Communities Dominate Brands

Electronic Echoes part 1 on Canadian Mint and Ian Bennett: permalink stains on digital character

Thank you all who have retweeted, blogged or reported on the censorship incident at the Mint Directors Conference in Canberra Australia, by Canadian Mint CEO and President, Ian Bennett.

I have some time now at home, and will do a quick first view of the early 'electronic echoes' of who and what have been mentioning the story.

TWO PRESS

Two significant press sites have already reported on the story. Bright Side of News reported on it, reprinting the whole long blog article that I had written. Thank you to Bright Side of News!

And Ewan Macleod over at Mobile Industry Review wrote an article entitled "Bizarre: Tomi is censored by Mint Directors Conference". He writes in the story: "Given that the chap who did the censoring is head of the Canadian Mint and that Canada's wireless industry is about as backwards as they come, should we be surprised? Poor show though, very poor show." (thank you Ewan!)

TWO BLOGGERS

Two bloggers have also joined in the support. Alan Moore at SMLXL wrote a long piece and in it he said: "Welcome to the networked world, Mr Bennett, where information moves faster than you can speak." He also advises that "A courageous man knows that sharing information is power, whereas a weak man is not prepared to deal with Darwin's greatest observation, that it is only those that are prepared to adapt to change, that will survive." (thank you Alan!)

And Doug McDonald at Infinite Monkeys blog also wrote in support of me, and he said, "On the one hand, you have people who are so scared of technology they would prefer to hide or smash it in classic luddite fashion, and on the other a whole subsection of the mobile industry that love a particular technology."

TWITTER

I have stopped counting how many times Mr Ian Bennett's name has been retweeted, in relation to those four stories and my original posting here on this blog. Its far past 100 already (thank you to all who retweeted).

GOOGLE

Probably the best measure of whether this has any meaning, is how is the Google ranking?

Search term "Ian Bennett" does of course bring tons of links to sporting stars of the same name. That makes the Canadian Mint Ian Bennett relatively 'googleproof'. But lets see how far we have to dig to find the Censorship story. The third page of search brings our censorship story, linking to the Bright Side of News coverage. But as far as I can tell, it is the first Google mention of that specific Canadian Mint CEO by the name of Ian Bennett. So? The highest ranking story about Ian Bennett is that he censored Ahonen.. Not his proudest moment perhaps?

What of search term "Canadian Mint"? That goes 4 search pages deep on Google, and also the first entry is the Bright Side of News story.

And the term "Mint Directors Conference" yields already the 5th item on the first page of search results, where the Mobile Industry News story is featured. The second page will show the Bright Side of News story, and our Communities Dominate Blogs blog article. So already 3 of first 2 pages of the search results will point to the censorship scandal.

This is a problem for Ian Bennett, the Canadian Mint, and the Mint Directors Conference, which will never go away. These are permanent stains on their reputation(s). We will monitor the space, there may be more stories reporting on Ian Bennett's lapse of judgement and sudden last-minute censorship of the speaker he had personally invited to the event...

Obviously anyone reading this, who is a blogger or journalist or on Twitter or Facebook or wherever, please do mention the story and help spread it. Also please link to the original story here. I will continue to monitor the story and report on any developments.

On Smartphone Bloodbath, how is Samsung's Strategy? Spot-on!

Samsung Strategy and Smartphones: Smooooth

(this blog article was drafted a while ago, is part of the series on the mid-year strategy in smartphone bloodbath. I already gave you my view on Apple's iPhone strategy and Nokia's smartphone strategy. This is part 3)

The quick version - Samsung didn't pay much serious attention to smartphones until last year, but once it 'woke up' it has run on all cylinders. They tick all the boxes, and have a great strategy - which they are executing perfectly. Do I need to say more? Ok, this is a Tomi Ahonen blog so of course I have to waste your time with more words, eh? So lets enjoy the analysis.

WE LOVE EVERY PLATFORM

Samsung is everywhere. They offer Symbian smarpthones and Windows Mobile smartphones. They offer Android smarthones. As if that was not enough, they launched their own smartphone OS, called Bada. And to top it off, they are one of the 5 confirmed handset makers to do Microsoft Phone 7 smartphones. And bear in mind, they are smaller than HTC. Ranked number 5 they are barely bigger than Motorola selling only about 2.9 million smartphones per quarter. RIM does 11.2 million smartphones on only one OS..

But this allows Samsung two advantages. First, it means they know every platform that allows licensing to third parties (Apple, RIM and Palm/HP do not license to others). So they can optimize given smartphones for given OS capabilities. That means Samsung can release new phones whenever any one OS gets an upgrade, but is not hostage to any delays of one OS, because they can then release similar phones on a rival platform.

And perhaps more importantly, they can always answer 'yes' to any requests by any carriers/mobile operators. If the operator has a preference (and they could not insist on any OS that is not licensed to others haha, so this preference can only be between Symbian or WinMo or Android etc) then Samsung can say 'yes'.

GALACTIC EXPRESS

So what makes Samsung so hot? Half of the big success is the Galaxy S series of smartphones running Android. Large screen multitouch iPhone look-alike smartphones, the Galaxy includes basic mimimalist iPhone clones, QWERTY sliders and even a model - called the Galaxy Beam - with a built-in Pico projector that will shoot a video on any white wall that is 50 inches wide. That brings any argument about whose screen is bigger - to an abrupt end. Did you say 50 inches. Yes, look at this...

Oh, and they launched the Galaxy Beam in Singapore already - price point? Same as the iPhone 4. Oooooohhh, I want one so badly.....  (Sorry, having a bit of new gadget jitters)

How is that Galaxy strategy doing? Pretty stellar in fact. In 3 weeks Galaxy sold 500,000 units in South Korea. Apple's iPhone 3GS did 800,000 in six months. In the first month, the Galaxy did a million in the world across some 30 carriers/mobile operators. Yes, that is not 1.7 million like iPhone in 3 days - but compare this to a certain superphone launch by Google or a pair of Kin phone launches by Microsoft, and suddenly Galaxy is quite impressive and viable.

Then remember that the Galaxy will be available with more than 100 networks - the most of any Android handset and you start to understand its full potential. In the USA, Samsung is the best-selling dumbphone so Americans already love the brand, and the Galaxy is carried by Verizon, Sprint, T-Mobile and AT&T. Samsungs touch-screen dumbphones are already well established, selling more worldwide than Apple's iPhone. This is now the 'next upgrade' phone for those Samsung touch screen customers.

As Samsung's carrier relationships and global footprint is far wider than HTC and whats left of Motorola's shrinking market, and as Samsung is already the 3rd biggest smartphone maker in China - expect a stellar autumn for the Galaxy. Early reviews have been very positive, in particular about the Super Amoled screen that is considered the brightest and most impressive screen behind only the Retina Display of the iPhone. Except that the Galaxy screen size is 4 inches, and is remarkably clear in direct sunlight.

Samsung came late to the Android party (HTC and Motorola were well established by now) but Samsung arrived with a bang. It has an excellent base from which to build, not just the bestselling dumbphone in the USA, Samsung is now running neck-to-neck with Nokia for bestselling dumbphone of Europe. So the customers and the carriers know the brand well. And with this launch, expect a strong share of Android phones this Autumn to be in the Galaxy class.

CATCH THE BADA WAVE

The Galaxy is in the superphone class of about 600 dollar unsubsidised phone prices like the iPhone. That is a nice premium price bracket, but that is not where market shares are made. In dumbphones Samsung has 21% market share. Its the second biggest phone maker behind only Nokia, so Samsung has to cater to a wide range of price points, across its customers worldwide. So to be really viable and contend for the mass market, Samsung needs a low-priced smartphone strategy as well.

And here it did its surprise OS announcement last year, called Bada. The OS is now ready and the first Bada based phone was released, called the Samsung Wave. Have a guess how many it sold in its first month? A million, yes. Now this is quite different. Bada is a new operating system. New operating systems don't sell a million in a month. Android did not sell a million in its first month, not even in its first quarter. The only other new smartphone OS that managed to sell a million in its first month was the iPhone in 2007. Now Bada is the next best new OS launch since the iPhone. But most people didn't hear about it. Many don't even know that Bada exists.

Well, much of that reason is that the Wave is a low cost smartphone and is aimed at Emerging World markets. It sold about 280,000 of those Wave phones in China. But thats more Wave phones in one month, than iPhones sold in the whole of Q2 in China - the second largest country for smartphone sales in the world, behind only the USA.

What can I say? If you are a dumbphone maker, you have to migrate your customers to smartphones. Samsung has a cheap smartphone platform with Bada, which is far newer than Nokia's Symbian (aiming for the same low-cost market segment). The first month of Wave sales suggests Bada will be huge. Samsung now can capitalize on its enormous global reach to bring the Wave to those markets where prices are very tight, and the Galaxy to markets where there is ample space for luxury phones. And then they still do the occasional Windows Mobile, Symbian and soon Phone 7 smartphones as well, just to cover all the bases. And Bada's developer community is growing well, with its nascent app store also starting to be populated with early apps.

IN SUM

Samsung grew strongly smartphone sales since the start of 2010, far faster than the industry grew. Samsung made profits both quarters in its handset unit (even as its profits declined with the intensifying competition). Samsung launched a very potent superphone class smartphone in the Galaxy, to very good market reception; and launched a new OS and with it a low-cost smartphone - to the best new OS launch since the iPhone. This is a great smartphone strategy, executed perfectly. What more can I say. Go Samsung!

So National Mints Behaving Like Ostriches? Or is it only Ian Bennett of Canadian Mint who is afraid of mobile money?

 

I don't know how to write this article, it seems like an episode of an alternate universe. I have never been censored before. And even now, more than a day after the fact, I cannot get my head around the fact that this happened. Or why.

 

THE INVITE

 

So, first the what. I was invited by the Canadian Mint (yes, the people who actually manufacture the coins) to speak to the 26th annual Mint Directors Conference, that is running right now in Canberra, Australia. I have a formal, signed invitation letter from the Canadian Mint, dated November 6, 2009, inviting me to speak at the opening session chaired by the CEO and President of the Canadian Mint, Ian Bennett. They wanted me to 'represent the mobile payments industry' and the reason they wanted me was 'given your expertise'.

The Mint Directors Conference is in Canberra Australia, and this was the Canadian Mint inviting me to come and speak. What a wonderful honor, and given my books on mobile related topics, including the world's first book on mobile money; and my countless lectures, articles, blogs and presentation on the developments in mobile money, this seemed like an ideal opportunity to talk about what is truly relevant to the coins-oriented minting industry - their future.

I of course agreed. We made our arrangements and the Mint Directors Conference would use my name as part of the advertised speakers scheduled to speak on the opening day, 27th of September of the Conference that runs to October 3. I found of course now in September that there would have been many paying customers asking to have my Monday 27th of September, but I was of course committed to Australia and the Mint Directors. Meanwhile as the date of the event neared, I started to mention this upcoming speaking engagement on my Twitter feed, at this blog, and in my public speaking engagements.

As the Canadian Mint had invited me, and was my host at the Conference, I wanted to be very open and generous in thanking them, so when I presented in Toronto on Sept 15, at the Mobile Media event (and my topic happened to be mobile commerce) - I clearly thanked the Canadian Mint for inviting me to speak to the upcoming Mint Directors Conference. I also showed a small preview of some of the slides that I had prepared to show in Canberra.

There was even a video of me at that event, interviewed by Rob Woodbridge for Untether TV. In the video I mention that I am soon speaking in Canberra at the Mint Directors conference, and that in my speech I will be talking about the end of money, etc. See for yourself (Tomi on Untether TV)

TOMI ARRIVES

I flew in from Africa on Sunday afternoon, arrived in Canberra ahead of schedule, and checked into my hotel. As I collected my delegate package, I found the printed official program to include my presentation topic same as it was online. My speaking slot was listed very precisely to start at 08:32 in the opening session entitled Imaginative Payment Developments. My topic was 'The future of money and payments: Mobile Payment Industry Perspectives."

