I Hate Bad Reporting - now usually reliable Guardian messes it up totally about mobile

I really hate bad reporting by any major publication. And now the Guardian - usually excellent in reporting about mobile - has totally goofed it up with their article "How the Smartphone made Europe look Stupid"  by Richard Wray. This is gonna be one of my 'rants'...

Richard Wray the Communications Editor for the Guardian, has a long history of studying mobile. He used to be with the publication The451 all those years ago and had several posts with media reporting on technology. Now he seems to have been drinking that West Coast cool-aid and gotten all drunk on the hype. He starts his article writing "The European giants that pioneered the mobile telecoms industry are now stumbling in the wake of American and Asian rivals."

Richard then goes on to add "For two decades, Europe's mobile telecoms sector has considered itself a world leader. It had the biggest names, the technological knowhow, the most customers. Over the past year, however, the hegemony has been smashed." Richard adds that Europe is now a flyover region not worth stopping at, because of how much it has fallen behind. He then points to where the innovation is happening: "All the service innovation is being done on the West Coast of the US, and all the manufacturing and technical innovation is being done in the Far East."

He then mentions that "access to Google, Facebook, and Twitter" on phones, is the services customers want; and the devices they "covet" are the iPhone and the Blackberry. Richard then adds HTC at the top end and Huawei and ZTE at the low end of smartphones as the global leaders. Richard points out that Microsoft is its "latest attempt to break into the market".

In the Guardian article he then mentions that Greece is one of the PIGS nations (Portugal, Italy, Greece and Spain), suggesting that because Greece's economy is in trouble with the Eurozone economic rules, that means apparently also that Greece (and the other PIGS) are struggling with mobile telecoms? 

Richard takes a historical comparison point from the 1980s mentioning Motorola, Nokia and Ericsson. He also brings networks clearly as 'valid game' in his argument, as he points out that US carrier/operator giant Verizon is going to be switching its technology from the CDMA evolution path to the 'European' GSM evolution path later this year. He says the future is the internet on mobile, and claims 'The (European) industry did not see it coming". Richard accuses (European) operators of limiting customers to 'walled gardens'. 

Richard then mentions "the runaway success of the iPhone" as if it had somehow become bigger a rival to Google's interests in smartphones than Nokia is. Richard argues that the 3G version of the iPhone in the summer of 2008 "proved that consumers will do much more than use their phones to make calls and send texts."

Richard points out that Nokia is still the largest handset maker in the world but says Nokia has been "sideswiped by by the success of Apple and the encroachment of Google's Android platform." He then claims that this has forced Nokia to Symbian free to developers, and to make the "desperate decision" to give satnav services to Nokia smartphone users. Richard claims that Nokia is in crisis (?) and pushed into bed with Intel because of it (??). Richard suggests that this crisis-collaboration is to have new devices to counter HTC.

Then Richard takes aim at Ericsson. He says Ericsson's market share had been cut in half in three years form 10% to 5% today and that it is because of Apple and Blackberry.

Richard does point out that European mobile operators (carriers) ie where he lists Vodafone, Orange and O2 (which is owned by Telefonica), have apparently the ability to get back in to the game. Ah-ha. Richard mentions networking of Huawei out of China. Richard mentions as the Google Nexus One as a new way to sell phones directly to consumers and clearly thinks this was both a success and an innovation. Richard does mention that AT&T had customer service issues related to that launch.

He then claims that "In the race to increase revenues, mobile phone operators have the chance to claw back money from the likes of Apple and Google" and refers to their apps stores. Clearly Richard Wray feels that the initiative is with Apple and Google and the European operators have to try to re-take that initiative. Richard ends with the claim that European mobile operators/carriers have to become "great at customer service" to get a fight-back.

WHAT A BUNCH OF BALONEY

That is utterly absolutely comprehensively faulty reporting, Richard Wray of the Guardian. You have taken some facts and twisted them beyond any reasonable interpretation, ignored far more relevant facts and made many false claims. You wrote a story that was not the truth, nor the whole truth, and everything but the truth. Shame on you Richard Wray! Lets take these claims one by one.

FIRST THE FACTS

First, lets be clear. There are some themes and some points which Richard refers to which have merit. Lets be very clear about this. First Asia. It is true, that the global leadership in innovation in customer service in mobile telecoms for the mobile operators/carriers is indeed very strong in Asia, starting with Japan, South Korea and Singapore. As to handsets, the South Koreans have been innovative in handset design recently for handsets designed for global markets (Japan's innovation has only been for the domestic market on usually non-standard technologies like 1Seg and SuiCa/FeliCa etc). Taiwan and China are not particularly innovative, more being powerful at copying quickly and offering lower price alternatives when it comees to handsets. With major network infrastructure providers, there is no significant innovation coming from Asia. And with applications and services, these are not typically Asian strengths with the exception of gaming in South Korea and Japan.

So yes, I agree with that part of the premise that the Guardian article has, that there is global leadership in Asia, especially with mobile operator/carrier business and also with handsets. That, however, is not much even mentioned in the Guardian article, which focuses on USA-West Coast based supposed 'leadership". Mr Wray never mentions the biggest Asian mobile industry innovators NTT DoCoMo or SK Telecom or KDDI or Softbank or Singtel etc. He also never mentions Samsung or LG in the article, but does mention HTC twice, as if HTC was the biggest handset innovator of Asia (it is far from it).

Then lets turn to America. It is true, that the North America based mobile telecoms industry has been revived, thanks in part to the iPhone, Blackberry and Google Android. These three companies however, represent only smartphones, a tiny fraction of all phones sold on the planet, where all phones form only part of the hardware side of mobile telecoms, and the services side of mobile telecoms is far greater than all hardware. Mr Wray makes the mistake of looking at an ant and thinking it is as big as an elephant. But yes, it is undeniably true that the US and Canadian mobile telecoms related industries are better off today, and more competitive today, than in the recent past. That is true. But does that mean that they have overtaken Europe? No.

And I also want to make it clear, that Europe is by no means perfect, and Nokis is not perfect and its smartphones or its operating systems or its apps stores ie Ovi etc are not perfect. There is room to improve of course.

So lets be clear. I am not arguing against some Asian players being big and powerful in mobile telecoms - but those big and powerful players like NTT DoCoMo, SK Telecom, KDDI, Softbank, Singtel, Samsung and LG are never mentioned in the article. None of the Asian companies Mr Wray mentions (Huawei, ZTE, HTC) are in any way considered innovators except perhaps for offering ultra-cheap technology. If price leadership is your definition if 'innovation' then that is all that these three companies can represent currently to mobile out of Asia. The true Asian mobile industry innovators are all missing in the article

I am also not against admitting that the US has recently woken up to the mobile industry and its opportunities. It has however, so much ground to try to catch up, that it will take years for it to reach parity with Europe, far less to 'overtake' Europe and somehow make Europe "look stupid". So, lets go over each silly statement and compare it to the facts.

"The European giants that pioneered the mobile telecoms industry are now stumbling in the wake of American and Asian rivals."

Ok, Richard Wray only mentions HTC, ZTE and Huawei among handset makers, and Huawei among equipment makers out of Asia. HTC and Huawei do not even register among 10 largest handset makers of the world. ZTE ranks as the 6th largest handset maker. These three companies together make about 6% of all mobile phones. He ignores the big Asian handset makers of Samsung, LG, Kyocera and Sharp, which combined make 37% of all mobile phones. If you want to claim that European makers - like Nokia - are 'threatened' by Asian handset makers, then if you count these four giants together, its still less than the 38% that Nokia alone sells.  

