I had a great meeting with my dear friend Ewan MacLeod the editor of Mobile Industry Review and a deeply insightful commentator on the mobile industry, as he visited Hong Kong last week. We had a good discussion about smartphones and both were astonished by the continuing rumors about Nokia operating system future options. All that speculation about 'when' or 'if' Nokia will migrate its smartphones to Google's Android operating system or to Microsoft's Phone 7 (the successor to Windows Mobile). This is ridiculous. Nokia is executing a migration strategy from dumbphones to smartphones - excellently, one might add, and has the best strategy of any handset vendors, for its smartphones.
Yes, you read it right, Nokia does not have 'an adequate' strategy or a 'plausible' strategy, it has the best strategy of any handset vendors, including Apple, HTC, RIM, Motorola etc: the best strategy into smartphones. Its central element now, is Symbian, and its Nokia-controlled evolution path, meaning Ovi store, MeeGo operating system and QT application development environment. And before you can say 'but' - let me add, Nokia is also the most successful legacy dumbphone maker, to migrate into smartphones.
COMPETITION IS NOT APPLE
So, lets first tackle the Apple argument. Nokia is not competing with Apple, much to the chagrin of US investors and analysts. Apple is a computer giant migrating into mobile, where its inevitable future lies. The PC industry has matured into the 'box mover' stage, where there are slim profits on thin margins. The profits are in smartphones. Its rival traditional PC makers all - all - HP, Dell, Lenovo, Acer, Toshiba - they all are on the path to smartphones. Apple is executing that migration path perfectly, from PCs to smartphones, far better than its rivals. Apple's competitor currently is not Nokia, nor Google, nor AT&T. Its competitors are HP, Dell, Lenovo etc, and against those rivals, Apple took an early stab at pocket computing with the Newton (and failed with a brilliant device), but now has returned with a vengeance, with a second attempt, and is leading the pack. And to show how much they are ahead, their integrated strategy with the iPod Touch and iPad on the iOS, iAd and App Store, are brilliant execution of a mobile strategy - for a PC maker.
Apple is a luxury brand, it cannot compete in the box mover races, and Apple understood this years ago, not attempting to fight against HP and Dell and Compaq, but rather focused on the luxury end of the market. Its like Porsche, who know they can't compete with Toyota or Ford for the mass market cars. Like Porsche in cars, Apple takes a disproportionate share of the total profits and because of meticulous attention to quality and detail, it has incredible customer loyalty. That is typical of success in the luxury segment of any industry with luxury goods, look at Swiss watchmakers vs Casio or Seiko or Citizen or Timex, the mass market watches.
The analysts want to position Nokia against Apple, it makes for good drama and a fun parlor game. But then they don't do fair analysis of Nokia. Nokia is not competing against Apple. Nokia's business is the phones business. The PC industry sells about 300 million personal computers of which Apple had about 4% last year. Most of the computer industry last year was not 'mobile'. The mobile phone industry sells about 1.3 Billion handsets globally, and Nokia had about 38% of that last year. Yes, Nokia alone sells more mobile phones than the total global size of the personal computer industry worldwide. Most of the mobile phone handset business was not 'smartphones' ie 'computers'. There is overlap yes, between Apple's and Nokia's businesses, but only covering a small part of the businesses - of either rival.
REAL COMPETITORS TO NOKIA
Nokia's main rivals are the other 'big 5' handset makers, which used to be Motorola, LG, Samsung and SonyEricsson (about 18-24 months ago, just in the last year, RIM, ZTE and Apple have been juggling to fit into the Top 5). The other former Big 5 handset makers were all big giant makers of 'dumbphones' before the smartphone was invented (by Nokia). So that is where Nokia's main competition is. If Nokia focused only on its smartphones, Nokia would abandon 300 million basic phones per year to the competition - notice, that amount of Nokia branded 'dumbphone' devices is as big as the global PC industry. This is the size of Nokia's 'non-smartphone' side. And in the 'real' PC industry, Apple had 4%.. Lets keep this story in perspective. What any dumbphone maker has to do - has to do, during this decade - is to migrate its customer base from dumbphones to smartphones. Nokia does not need to focus on the 'pure smartphone makers' like HTC, RIM and yes, Apple - who all counted together, account only for about 7% of the total handset manufacturing industry. But Nokia's biggest rival, Samsung sells 21% of all phones! That is where the competition to Nokia comes from, not from Apple or RIM or HTC, no matter how much a USA based 'analyst' may love his cute touch-screen smartphone today, or play with his brand new fart-app downloaded for free from the app store.
