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« Where is Your Competition Coming From? WSA Awards show surprising breadth in mobile innovation | Main | Nokia Smartphone Strategy and Execution IS Right, even if the Scobleizer can't find developers who say they like Nokia »

December 13, 2010

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Hyoun Park

I think Nokia's strategy is true if the goal is to control the future of mobile from a global subscriber perspective, but this is a very long-term perspective. Over the next 3-5 years, an Apple-like strategy of skimming the top 5% of users will provide more profit than Nokia's current strategy and I think that will lead to continued questioning of your assertions.

However, the real question about Nokia's ability to migrate to MeeGo. We're seeing RIM trying to do the same thing with QNX and Microsoft making a similar migration to Phone 7. How will Nokia be more successful when Apple and Android won't have to go through the same growing pains? It'll definitely be interesting to see how this launch goes through in the next year, as it seems to be a critical leap for Nokia to be competitive at the high-end or to bring high-end functionality down to the "dumbphone" more quickly than Android.

Antoine RJ Wright

A few questions while reading this Tomi;

- in an economy where data is just as important as communicating, is it important whether the platform (and its enablers) start from a communicator/phone mindset (Nokia/Symbian) or a communicator/consumption one (Nokia/MeeGo, Apple/iOS, etc.)?

- your paragraph at the beginning of "But is Symbian Dying in the Market" is too important, and yet so many people glaze over that point.

- you mention that it is Apple copying Symbian, could you dig a bit more into that (I don't agree; Apple seems to be copying Palm with better platform value and integration efforts/execution because of iTunes); Android seems to be copying Symbian, and doing so quite rapidly in markets where many of those entrants who weren't in that "8 in 2006" segment want to have a piece of the pie; can Nokia hold off its competitor in Google in that respect?

- in your section "Done It Profitably", you were careful to note that Nokia's handset division was profitable - quick readers will rebuke you a bit for that; but those who read won't - nice touch; question is, can Nokia maintain that with fewer products in the pipeline (for execution's sake) and its larger emphasis on Ovi as a profit driver?

Nice piece; and I got through it all before my tea got cold. You must be doing something different when writing :)

Dardo

Although Nokia is a good mass market smartphone maker, it is undeniably a terrible high end smartphone maker. While their Symbian smartphones might be great 100-300$ smartphones, their 400$+ smartphones are god awful and underpowered! Even the new Symbian 3 handsets are awful to use, I've tried them first hand.. the software is nowhere near a finished product, to their promise the hardware is amazing and Ovi Maps is what's saving them! The fortunate thing for Nokia is that non of their rivals are anywhere near of catching up to Apple with their wonder iOS product. This gives Nokia time to adjust.

However I will say this, if Nokia's new high end OS, MeeGo, isn't a smash home run hit they will remember the moment they passed on webOS, a great fluid OS that had potential to be on par with iOS. Just imagine a Nokia N8/E7 or C7 running on webOS right now.. I bet you it would be a smash hit home run. They're doing decently right now but no where near the level of the iPhone or the legendary N95 a few years ago.

We'll see how it pans out.. all I know is that if Apple released a stripped down 300$ iphone running iOS and keeping that beautiful screen it would double or even triple its sales. What if Apple brings out a $300 iPhone? All dynamics of the mobile industry would change.

EagleEye

Thanks for the great read and top notch analysis.

mirmit

Why Symbian OS is taget as Old from anybody, including you Tomi?

Linux has started in 1991 and is the adaptation of the old Unix started in 1969.

iOS is a derivative from BSD dated back 1977.

QNX to be used by RIM's future devices date back from 1980.

Symbian OS development started in 1994.

I would be happy to see how the most recently developed system is already taged as old.

Additionnaly, Symbian is the sole OS of the list to have been started from day one with mobile devices in mind. The others have been adapted to cope wit hmobile phones constraints.

Above all the OSes a UI layer have been adapted and from this standpoint, S60 is the oldest as first put on the market in 2002. But when the transition from S60/AVKON to QT will be completed by Nokia, then it will be on par with Meego/Linux.

Symbian will remain a central piece of Nokia's strategy, as it can run on half of the power or even less than any Unix derivated system. You don't need 1Ghz Cortex with 512+ Mb of RAM for a Symbian device, even if it would benefit from this amount of horsepower. This lead to devices less hungry in batteries with a lower BOM providing the same level of services as their competitor and will address all the markets needs.

Gerd

Nokia could conceivably use Android or Phone 7 to gain a foothold in markets they have currently no presence, such as the US or the global CDMA market.

