It's amazing to see how many Nokia fanboys are in gaping disbelief over Stephen Elop's "burning platform" memo. Despite confirmation by the BBC and other outlets that it's real, guys like Tomi Ahonen are still in complete freaking denial. (He first claimed it was a hoax, now he thinks that the memo could be "taken out of context". Nice try.)
It's impressive to see a CEO being so honest about how messed up things are -- at least in such a semi-public manner. There's no denying that Nokia is in big trouble. Four months ago when Elop joined Nokia I wrote about its massive structural problems and the enormous challenges he faced in trying to turn around a company that had internalized a culture of mediocrity (gdgt.com/discuss/nokias-fear-failure-as-im-sure-yo...). The memo is the words of a man coming to terms with the reality that he is in an awful situation with no good options.
Let's face the facts: the reason Nokia doesn't have any good options is because the company spent the past several years squandering opportunities and making lots of poor strategic decisions. There is no good reason that Nokia is in the position it's in. It has been the number one seller of phones for years. Nokia has often been the first to market with new innovations, but then because of a poverty of strategic vision does nothing with these innovations, often abandoning them only to see someone else figure out how to do it right.
Elop got it right that it's about ecosystems now. That's something that anyone who studied the rise of the PC would see right away. Windows dominated the desktop because Microsoft was able to create a vibrant ecosystem of OEMs and ISVs that didn't really see any serious challenge until the rise of mobile computing. The network effect was just too strong By being essentially on the outside of any viable ecosystem -- Symbian is a mess and Meego may be DOA -- Nokia has found itself far from the center of the smartphone world. Nokia now has to either dig in and find a way to create its own mobile ecosystem, complete with amazing handsets and a world-class OS that developers want to make apps for (something which is becoming harder with each passing day as iOS and Android further entrench themselves), or it needs to suck it up and work with an existing platform and try and use its massive resources to become the dominant player on that platform.
I'd guess that within Nokia the inclination is to go with the first option. They'd have more control over their destiny, but the big risk here is that they spend a couple of years working on something and it just falls flat -- and at that point it's game over. (Sound familiar? See: Palm two years ago.) If Nokia bets big on being able to create a game-changing ecosystem and it fails to catch on in the market, there will be no salvaging the company at that point. It would continue to see its profits and marketshare erode and would almost certainly be scooped up one its competitors (or possibly Microsoft) for a bargain price.
The mobile market is moving so quickly now that for Nokia to succeed with a strategy like this they don't need to just catch up with where everyone else will be in a year or two, they would need to get everything right. That doesn't just mean introducing a mobile OS with features that blow everyone away and that runs on really advanced, competitively-priced handsets, it means getting wireless carriers around the world behind it PLUS getting developers who are making money from iOS and Android to support Nokia's OS as third (or by that point probably fourth or even fifth) mobile platform for which to make apps. All that is going to be tough, and the only thing Nokia has going for it right now is that it's so large it can still afford to put money and manpower into something like this. Again, we saw what happened when a smaller, cash-strapped rival like Palm tried to do this.
Going with Android or Windows Phone 7 would make it possible for Nokia to more or less hit the ground running and get something out relatively quickly. I have no doubt that the prospect of a Nokia handset running either OS worries Samsung, HTC, Motorola, Sony Ericsson, and LG, all of which are trying furiously to compete with the iPhone right now. The last thing they want is for Nokia to have a serious option in the high-end of the market. Nokia would surely put developer resources into creating great Android or WP7 apps and experiences that would help distinguish it from the pack, but would it be enough? The market is overcrowded with Android phones right now, and Nokia isn't necessarily going to dominate it or even stand out, at least not without a ferocious fight.
Working with Windows Phone 7 is a little trickier to call, since it's so new and it's not clear what its trajectory is yet. I don't doubt that Microsoft has been lobbying Nokia to give it a try (Elop is ex-Microsoft, after all), presumably with enticements like deeply discounted licenses and promises of tons of development support. It'd be a big win for Microsoft, and Windows Phone 7 is early enough that Nokia could have a much bigger impact on its future course than it would on Android's. But that again might not be enough to save Nokia (although adopting WP7 would probably convince the US carriers to work with them).
So it may be that Nokia hedges its bets and introduces either Android or WP7 on a smattering of handsets in order to buy itself some time while it works on creating its own ecosystem. It may even be that when Elop speaks at Nokia's Capital Markets Day on Friday he'll pull a phone running Android or WP7 out of his pocket. Buying some time like this isn't an elegant strategy, and it'll piss off the Symbian diehards, but it's probably the least bad of Nokia's bad options. As Elop noted, standing still isn't going to work when there's fire all around you.
