Distilling market noise into market sense

VisionMobile is the leading research company in the app economy. Our Developer Economics research program tracks developer experiences across platforms, revenues, apps, tools, APIs, segments and regions, via the largest, most global developer surveys.

How to save Nokia (from itself)

[Who can save Nokia from a tumbling market valuation, declining margins and product failures? Guest author Thucydides Sigs deconstructs Nokia's culture and explains why an acquisition would be the best next step for Nokia]

How to save Nokia (from itself)

When CEO Olli-Pekka Kallasvuo took control of Nokia in 2006, the stock was at $25 per share. In late July 2010, the stock was around $8, the same level as in the late nineties. Ouch. In just four years, two thirds of shareholder equity is gone.

 

If  we go a step further, and compare market cap and sales by number of units, we observe an even more disturbing picture: Nokia’s valuation was at $33B on sales of 125M handsets last quarter; the same figures for Motorola were $17B on 12M handsets and for RIM $31B on 10.6M handsets. The math is pretty simple: Nokia is valued almost as much as RIM, but ships 10 times fewer MORE handsets.

The trend is not looking good for Nokia. No wonder that we have seen news reports of the board finally looking for a new CEO. Is a CEO change what it takes to fix Nokia? Will it make a difference if a foreigner takes over the proud Finnish company? Is Nokia beyond fixing – a dinosaur who can’t survive the climate change – or is there something that can be done to transform the company?

I don’t think Nokia is unfixable. Nokia has a huge potential: amazing global consumer brand, a very strong IP war chest and deep understanding of where the market is heading.

Yes, Nokia does know where the market is going and it always has known. From launching the Nokia Communicator in 1996… and attempting to expand into services (Ovi is the latest strategic attempt), Nokia has known where it wanted and needed to go. But the problem has been and still is the execution. The Finnish giant just fails to move and adapt fast enough to the chaotic, rapidly evolving software and internet market.

What is holding the execution back? More than anything, it’s the company’s culture. And before I dive into it the details, I have to preemptively apologize; like any discussion of a large corporation or a regional culture, one has to use generalizations. Yes, there are always exceptions, but if we want to analyze the culture we need to resort to generalizations. Some readers might find this offensive. Don’t say you haven’t been warned.

Nokia takes great pride in being “Smart, Cold Blooded Vikings.” Thoughtful and tough, strategic and careful, they don’t take chances. They calculate, analyze and think before they react. And “if it takes time, that’s fine”. This is an admirable approach. But as Google’s Shona Brown pointed out in “Competing on the Edge: Strategy as Structured Chaos“, if you try to analyze and manage chaos (or any environment which is rapidly changing in multiple dimensions), that might take a while. Plus, if your analysis takes longer than the rate of change, you are actually moving backward. In the age of fast moving internet and web, the best strategies are coming from the bottom up, and are best developed through experimentation rather than long analytical cycles.

This is the antithesis to what the Nokia culture is all about. And to a large extent, the culture goes beyond Nokia; it is deeply rooted in the Finnish way of living. Nokia is a Finnish company and I would argue that you can’t take the Finnish out of Nokia. Yes, some Nokians – especially those who spent parts of their careers in the US – know how to, and often do, operate differently. And in the last re-org some good “Nokia 2.0″ people have moved upward.

But overall, Nokia is a reflection of the Finnish culture: “Smart, cold blooded”, strategic, cautious, Vikings. This should not reflect as a negative comment on Finns: Just like a camel can’t survive in the arctic and a polar bear will die in the desert, a culture makes a company best suited to a specific kind of environment. Nokia has a great tradition of excellence in manufacturing and mastering logistics through process. This DNA is different – and I argue that it is the anti-thesis – of the Internet & Services culture.

The recent rumors about Nokia looking for an outsider, non Finnish CEO are interesting – and a move in the right direction. But will it be enough? I doubt it; either the strong existing culture will change the CEO, or the CEO will leave within a few years.

So, is it possible to change Nokia’s culture and save the company? In my opinion, to change such a deeply ingrained culture, a shock treatment is needed. Three things need to happen.

First, Nokia needs to be acquired by a foreign entity (Chinese? American?) or a private equity group. With a market cap of $33B, it is a bargain. Just turning it into another Motorola will double the value. And if whoever acquires Nokia succeeds in generating service revenues from those 500M handsets sold each year (and one interesting direction they should explore is mobile payments) the valuation will be in the hundreds of billions.

If Nokia were to be acquired it would cause a shock wave throughout the organization, the kind of shockwave that can induce a rapid cultural change. Yes, there will be a lot of resentment among the old-guard Nokians, many of whom will leave, but these are exactly the people who should work in industries that are not as fast paced. And many of the newer Nokians – what we call the Nokia 2.0 execs – who suffer under the existing culture might actually appreciate and support such a move.

Second, for Meego (Nokia’s live-or-die bet on a software platform) to become a viable alternative to Android, the Meego executive leadership must physically relocate to Silicon Valley. We hate to admit it, but when it comes to rapid development of software and services, this is where the right culture exists and right talent can be sourced. This physical change will lead to an attitude change that will impact every decision Nokia makes, and all else will follow.  By relocating to the Valley, MeeGo will become more independent from its Finnish roots and will be able to work more effectively with Intel. It would also give the Silicon Valley team something to rally around, and a clear ambitious goal they can focus on – which is how you build effective teams and why all of Nokia’s previous attempts to build high caliber teams in the Valley have failed. Yes, you can have satellite offices in other countries (just like Android does) but there is only one place where the software & services brains should be placed, and it is in Silicon Valley.

Third, Nokia’s handset development efforts need to be transformed from a mammoth machine into small, fast moving (9-12 month development cycle) commando units of integrated software, hardware, mechanical and design specialists. The economics of the CE space have changed, and it is now possible to test and create prototypes much faster and cheaper than it used to be. Forget the 24-month planning cycle… let multiple teams come up with contrasting ideas, prototype those and then cherry pick the best ones for market testing and production. It will build a constructive competitive culture that will push everybody forward. Samsung does that today. The Taiwan ODMs do that today. Nokia can and should match up.

Nokia is a great company with great assets and some great people working for it. It can be saved from becoming the cold-blooded 21st century dinosaur. For whoever saves Nokia – if they manage to change the culture – a big reward lies ahead.

So who will buy Nokia? Comment with your best guess below…

-TS

[Thucydides Sigs - a pseudonym - has many years of experience juggling computing constraints, mobile software and consumers needs. With that said, imagine listening to a violin sonata not know who the artist is or who composed it. You end up having to listen more carefully in order to make a judgment. He can be reached at thucydides /dot/ sigs [at] gmail [dot] com]

  • normallydisagreewith

    TS is right in every way. It's not often I say that!

  • http://- Johnson

    Pardon me, but this is probably the most shallow and biased "analysis" I have ever laid my eyes upon. Only a series of misunderstandings and inferior information combined with a reeking USA bias could produce something this awful. I don't even know where to begin..

    Get your facts straight.

    You could start by opening your eyes on the MeeGo, Symbian^3 and ^4 and Qt issue. Here its put simply enough, read:

    http://www.unwiredview.com/2010/07/30/revisiting-

    BTW, "the math is pretty simple: Nokia is valued almost as much as RIM, but ships 10 times FEWER handsets."

    Nokia ships FEWER handsets? Simple, huh?

  • http://truvoipbuzz.com Alok Saboo

    I agree completely with your diagnosis, however, do not agree with the solutions that you are prescribing. Nokia has been very successful (so far) even by staying outside the US, so I don't think relocating to US will solve the problem.

    To me, the problem can easily be addressed, if Nokia is willing to let go MeeGo (at least in the short run) and adopt Android. That will give Nokia time and free up resources to invest in developing smart phone hardware capability. Once it gains some traction in this space, it can then pursue other agenda in the future.

  • http://- Johnson

    Alok Saboo: Why on earth would Nokia use an inferior OS and bind itself to a competitor (GOOG)? That makes ABSOLUTELY NO SENSE!

    Here's what the bloggers say, I suggest you read the comments very carefully, as well.

    http://www.engadget.com/2010/08/02/nokias-treatme

    BTW guys, Qt is the real paradigm shifter here. Now get eyes on the horizon instead of the rear-view mirror.