However, they would probably make sure that such a phone would ship with Ovi services instead of Google's or Microsoft's. That would make an interesting not-quite-Android phone, as my understanding is that Google does allow access to Android market without Google approval (=Google apps).

It would probably be hailed by the market as the weird-shit-suicide move of the century, but in some cases I would certainly see it as a simple money-making opportunity.

Tomi Ahonen

Hi Hyoun, ARJ, Dardo, EagleEye, mirmit & Gerd

Thank you for the comments. I'll respond to each individually

Hyoun - I think we agree on the potential of skimming the customers, that an Apple-like strategy is possible for Nokia, but focusing only on the top end of the market, while giving short-term profits, would plunder Nokia into a global market share tailspin - exactly like SonyEricsson in 2006 and Motorola in 2008 - one which is almost impossible to recover from (witness SonyEricsson and Motorola haha). There is the real biggest rival to Nokia - Samsung - waiting for Nokia to make any market blunder, and take over. So I think Nokia cannot indulge in that short-term opportunity, else they will be a history lesson of how another tech giant fell and died.

I totally agree with you that the critical challenge for Nokia is the migration to MeeGo and it has to be done while rivals don't have the same problem, its similar to how Microsoft had to migrate its market leading DOS market share to Windows, while Apple's Macintosh didn't have to do that shift. It can be done..

ARJ - good points. On your first, I am still 100% convinced that communication does currently - and always will - trump the need to use data. It is why we carry smartphones today, not PDAs, which gave us data services more than a decade ago, and did it better in our pockets than early smartphones. So I do think any smartphone OS, that is from the start built on telecoms needs, ahead of data needs (Android, Phone 7, Bada, MeeGo) will do better than those that are ported or old.

On Apple copying Symbian, I had a blog posting here about 18 months ago or so, that showed the first 12 things that Apple copied from Nokia legacy phones and Symbian. Now that we have iPhone 4, we've seen that number grow to 15. If you could search on the blog for Apple and 15, I do think you'll easily find the article. As to Android vs Nokia - I do think the current trends suggest Android will pass Symbian next year. The primary driver to when that will happen is how rapidly Samsung starts to migrate its Android phones to Bada.

As to profitability, I am confident the Nokia sourcing channel management is also the world's best, meaning they can handle the inevitable bottlenecks etc, and use their size as clout, to get supplies when there are shortages, etc. That is why the biggest tend to have the best profitability in most such manufacturing industries, the benefits of scale go to the biggest. Its not a guarantee, but they are the 'most safe' in this way.

Dardo - I hear you, but I am guessing you live in North America and have not been exposed to most of Nokia's top phones over the years, like say the N80, the N93, the E90 Communicator, the N96 etc. Their last flagship, the N97 was a very rare failure as a top phone, but those other phones have regularly been rated among the best phones of their period - the E90 Communicator beat the current rival iPhone 3G handily in most comparisons in Europe - and the N93 would have easily beaten the original iPhone 2G (but was superceded a bit before the iPhone launched, by the N95). Please rememember that different consumers want different things on their phones, so for example the top-end Nokia phones have always had far better cameras than the iPhones - more people desire a good camera than a touch screen for example - and Nokia has had always a long series of premium QWERTY phones - again, more people on the planet buy QWERTY phones than touch screen phones - and the Motorola study this year said a third of consumers will not consider a pure-touch phone that doesnt have a real keyboard/keypad, for they need the ability to send SMS text messages with the phone hidden in one-handed operation.. But if you want to argue best touch-screen phones, yes, Apple totally re-invented that, and has by far the best touch screen phones today. In that area they lead, no question. But its only one part of what people buy in premium phones.

As to the rivals, haha, you did get my point. Its not that Nokia is racing Apple, Nokia is racing far bigger handset maker rivals (in volumes of handsets, obviously, not in profits) and there is where Nokia leads by a mile. We agree. And I agree with you that MeeGo is critical, and that Apple could easily double its sales if it released an iPhone Nano in the 300 dollar range (as an unsubsidised price). But even then, Apple's total sales would only be about 8% of all phones, being far smaller than LG for example..

EagleEye - thanks

mirmit - haha, thanks. Ok, I hear your point, but as a phone OS, Symbian is the oldest still running haha.. But you make a great point about the power consumption. Symbian has always been designed to be very power-efficient and has apparently (I am not a programmer, but what I hear) been far more efficient than its contemporaries, thus also able to run on less-powerful CPUs, using less electricity, giving better battery life - the real bottleneck in phone design.