Discussion about
Thoughts on Nokia's Dilemma
The thing that stood out for me is his mention of losing share in emerging markets, which is shocking. Having lived in and spent a lot of time in developing countries, it's pretty surprising to hear that. To me, Android is the perfect OS to bring cheap handheld computing to the rest of the world and I hope they go for that over WP7 - much as I love it, it doesn't lend itself to low cost markets. Anyway, I hope Elop takes aim at these markets and places like Europe instead of trying to get back into the US. Might be a bit late for that.
How long ago did you live in developing countries? I grew up in one in the nineties, and Nokia ruled at that time. I visit said countries from time to time, and my observation has been that while Nokia is still very dominant, they have lost significant marketshare to cheap Chinese and Indian handsets. These handsets are usually from new companies, are unbranded or knockoffs (aka KIRF).
E.g., one of the more popular Indian brands is Intex www.intexmobile.in/ [I hope this site practices good hygiene by using rel=nofollow]. And never forget Nokla, Somy and Sany Ericssan. More here: www.engadget.com/tag/kirf/.
E.g., one of the more popular Indian brands is Intex www.intexmobile.in/ [I hope this site practices good hygiene by using rel=nofollow]. And never forget Nokla, Somy and Sany Ericssan. More here: www.engadget.com/tag/kirf/.
This is in the last 5 years or so in W Africa. Obviously it varies widely from country to country, and W Africa is 75% of my experience. I was cheapo phone shopping in Liberia last year and Nokia was about 50% of the stuff in the store, and the primary option under $50. I'm sure Asian countries and North/East Africa have better access to knockoffs coming from countries with manufacturing capacity like China and India.
I agree, although I don't think it should be a temporary move. Nokia should be making mobile phones in general, not just Symbian or Meego phones. There's plenty of room for innovation in hardware, customization, and apps. It's an increasingly absurd notion that they want to run their own app ecosystem, because no other phone manufacturer will use it, so it's bound to be niche at best.
Yes, I know Apple does it. Apple is the very definition of niche.
Yes, I know Apple does it. Apple is the very definition of niche.
Am I the only one who thinks the better option might be for Nokia to license webOS from HP? They have shown a willingness to deal - with Intel earlier - and HP would probably welcome the partnership in order to build the broader brand of webOS, since they want to expand that beyond phones and tablets into netbooks, and touch-enabled laptops and desktops.
Am I the only one who has considered that Nokia may actually license WebOS from HP? This would make more sense for them than either android or WP7.
First, it gives them instant differentiation from all the other smartphones (except the Pre phones and Veer). I'm sure there must be people who have looked at WebOS and wanted to try it, but balked at the present hardware options. It would be a good advertising bullet point. I might even consider WebOS at that point. None of the just-announced HP phones look interesting to me at all. So, no matter how cool WebOS may be, I won't even consider it if I have to use a Pre to get it.
Second, this would be good for HP because, if they want to build up WebOS as a platform that interests developers, they are going to need more than the Pre 3 and Veer to gain momentum. Additionally, it gives them the leverage that Nokia has with carriers to get WebOS onto other networks that aren't interested in the Pre family.
Third, it gives Nokia a viable solution to venture back into other GSM/CDMA form factors. Perhaps they could release a new version of that netbook they made, only this time running WebOS. That would be pretty sweet, and would get them instantly into the market against the Chrome OS devices. They would also have an option to enter the tablet market instantly.
Tomorrow will tell if I am even in the ballpark, but if I am wrong, I hope someone at Nokia reads this message and considers it. I don't think that android or WP7 will save them as they will be just another device in a sea of similar devices. With WebOS, however, they can save themselves by standing out from the crowd with a truly interesting software offering, and save HP by bringing some decent hardware to the WebOS platform.
First, it gives them instant differentiation from all the other smartphones (except the Pre phones and Veer). I'm sure there must be people who have looked at WebOS and wanted to try it, but balked at the present hardware options. It would be a good advertising bullet point. I might even consider WebOS at that point. None of the just-announced HP phones look interesting to me at all. So, no matter how cool WebOS may be, I won't even consider it if I have to use a Pre to get it.
