Nokia CEO: Nokia is "standing on a burning platform"
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Second -- this guy has the Microsoft internal criticism DNA, through and through. This isn't quite a Gates-level memo, but it's in the ballpark. I'd love to see some leaks of him reviewing his experience using different phones, Gates style.
Third -- he's totally correct. Nokia f-ed this up, all by themselves. I STILL miss my Nokia E-90; it had 7mb up and down, a beautiful keyboard, video chatting, first-class SIP phone account support, and an 840x320 screen in 2007, for God's sake! The UI sucked, the apps weren't there, and there was no touch interface. Apple cleaned Nokia's clock. Then Android did it again.
One reason HN readers should care: Nokia is probably the only carrier in the world with the balls to just go ahead and release unlocked phones with things like VOIP accounts built in. They may be the only company who doesn't have to play nice with US carriers around; innovation from them will be excellent for consumers.
I took the calls of people angry that their 'top end' handset couldn't do VoIP because they bought it from Vodafone.
The carriers were always Nokia's customers, not the consumers, I can't see how that's going to change.
Oh, definitely in the US—look at the difference between the E71 and the E71x, the AT&T version. The GP was talking about unlocked phones. I have an N86 which I bought on Amazon, and it's got SIP and other features which AT&T would hate me to have.
>The carriers were always Nokia's customers, not the consumers
Yeah, but that's the case with every phone manufacturer.
That's exactly my point. In this regard Nokia are not in a special position to stand up to the carriers.
Unlocked handsets don't count: almost no one is paying that much for a phone. Even Apple had to accept carrier subsidies for the iPhone to get the end purchase price down.
Most mobile phones in the world are bought unlocked. Carrier-locked phones holding most of the market is an US/UK quirk, and in many European countries, carrier-locked phones like used in the US would actually be illegal.
Except for prepaid 20EUR-phones and perhaps the iPhone, which phones in Germany come locked?
Any subsidized phone purchased with a new contract is locked, as far as I know. But I don't know of many that are hard to unlock.
I've bought most of my mobile phones of the past on eBay to use with my prepaid card. I've seen Vodafone, O2 and T-Mobile brandings on them, but I never had to contact the seller because of a netlock problem. I've also found footnotes like "this telephone can only be used on XXX network, wait 24mo or pay us 99EUR" on brochures and paper ads, but only for prepaid contracts.
If there is a common practice of netlocking most German 24-month-contract phones, when did it start?
eBay isn't a reliable place to get a sense of the realities of the retail mobile phone market.
I. Vodafone's unlocking page explicitly mentions their CallYa prepaid offers and an outdated brand of "VPA" mobile phones and an "MCC" starter pack[1]. There is no sign of a page for the millions of people with a 24-month contract.
II. The T-Mobile page for old phones [2] lists several models of cellphones; those I recognize look like typical cheap prepaid phones (e.g. the Siemens C35 is there, but not the more expensive S35 of the same era). Their FAQ[3] says that SIM-locks have to be unlocked, but not which phones are locked. It does explicitly say that the iPhone is SIM-locked, which slightly contradicts the premise that all 24-month contract phones are SIM-locked.
III. BASE's FAQ[4] on SIM-locks says that SIM-locks are particularly common with prepaid phones.
While it may still well be the case that most contract phones come locked, it surprises me to read so little of it anywhere.
1. https://www.vodafone.de/privat/hilfe-support/hardware-entspe...
2. http://www.t-mobile.de/sim-lock-entsperren/0,20638,23789-_,0...
3. http://www.t-mobile.de/faq/1,1951,18-_,00.html?vgn_form_enco...
There are EU laws, but each member is free to add its own rules.
In Belgium, tied sales are illegal (or were mostly illegal until very recently), and subsidized phones linked to contracts are considered tied. Which makes them illegal in Belgium.
And nobody is going to buy a locked phone for the same price as an unlocked one.
Tied sales ('koppelverkoop') have been declared legal by minister Q since about end of 2009 (1), due to Belgian law conflicting with European law. I'm not sure if the revised Belgian law has gone through parliament already, but Euro law takes precedence anyway.
(1) http://www.quickonomie.be/nl/persberichten/29oktober2009-kop...
Locked Phones are the norm in Germany too.
In addition: SIM locked (i.e. only able to use a designated network) is not quite the same as a crippled phone (like in intentionally crippling the Bluetooth stack to force users to use a crappy service to upload photos for a couple bucks a pop).
I can't speak for Germany, but in Switzerland the only SIM locked phones are the ones that you buy together with a pre-payed deal. And then they have to unlock it for you after a couple years.
Personally I perceive the development of locking down devices as rather disturbing and I really hope that this trend doesn't swap into European mobile phones. That's why, yeah, I feel that Nokia matters a lot.
You can change a person's or a group's mind about something, even after a decision appears to have been made. You can clinch a job, win a contract, stop a lawsuit, regain a friend, woo a lover, and change history itself with just a few words.
