Category Archives: Nokia

Microkia – Birth of a New Species? or Death of Old Ones?

Last Week Nokia announced that they were ditching their Symbian Smartphone OS in favor of Windows Mobile 7.  For those consumers who live, work and play in North America this announcement barely warrants a yawn.  For the rest of the world- the world in which Nokia has been the number one mobile device for what seems like forever – this is big news.

I was an “involved player” in the early formation of Symbian.  At the time a Palm-like device from Psion was dominant in Europe.  The three intelligent organizers (as they were called 14 years ago) came from Palm, Psion and Microsoft.  The conventional wisdom, at the time was to not allow Microsoft to establish a monopolistic stranglehold on mobile platforms, like it did in the PC.

From this strategy grew the Symbian operating system that was used primarily by Nokia and Ericsson. Symbian was based on the Psion OS.  During the BiCE (Before Iphone common era), the coolest smartphones were in Europe and ran Symbian.  Microsoft tried to continually adapt a desktop centric design philosophy to mobile devices.   They had very modest success, far less than their corporate ego would admit, externally or internally.

The good news is that the strategy worked.  Microsoft never established a monopolistic foothold in the mobile space.  The industry exchanged one dominant force for another. Apple and Google have established that position in this next generation.

In the AiCE (After iPhone Common Era) period the world changed.

Nokia’s dominance which was (is) based on great physical phone design, radio interfaces, button placement, and distribution, suddenly seemed less relevant.

The great Symbian operating system was like the  Neanderthals, once Homo-sapiens appeared.

A report released just 4 days ago listed Apple with a 45% share of Smartphones in Europe, followed by 16% for both Android and Blackberry.  Symbian had fallen to around 12%, and is in free fall.  Nokia’s Smartphone share in the largest Smartphone market (North America) is close to nil.  On a worldwide basis, Symbian  has just been eclipsed as the leader by Android with both around 30% share.

Against this backdrop, Steve Elop the CEO of Nokia and most recently a top executive at Microsoft, issued an internal Memo in which he likened the Nokia business to a burning oil platform with multiple fires. Great imagery! (His complete memo to the Nokia troops is at the bottom of this blog)

Meanwhile Microsoft has also been ablaze, except they continue a public stance of  “damn the torpedoes, full speed ahead”.  They seem to have temporarily righted their ship with Windows 7 sales, mainly because businesses refused to buy the disastrous Windows Vista.   They are becoming the Xerox of the new millennium- Lots of great ideas and ground breaking technologies,  with very poor execution.

I have mentioned in previous blog articles that the Windows 7 Mobile, on the surface looks like a viable technology. However, the product is very late to the party, is called “Windows”, and its marketing was linked to Zune (Do you have one?) and Xbox.  Good ideas, poor execution.

Against this backdrop, Steve Elop hooks up with his former Boss, Steve Balmer and the two sinking ships attempt to tie themselves together to stay afloat.  Nokia will have to navigate through the support issues for the millions of Symbian consumers and also there now seemingly aborted relationship with Intel on the Meego Smartphone platform.  Nokia is rationalizing themselves as a hardware platform vendor, not a software producer.  They are making a deal that seemed unthinkable for over a decade.  They have been pushed into a partnership with Microsoft by the success of Apple and Google.

The real winner is Microsoft.  Nokia is betting their Smartphone future with the Windows Platform and hoping that it turns around its plummeting Smartphone share.   Microsoft is risking much less because they have much less to risk in the mobile space.  They have a single digit of market share.  The announced Micorosoft relationship with the largest manufacturer of mobile devices, as they say, “Can’t hurt!”.

The integration and production of  “Microkia” phones will take at least 6 months and  more likely a year.  That’s another year of innovation and product releases from Apple and Google.

The Micorosft /Nokia combination must define a new class of Smartphone, perhaps aimed at developing markets , that is a clear differentiation from the highend iPhone and Droids.   Without a new Smartphone species, Microsoft and Nokia with continue to look like Neanderthals and suffer a similar fate.

