A Look At the Pre-Elop Years

Recently I got a really relevant comment on my earlier post on Nokia. Let me copy-paste the comment here.

Anonymous said...

It Would be nice to see pre-Elop year in the graphs. Let's say Q3 2009 onwards. Now we know Nokia switched the strategy but do not e.g. see the rise of Android and drop of Nokia market share behind it.

April 20, 2013 at 9:00 AM

I created this post to extend the revenue & profit graphs in the pre-Elop years. In fact, right from Q1 2009 to Q4 2012. So here's the first graph, showing revenues & net profit for Nokia group.

Click for larger view

As can be seen, the revenues were rising from 2009 onwards, peaking in each Q4 (the Western holiday season which sees greater revenues). However, the profitability of the company was not too great. Q3 2009 was loss-making, while most of the quarters, Nokia manged to make a few 100 million euros of profit.

Profits shot up in the Q4 of each 2009 (882 million euros), and 2010 (742 million euros). In Q1 2011, Elop's new Windows-Phone strategy was announced, and revenues started falling, and profitability was hit. But this was covered also in the last post.

Although it is easy to see that revenues were higher in the pre-Elop years of 2009 and 2010 (Elop joined Nokia in Q3 2010), one can always argue that the profitability of the company was in question. So was Nokia feeling the heat of the iPhone and Android beating down on it's profitability? To answer this,as in the last post, I looked at just the "Devices & Services" business... the one which is responsible for the smartphones and feature-phones.
So here's just Devices &Services over the same quarters...

Click for larger view

Now this graph shows solid revenue, profitability and growth in Devices & Services until Q4 2010. Note that the nature of the industry is such that the "Q4 peaks" will always occur. So for e.g. it was not alarming that revenues fell from Q4 2009 to Q1 2010. Note that even in weaker quarters, D&S maintained respectable profits. In fact, in some quarters it was the "sole bread earner", compensating for NSN's losses. All that changed from Q1 2011. Of course, there's no point in going over that again, as it's already covered in my last post.

Some Thoughts on Android & Nokia's Lost Oppertunity

After working on Nokia's Symbian OS for around 4 years, I've recently started exploring the Android platform from a technical architecture perspective. The more I explore, the more familiar it seems. One reason of course, is that below the Java layers - what is known as "native" software in Android - it's all regular C/C++ based embedded software on a Linux kernel. Maybe it seems even more familiar to me because my work in Nokia involved a little bit of Maemo/Meego integration also. Indeed, below the Java layers, once could theoretically mix & match code from AOSP (Android Open Source Project) and Meego, and yet have a device that works!

The picture below is an over-simplified system architecture diagram, but helps explain a very high level view of Android.

Android architecture from developer.android.com

The Java layers, which I refer to are the top two layers in blue. The rest (libraries & kernel) is regular C/C++  software running on a Linux kernel. 

Open Source Licenses - Part 1

Having worked with open source software for quite some time, I thought it would be nice to jot down a few of my thoughts on open source, in general, and the common licenses, in particular. Open source is quite common in technology, and especially the smartphone industry today. As I have noted in one of my previous posts, open source is used in four of the popular smartphone OS’es today (iOS, Android, Symbian and Bada/Tizen). While I started, I thought this would be one post, but as I rambled on, I thought it would be better readability to divide this across two posts. So here is the is the first part in a 2 part series on open source.

What Is Open Source?

Before getting into the details of licensing, it maybe good to define the concept of open source. In very simple terms, "open source" means software that is available in source code form, and which allows users to debug, modify, enhance, and re-distribute it. However, there is a belief or philosophy behind open source, which is deeper than just having source code available. The philosophy is that users of software should have freedom to run the software, customize it according to their needs, improve the software, and also make it available for others to use, thereby propagating "good" software. Due to the fact that the open source concept revolves around the freedom of software users, it is also sometimes called "Free Software". Richard Stallman founded an organization called the "Free Software Foundation", and he stresses that the "Free" does not refer to price, but to freedom. A famous and funny quote from Mr. Stallman is "To understand the concept, you should think of ‘free’ as in ‘free speech’, not as in ‘free beer’". Open source resolves around this fundamental philosophy of freedom, and most of the licenses reflect this in their terms & conditions.
Another non-profit organization - Open Source Initiative(OSI) - goes a step further and actually defines the criteria that a software should have before it can be considered to be open source. The criterion are (in summary, full list at http://www.opensource.org/docs/osd)

• Freedom to redistribute the code.
• Freedom to access source code.
• Freedom to make modifications.
• Integrity of the original author’s source code.
• No discrimination against persons, group, or fields of use, or specific technology.