I'm not sure if people realize quite how powerful an email can be, directed at the right audience, at the right time, with the right message. And the flip-side is true too. A badly written, poorly directed, or mis-timed email can have terrible consequences. You can make or break a company with a single email.
Regarding this memo, it's a truly inspiring, and well-timed. I think this will be a Gettysburg moment for the CEO, and may mark a turning point for Nokia.
This means we're going to have to decide how we either build, catalyse or join an ecosystem [...] When we share the new strategy on February 11, it will be a huge effort to transform our company [...] The burning platform, upon which the man found himself, caused the man to shift his behaviour, and take a bold and brave step into an uncertain future.
This may be a turning point for Nokia, but in the end it will come down to just what this new strategy is and how effective it proves to be.
The path from the age of the letter to the age of the one-paragraph, stream-of-consciousness email may be a fairly easy-to-follow one, given the obvious way that technology first enabled, then gradually enforced a vastly lower expected interval between missives, but I'm still curious to see a critical investigation of this process in a McLuhan-esque sort of context. Anyone have any recommended reading?
And suddenly I remember Valentine's Day is almost here.
Please, please, Nokia, adopt Android and put your efforts into making great hardware to go with it, without ruining the interface like so many other manufacturers do.
Expecting companies to develop for then yet another platform, one which seems to be redefined often, is asking a lot and will result in getting only the really big players and lower rate developers trying to cash in on the under exploited platform.
In a way it's similar to Yahoo outsourcing their search to Bing, advertisers focused most of their attention on adwords and then also rolled some Bing campaigns, but only so much attention can then be given to the third player in the market for even less ROI for time spent due to the lower search volume.
http://www.forum.nokia.com/Distribute/Ovi_Store_statistics.x...
Eventually when the prices of the better smartphones fall you would expect a big shift away from nokia unless they can improve on their current offerings. I think we will have to wait some time to for windows 7 phone to pick up some market share before app store figures show whether it is a better bet than nokia in the American market.
Also, note these points:
* There are 30,000 apps available
* 400,000 new Forum Nokia developers were added in the last 12 months.
With Qt/Qt Quick you get an environment that is sort of competitive with where iOS and Android were over a year ago. Meanwhile, iOS and Android have moved on and are accelerating development of their SDKs, and Nokia is falling further & further behind.
Anyway, say you build your app, thinking how great it will be with the huge reach of the Symbian platform. You ship, and discover that (a) people who have a Symbian phone and can afford to buy your apps are just waiting to upgrade to iOS or Android, and so won't invest any time in new apps on their Nokia phones and (b) Symbian is only growing in use in the developing world, where people are very unlikely to buy your app because the cost is a lot more significant.
So you give up, and go back to iOS and Android where the toolsets are nicer and there is more money to be made.
I agree with what you said here. But to take it a step further I'd say that the number one rule I've learned from doing mobile native apps the last few years is that ideally one should NOT be making mobile native apps. Make a web app, that just happens to look and interact decently on a mobile device. Saves developers a lot of pain and a lot of time otherwise invested in a more narrow platform set of skills.
Yeah, make a web page so I would need to start the browser first, then wait for the page to load. The GUI and the experience will be completely different than anything what I already have on the phone, not to mention that the GUI will be suboptimal. Transition between screens in the app will be dependent on network coverage - if I'm in the bus and it stops on some blind spot just when I clicked the button, I'll have to watch white screen (or an error message) until the bus moves. And for what? To "save developers a lot of pain". Sounds reasonable, I'm sure I'll give you my money.
What web apps do you know that work great on a phone? Maybe my experience is skewed, but the slickest web-based phone app is the mobile version of Reddit, and that thing still sucks when you actually use it.
Color me unconvinced - native dev isn't going anywhere just yet.
Secondly, there is room in the market for other players as indicated by Bada's success.
It's my phone, at a minimum I should be able to pull all my own data off it in any form I choose.
And I'm REALLY curious about why you and 14 other people think that Android is such a good mobile OS. The VM is both a legal and speed liability, the Android UI is not GPU-accelerated and the entire OS is still immature (see the embarrassing bugs with the SMS or the browser security holes).
Isn't that part BSD-licensed?
> the Android UI is not GPU-accelerated
It's a bit hard when you have to support more than one device, but I believe it's a matter of time. As more and more hardware gains hardware acceleration, I assume it will come (if not already in the latest 2.x and 3.x series)
> the entire OS is still immature(see the embarrassing bugs with the SMS or the browser security holes)
Don't confuse the OS with the programs that run on it. You don't blame Windows when SharePoint eats up all your intranet, do you?
SMS and web browser are core mobile OS services, they're not simple programs since connectivity is very important for a mobile phone.
Oracle is not complaining Google is implementing Java in Dalvik. Oracle is complaining they are implementing things too similar to stuff Oracle has acquired patents about.
http://carlodaffara.conecta.it/oraclegoogle-the-patents-and-...
