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January 08, 2010

Comments

Jason Grigsby

Good stuff as always Tomi. One thing you didn't talk about with the iPhone is the end of AT&T exclusivity. There are strong indications that this is the year exclusivity ends.

I think Apple is banking on growth in the U.S. due to the fact that people will be able to get a subsidized Verizon iPhone. Assuming that happens, there is likely to even be a percentage of current iPhone users who are not only excited by the new iPhone release, but also excited to get off of what they perceive as an inferior network.

FWIW, I not an Apple fanboy trying to defend the iPhone here. Just think there is an element to the market that you didn't touch on that may have some impact.

Rodrigo M

Why don't you just disclose that you Tomi Ahonen is a formar Nokia executive and Nokia is a major customer of your research and consulting activities?

Richard spence

Tomi

The big problem I have with this analysis is the definition of Smartphone. For me Apple have created the first "real" smartphone. One with an upgradeable o/s, a proper browser that can access the current internet and a way of changing its behavior - installing apps. Nokia/RIM to date do not produce smart phones, they produce *just* phones. You are not comparing like with like.

The iphone is an iconic device because (much like sony walkman did for personal stereos) it defines what a smartphone is. Nokia despite the years of opportunity have just missed the boat. Their market share is huge but it is for phones not smartphones - they have a lot of catching up to do. Symbian is a laughable operating system with poverty stricken, arcane development tools, don't get me started on RIM.

Dismiss the USA at your peril. The iphone has finally put a decent smartphone, with a decent development environment into the hands of American software developers and it is American garage software developers who have led the computer revolution from the 1970s to today. They will create the smart phone and applications services that the world will use.

I speak as a European mobile software developer who has created software services for both Nokia, RIM, Apple and Google Android.

Richard Spence
Bluetrail

Romain Criton

Great article Tomi, I'm especially glad to hear about Samsung's bada, which I feel has been largely downplayed by tech media. I too think that Samsung has what it takes to make it a big success, including on mid-range phones, a la Nokia with Symbian. Samsung is very clear about their intentions when they say on their website:
Samsung has developed bada to make these exclusive smartphone experiences available to everyone.

Romain Criton

@Richard Spence: well judging from your own smartphone criteria, I don't see where was the novelty in the iPhone:
- Upgradable OS: Symbian phones had it years before. Heck, even Windows Mobile phones were upgradable
- Proper browser that can access the "PC" Web: didn't Nokia have a WebKit-based browser in the N95, which was released before the iPhone ?
- Installable apps: Symbian & Windows Mobile had it from day one. iPhone DID NOT HAVE installable apps until 1 year after its original launch !

Many people believe that Apple has invented a whole lot of tech stuff, but that's not true: Apple integrates other's inventions, make them actually usable and turn them into unique, great products and bring them to the mass market.

It's not about ideas, it's about execution

Tomi Ahonen

Hi Jason, Rodrigo and Richard

Thank you all for your comments. I will reply to each individually.

Jason - thank you. Yes, its a good point and something Apple quite needs - to be on 'all' networks in all markets. There are a couple of problems with the Verizon scenario, particularly the one about CDMA. Apple so far has saved a ton of money in not attempting a CDMA variant, and putting all radio research into only the GSM platform. That gives them (with WCDMA/UMTS ie 3G and HSDPA ie 3.5G) the whole world. CDMA would only cover North America and a few selected other countries mostly in Asia and Latin America, amnd often second or third tier networks in those.

In almost all countries of CDMA the migration is away from CDMA to GSM. The fully operational and functional and 'modern' CDMA networks with easily 10-15 years of life left, have been switched off in favor of GSM in countries such as Australia, India, Mexico, Chile, South Korea etc. So for Apple now to put effort into a CDMA variant just to get onto Verizon's network would be tremendous effort for very modest potential gain. Note that going to T-Mobile gets half the gain for no extra R&D as T-Mobile is on GSM.

