I am stunned by news from Nokia today. We hear that Nokia is terminating Nokia Money, the Nokia mobile payments solution it has launched in several countries in Asia including India the second largest mobile phone market on the planet behind only China, and other big Asian countries like Pakistan.
THE FUTURE OF MONEY
This is mind-boggling to me. Nokia saw the birth of mobile money, when the world's first mobile payment solution went commercial, in Finland. It was Coca Cola which deployed the world's first two SMS text messaging payment based vending machines in the Helsinki region in 1999. One was at the Helsinki airport. The other? In the technology city part of Espoo, Otaniemi - yes exactly the same township where Nokia Headquarters are based.
The world's first major international consumer survey of mobile commerce was .. by Nokia in May of 2001, covering over 11,100 people in seven major countries across four continents. (I happen to know, as it was my department at the time that conducted that survey and I was often quoted about its findings in 2001). By the time I presented a keynote to the world's first conference on mobile commerce in London in June of 2001, there were dozens of commercially launched early mobile payments solutions from lotteries to train tickets.
Since then we've seen ever more clever mobile payments and solutions. Smart Money out of the Philippines won industry awards for the first complete mobile payments solution (built around SMS). Soon its cross-town rival Globe launched G-Cash in the Philippines. More advanced solutions arrived in the form of NFC based payments solutions in Japan and South Korea, onto the SIM card based centralized mobile solution first executed in South Korea.
The world's first full 'mobile wallet' solution was launched by NTT DoCoMo as Osaifu Keitai in Japan in 2006. NTT of Japan is the company that launched the whole mobile industry years before the famous Motorola phone was sold in the USA. NTT DoCoMo is the most inventive and innovative company in mobile, they launched the world's first mobile internet service, first 3G service etc. And again, Nokia would know of this mobile payments development quite intimately, as NTT DoCoMo was a strategic partner with Nokia on the Symbian platform - those Osaifu Keitai mobile wallet phones were using Symbian as their operating system. NTT DoCoMo reports that Osaifu Keitai is the most loved service by its customers in the illustrious history of the company and is exceptionally 'sticky' in building loyalty.
In 2008 Safaricom of Kenya launched M-Pesa the internationally most famous mobile payments solution. Its creators including my friend Susie Lonie won the Economist Innovation award for 2010. Today more than 30% of the total Kenyan economy transits a mobile phone. Vodafone, the world's largest mobile operator group by revenues has been expanding the M-Pesa solution from South Africa to parts of Asia.
China Mobile the world's largest mobile operator group by subscribers believes strongly in mobile payments and has an initiative to develop it together with Vodafone and Softbank of Japan. Again Nokia would know this intimately as China Mobile was a strategic partner in the MeeGo operating system environment, and MeeGo was designed from the start to include NFC support (something that Microsoft Windows Phone for example cannot do today).
Nokia got involved in mobile money directly in 2009, with the launch of Nokia Money in India in 2009. Nokia has since been saying that the mobile money side of Nokia is one of the main keys to securing market success for the 'next billion' internet users that Nokia wants to serve.
Nokia said in 2010 that from 2011 all Nokia smartphones would support NFC, both using Symbian and using the upcoming MeeGo OS. Then Nokia's CEO Olli-Pekka Kallasvuo was fired, and Nokia hired ex-Microsoft man Stephen Elop to run Nokia. In February 2011 Elop released his infamous Burning Platforms memo (the costliest management memo of all time and half of the Elop Effect, the most damaging management communication by any Fortune 500 sized company in the economic history of humankind).
POURING MORE GASOLINE ON BURNING PLATFORM?
I am not going to re-litigate the Burning Platforms memo here again. I am only going to quote Nokia's CEO Stephen Elop about the very survival of Nokia. Elop wrote in his memo:
"Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem."
Stephen Elop also provides his definition of what is an ecosystem and what are its components, when he wrote in that memo:
"The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things."
Note that Elop says after developers and applications, the third item he lists is ecommerce (mobile payments) ahead of advertising, search,. social apps, location-based services etc.
Elop has been critical of Nokia management of the past, and stated that Nokia had missed major trends and was falling behind, as he wrote:
"What happened at Nokia? We fell behind, we missed big trends, and we lost time. At that time, we thought we were making the right decisions; but, with the benefit of hindsight, we now find ourselves years behind."
And Elop blamed past management and promised he would correct these errors when he wrote in his notorious memo:
"I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally. Nokia, our platform is burning. We are working on a path forward — a path to rebuild our market leadership."
