Nokia's Present & Future

Discussion in 'Mobile Industry' started by Arun, Dec 22, 2010.

  1. ToTTenTranz

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    An interesting tidbit I found in one of Engadget's commenters:


    Add the $120 million for the Intrinsity acquisition and Apple sits at around $1b and Nokia spends $1.6b.

    Now these numbers make a whole lot more sense. Why would Bernstein add the network infrastructure and GPS navigation R&D costs from Nokia Corp. to the pool of phone R&D is my real question now.
     
  2. tangey

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    I'm not entirely sure the graph is of any use ANYHOW, if you are looking for mobile handset R&D spend.
    The companies probably don't give any granularity of the R&D spend in terms of different departments, so for example the figure quoted for Apple is most likely their entire R&D spend, which would include ipad appletv, the entire mac line etc. Nokia's in turn probably includes network R&D etc.
     
  3. silent_guy

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    Following your kind of flawed reasoning the acquisition cost of NavTeq by Nokia should be considered an R&D expense.

    The Intrinsity acquisition is a one time investment.

    The salaries/operation expenses of the Intrinsity acquisition are a going concern that will recur every quarter.
     
  4. hoho

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    Nokia breakdown is pretty decent, too bad others don't seem to have it in such a detail
    [​IMG]
    My only hope is that all that money spent on Symbian basically just means they were making QT work on it and to make meego/symbian similar enough to allow devs to target them as one.
     
  5. ToTTenTranz

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    NavTeq was acquired in 2008. In what context of your flawless reasoning should that be in 2010's R&D expenses?
    Besides, Intrinsity is basically a company that only does R&D. NavTeq is a GPS imaging acquisition and map-creating company. Buying NavTeq means getting a lifetime license for their maps for free.
     
    #85 ToTTenTranz, Feb 4, 2011
    Last edited by a moderator: Feb 4, 2011
  6. silent_guy

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    Buying Intrinsity means a life time of expertise in CPU design. Both companies were acquiring and selling IP.

    And it's not My flawless reasoning, it's the reasoning of companies that are practicing GAAP based accounting. All US companies, in other words.

    But do continue: in your world, should the Intrinsity price only be charged during the quarter were it was acquired? Do you want to spread the cost over 1 year? 2 years? 5 years? If so, you would have to split the $112M over a number of years instead of adding it just once as an R&D cost. You're not doing that either.

    Which makes think that you're adding it only for 2010.

    Fine, then. In that case, it'll be fair game to not consider that $112M for the year 2011 when comparing Apple and Nokia R&D. After all, you're doing the same for Navteq.

    Right?
     
  7. Arun

    Arun Unknown.
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    Woah, Symbian User Experience: Headcount 5000?! If that's true, they better have something to show for it sooner rather than later...
    On a related note: ST-Ericsson hinted it'd probably be Q3 rather than Q2 for U8500 product availability in their latest CC, so that's a one quarter delay.
     
  8. DavidC

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    The CPU in Oak Trail is a 3W part that runs Windows. Moorestown's CPU is a 2.2W part, so that's more likely. But maybe its still too high for a smartphone, and it could all be a rumor. Wasn't there a statement by Nokia that they won't have Moorestown based parts at least for smartphones?
     
  9. tangey

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    the latest LATEST rumour regarding Nokia and intel, is that it will be medfield.
     
  10. ToTTenTranz

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    Intrinsity is hardly a "lifetime" of expertize, since the company was founded in 1997. Furthermore, it's a small and fabless semiconductor company, which only does R&D.
    NavTeq is the largest satelite-imaging company in the world, with their maps being used in 85% of all the GPS map softwares sold. It also does its own R&D (which, of course, appear in Nokia's total R&D expenses) but it's mainly an assets company. That's the way I see it, at least.

    The costs of R&D should be included when the payments are done. Doesn't it make sense..? And why wouldn't Apple pay the 120 million upfront? They're sitting on an amount of cash reserves that is orders of magnitude higher than $100M.


    Yes, sorry. I meant Medfield and not Oak Trail.
     
  11. silent_guy

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    14 years is an eternity in semiconductors but we're digressing. :wink:

    What you don't want to accept is that there is a difference between investments and operating expenses. Any accountant will tell you it's ridiculous to put them in the same box. It makes it impossible to access quarterly cost of running your business. Adding a one time, large cost to one particular quarter also doesn't make sense for something that's supposed to have benefits over a much longer term.

    In the short term, the acquisition of Intrinsity has almost no benefits to Apple: they could simply have continued to pay whatever royalities they are paying. Over the longer term, however, there are distinct benefits: they are shutting down access for competitors to a high quality CPU core, they get total control over the roadmap, they don't have to pay royalties anymore and they maybe also can reallocate some engineers that had to support other companies with their own projects.
    All those benefits play over a much longer term than just a quarter.

    Surprising as it may sound, the goal of accounting is to make it possible to compare businesses (or the same business over time) with similar kinds of metrics. Throw everything on one pile, or worse, do it selectively and you get a mess that makes comparisons impossible.