In the article Richard Wray focuses on the North American players. He mentions Apple, RIM, Google (as already apparently successful) and also Microsoft (as coming back) and Motorola as a past giant among American handset makers. Yes. If we add together all phones made in 2009 by Apple, RIM, Google and Motorola (the actual handset makers of the five, Microsoft only makes mobile operating systems) we arrive at 105 million total handsets. Yes, and Nokia alone sold four times as many as these four 'powerful' American manufactures all put together. Nokia sold 432 million handsets. This is Europe 'stumbling' in the wake of American and Asian rivals. I have not even added other European handset makers. Just Nokia alone is four times as big. Oh, and how about the only one of the North American handset makers who is big enough to be a "big Five" handset maker - Motorola? It is perennially making losses. Motorola had 22% market share a couple of years ago and today has 5%. It has shrunk sales to a quarter of what they were, and in that process went from being profitable to making losses. Economists suggest that should not be possible. If anyone is stumbling in the industry, its a US based former giant handset maker, not the giant from Europe. Meanwhile Nokia is the only handset maker to post a profit in every single quarter of the decade. Every single quarter of the decade (in its handset division). Even currently profitable Asian giants Samsung and LG were not able to post every quarter of profits in the past decade. And Richard says Europe is "stumbling"?

Maybe he means smartphone operating systems? The world's biggest smartphone operating system is Symbian. Out of all smartphones sold last year, Apple iPhone, RIM Blackberry, Google Android devices and Microsoft Windows smartphones - sold less than Symbian alone. Europe is stumbling... where? Microsoft - which by last count was still a West Coast based company - is the one stumbling. Microsoft had almost 30% of the market for smartphones a couple of years ago and now has a quarter of that.

Now lets be very very clear. Handsets are only part of the hardware side of the mobile telecoms industry. Mobile network infrastructure forms another major part of hardware and then we have the telecoms traffic. But you can't make a blanket statement of 'European Giants' and only talk about a tiny corner of the industry like smartphones. The world's largest telecoms networking infrastructure vendor was earlier in the last decade a company called Lucent. Based out of North America yes. Today that company is owned by Alcatel, out of France. Europe 1, North America 0. Then who is now the biggest mobile networking infrastructure vendor? It is LM Ericsson out of Sweden. Europe 2, North America 0. And where is that former Canadian infra maker giant, Nortel? Bankrupt thats where. Europe 2, North America -1. Yes Chinese Huawei has recently gained market share but whether they are second or third largest NokiaSiemens Networks is far larger than the last remaining North America based network infrastructure provider of mobile networking gear, Motorola's networks division. Europe 3, North America -1. European giants are 'stumbling' where, Richard Wray, where?

HEGEMONY SMASHED, HAHA

"For two decades, Europe's mobile telecoms sector has considered itself a world leader. It had the biggest names, the technological knowhow, the most customers. Over the past year, however, the hegemony has been smashed." 

But Mr Richard Wray, the facts to do not support your claims. Two decades ago, four of the world's ten largest mobile operators/carriers (ie the ones who have the 'customers') were USA based. They owned vast empires in Latin America, in Asia and even parts of Europe. What happened and whose hegemony was 'smashed?". Have you counted any customers recently Mr Wray? The biggest USA based carrier group by cellphone subscribers is AT&T, which barely fits in the global top 20, not in the top 10 anymore. Yes there is a "North American" carrier group that is in the Top 10 but that is America Movil, out of Mexico. You never once mentioned Mexico in your article. And what of those Europeans who so suffer in their hegemony being smashed? The top 10 has no US or Canadian carrier groups anymore, but has now Vodafone of the UK, Telefonica of Spain, Telenor of Norway, T-Mobile of Germany, TeliaSonera of Sweden and Orange of France. Yes, six of the top 10 biggest mobile operator groups are from Europe, Mr Wray. And of those Europeans? Vodafone owns 40% of US carrier Verizon Wireless and T-Mobile owns all of US T-Mobile. The tables have totally been turned, Mr Wray. European hegemony has not been 'smashed' - the exact opposite has happened. US based carriers have withdrawn from almost all of their international holdings, it is clearly that US hegemony has been smashed.

And where the industry is growing the fastest, in Asian markets such as India, Bangladesh, Thailand etc, we find Vodafone, Telenor, Orange etc growing strongly, while in Latin America we find Telefonica and Italy-based TIM (also a Top 20 sized player). If anything, European players are growing and expanding their holdings and US based players are withdrawing. This is exactly opposite to what you claimed.

INNOVATION

Richard says that Europe is now a flyover region not worth stopping at, because of how much it has fallen behind. He then points to where the innovation is happening:

"All the service innovation is being done on the West Coast of the US,"  He then mentions that "access to Google, Facebook, and Twitter" on phones, is the services customers want.

Yes, Mr Richard Wray, Communications Editor of the Guardian, how do the facts stack with these claims? Access to Google is what customers want, eh? Well, I had a Vodafone account in your native Britain, on a Nokia phone way back when in 2004 and used Google search happily on my service (yes, using WAP). Was this Google access invented by Apple or Blackberry (or Google) now in 2008/ No. So, why is Google search access today by some American company an innovation, but when European operators and handset makers offered it as a first years ago, that is not "service innovation"? Who leads and who follows? We have far more advanced mobile search solutions now such as AQA there in the UK, an idea being copied in.. America..

Facebook and Twitter are so new, that they have been launched in very close proximity by operators/carriers and handset makers globally so its hard to prove one way or another who was 'first' but years before Facebook or Twitter even existed, the Three operators in Italy, Austria and UK introduced a social networking service for 3G mobile video called SeeMeTV (which is making them tons of money). UK based Flirtomatic the award-winning social networking service that is among the most popular mobile internet services in the UK and launched in Germany, Australia and the USA, was on mobile phones before there was any Google Android or Apple iPhone of any kind - and they are profitable on mobile, whereas Facebook and Twitter still are not. Where is the 'innovation' Richard Wray? Who is copying who and who was the true inventor and innovator. And did you forget Skype? Another European invention that was also deployed on mobile first - in Europe. What of Habbo Hotel that invented the monetization of internet content and social networking, via the mobile phone? Not invented in America, invented in Europe.

But if you mean 'real internet' (non WAP non i-Mode) access that allows us to access any internet content like Facebook, MySpace, Flickr, YouTube, Bebo etc - that was not invented by Apple iPhone in 2007. The real unrestricted access to the real internet (not WAP) using cellular telecoms mobile phones was invented by Nokia with its 9000 Communicator - a DECADE before the iPhone in 1997.  Why is 'all service innovation being done on West Coast' if Apple is copying Nokia from ten years before? If you mean the all-you-can-eat pricing, that is not an AT&T iPhone-related invention from 2007, it was first done by KDDI in Japan at the start of the past decade and the first European carrier/operator to offer all-you-can-eat mobile data services was DNA of Finland four years before AT&T launched the iPhone. Europe is behind the West Coast, as in where?

You Richard Wray are saying 'all service innovation is being done on the West Coast'. Ah yes, what of Layar the Augmented Reality Browser, out of the Netherlands? What of Mood Music, a new (money-making) mobile music format invented by Dada of Italy? GiffGaff the Scotland based service provider that lets users do its marketing? Scotland is somewhat to the West Coast yes, but West Coast of Great Britain, not West Coast of the USA. How about the mobile stamps of E-Mobile in Germany etc.

Or lets turn it the other way. Recent big news in America has been that now over half of Americans send SMS text messages. That threshold was passed in 2008 in the United States. Europe reached that point in 2001. Who leads whom in services? President Obama is the first US president to use SMS? Wow, Tony Blair was using SMS in government in 2004, the Slovenian Prime Minister in 2001. Who is leading whom? SMS alone is worth over 100 Billion dollars, Mr Richard Wray, Communications Editor of the Guardian. You know this. And you know fully well that its a recent 'discovery' of American telecoms to join the family of SMS text messaging. They are a decade behind.

So its now the 'amazing' solutions around SMS that they are 'discovering' like paying for parking - whoop-te-doo - invented in Norway ...in 1999. In Estonia today all parking payments are paid for by SMS. Americans are 'experimenting' with mobile parking. Or mobile phone check-in, invented by Finnair in 2001. Today over half of passengers on Finnair's frequent routest use mobile check-in. American airports are gradually joining in this, even Canadian airlines got to it before the USA did. Those SMS contributions to Haiti that made all the news? You know this Richard Wray of the Guardian, the UK has had SMS charity contributions for years.

