Guys, this is a bit different. First, lets be clear. Delusional. I am serious. Delusion as defined at Wikipedia is “a belief that is mistaken or not substantiated, that is held with vehemence.” Wikipedia further explains: “(delusion) is pathological and is held despite evidence to the contrary.” Wikipedia even explains that delusion is different from perception, so a delusional person has to take an active effort to suspend reality and believe in something contrary to the facts (where perception allows for example memory errors and to be unwittingly mistaken, etc).
And for my regular readers and random visitors. This is a monster-long blog. Its 13,000 words in length, so it is longer than a typical chapter in a book. It will take you nearly an hour to read through, and it is stuffed with facts and data, so it will take effort to read and process. But the point is very important, if I am suggesting the CEO of Nokia is honestly, seriously speaking ‘delusional’ as per the above definition. Go get yourself a cup of coffee before you read this, and please give your feedback. And I apologize for the at times verbose or over-loaded evidence dump, but I have been editing this blog now for two days, and cannot put more time into it, I have a real job and life. So if this is an important topic to you, please wade in, but if you can’t put close to an hour into this, then please skip this blog. I don’t want to waste your time. And this article ‘builds’ so you cannot skip, else you don’t get it at all, at the end.
LETS TALK TATA
This is part 3 of my trilogy on Nokia profit warning. Part 1 examined the impact of the profit warning to Nokia 2011 sales and profits. Part 2 pondered the bizarre timing of the announcement of the Microsoft partnership, while Nokia didn't have phones to offer. And now this is Part 3, the climax. Is Elop Delusional.
So, next, we need a framework that is very very clear. I will use a simple analogy (sorry guys, its cars once again, maybe I watch too much Top Gear haha). Imagine you are employed by Ford the carmaker. Ford did not go bankrupt and did not need a government bailout like its rival General Motors. Now, lets imagine Ford hires a new CEO and a few months after the new CEO has started, he (or she) circulates a memo. And in that memo the new CEO urges the Ford employees to embrace dramatic changes (all good so far) and then, the new CEO sites as evidence why “because of Tata brand cars by Tata Motors of India, which are the world’s most advanced, most luxurious, most powerful and most safe cars, even more so than the brands Tata Motors has bought like Jaguar and Rover”
Ok. For those who are not fluent in car makers. Tata is the cheap car maker of India. Yes, they bought Jaguar and Rover recently, but the standard Tata branded car is definitely not – even Tata themselves will readily admit this – they are not attempting to be luxury premium sporty cars. Tata competitors are not Mercedes-Benz or BMW or Jaguar or Volvo or Cadillac or Lexus. Their competition is Proton and Kia and Skoda and the Smart car and whatever are the cheapest forms of transportation. Tata are cheap transportation. Tata purchased the Jaguar brand specifically to add the luxury/performance range to its cars. If you are an older American reader, if you can remember the Yugo, that is the type of ultra-basic, ultra-cheap transportation we are looking at in Tata today.
Ok, we are clear? So anyone working at Ford, reading that memo, gets a shock, thinking, is this guy for real. Is this a joke. Am I crazy. But the CEO continues calling the Tata - its basic car brand - the worlds’ most “luxurious” and most “sporty” and most “safe” and “premium” cars, better than BMW’s and Mercedes Benz’s and Lexuses and Maseratis and Cadillacs and what have you. And the new CEO clearly indicates he does not count Tata’s new acquisition of Jaguar etc.
So. What happens? The Ford employees – all – instantly lose total respect and trust in the new CEO. Some will try to convince the CEO that he (or she) is mistaken, and even show some competitor analysis about Cadillac and Lexus and BMW and Mercedes, but to no avail. Months later the CEO continues calling Tata the best luxury premium sports car brand etc.
Now. There is one element of delusion here, which is the initial denial of reality. But that alone is not enough. There needs to be a further level here, that even after the new CEO is told of the real world, and is shown evidence of it, the CEO still continues in perpetuating the falsehood. Only then it becomes delusion. And there is theoretically a third even more damaging dimension, if the CEO starts to make decisions based on that delusion..
ELOP ON CNBC
Fine. Now to what happened to prompt my 3 blog rant about Nokia’s plight. After the profit warning, Nokia CEO Stephen Elop was on CNBC for a short interview. I TiVo’ed it. Most is typical CEO PR spin but in response to one question, about how Nokia would recover its lost market share in the USA, Mr Elop made the following reply. I have written it completely, to make sure we have it in context. This is verbatim, the complete answer, taken from the recording. Elop said on 1 June 2011 on CNBC:
”Yes, I think what we can do in North America, first of all, is to listen very carefully to the consumers in North America. What is it that they want, that is different from the markets where we’ve typically been most successful. It is the case, in 2004, Nokia had somewhere between 30 and 40 percent market share in the United States, just seven years ago. Yet at a certain point, we stopped listening and we decided: no, our interests were elsewhere. We weren’t listening to the consumers the way we needed to do so. With that listening, with the focus on the critical operators in this country who control a great deal of the activity in the environment, we believe we can be successful. Just as an example of that, our very first Windows Phone products are being designed and put together here, in California, with the US market very much in mind.”
A SOOTHING FAIRY TALE
This sounds beautiful, doesn’t it? It is perfect for the TV. It shows that Nokia has been able to be very successful in America in the past. Clearly it suggests between the lines, that Elop’s predecessors got lost in their way and stopped listening to US consumers and by returning to these sound standard business and marketing practices, clearly Elop has a great plan to get Nokia back into America. Sounds brilliant. And it fits so well with the narrative of how the Finnish engineers would do stupidly European engineering-oriented devices, crammed full of buttons, heavy, ugly, not the fantastic sexy simple elegant Apple iPhone and Google Android types of modern phones. But it took the North America (and consumers and marketing oriented) new CEO to wake up to this mistake and to remedy it.
Then he gives the perfect ending with the example, telling us that the world’s first Nokia branded Windows Phone 7 based smartphone is currently being designed in California, aiming for US consumer needs (and even manufactured in California). This is a compelling response. It is sheer delight for all those US based investors of Nokia who have despaired for years how badly Nokia did in the US market. Now finally a CEO who explains simply with perfect marketing language how good it once was, what went wrong, how it can be fixed, and best of all, that this CEO is now already executing that very strategy. Wonderful.
Except that it does not square with reality. I am not meaning that there aren’t elements of truth in the above paragraph quotations (a good lie has a basis in truth) and I am not saying the phones are not now being designed in California, I have no doubt they are. But there is one fundamental factual error in the the above fairy-tale and even more alarmingly, the decision to use California based designers is consistent with that error and following clearly on a variation of the bedtime story we heard for the first time in the ‘Burning Platforms’ memo.
BEDS ARE BURNING
So, this is not sour grapes about that memo. To be clear, I heard first about the memo via Twitter. Someone provided a link to the website that had leaked the text of the memo. I read the full text, and immediately spotted in it several factual errors and statements that would not be perceived as correct. Remember our analogy of the Ford employees hearing about Tata cars. When I read that text, I did yes, agree with the sentiment (Nokia’s CEO should be saying these sentiments, to get slow-moving Nokia to change much more rapidly and take global competitiveness more seriously.) But because I spotted numerous errors in it (calling Tata a luxury car), I thought the memo was a hoax, and said so on Twitter and then wrote my blog explaining why I thought so.
I did not disagree with the main points and sentiments of the burning platforms memo, but I felt that if any Nokia senior exec circulated a memo with such blatant errors in it, that exec would lose instantly all credibility and trust in the company, just like in our analogy the Ford CEO praising Tata not for low costs and efficient production methods, but praising Tata for its ‘luxury’ and high performance etc.
Obviously I was proven wrong, as Elop himself owned up to the Burning Platforms memo and referenced to it many times since. I have acknowledged my mistake on the blog. The one point we have to get back to, is one of the errors in the memo. And then bear in mind the definition of ‘delusional’. If there is an error in that memo, a proven error, that Elop consistently repeats and still today clearly believes to be true, and uses that statement (and makes decisions based on it) – then he is delusional. But 1, we have to prove the statement is patently false, not subject to ‘opinions’ and 2, we have to prove he is pathologically ie repeatedly over time, insisting on believing in the falsehood and repeating it, thus 3, he must be willfully and deliberately substituting a falsehood instead of reality.
ON LEADERSHIP
The memo has many errors. It is one that instantly hit me when I listened to Elop yesterday at the CNBC interview saying that paragraph in the above. This is what he wrote in the Burning Platforms memo early in February of this year to Nokia employees:
”(Symbian) ..has proven to be non-competitive in leading markets like North America.”
He also wrote of Nokia’s recent past:
”We fell behind, we missed big trends, and we lost time. At that time we thought we were making the right decisions, but with the benefit of hindsight, we now find ourselves years behind.” To which he singled out the Apple iPhone saying it shipped in 2007 and still in February 2011 Nokia didn’t have a phone close to it.
Elop acknowledges that Nokia has plenty of strengths and has had leadership positions in the past but has lost that now.
This forms the elements of the grand delusion Stephen Elop held back in February 2011 and still believes in June 2, 2011. He honestly believes that North America is a leading market (for mobile phones) and evidence of that is the iPhone and that since 2007, Nokia has fallen years behind that US market and specifically the iPhone. Nokia’s new CEO now feels that Nokia has falled ‘years’ behind the USA and Apple. When we refer to his CNBC interview, clearly Elop now is using California-based designers for the first Microsoft based smartphones (and uses the US consumer preferences as the primary input for how Nokia’s most important phone will be designed).
PAGING COPERNICUS, PAGING COLUMBUS
To my American readers, please brace yourself. This is going to sting a bit. But this blog deals with the facts and if there is a chance, that Nokia’s CEO is truly “delusional” according to dictionary definition, not just misguided, but deliberately suspending facts to substitute his own alternate reality, then we have to be meticulous and specific.
And let me be very very clear. I mostly agree with the sentiment and most actual recommendations of the burning platforms memo by Elop. I am not claiming Nokia is fine, I am not claiming Nokia was not in crisis, and I am not claiming Nokia didn’t need to change – urgently. I agree with all of that.
Also, I agree to some degree, that a USA based design effort, based on US consumer preferences, can help produce phones that will do better in the US market. But that has another delusion we have to deal with. Lets first get to the main ‘grand’ delusion in Stephen Elop’s head.
He honestly believes and repeatedly communicates, that the USA is now a leading market in mobile phones. And his shining example is the iPhone. And specifically contrasting Nokia vs iPhone, he honestly believes, Apple has jumped Nokia by years.
PAGING FACTS POLICE
First. There is a ton of reporting by mostly US based analysts, pundits and experts who claim the USA has taken the lead in mobile, and in particular in smartphones, and led by Apple’s iPhone and weirdly Google’s Android (where Google’s own Android phone Nexus One massively failed in the market, and most successful Android based smartphones are made by the Asians - Samsung, HTC, LG etc; so it seems odd to claim US leadership where Google’s own effort in it failed and it takes mostly Asian phone makers to succeed on Android, but that’s not really relevant here, as Elop didn’t talk about Android really). You, the visitor to this blog, have probably read recently far more times at various sources, that the USA has taken the lead in smartphones.
Even as thousands of ‘experts’ claimed the world was flat, did not make it so. And a brave Christopher Columbus would sail to the edge of the world, and did not fall off its edge, as we found out, the world is actually round..
The US leadership in mobile is a myth. It is a widely held myth. It is regularly perpetuated by the ignorant. But no matter how many ‘experts’ claimed the world was flat, it wasn’t. The reality was that the world was round. And similarly no matter how many experts based in the USA claim that the USA has taken the lead in phones, it has not. In the reality based world, as opposed to Mythlandia, the facts show ZERO proof of that in any way.