Gerd- you make an interesting argument. The point, however, in the USA, is not the availability of an Android or Phone 7 OS based phone, it is that Nokia is not liked by the carriers and they won't support Nokia phones come what may. They wanted flip phones like the Razr a few years ago, Nokia refused, but LG and Samsung were happy to comply (and Moto). And the US carriers wanted Nokia to cripple its WiFi and Bluetooth, so that users couldn't use alternate wireless networks - Nokia refused, Samsung & LG & Moto too happy to comply. And Nokia wasn't producing CDMA phones (in its top lines), the rivals were. So the US carriers just started to hate Nokia. Now Nokia needs to make peace with the carriers, its not a question of what OS to use.

But the scenario you do map out, would indeed be seen by just about everybody as weird-shit-suicide, for both Symbian and MeeGo, and a clear sign Nokia is going to end that development. Then all Symbian and MeeGo partners would vanish, leaving Nokia high and dry. It would indeed be the dumbest move by a handset maker in history and would seal the fate of the company.

Thank you all for writing.

Tomi Ahonen :-)

mirmit

Tomi, in fact Symbian OS is the oldest as the sole smartphone OS still running ;-). The others are PC/Mini/Mainframe OS put in a pocket. And on dumbphone/featurephone, we are talking about VxWork, OSE and Nucleus which are older than Symbian.

mirmit

About App Store, does anybody remember Preminet, launched October 2004. It was an app store with operator billing for applications and contents distribution for Java and Symbian based phone. It's sure Nokia waited for Apple to have the idea to launch an appstore.

I guess Nokia has alway been too keen with its main customers - the operators - and tried to not disturb them, at Nokia expenses. Thanks to Apple, we have now data rate much more reasonable, making web surfing from a phone realistic for a lot of people, but before 2007, every single bytes was accounted and billed.

Dietrich

Good Lord.
Put a sock in it.
That was the most verbose article I have ever read.
I will never come here again.
Seriously, I get it--you like nokia and so do I.
They will prevail.
Peace out.

new era hat

thanks for sharing

Rob

Excellent article and understanding of global strategy

Geraldo

Hi, great article, thanks. I'd like to say that developers generally refer to the framework as Qt (Q upper - t lowercase) not QT (all upper), maybe to distinguish from QT (Apple QuickTime).

Billy

Just to say that Nokia did not create Qt, they bought the original developer Trolltech in what may eventually turn out to be the bargain of the century and what really saves Nokia's skin.

I also don't agree that Symbian is making way for or being replaced by MeeGo, I think the two will co-exist far into the future as they target completely different market segments - Symbian the low-end to mid-range and MeeGo the high-end smartphone and mobile computing markets. With Qt sitting on top of everything.

The biggest problem with Nokia, and this has always been their problem, is not so much their lack of vision or strategy, but their execution in terms of software. This has to change if they are to succeed longer term - hopefully Elop will see to it that the necessary changes come into effect.

arg

I can't see a single reason why MeeGo would be any superior to either the iphone or android platform, sorry.

Billy

@arg - being a truly open OS would be just one reason (as Android is only psuedo-open and developed behind closed doors, while iOS is entirely closed/proprietary).

shuffer

This doesn't really stack up, I'm afraid. The supporting arguments are taken from too disparate a field (using iOS from three years ago when it suits; using WinMob from eight months ago in the next example). You can make any argument when you scatter your focus in this way, as per the 'Magic Bullet' theory. Conflicting opinions about who is leading who in the technology aside, the prevalent market trend for Symbian and Nokia is down, and very fast. I predict that their market dominance will be eroded within the next two years unless they can gather a focused effort in their marketing and operational strategy. The main reason will be the gradual assimilation of the 'dumb' phone market into the smartphone field, facilitated by Android; if you can have an Android phone that is superficially simple and easier to use at the same price, who would bother with a Series 40 type device on either side of the market? Another reason is that the US market doesn't seem to want to adopt either Symbian or Nokia devices in any real numbers and while that is not devastatin in terms of numbers at the moment, the mindshare and promotion that the US media and web presence can offer to the rest of the world is going to be seriously missed. iOS is another matter, and perhaps not a significant one in this context.

There really is no way of explaining a massive market share loss and the retraction of the major partners as a positive thing for Symbian or Nokia. The confused open-source strategy didn't help, either (although I have to say, Meego does look interesting.) And I say that as somebody that used to use Symbian in all its forms and held a real affection for the system and its proponents (it has its roots in Britain, after all;). As far as the technology goes, there is a real difference between raw features and the modern feel of an OS. I has all the things you mentioned in your article when I used Nokia Symbian phones (folders, multitasking, Flash) and yet to this day, Symbian feels like an out-of-date system compared to iOS and Android. As for the iPhone fundamentally changing the way smartphones are designed and marketed, it is really difficult to argue with that, as in this example, Nokia never made a phone that resembled the iPhone before, and now they make many, with a lot of the same technologies.

shuffer

And: I would love to know the source of the statement that the average iPhone owner has an income of $100,000! I suppose all it would take is for a couple of dozen billionaires to swing it either way, but even so, the figure is utterly ridiculous.

