Entelligence: What's the future of Nokia?
By Michael Gartenberg 
posted December 1st 2009 5:46PM
posted December 1st 2009 5:46PM
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.
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
Nokia failed to lead a changed market and has been forced into reacting to competitors instead of driving its own vision of the future. |
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.
Nokia and Motorola are both in a bad position in the US market, even though they are the only two companies who are competent at making a phone that actually works and has good RF.
Nokia needs to embrace Android like Motorola has, as their RF engineering and build quality paired with Android would truly be the ultimate phone.
What about the non-smart phone but not quite dumb phone market? They have some great devices that have a ton of functionality like 3G speed and built in GPS and good cameras all running on their S40 platform. I'm an admitted Nokia fan and have a new N79 on it's way to me now, but their 6600 Slide is like an N95 for average folk. It doesn't multi-task, but when you don't have to worry about doing two things at once you can be really fast. And that's one thing that the simpleton S40 phones are, snappy. As mentioned everywhere the S60 is a fragmented beast. But I don't think their biggest hurdle is bringing that into better focus. That just takes decisions. But getting their phones for real people into the hands of consumers looking for the best subsidized phone without a 40.00/month data and text package is what will help keep them a household name. this will take lowering their costs and building better relationships with service providers. If you were on T-mobile and could get something like the 6600 Slide for 49.00 with a two year contract including a 'dumbphone' data plan, I'd think you'd be a happy customer. All the glam may be in the high-end, but I think the middle ground is where they'll win some battles. People can laugh all they want, but I hear, "I miss my old Razor" far too often.
Interestingly I spoke to one of Nokia's designers from Finland (Jonne Harju) who headed the development of N97 Mini (amongst other models) and one of the things that he revealed that there are product heads for every two years. The person I met was the incharge for 2008-2009 and there is another team working on 2010-2011 releases. He promised some DIFFERENT products will rollout next year. Lets see.
I have sent my N97 for repairs the third week I bought it, upgraded it to the v2.0, even did a hard reboot, backed up all my data. Still the phone is so poor in software application usability, I have not even listed the issues I and other N97 uses have with this phone.
Great article! Thank you
I agree almost completely with the article. Nokia never really enticed me. When I was out to get my first cellphone in December 07, I took one look at Nokia, and went instead with the LG Shine, because it had style, quality feel, 3G for $0. Nokia couldn't beat that.
Then just half a year ago I was out to buy a new high-end phone ($500). Nokia lost out here again - I wouldn't have minded importing a high end Nokia phone if the price wasn't just so damn high for very little hardware. Plus the design never really got to me. LG, Samsung, Sharp, Panasonic - they all have their share of breathtaking designs. Nokia does not.
In the end I imported a Sharp SH906i and been using it happily. I doubt I'll be considering any Nokia products in the near future unless they change, FAST!
True.. very true... Nokia has grossly ignored some of its most successful strategies. Most of the "best" phones it has out there right now, seem to have some basic flaw.. which evokes a reaction "How the hell could they miss that" ?!?!
As if their research & testing team dozed over the project!
For e.g. the Raised borders around the Touchpad in the E72 !?!?! Why???
Where is the Replacement for E90 communicator??!! Why let that Series DIE!!!!
Definitely N97 is one of the WORST ever... thoroughly HATE that odd 3 line QWERTY with the re-located spacebar.
The keyboards of 9300 & E90 are STILL HEAVEN for people like me.
Just shedding some light on the Situation of Nokia in INDIA... supposedly one of its BIGGEST markets.
Yes... its doing great in the entry-level & mid-range market, no one has been able to shake them there.
2323, 2600, 2330, 5030, 5130, 6300, 6700, 7310 are ALL Extremely popular handsets. 100%. No doubt.
but no think of this:
Nokia N85 - cost 24250 Rs.
Nokia N86 - 22450 Rs. ???!??!! huh??? what the hell??? how did that happend??? what kinda strategy is that? How does a 8 megapixel phone become cheaper than a 5 Mp phone?
Next up:
Nokia E71: 17000 Rs (keeps fluctuating)
Nokia E72 about to be launched around 22k (so they say)
BUT BUT Nokia E75 which was the gap in between these was present @ 18000 Rs... but NOW has been DISCONTINUED ??!?!?! Why??? No reason?!!!
& Nokia E90 communicator also gone!!! :(... stuck with STUPID N97 in the high end segment !!!
I wonder why the heck Nokia pays to Engadget to get bashed in this blog all the time...
I think the management in Finland just heard "they review our phones" but they didnt actually get to see all the hatred in here...
Despite Engadget trying very hard to put down all of Nokia's efforts I see a lot of posts actually defending Nokia. Let's see how long can engadget continue with this non-sense talk until the readers flock to another more impartial place..
Kudos to Engadget for being one of the very few independent in their views.