So, lets start with Nokia's original strategy in smartphones. Nokia was the world's biggest mobile phone manufacturer over a decade ago, when they decided to launch Symbian. They could have done it alone. Nokia invented the smartphone. Instead, Nokia went to its direct rivals at the time: Motorola, Sony, Ericsson, Siemens, Samsung, etc and asked them all to join Nokia in co-developing one smartphone operating system for all, that would be the same, so there would not be unnecessary fragmentation and the eco-system of the applications would be easier to the developers.
Note how radically different this is from say Palm or Apple or RIM, all who developed only proprieatry operating systems, only for their own handsets and not licencing to others. Nokia was the biggest handset maker, they could have easily created the OS for themselves, and without partners, could have evolved it to Nokia's particular strategic interests - including any later touch screen evolution much faster than with their partners. So the solution Nokia selected put the interests of the industry and the community, ahead of the interests of Nokia itself, and helped reduce the amount of confusion that a dozen operating systems in the last decade would have created if every maker had developed their own. By making it a Symbian Partnership with rival makers as part-owners, there was no one ruler, and while committee work is slow and consensus-building is tedious and costly, and bureaucratic - to try to resolve the at times opposing needs of different handset makers, Symbian held the world lead in smarttphone operating systems and still last year shipped as many phones with it, as the nearest rivals numbers 2, 3 and 4 added together.
And Symbian again, in Nokia philosophies of openness and cooperation, was even open to non-handset makers, like Japan's biggest mobile carrier/operator, NTT DoCoMo (which is still using Symbian today).
If you examine this with hindsight, was Nokia's strategy bold, brave, and forward-thinking a decade ago? Yes. Was it the best long-term, guaranteeing the dominance of Symbian, thus guaranteeing Nokia's own R&D efforts, on a platform sure to win - if all your rivals are with you, you know it will be there. Will it be the fastest to evolve, of course not. Will this be the cheapest way to go, no. Is it best for Nokia's long-term interests, yes. Is it best for the industry's best interests, yes. (Remember, if you think fragmentation today is a problem, it would be at least 10 times worse, if there had been a dozen more smartphone operating systems being developed over the past years)
BETTER THAN ORIGINAL iOS
So, then there is the conventional wisdom, that the Apple iPhone came along and Nokia "lost it all", and Symbian is "outdated" and Nokia is falling so badly behind, and now playing 'catch-up' to Apple - and the evidence seems overwhelming, even the newest flagship handset, the N8, is 'clearly' a 'clone' of the iPhone. The evidence is so obvious, even an idiot like Tomi Ahonen has to see it now. The Ovi store is a pale copy of the App Store, etc. Nokia is clearly playing catch-up to Apple. Nokia is on the brink of collapse. ...Or is it?
Lets go back to Symbian. Symbian was developed from the ground-up to be a phone operating system. Apple's iOS was not. It was evolved from the Macintosh OS/X. So Apple took an existing (excellent) PC operating system, and adapted it for mobile. What it did, was two things - clearly, the iPhone would have an OS which was very well suited for 'computer-like' activities (like all the apps we now see, or like internet surfing) but also, being a compromise, it was not well suited for 'traditional telecoms' type of needs. It was not designed to work as a phone operating system. Symbian was.
The original iPhone with its intuitive iOS operating system and touch-screen interface, was truly revolutionary. It truly changed the whole industry. We measure time in two stages, before the iPhone and after the iPhone. And the iPhone allowed us to do many thing so much better than ever before - looking at photographs on the phone for example, flicking them and zooming them etc.