MMS? About half of British users, over 80% of Norwegians use MMS based services, either in sending person-to-person picture messages or consuming ads and media content on their phones. Essentially all European-made phones and networks have supported MMS from 2005. The Apple iPhone was not even supporting MMS in its first two years but finally do so today. This is the world's second-most-used data application with 1.7 billion active users, MMS is. Its bigger than email. Yet Apple didn't add MMS to its 'innovative' device until 2009. Who is the service innovator and who is the follower?

No, Richard Wray, the West Coast 'innovators' are not making European mobile industry giants 'look stupid'; this article makes you look stupid, Richard Wray.

WANT iPHONES AND BLACKBERRIES?

Then Richard Wray says that the consumers 'covet' the iPhone and the Blackberry. Now it is true, that the consumers do covet the Blackberry. But where is the evidence they covet the iPhone anymore? Don't you do the simplest of research, Richard Wray? For the Christmas season, iPhone sales were flat, Blackberry sales grew market share and faster even than that, consumers snapped up more Nokia smartphones. So Nokia branded smarttphones are being coveted, iPhones not. The evidence does not support your position, Mr Wray. You should know this, it is widely reported in statistics by IDC, by Gartner and by Strategy Analytics. All showed exactly the same trends. What is this nonsense you say of consumers 'coveting' iPhones and Blackberries - ahead of Nokias? In fact for your home market, the UK, the Mobile Youth survey out at the end of last year said the most desirable phone brand was now Nokia, followed by SonyEricsson, then Blackberry. No, Mr Wray, European smartphones are not falling behind the iPhone and Blackberry. You are patently wrong.

PIGS VS WEST COAST

In the Guardian article Richard Wray mentions that Greece is one of the PIGS nations (Portugal, Italy, Greece and Spain), suggesting that because Greece's economy is in trouble with the Eurozone economic rules, that means apparently also that Greece (and the other PIGS) are struggling with mobile telecoms? 

Now, do you Richard mean to suggest, that the US and Canada are 'ahead of' the PIGS ? That while yes, Greece had trouble with its economy (I recall that a year ago the USA economy was so badly in trouble it needed the biggest bail-out in economic history.. but I digress). Lets stick to mobile telecoms shall we? So PIGS vs USA and Canada? Hmm. Yes, lets examine. The mobile phone penetration rate per capita - one of the most-used measures of a country's leadership in mobile, of the United States is 96%. For Canada it is 79%. This is the most widely used metric to indicated a nation's leadership or lack thereof, in mobile technology. The national penetration rate per capita.

Yes, now lets see how poorly the PIGS do with this most-used measure of mobile industry leadership, shall we. Spain has a national per-capita penetration rate of 121% (yes, that is better than the USA and better than Canada). Well, maybe its a lucky member of the PIGS? What of Portugal? 139%. Italy is at 146% and that maligned Greece - is at 148% mobile phone penetration rate per capita. Yes nearly twice the penetration rate of Canada and almost exactly 50% better than the USA. By the most used metric, all PIGS countries totally trash North America in mobile telecoms leadership. Every PIGS country does so.

Or if you don't like the penetation rate as a measure, lets take 3G adoption rate per capita. Taking of course the real definition of 3G ie that approved by the ITU (whereas CDMA2000 EV-DO is 3G, the lesser CDMA2000 1X RTT standard is not 3G). The USA has a 3G subsription for 31% of its total population at the end of 2009. That ranks it only 22nd among all countries (Japan and South Korea are world leaders). Yes, Greece is a bit behind the USA at 27%, but the rest of the PIGS are far ahead of the USA - Portugal has an active 3G subscription for 47%, Spain for 48% and Italy for 52% of its population. (Canada is so low its ranked with Third World countries in 3G adoption). Yes, what was it about the PIGS countries somehow struggling with mobile telecoms? Spain's Telefonica is the world's third largest mobile operator/carrier group, bigger than the two largest US based carrier groups combined. Italian Buongiorno is the world's largest mobile application developer. These PIGS were struggling in mobile exactly how Mr Wray?

GSM VS CDMA

Richard contradicts himself several times in the article. For example he points out that US based Verizon is abandoning the US based technology evolution path of CDMA2000 to the 'European' (actually 'international') standard of GSM. If the US is the leader and Europe the follower, this evidence goes diametrically against his argument. Richard also says the future is the internet on mobile, and claims 'The (European) industry did not see it coming" but then contradicts himself in the next sentence pointing out that the European players tried many times to create that mobile internet, including WAP and iMode. And as I pointed out earlier in this rebuttal (and Richard well knows this), it was Nokia who deployed the world's first phone to do the real (non-WAP) internet a decade before the iPhone.

Richard accuses (European) operators of limiting customers to 'walled gardens' as if this was not how North American and many Asian operators also do today. But again, the European operator/carriers are far more customer-friendly than US based carriers/operators. Europeans generally as a rule tend not to lock their phones to one network - this is illegal actually in many European markets. European customers usually have the chance to use their SIM card and switch networks easily. And European carriers/operators do not force handset makers to 'cripple' phones and eliminate features such as WiFi and Bluetooth as American carriers tend to do. Who is the leader and who is the follower. Who is better at customer service and who is pushing openness in mobile Mr Richard Wray? Europeans or Americans? And obviously Europeans had unlimited mobile data plans years before AT&T brought it to the iPhone in 2007.

RUNAWAY SUCCESS OF WHAT?

Richard then mentions "the runaway success of the iPhone" as if it had somehow become bigger a rival to Google's interests in smartphones than Nokia. Now, I am not going to argue that the iPhone has not been a tremendous success as a smartphone, but its not a runaway success and its actually severely suffering right now. Richard knows this. The Apple iPhone grew market share into the Christmas quarter of sales in 2007 and again in 2008 but for the first time last year, the Apple iPhone sales stalled in the Christmas quarter - obviously the best-selling quarter of the year. Meanwhile that 'maligned' Nokia picked up several market share points for the Christmas quarter. No, Apple is a success yes, but its definitely not a runaway success and all analysts tend to agree that for the first quarter of 2010 Apple will automatically lose market share gains due to its model being obsolescent, until the next iPhone is released in June of 2010. Apple may well have peaked. And no evidence suggests 'runaway' success. The only handset maker with a runaway success in smartphones currently is the Blackberry, not the iPhone.

Richard argues that the 3G version of the iPhone in the summer of 2008 "proved that consumers will do much more than use their phones to make calls and send texts." Now, the one thing and only one thing, that the iPhone proved in the summer of 2008 that consumers would do, which they tended not to do before, was to download apps to smartphones.

First, Apple did not invent the Apps Store, that was NTT DoCoMo of Japan nearly a decade earlier. Secondly, Apple did not launch an App Store before Europeans. Nokia's first App Store was with N-Gage games four years earlier. And still today, the majority of paid apps on the iPhone are games, so Nokia's N-Gage store was more of the original (gaming app store) and Apple's App Store (gaming app store) is more of the copy. I don't argue that Apple did it 'better' but Nokia was there well before Apple. But app stores were not the point, Richard Gray said Apple proved "consumer do more than make alls and send texts." How much is that App Store busines worth? Morgan Stanley told us that its worth 780 million dollars - under one billion, globally. Lets see what else those consumers do that is not voice calls or texts, shall we.

MMS is worth 27 billion dollars in 2009 said Juniper. 27 times bigger than app stores. If all Apple iPhone users downloaded apps, thats 35 million people. The active user base of MMS is 1.7 billion. Thats 51 times more than all possible App Store users. Now, in the summer of 2008, with the 3G iPhone, did Apple teach us that we could use MMS multimedia messaging to consume video clips, sounds, pictures and long texts, ads, coupons and share pictures? No, because Apple's iPhone 3G did not support MMS (they do today). But every Western European network and essentially every cameraphone handset made by Nokia, SonyEricsson, Alcatel, Sendo, etc of European handset brands did support MMS. So who taught us that consumers would do more than voice or texts? Not "Apple in 2008".

What of Ringing Tones? Ringing Tones were worth 5 billion dollars said Juniper in 2009. This, the first basic form of music on mobile phones was not invented by Apple in 2008 - at that time Apple still did not support ringing tones (they do today). But it was Nokia which first enabled the downloaded content to phones, in the form of ringing tones, back in 1998. So who taught the consumers they can do more than voice or texts?