Anyway, features i find pretty neat are:
- The concept of Activities
- The concept of Intents and their connection to activities
- real multitasking
- XML based layout with builtin internationalization
- the use of Java as widely known language
- Dalvik after getting JIT compilation = nice piece of technology, a fast and capable VM for such "slow" and limited hardware
- oh and it's open source (except for the google apps, just like any other app)
I’m not sure why you like XML so much, is it that you can write an interface programmatically? While it’s true that a nib is nothing more than a writeout of a view’s object graph, it features a higher-level mode of internationalization (nib-level) meaning that interfaces don’t have to be shoe-horned into text fields. Besides, it’s always possible to create a blank view that’s drawn into.
However, Dalvik’s JIT is more a ripped feature of the JVM (hah), and Apple has worked against implementing similar, their memory management techniques are still mainly reference counting.
And the open source thing? Apple’s core OS is OSS as well, Google’s strategy is the same: open source the fundamentals, leave the important bits proprietary. Apple’s children are UX and native apps, Google’s is online apps, which is why the Open Source tide line is a bit lower on iOS: Google couldn’t care less about churn and boring, long-range updates, as long as they get the users doing web stuff. Both Google and Apple both protect what’s important to their business interests.
But let me tell what i find so nice about activities and intents by example of a simple usecase. I am browsing in my RSS reader and find a good article. Now if i want to share this article, i usually have a "share" option which sends the intent to the OS. Depending on the registered applications it let's me send this article via mail or twitter or sms or even bluetooth (or really whatever app supports this intent). After deciding i want to send this as mail to a friend the mail activity opens up, let's me send it and seamlessly send me back to right where i was (reading the article). This is integrated throughout the whole OS.
Now, if i am reading some rss article in Pulse on my iPad, i have two options: Use the facebooks-share button of Pulse. Ok, but if i want to mail it or the app doesn't offer that at all? I'll have to copy the URL, close pulse, open the mail app, write the mail, close the mail app, open up pulse again.
Another example is: Google places offers me a restaurant i want to visit. Now depending on the apps i have installed i can use google maps, some other navigation software or the public transport app i have to show me the way to get there. It makes the user experience quite seamless, despite the applications not "knowing" of each other. I don't have to write down the adress, open up some other app, enter the adress again.
It's also the way to replace core functionalities of the UI. Want another home application? When pressing the home button on the device it's firing an intent and this can be handled by some home app of your choice. Same for the search button.
The nice thing about intents is that it's very flexible. Depending on the apps i have installed it offers me interaction between those apps.
About JIT: If you want to believe Wikipedia, JIT is no JVM originated feature but was invented somewhere in the 60s. I find it quite hard to imagine how the Dalvik JIT could be a real rip-off of the JVM JIT, as those are based on quite different architectures. The only thing in common is that they both use the same syntax.
About Open Source: I may be corrected here but it's perfectly possible to have a working phone by taking the sourcecode from android. It will have a running kernel, a working UI, i can install apps and live with it. What would be missing would be gmail or the android market. But there are other markets and other mail applications. Could you please point me to where i can find a compilable open source version of iOS?
I'd rather wait for one company to try to and get their UX together than wait for Google to do an 180 on their data collection policies or for Apple to tear down the walls of their garden.
Here was the original announcement: http://flors.wordpress.com/2009/08/27/software-freedom-lover...
If Nokia were to enter the Android market and promote their open ethos throughout the Android community then the company could make a mint. Something as simple as releasing driver code for their phones so people can modify code to be run on their phones would put them miles in front with the Android community. If Nokia were to do these simple things then projects like the GAOSP wouldn't be so relied on to provide a usable phone with support.
These problems exist because manufacturers have not thought about these issues, and would rather line their pockets with new customers than provide support for existing customers/suckers.
Most people I know with Android devices have never downloaded apps, some have downloaded a few in the first few days they had their phone, and only my most hard-core tech friends download any regularly. Most studies seem to confirm this behaviour. Most people don't even know what a 'phone update' is, and are caught off guard when their phone asks them about it.
So, you buy a new Android phone, try to download the Twitter app, and realise that your 2 month old phone will never be able to run it. Does the phone work?
A lot of custom OS projects wouldn't exist today if consumers believed it did.
Anyway, my main point is that 'twitter' is something most users have only heard from on TV and don't even know what it is. For a regular user, a phone works when you can make phone calls with it, send text messages and set reminders/use it as an (alarm) clock. Then there are fancy features like using it for navigation (which is something they're already familiar with from standalone devices), contact/full agenda sync, and password management; and reading news sites; and post on facebook when they're so bored out of their mind that they really don't know what else to do.
And then there's the uber-advanced, only-nerds-do-this, full phone-centered lifestyle, where as much as possible is automated through phone apps. This is where twitter-client downloading people fall into - web nerds, turtle-neck wearing marketing people and art students. Of course in absolute numbers this is still a sizeable market, but it's only a fraction of the overall 'mobile phone' customer base. It will become more main stream in time, but not now...
How many OS projects are really used? A couple of hundred users, a couple of thousands for popular custom android roms? That's still marginal.
