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« iPhone Second Quarter 2010 in Bloodbath: Market Share is Declining where All Big Rivals picking up | Main | Mid-Year point for Nokia next, in Bloodbath Update. And they DID grow smartphone market share (again) »

July 21, 2010

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Charles

"By all measures Nokia is executing well." (About 50,000 words higher up. I scrolled.)

Except on share price and profits. And revenue. And profit margin. Besides that, Mrs Lincoln, how did you enjoy the play?

Ewan

Genius

Janne Virtanen

Really interesting post and I have to post further thoughts after reading the rest of the article. I think Nokia's slow downturn started before OPK's era. Nokia is possibly the only brand out there that I have shown any brand loyalty towards and to be fair, I was a Nokia fan boy.

Where Nokia has been innovator in many areas, like the tablet, app stores and camera phones, but like you rightly point out, it does a terrible job at talking about these successes. I think that Apple & co have had the advantage of Nokia sludging out the R&D aspect of developing these devices, competitors can then take them and better them and spend number of marketing dollars on talking about these features.

The second aspect why I always loved Nokia was because of the design. But since the classic 6000 series, the designs have been truly awful. Yes there are some gems in there as well, like few of the clam shell phones, but again these are phones that Nokia classifies as commodities and doesn't spend a huge deal promoting. Though it has to be said that the N8 and N9 are showing that Nokia can still design an attractive phone. If the leaked concept model of the Kinetic phone goes to production, Nokia will have nailed it.

In the consumer space atleast it's not so much about the make of the phone that matters but what looks good when you put the phone down on the table when you're out having drinks with friends. Mobiles have been, and always will be a form of status symbol, the flashier the phone, the better you are in tune with the trends.

Thirdly why I have abandoned Nokia for now is because, well the phones aren't that simple to use. I got an iPhone 4 (yes I am ashamed of crumbling to Apple's marketing talk)recently and I was astonished how easy it was to use and to set up. I didn't need to go through countless menus and sub menus to find what I was looking for. It was a phone that I could use without having to read the manual. I think this is largely due to the Symbian platform on the phones, but in my opinion Nokia needs to ditch Symbian and bite the bullet and go with Android or RIM OS in their phones. I'm not entirely sure about Meego as an OS. Is the fragmented market ready for yet another open source OS?

andraz

One think on Nokia being such a samaritan for better world and open protocols/source stuff: Nokia is one (of many) to be blamed for MMS being such a terrible standard mess. That as a result of everyone doing their own MMS smil version and not following the agreed standards.

Andre

nice read Tomi - as someone who had a n95-8gb and some one who did mobile phone banking in 2002, used gps on the e65 at the beginning of 2007 and thought that the iPhone version 1 was a piece of (?$%&) I can relate to your article.. Lets hope that whoever is the new CEO he will continue the QT strategy which I believe will be successful.

QT gives Nokia the possibility to have the MEEGO Porsche and the Symbian Toyota but share the great Apps.

@Charles - why bother coming here to comment if you are unable to read the article

brad

nice article, very in-depth. Of course a little over the top in the nokia support, but it does seem you are somewhat incensed by the OPK situation :)

@Janne

" I think that Apple & co have had the advantage of Nokia sludging out the R&D aspect of developing these devices, competitors can then take them and better them and spend number of marketing dollars on talking about these features"

Yes, and now they are being sued for this taking :)

" Mobiles have been, and always will be a form of status symbol, the flashier the phone, the better you are in tune with the trends."

Man I feel sorry for you

"but in my opinion Nokia needs to ditch Symbian and bite the bullet and go with Android or RIM OS in their phones. I'm not entirely sure about Meego as an OS"

Did you even read the article??? And how in the world would Nokia release a phone with Blackberry OS?? Idiot

Randall Arnold

Nokia's immense market share is meaningless IF it cannot convert purchasers of cheap entry phones into purchasers of mobile computers. The US example is proof that their prior and current approaches have not and will not work.

Nokia cannot rest on yesterday's laurels. It must do a better job of moving forward... and bringing customers with it.

As much as I respect OPK, I'm not sure a lawyer/finance guy is the visionary Nokia needs right now. I had suggested Anssi Vanjoki for that role, but others point out good reasons for him to remain where he is:

http://tabulacrypticum.wordpress.com/2010/07/19/opk-on-the-way-o-u-t/

Mario Rojas

Hi Tomi,

Have you considered editing a post like this, making it brief; and titling it "The Nokia Way" and distributing it virally between US bloggers and analysts? I think it would help them to understand Nokia and how they act in this changing world. I can help if you want!

