Like a big collective cow, the blogosphere is continuing to chew on the Nokia-Microsoft announcement. It seems to be one of those rare events that forces people to stop, step back, and reconsider their assumptions.
I think it's impossible to say today what impact the Nokia-Microsoft alliance will have, because we don't know how well Nokia will execute. If Nokia executes poorly, there won't be any change at all -- both Microsoft and Nokia will continue to gradually decline in mobile. If Nokia executes well, I think the impact could be pretty big. Not asteroid-killing-dinosaurs big, but a very large meteorite, with effects felt worldwide.
For the purposes of this note, I'm going to assume that both Nokia and Microsoft will execute well. That's a risky assumption -- they would not have formed this alliance if they had been executing well in the past. But for today we'll give them both the benefit of the doubt.
How many platforms can we stand?
Ignore the hype from Nokia about the "third platform." The reality is that we're on track to end up with four or five significant smartphone platforms in the US and Europe: Apple, Android, RIM, Windows Phone, and HP/Palm if their new products are excellent. Japan as usual will be very different, and I don't think all five players will be equally active worldwide.
You might ask if the market can accommodate five platforms. There's a school of thought that says the smartphone market is destined to go the way of the PC market -- eventually almost everyone will coalesce on a single platform that has the most applications and licensees. If that's how smartphones are destined to work, nobody seems to have told the customers. Platforms with small numbers of apps (RIM in particular) have continued to sell well. Also, back when I was at Palm and we had far more apps than any other mobile device, it didn't let us destroy Pocket PC, or RIM, or Symbian.
I think apps do matter in smartphones, but so far they appear to matter less than they do in PCs. Without any apps, a PC is useless, whereas most smartphones ship with a lot of functions built in: voice telephony, texting, e-mail, browser, camera, etc. Third party apps are more gravy than steak, at least for now.
So maybe the magic number is two platforms. In marketing, many experts believe customers can hold only two major brands in their heads for any market: a leader and a challenger. Think Coke and Pepsi, Hertz and Avis, Airbus and Boeing. On the other hand, there are plenty of markets which have dozens of competitors. Automobiles, for instance. You can have huge numbers of successful brands there because the market is heavily segmented -- Rolls Royce doesn't compete with Mini Cooper.
I believe the number of smartphone vendors and platforms is going to depend on the actions of the smartphone companies themselves. If they treat smartphones like a single consolidated market, a shakeout is probably inevitable. If they segment the market, creating brands and devices that serve different groups of customers differently, I think there's room for all the platforms to survive.
Unfortunately, at this point most of the smartphone companies are focusing only on slavishly copying Apple. Even RIM, a company with differentiated communicator products, is trying desperately to turn them into iPhone clones. That's a great strategy to ensure commoditization and market dominance by Apple.
Since we're giving Nokia the benefit of the doubt today, let's assume they create differentiated products that help to segment the market. I think that would stimulate other handset companies to do the same thing, leading to a relatively stable multiplatform world.
Here's what that means to the rest of the industry...
For the Android licensees, there will be intense competition for shelf space
In a five platform world, I think it'll be hard for all of the Android licensees to survive. Picture your typical Verisprint store a couple of years from now (Vodorange if you're in Europe). It probably carries three iPhone devices, because Apple has diversified its line. There are a couple of RIM devices with keyboards. We're assuming Nokia and Microsoft are successful, so there are a couple of Nokia smartphones on display. Since we're giving the benefit of the doubt, we'll also assume HP has paid big comarketing dollars to get two of its devices shelved. That's nine smartphones. How much space is left for Android models? I figure maybe two or three devices, split between Samsung, HTC, Motorola, SonyEricsson, LG, etc. Life gets very uncomfortable for a couple of those companies.
Or maybe they get lucky and a RIM or HP gets knocked out of the picture. That would leave space for more Android vendors. But the Android licensees can't control that -- they're counting on Google to drive one or two of the other handset platforms out of business. Is Google prepared to fight that sort of alley knife-fight against an HP or RIM, companies that might otherwise be Google partners?