I like Nokia because of the hardware. The simplistic (Finnish?) design has some appeal to me. Currently I won the Nokia E71, which I absolutely love. It's the most sturdy and user friendly phone I've used to this day. If ... you use it for voice calls, SMS and MMS. It's a terrible internet device because it has the software all wrong. I also own an iPhone 3GS. The iPhone also has beautiful sturdy hardware (crappy camera though) but Apple gets the software just right. If I need public transport directions I just tap to open an App, the GPS gives me my current locations right away, I just tap in the destination and I get my journey, which bus, train to take. If Nokia get's these thing right.. I'm skeptical of using the browser (like in Maemo 5) for everything. A separate App is designed for a small screen. A webpage in a browser is not. When Maemo 6 or 7 is ready for primetime in 2011 I hope there will be plenty of Apps available which will make a future Maemo device useful. Same goes for future Symbian versions..
@pjhaas I have a n900 and before I had an iPhone...
Maybe you dont know but Ovi maps works beautifully as well..
And I dont understand the obsession of people with this apps. Mostly they are all useless. And when one actually needs something Apple wont make it easy for you.
For example, Apple also doesnt let me have my own pdf reader, I need to access through a dodgy combination of e-mail and pdf reader which is just terrible. N900 has all of this facilities included already. And I can store as many pdf's as I want because the entire device is for storage different from iPhone...
@Mr w00t I know most apps are totally useless. My point is that the few apps which 'are' useful - for me a Dutch public transport app and an app which enables me to watch all Dutch public television programs on demand - get used by me so often, it makes the user experience of this phone very friendly.
But it depends what you will use it for. The iPhone is most certainly not a business phone, although it opens Word docs and PDF in the mail application very well.. Well enough to distill the information you need. Now, to read a PDF I believe a 3,5-inch screen is not ideal, but when I receive a PDF attachment in an e-mail, it just opens. To get some real work done I have a 10-inch netbook. I will buy a Maemo 6 device in 2010/11 though, because I can see the possibilities of the Maemo platform.
@pjhaas Agreed with almost everything :)
Hope by the time Maemo 6 comes out, this neat apps will have been developed already...
@(Unverified)
Yup, spot on. This site REALLY needs to get some more non-USA input with things like this. The future of Nokia is pretty clear - continue to dominate in the non-smartphone market, and work to regain share in the smartphone side of things. There may be some shake ups coming in terms of the OS they use on the smartphones, but that's about it. They're a solid phone manufacturer.
What everyone is forgetting is that over half the spend in the mobile market in the last year was spent on iphone or blackberry devices. That is where the new money is world wide in phones. It doesn't matter who has more market share, what matters is who is making the most money per dollar put in. And it's quite clearly Apple and RIM, not Nokia.
Developing markets are cool for increasing market share but they will not spend anything like the money that an iphone or blackberry user will spend over the life time of the product. So the question is, not whether Nokia are making money now, but will they make money in the future given that they are NOWHERE in the fastest-growing, revenue-maximizing market of smart phones?
The fact is, anyone one can make a phone that accepts/makes calls. Phones from 5-6 yrs ago work perfectly well. Camera phones take ok shots. No one NEEDS a new nokia phone! Smart are the new ish. People are paying through the nose for the things. The iphone does so much more than just make calls. The market for normal phones is not growing in western economies where the real money is made. As i said, developing countries are cool but they are NOT where the real money is..
Did you just make that up?
wikipedia smartphone market share shows 50.3% going to Symbian in Q2 2009. The other half is shared by RIM,apple and others.
Either Samsung stole the entire Symbian smarthone market or Nokia is the dominant player.
Nokia will be fine. In Australia at least they are the most dominant mobile phone manufacturer. Almost everyone has a Nokia.
I hope that Nokia's management is not as detached from reality as most of the commenters here seem to be. And before someone starts accusing me of being US centric, I'm European.
Really I hardly know where to start -- but Nokia is in deep, hopeless trouble. Unless they decide on ONE single OS, make it both user and developer friendly and get a working App store, which Ovi is not, then they are well on their way to also ran oblivion.
Apple, with its relatively tiny worldwide phone market share is already making more money then Nokia. It also has grabbed the developer mindshare lead by a wide margin. Keep repeating that most apps are useless, that will indeed solve everything. All it takes is one killer app per potential customer that Nokia doesn't have.
Am not too sure whether comparing the two is a very good idea.. but one thing is for sure.. Nokia certainly has the edge over the I Pod phone..
I disagree with the author's comments about ignoring North America being a poor strategy. Many companies from Europe and Asia have actively ignored North America for the past decade. For instance, Sony and Samsung (Anycall) have a plethora of phones unavailable in North America. This could be because while North America is rolling out its "brand new" digital infrastructure like 3G, Asia has had it widely available 5 years ago.
Either way, the US will always be in a better position than us here in Canada...
Nokia was my second, third and fourth phone being the latest an N-Gage. I write this with all my heart when I say that "they have stabed Ngage fans in the back". That guy telling (and actualy showing on video) the Ngage2 just to scam us all into the later drop off of original users into a freaking "service" hit the spot.
It was a fun ride Nokia, but after S60 turn into a rollercoaster of iterations, other OS's appeared and Symbian, right now, is brain dead. Come on, dont be stupid! "We will never make an Android phone" atitude is not the right move. Do like Palm and make a new "WOW" platform.
Im even starting to hate your SMS ringtone.