Quick Review of Windows Phone/Lumia 820

About a month back, I broke my self-imposed promise of never buying a Windows Phone, and purchased a Lumia 820. There are a few reasons why I chose a Lumia over the iPhones or Androids.

• Why not an Upgraded iPhone? - My previous phone was the iPhone 3GS, which I thoroughly enjoyed for about 1.5 years. I missed a good primary camera (before the iPhone I had a Nokia N8), front facing camera for Skype calls, good video recording, and a battery that lasts the whole day. The 3GS was a great phone... actually, make that a great "entertainment device". As a phone, the iPhone was moderately good. Several times the phone would lose network connectivity, and not tell me about it (i.e. the RSSI indicators still sow full signal, but drop down when I try to make a call). I used to get a lot of complaints from people trying to get in touch with me, that my phone's always unreachable. Well, despite this issue, I loved using the phone, for surfing, facebook'ing, twitter'ing, keeping track of my stocks, and catching up on emails. But the minimal customization meant that I was getting tired of the UI... I guess this is bound to happen, as we use our phones every hour that we're awake. So when I was thinking of an upgrade, I was sure it's not going to be another iPhone. Although the Apple store was running a good offer of 7,000 bucks off on the iPhone 4, and 4S, but by now I was questioning what good would it be buying a phone which looks and feels pretty much like my old phone, but has some incremental improvements. So no iPhone for me!
• Why not Android? - Android would have made the most sense, since I recently landed a job with an Android OEM, and was eligible for a product discount, but somehow I didn't want an Android phone. The main reason (and a very personal reason, IMHO strictly), is that I find the Android UI very un-aesthetically designed. The different screens have no unifying concept, and it looks like messy patchwork to me. Maybe it was my work - the fact that I have to handle these phones most of my working hours may have built a "familiarity breeds contempt" syndrome. So again, no Android.
• Why Lumia? - One reason for leaning towards Lumia is of course, Nokia. Firstly, I worked for Nokia for a good 6.5 years (5 years as a employee, 1.5 years as a Accenture sub-contractor). There's still a good bit of emotional connect with the company, and I do want them to do well, as it's a good company. Emphasis on "good" is the topic of a later post maybe. Now, besides this emotional connect, there were a few things that I looked forward to from a Nokia phone - firstly, the great design. The Lumia devices all look great, and Nokia has even won design awards for the 720, 820 and 920 series (or was it 620, 720... I forget, but you get the point). 

Sure looks good, just sitting there!

The second reason for Lumia was that as a ex-Nokia customer, there are a few things that I can take for granted - for e.g. the camera will be great, the audio quality excellent, and the battery life better than either iOS or Android. The presence of HAAC (High Amplitude Audio Capture) was also a feature that I was looking forward to, as I am an amateur musician.
At this point, maybe I could also explain why I chose a 820, and not the then-flagship 920... well the reason was that I was still not too sure about the Windows Phone platform. So I thought, instead of paying big bucks for the 920, and then having the possibility of not liking the phone interface, and cursing myself later, the 820 was a more affordable way to take a peek at how good or bad WP8 really is.

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 2

In my last post, I wrote an overview of what is open source, and common concepts for open source licenses. In this post, I would focus on a few popular licenses in open source software.

GNU General Public License (GPL)

The GNU General Public License is the license under which the GNU operating system is licensed out. The license has been authored by Richard Stallman’s Free Software Foundation, and is a copyleft license. The current version of the license is version 3.0, however the previous version 2.0 is also quite popular. Since I personally have not dealt with version 3.0, I would stick to version 2.0 in this post.
The GPL v2.0 starts with a preamble, which summarizes the philosophy behind the license. In other words, the belief that software should be free to run, modify, and distribute (while noting that "free" means freedom, and not free of cost). It also points out that there are certain restrictions which are necessary to ensure that a user of the software does not limit the freedom of other users. Paragraph-4 in the preamble section states...

This is a good summary of what the license is trying to achieve. The authors believe that the software should be available to all to use and modify freely, however, such modifications should not result in the restriction of the freedoms of other users. The preamble goes on to mention that in order to enforce this, the authors assert their copyright over the software, and are licensing it out to users under the terms and conditions of the next section. The preamble ends with an explicit patent grant.