We were setting up my microphone and other speaking arrangements, when about 15 minutes before the morning session was about to start, the conference producers informed me that I 'would not be seated'. This means (apparently) that I would not be allowed to approach the podium and deliver my presentation.

The room was filling already with about 500 very senior national banking directors, the national mint directors of the USA, UK, China, Japan, France, Switzerland, (Finland) etc and national bank directors etc and I am very visibly in the front of the room, and the organizers now were clearly indicating me to move 'back' away from the stage.. What could I do? I couldn't 'insist' that I should be allowed up on the stage. I tried to behave as professionally as I could, and I was shown where the delegates could sit, and I took a seat at the side of the room. I was not so much surprised as flabbergastered. They did.. what? Did they now 'censor' me? Was I just being stiffled? What happened? No explanations, other than that I was 'not to be seated'.. No reason given.

 

I was not ejected from the room, I had not done anything, not said anything. They allowed me to sit in the room as a normal delegate so clearly I was ok. But for some bizarre reason, I was not being allowed to present. This has never happened to me before and I could not see why.

Well you'd think you've seen it all, but it really gets more bizarre still. The chairman of that session was no other than Ian Bennett, the CEO and President of yes, the Canadian Mint - my hosts! So he has censored me? First he invites me to speak, then he says I cannot speak. How incredibly weird is this?

IS LIKE A BIZARRE BAD DREAM

 

So, the online program on the morning of 27 September, 2010, for the Mint Directors Conference listed Tomi Ahonen still as speaking at 08:32. At about 07:45, I am told I will not be speaking. And yes, the printed conference program also listed me as speaking at 08:32. And of course, on the big screen, the delegates even see my name as one of the speakers for that session. All other speakers of the morning are allowed to speak.

 

Ok. This is now an episode of an alternate universe, yes? So get this - When 08:32 comes, and the previous speaker has ended his presentation, Mr Ian Bennett says that the next speaking slot is Mr Tomi Ahonen, but that Mr Ahonen will not be speaking. He mentions that that I am in the audience and points me out (I wave) and Mr Bennett says he will be publishing my paper with the conference proceedings. He says the reason for why I am not speaking is that I arrived so late last night, from my long journey from Africa. He seemed to suggest that I was apparently too jetlagged to speak, that I somehow arrived past midnight like in the early hours of the morning.

Ok. Number 1. If I arrived late from Africa (I did arrive from Africa) but I was here, at the event, ready to speak, then isn't that a bizarre reason why I am not allowed to speak? That I arrived late?

ARRIVAL TO CANBERRA

Secondly, if I was severely jetlagged and delirious, but still willing to speak - isn't it MY decision of am I 'in the condition to speak' and not his?

But the truth is, that the official registration form that I had submitted for the 26th Annual Mint Directors Conference had a requirement of specifying what airline and when the delegate would arrive. (Yes, they were quite... 'detailed' ... in the specifics on their conference registration haha). And trust me, these money guys can be pedantic. So yeah, on the form that I submitted to the conference on the 13th of August, 2010, I listed that my arrival flight was Qantas QF 1483 from Sydney, which lands at 17:10. I added the detail that my connecting flight was QF 064 from Johannesburg to Sydney, just in case there was some flight connection problem and I might be forced to take a later flight.

So. The official expected arrival time for Mr Ahonen was 17:10, on Sunday 26th September. And the organizers of the Conference had known this for more than a month before. And they were totally satisfied with this, they issued my delegate pass etc. What happened? I arrived so early in Sydney, that Qantas kindly put me on an EARLIER flight to Canberra. I flew QF 1485 (and yes, obviously, I have the airline ticket stub!). I arrived more than an hour BEFORE my expected arrival time.

Yet Mr Bennett says that I arrived too late to the conference and suggests my jetlag prevents me from speaking?

I AM NOT A HAPPY PUPPY

Now, I think its pretty rotten of my hosts to be so rude to me, that they - the Canadian Mint - forbid me from speaking. I mean, Canadians for heaven's sake. They are known as some of the most kind and generous and friendly and polite people on the planet.

 

But here's the kicker. I did not fly into Canberra on Canada's dime. I flew there on my own dime, and my own time. I arranged for my own flight into Canberra - they did not pay for it, they are not reimbursing me for it! And I was not charging for this presentation.

So, the Canadian Mint invites me to speak, the event uses my name to promote the event. They publish my speaking slot in the printed brochure and even on the morning of the event, my slot is there and even on the big screen they audience of 500 bankers sees my name and topic. I have been promised the chance to give an opening address to the big global mint directors annual event on the future of money. I was led to believe that I would get the chance to speak to the event, that is why I came there. Its not a trivial trip from Hong Kong to Canberra, there are no direct flights. I volunteered not just a full day of my time in Canberra for this one speaking slot, I also sacrificed two further days of travel into Canberra and back to Hong Kong. Yet 15 minutes before the event starts, I am told that I am not to speak.

The person forbidding me from speaking is none other than Ian Bennett himself who invited me, and he then points me out from the audience, recognizes that I was in attendance, and that says he'll publish my paper. But because I was late in arriving from Africa, somehow Tomi is now unable to speak (as if I was somehow jetlagged perhaps?)

 

WHAT WAS HE AFRAID OF

Ok. I have now talked about this with several of my trusted friends in the industry, to try to figure out what happened.

Mr Ian Bennett, CEO and President of the Canadian Mint, has clearly been spooked by my presentation that he has had for over a month.

Now, first of all, that presentation has NOTHING that is particularly new to anyone who follows our industry! I had written here on this blog just last week about the future of mobile in retail for example. I have written extensively about mobile entering the small payments space (ie coins, ie Mint Directors' domain). I have reported and spoken widely about how coin-operated parking was terminated in Estonia, and today parking can only be paid by mobile. And I have been recently adding the story from Sweden where public transportation payments are no longer accepting cash, and the most prevalent use to pay is mobile.

But I do understand, that my presentation may have caused Mr Bennett alarm, as clearly I do show in it the power of mobile. And clearly the facts do now prove beyond any doubt, that mobile will not cannibalize parts of cash, mobile will kill cash in some industries. The facts are in on that. The only questions are, whether that will hit every industry (of course it will) and how long it will take.

But this event is the 'Mint Directors Conference' subtitled 'Imagination, Inspiring, Innovation' - and most of the other speakers of the morning session spoke of how safe and secure the mint business is. (Can you believe that? Its like the music industry a decade ago, or print a few years ago!) Almost all speakers talked of the web based payments (a trivial opportunity compared to mobile) and of credit cards, debit cards and contactless payments. But few mentions of mobile in most of the other presentations on the 'future of money' opening session, haha..

Then in that context, Mr Bennett considered my last slides in my presentation where I show how coins have been eliminated of very significant coin businesses in Sweden and Estonia - perhaps he was spooked and felt, at the very last moment, that he does not want that story out?

I mean, there was clearly a strong delegation of press in attendance. Perhaps driven partly by the expectation to see Mr Ahonen speak about mobile money? I have a strong following among journalists in Australia. It may have taken Mr Bennett by surprise? Perhaps the journalists did not know of me from beforehand, but had done their homework as professional journalists; and that their preparation work illustrated, that the biggest threat to coins is - indeed - mobile. And now, the journalists would see a global guru about mobile money to be presenting to the mint conference? Its like an engineer of airplanes, talking to a conference about Zeppelins and other airships and ballooning.

 

One of my colleagues suggested the hypothesis that perhaps some journalist had asked Mr Bennett about Mr Ahonen specifically, and mobile money and perhaps even knew the Estonia or Sweden example? Easy, if you follow my writing or a good journalist doing a bit of reading about some given speakers? And obviously most of my Australian journalist friends would again know that story. Was one of them covering the Canberra event? Was Mr Bennett, CEO of Canadian Mint, suddenly frightened that his big opening session would end with 'the wrong message' that reporters would be writing about?

That would explain why my name was still showing as a speaker on the online program AFTER my session had ended, on the morning of 27 Sept. That would explain why Mr Bennett in his prepared written opening remarks, had no mention of the fact that one of his speakers is not to present. That would explain why my name was still showing on the title cards, when my turn was to speak at 08:32. That would explain why it wasn't until then, that Mr Bennett 'remembered' to tell the audience, that oh, Mr Ahonen won't be presenting - and that would also explain why he said - Mr Ahonen is in the audience - and pointed me out - AND it would explain why he was willing to put my slides into the conference proceedings - but not let me show them! It would also explain, why he has a total bogus utter palefaced lie about when I arrived in Canberra. That was simply a last-minute excuse.

 

He knew if I showed my slides, that would be the big story of the press. But if he hid the presentation into the proceedings of the event, it would be long after the event, that the facts would emerge, and no journalist would be focusing on that matter. They could effectively hide the truth.

 

And rather, they would show those obsolete slides that were given about the significance of mobile today.

HE BETTER NOT EDIT MY SLIDES

Now, Mr Bennett has promised a live audience of 500, and is caught on video - that he will publish the slides that he has from me, in the conference proceedings. Here is my position - he better not touch my slides in any way. When I talk about Sweden and Estonia, he better have those slides exactly as I sent them. I do have the original slide set, of course, and I will scrutinize every comma and exclamation mark haha..

So.. That is the story from Canberra. I was censored. Censored by the very man who invited me to come and speak. I would have thought that they had bothered to read what I wrote, BEFORE the Canadian Mint decided to invite me to speak, haha, or perhaps thats not really worth doing, is it Mr Bennett?

Obviously I will monitor this space. And I have already tweeted about this and will do more tweets about it. I have also decided that I think this is a story of interest to journalists on my mailing list. I think Mr Bennett may have bit a bit more than he thought he did, in attempting to 'control the story' haha. Isn't it like Communities Dominate all over again?

...But yeah, your faithful mobilist has been censored. I can tell you it did not feel good.

UPDATE 1 - 29 Sept - as many have asked to see the 'dangerous' slides, I will be showing them of course, and the first chance to see how mobile money eliminates coins totally, nationally, in two small coins-related industries - those 'dangerous' slides haha, will be shown at the Forum Oxford conferece at Oxford University in two weeks - come see us there with tons of superduper superheroes of mobile thought leadership like Ajit Jaokar, Chetan Sharma etc etc etc. Event page is at Forum Oxford Conference 2010.

UPDATE 2 - 29 Sept - The story has been getting a lot of support on Twitter, with many retweets, and some bloggers have weighed in, and this full blog article has been reprinted at Brighter Side of News (thank you!). I will keep monitoring the space

Lets Talk About Mobile in Retail

I had the pleasure of returning to Toronto to present at the Mobile Media Week last week, where I did a pair of keynotes, to the Mobile Think Tank, and the Mobile Biz Bootcamp. In the bootcamp they had one of the focus areas on mobile commerce and we heard from many retailers what they are up to in the mobile space.

So this blog is not about mobile banking or mobile credit cards. It is not about 'all' mobile commerce, ie any digital goods sold directly to a phone do not really involve (or need to involve) bricks-and-mortar type of retail. So our music, movies, videogames, airline tickets, insurance etc do not require a separate visit to a retail establishment, because the service (or proof of purchase of service) intended (music, movie, game, air ticket, insurance etc) can be delivered completely to our phone.

That is only a minority of our retail. What of the locksmith, the hairdresser, the dentist office, the florist, the clothing retailer, supermarket and drug store - the typical 'high street' or 'mainstreet' shopping experience in any small town on the planet. What of them? If you need your locks changed, that cannot be done 'remotely' via a mobile phone or the PC. Or your haircut? Can't be done directly via mobile. Mobile can show you what your new haircut might look like, virtually, but the actual hair still needs to be cut with actual scissors by an actual hairdresser or barber. That can't be fulfilled via mobile. So lets look at the real bricks-and-mortar retail establishments. What is the role of mobile to them?