  • normallydisagreewith

    Android? Pah. It adds no value to Nokia's strategy. Why are people obsessed with this line that Nokia should adopt Android? You need to understand the strategy first (Nokia have a store and a dev framework – why do they need to use a different one?)

  • @@

    OMG .. since when Finns are associated with Vikings! Dear TS, you are damned wrong! Get your facts right!

  • normallydisagreewith

    Wow, I agree with Johnson and TS now. What is wrong with me?

    I don't think TS is wrong to say that Nokia needs to break out of Finland. Nokia could end up as Betamax if it isn't careful. A technically superior solution but not very well understood or communicated (see Alok Saboo for evidence!)

  • Alfredo

    "Nokia is valued almost as much as RIM, but ships 10 times *FEWER* handsets."

    Should be *MORE*, or rephase as:

    "Nokia is valued almost as much as RIM, *who* ships 10 times FEWER handsets."

  • Tony

    I completely agree that this blogger has no real understanding of what is going on with Nokia. Nokia just needs to carve out a place in the new smartphone world by giving themselves over to the trolls. Qt is an amazing framework that wipes the floor with android or anything else out there. And it is truly open as in lgpl so the geek world loves it and already supports it.

    I believe, but many may disagree that one way to help qt mobile adoption would be to release the framework for android, and if they can get native type speeds on android phones, people will be hooked and meego will be easier to transition to.

    Sorry for the randomness of my post.

  • http://- Johnson

    "Nokia could end up as Betamax if it isn’t careful."

    This could be a real issue, if Nokia wasn't selling 500 000 000 phones per year. The margins will come with N8 alone. And the first MeeGo phone is just around the corner…

    Long NOK.

  • normallydisagreewith

    Tony, I'm not sure what you mean by releasing the framework for Android. Qt is already open source isn't it (sorry I'm not techie enough to understand the finer details) so can't the Android community do this already?

    Nokia don't really need to open up any more compared to their smartphone rivals. Seems to me they are already one of the most open of all! What they need to do is shout about it all a lot more, and nobody can hear them shouting from Finland.

  • http://- Johnson

    Actually, I'm more concerned about Mediatek's recent developments. They are growing like nothing else right now, and adopting Android as we sit. They may really threat Nokia at the low-end market.

    But no one has probably ever hear about Mediatek in the US..

  • normallydisagreewith

    Johnson, problem is that it is simply 500000000 blank tapes that Nokia is selling, and there isn't enough profit in that.

    I agree though to long NOK. The future portfolio looks very nice.

  • http://- Johnson

    normallydisagreewitheveryone: "..simply 500000000 blank tapes that Nokia is selling.."

    Now that just isn't quite true, is it. They may not be at the cutting edge (yet), but they are coming back. However, you are right that they are loosing market share currently, fast.

    "Nokia retained a substantial lead in the worldwide smart phone market in Q2 2010, achieving a 38% market share. The vendor shipped a record 23.8 million smart phones during the quarter, representing growth of 41% on a year ago, as it focused on delivering affordable smart phone offerings to the market, such as its popular 5230 touch-screen handset, based on the Symbian operating system (OS). But Nokia’s market dominance is not as unassailable as it once was, with its performance outpaced by growth in the smart phone market as a whole.

    The smart phone market grew by 64% annually worldwide in Q2 2010. "

    http://www.allaboutsymbian.com/news/item/11899_Ca

  • normallydisagreewith

    I know the volumes are holding steady but they had to slash prices to keep the volumes up. This wouldn't be too bad if all those Nokia smartphone users were buying music and apps from OVI to make up for it. I don't think they are really though are they?

  • normallydisagreewith

    ……but I agree, Nokia should be on their way back. The strategy is strong but poorly communicated, and more to the point is taking too long to arrive. Nokia can't win really though. I'm complaining that these things are taking too long (e.g. N8, Symbian3, Meego etc) but when they rush things it is rubbish (N97)

    This is basically what I thought TS was arguing originally though which is why I supported the view

  • http://- Johnson

    I agree. That's (among other things) why the share was at almost ATL just weeks ago. That's why I'm so concerned about Mediatek, as well.

    However, Ovi will come, the apps will come, N8 will come followed by even better devices such as the MeeGo tablet. Nokia World is only a month away, can't wait!

    Long NOK. :)

  • Yuri

    Johnson, you should have written that article :-) I got way more useful information from your comments than from the main text!

    Thucydides, don't you think that 33B is a little steep for a technological company? Merger may be, but acquisition…

    Nokia made mistakes with execution and marketing, but their valuation is due only to the fact that Wall Street doesn't understand squat from software development. It just takes time to make a technological shift as big as the one Nokia is doing, and they are doing it without sacrificing backwards compatibility or native OS access like Microsoft. They are also doing it without loss of market share. For the big money makers in the future of mobiles like payments market share has the biggest value.

    Nokia doesn't need to do anything big, just bring to completion all the smart things they've started.

  • http://- Johnson

    Yuri: right on the mark!

    I especially loved this "For the big money makers in the future of mobiles like payments market share has the biggest value."

    As you probably know, Nokia is one of the key players developing NFC:

    http://en.wikipedia.org/wiki/Near_Field_Communica

    http://www.nfc-forum.org/home

  • normallydisagreewith

    Yuri, you're right that Wall Street doesn't get it. Otherwise how could they value Apple (a company with little in the way of tangible assets really – just lots of hot air that could fall out of fashion quite easily)?

    I think TS was making the point that Nokia struggles to bring things to a completion in a timely fashion though. The vision is fine, but the execution isn't snappy enough

  • http://- Johnson

    On the other hand, if Nokia manages to raise their ASP just a little, the stock will rocket. There's huge momentum behind 500 000 000 devices.

  • Yuri

    normallydisagreewitheveryone: Yeah… I personally get the feeling that for Apple too much depends on one man and his (undisputedly great) ability to generate buzz about the company's products.

    Nokia did make mistakes, the N97 being the prime example, but Apple also made a bad mistake with the Grip of Death and that exactly when Android is picking up speed… IMO Apple's mobile strategy is in bigger danger, but interestingly nobody is writing articles entitled "How to save Apple"

  • Mike

    Johnson, disclosing you're a Nokia employee -which seems to be rather likely- wouldn't hurt you know? :)

    It's interesting to see you predicting that ovi will come, so will apps, n8, etc.. thats's pretty optimistic to say the least..

    The truth is no matter how many devices Nokia is selling, nobody is making money in the dev community. Ovi is crap, and things don't seem to be changing anytime soon.. no wonder why they only release #of downloads but say nothing about revenue top devs get

    N8? Just a device announced 6 months ago providing a rather boring UI compared to what you can get from the competition nowadays.. maybe 2 years earlier it would have been cool, but now -big yawn-

    Nokia simply lacks an ecosystem. The Ovi thing is crap.. compare that to what Android or iPhone is offering. So nobody will care if they give Qt or the best api in the world if they don't give developers a good environment to generate decent revenue. Nokia is terrible at that not now, but for years

    MeeGo? Very nice but will anybody care about an untested platform that will be launched next year? I won't for sure.

  • boring products from

    Nokia has talent….and potential….but for too long it has promoted a brand a detached conservatism in its management. the guys making the big decisions are not passionate about technology and the future…..they are dry and boring…collecting wine and playing golf…..they have managed to eliminate geeks from within the ranks almost completely….these people are not capable of making their own deicions about and by the time they find people they trust and understand to help them….it's too late….maybe not by much….but generally too late

    so what do you get….a predictably dry and conservative product line….nothing exciting…never anything really new….just trying to do what has been done on a bigger scale as carefully as possible

    what Nokia needs to do….is come up with something new….something they can own and take the lead…..something they really believe is the right way for their users to go……and if they cant do this then they should continue making more and more cheaper and cheaper handsets until they cant compete and sell out to a Chinese company

  • willow

    Mike –

    >no wonder why they only release #of downloads but say nothing about revenue top devs get

    This is all nice and true, but have you heard Apple say anything about the revenues of their App developers? We all know Doodle jump is the most sold game to date, with over 5MM downloads to date. You can figure out from there what the rest of the bunch are making on the 0.99 Apps..