But for all its brilliance, the iPhone iOS showed its weaknesses when the iPhone was used as a phone. How very clumsy that the original iPhone did not support multitasking (Symbian had done that for years already). So the inevitable conflicts between apps or what if some urgent telecoms traffic came in - a call for example interrupting our game. The original iPhone didn't support MMS picture messaging (the world's second most used data application, more users than total users of the internet). Again, coming from the computer industry, Apple arrogantly announced that the iPhone user didn't need MMS, they could send emails with attachments. That changed in a hurry, the industry taught Apple how much traffic is generated by MMS, how much money and profits it earns, and that the iPhone has to support MMS (it does now).
And folders, and office suite application support, these were standards to Symbian, that Apple didn't offer. Adobe Flash support, again something Symbian had and Apple argued for years in public that they didn't want to offer. Who had the advanced and well-developed OS, and who had the weak, incomplete OS. And most of all, the original iPhone did not even let users install apps! So it was not even a proper smartphone. That didn't come to Apple until a year later, in 2008. But Symbian had supported user-installed apps for a decade.
There are all those who say that Symbian is old - it is old. There are those who say it is poor at touch-screen interface (it is getting better). But there are those who say it is obsolete, and those are simply wrong. Symbian is a rich, powerful and mobile-specific OS, very competent, if elderly, operating system. It is far from dead. And of the improvements (some say bug-fixes) that Apple has done to its 'revolutionary' iOS over the past 3 years, almost every change that Apple did, was copying existing Symbian standard elements. Who is ahead, and who is following?
So if Nokia strategy was right, was it then, that Symbian execution was wrong? They missed out on the touch screen preparedness in 2007. Fine. That is only software, it will be fixed, and by now, it is mostly fixed. Those using the latest Symbian on say, the N8, are totally happy with it. Its not anything better than Apple (but who does anything better than Apple, in any area?) but its far better than most others, compare Windows Mobile or RIM Blackberry etc. The reason it took long time for Symbian to evolve, was that it was done in partnership with so many players in the industry. But it is still evolving.
I am not saying Symbian is the best operating system today. It cannot be, when totally new, mobile-optimized, new-from-the-ground, open source, Linux based operating systems for smartphones are now being developed, like Google's Android or Samsung's Bada etc. These are the new generation, taking operating systems beyond what Apple showed was possible, and Symbian will struggle to remain viable into that competition in the years to come. But today there are operating systems that are obsolete - witness Microsoft's defunct Windows Mobile - and there are operating systems which are still viable - like Symbian and iOS. But the future belongs to Linux based, open source, touch screen and smartphone optimized 'next generation' operating systems. Symbian is not one of those, but neither is Apple's iOS.
BUT SYMBIAN IS DYING IN THE MARKET
Is it? If you look at Nokia and Symbian market shares of all smartphones in 2006, before the iPhone launched, Symbian had 67% of the total market. We don't have Q4 numbers for 2011 yet, but if we take the last 12 months up to Q3 of this year, Symbian is 42%. So Symbian has lost 4 out of every 10 customers it had. Thats nearly half, that is catastrophic, over just a 4 year period, isn't it. It sure looks like that, doesn't it. So lets first have a bit of context. In 2006, of the world's giant corporations, those in the Global Fortune 500, only 8 were manufacturing mobile phones. At the start of this year, that had exploded to 23 giant corporations. The battle in smartphones has intensified by 3 fold. Then operating systems. In 2006 there were 5 smartphone operating systems worldwide. This year 2010, we have seen phones sold with 11 different smartphone operating systems on them. So the smartphone operating system war has intensified, ie more than doubled in intensity.
So how have the others done in this space? Microsoft was second largest OS in 2006 and had 14% market share for the full year. What happened to them? Over the latest 12 months, their market share has crashed to 4%. They lost 7 out of every 10 customers they had, far more than half! What of Palm? Palm had 5% in 2006. They failed so badly in this new competition, that they failed in the market and were bought by HP. In terms of market share, theirs is about 1% today (with HP's deep pockets) so Palm lost 4 out of 5 of their customers. But Symbian actually weathered the storms of trippling rivals and doubling competition, and lost less than half of their customers. That alone should say something that Symbian is actually doing quite well.