The facts please. First lets start with the phones. The bestselling phone brands in the USA are 1, Samsung (of South Korea), 2 LG (of South Korea) and 3 Motorola of the USA. That doesn’t start well, does it. In smartphones, the bestselling smartphone is Apple’s iPhone (of the USA). Number 2 is Samsung (South Korea). Number 3 is HTC (of Taiwan). Number 4 is RIM ie Blackberry (of Canada).
The last approximately 12 months have seen 5 US based smartphone brands of significant products/launches. Apple iPhone, Motorola, Palm bought by HP, Google’s Nexus One and Microsoft’s Kin. Which of these are in any way leading phones? Palm, proudly designed and built in America was so bad they went bankrupt. Google’s design, the Nexus One was proudly hailed by Google as so far superior to the iPhone it didn’t deserve the common term of smartphone and should be called the worlds first ‘superphone’. Nexus One failed in the market in less than 3 months and was withdrawn. Microsoft’s Kin phones went one better, the only phones designed by Microsoft – that same Microsoft with nearly 10 years of smartphone experience on the operating system side - they failed in less than 6 weeks, a world record. Motorola which started as the biggest Android phone brand when the others hadn’t launched yet, is today not the biggest, not second, not third biggest, not even 4th biggest Android brand; they have fallen to 5th ‘best’ Android brand in the world (HTC, Samsung, SonyEricsson and LG all passed Motorola already – and of the five, only Motorola does exclusively Android devices, the other 4 have managed to pass Moto ‘part time’ while supporting other smartphone platforms too!). This is American ‘leadership’? Most Android phones are obviously made by the South Koreans, Taiwanese and Swedish-Japanese. Hardly ‘American’ leadership.
JESUSPHONE
I skipped the iPhone, yes. Lets talk iPhone. First, please note, I loved the original iPhone so much that I named it the world’s first (and up to now still only) transformational phone, that not only would change the phone industry globally, but change the IT industry, media, advertising etc industries. My blog is the source of the commonly used term ‘Jesusphone’. So recognize, I truly love the iPhone and think it has completely changed the world of the smartphone and beyond.
To be very very clear. My view is that the iPhone is the single most important phone ever, and no other phone has changed the industry and related industries as much as the iPhone. I also regularly report that it is the most desirable phone, the easiest-to-use phone (so easy 4 year olds can use it and 94 year olds dare to use it). And it has by far - by far - the world's best customer loyalty.
But this blog is about the facts, not confessions of love and passion. Facts please. Americans very proudly consider the iPhone their ultimate proof of how strongly the USA has taken the world lead in phones and specifically smartphones.
Fine. The original iPhone (ie iPhone 2G sold from June 2007). Did you know it was not a proper smartphone, it was classified as a featurephone? Did you know, that when it was first unveiled to the world press and tech audiences by Steve Jobs in February 2007, and American pundits and experts were overwhelmed by the one-button slim large-screen touch screen design, that this very exact iPhone 'iconic' design form factor was a clear copy of a South Korean phone that won a 2007 award given in Germany – handed out in December 2006. Months before Apple showed its first iPhone, what looks like its clone had won an industrial design award in Germany. That design was by LG, and their touch-screen phone was so near to production that it was released in Europe weeks after the world had seen a prototype of the iPhone, and LG marketed it as the Chocolate.
If you think, that Apple’s ‘iconic’ iPhone look and feel, the one-button touch screen in the slim sexy body was a milestone in handset design. That we consider all phones before it heavy nasty bricks and all future phones should mimic that design – then you cannot credit that to Apple. Not one percent of it. That is LG’s award-winning design, from a year before. We are celebrating LG when we look at the latest HTCs and Motorolas and Nokia’s N8 and the latest iPhone 4 in white. Not Apple’s design! I know it seems odd. I know most Americans feel that is blasphemous to even suggest that. But it is true. Apple did not invent the mouse, they stole the idea from Xerox when they launched the Mac. Apple did not invent the the MP3 player when they launched the iPod – they just did it far better. And Apple did not invent that ‘iconic’ iPhone touch screen sexy large-screen smartphone design. LG had picked up its award for that specific design form-factor the year before. Yes, we are celebrating LG’s invention here, not Apple’s. Sorry guys. Its like the myth that Motorola’s handheld launched the mobile phone industry in Chicago on Ameritech’s network.. No it didn’t. This industry was born 4 years before in Japan.. I know these things hurt, but this blog deals with reality, not myths and fantasy.
TURNING JAPANESE
The original iPhone 2G was considered bleeding edge hottest futuristic phone in the USA. Meanwhile in Japan (the world’s most advanced mobile and phone market) the original iPhone 2G was never marketed – because Japan had already switched to 100% 3G (yes, just one sign of how advanced they are, still today more than half of Americans are on slower older networks on 2G technologies. Japan has shut its 2G networks off completely), and quite literally, the original iPhone 2G was obsolete for Japan. Considered bleeding edge in America, exact same phone literally obsolete in Japan. Who is the leader?
And then its world domination? The iPhone 2G sold massively in the USA but was a market flop in Europe, only the vastly upgraded and bug-fixed iPhone 3G was accepted in Europe one year later, and became a hit phone. This is the iPhone 3G from 2008. But even that model was not acceptable to Asians who have the most advanced phones, and it was not until the iPhone 3GS launched in 2009, that became a hit phone in markets like Japan, South Korea, China etc.
The original iPhone that American analysts felt was the ultimately radical futuristic world-changing phone, was literally obsolete for Japan and Asia and obsolescent for Europe. Europe needed the vastly improved 3G model (Apple’s first true smartphone, as Europe was far more advanced in smartphones) and Japan and most of Asia would not take to the iPhone until a year after that, when Apple had further upgraded and bug-fixed the iPhone to the 3GS model.
It is a myth that the USA leads in smartphones. It is a widely repeated myth, but there were thousands of scientists on the planet at one point who were all telling us that the sun is orbiting planet Earth, and the Earth was the center of the universe. Even if thousands of experts say so, it does not make a falsehood into a truth. The truth. The truth. The iPhone is not the most advanced phone on the planet. Sorry. It is a great phone, yes and I ever write openly that the iPhone changed the world, it is the only transformational phone ever, but that was more about what Apple can do with its image and brand, than any true innovations of the iPhone as a mobile phone, a featurephone, and in future iterations, as a smartphone.
IS APPLE LEADING OR FOLLOWING
I have counted that Apple has made a total of 15 bug-fixes and feature upgrades to the iPhone since the original iPhone 2G to the current model iPhone 4 when we include the software and OS upgrades. I am talking only of the really big changes, that Apple itself has listed on its new product press releases. Not the feature creep and minor details like adding more memory or a faster CPU etc. Only truly relevant big changes to the iPhone, so big, that they are among the 3 or 4 features that Apple itself lists as the highlight changes of its newest model. 15 of those over 4 years. Of those 15 upgrades to the 2007 iPhone 2G done over the past 4 years, 14 were in use already on smartphones sold in Europe in 2007. All 15 of those upgrades were on Japanese phones by 2006. Who leads? Who is the follower?
And please do not confuse usability with invention and innovation. If you want to argue that the iPhone is the world’s most user-friendly phone, I totally agree with you. Usability is important and Apple is the world leader in it. Apple did not invent the PC but with the Mac, Apple made its PCs, and then with the industry copying Apple, subsequently all later PCs easier to use. Apple did not invent portable music players, but with its iPod it made music player far more usable. If you want to say Apple is the global leader in usability – I will grant you that point. But at best, that is one aspect for Apple, where all its 15 major improvements were copies of what existed already in Europe or Asia. Even if I grant you this, The USA is losing 1-15.
Want more? The iPhone is super-slim. HP now offers a wafer-thin phone. The world’s first credit-card thin mobile phone was launched almost a decade ago in.. Japan. That giant screen on the Motorola? The world’s first 4.5 inch touch screen was launched in Japan.. two years ago.
I understand that you probably are hearing it again and again, from so many sources, that the USA is leading the smartphone market, but just saying it a hundred times does not make it so. The facts are irrefutable and globally consistent. The USA is lagging even mid-European markets for mobile and phones including smartphones.
BORN IN THE USA
So lets examine it in another way. What is cutting edge? What are we now expecting in the USA, for the iPhone 5, or see on the latest Android phones or the newest Blackberries etc? The hot stories for US top smartphones are near field (Blackberry just did that), 3D glassless display (expected for iPhone 5), mobile money/banking (Google just launched), and waterproof phones (for bathroom and shower use, not for the beach). Oh, and Motorola is promising us a wristwatch ‘Dick Tracy’ style phone. 8 megapixels is considered a powerful cameraphone and 12 megapixels is cutting edge.
That’s about the hottest best superphone concepts in America. Lets go to Japan. NTT DoCoMo launched near field in 2005 (six years ago). Sharp launched 3D glassless display already in Japan. Mobile banking and payments (NTT DoCoMo FeliCa) have been the norm for most of the past decade! Waterproof shower/bath phones were invented in Japan two years ago. The Dick Tracy TV-watch was first sold in Japan in 2004. The current top cameraphones in Japan have 16 megapixels. That is bleeding edge of handset design. Japan. There is nothing in the innovation space where the US phones have a leading position, but for all the hottest trends expected or now launched, Japan did long ago. The USA is not the leading country of mobile, not even close. If you ignore USA based experts (and ignore for fairness, Japan-based experts) and ask experts in any ‘neutral’ countries which country has more advanced phones, Japan or USA, practically all published experts, in all advanced countries, will say Japan leads the USA, most will add, Japan leads by several years. Ask handset experts in Britain, in Singapore, in France, in Hong Kong, in Italy, in Australia, in Sweden, in Taiwan etc. All say Japan leads, and most say, the Japanese lead is measured in years..
I could make the same argument for South Korea, Taiwan, Finland, Italy, Sweden, Singapore, Hong Kong, Australia etc. They all lead the USA. But I won’t. Because no doubt you are saying, its not the hardware, it’s the software. It’s the app store. Apple and 500,000 apps and all that.
APP STORE
Sure. I’ll bite. Apple launched its app store in 2008. Nokia’s first app store was launched in 2004. NTT DoCoMo invented the app store in 2002. Who leads, who follows? Yes, Apple has been ‘most successful’ as an app store, but you cannot claim they invented it, or in any way are the global leader. Just because Tata sells more cars in India than Ferrari, does not mean Tata is the innovation leader. It is the mass market leader. Apple’s iPhone App store is the most successful app store, not the first, and not the most inventive.
You want to say the 70/30 revenue share deal was radical (and it was – only in the laggard market of the USA). What is the revenue-share deal in Japan’s mobile internet? Try 91/09. So yes, you, the mobile service/app developer get to keep 91 cents out of every dollar. Apple only lets you keep 70 cents. And this ‘awesome’ revenue-sharing innovation, when did the Japanese come up with this? Try twelve - yes twelve - years ago. Apple did its 70/30 deal in 2008. NTT DoCoMo did the 91/09 deal in 1999, a whole 9 years before Apple. Who leads, who follows. Come on. Its not even close. But most US based pundits are not aware of the facts, they live in that myth that Apple sprinkles a bit of Steve Jobs magic dust and the world is forever changed.