But regarless of whether its T-Mobile or Verison (and Sprint, CDMA would obviously open Sprint as well..) that would be to Apple's considerable advantage. They saw for exanmple in France that once the networks all started to carry the iPhone, its sales took off. Good point. I think I do mention it in the article but not explicitly..

Rodrigo - ok, if you insist. I added the paragraph pointing out also that I am a former Apple/Macintosh trainer (and Apple fan) and that my current reference customers include not just Nokia out of this list, but also Motorola, RIM, SonyEricsson and LG. I have other customers from this list who have not yet revealed in public that they work with me, so I have not disclosed those names of course. But you can imagine its almost anyone from the top, as also my reference customer list includes the world's largest mobile operator, China Mobile; the world's largest mobile operator group, Vodafone; the world's largest mobile networks supplier Ericsson; the world's largest mobile application developer Buongiorno; the world's largest mobile internet company NTT DoCoMo; the world's largest computer maker HP and the world's largest IT services company IBM. Are you happy now?

Richard - I hear you and I understand what you mean. And there are two points here in your comment. One is, whether Apple had been a transformational (smart)phone - and I agree it has been. We measure the telecoms industry in two eras, the time before iPhones and after iPhones (as I predicted in my blog of the same name). You know this haha.. But yes, so the Apple iPhone did totally transform this industry.

But does that negate earlier smartphones. I think that is completely unreasonable to say so. You know from working with Symbian before the iPhone, that the world's first smartphone was the Nokia Communicator. You also know that the original iPhone 2G did not even fit the modern definition of a smartphone (the newer iPhones do). Just because we have 'better' smartphones now, does not negate the earlier ones. Its like saying only PCs after the Mac should be considered PCs. Come on, the original Apple II is a personal computer as is the original IBM PC (as in the Charlie Chaplin PC) that used DOS etc. Yes, the iPhone made smartphones radically easier to use, and easier for developers to develop apps for, but that is IMPROVEMENT not creation of something.

I understand what you're saying, but I don't buy the argument. Certainly currently there are phones that are easier and less easy to use, and easier and less easy to develop to, but the commomnly accepted definition is that if it has an industry standard OS and users can install apps - whether most users do or not - then its a smartphone. That is the definition used by Gartner, by IDC, by Canalsys, by Nokia, by RIM, by Apple, by HTC, by Microsoft, by Google, by Palm, by Samsung and by Toshiba. I will go by that majority view, sorry, and not eliminate some systems because they are a bit too difficult haha...

Thank you all for writing

Tomi Ahonen :-)

Jason Grigsby

To reinforce your point about RIM in 2010, I have to assume that they will release a new browser based on their Torch Mobile acquisition sometime this year. If they do so, expect them to skyrocket up in the metrics that the media (particularly US media) seems to be paying attention to (e.g., AdMob's and Net Application reports on mobile browsing market share).

Richard spence

@Tomi @Romain

In my post I said that Apple have defined what a smartphone is. Sure you can install apps on N95s - but hardly anyone does. Sure there is a webkit browser but it there are pretty useless for surfing the real web. Sure you can technically upgrade the o/s - do you know any end users who have?

I have been in the trenches trying to create services for these types of devices for some years and believe me it is horrible. If these so called smartphones had been any good we would have a vibrant services industry for them now - we don't. Most people who own Nokia smartphones have no idea they can install apps on them, there is no discovery and frankly hardly any apps as Symbian/J2Me dev is so bad. On the web side the web usage stats for these devices is pitiful given the installed base of phones.

In your reply you give examples of Apples IIs, to Pc to mac. I don't think this is a comparison that I would make. Comparing Symbian to iphone is like comparing an Amstrad Word Processing Device to an IBM PC. The Amstrad came with fixed software was ok for doing the odd letter but the IBM PC is a really general purpose computer that created a massive software industry.

I do feel you analysis misses the real importance of the iphone, it is a genuine watershed moment for mobile - finally we have a device we can create services for ... at last!! Nokia make and sell plenty of "phones" but they a lot of catching up to do in Smartphones. I think they know it too.