What of the YouTube Videos? The first phone to show videos was not the iPhone. It was the 9210 Communicator by Nokia in 2001. Videos on mobile are a multi-billion dollar global industry. And it was brough to us by Apple in 2008? No, not Apple, but by Nokia seven years earlier. Who is the one who showed consumers they can do more than voice or texts on a phone?

And videogaming? The biggest part of the paid apps on the Apple iPhone App Store is games. Who was the first phone maker to offer a gaming phone? Not Apple in the summer of 2008. Nokia released its N-gage five years before that and taught consumers to load game apps to a gaming phone. Or to go back further, the first videogame preloaded on any phone was the Nokia Snake a decade before that. The global videogaming industry for mobile phones was worth 4.5 billion dollars in 2008 according to Gartner. Who was it who showed consumers they can do more than voice or texts on a phone?

Richard Wray, you have made patently silly statements. In the summer of 2008, with the 3G model of the iPhone, Apple was playing catch-up with Nokia and its N95 model of a year earlier, on most of the announced 'improvements' in the 3G iPhone when compared to the original 2G iPhone, such as the 3G network speed, the GPS location positioning etc. The App Store was not invented by Apple, that was invented in Japan by NTT DoCoMo. And for the really popular mobile services used on the planet - MMS and ringing tones expressly, Apple did not even support those in the summer of 2008 when essentially all other European and major Asian handset makers already did so. And even today, the latest model iPhone 3GS still does not support multi-tasking, is not an open-source OS, does not have a flash for the camera, a memory card slot, etc. The 2009 (and 2010) model of the Apple iPhone is a still playing catch-up with a Nokia model... from 2007. Who is the leader and who is the follower?

SIDESWIPED ?

Richard points out that Nokia is still the largest handset maker in the world but says Nokia has been "sideswiped by by the success of Apple and the encroachment of Google's Android platform."

What proof does there exist for this? Sideswiped? If he means the touch screen - Nokia had released its first touch-screen phone almost two years before the original iPhone. If he means the applications, Nokia's first app developer community was set up a decade ago and had 400,000 application developers signed up by 2001. And Apple's original iPhone 2G did not even support user-installed apps! Nokia's smartphones have all supported user-installed apps for a decade already. If he means that Apple sold 25 million smartphones last year but RIM sold 35 million Blackberries - then yes, Nokia did pay attention - much more so - to the rapid growth of Blackberry. Very differently from Apple, RIM did grow market share into the Christmas quarter. That is where the real rival is coming from in Smartphones to Nokia. Not from Apple and certainly not from Google Android phones. RIM sold more smartphones than Apple and Google Androids put together!

How badly has Nokia been "sideswiped"? They are the biggest handset maker on the planet, as big as numbers 2, 3 and 4 counted together. But in smartphones they have a BETTER market share than in all types of phones, and are as big as numbers 2, 3, 4 and almost 5, counted together. That is really being 'sideswiped' indeed. And remember, Nokia is profitable whereas in both overall phones and in smartphones, there are rivals among its biggest 5 competitors who are not profitable. Sideswiped, I can tell you what you can swipe, I'll get you some toilet-paper Mr Richard Wray, Communications Editor of the Guardian and you can go and have a wipe.

FORCED NOKIA?

Mr Wray then claims that this 'being sideswiped' by Apple and Google has forced Nokia to make Symbian free to developers. Oh? And what was the 'free model' that Apple OS/X used on the iPhone? No, its not available to anyone other than Apple, is it? But Nokia was right from the start of the Symbian partnership - partnership mind you Mr Wray, partnership - willing to let its rival handset makers join in co-ownership of the Symbian operating system. There with then-biggest handset makers like Motorola and Ericsson, co-owning the Symbian OS. Thats Nokia mind-set, cooperation, not the 'only my way' style of Apple. And Nokia has been preaching open systems for this whole decade from network APIs to open standards in service platforms. The Symbian partnership was headed to an open system well before there was any - haha -  sideswiping by Apple, or gosh - Google Android ! Android only took to steam this last quarter, long after the Symbian foundation was announced. What is wrong with you Mr Richard Wray?

As to a "desperate decision" to give satnav services to Nokia smartphone users? Richard claims that Nokia is in crisis (?) and pushed into bed with Intel because of it (??). Richard suggests that this crisis-collaboration is to have new devices to counter... HTC.

This is so baloney I don't know where to start. Whats wrong with giving navigation services for free? Google does it? Nokia was earlier already giving the maps for free? I think this is perfectly logical in their evolution of their services and apps platform. They have a strength and are playing that card. "Pushed to bed with Intel"? Now this is simply silly. Intel powers many devices in the Nokia portfolio from the original fixed telecoms switching equipment and Intel and Nokia have had a long and fruitful partnership. But to counter HTC ? You gotta be kidding ! Nokia sold 50 times more phones than HTC, Nokia sold 8 times more smartphones than HTC. If Nokia bothers about someone, it is RIM who is nearly half of Nokia's size in smartphones, not HTC. And the company Nokia needs to be aware of is Samsung who sell a little over half of the number of total phones as does Nokia. Samsung is a bigger rival to Nokia than Apple, RIM, HTC, Motorola, ZTE, Huawei, Microsoft and Google branded phones all added together. "HTC causes concern that Nokia needs to counter" - what utter rubbish Mr Wray. How incompetent are you?

NEXUS SALES MODEL IS NEW?

Its not just Nokia vs Apple in his article of Europe's doom. So Richard Wray finds that the way Google sells its Nexus One, bypassing the carriers in the USA, via the web, is an innovation? Now I wonder where they got that idea? The Nokia N97 a year earlier was sold on the exact same concept. But that is not where Nokia debuted the idea - no, its not a 'North American' innovation, Nokia - and most handset brands - have been selling directly to consumers in Europe for most of this decade. Why in Europe, because of the freedom of the SIM card of course.

Then Richard takes aim at Ericsson. He says Ericsson's market share had been cut in half in three years form 10% to 5% today and that it is because of Apple and Blackberry. That looks pretty on first glance, as the two market shares of RIM and Apple conveniently add up to about 5%. But first, RIM was selling Blackberries already three years ago before the iPhone launched, so actually the math does not add up. And then, what of Motorola? Motorola went from 22% market share to 4.9% market share in the same time. And recently SonyEricsson has been climbing a little while Motorola continued its crash-dive. No, if the article is that US based giants are strong and Europeans weak, then clearly SonyEricsson is far stronger than Motorola, and again the evidence does not support Mr Wray's bewildering conclusions.

Lastly Richard Wray says that European operators/carriers have to 'claw back money' from Apple and Google (???) to re-take the initiative.

First. The valid Europeans vs Americans comparison in the case of operators (carriers) is Vodafone, Telefonica, Orange etc vs Verizon, AT&T, Sprint etc, not vs handset makers or operating systems. Its as dumb as saying British Airways competes with Boeing or American Airlines competes with Airbus. Wrong industry comparison. The handset makers like Apple iPhone and Blackberry (and Motorola, Palm etc phones from North America) are correctly compared to other handset makers like Nokia (Sony)Ericsson, Sendo, etc. And the operating systems like Windows Mobile, Google Android, RIM/Blackberry OS and iPhones OS/X, are correctly compared to European operating systems like Symbian and Maemo. You can't pit mobile operators (carriers) against handset makers or operating systems.

So right from the start, for Richard Wray to suggest that somehow Vodafone, Telefonica (ie O2) and Orange are losing ground to Apple and Google is plain silly. If you want scale, the total global apps store opportunity was worth 780 million dollars, the only part that could be considered to have some overlap with the operator business. But how is that operator business? The European operators/carriers earned in Europe alone (excluding their Asian, American etc subsidiary income) 265 BILLION dollars in 2009. Just the mobile data portion of that is 80 Billion dollars. The mobile data services generated PROFITS of more than 60 BILLION dollars last year. So what? That global income of under one billion by Apple and Google is somehow now crippling this European juggernaut that is called the mobile operator community, and European operators have to somehow 'claw back' the 'money' out of what? FREE apps delivered on the App Store? Where most app developers are losing money? You gotta be kidding.

