By Mark Watson
In 2008, Peter Knook left a 17 year career at Microsoft to take charge of Vodafone’s mobile Internet strategy. One of the things he brought with him, obviously, was his Microsoft rolodex (or whatever rolodex abstraction is currently used in Windows). Vodafone could engage directly with Microsoft for mutual competitive advantage and finally pull ahead of the pack in the field of mobile data services. And that, ladies and gentlemen, is why we’re all now using mobile versions of Windows. Sorry, got carried away there: Mr. Knook left Vodafone in September 2010.
By coincidence, also in September 2010, former Microsoft executive Stephen Elop joined Nokia to become their CEO (the first non-Finn to do so). He used up his honeymoon period to effectively brand his company not fit for purpose in an internal memo that was ‘leaked’ earlier this week: ‘Hello, I’m the new captain. WE’RE SINKING! TO THE LIFEBOATS EVERYONE!’ OK I’m paraphrasing. Here is what the memo actually said:
‘…the platform is on fire, we don’t have any lifeboats, everyone jump into the freezing oil filled water.’
To which he should have added: ‘Where we’ll be picked up by a massive liner which luckily has no passengers on it. And is also slowly sinking.’ Extended metaphor ends.
No sooner said than done. At today’s Nokia conference we got the official word – the much anticipated announcement that Nokia is jettisoning many of its previous strategies in favor of Windows Phone 7.
Does this actually make sense? Reaction from analysts has been, by and large, underwhelming.
Nokia is, per the ‘leaked’ memo…
- Losing on brand and user experience to Apple at the top of the market
- Losing on price and capability to Android phones in the rest of the smartphone market
- Losing on price to emerging suppliers in the feature phone market
The solution to the above, in my humble opinion, is not necessarily to go off and find a new operating system. Even less so to find an existing but so far not very successful one. Nokia seems to have got awfully hung up about operating systems, because the press seems to see that as the fulcrum of conflict in the market. It isn’t.
To show how important Apple thinks operating systems are, the OSX Mac operating system, which provided the basis of iOS, is ultimately based on BSD UNIX, and the UNIX operating system dates back to the early 1970s. Android is based on Linux (ironically, designed by a Finn named Linus Torvalds), a re-implementation of, yes, once again, UNIX. If operating systems were so important, developers would be looking for one which was younger than their parents.
The real competitive focus surrounds innovation in the industrial design of the user experience, of the hardware, and the interaction between the two. These are areas where Nokia needs to be independently successful, not dependent on partners.
The critical success factors in this market strike me as the following:
- A compelling user experience
- Hardware features
- Hardware pricing
- Brand reliability
- Exclusivity of content or experience
A company which was trying to succeed would be innovating in several or all of these areas. Nokia isn’t going to inherit a compelling user experience from Microsoft, and probably isn’t going to be able to control that interface either. Equally, Nokia is going to be dependent on Microsoft support of any hardware innovations they introduce.
Surely Nokia would have been better off taking Android and then investing heavily in putting a branded, exclusive user experience on top of it, linked to hardware innovation around new features, cost and reliability. To be honest, they missed a trick on this a while ago – they should have merged Symbian with Android and moved the develop dollars into industrial design.
The remaining straw to which one might cling is around what kind of content and applications Microsoft can bring to bear that nobody else can access. This strikes me as falling into two separate areas: one, primarily around Office (which is where Mr. Elop came from) and another around the Xbox platform. Tablet devices, especially, are going to require Office applications, but these won’t be full-fledged versions of the desktop apps, and in fact the main requirement will be that they can read and write Office formats, which many other applications can now do. There may be mileage in Exchange support, not for mail (which is easy) but for diary & calendar (which can be fiendishly complicated).
I’m not sure what the touted access to the Xbox community gives – to run a brief thought experiment, how is an exclusive and successful property such as Mass Effect (developed by Bioware, which was acquired by Microsoft some time ago) going to play on the smartphone or even a tablet? The answer is that it is going to be something completely different (if it crosses over at all) but with a similar name; but Nokia might have been better served by an exclusive relationship with, say, Hasbro, for the kind of games properties that might play on mobile.
Finally, from a financial point of view, it’s not clear that this really saves Nokia any money. Can it just drop its existing commitments on Symbian, or its partnership agreements on MeeGo? Do either of them really cost enough money to impact the margin on global phone sales? Probably the only real solutions on price competitiveness sit in the far more mundane world of tooling and locations for phone manufacture and components supply. As a profits fix, this is heaping all the eggs into the basket of believing Windows Phone 7 is going substantially increase the number of phones sold, i.e. a fix which is almost all dependent on the revenue side. And, re-reading the first part of that previous sentence, it doesn’t feel terrifically convincing.
This is why, following the sounding of the klaxons at Nokia a few days ago, many analysts have greeted this announcement with a resounding ‘ho hum.’ I fear that, once again, this is not the dawn of a new age where we all end up using mobile versions of Windows.
Mark Watson the former EVP of Technology & Engineering at Antenna and former CEO of Volantis Systems, during which time he blogged frequently for Mobile Masters.