    Not saying Ovi is the solution to all. Just pointing out that everything isn't as pretty as it seems at first glance.

  • Mallord

    Nokia needs to stop making so many handsets. Make only a high end model and a low end model. As they age, sell them at reduced prices and now you have a variety of different prices, not a confusing mess of multiple series of devices.

    Get rid of S40. Make only Meego high end phones and symbian low end phones. This depends on if Qt actually works. I think we have yet to see it in full action working on different handsets, with actual software and not demos.

    Add as many things as you can into the high end model. Do something weird like add a barometer. Make it interesting and an object of quality.

  • bod

    The problem is that within Nokia, the left hand doesn't know what the right hand is doing. It's incredibly fragmented as an organisation, as much as their product range is. Frequently re-organised, and there are hundreds of individual projects that just go on doing what they have always done.

    Plan and design a product, then when it gets to the software, take a reference point of Symbian and base it on that and modify it. Next model is based on a newer variant of Symbian and incompatible with the last. Even if it's based on the same one, there is no common firmware between models which means no two models are the same or compatible.

    Qt at least is a step in the right direction, but it only addresses the application layer (and there is still the issue of different form factors, touch and non-touch, etc). The core still varies per model so much that it becomes difficult to apply fixes and enhancements across the range. And then to make it more complex every individual variant of a model (which can be hundreds for regions and operators) have specific software. It becomes a nightmare to support. It confuses the consumer. It causes extensive delays to both launch and updates (if updates occur at all).

    The consumer meanwhile is frustrated that their model doesn't support XYZ or has some particular bug and no one seems to be listening because they've moved onto producing the next model and have no time to support the old.

    However, let us not forget where things are going right with Nokia. Series 40. They silently churn these out and they sell well. They're robust, reliable and do the job. Without them, Nokia really would be in trouble.

  • dans

    Not sure what you lot are going on about, but it seems Nokia's revamp is going along just fine.

    Symbain v3 is what its supposed to be – the same UI just faster with a better dev environment.

    S40 is more powerful than ever and serves the emerging markets.

    Meego shares dev with Symbain v3+, is easy to port to and the UI has met with approval so far.

    Whats not to like?

  • canard

    "Nokia’s valuation was at $33B on sales of 125M handsets last quarter; the same figures for Motorola were $17B on 12M handsets and for RIM $31B on 10.6M handsets. The math is pretty simple: Nokia is valued almost as much as RIM, but ships 10 times FEWER handsets."

    Eh? Your maths is backwards!

    Nokia is valued less than RIM, but ships 10 times MORE handsets.

  • http://@magicnode George

    TS I agree with your second and third points but not the first one. I believe it will make things worst for Nokia if acquired by another company!

  • normallydisagreewith

    George, I agree that it would be bad if Nokia were bought out, and they will end up like Motorola (i.e. dead) but there is a risk of that with a share price so low. Nokia has huge assets and is easily worth more than the market cap, so it's an asset stripper's dream. If someone bought them, the first things to go would be the massive R+D and software development areas which are very costly to run, and as others point out, Nokia could just go down the Android route at very little cost and trade on the manufacturing capability and name.

    Nokia doesn't exist for the purpose of badge engineering though, and it has to be hoped that the innovations and products believed to be in the pipeline can bring Nokia back to a standing and reputation in the industry that they created.

  • http://@magicnode George

    TS….or they could restructure in such a way that they will Pivot and Innovate as fast as Google (my wishful thinking :-)).

    In anycase, It's a pity that such a brand with that massive R+D ended up pushing mainly mid & low end devices.

    I've seen that even the Middle Eastern countries (i.e. KSA) which were traditionally Nokia fans (Nokia had more than 70% market share there) now adopt iPhones and Blackberrys. They do not consider Nokia/Symbian at all!

    It is mathematically certain that if Nokia does not change "something" in their recipe, they will soon die!

  • vpuik

    I personally like where Nokia is headed right now.

    They have services started at least, It took a Nokia a couple of years to start up now all of a sudden required services. Google and Aapple had a service framework they had built in the previous 10 years. Now all of a sudden you could not build a phone by itself.

    Apple and google just had to build a phone or OS that works with their allready tried and tested services. That is a lot easier than building a full set of now mandatory services that work on a line up of 100 different phone models.

    Now that Nokia has their Service up and running at least, not necessarily optimized They can get the software guys working on OSes again. Too bad Google and Apple didnt really have to try and develop, new phones, services and OSes all at the same time.

  • Marcus Hast

    I think the biggest problem for Nokia right now is that nobody cares about them anymore. Well, nobody in the west at any rate.

    Sure, there are some diehard fans; and they will remain for a while at least. But if they want to get back in business they need to start making things which are interesting to the high-end. So far I have yet to see them show anything which would make someone who's gotten into Android or iPhone to switch to MeeGo or SymbianX.

    And it's not just users, it's developers too. They left Symbian (the few that were around) for green pastures, and while most I know say the "really liked Symbian" I have yet to see anyone get back into it.

    I see people here mentioning QT as if it's the salvation of the platform. But I have never seen any demos or prototypes which make me the slightest bit interested. Not as a developer and not as a user. (And I even run my computers at home on Linux.)

    I will however give Nokia credit for actually showing the world before where things are heading. (Like with their first iterations of the internet tablets.) So it's possible that they are on the right track here as well. Unfortunately it always seems to be someone else who makes a good implementations of the ideas shown by Nokia.

  • niemi

    There is no momentum with Symbian. Number of past units sold means nothing due to Nokia's every-phone-gets-a-different-release history. It is a dying platform and needs to be terminated quickly in favor of something the market prefers.

    When Nokia's market cap drops to 10B, maybe Foxconn will buy it. ;-) That'll take care of the problem.

  • Dr Jain

    TS is absolutely right. The problem is cultural. It is the strong socialist culture of the Finns which does not believe in demanding results, instead rewards effort. Look at the GEB – the Steve Jobs of Nokia is Anssi Vanjoki whose credentials are well known – he took the market share in the US down to single digit, wasted money on gaming, took over the number 2 job & drove the profitability & share price down. He is being further rewarded in a recent re-organisation while the much respected & saner voices of the like of Mr. Simonson (earlier CFO) opted to leave the company.

    Nokia was doing well because there was no real competition or challenge – potential threats like Motorola made their own mistakes and hence Nokia pulled along. Now, with real competition at the top end & bottom end (Chinese), Nokia is struggling. End of the day, its a repeat of USSR – a socialist cannot survive in a capitalistic world.

  • http://@magicnode George

    Just thinking out loud:

    Since Nokia is selling well in the mid-low end segment which is actually larger (i.e. 1.3B dump phones) and promoting their Symbian platform to that segment (converting dumphone owners to Smartphone Symbian owners), why they need to care so much about the niche top segment , competing against Android and iOS???

    In terms of actual numbers, they will win the platform war, since Symbian will be installed in a much larger base than the competitors. And Nokia is doing much better work in converting these markets from dumpphone –> smartphones, than Apple, HTC, Motorola etc…

    What do you think?

  • niemi

    Nokia's share of mid-low is also shrinking. Go look at the top and bottom line numbers and you see why Nokia needs some higher margin contribution. The top line is relatively flat. The bottom line is a steady downward trend. MTEK is starting to eat Nokia's lunch from the bottom. No top, no bottom, shrinking middle means so long Nokia.

  • DAK

    As an American living in Finland for more than 15 years and working in the leadership development area, I agree that it is the culture that is destroying Nokia. Having done work with the people there in the past, developing R&D leaders, I can say that arrogance is one of the traits that best describes the people there. Passion is something almost completely missing, of course there are the odd exceptions, and as Dr. Jain said, it is not performance that is rewarded.

    People there are indifferent to their problems with most saying that there is "nothing I can do," which again is part of the Finnish mentality–they are fatalist. The management is busy congratulating one another for selling the most phones but spend no time asking why they don't make any money at it (or very little). Mr. Vanjoki, is a prime example of someone who talks up that they have the most handsets delivered (and they have even recently changed how they account for this by including also pirated handsets–how that makes any sense I do not know), and how Nokia has changed the world. Last I looked it was not a charity organization and this is the reason investors are leaving in droves–this kind of just idiotic non-business thinking.