Why Open Source?

Having defined what it is, the question arises why it is so popular. Here are a few reasons why I think open source is popular.

• High quality, and/or feature rich software: This is a general statement, and of course, there may be many exceptions. However, most open source projects have contributions from highly dedicated software engineers/programmers from around the world. Development is not budgeted by a single organization, but spread across many individuals, and the time and effort invested in the software is high. The result is either high quality code, or a plethora of features, or both. Note also that the source code access means that each programmer’s work is being scrutinized by an open peer review, which is one of the reasons for high quality code.
• Significant savings in R&D cost: More and more organizations are using open source rather than develop their own proprietary versions of the same software. One of the reasons has to be the large savings in R&D effort (which translates into R&D expenses, that reduces the bottom line).
• Faster time to market: As well as saving R&D costs, using open source means that time is not wasted in designing, implementing and testing the software which is already available. It involves significantly lesser effort in modifying existing software to meet a specific need, than to develop something from scratch. Again, this is a very generic statement, and exceptions will be there.
• Supplier Lock-In is prevented: During my tenure as a multimedia integration engineer in a mobile handset manufacturer, I had encountered a case where a chipset supplier had used closed, proprietary API’s to implement some media accelerators. This meant that for every small minor API change, every little enhancement or bug fix, we had to raise a request to this chipset supplier. This would take time, and of course, money as well. Had this handset manufacturer mandated that the supplier use open source API’s to implement their components, the situation would have been much easier. Anyone could have made the minor tweaks that are always needed when integrating complex software components. Moreover, the company could also choose to switch suppliers without risking costly changes in their own code (as the open API’s would ensure a new supplier’s implementations worked).

Smartphone's affinity for open source software

I had been preparing for a presentation on open source software, and I came up with an interesting find. Here's the 2011 market share of smartphone OS'es (numbers from TomiAhonen Almanac 2012), with call-outs indicating open source pedigree.

Open source use in smartphones (Source TomiAhonen 2012 Almanac)

 Android
Everyone knows that Android is an open eco-system, based on the GPL v2 Linux micro-kernel. The rest of the Android stack is also open source, licensed under the Apache license.


iOS
A bit of a surprise, isn't it? Even for a closed eco-system like Apple's the use of open source software is pretty widespread. The kernel of iOS & OSX is based on Darwin, another open source BSD licensed micro-kernel. Wikipedia has a good article on Darwin.
Besides the kernel, iOS also uses a variety of other open source components, for e.g. OpenGL ES, Independent JPEG Group's libjpeg, ANGLE (OpenGL to DirectX mapping), KISS FFT, json, among many others. If you don't believe me, check Settings->General->About->Legal on your iPhone!

Is HTC in trouble?

There have been quite a few blog posts about HTC's 4Q 2011 and full year 2011 performance. As stated here and here, the 4Q results were disappointing, while the full year results were encouraging. So let's look at the company's full year results (adjusted for exchange rates of New Taiwanese Dollar to US Dollar).

HTC yearly revenues, 2009 to 2011.

HTC revenues grew 111% in 2010, and 61.5% in 2011. These are pretty robust numbers. The smartphone industry growth has been between 55% and 65% according to analyst estimates, and HTC's growth seems to be in line with the industry growth. It all looks fine, until we take a look at the quarterly numbers (again adjusted for exchange rates at end of each quarter).

Five Reasons Why Forbes May Be Wrong on Microsoft's Windows Phone

My LinkedIn homepage directed me to this article today on Forbes, titled “Five reasons why Microsoft Windows Phone will make a big splash”.

Interesting read, but sadly, not many of these 5 reasons cited by the author make much sense to me. Of course, they all make sense, in general, but I don’t see any of these 5 reasons strong enough to make a “big splash”!

Reason #1: Windows Phone Has A Totally Unique UI

Yes it does. So did RIM playbook, but that did not help RIM much, did it? Having a unique UI may or may not help make the product a success. Having a UI that makes something simpler, easier or faster to do may help, but still cannot guarantee success. 