They do. Their customers are the telcos. most phone manufacturers will do whatever they are told, without much regard of how much this will affect the life of their users.
As long as we prefer to buy locked-up, subsidized phones from our telcos, this unfortunate arrangement will persist.
It's hard to grasp just how revolutionary the iPhone was. There are so many tiny things that's not by itself a revolution, but adding them all up and you're going disruptive.
I tried to compile some of it in a list here:
http://blog.opportunitycloud.com/2011/01/21/what-apple-did-w...
...
No 3G, no MMS, no video calling, shitty camera & bluetooth. Lame.
Their theme? "Burning platform". The exact same story that opens the memo was their story too.
Maybe this Mr Elop is really an original thinker that will do great things; but the "burning platform" analogy is the most tired image EVER.
Oh, and did it work in Paris in 1995? Not really. It was not an absolute disaster, but in the end (two years later) the British threw the towel and went home, and the French partners who were there before stayed on (are still there to this day).
The reality is that the "burning platform" metaphor is a classic story repeated ad nauseam in business schools and business books; see this for example (from 2005):
The term “burning platform” is a mainstay in business lexicon for many years.
For those not familiar with its origin, the story goes something like this:
A man working on an oil platform in the North Sea awakened suddenly one night by an explosion. Amidst the chaos, he made his way to the edge of the platform. As a plume of fire billowed behind him, he decided to jump from the burning platform even though jumping is a risky option for the following reasons: It was a 150-foot drop from the platform to the water.
There is debris and burning oil on the surface of the water.
If the jump into the 40°F water did not kill him, he would die of exposure within 15 minutes.
Luckily, the man survived the jump and hauled aboard a rescue boat shortly thereafter. When asked why he jumped, he replied, “Better probable death than certain death.” The point is the literally “burning” platform caused the radical change in his behavior.
http://www.imakenews.com/cppa/e_article000368179.cfm
(Please read the rest of this article to know how the story should be used in a business context; it really seems to describe the email, and it's prophetic since it was written six years ago).
Where do you think Mr. Elop heard this story in the first time? What's more likely, that he met an actual burning platform survivor, or that he read about this very common story in a business book?
“Piper Alpha was a North Sea oil production platform operated by Occidental Petroleum (Caledonia) Ltd. The platform began production in 1976, first as an oil platform and then later converted to gas production. An explosion and resulting fire destroyed it on July 6, 1988, killing 167 men, with only 59 survivors. The death toll includes two crewmen of a rescue vessel. Total insured loss was about £1.7 billion (US$ 3.4 billion). At the time of the disaster the platform accounted for approximately ten percent of North Sea oil and gas production, and was the worst offshore oil disaster in terms of lives lost and industry impact.”
In any case, I wasn't inferring that Elop didn't get it from there (and that he's a creative mastermind), but my question was specifically about what made it "tiring". I had actually never heard it, but am finding all kinds of sources to it now so it makes sense to me now why you would refer to it as "tiring". Thanks.
It is slightly disappointing to hear that he just reused the story, though. I don't even find the story that compelling -- there's nothing in there about the guy succeeding afterwards, but rather just surviving (and changing his behavior). I could think of a number of possibly more relevant stories.
Good luck to him though!
Me neither. I think it's a rather weak analogy: shouldn't you first try to put out the fire? And if you're running away, jumping to a probable death to escape a certain death, how is that good or inspiring?
But the worst about this story is that you have to tell it.
I've never been on an offshore platform, much less a burning one, but I'm guessing if it were on fire I would notice. I wouldn't need to have the boss come behind me and pat me on the back saying: "hey, listen, I think we're on a burning platform, here's a list of reasons why".
But when it's used in a business context, it has to be backed up by evidence, which means either that the platform is not really burning, or that it's a matter of interpretation.
Up there with "Burning Platform" would be "Problems are snakes. If you see a problem, don't hold a meeting, Kill the Snake" and "Our competitors don't have this problem as a central focus, it's like the chicken and pig at breakfast, we're the pig, the competitors are the chicken. The Pig is committed, the chicken is just involved", and, the one I've now heard no less than four times at four different companies - the story about the various people working on a church, and one character, sweeping his heart out, says that he's working for the glory of god (I.E. Do it because you love it, not because it's a job).
I never really got why dying to become someone else's food was supposed to inspire us - but I've heard it a couple times now.
Usually, after the meeting, a few of us would quietly point out that the pig was eaten, and they were asking us to sacrifice ourselves to the project, but that never seemed to discourage the metaphor from coming up, again and again.
Less than a decade ago, nobody could touch Nokia in the mobile handset market, Nokia defined quality... and then they got complacent and instead of innovating, they stuck to old principles. Its like Nokia witnessed the age old fable of the tortoise and the hare firsthand.
Don't forget that only a fraction of people can afford these >= £500 devices and only a fraction of those buy them without financing.
Nokia is still making money, but pretty much all new profit is going to everyone else (especially Apple).
Apple's profit margin is an extreme aberration, and it isn't sustainable. Any comparison that relies upon profit numbers is...disturbed.