THREE AREAS

Its three-fold. There is 'marketing communication' (ie advertising) we can deliver to our customers before they come to our store - and use mobile also to 'drive foot-fall' ie drive actual human visitors to our stores. This is very important in an era when e-tailers like Amazon and Expedia and Ebay are expanding their product offerings and trying to sell everything online (and increasingly also on mobile). If you own prime retail space in the main shopping district in your town, you want your customers to keep coming to your stores and make purchases there. Mobile is a new way to help drive visitors to your store.

Then there is the experience within the store. As the retailers get to know mobile, they notice it is a very powerful activation tool for customers already inside their store, to help them try something, go to a different part of the store, and to engage with the customer, assisting with the shopping experience - all this while of course hoping to sell them more stuff, and differentiating the shopping experience from that inside other shops today. In a very small shop - imagine a typical jeweller for example - there isn't much movement inside a store, but then consider the megastores by retail giants - you can literally get lost inside a super-duper-store..

The third experience is after the shopping experience. The mobile goes everywhere, where our shopper goes with the newly bought goods. Even if your customer bought condoms for having sex, yes, that weird statistic from earlier this year, that 10% of British youth think its ok to send SMS text messages while having sex..  So yes, the mobile will follow your customer to wherever they go, including the bathroom and the bed.. So every loyalty program should start with mobile: a mobile is carried even when the wallet is not.

SOME EXAMPLES

Lets take concrete examples. The examples of the first kind are most common, because that is usually where most mobile marketing will know to start. Its the 'obvious' bit. I have spoken a lot about some early pioneers in this space, like the Guinness beer Java app for the Rugby Sevens tournament here in Hong Kong which offered clever utilities to the international tourists who had travelled to Hong Kong for the big international rugby tournament. So it offered the rugby scores and stats and team rosters and biographies of the star players and all what you'd expect from a sports news service. Then it offered the typical tourist guide advice, the maps to Hong Kong, where is your hotel, where is the nearest MTR subway train station, etc. It was very innovative in pre-installing a series of links to short phrases said in Cantonese, so the English-speaking tourist could just click on a link on the phone, and the phone would 'speak' in Cantonese, telling the driver where to go, or asking the bartender to order a pint of Guinness beer etc. All makes sense.

So far we have the elements of any good sporting/travel related mobile web service. The whole thing was delivered via a Java app, so it works on 80% of all the phones on the planet (where an iPhone app would only work on 2% of all of the mobile phones in use, Android even less today). Then the clever bit about retail. You wanted the Guinness app to drive 'foot-fall' and to pubs that sell Guinness of course? And yes, it of course had included Guinness-serving bars listed on the maps it showed and helped tourists find the nearest pint of Guinness in Hong Kong.

How successful was it? Sean Rach of Ogilvy reported in Singapore earlier this year, that the Sevens Tournament Guinness app in Hong Kong had boosted Guinness sales by 25%. That is good use of mobile to drive retail sales.

In Toronto we heard for example from Chris Borek who runs the mobile initiatives for US retail giant Target stores. They have of course the mobile service that allows consumers to find out which of their Target stores has a given item in stock, and how many of those items are in that particular store, etc. This is all pretty 'obvious' to retail chains to consider when they start to deploy mobile marketing to their consumers.

I have countless such stories that I have collected into my 'Pearls' (and have many in my ebook as a collection of advertising related pearls in ebook Pearls Vol 1: Mobile Advertising). Mobile is used to drive retail visitors to stores from the Puma adver-game in China, to Victoria's Secret when they opened their new store in Chicago, to Borders bookstore, which reported 23% response rates to their personalized book offer coupons delivered via mobile. Perhaps the best known campaign is BMW's winter tyres campaign two years ago, which achieved a 30% conversion rate - measured actual purchases, driven by a simple personalized MMS campaign. And the world record as far as we know, is still the Gillette razor campaign in South Korea - where 98% of the mobile coupons were redeemed. Imagine that, a 98% conversion rate for a mobile coupon campaign.

Where e-tailers are direct rivals to the traditional bricks-and-mortar store, mobile is a friend to the traditional store-keepers. Mobile helps you bring visitors to your store. But it can be far more than that. However, before I go further, I have to make one obvious point.

MUST BE OPT-IN

Mobile can drive visitors to your store. But please don't think of the idea of the Tom Cruise movie 'Minority Report' and its style of personalized spam ads delivered by location. That idea of location-based ads delivered to random walkers-by is a myth, it is economically not viable and it is hated by consumers. Do not bother to spend one minute planning any location-based spam ad campaigns. If you're lucky you might get a tiny percentage of success but nothing like these award-winning campaigns I mention in this blog.

All of the above campaigns that I mentioned were on the basis of opt-in. You have to build your mobile marketing target database by opt-in basis. That is a slow process and you have to start now. But it can be incredibly powerful. Consider Japan. Today, out of the total Japanese population, one in 8 Japanese citizens has already signed up to receive coupons from McDonalds! Why would McDonald's ever bother to waste the money on advertising on TV or magazines or movies or radio - all of which are media where the majority of the message goes to consumers who are NOT customers of yours. When McDonalds can now reach the actual pockets of their actual consumers who not only use their products, but like McD enough to accept their offers and coupons and marketing, onto their mobile phones. Please do remember, Japan is a fish-eating nation (sushi bars are the real fast food of Japan) so 1 in 8 in Japan is an awesome achievement for McDonalds.

IN-STORE

The clever part comes to allow customers to engage with you when they are in-store. This is still in the early stages. But mobile should be used to move the customers around the store, to bring them to try new things you sell, and of course to offer them instant coupons and discounts and offers. Here we have the power of various non-cellular technologies we can use, such as Bluetooth and near field and even WiFi. We can also create further engagement of our current customer in our current store. I heard two great innovative examples this summer. In Singapore I heard of the Adidas store promotion, which was the world's first use of Augmented Reality 'in the first person' - when they introduced the digital mirror that allowed instant fittings of t-shirts with the help of a simple cameraphone and their clever use of the digital mirror. I blogged about it earlier so if you don't know the example, please take a look here (Adidas introduces first person AR)

Even more powerful is the idea from Tesco that I just heard three weeks ago when in Brazil, speaking at the Mobile Marketing Forum run by the Mobile Marketing Association in Sao Paulo. Tesco the UK's biggest supermarket chain, is now offering its intelligent shopping list service. The logic of using the mobile phone as your shopping list is pretty obvious for most consumers. The phone is always with us, so we can easily see what needs to go to the shopping list. If we integrate that with our Tesco's shopping experience, Tesco can offer to add items from our previous shopping visits directly to the shopping list - and using 2D barcodes (QR codes) they can make it really easy at one click to add new items to the shopping list while in the store, etc.

That all is 'to be expected'. A shopping list is very 'unsexy' and of little interest. Until we get to the magical part. Tesco's will ask you which Tesco store you want to visit, and then Tesco will automatically re-arrange the shopping list, in the order of the items in the shopping aisles - of that particular Tesco Store! Awesome! It is 'magical'. It is like Tesco and our mobile phone is reading our mind. Even as the stores will periodically re-arrange the stores completely (and confuse us shoppers..) - this app knows what was re-arranged and still intelligently routes us inside the store. And if we go to an unfamiliar Tesco store today - like the new one at the mall that just opened, all we need to say to the app is which store we want to go, and the shopping list is re-arranged based on the aisles of that store. Awesome!

Now, the really clever bit is of course under the skin. Its not that we help Tomi Ahonen do his shopping. Tesco's would know from my purchase pattern that Tomi clearly prefers Pepsi to Coca Cola. Well, if Tomi is using the Tesco shopping list app on the phone, next we will have Tesco selling incredibly powerful info to Coca Cola. Did you know Coca Cola, that a regular Pepsi drinker is now in Aisle 4 of Tesco store number 107, and on the next Aisle (Aisle 5) there are the soft drinks? Would you like to send a Coca Cola offer to this Pepsi drinker? We can actually identify the point of when a purchase decision is being made

Now, how important is opt in and personalization in this case? Tesco's has to have asked me permission to send marketing to me. And I will have had to have selected soft drinks as one of the categories for which I say yes. But yes, as I walk on the aisle, and I approach the soft drinks, and I am looking at my phone (as I am reading the Tesco shopping list)! - I receive an instant coupon for 2 bottles for price of 1 from Coca Cola... Or perhaps Coca Cola sends me a trial offer of one of their new flavors like cherry coke, vanilla coke or whatever new they now have..

Note, Tesco will not reveal my name to Coca Cola. Tesco will not sell my phone number to Coca Cola. Tesco will not violate my identity in any way. If I said no to soft drink ads, Tesco will not even bother to tell Coca Cola. But if Tomi Ahonen said yes to soft drink ads, then Tesco can tell Coke that there is 'a Pepsi buyer' in that very specific store. And it will be Tesco, not Coca Cola, who will deliver the ad to me. I have not given Coke permission to market to me. But I will appreciate Tesco trying to find me good bargains in areas that I am interested in..

But very VERY importantly, Tesco know me well from my past purchase patterns. They know what TYPE of product of Pepsi I buy. I am buying regular fully caffeinated Pepsi, not sugarfree Pepsi Max, so Coca Cola can equally target me very accurately with their corresponding product(s). Because Tesco knows this, they can help Coca Cola give me the best possible offer - don't sell me Diet Coke haha, this customer doesn't buy any diet sodas, ever!

Tesco also know what format I buy. I don't buy the 2 liter or 3 liter bottles, I buy several of the small bottles. So again, if Coca Cola tried to sell me a 2 liter bottle of Coke, it would be a waste simply because I never buy any soda at that size (I live alone, that amount of soft drink would go stale long before I had finished the bottle). Tesco can help optimize and target the ad for its retail brands and also deliver for its customers the best value.

Think about it. If you don't have a strong brand preference one way or the other, and you got served discount coupons instantly while in the store, of only those goods that you buy anyway - I would never be offered baby diaper offers for example, as I do not have kids. And I use an electric razor, so I wouldn't get any offers of Gillette razors etc. Only the stuff I really buy, in the categories I buy. Totally relevant offers to me...

This is still only the beginning. We can do games in the stores, have customers collect points for visiting a specific department or desk, or viewing a particular promotion or engaging with an automated digital marketing gadget like some touch screen promotional panel for example. Give our customers some loyalty points or chances to win some trinkets and soon they cannot imagine shopping without having the phone in their hands all the time. And remember - get their permission to promote to them - and don't abuse that permission.

AFTER STORE

The part least understood so far, is the after-store experience. Retailers do not quite understand this part - that the mobile phone is upon our person - even after our wallet is not there anymore - we take our phones to the bathroom, we sleep with the phone in bed with us, and most amazingly, we keep the ringer on, while in bed. So mobile can even reach us in our sleep. No other mass medium has ever had such a total reach.

What can we do with this? Its the obvious channel to use for customer feedback. In Singapore today all three mobile operators do this with the visits to their stores. If you visit the mobile operator (carrier) store, after you leave you will receive an SMS message asking you if you were satisfied with your visit to the store. You can respond by simple SMS saying yes or no. That message obviously is not charged to your phone bill. And what if you say you were not satisfied.

Mobile telecoms competition in Singapore is already so mature and customer-oriented, all stores do this - if you say no, you will receive a call from headquarters, from a senior exec in sales, who will talk to you personally to find out what happened. And obviously that senior sales exec will be calling next the store manager of where you visited and that store manager will go have a talk with the sales clerk who may be having a bad day today, or perhaps did not pay attention to the training, or who - perhaps, if this pattern holds - is not really suited for a customer service job like retail. Imagine how powerful management tool this is, if you let customers talk directly to sales management...