Somewhere in a garage in the US someone is inventing really cool apps/services for the iphone/android - because unlike Symbian/RIM devices they can.

For the record I do not own an iPhone. ;-)

Philipp Weiser

You might not want to start the Windows Mobile death watch just yet. As you point out in your Smartphone Realism Pt. 2 post, IT departments hate change. So they'll be buying new WinMo phones for a long time to come...

Microsoft could probably seize all development on WinMo (not that they have done much develepment anyway) and still continue to sell nice amounts of units.

As with the Internet Explorer, it will be enough for them to try and not fall too far behind with each new version.

As someone who's stuck with a HTC WinMo at work, it's really sad that we all have to suffer from Microsoft's inertness.

miko

@richard spence,

what do you own? your questions in your first paragraph are blatantly ingorant, to say the least. my 1 yr old Nokia N85 has about 100 apps installed and growing every day. The OS have been upgraded many times thru OTA, maybe not your definition of upgrade, but for a non-techie like me, it is. i dont understand about the webkit browser, but i do use Opera mini/mobile and skyfire browsers.

cycnus

Hi,

This is one of the BEST review of the cell phone industry I ever read that I believe is NOT biased. First, let me say that I really hate to see when analyst said that iphone will rule the world. It's not that I'm against iphone, but because i know the fact that iphone selling well just in the USA. kudos for you to pointing this out, as other reviewer failed to do so.

Second, I'm from Indonesia, and you mention about blackberry fever in Indonesia. I have a good news and bad news for blackberry. First, the good news. Yes, bb has doing some great advertising the phone. The president obama use is, then our president susilo bambang yudoyono decide to use it. And then, suddenly, the nokia communicator lost of it's prestige to bb in indonesia. The cell phone operator also pushed this bb so hard, because the ARPU (average revenue per user) has been down from US$30(year 2000) to US$3-US$5 (year 2006) due to price war between operator. With bb, user will use the bb service that were US$15-US$17/month, thus operator were very happy with bb.

Now, the bad news. Cell phone operator were trying to hide the hidden cost of bb in small print. There were lots of bad story here and there in Indonesian news paper, internet forum, etc, that when traveling aboard, someone would be charge with expensive roaming fee when connected to the blackberry server. I know for sure that there were a tiny market of less than 3% of user that have 'done' with bb and back to nokia. second, the bb representative in indonesia were very arrogant. there were an interview in the past by the biggest indonesian news paper to bb numero uno in indonesia about the cheap Chinese product with keyboard/thumbpad. and he said "the cheap chinese phone is only a steeping stone for that user for using bb, because it would be a shame to use such a cheap product, and it would be logical once that person have a money buying the real product that could up his status." This comment were like a storm in Indonesian people. And make a good percentage of people vowed not to buy bb at all. I, myself, a bachelor degree with good amount of salary won't buy any bb because I hate such arrogance. Nokia on the other hand, released their cheapest phone to date with nokia life tools and showing their care about the poor too. so, bb will going down because of it's arrogance. more bad news.... nokia messaging / ovi chat will surely be a better choice for indonesian because of the better priced. US$ 4/month for nokia messaging + ovi chat, compared to US$16/month for bb. With a group of anti bb (because of the arrogance + cheaper nokia messaging + bad publicty of hidden roaming cost) 2010 will be the year that bb fever will be cured in indonesia.

Now about bada.
I don't know if samsung will be success with bada in the long term. The korean company need to show the long roadmap of bada to be really success. For non-smartphone, no one care about support. the most important thing is phone+sms. that's it.... but no one will buy a smartphone that would not have a good support (firmware update). and samsung need to show that they were able to give such a good support for their product.

about nokia.
contrary to other believe such as symbian is old need to be replaced, I believe symbian were one the best operating system. it might not be suitable as the top os anymore, but for middle end, it would do just great, and nokia doing right with the maemo/s60/s40 positioning. BUT... nokia doing their hardware VERY WRONG.

First, the N97 fiasco. It's all about the RAM. the RAM / C-drive is too small. Nokia has been doing a if it's not broken, why fix it. Nokia need to make their phone with more RAM, especially, if their user willing to shell out US$500-800.

