Entelligence: What's the future of Nokia?

Entelligence is a column by technology strategist and author Michael Gartenberg, a man whose desire for a delicious cup of coffee and a quality New York bagel is dwarfed only by his passion for tech. In these articles, he'll explore where our industry is and where it's going -- on both micro and macro levels -- with the unique wit and insight only he can provide.

It's the largest cell phone maker in the world, with the largest share of any smartphone vendor in the world. Yet I increasingly look at Nokia's products and listen to its strategy wondering if the company can remain relevant in a mobile world that's changed drastically over the last two years. I'm not talking about a Nokia deathwatch, or whether the company will remain in business -- that's foolish. Of course Nokia is going to stick around; it's what it's going to look like that concerns me. A future of selling low-end phones into emerging markets with some minor services might be profitable, but it's not a direction that leads to industry relevance or influence.

First, I'm confused by Nokia's platform strategy. There's been a lot of chatter about Maemo being the future, and while it might be a strategic direction, it's nowhere near ready for primetime now. Chris Ziegler suggested to me the other day that "Maemo 6 (or 7) in an X6 form factor with a more cohesive Ovi strategy could be killer." Perhaps, but right now Maemo feels very immature and unfinished. In fact, it feels like what it is: an OS designed for Nokia's Internet Tablet MIDs. On a phone like the N900 it's just too kludgey for the mainstream market. That leaves Symbian-based S60, which was totally innovative in 2002 but now looks creaky and has fragmented into multiple versions, leaving a very confused developer market. Sure, Nokia supports Flash and Silverlight with Qt somehow tying all this diversity into some unified grand theory, but it's enough complexity to make most developers look elsewhere -- and that's exactly what's happened. Without a clear platform strategy, it's going to be difficult for Nokia to get the developer mindshare required to stay relevant to the mass market.

Second, Nokia's services strategy is as muddled as the fruit in Don Draper's Old Fashioned. Ovi sounded good when it was announced but it's now gone through so many iterations, with different services added, dropped, and changed that it's hard to know what's in and what's out. Comes With Music has been reported as having as few as 107,000 users worldwide, and Nokia's put off bringing it to the US this year, leading me to wonder what kind of future it has as a service. The N-Gage project not only resulted in two failed phone designs but the service itself is on its deathbed.

Third, Nokia's most recent hardware designs are baffling. Nokia's had some great phones. The 8860 defined fashion and technology in its time, the Matrix-inspired Nokia 7710 was the first phone with a WAP browser, and the N95 was a marvel of technology. Recent designs, however, have been a strange mix of checklist features that simply add up to a poor user experience. Last year's N97 flagship was an exercise in how not to create a touchscreen phone, complete with an odd three row keyboard

featuring a space bar mysteriously moved right of center. The N900 feels more like a science experiment to me than a product that's designed for mainstream users -- although, to be fair, Nokia does position it as an enthusiast device. I used to feel Nokia's hardware designs defined cool, but these days they just remind me of an aging movie starlet trying to re-capture some former beauty.

Finally, Nokia's greatly in decline in the US / North American market and in dire need of a successful product strategy and launch. With no US carriers supporting its flagship and most profitable devices, Nokia's share in the US is in huge decline, and only the most devout users are willing to pay over $500 for unlocked devices to use on T-Mobile or AT&T. There's more to the world than the US and North America, but if you're going to remain cutting-edge and relevant it's not a market that can be ignored.

Tossing around ideas about this column on gdgt last week, my good friend Peter Rojas said, "Nokia has a classic innovator's dilemma: they're so big and (at least to-date) have been so dominant that it's been hard for them to create innovative new products which might cannibalize their existing product lines." I think it's more than that. Nokia failed to lead a changed market and has been forced into reacting to competitors instead of driving its own vision of the future. As smartphones left the realm of the enthusiast and became mass-market in terms of adoption and feature use, Nokia fell behind.

Now, I don't think that's fatal or long term, and I don't believe Nokia is going out of business. But I do question the company's position in the market and ability to lead without a major change in direction and strategy -- especially in the US and North America. Truth be told, Nokia now reminds me a lot of Apple back in 1996, losing relevance and market share in places that matter but with huge potential to leverage core assets and a terrific brand with millions of loyal fans. And as Apple did in its day, Nokia must now either try to decisively seize back its leadership position -- or lose it entirely.

Michael Gartenberg is vice president of strategy and analysis at Interpret, LLC. His weblog can be found at gartenblog.net. Contact him at gartenberg AT gmail DOT com. Views expressed here are his own.