Of the apps. The bestselling/most downloaded app? Angry Birds? By Rovio? A US company perhaps. No. Try Europe. Is a Finnish mobile game developer. Apple’s award for best app programmer first year on the iPhone was.. some surfer dude from California no doubt? No, it was the Finnish game developer Elias Pietila of Qvik whose game Wooden Labyrinth 3D was the first smartphone game to pass 10 million downloads. What of Augmented Reality? The world’s biggest AR provider is Netherlands-based Layar. So maybe you rather want the mobile virtual properties and virtual money? That was invented in… Finland… by Sulake maker of Habbo Hotel. So then who brought it to the USA? Facebook? Farmville? Not to mobile phones. The social network to do mobile virtual properties and virtual money was Flirtomatic – a dating/flirting service from the UK which in less than two years became the biggest mobile dating service of the USA. You like Shazam as a magical service? From the UK. You like that magical translator utility, Word Lens, which does Spanish-English real time translators via the cameraphone and screen, the iPhone app that CNBC gave the world’s best mobile app award for 2010? That Word Lens, surely that is global leadership out of the US of A? Actually no. I had that service as a case study in my 6th book, because the world’s first to do that identical service was ‘Kamera Jiten’ out of Japan, five years ago!
If you say mobile web will supercede the apps, fine. The world’s biggest mobile web browser is what? It is Opera. Which comes from where? Silicon valley? No, from Norway. The world’s biggest mobile app developer is not from the USA, it is Buongiorno – an Italian company. How much more do you want to continue? Mobile payments like we now see on the iPhone? Invented by Coca Cola yes, but 13 years ago – in Finland. American Airlines doing its check in services on mobile, as many other US airlines started around 2009. Yeah. That was invented by Finnair in 2001, eight years earlier. Your location based social games like FourSquare? The worlds’ first mobile social game on location base was launched in Japan – eight years ago. Those hotels in Florida that are piloting mobile phone based locks.. Swedish lock-maker Abloy already offers the technology for home and office use in commercial lock products.. and invented? In Japan 5 years ago. American cars now starting to do smartphone-car integration? 20% of cars in South Korea had smartphone/mobile internet connectivity – in 2007.
Yes, the innovations in America seem awesome. So would a black-and-white television set seem awesome to a caveman who had never seen a television. But that does not make black-and-white TVs more advanced than a color TV or a plasma screen TV or HD TV or 3D TV. You get my point. American pundits and experts perpetuate the myth that USA leads, simply because they do not regularly visit the most advanced mobile markets like Japan, South Korea, Finland etc. The myth that America leads is widely-held, it is still a myth. The simple irrefutable fact is, that the USA has fallen behind, badly, in mobile. In all aspects of mobile, not just handset design. Lucent, Motorola, Verizon, AT&T, etc etc etc.
Yes, the apps on the iPhone and Android are mind-boggling. But don’t confuse fast movement today, for leadership. The USA has been far behind, it is moving fast today, but has not even caught up with Europe, far less the most advanced mobile markets like Taiwan, South Korea, Singapore and especially Japan. The USA is not the leader in app stores, and not in smartphone apps either.
HOW ABOUT NOKIA
So, Elop says that the USA has become a leader in mobile. Just examining the (smart)phones side of the industry (ignoring the carriers – true dinosaurs) and related app stores and apps, North America is not the leader. Japan is. So what of Nokia. If Elop’s main point is, that Nokia once was the leader, but it has recently fallen behind the USA, in particular behind the iPhone, then the rest is kind of moot point. The argument is not an abstract philosophical debate, it is true competitiveness, Nokia vs Americans, specifically, obviously Nokia vs Apple’s iPhone. And yes, Nokia includes Symbian.
It must be true. It has to be. Every bit of evidence will prove to any American that Nokia’s current phones are toys, rubbish. Apple’s iPhone 4 is the toast of the world. Yes. Not emotions here, lets do facts.
So yes. The premise is, that Apple iPhone overtook Nokia and leads Nokia now by several years. Lets examine the actual facts.
DON’T STOP ME NOW
The original iPhone 2G was not a smartphone. Nokia invented the smartphone so when Apple upgraded the iPhone to a real smartphone with the iPhone 3G in 2008, Nokia had only a 10 year lead on that point. But yes, in 2008 Apple added MMS support to the iPhone. Nokia’s first MMS phone was the 7650 in 2002 (six year Nokia lead on an Apple celebrated innovation). The iPhone added GPS in 2008. Nokia’s first GPS phone was the 3585i in 2003 (5 year Nokia lead on one of Apple’s most influential design changes, consider FourSquare etc). The user-installable smartphone apps were introduced by Apple for 2008. Nokia did that already in 2003 with the N-Gage (5 year lead for Nokia). Apple added 3G in 2008. Nokia did 3G from the 7600 in 2004 (4 year lead.. for Nokia).
Is Apple really somehow 2 years ahead of Nokia or is Stephen Elop living in some parallel universe where plus is minus and all this leadership is signs of Nokia having fallen behind? Lets continue. In 2008 Apple added stereo Bluetooth. Nokia did that in the 8800 model in 2005 (3 year lead for Nokia). Apple added Microsoft office suite support in its software update in 2009. Nokia supported Microsoft office suite from the 9110 Communicator in 1999 (10 year lead for Nokia). Apple didn’t do cut-and-paste until 2009. Nokia’s 9210 Communicator featured cut-and-paste on that tired Symbian OS, when was that.. 2001 ie 8 years prior to Apple. The iPhone added voice dial in 2009. Nokia did voice dial from 2001 on the 3310 model. Apple didn’t support video recording until 2009. Nokia did video recording from the 7600 in 2004. Apple upgraded its camera to 3 megapixels in 2009. Nokia’s first 3G cameraphone was the N93 in 2006. The iPhone didn’t do autofocus until 2009. Nokia had autofocus from the N90 model in 2006. And lets end on multitasking. Apple’s iOS added multitasking in 2010. Nokia’s ‘obsolete’ Symbian supported multitasking from… the 9210 in 2001.
I am not kidding when I say, if you take Nokia’s contemporary top model from 2007, the N95, when the original iPhone 2G launched – those above twelve changes and improvements to the iPhone operating system and handset design – every one of them – was on the existing Nokia phone before the first iPhone 2G was ever in the hands of those Apple loyalists who stood in line for two days to get one. If you want to see what will Apple put into the iPhone 5, study an old Nokia top phone.
I am not saying the N95 was ‘better’ than the original iPhone (in some ways it was, in some ways it wasn’t. Obviously the N95 was not a touch-screen phone, so if you want touch screen, the iPhone wins). Its like comparing a Cadillac Escalade to a Porsche 911. Both are expensive, both are exclusive, both are loaded with high tech. But the Cadillac Escallade is overloaded with everything, while the Porsche is a purist device, streamlined, and one that has abandoned many ‘normal’ features of most cars. (Similar to the iPhone, if you bring the Escallade to the race track and line it aside any old Porsche 911, the Porsche will easily lap the Cadillac, it will be no contest). But then, if you take just one other ‘normal’ use – take GPS on the N95, you could not do the real time maps and location-based services on the iPhone 2G but could do on the Nokia. On our analogy, try to stuff your family and dog into the two-seat Porsche 911. It’s a two-seater sports car, they wont’ fit. In one way – performance – Porsche wins, but in most uses, the Cadillacis better. In most but not all uses. Similar to the N95, in one way – touch screen – Apple won, but on 12 other uses, Nokia’s N95 beats the iPhone hands-down. And yes, in most markets, in most reviews, the N95 beat the iPhone also in side-by-side tests by the experts.
But the truth is, after the iPhone launched in 2007, excepting for its touch screen form factor, there is nothing ever that Apple had, that Nokia has copied, but everything that Apple did since, is a copy of what Nokia already had. That is the facts. That is the truth. Not one ‘innovation’ by Apple since its touch screen multi-touch, not one innovation has been copied by Nokia after Apple. Even Nokia’s app store was launched years before Apple’s. Yes, it stings, but it is the truth. This blog deals with the truth, not with some parallel universe where Captain Kirk is evil and Spock has a beard.
NOKIA HAD NO iPHONE CLONE
It is fair to say, that Nokia did not have an actual handset unit, closely comparable to the iPhone as a design, until the N8 came along. But for Elop to say, that Apple has somehow leapfrogged Nokia and Nokia fallen two years behind Apple – there is no evidence whatsoever that this is true. The opposite is true. For you to see what will the next iPhone 5 have as its features, take out a 5 year old Nokia to see what is coming.
Seriously. I am not fudging with the facts. Those are all items that Apple itself celebrated in its launches of its newest handsets or software updates to iOS. And EVERY one of them had existed on Nokia phones years and years before. It is simply, categorically, 100% true, that Nokia did indeed foresee, and understand – and launch – those all issues, that Apple considers its most notable upgrades and improvements. Nokia had all those changes done before the first iPhone had sold. Maybe Elop is not familiar with this, because it happened ‘so long ago’ but surely his staff has informed him, that anything Apple now celebrates as new, Nokia already had deployed years before!
It is absolutely categorically true, that Nokia leads Apple in smartphones. Even touch screens. Nokia’s first touch screen smartphone was years before the iPhone. Nokia’s phone was poorly executed, yes, it did not succeed in the market. But don’t accuse Nokia of not seeing the future, of not grasping the right concept and of not attempting it. (Newton, Apple loyalists? Brilliant PDA but just ahead of its time). And yes, Nokia has made its share of execution errors and fumbled a brilliant concept with bad design elements but so does everyone else (Apple's Lisa PC? Apple’s iPhone 4 Antennagate?). So yes, Nokia did see touch screens long before Apple came along. Nokia tried, and Nokia failed at it, and Apple came along to prove it can be done. That is typical Apple. They don’t invent. They take other companies’ failed ideas, and they turn them into successes. Look at Sony Walkmans (anyone remember their digital music players, the Minidisk players?). Along comes Apple and redesigns that idea, and we have the iPod.
But in smartphones there is not one element that Apple invented, that Nokia has since copied. Not one. What Apple had, is stuff others had invented (like LG’s one-button large screen form factor, or the multi-touch technology, similar to how Apple’s Mac took the mouse from Xerox etc..)
This is leadership! Nokia leads, Apple follows Nokia. Consistently, year after year, iPhone model after iPhone model. iOS upgrade after iOS upgrade. That is different from ‘desirable’ Obviously Apple’s iPhone is the most desirable phone on the planet. But Apple is far more expensive and has a very limited product range and is more like a Porsche where Nokia is more like Toyota of lower cost devices across a vast range covering multitudes of form factors to suit markets, customers and segments.
WHAT HAVE YOU DONE FOR ME LATELY
And what have you done for me lately, Nokia? So near field? Possibly coming to phones in America, Nokia announced near field phones late last year. Google’s money initiative for phones? Nokia Money is already deployed commercially, like in India. And did you see that the world’s biggest videogame platform provider, Sony (of Playstation) announced its Playstation based gaming phones? The SonyEricsson Xperia Play smartphones? Now. Who was it who invented the gaming-oriented smartphone? Was it Nintendo or Microsoft? No. It was Nokia – in 2004! Yes, Nokia’s N-Gage was released too early, with hind sight, and it was not a good design. But if you say that a gaming phone is cutting edge today, and the world’s biggest gaming company did it now, and the other rivals have not yet even dared to try, then we have to see who invented that. And once again, the credit goes to those incompetent designers of Nokia. They invented this type of phone. And Nokia’s management even was brave enough to launch it. But then when they saw the market was not ready for it, recognizing they were too early, they also pulled the N-Gage (not unlike Apple with Newton the failed PDA).
And those dual SIM phones that Stephen Elop talked about now? Nokia is making them now? Is Nokia copying California phones? No. There are no dual SIM phones in America but they are common here in Asia, where the most advanced phones exist. No near field on the iPhone. No Apple Money on the iPhone. No dual SIM on the iPhone.
So if Elop wants to compare and contrast Nokia specifically with Apple iPhone – all evidence is that Nokia has correctly anticipated all those changes and improvements, that Apple finds valuable to deploy. And Nokia has wisely launched them well before Apple.