Except, that it is not the 'truth, the whole truth and nothing but the truth'. If you look at the fall in Symbian market share without looking at Nokia and Japan, then you are going to misunderstand what has happened. There has been a deliberate migration of some of Nokia's former partners, away from Symbian. So if Symbian partnership with Motorola, SonyEricsson, Samsung etc had 67% market share in 2006, and those partners left the partnership, that is not a fair measure of how is Symbian doing with Nokia, is it. What we should look at, is how was Nokia doing before and after the iPhone. And for this, we have to include those manufacturers in Symbian who have not shifted away. Note, Nokia knew fully well that if Nokia took control of Symbian, the rival handset makers would depart. Even then, over time, this would be a better strategy, with hindsight, than Nokia fighting against a dozen rivals with their proprietary OS's over the past decade. Even so, Nokia wins.
So for you, the reader, to understand 'fair comparison' of what happened to Nokia and Symbian, 'because of the iPhone and new rivals' that means you exclude the 'deserters' and only examine the 'loyals'. That is Nokia and the Japanese. Nokia and the Japanese had 52% of the total smartphone market in 2006. How badly has Symbian suffered over the past four years since the iPhone launched, if we only look at the loyal Symbian family, Nokia and the Japanese? The last 12 month market share for Symbian Nokia and Japanese is 45%. About one in five of these Symbian customers had really 'abandoned' Nokia in favor of the newer handsets, 4 out of 5 have remained loyal to Nokia and the Japanese.
That puts the whole Symbian market in a totally different light. So American Apple came along (and later came another American, Google's Android) and radically shook up the market. Who did they kill? They killed American Microsoft Windows Mobile and American Palm. But they only caused the Symbian partnership to split apart, and of the real superpowers of smartphones - Nokia and Japanese carrier NTT DoCoMo, they only hit 1 out of 5 of their smartphone customers. If the competition grows by 3 and the rivals by 2, and you only lose one fifth of your customer base, you are FAR ahead of the game. Symbian is proving incredibly robust, able to sustain enormous challenges and still survive.
So how strong is Nokia's own Symbian part today? (ignoring Japan) Taking the last 12 months of smartphone sales, Nokia alone outsells all smartphones sold by Apple, by RIM and HTC, the biggest rivals numbers 2, 3 and 4 - combined! Do not misunderstand, that the 'departing family members' of Motorola, Samsung and SonyEricsson, when they departed Symbian and their numbers would be reflected, means any disaster at Symbian. You need to look at Nokia's market share, and yes, it has fallen but it has only fallen by a small portion - they are doing far better than any rival dumbphone maker - in this situation. And considering how many new rivals have entered the market, it is a small miracle Nokia's market share has not been cut in half.
There is the 'conventional wisdom' that Symbian is failing in the market place (it isn't). There is the conventional wisdom that Nokia is copying all of Apple to desperately stay alive (it isn't, Apple is copying Nokia far more than Nokia copying Apple). There is the conventional wisdom that Symbian based smartphones are not viable today and into the future (not true). The reality is, that Microsoft Windows Mobile was a casualty, and Palm was a casualty, both USA based non-modern smartphones on obsolete concepts. But Nokia and Symbian had fore-seen consumer oriented smartphones long before the iPhone launched. Nokia had fore-seen the touch screen long before the iPhone launched. Its only that they move with meticulous, methodical and yes, at times slow pace. The industry analysts claimed Nokia dead many times before, supposedly for missing the hottest new thing - remember Razr, just before the iPhone?
And still today, who sells more smartphones four years after the iPhone launched? Nokia, twice the level of iPhones. Nokia is not struggling in any place except the fantasy-land of US based clueless analysts who think the smartphone is the same as a pocket computer. They should go study the previous Apple pocket computer, the Newton, and why it failed, but why Nokia invented the smartphone and has dominated the smartphone space ever since.