    All this was in the context of R&D expenses: as an investor, I want to be able to see a graph of R&D expenses over time. If you're going to add one time events like a $112M investment here or a $8B investment there, the graph is worthless.

    It's IP, no matter how you slice it. And it got devalued by a factor, only months after the acquisition by Nokia, the day Google decided to add navigation for free to Android. The timing by Nokia was just as bad as the timing of AMD when they decided to buy ATI.

    No, it doesn't make sense at all. You're trying to subvert centuries of accounting rules. Please pick up an accounting 101 book. This is something that's probably discussed in the first chapter.

    If you pay $100M today for a state of the art lithography machine, do you honestly believe it's going to end up in the box for operating expenses? That machine will serve you well for, say, 4 years, so you're going account for it as a depreciating asset over that time. (BTW: if you don't, the IRS will probably have a good word with you.)

    Huh? Of course Apple made the payment right away. See lithography machine. The moment and the way you pay for something is completely orthogonal to the way you account for it.
     
  12. hoho

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    http://www.engadget.com/2011/02/08/nokia-ceo-stephen-elop-rallies-troops-in-brutally-honest-burnin/

    I'd be rather sad if they really decide to ditch Meego after spending billions on it and hiring hundreds of workers in last half a year. Yea, they spent way too much time and effort trying to keep Symbian alive and way too little developing Maemo/Meego. They should have switched their effor to Maemo months before N900 release, not in last few months.

    I wonder how other Meego partners are going to take it and how will it affect QT. I'd be rather pissed if that means Nokia won't be developing QT as much any more, it has been a toolkit a couple of generations ahead of pretty much anything else and pure joy to work with.
     
  13. Arun

    Arun Unknown.
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    If I had to guess:
    - Symbian for all low-end/mid-range 3G phones (S40 still for most if not all 2G phones)
    - Windows Phone 7.5 for upper mid-range/high-end starting in late Q3
    - MeeGo for tablets, and maybe a few Intel Atom-only phones
    - (If MeeGo fails for tablets, focus on Windows 8 in 2012/13)

    And yes, I do realise I've insisted both TI and ST-E had design wins for MeeGo, but obviously strategic decisions at the CEO level would supersede all previous roadmaps... Also, I would expect the partners on Windows Phone 7.5 to be Qualcomm first and later maybe Texas Instruments (or a more surprising option). If I'm right, this is not especially good news for ST-E (although at least they'll still have their Symbian U8500 design wins I'm sure, and would compete for the slim baseband slot next to TI's application processors...)
     
  14. Lazy8s

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    Texas Instruments went SGX544 as opposed to 543, so they're definitely looking to get some Windows Phone business.
     
  15. Arun

    Arun Unknown.
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    Is full DX9 support actually needed for Windows Phone? Pretty sure it isn't but I could be wrong. But it's definitively necessary for another segment OMAP5 is targeting: Windows 8-based tablets ;) ST-Ericsson's latest financial CC specifically mentioned their lack of DX9 support as the reason they weren't part of the early partners for Windows 8.
     
  16. Lazy8s

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    I should've said Windows business in general and not just Windows Phone (I don't think Adreno 200 is DirectX 9L3 compliant), as tablets are definitely a focus. Future versions of Windows Phones, too.
     
  17. Rys

    Rys Graphics @ AMD
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    I honestly can't fathom why Nokia would decide to equip it's upper mid-rage and high-end smartphones with yet another OS it has next to no experience with, while having a suitable OS already in-house! Can someone explain to me why going with WP makes any more sense than dumping Symbian to focus 100% of efforts on MeeGo, an OS they already have significant experience and engineering talent working on, alongside a very strong partner no less.

    WP7 would (highly likely) mean showing Intel the finger, ignoring MeeGo, and going with yet another hardware supplier they don't tend to use.

    I have no visibility at all of what might happen, but WP7 adoption at Nokia seems particularly nuts.
     
  18. Lazy8s

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    I don't think pride would get in the way of Android for them (last resort and all that); having their own OS, though, would make a lot of business sense considering their substantial development resources.

    If only they could get a clear vision and focus on one very scalable platform.
     
  19. ToTTenTranz

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    I'm honetly shocked with these statements from Elop, and I still have my doubts about its authenticity.
    The guy constantly sounds like those anti-nokia troll commenters in Engadget, with the burning platform thing.

    Sure, they need to somehow enter the north-american market, and the last years told us that they obviously can't do it without an USA-native platform (engadget, gizmodo et al keep making sure that Symbian gets no mindshare at all). Assuming a customized WP7 platform for the north-american market would make sense. Just give the americans what the americans want (WP7) and keep the stuff that's working well for the rest of the world.

    Not so much with Android which could be on its way to spread too thin with all the fragmentation. He keeps showing his fear for chinese Android handset makers, but those are the very same makers that screwed Windows Mobile 6.5 (and below) and are on their way to do the same for Android.