PAY ATTENTION 007
Please stop and think. EVERY improvement to the iconic original iPhone. EVERY improvement that is so significant, that ‘minimalist’ perfectionist Apple’s Steve Jobs has approved to be changed on the iPhone since, every single change, was already discovered, tested, deployed – and commercially launched in successful Nokia phone products – before the first iPhone of 2007.
This is not trial-and error design. This is not hit-and-miss experimentation. Come on, it’s an unbeaten winning streak! Nokia’s designers have correctly anticipated EVERY one of the very selective improvements that Apple has accepted to its iPhone. And LAUNCHED THEM BEFORE APPLE! Come on? What am I missing here? Nobody can accuse the iPhone of being a ‘Swiss Army Knife’ of feature overload. But when it comes to the must-have most important features that Apple approves to its hardware – or software – Nokia and Symbian have had EVERY one of them prior to the 2007 model (except for the original touch screen multi-touch, which obviously was not Apple’s invention and Nokia has since done).
From that evidence, for Elop to say, Apple has leapfrogged Nokia by two years, is true delusion. He has been presented with all the evidence and he refuses to accept it. He instead substitutes a fantasy he has concocted.
And please, don’t say that is ancient history. Today, Nokia has not stopped innovating. It is continuing to launch tons and tons of features, abilities and services that Apple does not yet offer. Like HD TV output, like full USB connectivity including thumb drivers and USB sticks plugged directly to the E7, etc.
ECO ECO ECO ECO
So, one more. Maybe I am being too literal here. Maybe the new Nokia CEO thinks Nokia the phone company should more see the future and think even beyond software and find the opportunity in the 'eco-system' like Apple's iPod and iTunes or iPhone and iOS App Store etc. Maybe the rest doesn't matter, the internet was invented in California and for us truly to grasp the future, we need to think eco-systems. And that, eco-system thinking, is where Nokia has fallen years behind Apple and California.
Good thesis. Lets explore. Apple's vision of its eco-system is the proverbial walled garden, where all activity is monitored and jealously guarded by Apple's thought police. No apps get approved that don't fit Apple's guidelines and the rules change at Apple's whims. No open source here, no access to outside tools, all kinds of silly restrictions in this 'eco-system''.
And then we compare. Nokia's Symbian was not developed by Nokia alone (like Apple's). Nokia had invited ALL of its competitors to come and build Symbian together in partnership (which is more mature, which is wider-reaching, which is better eco-system thinking?). Yes, ten years ago, fierce rivals Motorola, Sony, Ericsson, Samsung, Panasonic etc all joined Nokia to co-own Symbian. Yes, which is more understanding eco-systems? Its more messy with more partners but one is healthier than the other. Walled gardens died in the internet era..
And Symbian evolution. Now after most partners left, Nokia is left with Symbian, but turned it into a foundation and made it all open source. Apple's iPhone market is all closed and fiercely guarded by Apple. Nokia's partners in Symbian still today include guess who? NTT DoCoMo - the only company more inventive in mobile than Nokia itself, is NTT DoCoMo the most successful and most inventive company in mobile who launched this whole industry, who invented the mobile internet, did the first WiFi phones, the first 3G phones, etc etc etc. That NTT DoCoMo. So the 'obsolete' Symbian which Nokia controlled, had as one of its loyal die-hard partners Japan's biggest carrier/operator NTT DoCoMo and thus Symbian had a huge market share in Japan by default, the world's most demanding mobile phone market. Is this 'eco-system thinking' the right way - when will Apple let AT&T or Verizon be part of its system? Never. Apple is attempting in every way to cut the carriers out of the equation, even suggesting phones without SIM cards.
So, eco-system thinking? Should we go with how they think at Nokia or at Apple? Certainly Apple's way is faster and Apple has far more control but its also far more predatory for Apple to exploit. But Nokia's way via Symbian was definitely slower but was far more sustainable in the long run and far more friendly to competitors and partners. Hmmm... Makes you think?
And then Nokia's thinking about eco-systems of the future? We know how Elop thinks about eco-systems of the future. He is bringing Nokia to Microsoft's platform. That means that Nokia is hostage to Microsoft's whims, a 'partner' who has a horrible reputation of crushing all past partners. But lets set that aside. What kind of eco-system is it? Its another closed system. It has only a modest number of developers and apps. Its app store is weak. And none of the other handset makers in it have found Microsoft's 'eco-system' a good place to make business in - Motorola left in disgust, Samsung felt compelled to start its own, and HTC refused even to launch phones on the last edition of Windows Mobile. Thats how 'friendly' is the Microsoft eco-system to its handset vendors.
Yes, and Nokia's 'two years behind' thinking of eco-systems was what, in contrast? MeeGo. A smartphone operating system developed not alone by Nokia, but with a partner from California - Intel. Which is better thinking and where does Nokia have more control of its own future? Which was better philosophy, if 'eco-system' thinking was the measure we seek. Lets see how the incompetent outdated Finns set up this MeeGo nonsense? Is it a nice closed controlled system like Microsoft's or Apple's? No. Nokia went open source! Like Linux, like Symbian and like guess who - Google's Android. Yes, Android is Linux based - which further helps any developers - and is Microsoft's Phone 7 Linux based? No its not, and neither is Apple's. But is MeeGo, the idiot scheme from those eco-system incompetents from Finland? Funny you'd ask. MeeGo is Linux based! (Linux itself came from Linus Torvalds, a Finn...)
So do you want the Microsoft walled garden closed 'jail' mentality in your eco-system or the silly Finnish way of partnering in open systems? What of those developers then? No app store in MeeGo. Haha, we don't need to. We have Ovi already - the world's second-best-selling smartphone app store, behind only Apple's and ahead by a light-year of Microsoft's version. What about developers. Nokia went through the trouble of buildling a bridge, a migration path, for its family of Symbian developers so they could migrate to MeeGo by using a common tool set called Qt. Yes, Nokia did this. It was not the cheapest or fastest way, but it was the best way 'in eco-system thinking' was it not? Thinking of the best for its partners and developers, thats what the silly outdated Finnish way was. Microsoft shows the 'California way' of thinking about eco-system and simply said 'Screw you' to its Windows Mobile developers when it announced Windows Phone 7, no migration path whatsoever! Which thinking is more modern in eco-systems? The Nokia way or the Microsoft way, if we think about the future and long term viability.
Oh, and those funny phones you may have seen on something called Android. The tools that support MeeGo (including Qt) and the software modules built on Linux have a lot of commonality with Android. Yes! But does Microsoft give ANY compatibility to its 'strategic partner' Nokia's Qt tools to help existing Symbian developers migrate to Microsoft. None whatsoever. Screw You is the thinking at the company many call the 'Evil Empire'. Which eco-system thinking is more mature, and more viable in the long run.
So you say you've never heard of MeeGo and it will now die where Intel can't do it alone. Think again. Even before Nokia left, over 20 tech companies had signed up and committed to MeeGo including PC makers, including car manufacturers (using MeeGo for in-car stuff) including home electronics brands (TV sets etc) and yes, phone makers. HTC, ZTE and Huawei (and one more phone maker from Asia but I honestly don't now remember which) have committed to MeeGo. And yes, MeeGo already exists. The first MeeGo devices are in the market (some tablets and netbooks came first, this spring, the first went on sale in Singapore). And best of all, China Mobile! The world's biggest mobile phone operator - who alone is twice as big as all USA carriers combined - is committed to MeeGo and will use it to standardize its future 3G smartphones. So if you want your phones to sell in significant numbers on China Mobile, you have to use MeeGo. Its like Symbian was with NTT DoCoMo in Japan..
And this is what Nokia had done without Elop, the stupid Finns who don't know anything about West Coast thinking of an internet mindset and open systems and eco-systems. Come on. Nokia invested in a migration path for its Symbian developer community to join with Nokia to follow to MeeGo, via Ovi. So Stephen Elop kills all that, why? Because apparently according to Business Week, Elop felt that only 3 MeeGo devices could be built this year. Well, Mr Elop, you're lucky to get one Microsoft phone at the end of the year. The first MeeGo phone was ready to be produced in January. So when the choice is three MeeGo devices this year the first of which could sell in January, on a platform where Nokia is co-owner, or one device in December where Nokia is hostage to the friendliest of 'partners' called Microsoft. Which is the mature eco-system thinking and which is living in a fantasy world? No wonder Intel CEO was livid when Elop announced his decision to switch to Microsoft..
FROM DELUSION TO ACTION
So, all evidence says that USA is not the leader or one of the leading countries of smartphones or app stores or apps. The USA is littered with utterly failed phones recently from Palm to Nexus One to Kin. The US domestic market leaders tend to be rivals from abroad, especially the South Koreans and Taiwanese.
The real world leader in mobile is Japan, literally years ahead of the USA.
Nokia smartphone and Symbian operating system development has been years ahead of that of the iPhone with the one exception of usability. Even if the N8 is seen to mimick the appearance of the iPhone, in reality the iPhone mimicks the original LG design, so in terms of N8 form factor, Nokia is more copying the Koreans than Apple.
There is a mountain of evidence that the USA is not leading Finland; Apple, Motorola, Palm are not leading Nokia; Android and iOS are not leading Symbian; etc. Most tellingly, every major advance in the iPhone that Apple itself has celebrated most, was a copy of a far earlier commercially deployed and successfully produced Nokia or Symbian innovation.
And even in eco-system thinking, Nokia had the foresight to do open-source software on Linux, with partners, in a healthy environment including a migration path for its developers. And this all is supposedly the obsolete thinking, that somehow closed walled gardens will prevail.
The new Nokia CEO who joins from outside the mobile industry is not expected to know this, especially as many of these happened so far before there was an iPhone and have become parts of Nokia’s ‘DNA’ But when he first used a phrase like ‘USA is leading mobile market’ – his colleagues and peers at Nokia will have attempted to correct him.
Now. A rational person, when confronting that cognitive dissonance, where the perception of reality is not connecting with reported reality – reacts by studying the matter to find out what is the truth. The irrational person superimposes a pretend reality to be able to hide and ignore the truth.
If Stephen Elop tells us in the Burning Platforms memo in February that the USA is a world leader country and Nokia has fallen behind by years and Apple is far ahead of Nokia, it could be a temporary misunderstanding, and that he has since discovered the real truth. The sign we as pundits and Nokia-followers should be looking for, is does Elop accept the truth, and stop repeating the nonsense, or is he going to refuse to face facts and place his mind-set in a fantasy lala-land where Pan American is the world’s biggest airline, RCA makes all the television sets, the Ford Model T is the bestselling car still, and we all walk around with Motorola phones. What we were looking for, is after February, would Stephen Elop accept his ‘USA is leader’ comment is actually not true – and stop using it, or is he literally deluding himself “when faced with evidence” still willfully refuses to accept the facts. That is delusional. Dictionary-definition delusional.
So now, we go to the CNBC interview. Read what Elop said in the end of the paragraph: “Our very first Windows Phone products are being designed and put together here, in California, with the US market very much in mind.” This is the way Elop creates the single most important phone for Nokia’s survival. Remember, the US market is only 7% of all mobile phone subscribers. If Nokia wins in America but loses the rest of the world, Nokia goes bankrupt. The USA is too small. Nokia cannot design a USA phone and hope to win the world. Nokia’s main flagship first Microsoft based smartphone has to be a hit in Australia, in Singapore, in Britain, in Spain, in Brazil, in China, in Russia, in Italy, in Mexico, in India, in Egypt, in Poland, in Indonesia, etc. And now, they do need a hit, a world-winner phone. Where is that to be designed? Not where Nokia has over a dozen years of design excellence and market leadership in premium phone design – Finland – no, in California, where there is mainly a legacy of some of the worlds’ most rapidly failed phone designs. Hmmm…. This does not sound good.