And one more point about those operators. Richard Wray mentions that AT&T was having service troubles and dissatisfied customers in America. Yes, how bad is it? Sprint again lost customers in America. It was recently voted not just the worst telecoms company in customer care, the worst company in all of the United States. That is the 'standard' that Richard Wray wants European operators to 'emulate' for regaining their leadership? Ridiculous. Any professionals who have had work-related phones within the past 5 years in both Europe and North America will say in unison that European operators have better customer service than the American carriers. American carriers still today charge for incoming calls, incoming text messages etc.

What a stupid silly moronic article. What cool-aid have you been drinking Richard Wray? That is utterly incompetent reporting!

IN SUM

He says that Asia has taken some leadership from Europe. That is true, but he does not list any of the companies doing so, and only lists briefly four companies that are NOT doing the leadership.

He says that the USA and Canada (and specifically West Coast) has taken a leadership position over Europe. That Is patently not true. The Mobile industry is worth 1.07 Trillion dollars. 80% of that is service revenues. Where in the 1980s US based mobile operator groups were the 'hegemony' and controlled much of the mobile operators/carriers and dealt directly with the customers, today not one US or Canada based operator/carrier is even in the Top 10. But today 6 out of the top 10 are Europe-based operator groups. The vast majority of this industry and its revenues, are controlled by Europeans, not Americans. Europeans also own major parts of the carriers/operators in America, but none of the American carriers/operators own major shares of European major operators. In the big picture, Mr Richard Wray is totally off.

The handsets and network infrastricture form the remaining about 20% of the Trillion dollars in mobile telecoms. What happened to Lucent, Nortel? Motorola's networking division is a shadow of its past greatness. But three of the world's four largest mobile telecoms network infrastructure vendors today are Europeans, Swedish LM Ericsson, Finnish NokiaSiemens Networks and French Alcatel-Lucent.

Of handsets 85% of all handsets are not smartphones. In that market the biggest player is Nokia with 38% marklet share, bigger than all North America-based handset makers including all smartphone makers rolled together. Nokia's rival is not North America based basket-case 'giant' handset maker Motorola nor the tiny RIM, Apple, Palm or Google etc. Nokia's true rival is South Korean Samsung and if you want a second, 'dark horse' rival for the next few years if all goes really really REALLY badly for Nokia, that would be LG, also out of South Korea. America-based tiny smartphone makers will not bother Nokia just like an ant won't bother an elephant. That is the scale we are looking at folks. Nokia sells more handsets every three days than Palm sells in a year.. Please understand the scale.

In smartphones the rival to Nokia is not Apple, Apple was unable even to grow market share in its latest quarter and will definitely lose market share now in the January-March quarter. And Google's phones or HTC's phones are irrelevant to Nokia's market share. The only rival to Nokia's dominance in smartphones is RIM and its Blackberry, given minimal mention in the article by Mr Wray. Still, Nokia's smartphone market share is bigger than what it has in normal phones, and as big as numbers 2, 3, 4 and almost all of number 5, put together. No, Nokia has not been "side-swiped".

In smartphone operating systems the battle is even more lopsided. You can take all smartphones manufactured on the planet that have any of the North America based smartphone operating systems, RIM Blackberry, Apple iPhone OS/X, Windows Mobile, Palm, Google Android; and European Symbian outsells them all. That article is so full of baloney its not funny.

But what of apps stores. Yes what of them? They are worth less than a billion dollars in total revenues. They were invented in Japan not by Apple, and Nokia had its own developers and its own dedicated app store long before anyone had seen Steve Jobs showcase the first 2G iPhone. App store income at less than a billion is 0.4% - one fourth of one percent - the size of the global mobile data services income and yes, a little bit more than one tenth of one percent of all service revenues in mobile telecoms. Totally meaningless for anyone except some windbag journalists who want to make hype stories based on press releases.

App stores may become relevant later in this decade, they are not so now. But that change in consumer behavior that Mr Wray talked about, it was not caused by the Apple iPhone 3G in the summer of 2008. No, the changes to consumers, using a phone for more than voice and SMS, can be traced more than to any other company, to Nokia. Ringing tones ie mobile music, video gaming, TV related video clips etc. Nokia Nokia Nokia.

And of Europe? The world's largest handset manufacturer is not North American, it is Nokia of Finland. The world's largest mobile equipment maker is not North American, it is LM Ericsson of Sweden. The world's largest mobile operator group is not North American, it is Vodafone of the UK. The world's largest mobile smartphone operating system is not North American, it is Symbian of the UK. The world's largest mobile application developer is not North American, it is Buongiorno of Italy. The world's largest SIM card maker is not North American it is Gemplus of France.

Europe? The customers are there. The 'giants' of the mobile industry are there. The revenues of the industry are generated there. The profits are generated there. The innovations are generated there. In Europe. (Did I mention Motorola is making losses, Sprint is making losses, Palm is making losses, Nortel went bankrupt etc). 

What annoys me, Mr Richard Wray, Communciations Editor of the Guardian, is that I was compelled to waste all this time writing this reply to your idiotic article. You KNOW better than what you wrote. Shame on you Richard Wray! Correct your article now!

Comments

[Antoine RJ Wright]

The thing about the Internet is that he article will be read all the more because of this reply Tomi. That's not a bad thing by any means. But your tone in this peace is harder to listen to than his. Unfortunately, such things will translate to those who don't do their research that you are being too heavy handed - when you clearly are not (w/factual support at that).

I enjoyed this rebuttal, as I have previous ones. This could be a neat monthly feature for you here ;)

[jMac]

This article is written in the tone that Tomi uses in real life. Sure, its pretty hardcore, but I believe it shows the passion involved and shouldn't be judged against.

Each to their own.

For my part - I think it balances just fine - blogged here: http://www.jonathanmacdonald.com/?p=4349

[Benjamin]

Liked it too - lots of efforts put into it for sure!

[Tomi Ahonen]

Hi ARJ and JMac

Thanks to both of you. JMac, Antoine is a dear friend and he means very well in what he writes, and he obviously agrees with the points. So no harm done, and thanks JMac for stepping in.

ARJ - You make a very good point. This rant is a one-time writing project written without an outline, and had one total revision/edit before I posted it. Then I came back and re-read it a few times only to correct edits. Even so, it stole 5 hours of my life. I am further infuriated - still now agitated - that I wasted so much of my time on this rebuttal. I am still in too much of an angry mood to be able to do justice to my job of hosting the Carnival of the Mobilists that I need to get out today here at this blog.

I know I could do a far better reply with 'calm' and very 'facts-only' non-emotional posting if I now went back and did another thorough re-edit of it. And what would that accomplish, other than steal several hours more of my time.

Richard Wray wrote total bullsh*t in his story. I called him on it. I will be posting a link to this commentary at Forum Oxford and will be monitoring the #Guardian mentions on Twitter and send that reply to anyone referencing his idiotic article. If there was a comments section on Guardian, I would also post a reply there.

But yeah, I hear you and I really appreciate it, Antoine, that yes, this could be more productive if written in a more calm tone of voice. But there is no way I am going to give that idiot Wray any more of my valuable time for free to correct his mistakes. But he better not walk into my view anytime soon anywhere, I will very loudly echo this story should he turn up anywhere....

JMac - hey, thanks for the blog and yes, you make a very good point that this (blogging) is becoming more and more the 'checks and balances' on those who should have been the 'checks and balances' haha, ie the press. Very true. And just like the Tube bad customer service example you witnessed, we have considerable power in the blogosphere.

I have to say that this greatly dimishes my respect of the Guardian overall. I loved reading Vic Keegan's articles there and it seemed to me that for the past several years, the Guardian had good tech oriented pieces. Now this story really angers me and damages their credibility in my eyes to an enormous degree.

If he had wanted to say that Europeans 'don't hold a lead in apps stores' - which may be what he meant - that would be fine, but don't say European giants have lost their hegemony to North Americans... The facts are totally not there (haha). Ok, gotta stop now, else I'll do another rant here in the comments haha..