Nokia has seen the birth of mobile money, in its own 'backyard'. Nokia has seen some of its closest strategic partners invest heavily and reap great rewards out of mobile money. Nokia has moved into this space early and strongly. Mobile payments are one of the MOST CRITICAL ELEMENTS of any ecosystem in mobile.
Elop accuses Nokia of missing the big ecosystem view to winning in the mobile handset wars, and that Nokia has "missed big trends" and fallen behind by years. But in the case of Mobile Money, Nokia has literally been ahead of the curve, and literally years ahead of any other handset manufacturer, and often partnered with the major players of the industry.
BIGGEST MOBILE TREND THIS DECADE
In 2009 Estonia became the first country to eliminate the use of cash in a traditionally coins-operated industry - parking meters. Today you cannot pay for parking by coins in Estonia, but you can of course pay by mobile (Nokia knew this, Finland's first mobile parking solution was launched in 2000). In 2010 Sweden joined that idea by prohibiting coin use in bus fares, you can of course pay by mobile (Nokia knew this too, as the world's first public transport payment by mobile was launched in Finland in 2001 by Helsinki Public Transport). By the summer of 2010, Sweden became the first country on the planet to start Parliamentary deliberations of when to end the manufacturing of cash altogether - replaced by mobile phone payments. Today that race has been joined in countries from Kenya and Somaliland to Philippines and South Korea and Japan. In 2011 Turkey became the first nation to issue a target date for the end of cash: 2025.
In 2011 Visa became the first major financial industry giant to state that the future of payments is mobile. Yes. Visa. Visa says cash will disappear to be replaced by mobile money. The thinking is that radical, Visa only said that last year. If there ever was a major digital disruption opportunity in the world, here is one moment, in early 2012, that we can safely say, the biggest change to humankind this decade, is the shift from coins and cash, to mobile payments. A truly massive global trend. And Nokia had an enormous head-start in it. Here, more than anything else, Nokia was truly ahead of its rivals. Where Elop said Nokia had "missed big trends" and did not capitalize on the leadership, here was a case of true Nokia leadership which had been executed better than any other handset makers. Apple is not even out with its iWallet concept and Google's mobile payments are at their infancy.
In the memo Elop mentions Google or Android five separate times as a major threat to Nokia's future and a strong player in the battle of ecosystems, suggesting Google is a rival that Nokia should learn from. Google's Chairman Eric Schmidt wrote in the Harvard Business Review last year, that mobile money is the number 2 priority for Google's strategy. Not Google's 'mobile' strategy or its 'smartphone' strategy. Number 2 priority for all of Google!
Elop promised his staff that Elop will change Nokia leadership. To return 'accountability' and to 'align' Nokia to the new disruptive trends and to 'deliver innovation fast enough' on a 'path forward' to 'rebuild market leadership' - obviously suggesting Elop will be using the ecosystem thinking.
Now we hear that Nokia Money will be terminated. After Nokia had recruited 1.2 million paying consumers to its Nokia Money service (which is not free - it has a registration fee), now Nokia gives 3 months for those customers to deplete their Nokia Money accounts and then the mobile payment service will be discontinued. Nokia will also return its mobile banking license to the Reserve Bank of India etc. Note, as the India banking regulator tells that there are currently about 10 million mobile banking users in India, Nokia had achieved a 12% market share in the early going of a market that will soon pass 100 million users - most people in India do not have regular banking accounts and don't use such 'common' payment methods to many of my readers here, as credit cards etc.
I am flabbergastered. I have been critical of Elop's management but at least I believed Elop did understand that the future of smartphones was dependent on ecosystems - he did write that in his memo. But Elop is now actively dismantling and destroying something that he said was a major key to winning in ecosystems? Where Nokia had indeed built a huge lead over Google and Apple, Elop now destroys that leadership position. This is the same lunacy we saw a month ago when Nokia sold its advertising unit! What happened inside his brain? This man is a menace. He is single-handedly destroying all assets that Nokia had built. Specifically, Elop is destroying all the parts of the leadership in the ecosystems battle, from screwing the developers by killing the QT based migration path from Symbian to MeeGo, to now, yes, unbelievably, terminating the Nokia Money service! Why? So that Nokia could become a slave to Microsoft? Elop has to be fired NOW !
(PS anyone who wants to understand the mobile money opportunity, my 12th book was the world's first book on mobile money. If you want to see more, see Tomi Ahonen Pearls Vol 3: Mobile Money)