US CONSUMER NEEDS
So lets set that ‘grand delusion’ to one side. We have the fairy tale Stephen Elop told about Nokia’s past in the US market, the one that seemed so soothingly compelling. Like I said, the fantasy has several elements of the truth, intertwined very cunningly with blatant untruths. Yes, Nokia’s market share in the US market (in dumbphones, not smartphones obviously) in 2004 was well above 30%. There is nothing ‘inherently undesirable’ about Nokia designs being acceptable to US consumers. Those phones in 2004 were not designed for the US market. They were typical Nokia global designs but at times adapted to the US market for example for the radio frequency requirements etc.
And the story that listening to the US consumer will help design phones for US markets, that is very nice and probably it won’t hurt. To start with, in new tech, we need to remember Henry Ford who said if you asked what people wanted before they saw a car, they’d say they wanted a faster horse. So if we really are looking for a breakthrough phone, that is best not to be heavily consumer-tested, the iPhone for example was not tested by focus groups etc. It was designed to satisfy one client – Steve Jobs – who knew what he wanted. Often in high tech, its more important to follow the gut instincts of the trusted head designer than trying to seek opinions of consumers.
But still, I am not against the consumer opinions. What I am against, is the utter wives tale that by making phones desirable to the consumers, they will become market successes. Stephen Elop in that same interview contradicts himself by pointing out that it is the carriers/mobile operators who hold the cards.
In the USA, even more than most markets, it is not the consumer who ‘gets’ to decide, it is pre-ordained by the carrier. Look at the Nexus One by Google. A highly desirable phone, that was winning lots of reviews and yet it failed in the US market. Why? Because the carriers refused (at the last moment) to support it. The excellent design didn’t matter one iota. Same for Palm. Its last model was a huge hit with consumers but was only available on one small network in modest numbers, and Palm collapsed. A well-designed consumer-loved phone will NOT be a hit in the USA, unless the US carriers agree to support it.
The real reason why Nokia failed after 2004 was not because Nokia suddenly stopped listening to US consumers. Nokia failed in 2005 because the big US carriers punished Nokia. They hated Nokia’s N-Gage and its apps store. Note, the carriers didn't hate Nokia's N-Gage for its poor design, they hated it that Nokia was selling N-Gage games via an app store that bypassed carrier mobile data traffic (ooh, that sounds like the Apple iPhone App Store in 2008 - yep, yet another concept that Apple launched which Nokia did years before).
The US carriers also hated Nokia in 2004 for its private service sales and delivery ‘club’ called Club Nokia. Like their European and Asian counterparts, all major operators around the world punished Nokia from 2005 and Nokia promptly pulled the N-Gage and re-launched Club Nokia.
It had nothing to do with not listening to US consumers. And we have the ultimate Nokia evidence how ridiculous that statement was by Elop. So then what in 2005 and 2006. Nokia WAS listening to what customers wanted. Nokia was putting WiFi and Bluetooth and memory cards to its premium phones. The US carriers hated this, as they wanted to lock US consumers to their expensive data plans on cellular. So the US carriers insisted Nokia block these standard Nokia features. The carriers wanted Nokia to cripple its phones. Nokia felt that a customer would see the specs online, and see them described in the user guide, that Nokia customers bought phones specifically on the Nokia brand, and refused to cripple these desirable premium features. Nokia did in 2005 EXACTLY what Elop now suggests for 2011 - Nokia put consumer needs ahead of US carrier wants, and paid the price.
As George Santayana said, those who do not remember the past are condemned to repeat it. Stephen Elop has been told the truth about why Nokia lost the US market lead. He has heard it. He has seen the evidence. He then has taken that truth and refused to accept it, and replaced it with his fantasy version. And sadly, if that illusion is used as a basis of Nokia strategy in America - we have the experiment of how it will go. See above. The Carriers will punish Nokia again..
So the carriers boycotted Nokia’s premium phones and brought in those phones by rival makers of similar specs, who agreed to cripple these features. THAT is why Nokia lost its market share in the US market. And having supremely desirable features that consumers craved – think about it, WiFi on a cellphone in 2005 – you loved it on the iPhone. I had it on my Nokia Communicator in 2004! Which smartphone customer didn’t want WiFi in 2005? Come on. This is a superbly desirable consumer-oriented feature that Nokia had in all its premium phones by then. The US consumer-desirable phone design was completely useless in Nokia market share for the US. What decided then, is what decides today – the carrier (ie the mobile operator, to my non-US readers).
As Nokia lost its premium end of the phones, the US consumer never saw Nokia’s top phones like the 9500 Communicator, N93, E90 Communicator etc, N900 etc and now the N8 and E7. Recognize, the actual unsubsidized price of the E7 is about the same as the iPhone 4, so whatever price AT&T or Verizon now offer the iPhone 4, for that price you could have the E7. Suddenly this superphone does seem like an iPhone killer, doesn’t it (if we would ignore the fact that on February Elop announced he is killing Symbian haha). Thus the US market never saw the premium Nokia phones subsidized to the same prices as iPhones, Blackberries, Motorola Droids, Samsung Galaxies, etc and learned that Nokia phones were bargain-basement ultra-cheap basic phones.
All of this is known inside and out, by all Nokia’s US related sales staff, most of Nokia’s other US staff and most Nokia sales staff for other markets. It is also very well known by the carriers, and many independent experts in the USA who specialize in the handsets side of the industry.
So, the fairy tale that Elop can recover Nokia’s 30% market share by listening to US consumers is a tall tale. Has no connection with reality whatsoever. In the PC industry and the PC software industry and home electronics etc, the traditional consumer marketing matters in the USA. But not in mobile handsets in the USA. It is completely controlled by the carriers. Ask Microsoft about Kin. Ask Google about Nexus One..
GRAND CONCLUSION TO GRAND DELUSION
So is this really worth writing about? Maybe Elop is laboring under the misconception that USA has overtaken Finland in mobile (or Apple overtaken Nokia, Android passed Symbian etc) Or maybe he wasn’t that particular in the CNBC interview. Press interviews are not delivered under oath, after all. Is this really worth reading?
Ok. We know there is no credible evidence to support the position that the USA has passed Finland (or Apple passed Nokia, etc) But from February to June of 2011, Elop has been repeating that representation. And recall the definition of delusional. If Elop has pathologically refused the truth and substituted an imaginary reality willfully, despite evidence to the contrary – then he is delusional. So its possible there is some mental problems with the CEO (which wouldn’t be the first time that a top manager got to that position with perhaps not quite the ‘normal’ type o brain and mental ability).
The really dangerous symptom would be, if Stephen Elop has started to make actual decisions and actions based on his delusion(s). Then it would no longer be just a hypothetical problem. Then we’d have a Chief Executive who has deliberately, willfully suspended reality, despite clear evidence to the contrary, has substituted some imaginary situation and now acted on that fantasy world. That would be indeed a worrisome trait in a new CEO for the world’s biggest phone maker.
What was it Elop said to CNBC? That he has set the development of the first Microsoft phones away from Nokia’s world-leading designers in Finland, to the teams in California. To do what? Give us a clone of the Kin? To show us a next-generation Palm? To give us the Nexus Two? To repeat a Motorola Rokr maybe?
It is possible that the California design team can create a world killer phone. But if they also listen to the US consumer – and the US market is years behind advanced markets – it is very likely that even if the US consumers think those phones are cool and desirable and modern, there is a big danger that they are as outdated as the original iPhone was when taken to Japan. Already obsolete upon birth.
If it’s the other way, the phones are designed in the most advanced markets and then brought to the US, they can far more likely be a hit in both markets (witness Samsung and LG and HTC phone successes in the USA today).
THE DEEPEST CUSTOMER INSIGHT
Why is it that Nokia saw consumer smartphones first. Literally. First. Literally. Years before Apple. Why is it that Nokia was first to call the smartphone a computer. Why is it that Nokia put multi-tasking on its early smartphones but Apple did not. Why is it that Nokia put MMS in its smartphones but Apple didn’t, and had to rush to add it later. Why is it that Nokia bought a mobile advertising arm years before Apple or Google got into mobile advertising. Why is it that Nokia launched Nokia money before Google or Apple even talked of mobile money in public. Why is it that current innovations expected to phones in the USA are on Nokia phones already? How can Nokia be so far ahead? Its because Nokia has the world’s largest and deepest customer-insight research into handsets. The world’s deepest and largest and surveys that have the longest history so they can see trend data too. Literally hundreds of thousands of end-user surveys of what people want in their phones, and on the services, yes services, and apps, yes apps, on their phones. Nokia, by far the biggest research into this area. Not China Mobile, not Vodafone, not AT&T, not Verizon, not Motorola, not Apple, not Microsoft, not Google, not RIM, not Samsung, no Sony, not Ericsson and not even SonyEricsson…
This extremely deep and thorough consumer research has given us such things as the worlds’ first phone with the real internet. The world’s first phone with QWERTY. The first phone with full Microsoft Office suite support. The first phone with TV out, FM radio built in, FM broadcast, etc etc etc. And like I said, it has not ended, Nokia announced near field last year, it has HD TV output already now, it announced dual SIM two years ago (I don’t know why they didn’t launch already, probably because of some carriers said please don’t do it haha) and so forth.
If Stephen Elop was honest, and did some research into the facts, he’d find that his in-house research is the world’s best at one thing – understanding what consumers want, what they do, what they don’t want, and what they don’t do – on phones. It is not perfect nobody’s is. But the world’s best end-user research on mobile phone (and especially smartphone – remember Nokia invented not just the smartphone, Nokia invented the consumer smartphone too). And if Elop takes that deep and successful knowhow, and willfully ignores it, and goes hunting for some US consumer insights out of California, well, there is a very distinct danger that we find Nokia launching a phone like Danger also known in its latest iteration as the Kin phones – who set the record for fastest market failure in mobile phone handset history. Designed in California, indeed!
BACK TO CARS
Imagine you are new CEO of BMW, and you have all the engineering and design knowledge in Germany, you ignore that, and launch the most important flagship top car luxury/performance BMW ever –designed in India
How incompetent is Nokia’s existing design, led by Finland? How does it compare to the California based design? Or lets expand that, and add all USA based smartphone design. If we add together all smartphones made by Hewlett-Packard’s own smartphone team, and those made by the Palm team they acquired; and add all smartphones sold by Dell, and all smartphones manufactured by Motorola, and lets even add all smartphones produced in their best quarter last year by Google’s Nexus One and Microsoft’s Kin. And who am I forgetting? Oh, Apple. Lets toss in all iPhones sold as well.
Last quarter, Nokia’s worst quarter ever – they still managed to sell more smartphones than all those smartphones designed and made by all those powerful US brands – combined. This is powerhouse design and competence. One puny little European country, the size of one sixth of California, and one company in it – manage to design smartphones that outsell Dell, HP, Palm, Apple, Motorola, Google and Microsoft – combined!
Now Nokia is in crisis yes. After his Burning Platforms memo, the current designs on Symbian are rejected wholesale by global customers. And because of his self-inflicted market share suicide, Nokia is facing ruin. His one ‘hail mary’ pass is to have his Microsoft partnership – the only basket, where Nokia madly stuffed all its eggs on February – will make or break not just his career but that of 120,000 Nokia employees. And what does the Head Coach of Nokia do? He takes the current Superbowl champion quarterback and team off the field – while they were still winning the game – and replaces it not by the hotshot young Heismann Trophy winner backup quarterback (Asian phones and design) but rather the washed-out losers from some farm team nobody has eer heard from and who have not won championships literally in two decades.
