By Alok Saboo on July 10th, 2010
In a very passionate post, Nokia’s new mobile-solutions chief Anssi Vanjoki outlined that the strategy to boost Nokia’s position in the smart phone market will be centered around MeeGo, a platform Nokia developed with Intel. I was stirred by the passion in the Vanjoki’s commentary, but I am far from convinced that Nokia should be betting its future on MeeGo. Having grown up using Nokia phones, it pains to see the company growing out of favor in the mobile handset space (where it held a virtual monopoly for long). Here’s my humble response to Nokia’s strategy…
Dear Anssi Vanjoki,
Firstly many congratulations on your new role!! As the head of Mobile Solutions, you indeed are in a great position to have a lot of influence on the mobile devices in general, and Nokia in particular. Given that you have spent enough time in the mobile space to know it inside out, I am surprised at your decision to bet Nokia’s future on MeeGo. Although not an expert as you are, being a Marketing PhD, I know a thing or two about business and would love to offer you my $0.02.
Why has Nokia not done well so far in the smart phone space?
Despite being an incumbent in the mobile space, Nokia has not been able to make its mark in the smart phone market (I use smart phones for all mobile devices with smart features). Although the smart phone market in terms of size is very small, but these users have a lot of influence on the overall mobile market and it would be foolish to ignore this market segment. In fact, Nokia was the first mover in this space with the N series, but could not keep the momentum and lost out the new entrants (read Apple, Google, HTC, Motorola, etc.). Before prescribing any solution, it is important for us to diagnose what went wrong in the first place and why could Nokia not make it big.
Nokia has been operating for over a 100 years (boy that is a serious achievement). For a company that old, it is normal to have internal routines, procedures, processes, and best practices. Till the fundamentals of business remain the same, these routines and processes can be a source of significant advantage (and which is what happened till about 2000). But once the underlying principles of conducting business start changing, these routines and processes can be a source of inflexibility and rigidity.
The smart phone market is a fundamentally different space (IMO) as compared to the basic mobile devices and you cannot apply the same strategy in this market. The “dumb” phones emphasized “hardware” features, While the hardware is still very important, for smart phones the “software”, or what runs on the hardware, is equally (if not more) important. Thus, to succeed in the smart phone market, in addition to being able to produce stellar devices, you also need to be able to provide great content to run on your devices. This requires fundamentally different competencies, e.g., engaging with developers, developing content, partnering with content providers, developing applications. None of this was relevant for “dumb” mobile devices.
And from what has happened in the past, we know that Nokia has not been very successful with engaging the developer community. The problem, according to me, is spreading resources too thin – developing both hardware and software and ultimately excelling at none.
What can Nokia do to change its fortunes?
Let us look at what the competition is doing.
Apple has a history of producing great hardware and has great skills in developing applications to run on its hardware and hence it could combine these strengths to develop the iPhone. Google is a software company and has done well with it’s Android OS. Google’s attempt to enter the hardware space (with Nexus One) was not very successful. Other companies, such as HTC, Motorola, Sony Ericsson, Samsung, have chosen to focus on hardware and use the freely available Android OS.
Looks like for the most part, firms are choosing to focus on one aspect of the business. The only other company, besides Apple, which focused on both hardware and software, Palm, was recently acquired by HP. Despite the acclaim, Palm failed with WebOS for two fundamental reasons:
- Palm could not get WebOS on lot of devices.
- As a consequence, could not generate enough enthusiasm within the developers to work on WebOS.
While the mobile OS itself is important, we know from the WebOS episode that it is not the most important driver for success. By emphasizing the mobile OS (MeeGo), I am afraid that Nokia may meet a similar fate. Why do you think, Nokia will succeed with Meego when Palm failed with WebOS? For device manufacturers looking for a mobile OS, Android is a much better option – it’s FREE, matured, and already has lot of developer support. Why would developers flock to Meego? Developers would rather work on iPhone OS, Android, Windows Mobile, BlackBerry OS, or even WebOS (although I am not sure how many of these will survive in the long term, but that is a different story).
Moreover, Nokia at this point is short of resources. It is downright foolish (IMHO) to spend resources on both hardware and software and then convince users/developers to start using them. How on earth do you think you would be able to beat Apple or Google?
Nokia, as a company, would be much better off collaborating with Android rather than competing with it.
- By adopting Android (and customizing it, if required), Nokia can spend its resources in developing better hardware and let Google develop the OS. Nokia can then focus on its strengths (e.g., mobile hardware, distribution networks) rather than develop new competency (e.g., developing software).
- The Android community will welcome a formidable player in Nokia. Nokia may even collaborate with Google to produce the next generation smart phone (e.g., Motorola Droid). This can generate lot of excitement for Nokia. There is already lot of demand for Android handsets and Nokia can ride on this wave.
- Nokia will gain access to the thousands of apps already available for Android and will continue to reap the benefits of increasing interest in Android.
In summary, it is hard for me to justify why Nokia should choose to develop Meego and put its shareholders’ money at risk. I do not have any doubts about the quality or potential of MeeGo, however, as a consumer or as a developer, I do not see a compelling value proposition adopting Nokia with MeeGo. Motorola and HTC have changed their fortunes by adopting Android and Nokia can do the same. Please note that I am not suggesting you to “dump” MeeGo. All that I want to emphasize that Nokia will be better off channelizing its resources towards developing quality hardware and gain some traction in the smart phone space.
Hope you see this message and at least give it a little thought. Wish you all the very best in this journey!!
A Nokia well-wisher…