Hey, thanks to both of you for the quick comments

Tomi :-)

[Viipottaja]

Great rebuttal indeed.

Only two comments though. Not everything is measured in dollars. I am referring to the share of app stores of revenues. I fully, totally agree that the apps graze is a lot of hype. However, I do think they are more important than the revenue share only implies. Apps Stores are a bit like the free Maps on Nokias now. They add value, not revenue. :)

Second, let's not get _too_ hung up on the dictionary definition of "innovation"! ;)

[Faith McGary-Sepcic]

Tomi: Great Post! I would stand and clap, however, I would be the only one to see myself do that.... You simply said what most think!

Faith

[Isaac]

You miss the point when quoting total shipments of handsets. Nokia's margins are super-thin and becoming thinner. Apple's are not. In Q3 2009 Apple made more profit from 7.4m handsets shipped than Nokia did with their 108.5m in the same period.

Would you rather sell 10 things and make a dollar on each, or one thing and make $20?

Just a thought.

[Leonard Bix]

I am sure the respected gentleman is NOT a clueless yo-yo or a brainless idiot. No reputable publication would put a brainless idiot as Editor; he almost certainly IS intelligent and professional.

Then the only other explanation I can think of (for such a mountain of blunt inaccuracies and outright lies) is that he could be 'motivated' by interested parties to manipulate public opinion?

Hard to prove, I know - but give me another rational explanation, please?!

[V. Dimitroff]

@Isaac: the numbers so enthusiastically echoed among the faithful Apple fanatics crowd are just about one quarter, and
(a) there are serious doubts whether the methods used by the two companies to calculate profits for that quarter are compatible, and
(b) even if 100% comparable and correct, Apple's (immoral) margin is hardly sustainable in the long run.

I am very curious if they (Apple) will be able to claim higher-than-Nokia profits for the whole of 2009. Let's talk again when they post results.

- - - - - - -
(Disclaimer: I only ever use Sony Ericsson handsets because I insist on camera excellence. I rejected the current best camera in the market, Satio, because it runs Symbian. Just in case someone thinks I am a Nokia fan :)

[Vlad]

@Isaac

Actually, as a company, you're free to do either. And I don't see one model as better than the other. It's a matter of choice.

You can influence the lives of billions of people by putting communications devices in their hands for the first time, giving them their first internet experience and genuinely making their lives better by services associated with those devices, or you can make Scoble very happy.

Just a simple matter of choice.

As a consumer though, I'm having a very hard time understanding why any company's profit margins are relevant to me. That should be their concern, not mine.

@Tomi

I'd keep an eye out for Huawei and ZTE in the future. The growth they are both theoretically capable of is astonishing.

As for Samsung, they're slowly, slowly, flooding the market with dozens, if not hundreds, of devices. This strategy is a very good copy of what Nokia's strategy used to be (I hear they've changed their minds on this), and it should probably work just as well.

[Daniel Perry]

It is refreshing to see the passion you display. This is part of the reason I keep coming back to your blog, Tomi. As an attorney, I am constantly amazed at how misinformed and downright thick-headed some reporters are on basic legal issues - if they would simply consult Wikipedia they would see were off-base.

I find myself uttering the observation "stupid" more and more as I read supposedly high-caliber reporting. Don't change, Tomi. We need folks like yourself who will expose idiocy.

[Henry Sinn]

I wonder if Leonard Bix [above] is right?
What an interesting thought - all a lie as a 'motivation' for other reasons..
How could someone out of the UK be SO OFF TARGET?

OR

Are the "drunk" iPhone fanatics moving to the point of being completely inebriated? I wonder if Mr Richard Wray was actually drunk?

I have a very good friend on an angel investment board in Silicon Valley.
They see nothing besides Apple and Android venture start ups or related business.
Just about every article written by US journalist is off track.

Tomi, I love your rebuke but it probably should be aimed at all in the US that can't see past their nose.... and that's most of them, not just the journalists.

[Tomi Ahonen]

Hi Benjamin, Viipottaja, Faith, Isaac, Leonard, V, Vlad, Daniel and Henry

Thank you all for the comments. I will respond to each of us as usual...

Benjamin - missed you, we must have posted at the same time yesterday.. Thank you, and yes, put a lot of effort in the writing and editing. The numbers actually are mostly so familiar as basic data of the industry, I could pull them off the top of my head and that part didn't take 'work' to research the main facts haha..

Viipottaja - haha good points, yes, apps have more impact than their pure monetary value, but still - hardware is 20% of the industry. Handsets are ony part of the hardware. Normal non-smartphones are 85% of all phones. And of the remaining smartphones, Apple has about 14%. Now, of those iPhones, not all will even ever be used 'as smartphones' because some get an iPhone simply because it is cool (looking) or simple or elegant - or received it as a gift for example without any personal wish or desire to 'install apps' to a phone. But of those who do install apps, and the evidence suggests still a majority of iPhone owners do, then we do get both the monetary value of the apps sold (and traffic load of far more free apps downloaded, as a load to the networks); and the related benefits for example to prospective buyers to consider a given phone over another and consider say the apps store of that brand etc.

I agree with you there is more to apps than their value, but apps were a very tiny part of what Mr Wray wrote about - and he was talking of the European Giants having lost their hegemony. So in that case we do need to look at scale and relevance (hegemony) and obviously 80 billiion dollars worth of mobile data value just earned in Europe is far more than under 1 billion dollars of App Store revenue earned globally... For his point of 'hegemony' the apps are completely irrelevant, like walking under a leaking air conditioner box, with some drops of water falling - and concluding its raining outside haha...

Faith - thanks!

Isaac - ok, thats an interesting point, the profit margin - but its not valid to take one quarter (why the third quarter and not the latest quarter while we are at it; but far more relevant is profits for at least a year). But Isaac - you are arguing beyond the scope of that article. I would think there is some merit to analyze the profitability of the mobile industry in Europe, North America and Asia - but Mr Wray never mentions the word profit or margin - not once - in his article. It was I who argued that profit is an additional point to consider. And here, Isaac, you do need to then expand the picture far beyond 'Apple' - the author Mr Wray clearly said North American giants of mobile telecoms have grown far bigger 'in the past year' than European (former) giants - and thus we need to consider European industry in mobile vs North American industry in mobile - not just Nokia vs Apple - and by that argument, even if Apple is profitable in smartphones - the far bigger handset maker - making nearly half of North American phones - is Motorola. And they are making losses. The biggest European handset maker is making profits. The biggest North American network equipment infrastructure provider was Nortel - now bankrupt and being sold in pieces. Biggest European network infra provider is LM Ericsson - profitable. Biggest North American mobile operator is AT&T and they are profitable but their sibling Sprint is making losses. All of the biggest European mobile operators, Vodafone, Telenor, T-Mobile, etc - are making profits.

If you Isaac want the argument to be changed to who is most profitable, European or North American giants of mobile, then again Europe wins hands down. Apple is a nice exception an watch their profit be severely hit now as they face more competition than they have ever seen with the iPod, the Newton, the Mac or the Apple II..

Leonard - haha, thats pretty wiley of you, 'motivated' haha.. one wonders.

V - good points and also thanks for the personal comment of your phone. It helps illustrate a bit about the differences in us humans. Its just like cars. Someone feels that to buy a new car the best car for them is a big family-oriented SUV. For someone else its a convertible Porsche. For someone else again its a hybrid (haha, lets ignore Toyota's current prodution problems). Similarly no matter how 'perfect' a given phone form factor may be - consider iPhone 3GS - that is copied left and right by literally every major manufacturer today - that does not mean its the only desirable form factor. For me its QWERTY keypads, I could not imagine having a phone that can't do fast typing without me looking at it. Got to have QWERTY haha.. And for you its the camera.. And for someone else its the touch screen or app store or large screen etc..