Definitely not. But I do think that there's been incredible growth in Nokia's core business, and they haven't seen any of the growth.
Apple has been able to do this in four markets now:
1) iPhone -- a carrier subsisized market.
2) iPad -- see (3)
3) iPod -- Large margins based on industry leading large volume.
4) Computers -- Expensive niche product with huge margins. I believe the are the single most profitable computer company (if you look just at their computer division).
Why is a comparison based on profit disturbed? In business that's pretty much the only thing that matters. Profit yesterday, today, and tomorrow.
No, it isn't sustainable. History will prove me out, and in 3 years I would bet that Apple has seen a significant margin haircut. Quote me on a 50% decline.
As a comparison, by the way, look at Sony (which was the Apple before Apple). Once a purveyor of high margin audio equipment, they saturated that market and started moving to high markup mobile audio equipment...and then TVs...and then lower markup mobile equipment, etc, and then everyone started fighting back.
Apple is exactly following the Sony curve.
EDIT: Arrowed down. This is one of those seminal moments that speak volumes about a community, and I think HN is done (just furthering an observation that has grown). Account and site abandoned.
Sony eventually got commodotized in the very technology they created. This won't happen with Apple. At worst they get undercut in their industry, but Apple has a rich ecosystem that has to stay with Apple to reap the benefits.
And just for the record, no downvotes from me.
The most contentious statement you made, to me, is "any comparison that relies upon profit numbers is...disturbed."
Why is profit a disturbing business metric?
Anyway, Apple has always had a disproportionate share of any market it seriously participated in — the big difference is that 10 years ago Apple was a very small part of a single market. Some fluctuations will probably happen over the next half a decade, but you can bet that Apple will remain absurdly profitable in a way that embarrasses most of its competitors. It's just something that Apple is good at.
I'm betting it's not. It's something Steve Jobs is good at.
Wow seriously, overreaction much? I don't know how long after you edited your comment but you're +8 now. It seems a little petty to dismiss all of HN because your comment was downvoted. Big deal. You just have to put up with some downvoting and realize not everyone is always going to have the same opinion as yourself.
My guess is you'll be back tomorrow or the next day judging by your comment history.
I would say please don't let the door hit you in this ass on your way out, but you are a bog-standard troll and will be back again next week whining about Apple.
Dell laptops start at about $400. The MacBook starts at about $1000. If you only want to spend $400 on a laptop, Apple doesn’t want your money. If you want to spend $400 on an MP3 player, on the other hand, you can get a very nice iPod.
So the goal of a phone maker should be to sell as many devices as possible regardless of whether they're profitable? That sounds a lot like, say, Motorola before they adopted Android - not exactly a picture of a healthy business.
They're being squeezed by smartphone tech making its way down towards mid-range 'featurephones' (i.e. a cheap Android handset easily beats a mid-range Symbian featurephone), while the low-end stuff is becoming a commodity churned out by Chinese OEMs.
Maybe. Until the smartphone market mostly cannibalizes the dumbphone market.
Then where are they?
No - fairly good Android devices are already available for US$150 unlocked (see Huawei Ideos). In the next year they'll fall below $100 and after that they'll be coming free with your breakfast cereal.
Elop is absolutely right with his analogy of a burning platform - there's a very real prospect that within 2 years Nokia could be entirely wiped out from the low end market - down to single digit market share and making very little profit on those. It's nothing short of an existential crisis for them.
Is this what you are predicting for the smartphone arena? Having the hardware at increasingly lower prices in order to make money on the app sales?
Surely, this is the only logical conclusion if Nokia move into an app store-like closed marketplace?
Now, we have tons of carrier-subsidized phones that come with a service contract. (You get a cheap phone, but you have to pay $80/month for the next couple years.) That seems to be where the money is in phones.
Pretty bad luck for a company that was raking in billions selling lots of different low-cost phones to developing nations (which you wouldn't even believe is possible if you went to the John Gruber School of Business). Unfortunately those billions insulated them from the shocks, much like Microsoft happily ignored the internet for years. But the perfect storm of Apple, Android and low-end commodity competitors hit them hard from multiple directions (nice hardware, open ecosystem, low prices were all previous Nokia advantages).
Elop mentions it though, so at least Nokia is aware of the problem: "Let's not forget about the low-end price range. In 2008, MediaTek supplied complete reference designs for phone chipsets, which enabled manufacturers in the Shenzhen region of China to produce phones at an unbelievable pace. By some accounts, this ecosystem now produces more than one third of the phones sold globally - taking share from us in emerging markets."
At the end of the day, you can't create a best-of-breed product out of nowhere. You need the core competencies to be already present in your company's DNA.
Palm came back out of nowhere and created in the Pre a phone with great usability fundamentals, and an incredibly innovative contact/data management layer. But that didn't come from nowhere.... those are exactly the things that the Palm Pilot excelled at.
Apple created a phone with incredible industrial design that pushed the boundaries of what was possible in a category of device. These things, also, have lots of precent at Apple, in the Macintosh, the iPod, OS X, and the iTunes music store.