    Can an outsider come in to this culture? Doubtful. The board of directors has 8 of 10 members the old guard Finns and Finnish culture is hostile to outsiders as a whole. They are very afraid of outside ideas and do not like being challenged. Of course this is part of their historical geographical isolation. When I moved here in the early 90s there were just 10 000 foreigners in the whole country, today there is still just around 100 000–which is not many when you compare the other Scandinavian countries with millions of immigrants. Finns just do not know how to operate with people that think different from them–which is one reason why they continue to push out the same crap year after year–they think it's great and cutting edge–but then they have spent no time investigating or looking at what the rest of the world wants–which I hate to inform them is not what the 5 million of them want.

    To be long on NOK now would be to take a big big risk with the management they currently have. Even if they get an outside to move to Finland (which is to find anyone good is a near impossibility–no top CEO wants to be this isolated from the real world)–I give them 6 months or a year at tops before they quit.

    Things are looking bleak for them–and it looks like the luck that the Finns so often point to as their superior cleverness, has run out.

    Last point–Finns are not Vikings or Scandinavians for that matter–Finland is not geographically, culturally or linguistically associated with the rest of this area. Vikings certainly would not be considered risk adverse–as definitely the Finns are.

  • Marcus Hast

    George:

    Nokia (and everyone else) needs to compete in the high-end market because the markets are changing. Today high-end means smartphones, but tomorrow mid-end will be smartphones. (Which Nokia are "helping" with by bringing Symbian to mid- and low-end.) And the generation after that moves things down another level. Basically when you stop to bring stuff out in higher segments you will be gone from the market in 10 years or so. (Because by then no-one wants to buy your products. Not even in emerging markets.)

    The only people who want Symbian (besides a few die-hard fans) are the operators. None of the other big manufacturers seem interested in it. All they are talking about is Android (and Win Phone 7). Unfortunately for Nokia the operators are becoming less and less powerful. And while this is good for end users, it's bad for Symbian.

  • http://meedabyte.wordpress.com Simone Cicero

    Nokia is on of the victims of the radical disruptive changes that are changing the mobile industry.

    The new key to market share is the couple Platform-Ecosystem, not the handset portfolio diversity, the design or the platform quality by itself (WebOs is here to demonstrate)

    The Nokia mobile application/developer ecosystem is suffering (on one hand is too tricky to develop on Symbian, and the OVI store is not as good and commercially mature as Android and IPhone Markets)

    To unlock the long-tail economics you need a platform that is:

    - easy to adopt by OEMs

    - easy to develop/commercialize contents on

    only this can lower entry barriers.

    The future of the smartphone concept is user centered customization: apps, extensions, plugins and contents (is the PC market isn't it?)

    Operators are playing a qaulity assurance and distribution role, HW centered OEMs (like Moto or SEM) are suffering strong BOM based competition and platform commoditization; they are fated – long term – to an up to 5-10% niche market share: if Nokia doesn't want to play this role in long-term, it needs a strong platform (like iOS, Android, Windows Phone 7, RIM BBOs6) and an ecosystem – SDK, developer base, distribution channel (like Android, IOS and, partially, RIM and Microsoft are doing)

    Symbian is an aged product: will be always too late when Nokia will drop the Symbian platform instead of continuing wasting moneys on it.

    Meego and QT are the only valuable resource Nokia has to invest on. Every day they spend more on Symbian is lost.

    Embracing Android for Nokia would mean to accept the role of a nich HW-centered OEM fated to 5% niche market share, as said.

    cheers.

    PS: thanks TS and Andreas for having nailed the topic again

  • Phil

    Nokia (and Symbian) have managed to increase their global smartphone marketshare the last four quarters (taking marketshare from Apple each quarter) by focussing on the mid-tier. Almost 300,000

    Symbian devices ship every day. Unfortunately Nokia lacked the high-end high-margin devices to keep up their average selling price.

    The N8 is the first of a new upper-mid-range family of devices based on a new hardware platform, and OS platform, development platform, with an integrated services platform. The N8 and what we've seen of the E7 thus far, give every indication of being extremely successful offering (i.e., likely to out-sell iPhone globally on their own).

    Far from being an "aged" product, Symbian is the most advanced, efficient and open of all the mobile OS's… but suffers in terms of not having a broad core development community, and from lacking a modern hardware accelerated UI (being introduced with Symbian^3 and Symbian^4). For this reason, migrating (and merging) to a Linux based platform is the right Strategy…. which Nokia is executing beautifully by focusing on Qt as the development platforming. Of course, there is no chance of Nokia adopting Android, and anyone asking for this really doesn't understand the market.

    High end devices (based on Meego), including a slate/table offering, we have yet to see… with announcements rumoured to begin in Q4. Nokia's margin issues won't improve significantly until they arrive.

    But, it is the integrated services offerings on which devices must increasingly compete. Only Google, Apple, and Nokia are serious competitors in terms of their services offerings…. it is the integration and out-of-box experience with Ovi which will be the most important factor over the next couple of years…. and here Nokia's global presence and cooperative approach to working with operators (for example, Ovi Store billing, and operator wholesaling of Ovi Mail) has a distinct advantage over Apple and Google.

    For those detractors of Ovi Store, who point to the number of apps and the UI elements and call it a flop… consider the number of markets served by Ovi store, where integrated operator billing and native currency/language is available… and the fact that it addresses not just smartphones but featurephones as well. It is scaling much more rapidly and globally than it's competitors, with each device that ships with the client pre-loaded.

    Other competitors, including RIM, Microsoft, HP, Samsung, etc. are far behind in terms of their integrated mobile services offerings. (Microsoft has the services, but can't execute on a consistent strategy to mobilize them.)

    For those in the U.S. who look at the market in terms of Android, Apple and RIM…. you need to look at the services strategy to understand that the real smartphone competition is Nokia, Google, and Apple… with Apple (not Nokia) currently in decline.

  • Marcus Hast

    Phil:

    "Far from being an “aged” product, Symbian is the most advanced, efficient and open of all the mobile OS’s"

    Do you really believe that? I've worked in the mobile phone business for some years and I've never heard anyone call Symbian "most advanced". I can give you efficient as it's running on pretty low end devices. But you could run Android on very low end devices too if you just stripped out things to give it feature parity with Symbian. ;-)

  • http://meedabyte.wordpress.com Simone Cicero

    Ciao Phil,

    your analysis is precise and I even share some of your points (especially the points about Apple), but is way too optimistic: your picture simply doesn't justify, for example, the rumored chang of CEO.

    The point is that technology trend is shifting current hi-end devices (a segment where Nokia is behind its competitors at today) gradually towards tomorrow's mid and low-end segments.

    I cannot agree when you say that N8 will outsell iPhone… this is way too optimistic!

    Giving a look to sales figure here: http://www.bbc.co.uk/news/technology-10839034
    one can understand that (in a global smartphone market growing fast) Android growth is happening mainly eroding Symbian shares (along with Windows Mobile ones).

    Re OVI and the Symbian ecosystem: if developers count, and they do count, the message to Nokia is quite clear. Did you looked at: Mobile Developer Economics 2010 Report published on VisionMobile?

  • Phil

    Marcus:

    I haven't examined Meego in depth (although it certainly looks better than Android), but I do understand Symbian OS, iOS, Android, and Blackberry OS in detail, and I've been in the OS and mobile OS market for 20+ years.

    Symbian is a modern, micro-kernel based OS architecture capable of real-time (hosting the baseband call-control on a single core, to reduce BoM costs) and multi-core processing (important for power management in the most advanced devices). It's designed from the ground up for mobile communications, supporting multiple user interfaces and interaction models, power management, and mobile security with sophisticated and abstracted APIs. Applications are clearly separated into application (services) engines, and display/layout layers that allow application rendering and business logic to change according to the interaction method and device form factor.

    Memory management and multitasking are more capable than competitors', and there is a far richer set of mobile services and stacks exposed to the developer than with other platforms. For the most part iOS still hasn't caught up with where Symbian OS was over 5 years ago.

    Of course, flexibilty, abstraction and security come at a price… the environment is very different from Linux and has a steep learning curve for developers to get their heads around the server, communications, and eventing models (plus other changes, for example, there are changes in C++ designed to prevent memory leakage.)