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Steven Elop – CEO of Nokia – Memo to his troops

Hello there,

There is a pertinent story about a man who was working on an oil platform in the North Sea. He woke up one night from a loud explosion, which suddenly set his entire oil platform on fire. In mere moments, he was surrounded by flames. Through the smoke and heat, he barely made his way out of the chaos to the platform’s edge. When he looked down over the edge, all he could see were the dark, cold, foreboding Atlantic waters.

As the fire approached him, the man had mere seconds to react. He could stand on the platform, and inevitably be consumed by the burning flames. Or, he could plunge 30 meters in to the freezing waters. The man was standing upon a “burning platform,” and he needed to make a choice.

He decided to jump. It was unexpected. In ordinary circumstances, the man would never consider plunging into icy waters. But these were not ordinary times – his platform was on fire. The man survived the fall and the waters. After he was rescued, he noted that a “burning platform” caused a radical change in his behaviour.

We too, are standing on a “burning platform,” and we must decide how we are going to change our behaviour.

Over the past few months, I’ve shared with you what I’ve heard from our shareholders, operators, developers, suppliers and from you. Today, I’m going to share what I’ve learned and what I have come to believe.

I have learned that we are standing on a burning platform.

And, we have more than one explosion – we have multiple points of scorching heat that are fuelling a blazing fire around us.

For example, there is intense heat coming from our competitors, more rapidly than we ever expected. Apple disrupted the market by redefining the smartphone and attracting developers to a closed, but very powerful ecosystem.

In 2008, Apple’s market share in the $300+ price range was 25 percent; by 2010 it escalated to 61 percent. They are enjoying a tremendous growth trajectory with a 78 percent earnings growth year over year in Q4 2010. Apple demonstrated that if designed well, consumers would buy a high-priced phone with a great experience and developers would build applications. They changed the game, and today, Apple owns the high-end range.

And then, there is Android. In about two years, Android created a platform that attracts application developers, service providers and hardware manufacturers. Android came in at the high-end, they are now winning the mid-range, and quickly they are going downstream to phones under €100. Google has become a gravitational force, drawing much of the industry’s innovation to its core.

Let’s not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally – taking share from us in emerging markets.

While competitors poured flames on our market share, what happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind.

The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.

We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.

At the midrange, we have Symbian. It has proven to be non-competitive in leading markets like North America. Additionally, Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements, leading to slowness in product development and also creating a disadvantage when we seek to take advantage of new hardware platforms. As a result, if we continue like before, we will get further and further behind, while our competitors advance further and further ahead.

At the lower-end price range, Chinese OEMs are cranking out a device much faster than, as one Nokia employee said only partially in jest, “the time that it takes us to polish a PowerPoint presentation.” They are fast, they are cheap, and they are challenging us.

And the truly perplexing aspect is that we’re not even fighting with the right weapons. We are still too often trying to approach each price range on a device-to-device basis.

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.

On Tuesday, Standard & Poor’s informed that they will put our A long term and A-1 short term ratings on negative credit watch. This is a similar rating action to the one that Moody’s took last week. Basically it means that during the next few weeks they will make an analysis of Nokia, and decide on a possible credit rating downgrade. Why are these credit agencies contemplating these changes? Because they are concerned about our competitiveness.

Consumer preference for Nokia declined worldwide. In the UK, our brand preference has slipped to 20 percent, which is 8 percent lower than last year. That means only 1 out of 5 people in the UK prefer Nokia to other brands. It’s also down in the other markets, which are traditionally our strongholds: Russia, Germany, Indonesia, UAE, and on and on and on.

How did we get to this point? Why did we fall behind when the world around us evolved?

This is what I have been trying to understand. I believe at least some of it has been due to our attitude inside Nokia. We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally.

Nokia, our platform is burning.

We are working on a path forward — a path to rebuild our market leadership. When we share the new strategy on February 11, it will be a huge effort to transform our company. But, I believe that together, we can face the challenges ahead of us. Together, we can choose to define our future.