So we come back to the car analogy. Lets leave Ford, lets go to BMW in Germany and use the same scenario. The new CEO comes in. The company needs its next car to be a hit, and a car in the luxury/performance range, not the discount ‘1 series’ end of BMW. The new BMW CEO looks at the rich heritage and deep engineering and design competence, who produced the 7 Series and the M performance cars and BMW’s Formula One cars and who sit on top of customer satisfaction surveys worldwide and are keeping BMW remarkably profitable where most rivals suffer and even arch-rival Mercedes Benz has fallen into quality problems. So what does the new CEO do to find a new hit luxury/performance car? He deliberately abandons all of BMW’s existing knowledge to find the best design expertise in luxury cars. Did he head to Japan and poach Lexus’s team? Or go to Italy to Maserati or where? He heads to India to that Tata Motors discount car team and hires it – who have never even designed a successful luxury car into their home market even – to design BMW’s most important flagship luxury car. I think many would view that as the dumbest management move ever. Note, he was not trying to build a cheap car or a car with efficient production etc. To deliberately exclude his arguably the world’s deepest knowhow in only luxury performance car design. And substitute some team that has no record whatsoever.
CRAZY IS AS CRAZY DOES
It is one thing to be delusional. It is a whole different thing to have those delusions guide the most important strategic decision you make for the company, a decision that is a make-or-break decision.
Do I mean that it is impossible to design a world-beater smartphone in California. Of course not. The iPhone is perfect evidence that it can be done. Good luck trying to poach Apple’s design team to Nokia haha.. And judging by Microsoft’s years with Zune, attempting just to be as Apple as you can, without being Apple, that is one sure way to throw away billions in R&D investment.
While we’re on Apple. Even if you design a superb hit product (iPhone 2G) – that may work in America and fail in the rest of the world, like the original iPhone 2G did. It was not until one full design iteration later, iPhone 3G, that Apple was able to penetrate Europe in meaningful ways, as Europe is about one year ahead of the USA in smartphones. And it took two iterations from Apple – two full years of Apple’s excellence in design, and the 3GS model, which finally broke through to Japan, South Korea, China etc. Asian consumers and tastes are at least 2 years ahead of the USA (and to be clear, for most Japanese consumers who buy the iPhone 4 today, they do not buy it as their primary phone – it is too primitive for that – the iPhone 4 is their second phone, and more a Western brand luxury ‘bling’ thing than a practical phone for Japan, starting with the lack of near field, mobile money, digital TV, waterproof, puny camera, etc..)
So yes, it is possible for an American smartphone design team to actually design a smartphone that is a hit in the USA (why then are Samsung, LG, HTC etc outselling Palm/HP, Motorola, Dell etc?). But even if you are as good as Apple, it would take several iterations of that design to win over the rest of the world – where 93% of all mobile phone consumers live. And even if somehow Stephen Elop’s SEAL Team 6 California sniper design gurus manage to out-do Apple by this Christmas, it would take them two more years of redesign to become a success in China, etc. Can Nokia wait that long? If Nokia abandons 5 percentage points of market share per quarter, and is now at 24% - they would only have about 5 quarters of viability left. I don’t think the CEO should be placing this kind of hyper-gamble on his company’s future, on untested (or rather, proven not to be winning) design competence.
What does this tell Nokia’s R&D teams? It tells them that while they were able to come up with truly desirable, superbly successful designs and features (and software, cut-and-paste, anyone? Multitasking, anyone?) like what Americans now crave like HD TV outputs, mobile banking, full USB memory stick/thumb drive connectivity, near field, 12 megapixel cameras, etc.. All this competence is going to be ignored, and some amateurs are given the job to design Nokia’s most important phone ever. Smart move, Elop. And where do you think Stephen Elop, who so proudly announce that Nokia will produce dual SIM phones. I wonder where that idea came from? Oh, yeah, those multi-SIM phones that proliferate California, eh? Most Americans don’t even know what a SIM card is. The dual SIM innovation came from China and today we have dual SIM phones in most Asian markets like here in Hong Kong, in India, Indonesia etc. And Samsung was one of the biggies doing them back in… 2008. Yeah. Asia leads the USA by at least what, three years by this measure.
And your great dual SIM innovation? This is ‘your’ way to salvage Nokia? Sorry to burst your bubble, but I was reporting it back in 2009 that Nokia - yes that same Nokia whose business cards you now carry - announced its intention to do dual SIM. So those incompetent Finnish Nokia design guys managed to ‘ignore’ this radical 2011 Stephen Elop innovation, back, well, a year before you were even hired to Nokia. So your obsolete Nokia design teams were at least 2 years ahead of the California-led USA innovation superstars of today.
It is totally true, that the USA based mobile industry has been revitalized after the iPhone. It is totally true, that many former PC and internet and media and advertising creative and design people are now finding a new opportunity in mobile. It is also true, that the USA is experiencing a (far too much delayed) surge in their mobile industry. Yes, there is true innovation there. But the world leadership in mobile is not in the USA, it is in Japan and much of Asia. If the new CEO of Nokia, Stephen Elop, wanted to shake up his Finnish design teams and show he is bold about taking on the world, he could have gone to the real world leaders in mobile innovations, design and invention – Asia (where Nokia of course has a lot of R&D and most of its production). That would have been bold and show it is an intelligent man, studying the industry where he is now a leader and where his industry’s leadership truly resides. This is particularly true of mobile phone handsets. The companies growing fastest in mobile are not Motorola, Palm, HP, Dell or if we add the Canadians, RIM. The fastest growing are Samsung of South Korea, HTC of Taiwan, LG of South Korea, ZTE of China, Huawei of China and G’Five of China. What of Apple? Yes, the iPhone is almost completely outsourced to Hon Hai ie Foxconn of Taiwan.
And the real science fiction stuff that you’ll have on your US based phones in about 2 or 3 years? Try the pico projector like on the Samsung Galaxy Beam that I have in my pocket now. Sharp of Japan has already released the first similar phone. 3D displays that do not need glasses (like is rumored for the next iPhone) already exist in Japan by Sharp and was just released by LG. Dual CPU smartphones? LG did the world’s first one this year. And like I said, dual SIM phones have existed here in Asia for many years, and in Japan most phones already are waterproof (for shower and bath use), another design feature coming to a pocket near you, in a couple of years.
Nokia is in-between. It is significantly ahead of the USA, but Americans have not been exposed to most Nokia superphones like the E7 in my other pocket now, which was widely launched in Europe and Asia, but US based carriers like normal, refuse to subsidise Nokia’s top phones. Americans never got to experience the N900 or the E90 Communicator or the N93 etc. They have been taught to think of Nokia as a bargain-basement brand. That is why it is normal for US-based pundits and analysts to think that Nokia has lost the plot, that it is obsolete, that Nokia is outdated.
Because the US tech industry has not been exposed to the world’s most advanced phones, they felt the iPhone was the Jesusphone when it launched, and have been smitten by each of its successive iterations. Hardly anyone in the USA bothered to mention, that what Apple was doing, was taking old Nokia standards, yes Nokia design staples, and copying those and sticking them onto the iPhone. This has more been the theme in European and Asian press, that the iPhone had not been the ultimate phone, while expensive and sexy yes, like an expensive watch, as a fashion statement. As I said, in Japan it’s the perfect second phone if you’re rich enough.
DON’T MISUNDERSTAND ME
First, don’t misunderstand me on Nokia’s culture. They HAD fallen behind. Not in understanding consumers or discovering the most useful and practical and desirable aspects of phone design and software. Nokia is the world champion at that, undefeated Superbowl champions for a dozen years running. Nokia’s ability to design superb smartphones is unparalleled (but not perfect).
Nokia has had huge troubles with execution, growing bloated and slow. Their premium phones are perennially delayed and ship with bugs. The N97 is the ultimate fiasco and the N8 was delayed three times and shipped a year behind schedule, with it came Nokia’s first fully usable touch-screen interface, Symbian S^3. But Nokia is undefeated in anticipating customer needs in handsets, and in bravely launching those concepts – often too early in fact (N-Gage, touch screens, etc). That is not an error in customer research or in design. It is an error in management and execution.
Nokia can learn very much from Apple about desirable branding. About simplicity in design for one style-oriented segment. But Nokia cannot become Apple. Nokia cannot survive by attempting to copy Apple’s iPhone alone. The iPhone is not the ultimate phone, it is one niche premium phone that helps Apple the niche premium luxury brand. Nokia is a mass market brand. Its like Ford abandoned all its car and SUV and truck models and only made Porsche clones.
You can accuse Nokia of many things, of delays, and most of all of poor execution of many good ideas. But for hte CEO to say Nokia isn't listening to customers, isn't leading in inventions and innovations in smartphone design (hardware and software) is pure baloney. Nokia is by far the most successful innovator of the smartphone industry, by a long mile - and its sales performance shows it, even now, after Stephen Elop started to destroy Nokia market share, it still outsells all smartphones made by all 6 USA based smartphones makers including Apple combined. Or if you prefer the Asia version - yes, add together all smartphones made by HTC of Taiwan, Samsung of South Korea, LG of South Korea, Sharp or Japan, Fujitsu of Japan, Kyocera of Japan, ZTE of China, Huawei of China, Lenovo of China, Acer of Taiwan and Pantech of South Korea, and you know what. Even in Q1 of 2011, Nokia's most disasterous smartphone quarter it still outsold not one or two or three of the above - all of the Asian smartphone makers - added together. That is global smartphone design competence superiority! Superiority!
There is nothing wrong in listening to Californian customer needs either. It may be a useful project to do some phone designs out of different parts of the world, from India and China, from Japan and Korea, from Finland and Sweden and yes, from California and Canada, like from Brazil or Mexico or Russia or South Africa.
But please understand, if Nokia can create the best phone for the USA, that somehow defeats even the next iPhone (a very tall order) – the lesson from the iPhone is, that what is best for laggard market America, takes a year more of work to succeed in Europe and two years of improvements before it succeeds in the most advanced countries of Asia. I don’t think Nokia has two more years beyond December 2011, to experiment with California designs to restore the Nokia brand globally.
THE COUNTDOWN HAS STARTED
But for the CEO of Nokia to say, Nokia has fallen behind the USA, it is patently false. For Nokia’s CEO to say Nokia is two years behind Apple. That is patently false. The opposite is true. If Nokia CEO says the world leadership is in Japan and Nokia should adopt more Japanese ideas, that would be in line with the truth. But to suggest, that the world’s most successful smartphone maker should abandon its rich heritage and knowhow, built from Finland and Asia, and go to laggard-market USA, and learn from the inventors of the Kin and Nexus One and Palm and Motorola – that is a recipe for failure. I am afraid an Apple envy project would be a perpetual drain on resources and result in Nokia’s version of Microsoft’ Zune, at best. Rival the Microsoft Kin disaster at worst.
We know now, that Stephen Elop has expressed the ‘USA leadership’ myth for many months and continues to live by it. That is unfortunate. We now learned that Nokia’s CEO has taken his delusion, and started to make strategic decisions based on that fantasy. That is a dangerous sign. I think now we have started to count the days that Stephen Elop can remain in his job as Nokia’s CEO. When the CEO of one of the world’s largest corporations deliberately suspends reality and makes decisions on his own version of wishful thinking, that is the sign of the end is coming. I would think Nokia’s Board is now reconsidering their decision and if they are wise, are asking their headhunters to seek a new candidate for CEO. I bet they are kicking themselves that they let Anssi Vanjoki leave the company..