    It sounds like the guy took all the expertize that Nokia built up about the cellphone market and threw it in the garbage, and is now sounding like a trollish newbie. I'm worried about Nokia and this new CEO of theirs.


    It really sounds like Symbian is going to get flusehd ("burning platform?!").
    Let me say just this: I offered a Milestone with Android to my girlfriend in Christmas, advised my mom to give my father a WP7 Omnia7 for his birthday and I have both an Android X10 Mini and an N8.
    The Symbian^3 experience I have with my N8 owns nothing to either Android or WP7. The phone is very fast, very responsive, does everything I want in a quick, intuitive and easy way. HDMI-out and just media playback are just perfect, OVI Store is on par with Android Market or WP7 Market (mainly with the last update that now supports QT apps). OVI Music has just about everything I searched for, so far -> with DRM-free files. The free-for-all OVI Maps is just as good as the NDrive I payed for last year. Mail, Calendar and Contacts synching are just as effective as the integrated synch from Android handsets.
    Every week we have Nokia Labs launching interesting new features and gimmicks completely for free, like Nokia Bubbles, Big Screen, Diagnostics, etc.
    Not to mention the device's spectacular camera and video features (of course, these could be considered platform-agnostic).


    That speech would have made perfect sense last year. Symbian^1 was poor, outdated and slow. Processing hardware was sub-par and the let's-make-100-different-devices-per-year strategy didn't make up for it.

    But making this speech with the current Symbian platform? The guy is just:

    a) Not Stephen Elop - which would make total sense

    b) With his head stuck so deep inside his ass that he doesn't have a clue how good Symbian^3 is right now. (There were more N8s sold than all WP7 phones combined, for god's sake!)

    c) Trying to win over shareholders and USA-based analysts by simply switching the world's most popular mobile OS over to USA-based OSs, as stupid and unproductive as that may sound.

    d) A combination of the above.

    IMHO? If this is authentic, someone needs to purge that guy from Nokia really fast, before he sinks the company now that it's definitely in the right direction.
     
  20. Arun

    Arun Unknown.
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    Rys: Just to be clear: I'm describing what I think is most likely to happen, not what I would personally do. Several factors contribute into that reasoning, including Nokia's CEO past as a Microsoft executive and what investors/analysts/press are most likely to consider a good idea (even if it was wrong). The problem I see with your idea is that dumping Symbian to focus 100% on MeeGo is going to be seen by everyone as a very risky move given the lack of existing MeeGo devices, and in fact I'd consider it too risky myself.

    FWIW, if I was in a position to those make those decisions today, what I would do is:
    - Continue releasing Symbian phones with the ST-Ericsson U8500 and the new Broadcom 40nm platform for the next ~3 years, but do not support any future platform on it, and publicly announce *immediately* that all new 3G phones from top to bottom will be on MeeGo by early 2014. Possibly transition S60 as a S40 replacement in 2G to maintain its credibility as an application platform.
    - Focus massively on MeeGo, shifting more than 60% of Symbian software R&D resources to it by the end of the year. Introduce the ST-Ericsson U5500 as a low-end MeeGo platform, focus on 32nm Intel and 28nm OMAP4/OMAP5 for the high-end. Focus most resources on getting two MeeGo phones on the market by the end of the year: Intel Medfield high-end and ST-Ericsson U5500 low-end.
    - Announce a joint MeeGo/Windows 8 strategy for tablets with all future MeeGo tablets being user-upgradable to Windows 8 dual-boot for a fee.

    Most important of all, I would be very transparent about platforms and processors because unlike the market leading Nokia of the past, today's Nokia really needs transparency to maintain the perception of momentum. I would announce all phones 5-6 months in advance with a slightly pessimistic ETA to make sure I can deliver. Oh wait, even more important: I'm not Nokia CEO, so I just wasted 15 minutes writing this crap ;)

    ToTTenTranz: I must admit I don't like the idea of going for Windows Phone 7 personally (see above for what I would do) and I think it's at least as risky as what Nokia is doing right now, so I agree with some of your points. But I disagree completely with your assessment of that memo (which apparently is indeed real) - it's not a bad summary of Nokia's problems today. He omits the positive aspects, but understand: he *needs* to omit the positive aspects to restore confidence. If all he said was "Our situation isn't very good today but I believe things are improving so I won't need to make any major changes" he'd get laughed out of the room on Capital Markets Day on the 11th.

    If Nokia decides to announce a very incremental strategy on Friday that continues to focus exclusively on Symbian on MeeGo, then this memo will help a LOT to make that strategy credible because it proves he really believes it's their best path forward despite being aware of all the criticisms in the market about it and even sharing some of them. So it could just be a clever ploy. I think at a minimum we might hear something about Windows Phone 7 for the USA market (remember that USA-only Qualcomm partnership that went nowhere? It could be refocusing on Windows Phone), but we'll see!
     
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