Second, this would be good for HP because, if they want to build up WebOS as a platform that interests developers, they are going to need more than the Pre 3 and Veer to gain momentum. Additionally, it gives them the leverage that Nokia has with carriers to get WebOS onto other networks that aren't interested in the Pre family.
Third, it gives Nokia a viable solution to venture back into other GSM/CDMA form factors. Perhaps they could release a new version of that netbook they made, only this time running WebOS. That would be pretty sweet, and would get them instantly into the market against the Chrome OS devices. They would also have an option to enter the tablet market instantly.
Tomorrow will tell if I am even in the ballpark, but if I am wrong, I hope someone at Nokia reads this message and considers it. I don't think that android or WP7 will save them as they will be just another device in a sea of similar devices. With WebOS, however, they can save themselves by standing out from the crowd with a truly interesting software offering, and save HP by bringing some decent hardware to the WebOS platform.
It's an interestion notion, but I am certain it's not on the table. HP wants to have a platform of its own, and licensing webOS brings a whole host of business and technical issues that I doubt they want to deal with right now.
What Nokia should have done is bought webOS when they had the chance.
What Nokia should have done is bought webOS when they had the chance.
yup couldn't agree more. My fear for webOS is that HP just doesn't have Apple's marketing expertise ie give them less functionality, charge them more and they are desperate for more!
Still praise there margins. My sister (uk resident), couldn't make her sim work in Australia, one appointment at the Genius bar and she walks out with a replacement phone. Anyone else know a tech company that can afford to do that.
Still praise there margins. My sister (uk resident), couldn't make her sim work in Australia, one appointment at the Genius bar and she walks out with a replacement phone. Anyone else know a tech company that can afford to do that.
Not sure about this comment system... might end up with three posts, but I can't tell.
Anyway. I have some software in the Android Market. Last month i noticed a few hits from phones claiming to be Nokia phones when checking my Analytics. Looks like someone might be experimenting with Android at Nokia.
I for one loved my Nokia phones. IMO they had the best user experience and features (I still have my pre iOS/aOS Nokia) and i for one would be very disappointed to seem them die out.
At the moment I put them in the same boat as BlackBerry, except that I don't seem them doing anything about it, where RIM is at least trying to join the next migration.
Anyway. I have some software in the Android Market. Last month i noticed a few hits from phones claiming to be Nokia phones when checking my Analytics. Looks like someone might be experimenting with Android at Nokia.
I for one loved my Nokia phones. IMO they had the best user experience and features (I still have my pre iOS/aOS Nokia) and i for one would be very disappointed to seem them die out.
At the moment I put them in the same boat as BlackBerry, except that I don't seem them doing anything about it, where RIM is at least trying to join the next migration.
OT: Oh man, I almost spit my lunch all over my laptop trying to hold a laugh in when I saw your avatar in full size in the email I got. Hilarious!
All I know is the last time I owned a Nokia phone, the only mobile device with a QWERTY keyboard that existed was the Palm Pilot with a black and white screen. Aside from that, I haven't SEEN a Nokia phone in real life in 2 years (that I can recall).
I think their physical designs are unattractive, not because of the cosmetic appeal (they lack that, too) but because I don't see how the designs can FUNCTION as well as an iPhone or Android phone. Same applies to their OS...whatever its supposed to be. What kills me is that I feel the same way about WP7 and they plan to partner with Microsoft on this front! Nokia's problem is that they were the first big player in the game, got cocky, then they put the blind fold on and went to sleep. Now they are waking up a bit too late.
I think their physical designs are unattractive, not because of the cosmetic appeal (they lack that, too) but because I don't see how the designs can FUNCTION as well as an iPhone or Android phone. Same applies to their OS...whatever its supposed to be. What kills me is that I feel the same way about WP7 and they plan to partner with Microsoft on this front! Nokia's problem is that they were the first big player in the game, got cocky, then they put the blind fold on and went to sleep. Now they are waking up a bit too late.
It seems Nokia may finally be on the verge of realizing that going forward it needs to choose whether it will be a hardware company, a software company, or both (as it is today).
The reasons why most of these entrenched players want to own their products end to end are pretty clear. It's far more difficult to differentiate and innovate when you're not completely in control of the full software stack. You don't have to look very hard at the history of the PC market to see why one wouldn't want to end up like one of the many low-margin commodity players licensing someone else's high-margin OS.