That is my thinking about Delusion. And honestly, I am posting this with a heavy heart. I welcomed Stephen Elop warmly to our industry about a year ago on this blog and celebrated his early steps. It wasn't until that February 11 announcement of Microsoft that suddenly soured my taste to his management style. Now the more I examine it, especially as I wrote yesterday, the rushed timing of that annoucnement which has cost Nokia 14 Billion dollars this year alone - not the decision - the moronic timing in February for what should have been annouced in October - that and now this delusional thinking. My favorite past employer, my favorite client as a consultant (I can be pretty sure they'll never hire me again haha) and as a Finn our national pride company, is now led by a delusional man, and he is making massive unnecessarily risky gambles that make the conditions at Nokia worse. Nokia's platforms were not on fire, it was CEO Stephen Elop who is the pyromaniac who set his own platforms (both of them) on fire, so he could play fireman and 'save' the company to be seen as the hero. This is like a plot from a bad Hollywood movie and it makes me sick. Sorry to my readers, I am not a happy author-consultant after writing this long posting. But I think it needed to be said. I will be taking comments and responding.. (PS if your comment reflects the fact that you hadn't read the full 12,000 word essay here, I will mercilessly delete your comment. So think before you post..)
Ahonen's criticism about the 2G nature of the 2007 iPhone as evidence of the US' "trailing" in mobile technology is off mark. Note that even the US press commented in 2007 about how the iPhone ran on EDGE rather than 3G, and Jobs himself pre-emptively defended it by pointing to battery life. It wasn't the iPhone's hardware that impressed anyone (apart from the capacitive touchscreen). It was the software and the ease of use, which have long been Apple traits. Apple surmised, correctly, that they could make a splash and attract a following by introducing a subpar phone with a really great UI and tight integration with iTunes, and figure out how to make "real" phone hardware in the time it took the other manufacturers to catch up with its software. By the time they did (in 2010, where we can finally call the iPhone 4G the rough equivalent hardware-wise, and Android the rough equivalent software-wise), Apple had settled into a nice niche with the iPhone and had moved on to the next big thing with the iPad, entering another area that someone else (Microsoft in this case) had championed for the previous 10 years.
So, yes, it's true Apple didn't really innovate in terms of hardware, and never really has. However, where they succeeded was in creating the "community" to support their brand, and that is where they are innovative. I'm guessing that Steve Jobs had this in mind in 2001 when the first iPod was released (i.e. entry into the mobile space and tablets).
Posted by: KPOM | June 04, 2011 at 06:04 PM
Excellent post. Thank you for all the info. One thought tho, about that iPhone vs LG.
LG showed its phone late in 2006. Apple presented iPhone in february 2007. I refuse to believe they could come up with fully funcioning prototype to show off in just a few months. So i don't believe Apple copied in any way the LG phone. It just happened that they came up with very simmilar designs, as this design proved to be the most logical for such devices.
Second, Apple did work on a touchscreen tablet device (which later became the iPad) a long time before the iPhone. Steve Jobs himself ackowledged that they started on tablet and just later decided to make it into a phone. Which means the basic idea of a touchscreen device with big screen and button(s) at the bottom was already in progress at Apple. Of course, because of the secrecy Apple has, we will never know the exact details and timeline for their R&D. But i don't think we can nor should say that LG were the inventors for this device/style.
Posted by: Karlis | June 04, 2011 at 06:14 PM
When I read through Tomi's post, I'm reminded of an old Apple ad from the 1980s. Two men were staring into a computer lab, and one asked "which is the most powerful computer." The second went on and on about specs such as the one with the most "MIPS," while the first man observed someone walking past all the "more powerful" DOS PCs, sitting down in front of the Mac, getting his work done quickly, and moving on.
Everything Tomi says about Nokia phones being "ahead" of the iPhone is technically correct. Heck, even I opted for a Nokia N95 in 2007 (purchased from a Nokia flagship store) over the original iPhone. It was a technological marvel, to be sure, but after several attempts (N95-1, N95-3, N85, N97) I switched to a Nexus One last year and haven't looked back. Sure it isn't the fastest phone anymore, and the camera isn't any good, but the Nokia's always had something missing. Ahonen writes that "usability isn't innovation" but I think he's off mark. As that 1980s ad said, the most powerful computer is the one that people actually use. What Nokia was always missing was that ease of use and integration with everything else I have. The best in that space are Apple and Google right now.
That's the reason Nokia brought in a software guy to run the company. Nokia doesn't need anyone to tell them how to make a phone or produce hardware. However, what they didn't realize until late was that it's now the software that sells the phone, and not the phone that sells the software or even itself. Mobile devices are a mature area now. "Innovation" in the hardware front is less important now. When's the last time you worried about how "innovative" your refrigerator is, or which country is "ahead" in dishwasher design? While mobile phones haven't reached that point yet, they are quickly getting there. If Nokia is to stay relevant, they need to build up a service and software portfolio quickly, and apparently Elop concluded that building their own based around MeeGo wasn't going to cut it. Going with an unproven Windows Phone was risky, and it may yet fail, but it wasn't delusional.
Posted by: KPOM | June 04, 2011 at 06:38 PM
Heimo is right on:
"As an outsider I feel and see that what Nokia lacked was the courage to follow their ideas to the end. They had really cool technical innovations and ideas, but executed them ( on software and service level ) only to the half."
Even if the feature exists, if the user interface blocks you from easily accessing the feature, the feature is not really there to be used by the user.
If we look into Nokia's past, it is in fact usavility, which earned them success. The Jesus phone of gsm phones, Nokia 2110, invented the modern menu and softkey structure (and also the Nokia tune as ringtone) it was so much easier to use than any previous gsm phone and it was so much smaller. It was the iphone of the 1990's
Also, the first Symbian phones were rather easy to use as smartphones and the messaging client was just great at its time - first good e-mail experiences out there.
But up until then, the software stack was simple by today's standards and ever since, Nokia was terribly late with new OS releases. One in the first batch on nseries phones, N90, was delayed for months because it was the first phone running S60v3. Hardware was ready. The same story goes for N8. Hardware was ready on schedule, new release of software platform not.
Microsoft and Nokia have a chance if they can do it right. MS has had problems with hardware (overheating xboxes, anyone?) but with software it has done good job. Nokia on the other hand has always delivered on schedule with hardware. If they are able to combine only strengths, not weaknesses, they can succeed. Microsoft does have some cloud experience, at least far more than Nokia does, so they are prepared for the future.
If they can do the Wintel and repeat xboxes success there is a chance. But there are high risks also of course.
I agree that the communication of new strategy was suicidial. Not even grandmums of my friends buy a Symbian phone today. Even they know that Symbian is dead and I am not kidding here. I think that Elop with his b2b background did not quite understand consumer goods market.
In b2b it is quite normal to tell lifecycles of products and major shifts on technology to your customers long beforehand. b2b decisions are not as much emotional as consumer decisions. B2b do buy end of life platforms if the vendor says, that support will continue for years to come and if the discount is good. Goods are purchased for functionality rather than emotion. Consumers, on the other hand, make purchasing decisions more emotionally. Consumers buy brands which they can relate to - as long as it has sufficient functionality - not best functionality. Consumers hate to be associated with something that is "end of life". Is is a synonym of old and dying and who wants to be old and dying? Everyone wants to be young and growing and to be associated with a brand which represents that.
Posted by: JukkaM | June 04, 2011 at 07:20 PM
Molly Wood might object, but Ahonen should change the name of his blog to "Tomi Rants." His posts lately drone on and on and on but repeat the same dubious talking points.
- The US is FAR FAR FAR behind the rest of the world in anything and everything to do mobile (even though our carriers are putting up LTE networks and Europe's carriers are still working out license issues)
- The 2007 iPhone sucked but was transformational because Americans are stupid
- Symbian is the best OS ever, if only the American press were smart enough to say so, Nokia would be flying high right now.
- Elop is an idiot/delusional, because he's American (OK, Canadian, but close enough).
We get that you don't like Elop or Nokia's new strategy. However, they have taken their gamble, and we'll see how well it works or doesn't work over the coming months. Anyway, what has that to do with the rest of the industry? Android seems to be eating everyone's lunch right now, except for Apple's niche. Heck, Android is even #1 in Europe now. We all know Korea and Japan are miles ahead of the rest of us when it comes to the technical matters. However, for all the faults in the US infrastructure, dominance in the American market (or at least a major presence) is still a key for global relevance for technological goods. That's why all the big players want in, and why Nokia made a big mistake in largely abandoning the US market in the 2000s.
Posted by: KPOM | June 04, 2011 at 08:46 PM
Research recently conducted in the UK showed the demographic of iPhone users to be low skill, low education, low pay. I would suggest the success of the iPhone has much more to do with good marketing and the sound effects of flatulence than it does with productivity or eco-systems.
Posted by: Weave | June 04, 2011 at 09:40 PM
Tomi, I agree with nearly all your points. However, I think Elop is not deluded but makes everything on purpose to finally ruin Nokia and sell it to MS. Nokia doesn't allow to spy on its users and yankees are not happy with the independent European company that have independent strategy and "respect privacy" is not an empty phrase for Europeans.
And its useless to argue with the majority of US citizens because their mental capacity leaves much to be desired because they believe everything they are told by the mass media and refuse even to think by themselves. Here's an example, An ordinary US citizen supports usa trying to kill Muammar Gaddafi in Libya and even doesn't know that the majority of those peaceful rebels who are against "dictatorship" of Gaddafi are the members of Al Qaeda, ie terrorists because as we're all well informed Al Qaeda organized the September 11 attacks on the US. Doesn't it sound strange that US support those terrorists while Gaddafi is fighting against them? For the ordinary yankee there's nothing really to think about cause it's so difficult.
Al Qaeda backs Libyan protesters and condemns Gaddafi(reuters.com/article/2011/02/24/us-libya-alqaeda-idUSTRE71N12B20110224)
Posted by: Harris | June 04, 2011 at 11:18 PM
Hello Tomi!
Great arcticle - I for my part agree with you in most of the points. But there still are questions which are not adressed in your blog entry:
Elop is allowed by the board to dump symbian as part of his contract - he delays meego and two meego responsibles take their hats - and now they´re going to offer a meego consumer device before any WP7 device is brought to market?
Is the board of directors of Nokia forcing him to do so because otherwise Nokia doesn´t have ANY high tier device this year? Are they (board) getting nervous when they acually see their symbian sales rush down?
How does this fit in? What is their meego strategy, if they have one at all?
Posted by: Cloud_Connected | June 05, 2011 at 08:21 AM
Great post Tomi, keep them coming no matter how long they are.
I have linked to your post from my own blog where I have commented to your post and provided my take on the matter, but if you don't allow links I will copy and paste the content here directly instead.
http://www.mobileinfoplanet.com/2011/06/05/was-stephen-elop-right-to-go-with-wp7/
Posted by: MIP | June 05, 2011 at 01:15 PM
If there's any phone by any company that was an iPhone before the iPhone it was the Sony Ericsson P800 in 2002 (esp. when removing the keyboard and only using the touch screen - which was an intended way of using it as shown by supplying the keyboard-less cover with the product).
Full touch, full Internet, apps (and app market) etc, running an OS (Symbian) open for third party development.
Who cares? ;) It's only fun to remember for those of us who created the product (I'm one - that wasn't the unbiased part of this post).
The fact that Android was going to be popular with developers, thus consumers, thus carriers in the end was writing on the wall already late 2007/ beginning of 2008. While were I work influences when and how such insights are communicated, this blog post (and the linked one regarding It's Not About Smartphones) captures - I hope - the rationale:
http://blogs.sonyericsson.com/troedsangberg/speed-of-innovation/
Even earlier: Those in the business who were in London at Mobile Applications and OS (MAPOS) in December 2008 might recall the presentation I did there on how openness would change the mobile landscape completely. Sony Ericsson announced at the same time that we would work with Android by joining the Open Handset Alliance: http://www.openhandsetalliance.com/press_120908.html
The third party developer buzz came to explode out of Silicon Valley, which can be seen as natural since mobiles went from phones to computers, and that's why it's quite irrelevant whether less popular building blocks existed elsewhere. Some like to call it "eco system".