Let me say this... the N97mini, has double the RAM, while it looks like an improvement, I believe, nokia should quadruple it instead because N97/N97mini is THEIR TOP OF THE LINE. They should not do a '128 MB is enough' or '256 MB' is enough. They should be AT LEAST doing a enough TIMES TWO for a product that were US$400+.

Now, about the all their current line of the E series. I believe E52/E55 should AT LEAST have internal memory of 1GB, so it should be C-drive + 1GB internal memory to store email/sms/photo/video + tranflash. Their E72/E75 should at least have 2GB of internal memory. and so does their N series... reason...

I really hate nokia for this. I own Nokia E series and MUST store the email/sms on the memory card. If I store on the C-drive, it would be full in no time, and make my phone DEAD!!! and because I store it in memory card, I lose the ability to hot swap. DARN!!!!!!!! This is NOT a good bussiness phone, and I really hate it.!!!!! (note, I use Axis in Indonesia, they give their user 1000 free MMS each month, 1000x50kb photo = 50MB, so... go figure, why my C drive are draining so fast, other than email with attachment too).

Nokia problem is not the software choice or bad hardware, but their trying to use the if it's not broken, why fix it ideology. I even wonder if anyone that have a decision on designing nokia phone ever use email on their nokia.

Best Regards,

James M

@richard spence,

Symbian has thousands of applications and has had for years, before the first iphone app was written. Just because there's been no central place to get marketing info from (apple's great coup is generating headlines) doesn't mean they aren't there. http://www.engadget.com/2010/01/08/live-from-nokia-ceo-olli-pekka-kallasvuos-ces-2010-keynote/ Nokia are claiming 300,000 app developers in China alone for Symbian.

@Tomi T Ahonen

"couple of years ago, the Symbian operating system was owned across several giant handset makers (Nokia part owned with SonyEricsson, Samsung, Motorola etc) and had over 60% market share. Now being only Nokia's owned operating system"

You make a mistake when talking about Symbian being owned by Nokia, it is not. Symbian was bought by Nokia and now the Symbian Foundation has been setup to be custodians of the platform as it moves to open source. The Symbian Foundation has many members, Nokia, SE Fujitsu to name but a few.

Brendan

Hi Tomi,

A really insightful view of the next year in the smartphone industry, which I would expect from you! Very good point about Samsung - though to turn this into an advantage they need to make sure Bada is a good platform for development. I have heard this is not the case, but give them time.

Only one thing is bothering me though, in the Sony Ericsson analysis you say - "Recently with the Symbian OS shifting to Nokia ownership, SE has little reason to particularly push Symbian in its smartphones and is shifting to Android."

You must know yourself that Symbian is not Nokia owned. In fact, now Sony Ericsson have a BIGGER stake in Symbian since it is a not-for-profit foundation instead of a private company in which they have a (smaller) shareholding. If you didn't know that then I'm quite disappointed that someone who comes up with such insightful views can get that wrong.

Mr Swiss

usually...i would not get so upset..but...
i stand corrected wasnt the nokia 9000 the first smartphone? and lets add that the nokia 7650 was the first symbian smartphone...which in turn was an OS built directly for smartphones...(thus the fact that it looks aged now)...
the iphone was the 1st smartphone OS to be upgraded? let me go back a few years with the Nokia N90(oh the 1st Nseries device which carried superior multimedia capabilities) was able to be upgraded via Nokias (Device) software update updater...followed behind by the N70(correct me here but still is the worlds best selling smartphone?) N80, N93 and N95(and im being sporadic with the devices only listing the ones which were the flagships).....
full web experience? iphone? does "optimized for" ring any alarms? where other devices actually showed the actual web pages with no optimizations?...alot of people forget this point...that loads of webpages have been optimized for the iphone....its like .mobi just became .appiphone
you can develop for iphone easier- true fact that you can..but how easy is it to actually get past apples red tape? no problem here with other OSes...as a matter of fact there was an article recently stating how app store developers are now moving away from the app store due to the restictions of apple...while other OSes are making it much easier to develop apps....
and to your n95 comment about peple dont/didnt know you could install apps...if that were of any truth...the developer Samir of the famed "Rotateme" application would not now own his own developing company and also working in conjunction with nokia...if people didnt know....
it is an insult for mr richard spence to even state that he was a developer....given such ignorant facts spewed from him. if human waste could fly your mouth would be an international airport!!!!