The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future. He was able to tell his story. Now, we have a great opportunity to do the same.

Stephen.

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Filed under android, Apple, blackberry, Google, iphone, microsoft, mobile, Mobile Application Stores, mobile commerce, Nokia, smart phone, Smartphone, Windows, Windows Mobile, wireless

HP answers Palm Code Blue

New Icon on Palm Web OS Smartphone?

The Smartphone business has been very busy this week.  One day before Verizon officially releases the Droid Incredible (I am tracking mine via Federal Express), HP scoops in and acquires Palm.  Palm does have some pretty good technology and mobile handset know-how.  Do they have $1.2 Billion worth?  HP says yes and, anyway – that’s just a rounding error for them.

If you have seen the Web OS on Palm’s devices you have to be impressed.  Why this really makes sense for HP is that it is so much more than Smart Phones.  Perhaps you noticed that Apple iPad launch last month?  Tablet and netbook computing are the next disruptive technologies.   The Palm OS will likely make a bigger near term impact on HPs tablet and netbook devices.    This is not good news for Microsoft.

The OS landscape for the sub-laptop market is rapidly fragmenting.    Android from Google, Chrome OS (Google competing with itself?), Web OS from Palm, Apple OS4, Windows 7,  Windows 7 mobile,  RIM and Symbian (Nokia).   The environments that appear limited in scope are RIM and Windows 7 mobile (just SmartPhone) and Windows7, Chrome OS (Netbooks). Android, Palm Web OS, Apple OS and Symbian all provide (in theory) a unified sub-laptop platform.

What’s a developer to do?    Can an OS thrive with a single hardware vendor – Steve Jobs would certainly say yes, so why not HP?

The near term loser is likely Microsoft.  By the time they have Windows Mobile 7 devices in the market, HP/Palm should have been able to iterate an upgraded device and spend significant marketing bucks attracting both consumers and developers.

All of this competition is good for innovation and good for consumer price points.  It will take at least another 3-4 years for this market to shake out completely.  When the dust settles you can count on Apple and Microsoft still standing – their present overall positions in OS technology are virtually unassailable.  What will be interesting is their relative market strength in this very interesting sub-laptop market.

If you dominate this new market you are THE company for the next generation.

HP has placed their chips on the table.  Who is next?

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Filed under Acquisitions, blackberry, cloud computing, iPad, iphone, Ipod, microsoft, mobile, mobile advertising, Mobile Application Stores, netbooks, Nokia, smart phone, Smartphone, Social Media, Verizon, wireless

Apple Beware? Or Not

Two consumer electronic giants are challenging the Apple iPhone momentum. 

I will not use the popular cliche term iPhone killer.  The only way the iPhone will become extinct is if another Asteroid hits our planet.  Lets all settle on the less violent – iPhone competitor.



Here are the competitors:

These companies dominate their respective home product markets and now have designs on the iPhone.

Let’s size up this fight and make the predictions.

Nokia 5800 "Tube"

Nokia 5800 "Tube"

 

 

In one corner, weighing in at over 100M mobile phones per quarter and a recent announcement that their new touch screen “comes with music” phone, has sold over 1M units, a dominate 40% market leader in all major worldwide markets, is Nokia.

 (European whistles, and polite Finnish cheering)

 

In another corner, weighing in, and weighed down by Vista, with over $60B in yearly revenue, over 30% market share for desktop and laptop computers, with extra muscle in the enterprise space and an e-commerce website that ranks in the top 150 of all sites, worldwide – The Maven from Texas – Michael Dell and Dell Computers. 

(Yelping and waving of cowboy hats!)

 

Now entering the ring, the reigning touch screen champion.  They have sold nearly 14M iPhones, with 4.4M last quarter.  They have generated over 500M application downloads and have corporate revenues of about $10B quarter.  Ladies and Gentlemen welcome Apple.

  (Audible humming from Lycra clad Apple-philes on yoga mats)

Before I get hate mail from Blackberry users asking why I did not include them, I have to state the obvious.  Have you seen the Storm?  If you have, you know that the Blackberry product, while good at what it does, is not yet a threat to iPhone. Let’s move on.