    So, why do people think it's behind? Because it was designed for device manufacturers, who wanted to differentiate at the user interface and application level. Series 60 was a Nokia design, not Symbian.

    But, partnered with Qt for application developers (built-in starting with the N8), better hardware, accelerated graphics, and a modern UI… it is by far the richest and most capable (and popular) smarphone OS on the planet. It's governance, license, and community engagement process is also more open than Android or (of course) iOS.

    Have a look at the Symbian^3 feature list…. it's far more than S60 with "more touch" in the UI.

    http://conversations.nokia.com/2010/08/03/three-t

    http://library.forum.nokia.com/index.jsp?topic=/N

  • Phil

    Simone:

    re: rumoured CEO change. I tried to address Nokia's market strategy, but clearly their market valuation has taken a beating, and that alone is reason for investors to call for a change in leadership. Nokia has also spectacularly failed to address the U.S. market….

    And that's the real crux. Most U.S. analysts (and bloggers) don't really understand the global mobile market, and certainly don't understand the longer, quiet, methodical, approach that Nokia takes.

    The North American market was almost stagnant before the introduction of the iPhone… with hostile data tariffs and the concept of a smartphone synonymous with Blackberry. The mobile apps and services market was almost non-existent in the U.S. Apple, to their great credit and everyones' surprise changed that… and that is the real legacy of the iPhone.

    Nokia didn't appreciate how much Apple changed the concept of what a smartphone was…. and the impact that would have. They took too long to react…. and it's like trying to turn the Titanic after it hit the iceberg.

    The fundamentals of Nokia's global business and strategy are strong…. but they have to address the U.S. market.

    As for N8 shipments…. the Nokia 5800 outsold the iPhone in the UK for several quarters… I don't for a minute think that the N8 with out-sell the iPhone in the U.S., but the lower price, combined with Nokia's global operator relationships, to me point to the N8 outselling the iPhone globally as soon as manufacturing can ramp up – even if it doesn't sell in the U.S at all. Nokia won't realize in all markets at once, however, it'll probably take 3 quarters before peak sales are achieved.

    The N8 should be free on most monthly plans in the U.K., and there's a sort-of interest free financing deal being put in place in India….

    I do think it will be important for Nokia to promise a Symbian^4 firmware upgrade to N8 purchasers…. or the opinions of "antiquated" UI will drag down sales.

  • Phil

    re: developer economics.

    Developers will go where they can make the most money.

    Right now, the average app. on Apple's App store loses money (see some of Tomi's analysis for the reasons on this…. while I think some of it is arguable, that basic point I believe is true.)

    Apple has been a master at monetizing the iPhone and iPad: music, video, apps, books, magazines, newspapers and now advertising. Apple is turning not into a mobile company, but a content publisher/advertiser with a distribution monopoly. (Why the Retina display? Adverts.) Apple will do anything to protect this monopoly… ban in-app (non-iAd) advertising, cross platform development, Flash…. etc…

    But markets (and governments) abhor monopolies. The way to fight such a monopoly is to achieve a larger, cheaper or more open distribution network (or legislate). Both Google and Nokia are likely to achieve this with time, unless Apple starts to sell more models in more markets (or distribute to other platforms).

    As for developers…. I would say the opportunity at the moment is to target new platforms…. Android and Symbian^3 / Qt (and Bada). There will be a hungry market for Qt apps shortly… an early entrant with N8/Meego apps. is more likely to see return than one competing for air space in Apple's app store.

  • http://meedabyte.wordpress.com Simone Cicero

    Very valuable discussion Phil,

    I'ld be pleased to connect if you want. On my blog you can find all the details needed to connect (simply drop me an email if you don't have a linkedin profile).

  • http://www.derozard.com Jerome

    Crazy idea I had yesterday. What if instead of choosing Google or Microsoft, Nokia would partner with… facebook, and give them a share (or all) of Symbian/Meego/ovi.

    I know they do not make any OS but they got one of the best cloud platform, and could use some additional ammo to fight Google on the (mobile) web.

    After all:

    - fb is the most used app on most mobile platforms (iOS, Android…)

    - 500m Facebook users + 500m Nokias sold each year … nice

    - FB needs to address all devices ranges and markets, from dumb/cheap in emerging markets up to highend.

    - all Nokias could include a free/preintegrated access to FB. Fb already offers free access to fb zero in certain countries.

    - OVI store would gain some traction by being integrated with the fb app ecosystem

    - fb could still maintain there existing fb apps on other platforms (in house or through API), but focus new developments on nokia devices

    - what's more social than a phone ?

    No need for a full blown merger, just tying in marketing & software development.

    Any takers?

  • Phil

    Jerome:

    Nokia has in the past been very open to partnering with leading services. Most recently Yahoo!, but also with Microsoft (ActiveSync and Live! services), and Adobe (Flash), Skype, etc. and provide clients for Facebook, Twitter, Flickr, Google Talk, etc.

    Nokia Messaging for Social Networks supports Twitter and Facebook and will come on the N8, including a Facebook home screen widget.

    Generally Nokia has a more "cooperative" approach to the market than Apple, etc.

    So Facebook is an "out-of-the-box" experience…. to achieve a more strategic partnership probably depends more on Facebook than Nokia.

  • http://www.derozard.com Jerome

    Steve

    Of course everybody can partner with anybody in the internet world, and all is fine. Anybody can build widgets using public APIs.

    What I am talking about is something closer, more like a merger of software assets which would then be lead by facebook as part of their "platform" drive. After all they have hired a lot of software architects from Google, MS…

    I mean facebook feature being natively integrated in all Nokia devices, the same way google services are a central part of Android (try using an android device without a google account)

    I mean Nokia developing new business models for access to facebook services, instead of having devices that "come with music" having something like "comes with facebook access", regardless of the operator / subscription / location.

    I mean Nokia discarding all ovi services and moving them onto the facebook platform.

    I mean building an integrated cloud + device platform much like Google Android OS + cloud services, Microsoft with Windows Phone + Windows Live or Apple iOS and its cloud services.

    But maybe it is too soon or too far fetched.

  • Christian

    It will be very difficult to stop the Android momentum and the Mediatek partnership with Google will give access to low and mid end market.

    The carrier and handset maker need Android to compete with Apple but they choose a very dangerous partner. The Google brand is strong and now consumer begin to know the Android brand:

    http://thenextweb.com/mobile/2010/07/26/uk-androi

    “The figures suggest an increasing number of consumers are now asking for Android handsets by name,” commented GfK analyst Megan Baldock. “Operating Systems are no longer simply a by-product but a key selling point in their own right.”

    I understand Nokia need to differentiate themselves from all the Android handset. But it will be a tough fight between Apple and the best Android handset into high end market

    and the Adroid handset into the low and mid market.

  • Phil

    Jerome:

    In order for your idea (of a Nokia/Facebook strategic partnership at the technology level) to work, there would have to be a real merger, or at least a separately incorporated joint venture.

    The reason is that you need to consider where the value is in future. Margins on mobile devices are declining (apart from Apple). Device manufacturers are attempting two things:

    - conversion of their feature phone install base to smartphones

    - creation of value-added (on-line) services that can help to monetize smartphones

    Long-term, it's possible that device purchase price will be (at least partially) subsidized by services revenue… in the same way they are today by many mobile operators.

    Apple is executing on this beautifully, achieving the highest margins on devices and with the most closed services offering. However, they play only at the highest end of the smartphone market, and risk a back-lash (from operators they cut out of services revenue, from publishers, and end-users.)

    Google has a wide range of (loosely) integrated services which they monetize primarily through advertising right now…. but for other manufacturers, Android is sucking the margins out of their market and they are unable to capitalize on the services revenue. (Have a look at the desperate straits of Motorola.) Note, I'm not Android bashing here…. In contrast to iOS, at least Android provides the faint hope of being able to create and capitalize on other services… if you can compete directly against Google… (potential sidebar here about the problems Google will have with Android fragmentation vs. tying Android OS and Google services together. Google is not providing enough opportunity for handset manufacturers to add value, build brand, and sustain margins in the long term (e.g. Samsung – Bada). For a handset manufacturer, Android is increasingly a short-term tactic, not a long term strategy.)