This is the newest and most difficult part of the use of mobile in retail, so its rather easy to see that its the mobile operators/carriers who are first to adopt this. But it can also be simple other things like loyalty points, like follow-up communications, like updates, accessories, etc. Since we know what you bought, we can follow up.

In the USA, Rite Aid the pharmacist retail chain is now letting its loyalty card holders register their cellphone number to the loyalty card. Then the customer does not need to carry the Rite Aid printed loyalty card anymore, but only give the phone number at the cash register, to collect the loyalty points. Clever. But what does Rite Aid do with these customers? As it sells prescription drugs for example, it can send alerts when a given prescription is about to run out, a few days before, and remind the customer to go get a doctor's authorization to renew the prescription before it runs out, etc. This kind of 'after-care' is what mobile is by far the best tool to use.

Finnish libraries do that, by sending reminders to the library users two days before a book is due back, to remember to bring it back, and allowing the user to re-new the book loan via SMS (as long as the book is not ordered by another library patron). Isn't that cool. Renew your book by SMS, rather than lugging the books back to the library to be stamped...

CLEVER BITS

There are some other clever bits to retail use of mobile that I want to mention. One magical opportunity obviously is AR, Augmented Reality. But AR is currently mostly limited to smartphones, so your AR solution is one to deply at a later stage, when the basics have been covered. But consider this for magic. Ikea has an AR app for some smartphones, that allows you to select any items from the Ikea catalog, and 'virtually test' them in your home. To use the cameraphone view, to look at your own living room, then super-impose that new Ikea sofa onto the view, and see if the sofa brown color matches your curtains and goes with the coffee table you have, etc... That kind of thing. Magical.

Viral is another thing we should all be thinking of every time we are in anything with mobile. The Puma racing advergame I mentioned earlier, had this element. You get a chance to win Puma rewards if you are a good racer, yes, against other racers. But you also win Puma rewards if you are active in spreading the game to others. I love this idea. I just was in Athens this week at a customer event by internetq for several operator customers of internetq, where I was presenting about mobile marketing and advertising. And one of the examples I told was that of Orange Poland, who had this kind of incentive in their game (the daily prize was a BMW car, and they were promoting their new Club Orange). All those who were active in spreading the news about the game were also rewarded with points, which increased the chances of winning in the game. In all, the campaign was so successful that 1.5 million people participated - 13% of Orange Poland's total customer base. This is the kind of uses we need in all mobile campaigns. As Rudy de Waele likes to say, Think Global, Act Viral. Or how Fjord CEO Mike Beeston says, make all mobile services 'sufficiently contageous'. Viral is a very powerful element of mobile, we need to learn to use it well.

I just heard in Athens at that internetq event from Mike Walsh about fashion shows in Tokyo now, where as the models walk by, you can point your phone at the supermodel, and pick the item of clothing they are wearing, and order it on the spot, in your size, in the color of your choice, etc. Instant shopping. Cool, kawaii, as the Japanese would say. This is a sign of the things to come in the near future for all for us.

And back to foot-fall. We know that the mobile is unique to each person, so personal, we don't even share it with our spouces. So when phone number 123-456-7890 walks into your store, it is certainly the same person with that phone number as visited your store two weeks ago or a year ago. Certainly. So we can do great things with that information.

We need to have the customer tell us they're in the store now. The Rite Aid loyalty card or Tesco Loyalty card is one way. We can do many other things - why not create a game where you can register via a 2D barcode or QR code which is only inside the store. Each of our stores has a different code, when you visit, you have a chance to win, but give a chance to win something in that store for all who visited that specific store, then give a grand prize where odds increase for all who visit many stores... Make it a game to try to get your customers to visit as many of your stores as possible..

ENGAGE THROUGH WINDOW DISPLAY

The last thought I want to leave you with today, is about when the store is closed. You pay a massive rent for that prime real estate on that specific street in your town, for your store. Most shops are not open 24 hours a day. If your store closes at some hour, and is on the street (ie not a shopping mall which itself also closes) - then there are people walking by your store after it is closed. Your expensive store space is 'idle' for what, 12 hours of every day? We can do better, with mobile.

You have your window display. It is designed to try to bring people into your store. It can be a very powerful sales person while you are closed. Why not make an interactive advertising game into your window display, to run automatically overnight, to collect phone numbers and permissions of passers-by to join the game. So if you are a jeweller, offer a chance to win a men's watch at the end of the month - in that window where you have men's jewelry, and the chance to win the corresponding women's watch in the window where you have womens' jewelry. Run a small video clip on a cheap DVD or flat screen PC monitor, just enough active, that anyone who is really watching the window, will be interested - but not a giant display so those who are not really interested (but want to enter every contest) would notice. A small portable DVD player is perfect for this, with a short 1 minute video on perpetual repeat. inviting passers-by to join the contest.

Then two critical parts - number 1 - make sure you give the passer-by the chance to double his chances if the customer visits the store itself, before now and the date the prize is awarded. You want the visitors to come into the store and fill out a short survey (by mobile or on a touch screen simple interface at the store like an iPad for example). And of course, the prize has to be picked up in person, inside the store.

Every single store with a store-front at any street in any town should have a simple interactive tool to engage with passers-by for after-hours. No matter what you sell or offer, give the passers-by a chance to win something nice. Make it something different every month, don't run the same promotion in any way inside the store - you don't want to give away stuff to regular customers, this is a away to connect with those who did not make it inside your store. Nothing stops your regular customers from playing in the game too - but they have to 'notice' the window ad (and most regular visitors won't be bothering to look at your window displays).

And as the customers register to your contest, ask them if they will allow you to promote to them via the phone. This is the process you should be doing at all times, everywhere. Keep asking permission to have your customer signed up to your opt-in database. Remember McDonald's in Japan. You have to do this continously over years, to get a big database of your actual customers. When you get the permission, make sure you offer only relevant ads - I am a man, don't offer me discounts on womens' things, etc..

SURVEY YOUR ACTUAL CUSTOMERS

Then use the mobile channel as your occasional customer surveys. A couple of times per year, only to a small sample of your total opt-in database, ask them about your next changes to your store. You are considering expanding the X department and shrinking A, B or C, which would your current customers want you to shrink first. Or you are considering adding brands Y, Z and W, which brand would they want you to add to your store shelves, etc..

This is far more powerful than any marketing intelligence you can find in any trade journals or by any wholesalers' marketing materials etc. You get actual factual information from your actual customers. Their exact preferences. Ask for them, not often, in small amounts on a small sample, so never more than once per year per person. But imagine how much more this will increase the loyalty of your customers, if you ask their opinion - and obviously - after you have processed the survey - since you know who was asked - TELL THEM. Not everyone of your customers gets what they asked for. So tell EVERYONE who participated, what was the result. Now they feel they were listened to. Then tell them you'll implement preferences number 1 and 2 (this time..).. Those who voted for number 3 will fully understand - IF you tell them that 1 & 2 got more votes.. Far too often, after a brand asks a consumer for his/her opinion, they don't come back to tell the consumer what was the final tally. Tell your customers what was the final result. They will love you for sharing this.

Customer loyalty and CRM in the age of mobile is radically different from before mobile. It is very early days, but the wonder of mobile is that it is in the pockets of every economically viable person on the planet. If you are a retailer, the only way to talk to every one of your prospective customers is through mobile. This is new, it only became viable a few years ago. Remember, its not an iPhone App or any smartphone app that you want. You want to engage with SMS and a simple mobile web page built on WAP. Thats it. If you want to get creative, you add MMS and Java. That gets you to 80% of all phones of all consumers to the planet. Smartphones will not even reach a tenth of that, so any retailer should not give one penny to any app development of smartphones today. The start is SMS and WAP (and possibly voice and IVR). That is where you start. Then the second stage is MMS or Java (and in CDMA markets like the USA, Korea, Japan, China: Brew). You have to have these deployed before you even listen to someone who is excited about a 'cool' iPhone app for you. You are in retail, that means serving mass market consumers. You are not in the making cool apps business.

NOW IS THE TIME

But retail.. Now is the time to get to understand mobile. This blog had a few simple early examples. Remember, you can go into mobile at three separate stages of your consumer's consumption pattern. You can talk to the consumer before the purchase, advertise to the consumer. You can also talk to the consumer when they are in your store. And you can still engage with the consumer after they have left your store with their purchase. Mobile is the ultimate customer relationship device. Make powerful use if it now, before all of your rivals are doing it, and you will find a competitive advantage out of mobile.

If you want more info, you may want to look into my seventh book, first in ebook format, Tomi Ahonen Pearls Vol 1: Mobile Advertising. It is obviously primarily about the advertising (first stage) part of this opportunity, but that is where most retailers will need to start anyway. My ebook has 50 case studies of mobile marketing excellence the world over, and very highly rated as a practical book of what you can do today.

Welcome Stephen Elop to Best Job in High Tech: New CEO for Nokia

(First, its been a hectic week of travel for me, Asia, North America, Europe this week, so apologies for this blog being somewhat 'delayed'. I know there are many who are interested in my view about Nokia's new CEO. Secondly, I promised a review of major smartphone player strategies after the half-year results came in. I had already given my view of Apple's strategy in smartphones which I wrote during my summer vacation. This new Nokia CEO blog is also going to be, by necessity, a review of Nokia's smartphone strategy. Thirdly, please allow me some more clumsiness and brevity and even more meandering in my writing style this time in this blog article, as I am back from vacation and heavily travelling and super-busy, so I wanted to get my thoughts out sooner, rather than try to find the time to refine and edit this blog down some more. But yes: Long blog warning! And lets delve into the biggest news in mobile of last week..)

ULTIMATE JOB ON THE PLANET

Imagine, its just about the ultimate job? If you were in the IT industry in the early 1990s, and you were given the job of CEO of Dell, the world's biggest PC maker - and with it came the job of Toshiba, the world's biggest laptop PC maker - where the bulk of the revenues were in desktops (Dell) and the future of PCs and more of the profits, was in laptops. And as a bonus the job came with being CEO of Microsoft, the biggest operating system that ran on all those PCs? Thats a bit what the job of CEO of Nokia is today. Except that the job at Nokia in 2010 is actually far better, and far more than those three giants even, two decades ago! What is best, is that the strategy and business basics at Nokia are supremely sound. The new CEO inherits a powerhouse mobile phone maker giant, which is on solid foundations, well positioned to reap benefits of the economic upturn, and well poised to capture a disproportionately large share of almost any conceivable mobile phone industry opportunities that can currently be seen on the horizon, including all flavors of smartphone opportunities from superphones to app stores.

Against its real rivals today, Nokia is a powerhouse utterly dominating its industry, the true gorilla of the mobile world. Yes, its share price has taken a battering recently, but even then - in the worst economic crisis of our lifetimes, when all rival giant global handset makers stumbled, Nokia came through with flying colors, its handset unit profitable every single quarter. And most of Nokia's stock price issues are related to either communication problems (not fundamental business and strategy) and of sectors of the market where Nokia's global success is not in any way dependent - but which have recently received significant shareholder attention (US market, iPhone, Android). And best of all, Nokia is poised to launch a new phone that the early reviews suggest could be a huge hit - any of its success over the next 12 months will befall the new CEO.

WELCOME STEPHEN ELOP

Its the ultimate job for someone hungry to make a name as a miracle-maker in high tech. Enter Stephen Elop, from Microsoft, to take the reigns as Nokia's new CEO. Welcome Stephen and we wish you the very best of luck from here at the Communities Dominate blog - both Alan Moore and I have been regular advisors to Nokia in the past, and we know you will be joining a great team of professional senior managers who take things strategically and with focus, yet constantly observing this industry - mobile - to ensure Nokia understands how the landscape is evolving.