Android was a fun product for Google when all it meant was bleeding Microsoft. But it eventually made Apple into an enemy, and now Nokia. HP is next, and RIM will come after unless it licenses Android. Is that the lifestyle Google wants? I doubt it.
By the way, I think the Android shelf space problem is one of the reasons why Nokia went with Microsoft rather than Google. Nokia has more control over its fate as a Windows Phone vendor, and it knows Microsoft is willing to do anything to win.
What happens to the other Windows Phone licensees?
It's really hard for me to picture them sticking with the platform in more than a token fashion. They avoided Symbian because it was a stacked deck in Nokia's favor; I think Windows Phone now looks the same. The only way they'd invest more is if Nokia's WinPhone products started to take off strongly in a couple of years, and they were afraid of being left out. I presume that's what Microsoft is counting on (it's how they dealt with IBM in PCs).
Can HP really be the fifth platform?
HP is by far the weakest of the five mobile platforms. Although it has a great legacy, it has neglected its developers tragically and its products are late. The recent HP event shows it still has a legacy of goodwill in Silicon Valley, and you can't count out the world's largest PC company. But HP's success depends on great execution. If its products are timely and deliver on their promises, I think it has a good shot. I am especially impressed by the things HP wants to do to link its products together (another on the long list of things Microsoft fumbled years ago).
But can HP execute? It's been steering a zigzag course in PCs. For several years it invested heavily in differentiation, and hired a lot of former Apple staffers. But in the last year it laid off many of those people, killed its advertising campaign, and focused on Acer-style price competition. Now suddenly HP is talking like it wants to go back to being a differentiated premium vendor. That sort of inconsistency will be deadly when competing directly with the other smartphone platforms.
I can't figure out if the HP guys are Jedi knights or middle-aged paunchy men playing with plastic swords. Based on history, I'm about 60-40 in favor of the plastic swords.
For the mobile operators, all of this produces immense happiness
Sometimes it's better to be lucky than good, and the Nokia-Microsoft deal is a huge stroke of luck for the operators. They have always wanted the handset vendors to be barefoot and pregnant, too weak and divided to fight with them for control over phone customers. A five-platform world is immensely attractive to them because the platforms can be played off against one another. If RIM gets too uppity, you can just tip the product mix toward HP, or vice-versa.
The downside of this for the operators is that five platforms are a lot more work to support. So they'll have conflicting temptations -- carrying more platforms gives them more leverage, but adds to their costs. I think the biggest operators will choose the leverage; Verizon proved that it's not healthy to be cut off from a successful platform, and you can never tell which one is going to be successful next.
For app developers, there will be more pain
The prospect of a five platform market is a nightmare for developers. It's already hard to support two platforms (Apple and Android); the idea of supporting five is a logistical nightmare. Most developers will focus on one or two, but that limits their potential revenue because the available market is smaller.
This situation favors large established developers that can afford to do ports to all the platforms. Unfortunately, large software companies are usually the slowest to innovate, so I fear the net result of a five-platform world is likely to be less innovation in mobile apps.
There will probably be intense interest in cross-platform development environments that let a developer write once and deploy anywhere. The platform companies will resist, and probably governments will eventually get dragged into the debate as they are asked to define what constitutes restraint of trade in an online app marketplace.
The one silver lining might be if the platform vendors start to compete for developers by giving them benefits -- for example, by loosening restrictions in their app stores, and taking a smaller cut of revenue. I hope that will happen, but it's not enough to make up for the fractured development platform.
What it means to Nokia: A chance to survive
Although Europe is really a collection of nations rather than a single place, there are a few things that seem to tug on heartstrings across many European countries. The Eurovision song contest is one, Airbus is another, and Nokia is a third. It represents European style and marketing prowess, and it proves that people in Europe can lead a high-tech industry. So the deal with Microsoft represents far more than a business deal; it feels like a betrayal of a European jewel at the hands of a rapacious American company.