    And then there's Nokia… who more than any other tranditional phone manufacturer have achieved a high rate of conversion of their featurephone installed base to smartphones, and have launched a broad array of increasingly integrated mobile services.

    To do what you suggest…. a Nokia/Facebook pairing, would hand the bulk of Nokia's future revenues over to Facebook. Nokia can't allow that…. such a pairing could only take place where there was revenue sharing… but I suspect Facebook would place to high a valuation on their contribution for that to work for Nokia.

    It would also mean that the bulk of Nokia's current (considerable) investment in services development would be wasted – but no matter if the return was compelling enough.

    So, the idea is great… but I can't see it working commercially for Nokia.

    Samsung on the other hand….. Samsung is Nokia's main direct competitor, their strategic smartphone focus is on Bada OS going forward, and they need a services portfolio. They're too late in the services game to develop it entirely from scratch…. look at how long it's taken Nokia. Where are they going to get it from?

    But Jerome, one thing you're definitely right on is that Facebook is likely to develop a more direct mobile strategy. Probably not with Nokia, and definitely not with Apple or Google. It'll be interesting to see what happens with them going forward.

  • Christian

    Microsoft owns some Facebook share(1,3%). In the Future, a partnership between Microsoft and Facebook could happen. But it is very difficult to tell before the Facebook IPO.

  • Jerome

    Phil (sorry for calling you Steve, long day)

    Agree with your analysis. We have reached the turning point software (on device or in the cloud) is the value and hardware becomes pure commodity and can be sponsored, not just by telcos.

    A deal with fb would be a tough sell for Nokia, probably too early. It would help them solve another problem they have, that they are present on only one "screen" while MS, Google, Apple have their hands on all screens, from mobile to TV. Yes they can wait for Meego PCs, MIDs, TVs to arrive but they may have some unpleasant surprises there with Intel.

    I do not think facebook will partner in such a way with Microsoft (a lot of companies hold fb shares, MS is too small in mobile to be of interest for them) or Samsung (will probably continue to put their eggs everywhere in OS/services, and remain an horizontally integrated hardware company).

    Let's see what they will be up to now that they are no longer "just another website" and must build a complete platform they control.

  • Phil

    Jerome:

    Very good point about multiple screens.

    I believe the shift to Meego is really about two things:

    1) linux base makes it easier to port open source projects, and engage open source community

    2) Meego lays the base for multi-screen / mobile cloud, with persistent, portable sessions, etc.

    Meego is being aimed at tablets and automotive, as well as high-end smartphones, and Nokia is rumored to introducing a slate/tablet device (S1) based on Meego.

    Providing a persistent (or at least transparent) experience between smartphone, tablet, notebook and perhaps desktop (browser) would be a key USP against Android, iOS, etc. I think that'll be the next step in mobile platform evolution, and is impossible without an integrated service (and "cloud") strategy.

  • Matt

    @Jerome,

    I thought about another possibility which is not feasible without such a partnership.

    Calling a facebook friend without knowing his mobile number.

    As the FB services are integrated at low level, it will be easy for the device to pull the number from Cloud and then dial it.

    "Calling Jerome…"

  • Jerome

    @Matt definitely a good example of a low level integration that would greatly benefit both Nokia and facebook (but maybe not telcos…).

    What I think nokia could bring to facebook in is its strength in emerging markets, where the lack of operator subsidies means completely different market dynamics. I remember that a few years back in the middle east Nokia used to own 80% or more of the device base.

    In those market telcos have no control whatsover on devices, and if facebook wants to conquer the mobile user base they need to be preintegrated on all types of devices with a service that works 'out of the box' even on grey market devices.

    Only with deep integration with the handset OS and some network expertise will they be able to pull this off, using not only IP based connection but also good ol' GSM tech (SMS, USSD…). Partnering with a device manufacturer that is also a network equipment provider would be a good idea.

    @Phil: multi screen, yes Meego would help, but without attractive consumer services and applications it will be just another empty platform like N-gage, Ovi, Maemo… Today I honestly do not see what Nokia service could be "adapted" to another screen and instantly provide synergies.

  • RegT

    I feel Nokia's problem is they are fighting a development war on four fronts S40,S60, S^x and Meego. This means your fixed development resources are split across three product lines meaning its far harder to innovate and fix issues than with a single platform.

    Many of the horrible issues in S60/S^3 could be fixed quite simply by adding a new API that has simple listboxes, editor and button controls as well as transitions between windows. ALFRED was a step towards this but the API's were horrendous. If Jan Ole can build an excellent GUI platform for S60 it should not be beyond hope that Nokia with all its resources could as well.

    Which bring me onto the next point that the move to S^4 will break all the existing Symbian code meaning yet more hassle to the VAR's to support yet ANOTHER platform for their product. QT is not the panacea that everyone thinks it is (DLL Hell being one example), the focus needs to be on the OS not trying to run on every device with a different end user usage profile.

    My other issue is that with VARs having three platforms to support and umteen device ROM's and configurations its a development blackhole to try to support and release software and that excludes the QA and signing costs for S^3 and Meego releases

    This multiplatform approach makes Nokia look weak because senior management does not have the strength and drive to say "We are going to focus all our development and VAR support on platform x" and make it the best in the market.

  • Sam Liddicott

    Nokia's problem was not making their web-tablets a phone as well. I can't even remember what they call them now.

    Nokia innovation is in weird handset designs; and their last win in phone software was symbian, too long ago.

    They have the same problem microsoft have, which is too many business angles.

    Good for Meego, but let it compete internally with Android. If Meego isn't ready, ship with Android – you get the market even if you hurt the feelings of employees.

  • normallydisagreewith

    @Sam, this Android on Nokia discussion is simply pointless. Nokia needs to innovate and have a unique and compelling offering that is compatible with their services strategy (Music, Maps, Ovi Store etc) and meets the needs of their customers (read operators). What it doesn't need to do is go down the pan like Motorola and SonyEricsson by becoming a 'me too' organization. Nokia has the largest share of the smartphone market despite many perceptions and is clearly determined to use that market position in the way it sees is most appropriate for Nokia. Android doesn't fit in that strategy.

    Are the web tablets called N800, N810 and N900? The N900 can make calls so perhaps they solved their 'problem'?

  • normallydisagreewith

    @RegT, are there horrible issues in Symbian3 already? And Symbian4? Doesn't Qt work for both of them?

    I thought the point of Qt was to allow single development for multiple platforms. On one hand you are complaing there are too many platforms and then you say 'the focus needs to be on the OS not trying to run on every device' I'm not sure what you are saying there.

    I think the multi platform problem you describe is a red herring. Meego won't run on S40 devices, and S40 would be disappointing on the web tablets. What can Nokia do apart from have mutliple platforms? Less range of devices?

    Developers already have to deal with (or avoid) multiple platforms such as S60, IOS, Android etc so they can simply decide whether or not they want to work with Symbian3 or Meego or both or Qt solves the problem, the same choice they make between IOS and Android already.

  • Phil

    @Jerome

    re: Meego services… you're quite right, the service infrastructure isn't in place for Meego yet for the mass-market… although the major innovation introduced (from my perspective) with Meego is a sort-of transparent sync between devices, and a form of persistent session. However, that functionality is more important to establishing Nokia as an innovator again (and for introducing new classes of devices), rather than for the mass market. Of course, Nokia's intention will be to update all of the Ovi services for Meego as they try to make Meego address a larger market.

    I'm very interested in the issue of Meego / Symbian positioning…. (against each other, and against the competition) if you have any thoughts in this area, please expand.

    @normallydisagreewitheveryone

    re: Qt and "write once, run anywhere" (pipe-dream) capabilities… When you change the interaction model (keyboard/pen/touch/gestures,T9, etc.) or the device form-factor (i.e., screen resolution) you typically have to modify the business logic of an application if you want the user experience optimized for a new device – even if Qt does make things easier scalable vector graphics easier.

    Even if Qt apps will install and run (with the smart installer dealing with a lot of the DLL issues RegT mentioned) between Symbian^3, Symbian^4 and Meego devices (and Android, etc.), the likelihood is that applications will need to be modified for different classes/form-factors of device.