I do not know anything about Stephen Elop except that he's a Canadian, he ran Microsoft's Office unit and championed cloud computing at Microsoft. He is not just a Microsoft guy, he was previously with several other IT companies based in the USA. I honestly am not even Googling his background now - I am sitting at a Starbucks in Toronto, waiting for my next meeting appointment, and am drafting this article with a nice tall cup of cappuchino. So I cannot tell you really anything 'deep' and 'insightful' about Mr Elop. I can make some very general assumptions but honestly I have never met the man, cannot comment on his management style etc.

I do know Nokia pretty well, as a former Nokia executive and having followed it actively through my independent consulting career this past decade, and regularly discussing Nokia in my books and on this blog (I was just quoted about Nokia in the Financial Times this week for example). So I can talk about Nokia's strategy and corporate health, in this age of the 'ultimate contest in convergence' for the 5 Trillion dollar prize, as I blogged last week.

NOKIA IS NOT APPLE

Apple was a struggling PC maker who was finding it difficult to sustain the proprietary Macintosh operating system and its expensive ecosystem. Apple saw the trend to tiny pocket computers years ago and launched the Newton PDA - a gadget far ahead of its time - which was a technical masterpiece and a market failure. Apple revived itself in the pocket electronics market, by re-inventing the pocket music player market with the iPod and revived the whole company, with iPod mania helping sell more Macintosh PCs and boosting Apple's margins. But it was not until Apple entered the mobile phone market with the iPhone, that its profitability exploded. This was a PC maker company with a tiny global market share of about 3%, that made corporate losses in the mid 1990s, that found new profits by selling premium luxury smartphones.

Nokia was nothing like that. Nokia was a juggernaut profit factory, selling the world's most widely adopted gadget (the mobile phone) utterly dominating that space and doing it profitably. For the whole past decade, Nokia was every single quarter as big as two of its next largest rivals combined, there were several quarters where Nokia made more mobile phones than the next 4 biggest handset makers of the world - put together. This at a time when mobile phones went from geeky-nerdy tech toys for business execs, to must-have communication tools of the whole planet, from the youth to the grandparents. Mobile phones sell 1.3 Billion units annually - in any one year they sell more mobile phones than the total installed base of personal computers on the planet. And for several years now, Nokia has been selling more than a million handsets every single day of the year, including weekends and holidays. In that decade, Nokia became not just the world's biggest mobile phone maker, and the gadget most used on the planet - Nokia became the world's most prevalent 'clock' or 'watch', the most used camera brand - even the Nokia default ringing tone, known as the 'Nokia Tune' - became the most recognized song on the planet, known more than White Christmas or Happy Birthday or any song by the Beatles or Elvis or Frank Sinatra or Michael Jackson or Madonna.

There is a Nokia branded phone in the pockets of 1.6 Billion people! Thats almost a quarter of the planet! There has never ever EVER been any brand even remotely as dominant globally, as Nokia is today. Ford once sold more than half of all cars manufactured on the planet yes, but in no country was there a Ford in the garages of 25% of the total population. Even at the height of 'Beetle mania' meaning the iconic Volkswagen original Beetle, there was not a VW for every fourth person on the planet. Timex is the best-selling watch of all time, but never was a Timex on the wrists of one out of every four people. Microsoft ended up selling over a billion copies of Windows and for long times they had over 80% market share in the PC market, but PCs are not that widely spread across the planet, so Microsoft never approacted 25% of the planet's population. Levi's jeans, Coca Cola drinks, Sony Walkmans, Bic pens, Hoover vacuum cleaners, there is no brand ever, that had one quarter of the planet - but Nokia is almost at that incredible point, currently used by 23.5% of the planet's population (and climbing)

There are those who say 'But Tomi, the iPhone, the app stores, the software/internet side of phones'. Yes. Sure. I hear you. Who invented the smartphone? Not Apple. It was Nokia. Remember Nokia was not a PC maker like Apple or HP or Lenovo now urgently trying to capture the shift from traditional PCs to smartphones. Nokia invented the smartphone more than a decade ago. Nokia was the first company to boldly claim that the future of phones was smartphones (a view still found controversial to many today) and more brazenly, Nokia was the first company to say a smartphone was a computer (something ridiculed by the 'real' PC makers at the time, and only very recently the PC makers - all 6 of the 6 biggest PC makers in fact - have all found it to be true, that a modern smartphone is indeed a 'real' computer, only a tiny and pocket-sized one).

What happened when giant mobile phones makers Motorola, SonyEricsson, Samsung and LG tried to shift their 'dumbphone' user base to smartphones in the past decade? They lost customers in that shift! The market shares of those other 'big 5 handset makers' in smartphones was almost every quarter worse, than their share in dumphones. Motorola was so bad at it, that for about two years, for every one customer they convinced to 'upgrade' to a smartphone, they lost literally nine other previous Motorola customers of dumbphones to either other branded dumbphones, or the new pure smartphone makers like Apple, RIM and HTC.

That was the norm for dumbphone makers. You lost customers trying to shift them from dumbphones to smartphones. The norm. To all except Nokia. Nokia market share in smartphones has year after year, quarter after quarter, been better than its market share in dumbphones. And this amazing transition they have done - consistently - while making the best profits of any big phone maker. That is the ultimate perfection in 'executing a smartphone strategy'

Those who marvel at Apple's iPhone or Google Android phones today, seem to forget that Nokia in its smartphones is not just bigger than all iPhones and all Android phones put together - in smartphones this past quarter, Nokia was almost as big as its biggest rivals numbers 2, 3 and 4 put together! Thats dominance. And again, doing it profitably.

Even better than that, Nokia's operating system for smartphones, Symbian, is so huge, it powers half of all smartphones in use on the planet. Even in the big growth stages of the Android now, Symbian has lost only a little, still selling more than 4 out of every 10 new smartphones this year - where Microsoft's Windows Mobile and Palm have all but disappeared, and Apple's iPhone took big losses the past few quarters. Even Blackberry has been seeing declines in market share. Yes, Symbian too has lost market share, but very little. Android has been killing Microsoft and Palm, and damaging Apple - while Symbian (and Blackberry) has been barely touched.

And yes, Symbian is an open source OS (something Apple and RIM and Microsoft are not), it is supported by 4 of the world's 10 largest mobile phone handset makers (Apple and RIM are not used by any other makers) and most tellingly of all - in the world's most advanced mobile phone market - Japan - Symbian powers half of all smartphones sold there (it is the OS used by NTT DoCoMo for almost all of its smartphones).

But Nokia is not Apple. Apple can focus exclusively on its super-premium luxury smartphone, the iPhone, releasing only one new model per year, putting all its effort to create genuine most-desirable masterpieces, much like a Ferrari or Porsche in cars. That means Apple is consigned to being a tiny nicheplayer which has a global market share of 2% of all phones sold (14% of all smartphones). Apple does it thumbing its nose at industry standards and quarrels with major players like its long-standing feud with Adobe Flash. That is a way to produce exceptional devices and services - for the luxury crowd, ie for a tight niche market - but it is not the way to win the world. You cannot win the world that way.

Nokia is more like Toyota or GM, where Apple is more like Ferrari or Porsche. And recently the Nokia shareholders have lost faith in Nokia, comparing Nokia's flagship model only, rather unfairly, to the Apple iPhone, and then concluding that Nokia has somehow 'lost it'. In reality, the top of the market is not the growth opportunity in smarpthones - all major analysts say, time and again, that the growth opportunity in smartphones is in the bottom of the price range, as smartphones go mainstream to the mass market consumers.

Who invented the cheap consumer smartphone? Not Apple. It was Nokia again. Nokia already sells basic non-touch screen smartphones at 100 dollars (price without subsidy, ie without contract, where the iPhone without contract costs 600 dollars) and is pushing the price point of cheapest touch screen smartphones to that level too - already offering its cheapest touch screen smartphone at nearly 100 Euros. No matter what the Apple loyalists think of the iPhone, it will never be a mass market phone. Apple is a classic premium luxury niche maker, who can hope to have 3% of the market - like it has with the Macintosh PC, after 26 years of fighting those battles with its 'revolutionary' PC.

WHAT IS NOKIA?

Nokia is the world's most used technology brand (And most used brand, period). It is the world's most popular smartphone too. But the vast majority of Nokia's business still today, is in 'dumbphones' ie the basic phones and the featurephones like say a cameraphone or a musicphone. And yes, a fraction of Nokia's total phone output is smartphones, and this year the revenues out of smartphones roughly speaking match the total revenues of the dumbphones. But Nokia sells more than phone handsts. It also sells apps, services, and networking gear.

So lets look at it in terms of size. There are three major business units at Nokia which derive most of the revenues. There is the basic phones unit, there is the newer smartphones unit, and there is the roots of Nokia's telecoms business (many people do not know this, long before Nokia made handsets, it was a telecoms networking equipment maker) which is now known as NokiaSiemens Networks. These guys manufacture the wireless telecoms infrastructure, ie the thousands of 'base stations' and various antenna gear etc that is needed to build a billion-dollar cellular network. Nokia is one of the giants of that business too, which is not well known, as it is a B2B (Business to Business) type of enterprise.

Apple's iPhone or indeed none of Apple's products compete directly with 2/3 of Nokia's business (the dumbphones and the networks). Neither does any of RIM's Blackberry products nor any of Google's Android related initiatives. And Nokia's basic handset (dumbphones) unit is also profitable, and while its networking unit had struggled for a few years after Nokia bought the loss-making networking unit from former giant rival Siemens, Nokia networking management very efficiently turned that loss-making business around, and now the combined entity is profitable - albeit only marginally so. It should be said, that the telecoms networking business has been a huge drain on most major telecoms vendors - Motorola's networking unit went bankrupt, Ericsson's was loss-making for many years, Nortel of Canada went bankrupt and Lucent from the USA, also loss-making, was sold to Alcatel of France. So the NokiaSiemens Networking unit has been fighting a brave fight in a loss-making industry and turned it around to generate modest profits - that is a very good sign of good management.

Beyond the networks, looking at phones, while RIM and Apple are pure smartphone makers (in the telecoms industry), Nokia is not. Nokia's true rivals are Samsung, Motorola, LG, SonyEricsson and ZTE - each of those five makes both dumbphones and smartphones. It is true that the dumbphone market is shifting to smartphones - they expect half of all new smartphones sold in the USA next year to be smartphones - that is happening in Western Europe now, and has already happened in some of the most advanced markets of the world - like my new home country of Hong Kong where half of all phones already are smartphones today.

But Nokia dominates the 'old way' of dumbphones - bigger than its nearest rivals (profitably) - and it dominates the 'future' being far bigger than any rivals in smartphones, whether they are classic big phone makers like Samsung or SonyEricsson of Motorola, or pure smartphone makers like RIM, Apple or HTC. Nokia utterly dominates the new smartphone market too (and does it profitably).

NOKIA MISSED THE TRENDS... NOT !

There are trends happening in smartphones. The touch screen phone was not invented by Apple, Nokia had its first touch screen phone out years before the iPhone. But Apple did what it always does, it made existing things far better - so we see a new world (in touch screen interfaces) after the iPhone - and now also in tablet PCs too (Kindle, iPad etc). This is similar to what Apple did to the PC industry in 1984 when it released the Macintosh, and all 'IBM compatible' PC makers had to adapt, where the primary change was the shift to Windows, Microsoft's version of attempting to copy what the Macintosh offered. Apple brought a new era to PCs (but was unable to capture a major part of that new world).

Similarly now, the touch screen smartphone Era. I wrote about it before the iPhone was ever sold, promising the iPhone would accomplish this to the industry. So its nothing new, and it was relatively easy to predict. That kind of revolution is typical Apple. But Nokia did not abandon the new world like Sony abandoned the musicplayer market to Apple's iPod. Nokia adjusted, and it now has not just one touch screen phone like Apple, Nokia has of coursee a series of touch screen phones. They are not as good as (when considering the touch screen only) as the iPhone is - but who is, honestly, this is comparing a Ferrari to a Toyota for goodness sake - but Nokia's touch screen phones are getting better every generation.