Google, in Android, built a phone OS that has incredible integration with networked apps, and is built on a well run open source project. But before they started, they already had the best network app development teams in the world, and many world class open source developers and evangelists on staff.
What does Nokia have? I'm honestly not that familiar with their history, but they appear to have had (at one time) world class supply chain management and global distribution. And solidly built hardware? Is that it?
Honestly, I think Nokia had the right DNA to make a huge contribution to cell phones when they were a brand new, untested product with limited global reach. But now that those issues have been nailed, the distribution channels are in place, and everyone's phones, from Motorola's Android phones to LG's crappy feature phones are "good enough" for the people who buy them.
My guesses for the big future developments in phones are the web maturing as a development platform (Google seems positioned to ride that wave), powerful new software APIs (social, location, augmented reality, AI, etc), new media distribution models (Netflix, iTunes, Shopify, etc), and of course design-driven expansion of the user experience (Flipboard, FaceTime, Google Maps, etc).
I don't see product teams at Nokia who appear to be executing in any of these areas at the level that would be necessary to dominate in them. And they would need to dominate in two or three to stop hemorrhaging customers.
I think they're toast.
They also know how to differentiate without creating fragmentation. Most Android products suffer because of fragmentation - different OS versions, different hardware, etc. Nokia should know to create a core platform or 2 (standard screen size, hopefully upgrade support), and then make money on marketing prettier models to the people who'll buy them.
It's obvious that they need Android, maybe with some "value added" features tacked on (but not in a tacky way).
OK, crappy feature phones may be "good enough", but mobile phones has always been something of a fashion business. Nokia is good at this game, they just got blindsided by the iPhone and Android.
Now there's iPhones (which Nokia can't really do anything about), and Android phones (which Nokia can do better than anyone, if they really try), Windows Mobile (maybe) and burning platforms like Symbian (despite Qt rocking, or so I'm told).
Some examples include:
* Code-naming their phones obscurely, making it nearly impossible to remember and later buying a phone you like. Compare "Galaxy S" and "iPhone 3G" with "N6310".
* Not bothering to place the phone's name anywhere remotely visible on the phone, so you have to yank the battery out if you want to know your friend's phone model.
* Repeatedly implementing really dumb design decisions without ever fixing them: When calling someone, the "Speaker" button temporarily means "End Call" in addition to the "End Call" button. What possible purpose does this serve? It means you need to bother your eyes and hands with the phone when explicitly need an eyes/hands-free experience!
Many more of Nokia's decisions seem simply stupid. Does anyone see justification for these dumb practices?
Nokia's phone naming strategy was certainly not dumb at the time. They built brand around 'Nokia', not around specific models. You had 'Nokia' phone regardless of the model, similarly as you currently have 'iPhone' regardless of the exact model. (And current iPhone numbering i.e. 2G, 3G, 4 is easy to remember just because there are so few models) It was an integral part of Nokia's strategy that there were many many models to choose from, any single strong model brand could have been hindrance for that strategy.
Now, we can argue that in smartphone era, building strong model brands might be wiser strategy (Galaxy S), but that's another discussion. Nokia's model naming strategy was definitely not stupid in earlier times.
But instead they decided to start over with Qt and a partnership with Intel.
They ripped all progress out from under them.
It is far more easier to have Meego adopt an Android personality, since they're the same kernel inside. They could add Nokia flavor on top.
The far more important decision is positioning; they would've to leave the low-end phone market to chinese, and focus on the midrange.
b) having an OS team has turned into a liability for Nokia. CEOs normally don't care about 'gutting' workforces. In fact, I predict that Elop will cut the 'deadwood' of the old company as soon as he announces whatever on Friday.
c) (edit) Elop has to pay attention to Oracle having sued Google over Java in Android.
No, this is Microsoft establishing a brand in the phone space via take-over of Nokia. Watch and see.
I really hope Nokia doesn't follow the SGI way.
edit: just thought of this... maybe MS will convince Nokia to sue Google?
An Android-based Nokia could come with improvements in the phone features that make it feel like a Nokia, so that existing Nokia customers who are considering jumping ship to the Android of the week will be more comfortable sticking with Nokia.
This is where I went wrong; Elop was able to negotiate an exemption for Nokia.
I think there is no way they could go only WP7 - WP7 is controlled absolutely by Microsoft and Nokia cannot afford to be subjugated that way.
If they are really bold - and I kind of hope hey are - I would base it on Android but make it "better" - as in, devote huge resources to solve the long standing problems with Android - the UI is not slick enough, not smooth enough, the compatibility story is problematic, the market is polluted with low end stuff and much of the high end stuff doesn't run on all the phones.
If they forked Android and put out kick-ass awesome hardware with compatible but totally redone and beautiful iPhone-quality UI, a more curated market (without Apple lock down), bold promises about upgrades ("we will guarantee any phone we release will get current versions of the OS for 3 years") - they could possibly even steal the market leadership from Google on the Android platform. They are one of the few companies that would have the resources to do this - I hope they give it a shot.