LOW COST MARKET
So then there is the reality. The reality is, that in most markets, the end-user surveys say that the most desirable smartphone is the iPhone. Sure, so too in cars, the Porsche is more desirable than the Toyota. But the iPhone is, and will always be, a luxury phone, only for the very rich. The average household income of iPhone owners in the USA is 100,000 dollars, far above the second highest, which is the Blackberry. The iPhone costs, when you remove the handset subsidy (2 year contract price) about 600 dollars. The average of phones sold on the planet is about 120 dollars. Apple's brand is by far the most expensive by average price, of any mass market phone maker, nearly twice the price of its nearest competitor, RIM.
Nokia's average phone price is under 100 dollars. Nokia is not in the business of connecting only the rich people. Nokia slogan is connecting people. All people. They want to bring phones to everybody. It means cheap smartphones. It means a robust, mobile-optimized but efficient and 'cheap' smartphone operating system for the mass market - this is Symbian, not iOS. All analysts of the industry state that the growth in the market is not at the luxury price end, the growth is all in the low-price end of the market. Can Apple sell a 100 dollar iPhone profitably? No. Can Nokia? Yes. It has the reach, the distribution, the scale, and the production capacity to do just that. So can Nokia capture this growth opportunity? Yes. Will it mean low-profit phones, yes. So don't expect Nokia to suddenly take half of the industry's profits. That is as unlikely as Toyota taking the majority of the car industry's profits. The luxury end takes a disproportionate share of any industry's profits. Again, look at the Swiss watchmakers.
But Nokia cannot contemplate a shift away from its mass-market strategy, into a luxury-only strategy (something Motorola and SonyEricsson have both tried and failed miserably in so doing, while abandoning hundreds of millions of customers and annual sales in the process).
So Nokia's Symbian? It is being aggressively rolled out into lower cost phones, that previously used to be 'featurephones' for India, China, Africa, Brazil, Russia, Indonesia etc where there is a huge market for smartphones, but most of those will be mid-tier priced, not luxury premium phones. Is this the right strategy for Nokia? Of course it is. Are they executing it well?
MARKET SHARE VS DUMBPHONES
Here is the ultimate proof that Nokia is executing perfectly. Please remember again, that the rivals to Nokia are Motorola, Samsung, SonyEricsson and LG. Their mission, for all 5, is to take their global markets in cheaper dumbphones, and migrate those customers into the more expensive and capable smartphones. Who is doing this the best? Well, the only one of the top 5, who has consistently maintained a better market share in smartphones than dumbphones - is Nokia. The only one! So Motorola, SonyEricsson, LG and Samsung, when migrating customers from dumbphones to smartphones - have LOST customers. That is failing execution. But contrast Nokia, for every quarter since the iPhone launched, Nokia - and only Nokia - has GAINED customers in migrating them from dumbphones to smartphones! Yes, every single quarter Nokia's market share in smartphones has been better than its (world-leading) market share in dumbphones. This is what you want as a Nokia executive or investor. To successfully transition from the old technology to the new, and to be best at that transition. It is what Nokia has single-mindedly focused on. Not on copying the fashoniable phone of the day, whether that is the Razr or the iPhone. Nokia has focused on ensuring it gains customers, as it migrates from dumbphones to smartphones. This is perfection in execution of a smartphone strategy - by a legacy dumbphone maker. Nokia is as far ahead of the pack against its true rivals, the top 5 legacy phone makers, as Apple is ahead of the pack among its traditional rivals, the PC makers.