But while tech analysts marvel at the iPhone (and Androids now), the touch screen is not the only 'preferred' form factor, nor the 'decisive' purchase criterion. Apple is the master at its user interface, but Nokia has for example consistenly made far better cameras on its smartphones than Apple. For some buyers a camera is more important. Or others insist on such a bizarre concept as a QWERTY keyboard haha. Or having a phone that is compatible with industry standards (the original iPhone didn't even support MMS and even the current iPhone 4 doesn't support the industry standard 3G video calling, etc). For those pundits who obsess about the touch screen UI leadership - which Apple clearly holds over any rivals in handsets - there are dozens of other issues of phone feature (and price) factors where Nokia has mastered most, and is getting ever better at the touch screen too.

The critical point is, that Nokia can sell touch screen smartphones for a quarter of the price that Apple can - while still doing it profitably. (Most of the smartphone rivals are complaining bitterly of how expensive the smartphone market is, and how difficult it is to generate any profits there - note just this year Palm died and two very high profile smartphone/superphones were terminated totally, the Google Nexus One and Microsoft's short-lived Kin series of phones, and Lenovo has been very public in complaining about how much more expensive its entry into smartphones was, than what it expected).

The original Symbian OS which powers Nokia's smartphones was not designed for touch screen inputs. So it had to be changed - quite a lot actually - and that has been a painful and costly journey. It is well along, and the latest iteration of the Symbian OS is said to be far better at the touch screen parts. It says a lot about Nokia that Symbian survived this transition where Palm died and Microsoft found the transition so difficult it killed off the Windows Mobile platform to launch a totally new one, called Phone 7 - while its market share crashed from near 20% to 2% in just four years. Note that while Apple's iPhone is a one-trick pony, and only sells a touch screen super smartphone - Nokia keeps selling in similar quantities of touch screen smartphones across all its product lines. Its like Toyota making a supercar that matches a Ferrari..

There is a parallel trend from basic phone pad (12 key) ie T9 inputs to QWERTY inputs, especially for enterprise/business users (email) and youth (SMS and instant messaging). This was not invented by Blackberry. The world's first full QWERTY smartphone was also invented by Nokia and it continues to hold a similar 'Blackberry-matching' market share in all QWERTY phones with its E-Series and other QWERTY phones. This is totally different input paradigm from the touch screen, and its amazing for Nokia to have been competitive in both (Touch and QWERTY) at the same time. Motorola told us earlier this summer that a third of all smartphone buyers will not consider a smartphone that doesn't have a QWERTY input. We heard earlier this year that the UK youth's number one desired phone is not the iPhone, its the Blackberry. I was just in Toronto at the Mobile Think Tank this week and learned from Professor Matrix of Queens University, that 70% of Canadian college students use a Blackberry. To me, always in mobile, a safe bet about the future has been to study the youth of today. That makes you wonder about Apple's silly strategy of not giving us a QWERTY variant to the iPhone. RIM offers touch input versions of the Blackberry, why can't Apple give us a QWERTY iPhone? Nokia offers both of course as makes sense in this market.

There is a third parallel trend in smartphones, from business phones to consumer phones. This trend was captured by the iPhone but not invented by Apple. Who invented the consumer-only smartphone? Nokia. And it utterly dominates this space worldwide. Some classic smartphone vendors and systems (Palm, Microsoft) have suffered in trying to cope with this shift. Blackberry's big global rise has been driven by this shift (as the youth - ie consumer not enterprise customers - have fallen in love with the Blackberry). And Nokia invented the consumer smartphone, utterly crushingly devastatingly dominates it, and leads it. And this shift is far more price-sensitive than the enterprise/corporate phones market, so super-premium prices 'superphones' like the iPhone 4 or Samsung Galaxy or Blackberry Torch will be mostly out of reach to the true mass market consumer segment. But Nokia's sub 200 dollar 'basic' smartphones play perfectly there. If you always wanted a Ferrari but couldn't afford it, perhaps you bought yourself a Toyota MR 2 sportscar or a Ford Mustang. That is the Nokia mid-price smartphone. Nowhere near as great as the iPhone but nowhere near as expensive, and being of Nokia quality and brand and sales channel - it will dominate the market.

The fourth shift in smartphones is the price trend to the sub-100 dollar smartphone for the mass market. Again a shift that Nokia initiated and is mastering today with few real rivals (Samsung the strongest to try this tactic too, with its Bada based smartphones that were only launched earlier this year).

So in sum about Nokia today, it is the biggest, most dominant dumbphone maker. Nokia is offering ever cheaper 'Africa phones' and keeps providing features and abilites that many rivals ignore, specific to the less wealthy customers - replacable batteries, critical in countries of poor electricity supply - in-built FM radios - surprisingly for many in the poorest countries the first ever FM radio they have owned, is the one that comes with the new Nokia phone. Etc. In the emerging world market, where all the growth is now in dumbphones - Nokia's market share is above 50%. And they manage this profitably. Tell me this is not good execution?

And Nokia is also a network equipment maker. It bought Siemens's giant but loss-making networking unit, and turned it around and now NokiaSiemens Networks makes some profits, in a sector of the industry where profits are very rare to see. That to me speaks excellent management in very difficult conditions.

And Nokia is also a smartphone maker - the biggest in the industry, with the best-selling smartphone OS as well. Nokia invented the smartphone and has launched or pioneered all of the four major trends in smartphones. And even its OS, the most advanced smartphone OS in the world in 2007 when the iPhone launched - almost all upgrades to the iPhone were actually 'bug fixes' to try to make the iOS as good as Symbian - is now having a migration plan to a totally new smartphone OS, based on MeeGo. Both Symbian and MeeGo are open source OS's that conform to indsutry standards, and are supported by many manufacturers. That is the right strategy for Nokia (while it would not necessarily be the optimal strategy for a specialist niche maker like Apple or RIM).

MISSED THE APP STORE

And I should mention the App Stores. While all the silly hype globally in mobile is about apps - I have been repeating and repeating and repeating, that it is a trivial - trivial - sized non-business (today). It may - it may - become meaningful somewhere years down the line. We heard from Apple - the leader in app stores - earlier this year, that the total earned by the Apple iPhone App Store last year was under a billion dollars. A billion out of what, over 200,000 actual apps that exist in the App Store?

A billion may seem like a "big number" to those who don't understand mobile, but hey, Crazy Frog the ringing tone - yes just one - one - ringing tone - sold half a billion dollars - in paid downloads to mobile phone users - in one year - three years before Apple even opened up its app store. Put that into your iPhone app and think again. What is the bestselling category on the iPhone  - games. What is the bestselling game? Angry Birds. Sold what, 4 million copies. This is the best game on the 'amazing' App Store. But we mentioned on this blog years ago, that Artificial Life's side-line product (their main business is TV-mobile interactive services like SMS TV games etc) - a mobile Java game called 'V-Girl' the Virtual Girlfriend on your phone - sold 4 million copies. Paid downloads and paid customers to mobile phones, not smartphones, globally, years before Angry Birds. 4 million is nothing amazing to the mobile industry. Its a nice number yes, but what is the record-breaking achievement in the tiny sandbox called iPhone, is trivial to the big world of mobile. You want paid downloads to mobile? Try Tetris. Sold 100 million copies to mobile phones and counting.

The total global mobile phone app market last year was worth 5 billion dollars (said Chetan Sharma Consulting). Most of that was not consumer-oriented app store applications. No, most of that was enterprise/corporate solutions to integrate IT apps like SAP and Oracle to mobile. Then the comparison - SMS text messaging alone is worth 100 Billion dollars. Mobile data is worth 250 Billion dollars. App Stores are less than meaningful (today). Yes, from small things, big things can grow. But the hysteria about app stores is totally ridiculous today. I did a meticulous calculation of the futility of investing in apps today, and showed with rigorous analysis and facts that half of developers of paid apps will not make a profit in less than 11 years, and for the free apps (ie used in advertising and marketing) the prospects are far worse than that even.

One should not even bother to mention the word 'apps' not even when discussing the business of Apple or Google today. Its that tiny. And for Nokia, who cares. Yet... Yet... Yet... years before there was an iPhone App Store, there was a Nokia app store. The first generation of iPhones would not even let users install apps to it! All Nokia smartphones have allowed users to install apps for all of the past decade. If you seriously think that there is a trend to apps in the phone business, then yes, Nokia saw it long before the current hysteria, and had built its app offering and business systematically. We know the latest iteration of Nokia's app store as Ovi - incidentially the world's third best-selling app store for those who care about the lives of ants in the world of elephants.

PERCEPTION PROBLEM

Against this light, Nokia is 'accused' of 'failing' because of three major faults. Its flagship phone is not seen as good enough to go against the iPhone. Its profits have been declining (some might say perilously). And Nokia has lost most of its market share in the US market where Blackberry, the iPhone and various Android phones now are popular. So by faulty leap of logic, many see that Nokia is somehow 'losing to iPhone' (or Android or Blackberry). In reality that is a market anomaly that applies to North America only, where only 8% of the planet's mobile phones are sold..  Nokia utterly dominates the rest of the world (with the exception of those countries where strong domestic rivals control that country, South Korea, Japan and yes, the USA).

The reality is that recently the iPhone market share has been declining (four quarters in a row) where Nokia's market share held steady or actually grew. The reality is that in the past 12 months, Nokia smartphones have been winning against the iPhone, not losing to it. The numbers are irrefutable, but the myth prevails that Nokia is somehow 'losing' and specifically 'losing to the iPhone'. This is a perception problem! This is a communication problem. Not a strategy problem and not an execution problem. All the new CEO needs to do, is to communicate Nokia's true performance more clearly than previous Nokia managers have done in the past. The numbers are very clear. How awesome is that for Mr Elop, he gets the media attention for being the new guy, and he has a wonderful story to tell, where he does not need to 'fix Nokia' but rather just elaborate clearly what Nokia is doing. Awesome?

Nokia profits have been declining - as one might expect in a global economic downturn where many 'gold standard' corporations of impeccable credit ratings went bankrupt. Yes, Nokia should be able to do better than it is doing, but every other big 5 handset maker has seen either quarterly losses, or severely declining profits in the past few years, including Nokia's nearest true rival - Samsung. As this is a 'partly true' issue, the new CEO needs to tackle it on two sides - address the actual profitability rigorously, but also communicate it far more clearly - that Nokia as a mass market consumer phone maker - should be compared to Samsung, LG, SonyEricsson and Motorola (and ZTE) - and compared to any of those, Nokia profits are very good. And then just make sure as CEO, that those profits will now turn into growth again, as the economy improves - and probably with some strategic decisions about focus areas.

The North American market situation is the trickiest communication problem. If there are 5.1 Billion mobile phone subscribers on the planet - and the option is to be the best-selling phone for that part which is 285 million of those - or the remaining part which is 4.815 Billion mobile phone users - Nokia has focused correctly. Yes, it should do better in the US market, and Stephen Elop gets a fresh chance to turn Nokia around in the USA, but the shareholders need to be told much more about how enormous the market is globally, compared to the pretty trivial-sized US market in phones. That is not the same in television or personal computers or cars or airplanes etc - most other industries the role of the US market is very big. In mobile, it is very small (as a percentage of the world).