Regards

Mario Rojas

Hi Randall!

Here is mrojas from Maemo Talk. Just to comment and what you said: "Nokia's immense market share is meaningless IF it cannot convert purchasers of cheap entry phones into purchasers of mobile computers. The US example is proof that their prior and current approaches have not and will not work."

That is already happening in Latin America (consumers migrating from dumbphones to entry level smartphones). The US market, due to its "unique" characteristics; shouldn't be taken as measure of how the global market is going to develop. I think one of the points in Tomi's post was to highlight how Nokia's strategy is working very well, globally, but failing in the US.

Now, if you meant that "the US example is proof that their prior and current approaches FOR THE US MARKET have not and will not work", then I fully agree.

The US market needs a different treatment, which OPK has not been able to deliver. It's almost like Nokia wanted to lose the US market on purpose...

Blahblah

Disclaimer: Nokia employee

Very saddened by this turn of events, if true. I believe the problem with Nokia is not strategy, but execution & speed of execution. That's something controlled by the pompous, self-important middle managers in the company. They're the leeches who have put Nokia in this position of poor mindshare, because of their ant like brains & snail like speed.

I'd honestly lose confidence in the board if this comes to pass. Tomi's got Nokia's core values to pat, openness & no hype. In my time in Nokia, OPK has shown this very impressively.

I'm out of here, before I say too much!

Randall Arnold

mrojas,

Hola mi amigo!

You're right, much of the failure is specific to the US-- for now. And other markets (like those in Central and South America) can be very different, ie, wide open.

But ultimately carrier-driven models will likely emerge outside the US. It's inevitable, even in markets that are currently loaded with choice. I think many forget that the US used to have more real choice, too... before some major industry consolidation.

So it's best IMO to think of the US as worst case (although it's arguable that Japan really is). Make it work here, and you can make it work anywhere. Not that every aspect of a market model will translate, but the core aspects will.

-Texrat

Guillaume B

Nice article Tomi, but don't praise OPK so much when you send your CV to the board at Nokia! ;)

Timuke

Might be unacceptable to many in the US to accept or even admit to foreign technological leadership in any technological area, especially in mobile & internet (Think CDMA history, name 1 popular internet brand in the US not invented locally).

Imagine what would have happened if Nokia were an american company - President Obama would have given praise for spreading freedom and connectivity across the planet and every american would own a Nokia phone.


Sam

Why then, is Nokia working so hard to make its smartphones look like iPhone clones?

Randall Arnold

Sam, I don't see a single Nokia smartphone looking like an iPhone clone...?

Roger Johnson

Remember that Steve Jobs is nothing more than a salesman, he's not a programmer nor an engineer. The real technical brains behind Apple was co-founder Steve Wozniak, who doesn't work for Apple now yet still gets a fat paycheck from them. This explains the arrogance, defensiveness, and overhype from Steve Jobs. He's selling a dream lifestyle idea, not an electronics gadget. This is how the phrase "Reality Distortion Field" was coined, and it is forever attributed to Apple and its products. So everytime a non-technical gadget-collecting fanb0i buys an overpriced, overhyped but under-spec'ed product, that's a victory for the marketing department of Apple, aided in no small way by the US mass media which, quite expectedly, is "jingoistic" and insular when it comes to defending their own homegrown companies and products.

Mark

@Sam

Do you know any other form factor for a 3.5" to 3.7" touchscreen? If so please let us know.

I mean that's as silly as saying the iPhone is a clone of the Prada.

Roger Johnson

This is expected if you studied the history of Apple as a company. They are not an engineering powerhouse, even their much-hyped product designs, unknown to their ardent fanb0is, is outsourced to third-party industrial design outfits like Frog. Apple is only good at marketing with their Reality Distortion Field­©®, with a big help from the largely-ignorant mainstream US media which always likes to champion one of their own companies.

Roger Johnson

The Apple Way: "Small advances are applauded as breakthroughs." LOL. So true.

***
Reality distortion field (RDF) is a term coined by Bud Tribble at Apple Computer in 1981, to describe company co-founder Steve Jobs' manipulative marketing propaganda and its effects on the developers working on the Mac project. Later the term has also been used to refer to perceptions of his keynote (or Stevenote) by observers and devoted users of Apple computers and products (iFanb0is).