Vlad - funny, yes you can be the company that brings technology for the first time to literally a billion new consumers on the planet - with all that long-term loyalty and customer preference that will entail, plus media and ad platforms etc it will have - or you can sell to 0.7% of the mobile phone owners on the planet and sell a luxury premium product like say Ferrari or Porsche, as Apple does. But American industry cannot survive on a luxury bracket. Ferrari is not big enough to power Italian car industry and neither is Porsche for Germany. Italy needs Fiat (big enough to buy Chrysler) and Germnany has VW (and Audi), BMW, Mercedes, and several foreign car makers like Ford and GM, plus yes Porsche.. A luxury bracket niche product (like the iPhone or Google Nexus One) is not enough to sustain the industry for a continent.. The US needs a Motorola-equivalent (could be Microsoft or perhaps even RIM soon)

Good point about Huawei and ZTE, trust me, they are very much on my radar right now haha.. yes, very much must keep monitoring them, could be - and likely will be - big.

Daniel - thank you so much. It really gives me solace to read that, that there are some of our loyal readers who actually appreciated it and read it and now come here to thank me for it. Makes that time worthwhile haha. And seriously, obviously (like many others like you Daniel, like Faith in the above for example) who have read the original, felt 'its wrong' and didn't have really an outlet to find confirmation to their feelings. Yes, someone needs to point out when journalists (columnists etc) write totally erroneous articles. I can't comment on rocket science or green tech or nanotechnology haha but if they come to 'my backyard' and talk about mobile, they better come with their facts, cause if they will spread lies, I will call them out on it haha..

Henry - great point, yes really makes you think, what is wrong with Mr Wray, even more so, that he is from the UK, so why is he so mis-led or is there a hidden motivation to distort the story. (makes one wonder what brand of phone Mr Wray uses, and did he receive a free touch screen phone recently perhaps, that he may have been hoping for to get for free for a while? who knows, if they had comments section open at that article over at the Guardian, we could ask him haha)

Also valid point that this is symptomatic of the US (west coast) industry as a whole, and I do also write to them at times, if you remember, the 'West Coast Drunk' blog about apps stores last year and earlier the silly reporting by that Forbes journalist etc...

Thank you all for writing. I trust you all have also read the good news posting for the same day, the Carnival of the Mobilists - lots of good uplifting and factually correct reporting about the mobile industry by many of our fave bloggers and real stars of the mobile industry, haha

Tomi Ahonen :-)

[James Pearce]

The king doth protest too much, methinks.

Whether or not his factual reporting is right or not, I think the original article is on to something.

Europe's best response would be to seize the initiative back. Sadly, many original incumbents are indeed relying on past glories and a legacy telco culture.

Now... if Nokia had released a new version of Symbian which was as radical a departure as Microsoft's new Phone 7... well, that would have been an illustrative action to back your words.

Maybe next year, eh? ;-)

[Tomi Ahonen]

Hi James

Haha.. very funny. Now, there is nothing wrong to suggest that being big today is no guarantee of being still big tomorrow. Nothing wrong with that and tech history is full of former giants that lost it haha I remember back when IT industry was dominated by "IBM and the BUNCH" ie Burroughs, Univac, NCR, Control Data and Honeywell (look them up in Wikipedia under where have they gone haha)..

But - first the point - James, the author Wray claimed 'Europe had lost its hegemony' and suggested that was to the USA based 'giants' That is flatly not true. It MAY BECOME true, perhaps in half a decade or more, but clearly the continent with former past giants in death-struggles is North America witness Lucent, Motorola, Nortel, Sprint, Palm etc. And that Europeans tend to be the ones buying up North American assets whether Telefonica buying up former US owned assets in Latin America or Alcatel buying Lucent etc.

So I can't let you by in that the author had any merit in his article. What you talk about, is not in the article. You may have a point, he did not. He claimed 'in the past year' the hegemony had been lost in Europe. Haha, utterly patently not true.

Now, to your point about Nokia and Windows Mobile 7. I take it you are aware James that Nokia did both take control of Symbian from a former partnership that included all of its biggest rivals from a decade ago (limiting back then the ability for Nokia alone to control Symbian) - and also launching Maemo as a top-end smartphone OS. If your position is, that Nokia 'is relying on past glories and legacy telco culture' and then argue Nokia is a prime example, the facts do not stand with that position. Nokia has taken aggressively into its control the evolution of Symbian - which is an old OS and its updating is not easy or quick but is now being done.

And Nokia turned it into open source - something many industry analysts suggest is the best way forward whether you happen to believe that or not - Windows Mobile/Microsoft Phone 7 is not open source, neither is Apple iPhone OS/X and neither is RIM's Blackberry OS an open source OS. But both of Nokia OS's, Symbian and Maemo are open source (as is Google's Android).

So to your point, that European incumbents 'are relying on past glories and telco culture' your explicit example of Nokia is not fitting that pattern. Perhaps you personnally think Microsoft Phone 7 (as it is shown on demos, before its in your hand in an actual phone, and assuming it ships anywhere near on time) is a fantastic smartphone OS and better than Symbian or Maemo. Fine, that is your right of course. But you can't say Nokia was sitting still and not doing something about it. For most comparisons of the currently available OS's, the latest edition of Windows Mobile, vs latest edition of Symbian and latest edition of Maemo, most smartphone analysts prefer Symbian and especially Maemo over WinMo 6.5. I am not a programmer (anymore) and can't comment personally.

But you suggested a bigger assumption on that Nokia example, that many of European incumbents are guilty of this thinking. Again, I beg to differ. We have seen many European major players make big moves beyond their basic 'turf' from Vodafone 360 to Three's new handsets on the INQ brand to Ericsson's move to hosting networks and managing them, etc. The only major thing that North Americans have recently done, which was not a high priority for Europeans, was the apps store, and you know fully well James my view on that; that apps stores are a total side-show, a freak-show in fact, totally irrelevant (Today) to the mobile data market. The European incumbents have been smart to focus on where the money is - SMS, MMS, mobile browser-based services etc, not apps. The European mobile data alone is worth over 80 Billion dollars, and generates over 60 Billion dollars of PROFITS. Most of the app store develpers who made the 150,000 apps are not turning in any profits at all. It would be stupid to abandon profitable business to pursue loss-making business, isnt' it James..

Thanks for writing again, looking forward to more with you again.. :-)

Tomi Ahonen :-)

[KPOM]

I think Tomi is missing a larger point. "Innovation" isn't just coming up with something first. It's coming up with something and making it a success.

If we take a look at market cap, back when the iPhone was announced, Nokia and Apple had similar market caps. Today, Apple is worth 3.5 times what Nokia is. Stated otherwise, they could purchase Nokia with shares and dilute their existing shareholders by less than 33%. A lot of that is due to the iPhone.

Sure, Nokia might have been "first" with N-Gage, but it was a colossal failure, twice. Apple created an app store almost overnight and created a platform that in two years has spawned 140,000 applications. Everyone talked about a phone that would replicate our computers, but it took Apple to make it a reality. Does anyone here think the 5800XM and N97 series, much less Maemo 5 and MeeGo would have come to be if Apple hadn't shaken things up so much? More likely we'd be on our 12th variant of the N95 with Nokia still insisting that touchscreens were unnecessary.

To Tomi's other point, true, the European telcos have done a better job encouraging people to use services like MMS and SMS, but the US telcos' lack of market says more about their complacency and oligopoly in the US than about Europe's dominance. On top of that, it isn't like European companies operating in the US have done that well, T-Mobile USA has long languished as an afterthought of T-Mobile DE. If Europe is so innovative, T-Mobile USA ought to be cleaning up the market instead of struggling to keep pace after a decade of poor management decisions from Germany. VZW is a success, but Vodafone is a passive investor that actually thought of selling its stake a few years back but wisely decided not to. Moving to LTE makes sense, but they've done well for themselves with CDMA2000.

Anyway, in a larger sense, Qualcomm (a "west coast company") correctly predicted that CDMA, not TDMA was the way of the future a decade ago. WCDMA and LTE would not be possible without their innovation, which Europe tried unsuccessfully to work around (hence the kludgy WCDMA technology that sucks up spectrum).

[KPOM]

On another topic, I do think Nokia's decision to give away Ovi Maps smacked of desperation. It seems highly unlikely that they would spend $8 billion for Navteq for the sole motive of giving away the software. Ovi Maps was to be the centerpiece of a service-oriented business model. People would buy phones and then continue to provide revenue to Nokia through their Ovi Maps subscriptions.