SANTA CLAUS CAME FOR MR ELOP WITH FREEBIE GIFTS

There are few things that were long in the pipeline, that will now come as gifts to the new CEO. Most of all, is the migration of Symbian OS to touch screens. That was a time-consuming long journey, it is not over, but it is now far along. Soon Symbian will be 'just as good' as most in the multi-touch experiences. That will bode very well for Nokia smartphones. Nokia's touch screen interface will not need to be 'better' than the iPhone - nor even 'as good as' the iPhone, as long as Nokia's touch screen interface is 'good enough'. That was the lesson we learned in the PC industry with Windows vs Macintosh. The Mac was always better. Always! The early Windows versions were horrible up to Windows 3.0 in 1990, when finally Microsoft released an 'Macintosh clone' that was good enough. Not as good, but good enough. And the rest is history. Microsoft used its scale to crush Apple, even where Mac was always better. That is where we are with Symbian today. It need not be better or even as good as the iPhone. All Symbian needs, is to be good enough. It is very likely that the current new about-to-be released version is good enough (that powers the N8) but even if its not quite there yet, Nokia will keep evolving and improving the touch screen parts of the OS, and will become good enough, soon enough. This is a freebie gift to Mr Elop. He will be seen to have saved Symbian and Nokia in the process..

There is the new N8. It seems by early opinions to be a long-overdue hit flagship for Nokia. Remember that Nokia's last succesful flagship - the N95 - handily outsold the iPhone globally. Nokia has the carrier relationships to turn a good phone into a big hit and the N8 seems to be very well poised to do well. It comes to a crowded market with the Samsung Galaxy now the big dog of the yard, with the iPhone 4 a very strong contender, and various other superphone wannabes, from Motorola Droids to Blackberry Torches to Lenovo LePhones out there. But Nokia has the world's best carrier partner network - if the carriers like the N8, it will become the planet's best-selling superphone, almost by default. This is all someting Stephen Elop was not in any way involved with, yet he stands to reep the rewards of the work that was done before him.

Apple's sudden decline comes also at optimal timing for the new CEO of Nokia. The actual peak of the iPhone market share has already happened (the iPhone had 17% of smartphone market share this time last year, they are now down to either 14% or 13% depending on which analyst numbers you look - every analyst now acknowledges that the iPhone has peaked and is losing market share globally). But the timing is close enough, that any 'revival' by Nokia can be seen mirroring a decline by Apple - and from now forward, it will be credited to the new CEO, even though he actually had nothing to do with that. But it will help create some image of Stephen Elop as a miracle maker if analysts a few years later start believing a legend that Elop came to save Nokia and in doing that, he defeated Apple's unstoppable gains in smartphones. (as I have written in my iPhone strategy blog - Apple now needs to diversify its iPhone portfolio and until it does that, it will see erosion of its market share, most of all to Android phones like the Samsung Galaxy)

ALL IS NOT PEACHY

So far its been a love-fest here with the Communities Dominate blog admiring Nokia.. Well, all is not well. There are indeed real problems too. But please lets be very clear, the problem at Nokia is not anything to do with its 'smartphones strategy' and mostly not even with its smartphones execution, nor with the Symbian OS and the future strategy of the smartphone OS into MeeGo. So please understand, Nokia's smartphone strategy is the best in the business, and any shift to Android for example would be stupid, abandoning a huge market lead and total control of its future, to the whims of Google's 'do no evil' strategies..

Most of all any business is about profits. The Nokia of old was a profit factory. Massive profits in this fast-moving and dynamic industry. Not so often the actual inventor (Japan's NTT DoCoMo has most true inventions in the mobile space), but being the fast follower, Nokia was well picking winning concepts (cameraphones, consumer smartphones) but made its stumbles too (N-Gage). Nokia was very good also at keeping to its vision - not for example taking the populist view from 2006 that flip phones would take over the world (anyone remember the Razr). And Nokia would often time its mass market launches with particular precision - consider its 3G phones for example.

Now Nokia's profits have shrunk to razor-thin. Some of that was due to the global economic downturn (remember, 3 of its rivals in the big 5 handset makers reported losses in their handset business during this economic crisis - Nokia never did. Its only loss of the past decade was one quarter during this economic crisis, when the NokiaSiemens unit's losses were bigger than the profits made in the handsets unit. One quarter, this after Nokia absorbed Siemens's loss-making networking unit and was fighting during the economic crisis, to turn it around).

But some of it is no doubt historical cost reasons. Nokia is a complex organization with much design and R&D overlap - quite costly. Its R&D processes are slow, painfully slow compared to 'internet speed' rivals like say Google. Here a successful 'West Coast' manager from Microsoft no doubt can help a lot in forcing much-needed changes to streamline Nokia's design and development work.

There is the question about synergies between the Networking unit, NokiaSiemens Networks and the rest of Nokia. When I joined Nokia in the 1990s, the networking side was the bigger side with most of the staff and most of the revenues. Now it has become the little brother in the big picture. Is there a synergy? That is hard to find, and most rivals who tried to do the synergy route, have abandoned it - Ericsson, Motorola, Siemens (used to be a Top 5 handset maker, it abandoned its handsets unit first to focus just on networks, in the past decade). And the NSN unit is a drain on profitability, even if they manage miniscule profits in the unit. By divesting NSN, Nokia could focus more on its core business - related to handsets - and instantly get a jump on the profitability of the company.

This would be a painful change, but Nokia has done that many many times before - it once made paper. Nokia was once for its main business being rubber. Nokia once had the majority of its business out of home electronics like TV sets. IT once made personal computers (primarily for the domestic Finnish market, Nokia's MicroMikko was an IBM-compatible PC running Microsoft operating systems). Nokia once made WiFi equipment, Broadband equipment, etc etc. They have not been afraid to abandon businesses that did not show promise for the future. It may be time for Nokia to get rid of NSN, and if so, a new CEO, in these times of poor profits, especially as an outsider and non-Finn, with no internal loyalties to worry about - this is something Stephen Elop will no doubt be considering. Coming from Microsoft's unit looking at the future of the PC side, cloud computing etc - will give particular insights into what kind of synergies may be useful in the near future - in evaluating the value of NSN to Nokia as a strategic asset, or whether they try to get rid of it now while it is marginally profitable.

There is the issue of becoming a box-mover. The basic phone is becoming a commodity product, and if we plot the price of basic phones with Moore's Law, by the end of this decade, a cheap cameraphone for Africa will cost 1 dollar. How long is it worthwhile to try to fight for that ultra-cheap market and what strategic moves if any, Nokia may want to make in that space.

Simultaneously we see shifts from hardware to software, from phones to apps. Is it the services model (cloud computing etc) or the app store. What are the profitable opportunities in mobile for a phone maker. What of Navteq, of Nokia Money, or mobile avertising, the Ovi store, etc etc etc. There are lots of opportunities, but also lots of endless pits of wasted effort in mobile, where the profits will never come.

There is management overhead. The world is going ever more lean. I have not seen any recent Nokia organizational charts, but probably there is room to cut some areas that drain managment resources but deliver little value to the bottom line. And where once Nokia Mobile Phones was a young person's job, today those former young graduates are middle-aged, and have seen the salaries grow and perhaps the hunger of wanting to become the biggest phone maker in the world has dimmed in their eyes. I honestly do not know, but I would not be surprised, if there weren't many middle to senior managers who really should be moved on. The Finnish employment culture - and that at Nokia - rewards loyalty and makes it difficult to lay off people. But the opportunity is good when a new CEO comes in; the opportunity is greater still, if the company has been seeing a dangerous decline in profits. This is a time to consider staff cuts (and not just in management, obviously)

SO WELCOME STEPHEN ELOP

There is so much to an Fortune Global 500 sized company CEO job description that I cannot even start to imagine. Most of the work Mr Elop will be doing is stuff we'd never even bother to write about on this blog. But Nokia is the gorilla in the room, when it comes to the mobile industry. So very many of the stories we discuss here, will invariably touch upon Nokia, or feature Nokia.

I do feel that Olli-Pekka Kallasvuo got a 'raw deal' in how he was kicked out. But also, that there were some good reasons as well, and that I could well see why the shareholders felt that was needed. The Chief Executive Officer of Nokia had lost the trust of the owners of the company, and therefore, could not really sustain the trust of the Board either. It was a hard choice for Chairman Jorma Ollila and his Board, but once that decision was made, they did need a new CEO.

I do think that the very superficial view to Stephen Elop's past suggest he could be a great CEO for Nokia. He is a North American, he knows the way to talk to North American press and analysts and investors - that is where most of Nokia shares are held. He comes from the PC and software side of the tech industry, a welcome infusion of new thinking to top management at Nokia. He is a Canadian - a nationality that seems to gell particularly well with Finns (maybe its all that ice hockey - the greatest ever ice hockey player, the one they called 'the Greatest' ie Wayne Gretzky, a Canadian, did after all get most of his points scored, by setting up passes to a Finn - Jari Kurri his long-time scorer-sniper, who in turn is of course the greatest-ever Finn to play ice hockey. Both are obviously inducted in the Hockey Hall of Fame..).

I made the joke speaking in Toronto this week, that Finland has just appointed its first-ever Canadian Vice Prime Minster - arguably the CEO of Nokia is perhaps the second most powerful man in the domestic Finnish economy haha..  Or maybe its the long dark winters, the snow, who knows. A lot of Finns have migrated to Canada, so there is a kinship too, probably most Canadians know at least someone who has Finnish heritage. And we are both large countries geographically, with small populations, in the shadow of superpowers. You learn perhaps a certain level of humility and willingness to compromise, if you are bordering on the USA or Russia/Soviet Union..

So, all you you out there who are screaming for Nokia to shift now to Android. Get over it. It will never happen. Nokia has a robust and good mobile phones-optimized smartphone OS called Symbian, a fully open source OS supported by dozens of handset manufacturers. It also has a new OS coming up, called MeeGo, also open source, also supported by many manufacturers, but is now fresh and new, and Linux based. What more could you want? If Nokia abandoned all that leadership, and surrendered to the whims of Google, that would be a colossal mistake. And Nokia does not do colossal mistakes. It does stumble as any handset maker will stumble (iPhone Death Grip, anyone?) The N97 was a rare Nokia stumble, but that pain is just about over. I would be very confident in believing that at least the N8 will not be seen as a failure in its early reviews the way the N97 was received.

There is a new man now at the helm of Nokia. The shareholders have been satisfied, it is not another Finn, and not someone from the inside, who might have been 'poisoned' with too much 'Finnishness' or 'Nokia-think' so the shareholders should now be happy for the short run. But the really weird part is, that Nokia is pretty well poised to outperform its other big 5 handset maker rivals into the foreseeable future. Nokia will never generate as huge profit margins as Apple, but if Nokia's profits turn now from decline into growth - then Stephen Elop will be seen as the savior, the miracle-maker, the man who defeated the Apple iPhone challenge and saved Nokia. While that may not technically be true, it will be a far better story for the Nokia PR people to spin, than the past year of explaining why the N8 was again delayed...

Good luck Stephen Elop. You are landing in the coolest job on the planet and may your reign be long and prosperous.

Is the 50 Billion mobile subscriber number feasible for this decade?

I have recently heard several times the number that the future of mobile/cellular connected devices will leap ten-fold from today, when we have 5 Billion mobile phone subscriptions to 50 Billion, usually expected to happen during this decade.

First, lets be very clear, in the past decade we did grow 10-fold in mobile (vs only 3-fold growth in the internet for example). And yes, I do believe in dramatic growth to come in mobile, so I am all for the expectations to be big. We will easily double from today's 5 Billion during this next decade, easily! We may be growing 3-fold or even more than that. But 10-fold in one decade? That does beg the question: is this feasible.

The planet has only 6.8 Billion people. So the 50 Billion number has to include lots of devices per person, as well as a lot of non-human connections, whether devices, household gadgets, cars, etc; as well as other living beings like pets, farmyard animals and even connecting other things like plants.

LETS START WITH HUMANS

Yes, so the biggest usable number we can start with, is the human population. 6.8 Billion people. In a very rough term, we can expect that the mobile phone subscription penetration rate globally will pass about 120% human population per capita during this decade (at least). That means that the world would match roughly what is normal in Europe today.  But that gets us only 8.2 Billion subscriptions. Nowhere near enough.