But the fact is it took the iPhone (and later Android) to make existing players acutely aware that their lack of expertise in software and user experience was holding the mobile space down, and that the only way forward was to ditch the old, early way of doing things in the mobile world. Motorola, Samsung, LG, Sony Ericsson, and nearly every other major entrenched player in mobile realized (some sooner than others) that there's no shame in letting someone else manage the OS if it means doing a better job at their core competency: creating (hopefully) compelling devices at scale.
Nokia has a rich history of capable, sometimes industry leading hardware, and they made a lot of hay back in the days when a few geeky phones was really all you needed to get by in the mid to high range market. But here we are in 2011 and Nokia's only now starting to realize just how long it's been blind to the fact that user experience and a cohesive ecosystem truly matters, and that you can't saddle your phones with some of the worst mobile software ever created and not expect to be swept away.
Now, if you ask me, the decision here is pretty clear. Whether or not you agree that Nokia's competency is as a hardware company -- not as a hardware AND software company -- it's becoming increasingly obvious that their current lineup isn't the way into the future. MeeGo seems like a non-starter (plus, it sounds like Nokia's lone MeeGo phone has already been canned), and Symbian is already years beyond the end of its useful life.
Nokia needs to address the short term AND the long term, but going scorched-earth á la Palm and Windows Mobile only going to put them another couple years behind if they started today, and running with what they've got now until 2013 or 2014 simply isn't an option. If they're going to bridge that gap for the next few years, Nokia's going to have to start turning the ship around now, and I think that's going to mean ditching the dead weight and getting behind Windows Phone 7 or Android.
The reasons why most of these entrenched players want to own their products end to end are pretty clear. It's far more difficult to differentiate and innovate when you're not completely in control of the full software stack. You don't have to look very hard at the history of the PC market to see why one wouldn't want to end up like one of the many low-margin commodity players licensing someone else's high-margin OS.
But the fact is it took the iPhone (and later Android) to make existing players acutely aware that their lack of expertise in software and user experience was holding the mobile space down, and that the only way forward was to ditch the old, early way of doing things in the mobile world. Motorola, Samsung, LG, Sony Ericsson, and nearly every other major entrenched player in mobile realized (some sooner than others) that there's no shame in letting someone else manage the OS if it means doing a better job at their core competency: creating (hopefully) compelling devices at scale.
Nokia has a rich history of capable, sometimes industry leading hardware, and they made a lot of hay back in the days when a few geeky phones was really all you needed to get by in the mid to high range market. But here we are in 2011 and Nokia's only now starting to realize just how long it's been blind to the fact that user experience and a cohesive ecosystem truly matters, and that you can't saddle your phones with some of the worst mobile software ever created and not expect to be swept away.
Now, if you ask me, the decision here is pretty clear. Whether or not you agree that Nokia's competency is as a hardware company -- not as a hardware AND software company -- it's becoming increasingly obvious that their current lineup isn't the way into the future. MeeGo seems like a non-starter (plus, it sounds like Nokia's lone MeeGo phone has already been canned), and Symbian is already years beyond the end of its useful life.
Nokia needs to address the short term AND the long term, but going scorched-earth á la Palm and Windows Mobile only going to put them another couple years behind if they started today, and running with what they've got now until 2013 or 2014 simply isn't an option. If they're going to bridge that gap for the next few years, Nokia's going to have to start turning the ship around now, and I think that's going to mean ditching the dead weight and getting behind Windows Phone 7 or Android.
Hello Peter in response to your Twitter this morning I have read your full article. I replied to you on my iPhone. Having read the article I agree with you however it will be stunning if Nokia's Stephen Elop does not follow through with your advise and continues down it road. Symbian is dead, agreed but Meego has potential as an Open source Os, just give it away and turn it into something like Linux, a model of Scandinavian initiative.
Some good points here. I think americans under estimate the massive following and great reputation that Nokia ( with me Nok-ee-ah NOT know-kee-ah) has in Europe. I recently retired my bomb proof e71 which was an amazing phone which still does some things better than my Galaxy S. Samsung was my next choice as Nokia don't do android.. If Nokia opt for Android there will be a queue a mile long to get a hold of it.
Nokia going with Windows Phone 7 or Android reminds me quite a bit of SGI switching to Windows NT. Given the relative share of smart phones to feature / dumb phones, Nokia still has time and a user base to build their own thing. They have the building blocks (e.g. QT) and time.
Maybe I agree cause I've been a Nokia fanboi (albeit jaded), but having used Maemo extensively imho it has a lot of great things there (UI, features, ease of development etc) that was treated like a step-child by management and left to rot for what seems like ever.