It's important to understand what the alternative was for Nokia. If the company had continued at current course and speed, the decline in gross margins would have put it close to breakeven this year, and it would have started losing money in 2012. Things were already so bad that restoring 10% operating profit this year would require laying off about a third of the company. Obviously the cuts won't be that severe because Elop is aiming at a multiyear recovery, but the numbers show how close Nokia was to a death spiral in which spending cuts and revenue declines start reinforcing each other.
Nokia was like a plane rapidly losing altitude. If you don't pull back on the yoke in time, there's nothing you can do to avoid hitting the ground. The company was very close to that point.
I believe Nokia's directors knew this when they hired Stephen Elop, and his charter was to restructure the company radically before the problems became unsolvable. In that sort of situation, you don't ask what products you ought to save. You figure out how much money you can spend, you make a prioritized list of everything you do, and you start cutting from the bottom of the list until your activities fit into the budget.
I think when Elop and the board did that exercise, all of Nokia's OS business was below the line. They just couldn't afford it.
Although stepping back from OS is emotionally devastating to many Nokia employees and fans, I don't think it's necessarily bad for the company. Operating systems are like plumbing; they don't actually add much value to the building, but if they're built wrong they can destroy it. Symbian advocates talked persuasively about its superior power management and ability to run on low-cost hardware, but as far as I can tell that was never reflected in higher margins for Nokia smartphones. Most Symbian users didn't even know the OS was there, and if they had they would not have paid extra for it. Symbian was enormously complex and difficult to work with, and it cost Nokia a fortune. According to Nokia's annual reports, it paid about $800 million when it bought Symbian, and it reportedly employed at least 2,500 Symbian engineers (link). Those engineers probably cost about $500m a year, or about $5 per Symbian phone sold.
Nokia went into the OS business because it was afraid of depending on someone else's plumbing. Now it's betting that Microsoft is weakened enough that it'll actually cooperate with Nokia. Microsoft will reportedly end up paying Nokia more than a billion dollars to adopt Windows Phone (link), and Nokia can reassign the Symbian engineers to tasks that will actually differentiate Nokia's products. The deal with Microsoft could end up being not a surrender for Nokia, but a liberation.
But as I've said before, it all depends on execution. For the folks inside Nokia, things will feel worse before they feel better. The layoffs are still to come, and until then it will be hard for employees to focus on their jobs. Even after the layoffs are done, it will be a lot of months before Nokia can ship new devices designed to take advantage of Windows Phone. Until then, Nokia is unlikely to reverse its gradual loss of share in smartphones.
When I first held a Nokia n97, I was lost in admiration at how beautifully the hardware was put together. Everything from the shape of the case to the motion of the sliding hinge screamed elegance. Then I tried the software and I wanted to toss it out a window. Nokia's smartphone task is now very simple: produce some great devices like the n97, marry them cleanly with Windows Phone, and partner with Microsoft to get them distributed as broadly as possible.
If Nokia targets those products at real customer needs, and differentiates them from the iPhone rather than just trying to top it, it has a good chance of creating the multi-platform future it's talking about.
It's not as much fun as conquering the entire tech industry, but it's a lot better than going broke. And it's probably the only choice Nokia had.
Showing posts with label smartphones. Show all posts
Showing posts with label smartphones. Show all posts
Review: Cleverwraps Ringer Wraps Protection for Smartphones
Picture this:6AM, one December morning in 2010, light rain in the city. Destination: Catskills area for a Snowboarding day trip. My buddy Yann and I thought for a minute and decided to go for it… just incase its not raining up in the mountains. 2 hours later… the rain continues and was coming down even harder at Hunter. “Lets do it!” we said, and proceeded to gear up and went up the mountain. I kept my iPhone 4 in a mid-layer jacket pocket, covered by another layer of outer parka. Yann, kept his G-1(yes, I know, very dated device), in his exterior jacket pocket. After four runs, completely drenched, we found shelter at the resort cafeteria to assess the damage. Pants wet, Jacket soaked, Wallet is damp and my iPhone 4, being inside of another layer, stayed dry. Yann’s G1 on the other hand… had water leaking out of its mini USB port.