(Boos, hisses, and lot’s of Tim Horton Donuts thrown into the ring, ehhh?)

Pre-game analysis:

If anyone is going to pose a serious challenge to Apple and iPhone it will be Nokia.

Nokia is the world class, world leader in mobile devices.  They have a competency that approaches Apple for usability.  They already have achieved massive economies of scale.  The Nokia  “Comes with Music Service” launched in the U.K. in 2007.

This service allows users to download as many songs as they want from the Nokia Music Store for 12 months after they have purchased a compatible Nokia handset.

Users may keep all the music that they download.  Songs are available from all of the major record labels; Universal, Sony BMG, EMI and Warner Music Group artists.

There have been bumps in the road for Nokia.  Their learning curve is taking some time.  With the introduction of the 5800 touch screen handset (the sexier name of this phone is the “Tube”), and over the air music downloads, they are getting close to getting it right.

With the kinks being worked out in the U.K., market expansion is expected in 2009.

Another big advantage that Nokia has is that the music industry wants a competitor to Apple and ITunes.  I give Nokia a better than 50/50 chance of being the significant 2nd place market chaser to the leading iPhone product.

Dell is a different story.  Dell’s Smartphone plans, or lack thereof, were chronicled in today’s New York Times.   The “paper of record” was less than kind to Dell’s prospects in the Smartphone arena.   The reasons for pessimism are simple.

3248Firstly, Dell is only barely in the handheld computing business.  Their handhelds have been product and market failures.    Both Apple and Nokia have huge successful handheld device product lines. Strike One.

Secondly, Dell is not known for software and user interface design.  They are basically a hardware commodity manufacturer.  Both Nokia and Apple are device software and usability leaders.   Strike Two


Lastly, Dell has no phone design experience.  To be fair, Apple did not have a resume of phone design expertise prior to the iPhone.   Apple has fixed many of the early phone issues with the Iphone. Nokia has forgotten more things about phone design and marketing, than Apple or Dell will ever learn over the next ten years.  Strike 2 and a half.

The strengths of Dell are in manufacturing, web marketing, enterprise accounts and sheer volume of PC boxes.

So, Dell enters this fight strategically and tactically handicapped.

Nokia, on the other hand, has better worldwide marketing clout in the mobile segment; tremendous handset design and manufacturing capability and partners who really want them to succeed.   An example of the Nokia thought process for communications design is the inclusion of a second camera on the front of the phone to facilitate video conferencing.  The “Tube” is powered by Symbian software and has borrowed from the iPhone in certain look and feel aspects

This will be the battlefield for touch screen, music enabled phones for the next several years.

So what should Apple do to compete with Nokia?  Simple, just be Apple.  Change the game every 6 months and out innovate Nokia and everyone else.  Nokia may compete in the music download feature, but Apple will define the product as something much broader.  The Iphone platform will out game, out video, out cool, the Nokia devices.

Nokia will try to out produce and provide their devices at a cost advantage to the iPhone.

While the outcome of this looming market battle will not be as exciting or definite as Santonio Holmes’ last minute catch in the Super Bowl, for wireless pundits it will provide enough material to fill a thousand blogs, and hundreds of trade mag articles.  The initial impact for consumers in the U.S. will be some increased price pressure on the iPhone, with a drop in its contract price to below $100.


Let the games begin.

Iphone and Tube

Iphone and Tube

 

 

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Authors Note:

By popular demand, I will start a lighthearted “DotMania” blog to relate all of the truly wacky things I have witnessed over my years in big and small companies.  In most cases I will change the names to protect the innocent, the guilty and everyone in between.  Watch for it on Fridays.  If anyone wants to contribute their stories to this regular feature, just send me an email with the details.  See you  on Friday’s at dotmania.wordpress.com


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Filed under Apple, blackberry, Dell, Google, iphone, mobile, Music, new media, Nokia, Smartphone, wireless