Ok, lets take the UAE example (this is Abu Dhabi, Dubai etc the oil-rich Emirates on the Arabian Peninsula). The UAE became the first country to pass 200% mobile phone subscriptions per capita. If we assume that to happen for the whole planet, that would get us to 13.6 Billion.

This is our biggest number and we do need to pump it as much as possible to get us to the 50 Billion. So 2 phones per person are not enough. Lets add in a laptop per person. Whether its a netbook or iPad or Kindle or a notebook, lets say the planet gets a laptop for every person - and by the end of the decade that will of course have a 3G or faster connection. 3 mobile subscriptions per person (not inconceivable, I for example walk around daily with 3 subscriptions, have done so since 2003). If we multiply the planet's population with 3 subscriptions we pass the 20 Billion mark, and arrive at 20.4 Billion. Thats a good start. Now lets turn to our car.

GROWTH RATE

What of the growth rate? The population of the planet keeps growing. Yes, thats true. But the population of the planet today is 6.8 Billion people in 2010. By definition, all new born humans between 2010 and 2020 will still be pre-teens by the end of the decade. All will be less than 10 years old, half will be 5 years old or younger. This is not the target market for new mobile phone subscriptions. A few of the 7-8-9 year olds perhaps, but thats not enough to push us far above current 6.8 Billion level, in particular that for those few of the eldest in this group, we then have to balance out those elderly people who will be dying in this decade. In terms of a viable 'mobile phone age' population, what is the total population of 6.8 Billion people today, can be seen to be the viable mobile phone aged population a decade from now.

CARS

So the car. We've heard the internet people like Google and Yahoo say that the next internet is mobile; and in the countries where the internet is already fully mobile (South Korea, Japan etc) they say the next internet is in the car. That will give us a nice boost to our count. Imagine one day when every car is connected. Roughly a quarter of all cars in South Korea are already connected to the internet.

Or will it? The world has under 1 Billion automobiles! If we assume one car-related subscription that comes with the new car when we buy it, to connect to the maps and security systems and self-diagnostics and on-board games etc - we only add 1 Billion mobile subscriptions to the planet. Thats not much when we consider our ambitious 50 Billion target. Funny to say that, one billion is not much...  But yes, adding cars, we're at 21.4 Billion so far.

Note, the car may have multiple subscriptions, as we may for example use our normal phone service, take out the SIM card from the phone and insert it into the car's SIM card slot. That would give the car 2 subscriptions (for a short duration) but then upon our person we'd go down from 3 subscriptions to 2, as one was temporarily assigned to the car. It would not add to the total. And for the car makers, it makes no sense to split their data traffic to many mobile operators, rather to accumulate their total traffic load and negotiate with all carriers/mobile operators to get the best bulk deal for the whole fleet of cars, on one network. So only one new SIM card per car.

CAMERA, PSP

So then we have the other stand-alone digital gadgets, like the advanced digital cameras by Canon, Nikon etc; or the portable gaming systems like the Nintendos and Playstatoin Portables. Lets connect these all to 3G networks. Sounds very plausible.

Except the numbers are trivially small, compared to mobile. The mobile industry sells 1.3 Billion new mobile phones every year (with a replacement cycle of 17 months). Stand-alone digital cameras sell 103 million per year (says Morgan Stanley in 2009). Similarly pocketable stand-alone gaming devices sell 48 million units. Portable multimedia players including DVD players sell 130 million. Pocket music players including the iPod sell about 127 million units (same source for all). These numbers are very very small. Even if we add them all together, we arrive at 408 million devices per year. Even if every one of them was now suddenly made 3G compatible with a mobile data subscription, in ten years of sales we'd only hit 4 Billion more connected devices. But we should assume growth, so lets double that number and we arrive at 8 Billion connected personal stand-alone (non mobile phone based) digital gadgets. Now our cumulative number hits 29.4 Billion. We are starting to get there..

WHAT OF THE HOME?

Ah, then the homes.. We can have our washing machine connected to the web (there are some that are sold already that offer internet connectivity). And the coffee maker. What else? The microwave oven? The fridge definitely. And the (intelligent) vacuum cleaner? The problem here is that we only have 1.7 Billion households on the planet. So while yes, we can probably imagine 4 or 5 household gadgets today that could easily imagine being connected, and another couple likely to come - most obviously the home robot (South Korea already has consumer-oriented household robot stores in major shopping malls). If we say 6 connected gadgets in the home, we'd arrive at 10.2 Billion more to add to our total. This is good, now we are at 39.6 Billion.

HOME METERING

We actually have another issue with the homes too. That is metering of our utilities. Water, electricity and gas metering. The modern way to do utilities metering is with a digital meter, connected wirelessly to the network. Lets say 2 utilities meters per household, and we add another 3.4 Billion connections and arrive at 43.0 Billion. We're almost there...

PETS

So next lets connect our pets. We have intelligent dog collars for hunting dogs for example, and the dogs-to-humans translator (Bowlingual) which translates dog sounds to SMS messages for humans of what the dog is trying to say. I have no idea how many household pets there are, but I think its safe to say, the proportion of pets is far less than the total number of households, even as some households may have more than one pet.

What number is reasonable, I don't know. Lets work on the upside and say, on average there is a pet in one third of all households (my guess is that the number is smaller but no doubt someone among our readers will know it). That gives us 560 million connected pets. With a bit of rounding off, we are now at 43.6 Billion.

FARMYARD ANIMALS

Then it starts to get difficult. What of farmyard animals? Yes, there are cows that are called to milk via an old mobile phone or beeper hanging on their neck, and when the cow hears the arrival of SMS (or the ringing of a phone call - no danger, the cow won't answer so there won't be billable calling traffic to the farmer) the cow knows to come home to be milked. Except that where cow herds can be big, cows are herding animals, so all the farmer needs to do, is connect the lead cow, and the others will follow. No, cows won't get us there. We may get some millions of connections, but this math won't even start to work until we look at billions, or at least major fractions of billions.

I am sure there are plenty of uses for near field connections for all sorts of sensors to enable something like digital farming, to identify animals, but those don't need cellular network connectivity. So I don't foresee SIM cards in chicken or pigs or sheep..

TREES

So then lets move from animals to plants. I've told the story of modern forestry management, where trees are tagged with devices containing GPS-GSM chips, for intelligent digital forest management. They can actually tag trees in forests of a million trees. But these gadgets are relatively expensive, and there is no point in paying for their cellular connectivity for the 20 to 30 year life that the tree spends growing to full size before it is felled. Again I am not a lumberjack but to me the clever way to use this technology is for some forest 'manager' to go tagging trees that need to be felled, with the intelligent GSM-GPS devices. But not to tag all trees, only those scheduled for the next round of cuts in the forest. And for the tagging devices to be recovered at the saw mill, and re-used. So for a forest of a million trees that has been managed well, so it has an even balance of trees of all ages, then about 5% of the trees reach maturity any one year. Thats only 50,000 trees to fell per year. If we split that by weeks, its 1,000 trees cut per week. I don't need 1 million SIM cards, I need 1,000. Maybe 2 or 3 thousand just to have some spare capacity, but not a million per forest.. Trees won't get us there either.

What of our plants at home? Yes, we have the clever plants-to-humans communications by AgriHouse of Japan who offer the humidity sensors to plants that send SMS messages to the owner saying when the plants need to be watered. If you have 20 plants in your home, and really want this level of technology to monitor each plant, yes, we could quickly pass 50 Billion subscriptions. But I do not foresee most homes having this technology. Yes, some will love it, but most not. And even those who will use it, will probably not need it for all plants. And the technology need not have a cellular connection, the more logical way of doing this is to coordinate with the home connectivity center (a home WiFi connection center and/or femtocell for example).

OK LETS TOSS IN MONEY

We are still about 6 Billion short of the magic 50 Billion number. Ok. Then lets go radical and say mobile banking. I am a firm believer in mobile banking and mobile money and payments. I am however, very well aware that the banking and money industry moves very slowly, is very conservative. It is not rushing to mobile. And there are many technical ways to do mobile payments and mobile banking and mobile wallets, which do not all require a separate subscription and/or additional SIM card.

But one of the preferred solutions is what for example was deployed in South Korea, where on the phone you have one SIM card for your telecoms needs, and a banking-specific SIM card for all your money needs including banking, payments, credit cards, loyalty cards etc. The one SIM cards is compatible with all South Korean banks and credit cards etc, so its just a question of a given bank or provider enabling their account onto your banking SIM card. And then if you need to move your banking services to a newer phone, you can do so simply by inserting the SIM card to your new phone.

So far so good. If we now assume all 6.8 Billion people on the planet get a mobile wallet/mobile banking service that adds yet one more SIM card, we do reach the 50 Billion number. But in all honesty, this won't happen to all people on the planet (kids for example) and definitely won't happen in one decade.

NUMBER CAN BE SEEN AS FEASIBLE

But is it plausible? We had some very severe assumptions there in that quick analysis. Assumptions that are quite deadly to the target number.

Lets start with the human 3 SIM card target. That could be seen to be reasonable for adult and employed populations. But teenagers and retired people? 3 SIM cards? Teenagers, Maybe. But the elderly? One mobile phone subscription, certainly. Two, maybe. Three? Unlikely for all of the elderly. In many cases a retired couple could get one iPad style device perhaps - to share among the pair. I think the 3 mobile subscriptions per person concept is not really viable for the whole global population. Not in this decade (yet)

Next lets go to the households. We thought that each household would have 6 connected gadgets. Well, actually that number is implausible because of the lack of electricity. 1.6 Billion people live without electricity according to CNN in 2008, so if we take the average household size of 4 people per household globally, thats 400 million households without electricity. No electricity, no clever digital household gadgets either. We just lost 2.4 Billion connections and a further 800 million metering connections.

Of the portable digital gadgets, with the 8 Billion number. That was a lot of smoke-and-mirrors. A cheap MP3 player won't gain from a 3G data connection - it would be a very sad rival to a musicphone but would add the monthly connection fee, while not offering telecoms connectivity (not being a phone). Not plausible. If the consumer wants to buy a stand-alone MP3 player, that will then have very particular music needs, and that person will definitely own a smartphone also, towards the second half of this decade. No, the MP3 players will not be networked on the cellular network (mostly. Some premium iPods probably will offer the connectivity but even those, mostly will not connect to the cellular, and will rather connect via WiFi).

The worse assumption is that all 8 Billion sold gadgets are still used by the end of 2020. While the replacement cycle for non-phone portable gadgets is longer than the replacement cycle for phones, certainly a significant fraction of the total cumulative sales of that number were replacement units, of better capability, sold to the same consumer. So we need to cut the 8 Billion number down by several billion..

Then we have issues with poverty, with illiteracy (800 million people of reading age are illiterate worldwide - illiterates will not need a laptop surely, and probably won't have much need of more than one phone in most cases), with wars, famines, and refugees. The victims of natural and man-made disasters will not be accumulating multiple IT devices..

50 BILLION IS NOT PLAUSIBLE

I do like visions of big growth numbers in mobile. I do like the bold predictions to suggest big growth, to counter those who peddle the tired myth that we are somehow at saturation or near saturation in mobile. I also like the guidance by the mobilists and futurists, who look at the past decade, observe that mobile grew 10-fold in that decade, faster than any other technology of significant size - and then to argue that the same rate of growth would continue this decade, another full decade of growth of 10-fold. And that kind of provocative argument does suggest those considering the market opportunity to also focus on who and what is to be connected, to understand we will run out of humans to connect, very soon, and the growth will need to be made from other devices and gadgets and pets and so forth.

But to me, the plausible number of mobile phone subscriptions for the end of this decade is somewhere in the 15 Billion to 30 Billion range, not in the 50 Billion range. I will be most happy to be proven wrong, but just please do take some sanity checks on the assumptions. Some of the fantasies and science fiction views are dramatic yes, but the numbers do not add up. Lets try to be realistic when giving guidance about the near future.