Having said that, I bet WP7 will be in the mix if only to convince the market that there is a backup plan.
Also, Nokia's work on Meego would transition well to webOS, since they are both linux based.
The memo repeatedly mentions innovation and market leadership.
With WinMo7 locked down as tightly as it is it is very difficult for a company to be innovative in that market.
OTOH, Android already has quite a diverse ecosystem, and would allow Nokia the opportunity to do it's own thing while still supporting an active developer community.
If Nokia was interested in WinMo7, why would they invest heavily in a Silicon Valley Engineering office (as opposed to a Seattle office)?
Finally, there is already a (very active, community) port of Qt to Android (http://code.google.com/p/android-lighthouse/). If Nokia got behind that it would give them a roadmap that would avoid alienating app developers who were hoping to support MeeGo.
The way I see these types of memos work is like this: spend the first part of it describing the problem, and the second part should include the suggested solutions. I know a former boss of mine who , if I didn't do that in my "lamentation" emails, i.e. not suggest solutions, would have smashed my head against the nearest desk.
The problem is that Apple already did that recently. The iPhone was Apple's Wii, and now it seems incredibly difficult for Nokia to innovate that much that quickly without creating something the world might not be ready for, like the N-Gage.
I hope they pull it off though. Respect for the candor in the memo.
No one criticizes Samsung and they are pretty much a mobile-OS whore: SHP, Bada, WP7, Symbian (albeit a year or so ago), Android, Limo, etc.
N.B. Regarding SHP: I can't remember the name properly but this was the old/existing Samsung feature phone platform, it probably has got rolled into Bada, although Bada has two configurations (with and w/o the Linux kernel).
Samsung's business is in selling phones, not developing a software platform and therein lies the problem. They make their bread and butter on planned obsolescence and in the process screw over their customers.
Once the operators (typically) have added their crap on top it leaves you little margin to extract extra cash until you get someone to buy another device.
Nokia is renowned for their hardware build quality - well in advance of LG, Moto, or Samsung. I think the market has spoken that they want the full experience - solid software, beautiful hardware, and impeccable integration of the two. Samsung IMHO has fumbled that ball up until now, producing cheap-y hardware coupled with lazy software integration. There's a lot of room for someone who knows what they're doing with Android to come and eat their lunch.
Maybe they just want to focus on selling profitable phones... Not every business model should depend on a single software platform.
Except me, maybe. I don't know anyone who's been satisfied with a Samsung device. I certainly wasn't with mine.
The article is longer than the mail, says less, and says it less eloquently.
http://www.youtube.com/watch?v=83EwglrnvlU
edit: part 1 for those interested
1. create a really awesome skin like HTC has.
2. create a suite of really awesome apps and release them on the apps market, but give them free to users of your specific phone.
and that Elop would start looking to Nokia's new Silicon Valley campus as its center of gravity, with execs and senior management expected to start spending more time outside Finland.
That's quite an endorsement of Silicon Valley as a tech hub...
But how exactly is moving the heart of the company into Sunnyvale going to help? Nokia isn't exactly in the position to compete for the best people in those horribly over-fished waters, especially soon after a round of brutal layoffs. Are the dregs of Silicon Valley really going to be that much better than the talent elsewhere? Does the world even need one more company centered around that echo chamber?
1. Qt is really valuable asset, they are keeping it. Actually they are keeping everything they have now.
2. Joining WP7 or Android as an OEM would cut Nokia out of their ecosystems, not going to happen.
3. Adopting WP7 or Android as is would require Nokia to cut back some custom hardware features and make differentiation harder.
My best guess is WP7 with Qt allowing Nokia's services and apps on those phones. This would be additional to Symbian and MeeGo devices. However, I'm pretty sure they are starting to ramp Symbian down.
If they adopt any third-party OS, I can't see them keeping MeeGo. That'd be stupid; it'd leave them having to build a MeeGo ecosystem instead of just taking advantage of the one they join.
And I don't see Microsoft allowing Qt on WP7; it'd undermine their whole .Net-based story.
I sometimes wonder where Microsoft might be if he'd replaced Balmer, but it's great to see him take on Nokia. Talk about a tough gig!
Zero points for coming out: Mr Elop was brought in by the board exactly with the goal of rescuing Nokia in mind. Looking from that angle the memo is a bit overdue.
Zero points for opening the letter with a metaphor - this is the way someone steering a major technologic corporation is expected to convey the direction - by projecting a vision.
Negative ten points for picking wrong metaphor. It broke down immediately. See for yourself: should Mr Elop's best employees take his advice literally and jump the burning platform? Followed with a change in behaviour meaning never again joining a severely fragmented bureaucracy ridden company? What was the lesson learned by the oil rig worker? What could he have done differently in the situation when he woke up on a burning platform in a middle of a sea?
I’d award one point for openly enumerating the challenges. But these are the symptoms of Nokia demise, he hasn't dug deep enough, the list is known at this point to every man and his dog.