Just like that, a perfectly working (albeit outdated) smartphone is finished. Mother nature pwn’d it. In hindsight, we talked about bringing a Ziploc bag with us next time or leave the phones in the car. When the folks at Cleverwraps contacted me about a product called Ringerwrap, it immediately caught my attention. This story popped up in my head and immediately recognized the importance of such innovation. Ringerwraps come in 3 sizes: Small (for iPhone, iPod Touch), Medium (for vertical/flip phones), Large (for horizontal slider phones). It offers a low bulk solution to hostile environments like the snow, rain, beach, and muddy terrains not friendly for your gadget. At around $2 per sleeve, I think this is a no brainer. It would have saved Yann’s G1 for sure. I think everyone should consider keeping a couple of sleeves in their backpack for their next outdoor adventure.Cleverwraps
Nokia: An Excess of Cleverness
I'm looking forward eagerly to Nokia's strategy announcement this week. Although Nokia is not highly esteemed in the US, most of the rest of the world recognizes it as an enormously important company: a brilliant manufacturer, a symbol of status and affluence in the developing world, and a source of great pride to its many fans in Europe and elsewhere. If Nokia could combine its strengths with better execution in software and smartphones, it could be a formidable force in the computing industry as a whole, not just in mobile.
In anticipation of the new strategy, I wanted to share a few thoughts on why Nokia has struggled with the intersection of phones and computing, and what it might do to fix the problems.
A couple of disclosures first:
--Several years ago I did a consulting project for Nokia. I've also met with them, I have had a lot of briefings from them, and I know several people who work there. No inside information from any of those sources has gone into this note.
--Before someone posts a comment saying so, yes my views are colored by the place I live, Silicon Valley. Your paradigm may vary.
As is often the case for big successful companies, I think Nokia's strengths are also its weaknesses:
Strength 1: Nokia focuses very well...which can lead to denial of reality
Nokia has a very intense, delivery-focused culture that has enabled it to pursue strategies with awesome focus and determination. Over the years, the company has transformed itself from a paper mill to a rubber boots company to a video monitor company, etc, etc. I can think of very few modern firms that are capable of that sort of huge transformation.
But I think that same determination has also sometimes enabled Nokia to live in denial of reality. As an outsider who has dealt with Nokia a lot over the years, the company often comes across to me as the opposite of a learning organization. Rather than getting inquiry and questions, when you discuss an issue with Nokia you tend to find that there is already an official Nokia answer to it: self-assured, hermetically sealed, and often sounding slightly condescending.
When Nokia was on a roll and executing beautifully, that self-assurance was entirely justified. As somebody once said, "it's not arrogance if you can do it." But as the company faltered, I think its belief in its own specialness and power led it to resist making changes that would have happened at most other companies several years ago. This deepened Nokia's problems.
A quick look at the company's financials tells the story. In 2006, Nokia was on a roll. Its revenue was growing nicely, and it had operating profits of about 12% before taxes. But starting in 2007, Nokia hit a wall. Its revenue flattened and then fell. Despite the revenue problem, Nokia held its R&D, marketing, and administrative spending almost steady in Euro terms, increasing them as a percent of revenue. It's as if Nokia believed four years of revenue stagnation were just a temporary glitch to be endured rather than a fundamental problem that had to be fixed.
(Note: Fiscal years, all figures in $millions. The numbers above and below were restated from euros to dollars. I also excluded miscellaneous revenue and expenses, and one-time charges, because they distort the trends.)
To give you an idea of the impact of Nokia's slowdown, here are a couple of comparisons to Apple.
First, revenue...
Yes, Apple is now a bigger company than Nokia in terms of revenue. That alone is pretty astonishing to me, and I'm sure it irritates the folks at Nokia, since they routinely bristle at this sort of comparison (link).
Here are expenses (R&D, marketing, and administration) as a percent of revenue. Lower is better.
Apple has done a nice job of holding its expense growth below its revenue growth.
And here's the payoff: Operating income
Financially, Apple has just plain run away from Nokia.