Freem

I think Nokia is on the decline because they have totally overslept the changing dynamics of the smartphone industry.

X6 or E72 all the way up to N97.. just a weak lineup!

Nokia is weak in all the segments right now to compete, the only reason they sell so many phones is because of their brand recognition, thats it. Once the consumers find out that what they're buying is not on par with the competition they will run in masses and never look back!

X6 is so expensive for what it offers, namely a huge headache, it should come with all the CwM music collection pre-installed on the device DRM-free to justify the price.

E72's email client is so laughable that even the free flash gmail app is better to use.

How about, the E-series is supposed to be all business right? Well if you try using the build in calender or contact app, its just pure anti-business! If you want to remember your client's birthdays which are stored in your contacts guess what your calender wont know it and there is no way to tell the calender go and import all birthdays. If you search for a contact and you only remember his company name, well guess what your all business phone wont know you're looking for a business because it only searches the names of your contacts!

The N97 has a 3 row QWERTY keyboard.. enough said!! The inventors of the original QWERTY go ahead and destroy it!

Ovi maps is so laughable and slow that it should pay you to use it, not the other way around considering that Google Maps is free to install und much better to use. The Navigation part is not bad, it should be free though.

Their chat app is so laughable i had to immediately uninstall it.

Their touch screens are so ridiculous, if you want to use the N97/mini and all their touch screen phones for that matter, you better sharpen your nail on your index finger and make it pointy in the middle otherwise the phone wont properly recognize when you try to touch it.

I used to like Nokia because they were leading the market, nowadays, they're stuck in the past. They can't fire their senior engineers who are clueless with today's technology demands because they once were actually leaders and helped Nokia get to where they are now, and now the same people who helped it get there will take them down.

Nokia fire your top designers and engineers because for the past 3years they have shown no results, they're old and stuck in the old ways. Get some fresh blood in there and let them make some bold moves.

Jason Lackey

Tomi, if you have used an N97, X6 or any of the latest touch screen Nokia Symbian devices it would be clear that Espoo 2010 is Detroit 1980 and that the seeds sown with these awful devices will be reaped in plummeting market share. To command anything, you need to own the high ground. Today's high end device can easily be tomorrow's midrange and the day after's low end, but today's low end will never be anything but tomorrow's giveaway.

Alexandre Bouillot

First Nokia Smartphone was 9000. First Symbian Smartphone was the 9210. First S60 Smartphine was 7210. iPhone cleary bring a different model from the era before it. Apple isn't after complying Carrier requirement and don't care being frontal with their business model.

iPhone was one of the first 3G phone without video telephony embedded. It was not unusual on Nokia's E line up, but not on mass market range.

For years Nokia was struglling between pushing apps to the phone - remember Preminet - and not ruin carrier's portals and what was their appstore at that time.

Apple succeed transforming carriers into pipe for data and bring unlimited Internet on subscription plan.

Google is now benefiting of this and is able to produce Android on the same ground.

Regarding Internet experience, when I'm browsing on the net, I'm pretty sure I have the 'generic Internet' pages (the one 750K/1.5Mb) and not a cut down version without flash.

This might explain why Nokia's smartphone devices are under represented in adMob stat. I'm pretty sure I rarely cross them during browsing.

I'm planning to try to make an app to check what site are visited, then make stats on what add network are the most proheminent...