    Symbian and Nokia are of course far ahead in terms of supporting a range of form-factors of devices (experience, APIs, dev. tools, etc.), and the developer issues involved… eventually Android and iOS will need to address the same issues. (QWERTY and keypad are both larger markets than touch screen, and likely to remain so for quite some time. And you have different interface requirements for different markets, such as automotive or "10-foot" TV set-top box market.)

    Qt is not a panacea…. but it is more efficient as it relies mainly on native methods for execution, and is more scalable (in terms of graphics) than Java…. so it is much better suited as a mobile developer platform than "native" Android / WebOS / Blackberry. (Also, the processing overhead for Java apps. typically hits the CPU and therefore battery hard…. hence the need for 1GHz + CPUs with Android…. however, I haven't heard of any real compute efficiency comparisons of Qt vs. Java).

    Bottom line is, Qt is the best developer platform for multiple mobile devices – but you still have to deal with optimizations for significant differences in device classes/capabilties/interfaces/form-factors.

    @sam…

    re: internal platform competition with Android…

    I understand your sentiment, but honestly, Nokia really can't afford to invest time in Android, or confuse the market any further in terms of their platform strategy.

    Thucydides third recommendation (and I agree with none of them) is that "Nokia’s handset development efforts need to be transformed from a mammoth machine into small, fast moving (9-12 month development cycle) commando units of integrated software, hardware, mechanical and design specialists) doesn't recognize that there are two types of development: core platform, and device adaptation.

    Primary development of the core software platform, core hardware (reference) platform, developer tools, testing, etc. does need to be dealt with very differently from line-of-device development. With the N8, you're seeing the first of a new generation of core platform… hardware, software and tools. It's taken over 2 years to develop that generation…. a process that probably longer than it would have because of the purchase of Symbian and open sourcing of the platform.

    However, Nokia already has "small, fast moving (9-12 month development cycle) commando units of integrated software, hardware, mechanical and design specialists" that adapt the core internal platform to individual device models… so much so that most analysts complain that Nokia has too MANY models (although the selection of available models varies according to the market you're in.) The core hardware/software platform in the N8 is likely to show up in many devices over the next year or so (see the rumoured E7 for an example.)

    I've whittered on too long… but it's an interesting conversation.

  • normallydisagreewith

    @Phil, thanks for your insight. Clearly each form factor etc will require an optimization for the target platform but I hope this isn't an onerous task for developers once the core app is written. Perhaps there will be some apps that just aren't appropriate for a given platform and shouldn't be ported anyway (e.g. screen too small or no camera). I think this gets at the heart of why developers complain about developing for Symbian (i.e. S60 mainly). As I understand it, there are two main issues. Coding for Symbian is too hard for the average Joe bedroom developer, and there are too many devices to write for to be able to create an app for 'Nokia' devices. This leads to user frustration perhaps, as people wonder why there is an app for their friend's E71 but not for their 5800 even though they are both modern Symbian based phones.

    It's easy for Apple developers while there is only one platform and they don't have to think about QWERTY or T9 users which form the majority of the market. The large form factor devices such as iPhone and most or all Androids just aren't appealing to everyone anyway.

  • Phil

    @normallydisagreewitheveryone

    re: Coding for Symbian is too hard for the average Joe bedroom developer

    There were a number of issues:

    1. the difficulty of learning to code for the native platform (modified C++, and platform IS "different"… it's not based on Linux or Windows and it has a different philosophy, architecture and approach). Historically, application developers were encouraged to use Java as their application platform… but the user experience frequently suffers as applications required more memory, ran slower, and consumed more power

    2. the development tool-chain historically was not free/open source – although it is today

    3. signing of applications was not free, and was only available to companies, not individuals – this has been very recently changed for Qt developers who may now develop and distribute via the Ovi store with free signing

    re: there are too many devices to write for to be able to create an app for ‘Nokia’ devices.

    This is true…. even if you do create a single app that will install and run on different "classes" of devices (dealing with differences in UI, etc.), you still have a significant testing effort. With Nokia, you know that they're going to produce touch, qwerty, and keypaded devices at a variety of screen resolutions and orientations, for different markets at different price-points. Hopefully other manufacturers will continue to as well (but without access to the Ovi store, that's another complexity for developers.) As long as Nokia can continue to push the price-point of entry level smartphones down, this should translate to a larger addressable market for developers. The key question, is when/if Android will over-take Symbian/Meego for maketshare.

    The issue of device diversity (platform complexity) is also increasingly true for Android, however, and the problem will get much worse with the advent of tablets, embedding in TV's, etc.

    The issue will effect Apple to a lesser degree, as they control all elements of the platform and industrial design. Still, differences in the iOS platform between devices (support for what Apple calls "multitasking", for example) effect developers already. And it is likely that for Apple to stop losing marketshare, they will have to launch more mass market devices… an iPhone Nano, perhaps.

  • Phil
  • David

    @Phil : very interesting input. Unfortunately the link you provide (open screen fund) is for Flash apps only, which is a pity as other (native) developers would like to take advantages to similar opportunities.

    Which brings me to the issue of app stores. This is clearly not working, and no wonder Nokia is not showing stats about paid apps, given that if they did most developers would feel completely disappointed and run away..

    I'd really like to see Nokia realizing that imitating other's (ie. Apple's) approach doesn't mean it will work for you. Ovi Store is miles away from the numbers of the App Store yet I don't see Nokia reacting to this. It is also beyond me why they chose "Ovi" which is a really cr*ppy name instead of taking advantage of the Nokia brand, but most of all, I'd really like to see Nokia innovating into this and providing alternative ways of monetization for developers.

    All this Qt story is very nice, but they are (again) missing the main point, which is allowing developers to make money. Nobody cares if you sell millions of devices if developers can't get their apps discovered and deployed. Give this to them, and developers will not care to program in assembler if needed.

  • Phil

    @David:

    Are you an app developer, and is your opinion based on your app sales in the Ovi store? Just curious…. your right, app revenue is not reported on…. although there are a number of individual apps which have achieved more than a million downloads per week. Nokia's own Ovi Maps is one of the most heavily downloaded apps of any app store (but free… to your point.)

    Last stats I saw were in April (1.7M downloads per day), and last week 1.9M downloads per day were quoted by Niklas Savander…. growth does seem to have slowed significantly if that's the case.

    I think the things in Ovi's favour are:

    - now available in 210 countries

    - integrated operator billing (+ credit card & other options)

    - most current Nokia devices are now shipped with the Ovi Store client pre-installed

    Most apps., and most download activity, is on S60v5.

    Most app purchases are made in the first month after a user buys a new phone. Also, the more expensive the phone, the more apps people are likely to buy for it. For that reason, it will be interesting to see Ovi Store growth after launch of the new generation of devices, starting with the N8.

    re: openscreen…. yes the platform is Flash, but part-funded, promoted and distributed by Nokia. Of course, aggressively supporting flash is in Nokia's interests (and against Apple's).

    Flash is, of course, an alternative mobile development platform…. one without significant integration with the underlying platform, however. But OpenScreen is largely an Adobe reaction to Apple, and while I love the concept videos on the OpenScreen site, it remains to be seen how successful it will be.

    Still…. if just a few of those Flash game developers start porting to the N8…. there will be a lot of games available in the Ovi store very quickly. Very quick way to make money if you're sitting on existing Flash assets.

  • David

    @Phil: I'm a developer myself, though working with software companies instead of publishing my own apps (by the comments I made you probably realize why). In any case my comments are based on direct experience through the people I work with and peer developers.

    Regarding your stats, this is exactly the issue. I know that many apps have been downloaded millions of times (another example is Offscreen) but they all share one thing: they're FREE. So applying some simple math we know that "N millions" * 0 = 0. And in the case of paid apps, don't forget developers are not only getting 70% of their set price, but 70% of the one less 22% (VAT) applied by Nokia. So in fact they get 54.6% of it.. Why they haven't chosen better alternative is beyond me.

    Also, reality is that most people end up downloading apps from alternative sites, mostly warez, and also given Ovi's lack of proper software protection offering (providing drm forward lock is certainly a joke) the situation worsens.