DONE IT PROFITABLY
And only Nokia has done this transition profitably. The past four years have seen the introduction of the most desired tech brand, Apple, into the smartphone space (something to hurt every legacy player), and the explosion of smartphone makers from 8 to 23, and the explosion of smartphone operating systems from 5 to 11, and the abandonment of most of Symbian partners leaving Nokia alone with it. This had been the bloodiest time of any tech industry, ever. The most competition in the smartphone space than any technology ever, among Fortune Global 100 players - with major companies utterly bloodied in just the past year (Palm died, Google Nexus killed, Microsoft Kin phones killed). Yet in this bloodbath, Nokia is the only one of the classic Big 5 phone manufacturers, that has reported every single consecutive quarter of profits in its handset unit! LG, Moto, SonyEricsson and Samsung have all reported losses in their handset units for at least some quarters in the past 4 year period. Only Nokia did this incredible balancing act, profitably! And this, while the global economy suffered its biggest crisis in our lifetimes. A time when dozens of global giant corporations went bankrupt, and most industries lost money, and most companies reported losses - including each of Nokia's real rivals. But Nokia reported consistent profits in its handset unit, quarter after quarter after quarter.
Is this not the perfect execution of a smartphone strategy - for a legacy dumbphone maker - and compared to Motorola, LG, Samsung and SonyEricsson - isn't this a 'night and day' comparison? But no, the Apple-obsessed analysts cheer how big profits Apple makes and ridicule Nokia 'for having lost the plot.' All the while ignoring the facts, that Nokia keeps increasing unit sales every single quarter-on-quarter (something Apple has not been able to do). And still today Nokia towering over its rivals, the numbers are clear that for the full calendar year 2010, Nokia will sell at least as many smartphones as its next biggest rivals number 2 and 3 (Apple and RIM) combined. Nokia was 'failing' in the market, exactly how?
OVI STORE - IS A SUCCESS
And then the Ovi Store. There are those who say Nokia lost it when compared to Apple's iPhone App Store. First, obivously, Nokia had an app store before the iPhone. Nokia's first consumer-oriented app store - where apps were not sold via the carriers/operators, was created for the N-Gage. It failed in the market, not because it was bad, but because the carriers/operators hated it that Nokia, a handset maker, was introducing an independent app store. They would not help Nokia sell the N-Gage handsets in any way. But Nokia had seen this opportunity - what Apple then did - of offering consumer apps in an app store - long before we had seen an iPhone. And Nokia was brave enough to launch it too. And was severely punished by the carriers/operators of the world for doing that. So Nokia withdrew its N-Gage store.
Don't say Nokia didn't see this coming. And then Ovi. Nokia waited until Apple had its App Store up, and then Nokia came back. If Apple is allowed to do this, then Nokia can also. But this time, Nokia did it with the operators. Not against the operators, like Apple.
Nokia went through the trouble of getting operator billing for its Ovi Store (none of the major rival apps stores have operator billing). Nokia has negotiated the operator billing portion for over 100 carriers/operators already! Ask any experienced developer, would they prefer operator billing rather than credit cards or Paypal - they all say they prefer operator billing. Who is giving it to the app developers? Not Apple or Android. Its Nokia again. What is best for the whole eco-system. Not the easiest or fastest, but best.
Meanwhile how is Ovi doing? Of the handset maker or OS maker app stores, Ovi is now second best-selling behind only Apple's iPhone App Store. If you cannot - as Apple forbids it - use Apple's own App Store, then if Ovi is the second best performing app store on the planet, you'd have to be a fool to abandon that, in favor of Android or Phone 7 or any other app store, wouldn't you? Nokia is still building its Ovi store, it is gettting better by leaps and bounds, and will reach a far wider range of total Nokia phones than just 'Symbian' phones. Many simpler S40 phones can use the Ovi store, as can soon the MeeGo handsets. After all that investment in Ovi, and the considerable success - second best-selling manufacturer app store only behind Apple - this alone is reason for Nokia to continue on its path, not shift to Android or Phone 7.
But obviously Symbian is still old. It is ever more costly to maintain and develop. It has a broad global developer community who hate developing for the very old system, and find it far easier to develop for the iPhone or Android. So what, if Nokia once did have the right strategy, it needs something new for this new decade. Ok, I agree with you on that. But that 'something new' is not Android or Microsoft Phone 7. It cannot be. And here is why.