Reason #2: Originality Means Fewer Forays Into The Patent Wars

Come on now! When you have a minefield of patents for everyday activities like clicking a button on a touch-screen, or uploading a photograph, no smartphone OS maker can be safe from patent wars. The only way to prevent patent wars is to build a big & mean portfolio of patents as a deterrent to any infringement claims. I believe Microsoft already has this, and so the point of fewer patent wars is valid, but the reason is not "originality".

Reason #3: Uniformity Across All Devices & Carriers

iOS already has this. So what's new? And who says that tight control and uniformity is the key to success in smartphones? We're talking about the world here, not USA. Android's "clopen" system is successful, Apple's closed iOS is also successful. Microsoft has just chosen to go the Apple way instead of the Google way.

Goodbye Symbian, Hello iOS

I finally joined the iOS bandwagon by purchasing a iPhone 3GS from Aritel yesterday. It was available at a discount, because of the launch of 4S (I guess Airtel needs to clear it’s inventory). 

iPhone 3GS in the box.

Contents of the box (everything but the swiss knife on the right).

Why iPhone/iOS?
This is my first non-Nokia phone in the last 11 years. This is my second non-Symbian phone (I breifly used a S40 phone) in the same time. To be frank, I never thought I would buy an iPhone. A Nokia Symbian phone has always offered the best value-for-money while still satisfying the techno-geek in me. But as Nokia CEO decided to kill Symbian, I thought it’s about time I looked at some other smartphone OS. I had to choose between Android or iOS, because the other OS’s out there are not for me! Windows Phone is something that I personally will never buy, the reason for which I have ranted on in an older post. Blackberry is in more trouble than Symbian, and I strongly believe it will not last. The smartphone market is what economist call a "networked market" where it’s either a virtuous cycle or a vicious cycle.
My first choice was, of course, Android. However, after researching a bit, and asking a few questions to Android owners I realized that Android is just the new Symbian. Android’s evolution is quite similar to that of Symbian... a large technology firm is backing it and driving the roadmaps, many handset manufacturers have adopted it, ported it on a wide variety of hardware, ranging from ARM9 to ARM-Cortex-A9, and customized the UI. Android users also give a pretty underwhelming response when asked for feedback. The most general response from Android users is "It’s a pretty attractive phone, but it has a few nagging problems". I think Android will soon face all the problems that Symbian did, and within the next 5 years will start declining. But that’s all my prediction, which is based on no data to speak of, except an uncanny resemblance to the Symbian story. My logic, whether flawed or otherwise, convinced me to not buy an Android phone.
So I was left with iOS, and seeing the prices of iPhone 4, and 4S in India, I kind of gave up on the idea of buying a new phone. The iPhone 4 costs Rs. 38,000, while 4S is Rs. 44,500. For that much I could buy a nice laptop, thank you very much! However, while searching the airtel website for iPhones, I noticed that they are still selling the 3S, for a much more affordable price. At Rs. 20,900, it is cheaper than my existing N8. I guess this was the best way to jump on the iOS bandwagon. I researched the technical specs a bit, and found that although it runs at the same clock speed as the N8, it’s based on Cortex A8, which is faster than the ARM11 on my existing Nokia N8.

2011 Smartphone Market Share

What would be the 2011 market share for smartphones by OS platform? If predictions by Gartner & IDC are anything to go by, Android is clearly the winner & Windows Phone at the bottom. Both Gartner and IDC have released their forecast for 2011 market shares. Both have similar figures, as expected, but Gartner is slightly more optimistic iOS and Windows share. But overall, their figures differ by 1 to 1.5% only.

The chart above is a average of the two analytic firm's predictions. 


Looking at this, I could draw the following conclusions...

• Android is the new Symbian
• iOS is the new Blackberry
• RIM itself is down but not out
• Windows - Long way to go to become anywhere close to the "3rd ecosystem".

Android strikes back!

Aha! This will be interesting now. HTC is sue-ing Apple using patents it bought from Google, which Google got from Motorola.

Everyone in the industry knew that Google is stocking up patent ammunition to lead it's counter-attack against Apple & Microsoft. This move also redeems Google's lost credibility among Android licensees (handset manufacturers like HTC and Samsung) when it acquired Motorola. I would expect very soon to hear news of Samsung fighting back the injunctions against Galaxy tabs with similar Google-supplied patents. A proxy patent war has started. Clash of the titans, indeed!