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Why did investors who rallied to Nokia two weeks ago, when new CEO Stephen Elop hinted at a Microsoft deal, desert the company on Friday?

The market wiped $17bn off Nokia's share price on Black Friday, once the strategy was disclosed, with the stock losing almost 14 per cent in value in a day. The fall continues: three per cent down this morning in pre-market trading.

Some reports suggest that Harlow said the first Nokia Windows Phone will appear in 2011. In fact, she made no such commitment. Pressed when the first WP7 devices would appear she merely noted that, "I can't tell you when, but my boss has told me he would be much happier if that time was in 2011." And that was all.

A wire report claiming that "Microsoft is paying Nokia billions of dollars to switch to Windows Phone 7" is equally ill-founded.

What Elop actually said was that the "net benefit" of the strategy changes he announced would ultimately save Nokia billions. "The value transferred to Nokia is measured in billions not millions," he said.

That's not the same thing. Ending Symbian and Meego development, and using Microsoft as an outsourced supplier, ought to save substantial R&D costs. Perhaps this will add up to billions of dollars, eventually. But this doesn't mean Microsoft is providing nine-figure marketing and engineering support - as the headline on the original wire report suggests.

Let's return to the original question - why do investors think Elop's strategy is a dud today, when they were so enticed by the prospect of a fresh start just two weeks ago? Analysts called for Nokia to offer competitive smartphones once again, and cut its costs, and so rallied to heavy hints Elop dropped of using an outside platform. Hasn't he ushered in the changes they craved?

Reality sinks in

One factor is that Elop has gambled on an all-or-nothing strategy, kicking the ground from under Symbian (which is being grandfathered) and Meego (which becomes a small labs project). This increases the short-term and medium-term risks - risks which are now being factored into the share price.

Some investors are also waking up to the reality that Windows Phone 7 is much less advanced than many suppose. It is not a carrier-grade OS and lacks many of the tick-box features operators and users demand. In many ways it resembles Symbian circa 2001. It's a long way from being "finished" (let alone "Finnish-ed"... yes) and it's going to take a lot of work to reach parity with the competition - who of course, aren't standing still. Nokia's engineers know how hard this task is, having laboured to put them in Symbian (and lately into Meego).

The short-term danger is that customers turn away from this year's Nokia Symbian offerings for 2011, declining to spend money on a dead-end platform. Perhaps this is overstated, as Symbian had poor take-up as a "platform" for content and applications in comparison to Apple and Android.

So Harlow talked last night about how Symbian will be "continuously renewed". The only thing that can assure investors in the long run is great Windows devices, but they are some way away. And even after the latest press statements (and cynical leaks of hurriedly-drawn device mockups to Engadget), nobody knows when that will be. ®

Bootnote

It's worth putting Black Friday in perspective. Nokia lost $8.7bn in value as shares slid, to value the company at $35bn. Nokia's value in November 2007 was $148.5bn.

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