JB

Interesting take as usual. Your analysis is very carrier/feature set based. If you were to compare the players on different criteria you might see a different picture. What about customer satisfaction as a driver of sales? Mobile is a product that people share face to face, word of mouth is probably a huge driver of sales, particularly with people upgrading from feature phones. If you can capture a big percentage of the upgrade customer, your going to grow. Or you could look at who has the strongest connection with existing customers, or who has a robust feeder system... By these criteria RIM and Apple are way out in front and the have been eating up the lions share of the market growth for the last 3 years (0 to 17 is amazing!). I'm not sure you've made a strong case for Nokia or Samsung to grab a big chunk of the new audience and without the new users they can't maintain share, let alone grow.

Hyoun Park

Tomi,

Fantastic post, but a couple of points I disagree with:

1) The assumption that RIM can count on its 75% enterprise market share. If they thought that, they would not have hurried into the consumer space as quickly as they did. With the increasing consumerization of enterprise IT services, we're going to see more iPhone/Android to go along with Symbian/WinMo/RIM. Specifically, iPhone has critical mass in specific geographies to make inroads and the device management companies are quickly stepping up to cover these new OSes. As companies analyze the cost of training, hardware acquisition, software acquisition, and cost of support, both math and strategy will start leading to the increasing adoption of multiple OSes. For the 80% of businesses who only support 1 OS, I'd be interested in seeing how many of them have individual-liable devices in their companies. Based on our numbers, I'd put good money that more than half are unofficially supporting additional mobile OSes. This unofficial support ends up affecting the enterprise mobile ecosystem whether it is acknowledged by IT or not.

2) One of the challenges that Nokia, RIM, and the Japanese providers struggle with is their focus on hardware functions at the cost of UI. Although this worked well in the early adopter phase of smartphones where only techies or tech-advanced cultures picked up on the smartphone, we've moved into an early majority phase where intuitive usability becomes far more important. Simply put, if I need a manual, the device isn't worth it at the majority phase of adoption. As long as Nokia doesn't realize this, they are doomed to become increasingly irrelevant to the future of smartphones. I think they're well positioned to continue to be the market leader in cell phones in general and have taken fantastic steps in owning emerging markets. But this will be at the cost of thought-leadership and creating the next generation of smartphones. Eventually, this will catch up to them (and all other hardware-focused vendors)

One of the reasons that HTC has been so successful is that they realized this from the beginning and rather than simply provide hardware functionality for WinMo, they created intelligent skins and form factors on top of winMo that have been far more usable than anything Microsoft has figured out for themselves. If HTC had taken a Nokia approach to development, they would have missed their opportunity to become the great company that they are today.

Davide Rota

I'm sorry but after reading some of your articles I really had to comment! Really liked the different point of view of your posts, the numbers/business/market share view, but I was also so disheartened ...

So let me sum it up:

Big customers buy retro phones because their IT departments are too afraid to support new OS and new technologies and carriers don't want to sell them new phones anyway.
People will only buy the cheaper subsided phones available in their country, be it N97, iPhone or whatever.
People will also value a lot more some useless feature like flash or Mpixel or color ahead of important ones, like OS choice or CPU speed etc..
People will happily spend tons of money for useless premium services, ringtones et similia, but will not care of good, quality applications.
Everyone can make smartphones since apps, community and developer support are apparently not needed. You just need to come up with a new OS, put it on your lineup of dumb-phones, et voilĂ . The cheaper the better, quality is not required.

You are probably right because that's exactly the way the mobile industry has worked for decades and that's why mobile phones basically sucked and Apple managed to release a product years ahead of the competition.

I'm so glad Apple decided to take the risk and propose a revolutionary product, putting quality OS and polish over meaningless tech specs, leveraging great apps over ringtones and so on...
I'm still convinced, but maybe it's only a stupid hope, that in a while the differences between the innovators pack (IphoneOS, Android) and the others will be too big and glaring for anyone to just ignore them. And I hope that more and more competitors will stop just thinking in terms of numbers and start to put some love/passion and innovation in their products.

Also I'd like to quote another user comment "To command anything, you need to own the high ground. Today's high end device can easily be tomorrow's midrange and the day after's low end, but today's low end will never be anything but tomorrow's giveaway."

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    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

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