Bud Tribble claimed that the term came from Star Trek.

In essence, RDF is the idea that Steve Jobs is able to convince himself and others to believe almost anything with a mix of charm, charisma, bluster, exaggeration, marketing, appeasement, and persistence. RDF is said to distort an audience's sense of proportion or scales. Small advances are applauded as breakthroughs. Interesting developments become turning points, or huge leaps forward. Impossible-seeming schedules, requirements or specifications are acceded to. Snap judgments about technical merits of approaches are sometimes reversed without acknowledgment. Those who use the term RDF contend that it is not an example of outright deception but more a case of warping the powers of judgment. The term "audience" may refer to an individual whose attitudes Steve is intending to affect.

Often the term is used as a derogatory remark to criticize Apple's products and its more enthusiastic fans.

The term has extended in industry to other managers and leaders, who try to convince their employees to become passionately committed to projects, sometimes without regard to the overall product or to competitive forces in the marketplace. It also has been used with regard to hype for products that are not necessarily connected with any one person.

Roger Johnson

As for the US tech blogs, sorry, but they simply don’t have a clue what they are talking about. The US tech media is well known globally for being ignorant about mobile generally – they live in such an insular, inward looking world, and are highly defensive and protective about home-grown technology (Android, iPhone).

The truth is the N8 makes current and rumoured iPhone and Android devices look like over-priced toys. The truth hurts – it hurts Android and iPhone fans, and it hurts US tech blogs who love their home-grown tech. So they slag off and do down non US tech. I’ve seen it lots before. Luckily the US is actually not a very important mobile market at all, only about 8% of world’s mobile users live there. So I think we can live with the US, loud and proud as they are, not appreciating Nokia technology. It’s their loss.

em

@Randall Arnold

The carrier-driven model is actually prevented by legislation in many countries. For example, in Italy it is prohibited to subsidy phones. Ultimately it is the government that guarantees the competition in the markets of different utilities, and this applies also to wireless communication.

@Sam

Nokia has one model coming (N8) that looks like an iPhone. Nokia has tens of phones out there and if one announced model looks like an iPhone, I wouldn't say it is working hard to make its PHONES to look like an iPhone.

Roger Johnson

Nokia should take the Apple "false need" product differentiator by the horns and directly address why touchphones are a solution looking for a problem. Why would I give up hardware buttons and tactile keypad feel for a touchscreen that , 4 years on, still doesn't even have haptic feedback (incidentally, even the cheapest resistive touchscreen phones from Samsung and Nokia have haptic feedback, ex: N5800XM). I've been asking Apple salesmen since 2007: "why would I not want to use hardware buttons and keypads?", and no one has given me a cogent answer. I would argut that given the same Apple-style disingenous marketing propaganda, Nokia can push QWERTY smartphones to get the most market share overall. Just look at most of Asia, especially the English-speaking, messaging-addicted markets, and you'd see that QWERTY smartphones are outselling touchscreens by a huge factor.

Maybe Nokia can start their marketing agit-prop with: "Nokia QWERTY smartphones: because our target customers are smart enough to utilize an electronic device with more than one hardware button." :P

Tomi T Ahonen

Hi Charles, Ewan, Janne, andraz, Andre, brad, Randall, Mario, Blahblab, Guillaume, Timuke, Sam and Roger

Thank you all for the kind comments. This was a particularly emotional blog for me to write (I think it also shows reading between the lines) and for me personally, 'fairness' has always been a particularly high value - I tend to stand up and fight 'unfairness' haha... So yeah, many of you were very kind in the comments and let me just say thank you. I will address only a few of your comments personally where there was a particular question or comment that was not directly supportive or in agreement, ok?

Charles - the share price equals Wall Street so its a moot point. The whole point of the blog (if you had bothered to read it) was to discuss WHY Wall Street ie stock price is punishing Nokia. Profits? If you compare Nokia to its nearest rivals (not Apple obviously) ie Samsung, Motorola, SonyEricsson and LG - then Nokia's profits, reveues and profit margin has been better in OPK's reign than the rivals. Pls read the blog haha..