Nokia's nearest three rival smartphone manufacturers - Apple, RIM and Samsung - all have their own OS. Nokia also has its own OS. If your nearest rivals have full control of their destinies, and are not dependent on an outsider like Google (Android) or Microsoft (Phone 7), then in an ideal world you - Nokia - should also maintain control of your own destiny, and develop your own smartphone OS.
The ideal solution for Nokia is to create a new operating system, from the ground-up, optimized for touch screen modern smartphone apps oriented uses. Like the Android and the Phone 7 (and iPhone iOS). And it ideally should be Linux based like Android (but not Phone 7 and not iOS). And ideally it should be open source like Android (but not Phone 7 and not iOS). And ideally it should not be solely proprietary, it should be developed together with the industry such as with Intel (unlike Android, Phone 7 and iOS). And ideally it should be developed with a compatibility level built in, to allow developers to continue to develop for Symbian while the work could be used simultaneously for the new OS (unlike Android, Phone 7 and iOS). And finally, Nokia should make the new OS available for multiple manufacturers, like Android and Phone 7 (but not iOS). And the new OS should be compatible with the current app store and the current OS like Android and iOS (but not Phone 7 vs Windows Mobile).
That would be 'perfection' in a new OS, it would encompass everything that is excellent in iOS, adding everything that is excellent in Android, and adding everything that is excellent in Phone 7. But it would be even better than any of those 3 rivals.
This is Nokia's MeeGo (formerly Maemo) strategy. It is a totally new, from the ground-up, brand new touch-screen optimized Linux based smartphone operating system. The newest on the planet, first phones on it will only ship next year. It is open source (something iOS and Phone 7 are not).
This develpment path is not easy or cheap. It will require 'parallel' development of two expensive smartphone operating systems, but this will be best for the end-users (consumers who already hold hundreds of millions of Symbian phones by Nokia); it will be best for Nokia distributors (mobile operators/carriers); it will be best for Nokia apps developer community. This is the best solution, if not the easiest, fastest or cheapest. And compared to joining Android or Phone 7, only this, the MeeGo strategy, would allow Nokia to maintain control of its own destiny.
If you think Symbian is too old, and must be discarded for a more modern OS, then yes, Nokia is doing that. But it is doing it the best possible way for Nokia and all its existing developers and customers (and investors). That strategy is the new OS, MeeGo. And then Nokia has gone through the extra trouble of branding its app store separately, as Ovi, so that when the migration happens, Symbian developers won't feel their store is closing (look at Windows Mobile) and the new MeeGo developers can find their store with much business (vs Bada, Phone 7 today). Then Nokia went through the extra step to ensure backwards and forwards compatiblity, by creating QT the development environment. Today all Symbian and MeeGo development goes through QT, which means that one development environment can truly provide 'create once, publish twice' solutions to create for both Symbian and MeeGo - and better yet, QT can be used to develop for Android and iOS and Phone 7 too. This was a costly extra step for Nokia, but again, isn't that the best step, considering the developer community? Microsoft simply abandoned Windows Mobile, no migration path whatsoever. Apple has said its backwards compatibility will not be extended to earlier OS versions. Nokia doesn't think that way. Nokia looks after its developers - but this is costly and takes time. But over time, it is the best way for all.
If you subscribe to the theory that IBM, then the world's biggest PC maker, abdicated control of its own destiny, when it allowed the small outsider company called Microsoft to produce its operating system for PCs, called DOS, and allowed Microsoft to sell that to other hardware vendors - then you can see a parallel to LG, SonyEricsson, Motorola and HTC, where they do not control their own destiny anymore. They are dependent on the whims of the operating system makers (Google for Android and Microsoft for Phone 7). Nokia has taken control of its own destiny with Symbian and is in control of it with MeeGo.
If you subscribe to the theory that box-movers in the PC world are in diminishing margins, ie Dell, HP, Acer, Lenovo etc, and the only way out of that conundrum is up the services and apps ladder via software - like Apple - then again, most of the 'second tier' handset makers are in that situation - Motorola, SonyEricsson, ZTE, Huawei, HTC etc - and only a few like RIM, Apple, Samsung and Nokia - are making both their own OS and their own handsets.