Former Nokia people have been coming out for the past 2 years saying that it works like a bureaucratic quagmire where divisions are in-fighting and technological decisions are killed for short-term profits.
An organisational restructuring would not be a bad first move.
Former Nokia people have been coming out for the past 2 years saying that it works like a bureaucratic quagmire where divisions are in-fighting and technological decisions are killed for short-term profits.
An organisational restructuring would not be a bad first move.
I disagree. They don't have time. They need to get things moving now, and they can't do that by focusing on trying to catch their outdated OSes up to the competition. With they way Nokia has been falling out of favor and experiencing a decline in business, they definitely don't have the ability or the money to work at the same pace as Apple, Google, and Microsoft in the mobile OS space.
With the pieces they already have, they have the time. The feature phone to smart phone conversion is still young. Look at the numbers they are reporting and how far their reach is. Also, they have the money to build the software to compete. Small high skill teams aren't that costly.
Using Android or WP7 would make them another "me too" builder and other companies are setup better for that. If they aren't in control of their own software / hardware integration, then they won't survive. The best thing they could do is pick one of their inhouse OSes and get rid of their massive bureaucracy.
Using Android or WP7 would make them another "me too" builder and other companies are setup better for that. If they aren't in control of their own software / hardware integration, then they won't survive. The best thing they could do is pick one of their inhouse OSes and get rid of their massive bureaucracy.
Nokia should consider the high end market for Android and WP7.
For Android, with its coffers, it is possible for Nokia to not only secure next generation electronic hardware but also lock brief exclusivity (quad cores, dual screen, etc).
To separate Nokia apart within the WP7 market, Nokia can use "exotic" physical hardware materials (aluminium, carbon fiber, etc).
Nokia can really push the price point because there exists a market with the wallet to match. As shown by custom colored and jeweled iphones and the likes. Nokia's existing clientele will definitely not be alienated by this.
For Android, with its coffers, it is possible for Nokia to not only secure next generation electronic hardware but also lock brief exclusivity (quad cores, dual screen, etc).
To separate Nokia apart within the WP7 market, Nokia can use "exotic" physical hardware materials (aluminium, carbon fiber, etc).
Nokia can really push the price point because there exists a market with the wallet to match. As shown by custom colored and jeweled iphones and the likes. Nokia's existing clientele will definitely not be alienated by this.
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I really think that they need to focus purely on hardware at this point. The market is too crowded for Nokia to jump in with a new ecosystem, and there is not enough time to shore up their existing platforms to the point where they are even close to competitive.
If they threw out their OSes and just went with Android or WP7, I could see a lot of possiblities for their future. I don't see it as something where they would be buying time, it could be a permanent solution. Of course, like you mentioned, that could piss of the Symbian folks and they'd need to lay off most of their software staff, but they could really do some great things if they weren't splittling their attention and resources across 19,782 different projects while no one department talks to the others.
If they threw out their OSes and just went with Android or WP7, I could see a lot of possiblities for their future. I don't see it as something where they would be buying time, it could be a permanent solution. Of course, like you mentioned, that could piss of the Symbian folks and they'd need to lay off most of their software staff, but they could really do some great things if they weren't splittling their attention and resources across 19,782 different projects while no one department talks to the others.
No. Nearly all of Shenzen really just churns out crap. I'm talking about Nokia-branded high end hardware similar to what HTC is doing with both Android and WP7 (and doing it well I might add). That way they could have a small software team working on making either Android or WP7 work on their devices while focusing most of their budget on great hardware design and actually bringing phones to market fast instead of having months of delays. They're already in a much better position to market their phones globally than almost anyone else so I think it would work out really nicely.
I see your point.
But with the WP7 restrictions there is not a lot of opportunity to differentiate and with Android its an arms race where every phone becomes meh by the time it hits shelves because another company has announced a product that has bloggers salivating. This along with the fast declines in margins is a recipe for disaster for most manufacturers.
Its a short term win but hard to be a sustainable business when you are the incumbent (in terms of global size).
But with the WP7 restrictions there is not a lot of opportunity to differentiate and with Android its an arms race where every phone becomes meh by the time it hits shelves because another company has announced a product that has bloggers salivating. This along with the fast declines in margins is a recipe for disaster for most manufacturers.
Its a short term win but hard to be a sustainable business when you are the incumbent (in terms of global size).