It's also interesting that, on the one hand, Ahonen blasts the App Store for being unprofitable while claiming that Nokia always intended to give away a service that it had been selling for about $100/year. The fact of the matter is that it doesn't matter if most of the 150,000 apps are loss-making. If just 0.5% of those apps are useful, that is still more than what is available for other platforms, and it is a big draw of the product. It spawned the iPod Touch and now the iPad. Do you really think Nokia envisioned every N-Gage program being profitable? More likely they viewed it as a draw to their phones. It wasn't. App Store is. Plus, with App Store, Apple lets others do the heavy lifting while they cover the costs with the 30% revenue share. Nokia had to buy Navteq to get something with the same appeal.

[Tomi Ahonen]

Hi KPOM

Great comments, thanks. First on 'innovation' - one part of innovation is the invention part, another is the adapation part. Either is valid. BUT you cannot give a company 'credit' for being 'innovative' if it only copies. And Mr Wray wrote that this past year Europeans fell behind, and he took very specifically the 2008 summer launch of iPhone 3G as the point when this big leap forward happened. The original iPhone 2G was a MASSIVE innovation. A totally transformational phone. The 2008 edition of 3G iPhone was NOT. It was only fixing obvious deficiencies in the original and every single 'innovation' in the 3G iPhone in 2008 - including App store - was done by someone else years before. While the author was clearly unaware of these, and made his erroneous claim that Apple created the whole world in June 2008 - I am not going to let that slide. No, that release was a 'bug fix' iPhone only.

Market Cap, come on - that is stock market gambling, where expectation and hype play far more a role than real performance. We can go back in time and find totally ludicrous market cap evaluations in any industry - take AOL and its merger with TimeWarner as a ridiculous example. No, market cap is of interest to market speculators. If you want to measure market performance, then yes, lets measure the size of the company's revenues in mobile. As you saw, I did that analysis for us, and Nokia is what, four times bigger than Apple.

If you want a more 'human' impact - then Apple has managed to impact 0.5% one half of one percent - of the populatin on the planet. That is how many people - at absolute max possible use - have an iPhone. In reality, less than that, because some iPhone 3G or 3GS models were used by the same person who had an iPhone 2G and thus are replacements. But in absolute max possible impact, Apple has one half of one percent of the population of the planet. Nokia? is in the pockets of 22% of the planet. Who is more relevant eh? Apple is a luxury niche product. Nokia is the most widely spread brand of technology of all time.. Doesn't really compare does it.

You said Apple iPhone re-ignited the mobile 'computer' concept. That is totally true, as I predicted before the device had even launched, and that is the 2G version of the iPhone - the most important mobile phone of all time. But that is not iPhone in 2008 or 2009, that was 2007. You and I agree totally on this, but that is not what the idiot Mr Wray wrote. He said the dramatic change happened very explicitly with the 3G iPhone in the summer of 2008. That is not true. I called him on it. I think you agree.

We obviously agree on European operator innovation and both are puzzled at how inept T-Mobile has been in its US operations. As to Vodafone's 'passive' role - I can tell you for a fact (I was there) that the fight inside Verizon Wireless was intense over many years, with Vodafone using every trick the minority ownership allowed, to force Verizon's hand, to get it onto this path to LTE and the GSM side of the CDMA battle. Obviously eventually they won. Its not an easy achievement, where Verizon was chairing the CDMA carrier side, and thus a poster-child of CDMA 'supremacy' over GSM. It is no small achievement and will guarantee Verizon Wireless's technical competitive advantage over Sprint Nextel (but not vs AT&T or T-Mobile who already are on the GSM path) on a 'decade' length timescale window. Just like China Mobile vs China Unicom for example or all the markets where CDMA carriers/operators have switched to GSM and experienced dramatic market performance gains..

Qualcomm yes they played the CDMA card as hard as they could but in the process they angered most of their partners globally and faced lawsuits etc. Meanwhile the GSM juggernaut totally crushed them. Yes, the CDMA technology is underneath the 3G evolution of two of the three main 3G technologies but it was not purely a Qualcomm invention, its an international standard with a lot of input from many major players starting obviously with NTT DoCoMo (and Nokia and Ericsson etc)

"smacked of desperation' - you clearly don't know Nokia haha. No, that is actually typical Nokia. They are paranoid about missing the next big stage. That is why they do luxury phones like Vertu and ultra-Africa-cheap phones. Why they do the Ovi store and buy an ad network and a navigation company and offer maps and do mobile money etc etc etc. That is the soul of Nokia, they make sure they have a piece out of anything, early - and then they observe if it grows. If it does, they have a piece in it and then make a massive push to become big in it. Like say cameraphones - early Nokia vision was that cameras were not going to be big on phones - and did cameras as additional gadgets you could add ot your phone. Then evidence from Japan said cameraphones were creating happy customers, even when resolutions were worse than VGA - then Nokia crashed the party and before you knew it, Nokia became the world's largest maker of cameras of any type... This is typical Nokia.

Finally on iPhone App Store driving sales of the iPhone. Yes. The App Store was a brilliant move by Apple, brilliant - and I've said so countless times. But its irrelevant (today) to the mobile data industry. Its like the invention of that Segway - the electric moped that you stand on, you know.. - its interesting for human transport. Today it is totally meaningless in its volume of sales and use, compared to motorcycles or cars. But its interesting. It may become - after a decade - big. It may. It may not. But for sure the CEO's of Toyota and Ford and VW do not lose sleep worrying that the Segway will 'steal' their market. They will monitor it as a curiosity.

The App Store was brilliant for Apple, it is irrelevant to the global handset industry. Outside of the USA, the Apple iPhone App Store is irrelevant to even the smartphone market. Normal customers do not walk into the operator/carrier stores, asking 'give me the smartphone that has the biggest app store' - irrelevant. But its hype right now by totally dumb US based analysts and reporters who have been taken in by Apple's PR machine.

In five years, App Stores of all brands may be relevant and we will celebrate them here at this blog. But today they are not. I wrote a long blog explaining why, with facts and numbers. It is ONLY hype. But its clever by Apple

Thank you for writing and I know you also left a comment elsewhere. Well thought-through opinions, thanks.

Tomi Ahonen :-)

[Romain Criton]

Hi Tomi,

Reading your article, I was a bit surprised when you say that SIM locking is illegal in most countries in Europe, since I know that in France for instance SIM Locking is perfectly allowed, as long as the operator offer the consumer a way to unlock the phone:
- either for a fee during the first 6 months of the contract
- or for free after 6 months in the contract.
So I did a bit of research (well, actually I just looked in Wikipedia ;-) and it seems that actually few European countries have totally outlawed SIM locking:
http://en.wikipedia.org/wiki/SIM_lock#Laws_on_SIM.2Fnetwork_locking
That doesn't change anything to your argument that European carriers have NEVER been more "closed" than their US counterpart though, as stated in the Guardian article. I know US carriers have recently loosened up their "walled gardens" a bit but I remember a particular painful experience of distributing multimedia content to US carriers (especially Sprint and Verizon)...

Another subject where I disagree with you is when you dismiss the comparison between carriers and handset makers/OS vendors. Even if it is really not a matter of US vs. Europe, it is my understanding that carriers are really upset about the App Store trend started by Apple, because they see their own "decks" bypassed as far as content distribution is concerned. Just look at the recent initiative by 24 carrier to build an App Store alternative... Or the recent announcement by Ericsson.
See also the couple big mergers between Internet service providers and content publishers back in the dot com days (AOL/Time Warner, Vivendi/Universal...)
Even if you consider that selling apps is not the carriers' business, it seems like they think it is... As far as I can remember, carriers have always tried to get hold on the content. They seem to hate the idea of being relegated to just "dumb data pipes". Even before the App Store craze, carriers had their own "decks" where they could sell ringtones, wallpapers and apps (well, actually, games). Handset makers and OS vendors App Stores disrupted the control carriers had over content (and the associated revenue).
That's also the same situation on fixed Internet market BTW: triple play technologies have enabled Internet providers to get a cut of the TV content distributed through their "pipes"

[JillHooper28]

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