Nokia has had the best strategy of any traditional dumbphone vendors, to shift from featurephones to smartphones. Its strategy is in many ways far better than what Apple among PC vendors or Google among internet companies have managed. Those who have complained that Nokia somehow 'lost the plot' have only obsessed about touch screen phones - but even there, have not done a reasonably accurate analysis of that small market-segment (roughly as many QWERTY phones sell globally as touch screen phones, why is Apple not accused of stupid strategy for abandoning this market segment, all 5 of its big rivals in smartphones, Nokia, RIM, HTC, Samsung and Motorola, offer QWERTY based smartphones as well as touch screen smartphones). And if the future of smartphones is cheap 'Africa' and 'India' smartphones costing under 100 dollars, why is Nokia not cheered for the right strategy, and Apple accused of missing out on the obious trend where the market is shifting. No, there is more to the market than just touch screen phones. But even if you believe that the 'only' future of smartphones is touch screens - then Nokia N8 and the latest edition of Symbian prove, that Nokia has adjusted to this challenge well - better than say RIM or Microsoft.
But the future for Nokia is a Linux based totally new operating system, optimized for touch screen smartphones. It will be an open source OS, developed with giant IT partner Intel. That is called MeeGo. It will be one of the best OS's out of the box, and it will be developed with a mobile phones type of mindset, rather than clumsily adapting from the PC world like iOS from OS/X or the defunct Windows Mobile. Nokia has executied its smartphone strategy the best of all dumbphone makers. It also has the best strategy for the future of smartphones, of any current smartphone maker. MeeGo has everything you could want for in an OS, and has several items that none of its rivals can match. Nokia would be utterly crazy to abandon this path, and join Android or Phone 7.
So I say this: shifting away from Symbian/MeeGo would be suicidal for Nokia. If they do that, it is a sign that Nokia is throwing in the towel, admitting defeat. If Nokia abandons Symbian/MeeGo and joins Phone 7 or Android, that is the time to immediately liquidate all Nokia shares, it is a sign that Nokia HQ has gone berzerk and truly mad. But they won't do that, I trust the Nokia HQ is occupied by execs with brains far bigger than mine, and they can see the big picture - and the long game - far better than I can. They have built meticulously a strategy, to take advantage of Symbian, to not forget their developers, to have a migration path, to have an app store, and a future-proof new OS for their smartphones, allowing today's developers to develop for both Symbian and MeeGo, using QT, and selling on the Ovi Store. This is the best strategy in phones - proven not only by Nokia's giant lead in smartphones, but by the fact, that only Nokia manages to gain customers as it migrates from dumbphones to smartphones. And even as its margins have been hurt in this economic global situation - whose hasn't - Nokia has not reported one quarter of losses in its handset unit, that is how good they are in execution.
Don't belive the hype or hysteria, that Nokia might abandon its Symbian and MeeGo strategy. It is truly the best in the market. Nokia will have more than a third of the total smartphone market in 2011, and in 2012, and in 2013... mark my words.
Two comments about 2 hours later: - first, later this week I will have the pleasure of announcing my 10th book. Please come back towards the end of the week for it. UPDATE - the 340 page book has now been announced, it is called 'The Insider's Guide to Mobile' and best of all, this is the first time a book of mine is available completely free for download. See here for link Tomi 10th book.
Secondly, Robert Scoble (Scobleizer) gave a quick comment, a bit tongue-in-cheek, saying no matter how many words I write, Nokia is still doomed. His rebuttal is here: Why Nokia is Still Doomed, no matter how many words Tomi Ahonen writes - please go read his reply and I will meanwhile write my response to his posting. He makes good points but, Nokia's strategy and execution is sound, even if the Scobleizer doesn't meet Nokia execs that he might like.. Please read his response first, then read my reply to his blog here: Nokia strategy is right, even if the Scobleizer can't find developers who say they like Nokia.