    I'm also interested to see how it will change after more new devices come with Ovi client preinstalled, but I yet have to see how the N8 will perform. It's coming too late and competition is really tough nowadays. Nokia unfortunately is not -and will not- be offering a free update to S^4 for N8, so I wonder how many people will buy a device which is known to be obsolete in a matter of months.

    Please do note that my arguments are not against Nokia only, but my comments about apps mostly applies to many other platforms as well (Android, etc). Manufacturers need to find other ways to let a developer economy flourish, otherwise this will be just another bubble.

  • Thucydides Sigs

    I was delighted to see the lively discussion that the blog entry generated. Thanks everybody for sharing their thoughts and ideas. Nokia is a great company with long history and great people, and I think all of us share the hope that they will remain a leader in the mobile & computing industry.

    There are too many comments to address them individually, so I will try to address them categorically:

    First – I did have a typo saying "Fewer" instead of "More" – thanks for pointing it out and it got fixed within a few hours. And there is a lively discussion whether Finnish were vikings or not . Seems like it was a Swedish colony (early incarnation of Ericsson?). Regardless, I think the point about tough, smart and hardened warriors came across.

    A few readers seems to say that Nokia is doing just fine and will maintain their profitability and market share. To those readers, I would ask the question "What kind of indicator would you consider as credible sign that there are serious problems? If the radical loss of shareholder equity, the loss of industry mind-share or the many articles and books about the organization problems are not enough, what kind of information would cause you to agree that "Houston we have a problem" ?

    Other comments pointed out different product and services problems. Interesting discussion about Ovi services, the ecosystem challenges vs iPhone and Android, the broad handset portfolio and more. Lots of valuable suggestions, but I would like to ask the readers to try to dive a level deeper. What is the *root* cause of Nokia problems? An interesting method I recommend for this is the "Five Whys " which was invented by Toyoda Sakichi . The basic idea is simple – keep on asking "Why". Again. And Again. And Again. And Again. So if you think the problem is the "weak developer ecosystem" just ask "Why" – and then after answering, and Why again. If you think the problem was an incompetent executive who moved around, you should ask "Why were they allowed to stay in the company"?

    What I argue in the article, that the *root* problem is cultural, and that it is inherently linked to the Finnish culture.

    An interesting reading that I strongly recommend is Andrew Orlowski interview with former Nokia Risku about his book on Nokia problems. Me and Risku mostly agree in our analysis of the problems running deep inside and originating in organization cultural problems. we end up with opposite recommendation about the solution. I will let the reader pick sides. And also suggest Andrew recent update to the blog – here .

    A few commentators suggested an even stronger underlying trend: Europe losing ground to both Asia (in terms of production) and the US (in terms of mind-share). This is worth exploring further: around 2001 a friend introduced me to the term "The MENS club" Ten years ago, the mobile industry was led by Nokia and the Europeans – both in terms of market share and mind share. MENS was the initials of Motorola (one American company), Ericsson, Nokia, Siemens. A formidable European trio. Ten years later, Siemens is out. Ericsson is SonyEriccson and mostly out. And Nokia is the only one who somehow remains. The mobile industry *volume* leadership have shifted from Europe to Asia (Samsung, LG, HTC and the other Taiwanese ODMs) and more importantly, the mobile industry "mind-share" has shifted to Silicon Valley: Apple and Google. As one of the fathers of the mobile industry commented after reading the blog "Software Creativity" won and brought the focal of the mobile industry into Silicon Valley. That's a very strong statement that stirs a lot of emotions. So I challenge us all to ask "Why"

    TS

  • Germany 4tw

    The Germans will save Nokia not Silicon Valey. The German's always triggered Europe's commercial resurrection. :)

  • http://itv.derozard.com Jerome

    Looks like facebook is getting ready to build their own phone: http://techcrunch.com/2010/09/19/facebook-is-secr

    Now let's wait for them to realize they need to go further than that and build their own OS…

  • Tony

    I partly agree with the blogger, but generalization should not be too general, thus you cannot hit the points and making convincing explanation.

    Nokia's problem should be placed in the context of the change and trend of internet. Access to internet has become a necessity now, and with the development of mobile broadbrand, it should be everywhere and anytime now. Mobile phone is not a mobilephone now, to many users. The cast expectation on their phones, always more and more, ultimately they need every functions that they are using in their laptop available on their phones.

    Can Nokia cope with this trend?

    The whole market has already developed to a highly-segmented one, unlike what is was in the beginning when the name of Nokia is equivalent to the mobile industry. High-end and low-end handsets have their own and non-overlapping target customers, which require different company image, technology, marketing campaign, etc. How can one Nokia wins both in two battlefields? Imagine, in real world, are there many common languages between an iPhone 4 owner ( typically, a white-collar young guy) and a Nokia 1001 owner ( typically, a working labour) ?

    The cost to be a giant is always bitter.

  • HH

    Dear TS,

    being a current Nokian and having had some visibility into matters discussed here, I read this with interest.

    Couple of comments

    First, agree with your comment about relocating Meego leadership to Silicon Valley. Many of us are doing our best, but too bad they don't agree themselves.

    Second, you don't do yourself a favor quoting Risku. As an insider, that is 60% ok and 40% misinterpretation by him due to his limited visibility. But which is which?

    Third, I think it's a great point to think about the root cause. Symptoms we all a see, and most fatal of those is poor software execution. But how could you know root causes, since you havent' been there? Risku don't help you get there. You say it's cultural, but that's too shallow. Remember, Nokia led user experience evolution against Ericsson & Moto in the '90s with personalization (ringing tones), phonebook, user interface. The right question is, what happened to it and what can bring it back?

    Having said this, only those of you who really see inside here can help us in figuring that out. Outsiders operate under too little information to identify right root causes, not to mention advise on remedy. And no VC can unfortunately help in that. Elop is the best shot to do that.

    Finally, after having written all this I realized what does all this musing matter? You don't matter, nobody of significance reads this, my text doesn't matter. Do you really think Elop or his management team reads these anonymous/pseudonym blogs? And gets deeply moved and influenced, particularly after you recommend a take over? Or VC guys go like.. geez, that TS guy really has a point, I'll go and start due diligence…

    So in other words, this an industry insider water cooler talk, and I hear that enough here already. Given this, I'll stop here.

  • Peck

    @normallydisagreewitheveryone

    Why won't Meego run on an S40 device? They would have to do a base port for it, but surely that is possible, and a baseport is required for every new device that Meego will run on anyway so why not for S40 devices?

  • zima

    Peck, you're asking "why a full featured, heavyweight & with high hardware requirements OS won't run on a class of basic and inexpensive devices?"…

  • Cheese

    So in other words Zima its all one big blob of tightly coupled code and its not possible to leave out unnecessary bits.

    That will present problems if somebody wants to port it to a smartphone that doesn't support bluetooth for example. Take the whole thing in its entirity or leave it. Doesn't sound like a very well designed OS.

    Apart from that, it'd need a new UI of course though to move to S40.

VISIONMOBILE BLOG

Distilling market noise into market sense

3D Printing: The 3rd Dimension of Mobile Marketing

3d-printing

Despite the hype, 3D-printing today is far from a household technology, mostly used by non-professionals for fun, entertainment and utility.…

Continue reading ...

The kingmakers of the Internet of Things

image00

For the first time we have data to understand who IoT developers are, where to find them and how to…

Continue reading ...

The 3 key Apple Watch features that nobody talks about. Yet.

apple-watch-09

If Apple wants to create a new, large product category out of smart watches, it must empower developers to discover…

Continue reading ...

VISIONMOBILE RESEARCH

Research on the app economy and developer ecosystems

App Profits and Costs

AppProfits

This research report examines the critical success factors for a profitable app, and how business and technology choices, such as…

Continue reading ...

Developer Segmentation 2013

Developer Segmentation 2013

The Developer Segmentation 2013 report delivers a needs-based segmentation model that actually works, with extensive profiling of the eight principle…

Continue reading ...

App Economy Forecasts 2013-2016

App Economy Forecasts

This report investigates the relative sizes of the app economy: developer population by region and platform, distribution of revenues, revenue…

Continue reading ...
Our Developer Economics Survey is Live!

Contribute to our developer research - the free report with key findings will be out in Feb 2015.

TAKE THE 10min SURVEY

Close