When Stephen Elop was announced as CEO of Nokia, people made a lot of hay about his background as a Canadian. I think that was the wrong bit to focus on. To me, the most important element of Elop's background was the ten years he spent in Silicon Valley. I wondered what a Silicon Valley guy would think when coming into a company and seeing financials like these. I believe the reaction would be horror: "Why didn't you people panic back in 2008?" The accepted wisdom here is that you just don't let expenses stay high through four years of declining revenue. That lets the problems fester. Nokia is now a bit like a patient who has delayed routine medical treatment for so long that he ends up in the emergency room needing surgery.
Elop's now-famous memo on Nokia's problems speaks volumes about the company's culture (link). Assuming the memo is real (I am taking the word of the press on this), Elop likens Nokia's situation to jumping from a burning oil derrick into the North Sea -- where, as anyone in the Nordic countries would know, you can die of hypothermia in minutes.
What does it say about the employees' resistance to change that the CEO feels he has to be this alarming?
Strength 2: Nokia manufactures wonderfully...which produces sterile, inartistic smartphones
Nokia is one of the most efficient manufacturing companies on the planet. Very few western companies have ever withstood an all-out assault by China Inc, but Nokia, a company from high-cost Finland, has also been for years the world's lowest-cost major producer of phones. Elop's memo says that cost leadership is now under threat, but still it's an unbelievable accomplishment that ought to be studied in every business school worldwide.
But the same manufacturing-driven culture that turns out great, cheap feature phones by the dozen breaks down when asked to craft an intricate smartphone in which overall system integration is the most important feature. Nokia designs phones using a manufacturing-like process in which different groups create features in parallel. So (to make up an example) one group might do the user interface, another the mail app, and another the browser. That's very efficient for creating lots of phones quickly, but it means it's very difficult to integrate all of the pieces together closely so they produce a great user experience. The best smartphones, like the iPhone, are designed holistically, with all of the pieces coordinated together. A product manager controls the process and can enforce compliance with the product vision. This process is much slower and less efficient than Nokia's, but when you're creating a product with a lot of software, it ensures that everything works together well.
Apple can get away with this less efficient process because it produces one phone at a time. Nokia has 89 different phone models available currently in Europe (link).
Strength 3: Nokia makes fantastic plans...over and over and over again
Nokia has for decades been able to hire the brightest people from a very bright country, Finland. After meeting a lot of Nokia employees, I can tell you that it probably has one of the smartest workforces anywhere. But all that intelligence has produced an analytical culture that breeds complicated plans elaborately fleshed out by committees. Its history in the last decade is a series of wickedly clever, logical strategies that were so complex and took so long to develop and implement that they were often obsolete before they came to fruition. It sometimes seems as if Nokia has been crippled by an excess of cleverness.
I'm reminded of a short story by science fiction legend Arthur C. Clarke, Superiority. In it he described a society that lost a war by continually focusing on the new weapons that were about to come out of the labs, rather than mass-producing the ones that it already knew how to build.
To make matters more difficult, Nokia defined almost every major company in computing and telecommunications as its enemy. At one time or another it has decided that it needed to dominate or defeat Microsoft, Apple, RIM, Google, the entire handset industry, the network equipment suppliers, and of course the mobile operators. Even the US government tries to fight only two wars at once; Nokia has been fighting at least five.
There are so many examples of Nokia's busted plans that I don't know where to start. The Symbian adventure, in all of its permutations, is an obvious one. Nokia has gone through a number of different organizational structures, each of which was supposed to optimize it to compete in the new world of computing and internet. But the one that sticks out at the moment is Nokia's venture in tablet computing.
Don't get me wrong, I do know the differences between an iPad and an n900. They are dramatically different devices that reflect profoundly different design philosophies. But both were designed for a similar high-level goal -- to make computing and web access mobile. Nokia shipped its product first, more than three years ago. Apple shipped last year. Apple is selling seven million units a quarter, while n900 sales are what, a few hundred thousand? Nice, but not a new industry. I know Nokia has learned a lot, and has built a lot of infrastructure, but at some point you have to generate revenue rather than just having a great learning experience.
What do you do, Mr. Elop?