Janne - good points, I've also observed that since the 6000 series, there seems to have been an erosion. A few top phones were good but it was more sporadic.. And usability, haha, I have so many experiences of disappointment and frustration with Nokia until I then try by chance a phone by some friend, and it seems to be far worse haha. But like you say, the iPhone is the exception. It is that easy, even our grandparents can use it haha.. As to Nokia abandoning Symbian/MeeGo - is not going to happen, try to get your head around it, no sense to wish for something that is totally implausible. The strategic right choice is how Nokia did with Symbian/MeeGo. That it takes time for Symbian to be evolved, is a price they are willing to pay..

andraz - I hear you, and MMS is far too much a mess yes, especially international interconnect wise. But I don't see that particularly as a Nokia-caused problem, do you?

brad - haha yeah, am an ex Nokia dude and being a Finn it would be treason not to support Nokia haha.. great national pride.. But the one point about fashion items and flash - I think you should accept that this is reality for roughly speaking 10% of the total market, its a very big part of the population who think that way, and its even more pronounced with young people - more likely to buy a smartphone. Don't pose personal judgements on human behavior, accept the facts and then consider how you might make sense and use the facts. Its a fact many think of the phone as a fashion item and many very proudly show off their latest phone...

Randall - about that migration from cheap phones to premium phones. I recognize that isn't happening with Nokia phones in the US, but its because Nokia's premium phones are not prevalent in the US landscape. In the rest of the world it is exactly as you ask for - Nokia knows fully well, that the typical phone owner, when replacing the phone, will seek to get more/better features. A basic phone owner moves up to a featurephone. A featurephone owner moves up to basic smartphone. A basic smartphone owner moves up to premium smartphone. And Nokia is the world's second best brand with phone loyalty (behind only the iPhone). So Nokia is benefitting from this transition on a daily basis globally, except not in the USA..

And I like the thought 'if you can make it there, you'll make it anywhere' haha for the USA, like in the Sinatra song... But of the iPhone clones, I think its fair to say the N8 is a total iPhone clone. There was also a cheaper touch screen phone from Nokia earlier this year which was a similar touch screen only tablet candybar phone, very much looking like an iPhone clone. I forget its number..

Mario - great idea! I have actually something in development which kind of addreses that need, but yeah.. Keep reading the blog, I hope to announce something you'll love in about a month perhaps? You'll spot it immediately as 'oh, wow, this is cool, this is what Tomi meant' haha..

Blahblah - thank you for visiting and I appreciate your sentiments and read a lot between the lines too. Thank you so much. I also can very well recall from my time (so long ago) working at Nokia HQ, yes, there are those matters of middle management, and the strategy thinking usually is very solid for Nokia, but sometimes the middle management execution may suffer (in some units and departments, not others obviously). I totally hear you. And if you want to write to me off line via email, you know my email is obviously tomi at tomiahonen dot com. Cheers!

Guillaume ! Haha ! Loved it!

Timuke - great observation, yes, if Nokia was US company, it would be cherished and cheered.. (as we do in Finland haha)

Roger - thank yeah, thats Jobs vs Woz definitely and yeah, I really like the Reality Distortion Field concept that is often used with Apple..

Thank you everybody for very kind and warm comments! Please post more.

Tomi Ahonen :-)

Timuke

Listen to this what Steve Jobs said at his invitee-only 'press conference':

"I guess it’s just human nature, when you see someone get successful you just want to tear it down. I see it happening with Google. Google is a great company. Look at everything they’ve created. Would you prefer we’re Korean companies? Do you not like the fact that we’re an American company leading the world right here?"

http://live.gdgt.com/2010/07/16/live-iphone-4-press-event-coverage/#11-01-58-am

What a weird thing to say isn't it? It's actually incomprehensive. But then again we must understand the US in a huge crisis. Technological leadership happens to be an integral part of the US National Security agenda. So that says everything about the US market sentiment. It's a national interest in the land of the master spindocters that brought us the .com bubble, Enron, the Iraqi & Afhanistan War, Credit Default Swaps and High Frequency Trading.

Again, can anyone name 1 successfull internet company in the states that was not a local startup?

Randall Arnold

Tomi,

I was a Nokia employee from 2005 to 2009, here in the US. As an enthusiastic evangelist I tried to convert friends and family to the fold. But again, Nokia had done too good a job selling into the low end-- that's how people here associated the Nokia name. Nokia=cheap. True, carrier issues at the high end didn't help, but Nokia was also largely to blame there as well. We had great shots with the N80 and N75 but blew them by screwing up during R&D (it was way too hasty) and pushing showstopper defects down to the factory... where we were helpless to fix them but right in AT&T's firing line anyway.

I still think Nokia should do better at separating the low and high ends with sub-branding. It certainly can't hurt...

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