Negative ten for the actual lack of a credible vision at this point. Let’s wait till the strategy comes out.
Windows 7 isn't much of a competitor. It had a smaller debut than Android and iPhone, by a large amount, and is being outsold by both so the gap is widening. If I were Nokia, I wouldn't be worrying about fellow also-rans in the industry, like Microsoft. I'd be worried about the products that were eating my lunch, and I'd let Microsoft figure out how to protect their own lunch.
If Nokia chooses Windows for their next generation, I'd wager they'll keep dropping like a rock. How could they generate any excitement over a Windows phone? Nobody likes Windows phones, even people who like Windows on the desktop.
That's a bit categorical, no? I know at least two people who quite like their Windows Phones. Before you ask, not all of them work at Microsoft.
This leads me to believe that 50% of the people you know who like their Windows phone do work at Microsoft.
My hypothesis is that Windows Phone 7 is a stop-gap measure introduced to build their brand and app portfolio while they're working on the 'real' thing. Note that WP7 apps are .NET apps, so transition to a pure .NET kernel would be relatively easy. Of course I have nothing but a hunch and some rumours, to base this on, but I find it highly unlikely that MS is just going to sit there while Google is building the dominant platform for internet usage (note that in some countries, like India, smart phones are now the most popular device for accessing the internet).
Remember that although us geeks are picky about the OS our phone runs, a the large majority of phone buyers really don't give a crap and switch easily. My girlfriend goes into a store and just picks out something shiny, possibly looking for specific features like a keyboard to type out email on. And app portfolio isn't just a matter of quantity. About 10% of the apps on any given platform probably satisfy 90% of a user's needs. Microsoft really just needs to have that 10% to be a compelling alternative, and they have the cash to simply write it themselves or pay people to write it for them.
So all in all, I don't think that Microsoft is out of the game just yet. On the contrary, they're just getting started, and this deal with Nokia is going to be very valuable for both companies.
So, what? Everything in userspace on an Android phone is Java and runs in the JVM. That's not really a feature users care about, but even if it were, the leading OS already has it.
You then go on to say:
"Remember that although us geeks are picky about the OS our phone runs, a the large majority of phone buyers really don't give a crap"
Which I agree with. Which is why there's no reason for someone to switch to a Windows phone, even if, on some technical level a .Net phone were lovelier than the competition.
Just because the next magical version of Windows is based on a smarter core, doesn't mean any normal user will have a reason to switch.
"On the contrary, they're just getting started, and this deal with Nokia is going to be very valuable for both companies."
You still haven't answered why Nokia would sign on with another sinking ship rather than simply choosing to make great devices for the leading (free) OS.
Of course, because the new CEO is coming from Microsoft, he may very well have loyalties that simply don't make sense for his new company...and if that's the case, he'll merrily drive the company into further insignificance while drawing a nice fat paycheck, and making his friends at Microsoft happy.
I agree, but chip makers, handset makers, and ultimately carriers do care. Apple, Sony, Microsoft, and Nintendo sure care a great deal about people jailbreaking their devices.
My point was not that a new kernel would directly persuade potential buyers, but I do think it is needed to support the features that users have come to expect from modern phones (i.e. multitasking). In my opinion WP7 is just not up to the task, so if they want to compete, they need to step up their game in the OS department.
"You still haven't answered why Nokia would sign on with another sinking ship rather than simply choosing to make great devices for the leading (free) OS."
I don't know, maybe MS is giving them a truckload of money? Nokia has a large software development group, so maybe the deal is that Nokia will develop apps for WP7? Maybe they just want to differentiate from the Android horde? I really don't know why they would go with MS, if indeed they choose to do so, but all I'm saying is that I don't think Windows Phone is a 'sinking ship'.
There is no way that Nokia will ever win using Symbian/MeeGo or Android.
If they stay the course then Nokia's dead and will never recover.
Both companies are at a point where they're about to enter irrelevance in the mobile space (Nokia actually entered irrelevance as soon as the iPhone launched, but it took them a while to figure that out due to pride and thinking all that matters is how many widgets you ship -- they're about to hit the bottom of the abyss).
The problem Microsoft has is that all the existing licensees don't care at all about their platform. Samsung, HTC and LG all have their hands in multiple pies, not willing to commit to any platform because they don't care about who wins, as long as they make money.
They need someone to focus exclusively on WP7, delivering the best integrated experience the platform can offer. Nokia's not going to go exclusive unless Microsoft does too.
There are issues on both sides though:
* Nokia used to build great hardware. They need to start doing that again to convince Microsoft it's worth acquiring.
* Microsoft needs to recognize that WP7 isn't going to go anywhere unless something major changes.
The upcoming announcement might be a precursor to the above scenario.
The downside is that MS probably has the inside track on that with Windows Phone 7/8.
Looks like Nokia is going with Windows Phone 7
http://news.ycombinator.com/item?id=1481354
this new memo makes me think better of them. if Nokia can get out of the new CEO's way and let him execute, then maybe they can turn it around.