I think the biggest challenge facing Stephen Elop is that he needs to preserve the strengths of Nokia even as he undoes their effects. Expenses have to come down, but at the same time he needs to invest in innovation. The company must keep its manufacturing strength, even as it adopts a design philosophy that undercuts manufacturing efficiency. People at Nokia have to be free to innovate independently, but when left to itself the Nokia culture tends to seek consensus and compromise.
I suspect that given all these changes, even motivating the Nokia workforce may become a challenge. The Nokia people I've talked to love the company and desperately want it to get better. But nobody could live through the last few years without getting a bit burned out. Now the CEO says your home is on fire and you need to jump into freezing water. Would that memo motivate you to work harder, or would it motivate you to work on your resume? I was discussing the memo with several of my old friends from Apple today, and one of them joked that the message to employees was, "Everybody come to the communication meeting Friday! Oh, and you might want to pack up your personal belongings and bring them, just in case." On Friday, Nokia's people will need to see a carrot -- an attractive, plausible vision for the future of the company -- rather than just a stick.
I'll be watching carefully for that vision. We're hearing rumors that Nokia is planning to shift away from its current operating systems and build on top of Windows Phone 7. I doubt that's the full story. For one thing, Nokia can't completely cut off its current software and switch to something else; there would have to be a long transition. Besides, in the Nokia earnings call last month, Elop dropped some hints about his plans. He talked about maintaining two platforms, one aimed at the mass market and another at the high end. He said Nokia's biggest challenge is at the high end, so that's where I would expect a change is most likely. Elop also went out of his way to praise the QT software layer, so I would be very surprised if it's killed. If Windows Phone is in Nokia's future, I think we'd see it at the high end, paired with QT. So we'd get a hybrid OS with Microsoft's plumbing and Nokia APIs.
That would be a bold move, but it's also extremely complicated. I remember when Palm tried to build its future on Windows Mobile, and gave up in disgust a couple of years later when Microsoft licensed Palm's innovations to other phone companies. How would Nokia restrain Microsoft from doing the same thing again? Elop worked at Microsoft, so I'm sure he has some ideas.
Overall, it sounds like a high risk strategy, almost wickedly clever. Exciting stuff. And yet I keep remembering how Nokia's other wickedly clever strategies have worked out.
Note: I've added more commentary on the Nokia announcement here.
In anticipation of the new strategy, I wanted to share a few thoughts on why Nokia has struggled with the intersection of phones and computing, and what it might do to fix the problems.
A couple of disclosures first:
--Several years ago I did a consulting project for Nokia. I've also met with them, I have had a lot of briefings from them, and I know several people who work there. No inside information from any of those sources has gone into this note.
--Before someone posts a comment saying so, yes my views are colored by the place I live, Silicon Valley. Your paradigm may vary.
As is often the case for big successful companies, I think Nokia's strengths are also its weaknesses:
Strength 1: Nokia focuses very well...which can lead to denial of reality
Nokia has a very intense, delivery-focused culture that has enabled it to pursue strategies with awesome focus and determination. Over the years, the company has transformed itself from a paper mill to a rubber boots company to a video monitor company, etc, etc. I can think of very few modern firms that are capable of that sort of huge transformation.
But I think that same determination has also sometimes enabled Nokia to live in denial of reality. As an outsider who has dealt with Nokia a lot over the years, the company often comes across to me as the opposite of a learning organization. Rather than getting inquiry and questions, when you discuss an issue with Nokia you tend to find that there is already an official Nokia answer to it: self-assured, hermetically sealed, and often sounding slightly condescending.
When Nokia was on a roll and executing beautifully, that self-assurance was entirely justified. As somebody once said, "it's not arrogance if you can do it." But as the company faltered, I think its belief in its own specialness and power led it to resist making changes that would have happened at most other companies several years ago. This deepened Nokia's problems.
A quick look at the company's financials tells the story. In 2006, Nokia was on a roll. Its revenue was growing nicely, and it had operating profits of about 12% before taxes. But starting in 2007, Nokia hit a wall. Its revenue flattened and then fell. Despite the revenue problem, Nokia held its R&D, marketing, and administrative spending almost steady in Euro terms, increasing them as a percent of revenue. It's as if Nokia believed four years of revenue stagnation were just a temporary glitch to be endured rather than a fundamental problem that had to be fixed.