Today it's all about becoming #1 in Android ;) The next shift will be when the OS is of no concern and it's about becoming #1 in web applications.
I'm just surprised it took this long for Nokia to react. If the reaction (WP7, not Android) is the right one will be interesting to see.
Posted by: Troed Sångberg | June 05, 2011 at 01:16 PM
@Harris, this isn't the appropriate board (if there is one) for American-bashing. Take your closed-minded and hateful political views elsewhere.
Anyway, Android has passed Symbian in market share in Europe in Q1, and much of this was before the fateful announcement. By your argument, shall we conclude that the mental capacity of the average EU citizen leaves much to be desired because they believe everything their mass media tells them?
Posted by: KPOM | June 05, 2011 at 02:41 PM
Congratulations for such a brave post, Tomi.
Do you have any idea about how much of the huge political change in Finland in last polls can be attributed to Nokia demolition?
Posted by: Alberto Depiedra | June 05, 2011 at 02:42 PM
A passionate writing indeed and interesting read (as well as your blog as a whole).
What I find interesting is that in the interviews given to the Finnish press Elop has said that the future phone is designed and built in Finland - so to say that it's being designed and build in the USA is contradicting at least.
Elop is being a sales man and he tunes the message to the audience (and shareholders) in question. In USA he's competing with Google and Apple in 'being American' (Which Nokia is not by a fact, but he's stating the new reality).
In saying that the US is the leading edge he's being conforting and not factual, playing with the emotions of the audience rather than being an engineer and statistician (or a mobile analyst :))
Nokia will surely be the underdog for some time and I believe in the end Windows platform will be phased out by Nokia and they'll replace it with something new. The future lies in virtualized and adaptive multi-platform devices.
Posted by: janne | June 05, 2011 at 06:12 PM
Elop is doing some very discutable things, but I doubt he has lost his mind. I think he is a politician that will get away with this in time. He is making powerful friends in a space that is structurally not going to change over the next 15 years. He sold his soul to Microsoft, and is now consciously re-valuing Nokia for the imminent takeover. It is a bit of a shame he is too incompetent to make it look a bit less banal.
It is a bit scary to see that Americans still think their country IS the world. I am sorry it is not. If you want world-domination in mobile the US is just not that interesting. Apps? The 'ecosystem'? Nice for marketeers and advertising agencies.
Very sad, but the battle is for the 'bottom part' of the world. She who comes up with a smart-featurephone (cheap-smartphone) will be the winner. I don't see Apple being interesting in that so much, although there are those rumours... I do believe this is the sole reason for Google to have invested in Android (getting Africa online). And Nokia can be Microsoft's new HP for the emerging markets.
Apart from this I still think Nokia and Microsoft could be an interesting partnership, technology/product-wise. Look at what Microsoft did with a technology like Kinect. Really really interesting...
Posted by: Jurg | June 05, 2011 at 09:42 PM
@Troed Sångberg, interesting that you mention the SE P800. I actually owned one of them. I think I paid some ridiculous amount of money for it back in 2002 ($800 sounds about right). I did think it was ahead of its time, and I'm surprised in retrospect that Nokia didn't see the promise of UIQ back then (opting instead to go the non-touch route with S60).
Fast forwarding to 2007, when Android was being shopped around, I recall OPK making a comment about how he didn't think it would be much of a threat, and that Nokia wasn't interested, not that it was asked. Nokia's market cap was close to Apple's at that time (both were around $150 billion), and I'm wondering if there weren't any C-level execs at the time (or perhaps some EVPs or SVPs) who thought it might be worth it for Nokia to develop an Android phone as a side project. Sure they were all gung ho about how great S60 Touch (as Symbian^1 was referred to back that) was going to be, and iPhone had only recently made a rather muted initial European launch (it was still in the EDGE era), but what would it have cost them to have a small US team working on an Android phone for the US market? Imagine how differently things might have turned out.
Well, you can only look back for so long. Symbian's on its way out, and Google is now in a position where it can turn away Nokia (and essentially did). WP7.5 is the future and for Finland's sake, Nokia's critics there ought to stop wishing to turn back the clock and instead work for a successful WP7.5 launch.
Posted by: KPOM | June 05, 2011 at 10:05 PM
Check this out: "I am not a Trojan Horse" claims Nokia's neigh-sayer Elop
http://www.telecomtv.com/comspace_newsDetail.aspx?n=47704&id=e9381817-0593-417a-8639-c4c53e2a2a10
Posted by: Ben Eng | June 06, 2011 at 05:14 AM
I tried my best to resist the urge to pile on ....
Sorry, I failed. :-)
Unfortunately Tomi, I must agree with many others that the deluded individual here isn't Elop - it's you.
You seem to define a smartphone as this list of features with check-boxes next to them and as per your definition, the most competent smartphone is the one that checks the most boxes and an "innovator" is one who checks the boxes first. Usability, in your view is yet another check-box. So, as per that view, Apple may have been the first to check the "usability" box but Nokia (and others) have had a lot of the other boxes checked for quite some time now.
The problem with that view is that usability *isn't* merely yet another feature. It affects every other part of the phone and opens up features to users who were not even aware that such features existed. Check-boxes are for power users and smartphones aren't catering to just power uses anymore. The average smartphone user isn't going to find one tenth of the features in the average smartphone unless they are made accessible to him/her. If they aren't easily accessible, they won't get used. As someone else put it in one of the previous comments - having the best gun in the world is absolutely no use if you can't find the trigger.
When we talk about usability, we're talking about software - not hardware. Nokia and the Asian vendors did a tremendous job in hardware innovation but software was always an afterthought. What Apple did was to make smartphones less about the hardware and more about the software and in doing so, they turned the market upside down. When the original iPhone came out it was admittedly a less-than-capable phone but what attracted people to the phone was the following combination of features
1. A capacitive touchscreen
2. A gesture-based multitouch interface
3. A browser based on WebKit that allowed full websites to be displayed on the phone.
Now take each of these things individually and you are justified in claiming that someone other than Apple is the innovator. The iPhone was not the first phone with a capacitive touchscreen - the LG Prada had it before the iPhone. Apple did not invent multitouch gesture-based interfaces - they bought the technology. They were certainly not the first company with a WebKit-based mobile browser - Nokia had that long before Apple.
However, ask yourself the following question. Prior to the iPhone, how many phones were released that had the above combination of features. The answer is - none. The iPhone was the first to combine these features. And how many phones have this combination of features today? Pretty much every single high-end phone does. If that isn't innovation, I don't know what is.
Today, the two fastest growing smartphone platforms in the world (iOS and Android) are developed in the US. In addition, you have platforms like Microsoft Windows Phone and WebOS which are developed here. Even Blackberry OS, while not developed in the US, is from North America. Elop is right - the US is where the action is in smartphone software - and, as I mentioned earlier, smartphone are now more about the software than the hardware. The hardware is getting commoditized. It is fast becoming clear that if you want to make a lot of money in the smartphone space, you need to control a software platform.
- HCE
Posted by: HCE | June 06, 2011 at 07:41 AM
1. Your comparison of mobile phone industry with car industry is lame.
2. So it is Jobs fault after all. If only Jobs didn't return in Apple in late 90's and if he didn't any vision of future Nokia would still convince you, themselves and everybody else that Symbian rocks.
3. You spend good deal of your article convincing yourself and everybody else that Apple is only following what Nokia invented before. This is also lame, yes IBM invented PC industry and Nokia invented smartphone. What does this mean? Using your outdated car industry comparison how does the Japanese car industry fares. Didn't invent diesel and otto technology, didn't invent ABS brakes, in fact adopted technology from competition. Does this make them less worthy? Is Tag Heuer better because the company was founded 24 years before Breitling?
4. You can blog at a rate of thousand and thousand words of day, but as not to go into Groundhog day syndrom Nokia's problems are vey well documented and at the end of the day of their own doing.
5. General buying audinece have sent Nokia strong message what they think about their products, especially in the smartphone segment. This blog is just a mirror of Nokia's business practice. Instead of making changes to their portfolio and overall business practice they spent good part of their energy convincing everybody else that their way is the right way?
6. Yes the 2007 iPhone was no smartphone. Missed all the features the competition had. But guess what? They listened to their customers and in 4 short years made an OS second to none. And you can be sure that today's announcement of iOS5 will bring new improvments. And these improvements can be actually seen and used by their users. Nokia's Symbian improvements were twofold. Yes we changed something in the code, and we give you new theme! It took them YEARS to implement auto-lock, for example! With Apple/Android users get added features they actually could see and use. My God HTC desire came with Andorid 2.1, and you can update it to 2.2 and even 2.3. Nokia sees this as an missed opportunity to sell millions od 2.2 and 2.3 devices!
7. Nokia is not listening to its customer. It only started to listen recently after HTC, Samsung, Appla, Android and likes came for their share of Nokia Pie. I don't know about Nokia innovation, but if those innovations are kept in the labaratory and never implemented then they are not innovations. Don't tell me that implementation of international standards such as WI-Fi and Bluetooth are result of R&D.
Back in 2007 Nokia issued a stetement about introduction of Haptikos technology to basically make screen give the user tactile feedback (http://gizmodo.com/319318/nokias-haptikos-technology-makes-physical-keyboards-obsolete-hopefully). Where is that technology today? And after Apple and Nokia successfully implement it Nokia will be taken by surprise and will only utter "Yes, but we invented smartphone". Invention without implementation can only guarantee you royalty payments through oatents, not a household wordwide marketed brand name?
Nokia has failed miserably. Had n-gage in 2003, shipped Nokia 770 mamemo device in 2005, bought Intellisync in 2006 (think active sync), bought Navteq in 2008, had ovi store introduced in 2009, in 2007 they bought Enpocket, a supplier of mobile advertising technology and services. They introduced Comes with music in 2008.
This has iPhone written all over. Nokia was probably the best positioned mobile phone company in the world few years go. They could go any direction they wished. They decided to peddle millions and million and millions of cheap plastic phones to the third world markets, keeping their market share and offsetting any loss of smartphone market share.
From 2005/2006 Nokia was run ba a ship of fools, and now you call Elop delusional!
Posted by: Michael | June 06, 2011 at 11:19 AM
Hi everyone,
As a regular here I agree many times with Toni's remarks, but now I am going to differ on something substantial to me: who leads and who doesn't.
To me it seems clear that since the iPhone appearance the whole mobile ecosystem has been disrupted in a way that doesn't depend only on devices' features: the launch of the iPhone has made effectively available -and sexy- to millions Internet browsing on a phone. The App Store has achieved a degree of integration content-device that has been favored with people's interest -and money-, and has created an interesting, global environment for developers in a way that Nokia or others never did.
With Android, Google has set up an open community of developers who work to offer users the best of their talent, and has offered to device makers a cheap, customizable -OK, at a perhaps costly price of fragmentation- opportunity. The walls of the garden dissappeared!
What is DRIVING industry: is that the Amoled screen? Is that the new chips? the 3D?the wi-fi? Femtocells? All that is important, but not disruptive, to my understanding. I would rather turn my head towards aggregation activities, operating systems, communities made of users/developers.
I wouldn't like to sound arrogant, but the rest resemble rather to the "box movers" so many times discussed here, than to truly innovators who can address to a mass audience a new value proposition. So who is a leader and who a laggard?
And that's my two cents.
Posted by: Andreu Castellet | June 06, 2011 at 12:53 PM
Tomi, as usual, your posts are long and interesting. I wanted to remember (becouse I'm sure you already knew) that besides China Mobile, there is other operator backing MeeGo up: Movistar. It is one of the biggest operators, and is getting bigger (specially in latin america) by the days. I doubt MeeGo will die (anytime soon), nor Nokia, but in the long run, who do you think will outlive who?
Posted by: Jonay | June 06, 2011 at 03:15 PM