Phil W

@shuffer, there's the problem with all these blogs. they keep repeating things even when not true. There has been no massive market loss for Nokia. Nokia has lost a little it is true, but it's hardly massive. There has been a bigger loss for Symbian and that tends to get confused with Nokia, but in fact most of the loss for Symbian has been because Sony Ericson and Sampson have pulled out of producing Symbian phones.

Jontte

Tomi,

I am a bit puzzled by your analysis and choice of some numbers. You claim Symbian share in Japan is 45%. I have seen reports, for example in BusinessWeek last spring, that iPhone’s share in Japan is around 70%. One of these numbers must be wrong.

Also, when comparing Nokia share to biggest rivals you choose 12 months, but fail to mention that during that time RIM, Apple and especially Android (from several manufacturers), have grown faster than market, and that Nokia is having hard time on the most profitable segment.

USA may be quite a small market unit wise, but money wise and mindshare wise (both media and developers) it is not. Remember the Ballmer dance, Developers, Developers, Developers. Apps are the future of smartphones. No apps or poor apps equals an uninteresting platform, for which you can not charge premium and to which the users are harder to bind. Android and iOS are leading the pack, by a long margin, here.

I still fail to see why number of sold phones is the most important thing for you? Companies live to make money, if they are not profitable they cannot live. If they have problems with margins (Nokia is in the danger zone) they may be incapable to invest enough in R&D.

Sure, Nokia is trying to be green, ethical and everything good and fluffy, none of that really matters if you lose developer support, or get in trouble with margins.

Autoexec.bat

Let me say straight out that I am an American. But I am an American who has given Nokia plenty of chances including up to about 3 months ago.

But the pro-Symbian/pro-Nokia mental gymnastics continue. Point well-made and well-taken on how Apple essentially destroyed other *American* competitors in the smartphone race but didn't harm Symbian all that much. That is still true up to this point in terms of market share. So it seems that the biggest factor in Nokia's favor is an increasing rate of population growth and little more.

Nokia is in serious danger of being the phone manufacturer that people can't wait to leave behind once they've achieved a wealthier status in life. In China, for example, brand names matter in terms of personal pride and as a signaling device to others. If Nokia is the phone of choice for the population at-large, those same people will probably leave those phones behind once they have more money to spend. This won't apply in every country but what happens to Nokia if they push billions of low margin handsets to the masses but fail to keep those same people as customers as they "graduate" to a smarter handset?

Niclas

It's good that Nokia took back control of Symbian.

Nokia has lost some of high end market to android and ios but I hardly see them fighting for their life. When Symbian is reaching cheaper devices then it will also go in incredible volumes and the app market will come. I agree that Apple is too expensive. I just got an N8 for free(2 year contract), I would have had to a pay a fortune for an Apple. I would agree, Apple will never ever connect all people.

With Qt in both Symbian and Meego the two OSes will contribute to a Qt market.
I wonder how it goes with S40? S40 is today for the very cheapest devices,
maybe add of subset of QT to s40? that would be create a huge app market. s40 is huge and nobody speaks of s40.

Fai

Just a correction on some facts: Symbian was created by Psion as a spinoff from their EPOC OS. Recognising that they needed licensees to continue development on this, they co-opted Nokia and Ericsson into the deal, forming Symbian in the progress. Motorola came soon after. There's an in-depth article on The Register that covers Symbian's history quite extensively - and the politics behind this.

Gerd

Tomi, the move I describe is not entirely unprecedented. Nokia 6708 was an UIQ phone for the Chinese market only, even when Nokia was throwing their full weight behind S60 at the time.

But basically I agree that it would be an odd move, and especially in the US market. I'm just saying that if there was some market opportunity or operator requirement to sell a few ten million phones, doing a completely OEM Android/Phone7 device might not be totally out of the question.

Raphael

Nokia is well suited for emergent market (bric) because their phone are cheap, solid mobile. Plus there is not 3G/wifi or only in city, there is no or few data plan, weak networks. Apps cost a lot for this kind of customers and they don't reach their firts expectations (make call). But in mature market, Nokia is doomed because people expect far more from a mobile : they want infotainment and the price is ok (less than 0,5% of their revenue for a terminal vs 10% for a bric citizen).

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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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