia could have recovered. Now the Q4 results tell us that the current product portfolio, and the strategy, is not working. Nokia grew the least of all major makers, and lost market share in all price segments. The current trends suggest that Google’s Android may pass Nokia’s Symbian OS during this year 2011. This is a ship which is seriously taking in water and will sink if management doesn’t turn it around very rapidly.
I think the biggest critical mistakes are that Nokia is almost willfully annoying its loyal customers. Customer loyalty is a fickle thing, if you lose it, you may not get a chance to try to recover it, for many many years. Think about it, in terms of market share, out of all those customers who bought Nokia branded smartphones in 2006, for every three customers Nokia has managed to keep – it has lost another two! Only three out of every 5 loyal Nokia smartphone users five years ago, still support Nokia today. What is worse, Nokia’s loyalty is strongest in markets and segments of low-cost smartphones – India, Africa, China etc – but Nokia has all but lost the top end of the market.

Nokia used to be the must-have phone. Now its a phone its owners dare not recommend to friends. That is the core of Nokia’s problem. At one point you bought Nokia and you knew you got ultimate value and you would not be disappointed. Now even the most loyal Nokia fans, whenever they write about their newest Nokia phones – write about one disappointment after another. This is the problem the new CEO, Stephen Elop needs to address.

Let’s now update our previous market share chart a bit with the data we just got:

Quarter | Market share | Change (points) | Change (% of previous market share)

Q2 2010 | 39%
Q3 2010 | 33% | -6 | -15%
Q4 2010 | 28% | -5 | -15%
Q1 2011 | 24% | -4 | -16%
Q2 2011 | 16% | -8 | -33%
Q3 2011 | 14% | -2 | -13%
Q4 2011 | 13% | -1 | -7%
Q1 2012 |  8% | -5 | -38%

We have an obvious bump in the graph, but it is not 2011 Q1 as Tomi Ahonen claims, it’s Q2. That I am fully crediting to Elop Effect. BUT it is actually lost already in Q3 and Q4. First Q3 doing smaller change (both in points and as % of previous market share) than ANY quarter since 2010 Q2! An then 4th quarter 2011, where we have new record in slowdown of “the dive”, smaller than any before. And please note, during 2010 Nokia’s market share loss did NOT slow even in Q4, where sales are supposed to go “up”. Elop effect frankly is not visible here in a scale it should be.

So let’s do my checklist:

  1. There was a decline that started before 2011 Q1, preferably so early in 2010 that Elop was not yet in charge.
    There is. Started from Q3 2010 results. Elop took charge at end of Q3 2010.
  2. The decline needs to match the trend we have seen.
    It does. There is visible change possibly caused by February strategy change in Q2 but it only affects one quarter.
  3. The decline would have been noticed and reported by someone with at least as much credibility as Tomi Ahonen.
    Tough one. I guess everybody waits to hear who I’m citing here? Time to go for the truth, the whole truth and nothing but the truth. I’m citing

Yes, my dear readers. Tomi Ahonen wrote all that before Elop even announced Windows Phone strategy. [11] Ever since he has been crediting the market share decline – decline he saw with his own eyes in January – to the Windows phone strategy, ignoring his own analysis of the previous decline of Q3 and Q4 in 2010, crediting Elop of things he could not have done and blaming Windows phone of issues he forecasted in January 2011 before Windows Phone strategy was announced. I rest my case and call Elop effect as FUD.


Nokia is a company battling for its survival. It has the worst 7-quarter performance in the history behind it. Thousands of people have lost their jobs, thousands more will. Spreading false data and deliberately hurting the brand even more is an action that we should never expect to see from a “six-time bestselling author of hardcover telecoms/tech books who has also released a series of three eBooks in 2009. An independent consultant and motivational speaker in the converging areas of mobile telecoms, internet, media, advertising, credit and banking, social networking and virtual reality“. [12] And don’t get me wrong – I acknowledge that Tomi Ahonen is a world-class influencer and global-scale skilled business analytic. He has talked to thousands of people and one does not get to those circles by accident. I consider him as iron-hard professional. So it is understandable that I was asked why I’m being rude and calling him liar. Another person asked why I use words like “intentionally” and “deliberately”, as it could be that Tomi’s numbers and analysis are simply mistakes.

I answer: because people of that caliber DO NOT accidentally post invalid figures, they DO NOT “by mistake” make long blogs based on data that is disputed or unreliable (or likely – both). And more than anything, those people DO NOT make elementary mistakes like claiming reporters were asking for a Lumia device when the news article they use as reference themselves clearly says the reporters did not. (See my previous posts and you can witness yourself Tomi Ahonen does ALL that.)

People of Tomi Ahonen’s level do not do that. They just don’t, or they are out of job. And in the unlikely case they would, they quickly fix their mistakes, not quote it for months to come. People. Of. That. Level. Don’t. Do. That. Not unless it is deliberate and intentional.

Tomi Ahonen is repeatedly spreading data he even himself knows to be fouled-up. In his recent post he is saying that at end of 2010 Nokia “was literally bigger than Apple and Samsung combined, with a massive 29% market share, growing unit sales, growing revenues, growing average prices and massively growing profits” [5] (And the fact is it was – and STILL going down in an alarming rate. Before February 2011 Tomi Ahonen said himself Nokia “abandoned one quarter of its total market – in half a year” and was “in a dive“, like we just read.) Tomi Ahonen claims that Nokia’s current strategy has caused problems he reported himself being there for two full quarters of a year BEFORE new strategy even existed.

Now I grew up to believe that it is right to call someone a liar when he is.
This constant feeding of misinformation sickens me and therefore I now publicly call Tomi Ahonen a liar.

1] http://en.wikipedia.org/wiki/Osborne_effect

[2] http://en.wikipedia.org/wiki/Gerald_Ratner#The_speech

[3] Calculating the Elop Effect

[4] The final Reckoning

[5] Smartphone Market Shares after Q1

[6] Paging truth police one last time

[7] Lumia, Lumia, what are you doing Nokia?

[8] Brutal truth

[9] Patient heart has stopped

[10] The real top 14 reasons

[11] http://communities-dominate.blogs.com/brands/2011/01/undesirable-at-any-price-what-happened-to-nokia-who-invented-the-smartphone.html

[12] Biography of Tomi Ahonen

Guideline for commenting:
I hate the way Tomi Ahonen deletes criticizing comments from his blog. However, I plan to follow three of his principles: I’ll delete comments that are

  1. Personal insults to someone
  2. Duplicates
  3. Spam

In addition, if you wish to challenge my previous posts, please comment to those.