The preamble is followed by the main "Terms & Conditions for Copying, Distribution and Modification" section. Paragraph-0 states that the license applies to both the original software work, and any derivative works. The term "derivative works" is defined as "...a work containing the Program or a portion of it, either verbatim or with modifications and/or translated into another language". This is a bit generic definition, and is one reason why GPL is not very popular for use in commercial software products. Companies that want to use open source along with their proprietary software architecture are deterred by this wide definition of derivative works. The concern is that under such a definition, all of their software stack would become a "derivate work" if they link with the open source library, and/or use the functions of the open source library. This would cause proprietary software to become "contaminated" - a term used to define the situation where proprietary code has to be licensed out in source code form, because it comes under the copyleft clause of an open source license. However, in certain cases - notably in the Linux kernel license - the authors clearly state what they consider as derivative works, and what are unrelated code. Here is a snippet of the explicit notice put in the Linux license (rest of the license is GPL v2.0)

Estimates for Nokia 1Q2012

Update on 19-April

Results are now avialable at http://www.results.nokia.com/results/Nokia_results2012Q1e.pdf

I was close on the revenue, but way underestimated the loss. In particular NSN made bigger losses than I expected.


My estimate of Revenue: EUR 7.8B
Actual Revenue            : EUR 7.4B
My estiamte of Losses   : EUR 0.3B
Actual Losses               : EUR 1.5B

Original Post from 14-April

Just to make it clear in the beginning... Nokia reveals it’s 1Q 2012 earnings next Thursday (19-April-2012), and this is just an estimate based on recent announcements made by Nokia. Last week, Nokia lowered it’s outlook for it’s Devices & Services business in the first quarter of 2012.


What was stated
Nokia stated that in 1Q 2012

• Operating margin was negative 3% for Devices & Services.
• Net sales was 4.2 billion EUR.
• Out of the above, Mobile Phone (i.e. feature phones) sales was 2.3 billion, while Smart Devices sales was 1.7 billion EUR.
• Volumes were 71 million feature phones and 12 million smart phones.
• Gross Margins was 25% overall, with 26% in Mobile Phones & 16% in Smart Devices.
• Cash & liquid assets were 4.9 billion EUR.

Interpretation
Devices & Services forms the largest business unit in Nokia, followed by Nokia-Siemens Networks, and lastly, Location & Commerce. Nokia reports Devices & Services sales as the summation of the sales of the Smart Devices & Mobile Phones. In the last quarter, i.e. Q4 2011, Nokia sold 19.6 million smart phones. We know that this number has decreased to 12 million now. Similarly, in Q4 2011, Nokia sold 93.9 million feature phones, and this number has reduced to 71 million.

Devices & Services	Q4 2011	Q1 2012	QoQ Change
Smart Devices Net Sales	2747	1700	-38.11%
Mobile Phones Net Sales	3040	2300	-24.34%
Other (Royalties, Microsoft Payments etc.)	210	200
Sales	5997	4200	-29.96%
Smart Devices Volumes (million)	19.6	12	-38.78%
Mobile Phones Volumes (million)	93.9	71	-24.39%
Volumes	113.5	83	-26.87%
Smart Devices Gross Profit	546.65	272	-50.24%
Mobile Phones Gross Profit	842.08	598	-28.99%
Gross Profit	1547.23	1050	-32.14%
Operating Profit	293.85	-126	-142.88%

Figures in miillion EUR

With these estimated results in devices & services, if I add the estimated sales & profits expected in Location & Commerce and Nokia-Siemens Networks, then it should give the full estimated Nokia P&L statement. Location & Commerce sales have been too small (range of 200~300 million) to impact the top line as much as the other divisions. Last quarter (Q4 2011) it impacted the bottom line due to a 1 billion EUR goodwill impairment (discussed in a previous post). The nature of this loss could be considered a one-time event, so I assume it has no impact on the profits as well. With Nokia-Siemens Networks (NSN), the sales have been declining at a rate of 4% QoQ in Q4 2011. Assuming this same rate continues, this division should generate about 3.6 to 3.7 billion EUR in revenue. NSN is expected to have an operating margin of -5%, or, in other words, a loss of about 183 million. So combining these, we get the expected Nokia Q1 2012 results below (figures in millions).

Full Nokia	Q1 2012
Sales	7860
Net Profit	-309
Device Volumes	83

Assuming no other source of profits (for e.g. royalty payments, Microsoft payments etc.), it seems like Nokia will make a loss of about 300 million EUR this quarter.

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!