(Note: Fiscal years, all figures in $millions. The numbers above and below were restated from euros to dollars. I also excluded miscellaneous revenue and expenses, and one-time charges, because they distort the trends.)
To give you an idea of the impact of Nokia's slowdown, here are a couple of comparisons to Apple.
First, revenue...
Yes, Apple is now a bigger company than Nokia in terms of revenue. That alone is pretty astonishing to me, and I'm sure it irritates the folks at Nokia, since they routinely bristle at this sort of comparison (link).
Here are expenses (R&D, marketing, and administration) as a percent of revenue. Lower is better.
Apple has done a nice job of holding its expense growth below its revenue growth.
And here's the payoff: Operating income
Financially, Apple has just plain run away from Nokia.
When Stephen Elop was announced as CEO of Nokia, people made a lot of hay about his background as a Canadian. I think that was the wrong bit to focus on. To me, the most important element of Elop's background was the ten years he spent in Silicon Valley. I wondered what a Silicon Valley guy would think when coming into a company and seeing financials like these. I believe the reaction would be horror: "Why didn't you people panic back in 2008?" The accepted wisdom here is that you just don't let expenses stay high through four years of declining revenue. That lets the problems fester. Nokia is now a bit like a patient who has delayed routine medical treatment for so long that he ends up in the emergency room needing surgery.
Elop's now-famous memo on Nokia's problems speaks volumes about the company's culture (link). Assuming the memo is real (I am taking the word of the press on this), Elop likens Nokia's situation to jumping from a burning oil derrick into the North Sea -- where, as anyone in the Nordic countries would know, you can die of hypothermia in minutes.
What does it say about the employees' resistance to change that the CEO feels he has to be this alarming?
Strength 2: Nokia manufactures wonderfully...which produces sterile, inartistic smartphones
Nokia is one of the most efficient manufacturing companies on the planet. Very few western companies have ever withstood an all-out assault by China Inc, but Nokia, a company from high-cost Finland, has also been for years the world's lowest-cost major producer of phones. Elop's memo says that cost leadership is now under threat, but still it's an unbelievable accomplishment that ought to be studied in every business school worldwide.
But the same manufacturing-driven culture that turns out great, cheap feature phones by the dozen breaks down when asked to craft an intricate smartphone in which overall system integration is the most important feature. Nokia designs phones using a manufacturing-like process in which different groups create features in parallel. So (to make up an example) one group might do the user interface, another the mail app, and another the browser. That's very efficient for creating lots of phones quickly, but it means it's very difficult to integrate all of the pieces together closely so they produce a great user experience. The best smartphones, like the iPhone, are designed holistically, with all of the pieces coordinated together. A product manager controls the process and can enforce compliance with the product vision. This process is much slower and less efficient than Nokia's, but when you're creating a product with a lot of software, it ensures that everything works together well.
Apple can get away with this less efficient process because it produces one phone at a time. Nokia has 89 different phone models available currently in Europe (link).
Strength 3: Nokia makes fantastic plans...over and over and over again
Nokia has for decades been able to hire the brightest people from a very bright country, Finland. After meeting a lot of Nokia employees, I can tell you that it probably has one of the smartest workforces anywhere. But all that intelligence has produced an analytical culture that breeds complicated plans elaborately fleshed out by committees. Its history in the last decade is a series of wickedly clever, logical strategies that were so complex and took so long to develop and implement that they were often obsolete before they came to fruition. It sometimes seems as if Nokia has been crippled by an excess of cleverness.
I'm reminded of a short story by science fiction legend Arthur C. Clarke, Superiority. In it he described a society that lost a war by continually focusing on the new weapons that were about to come out of the labs, rather than mass-producing the ones that it already knew how to build.
To make matters more difficult, Nokia defined almost every major company in computing and telecommunications as its enemy. At one time or another it has decided that it needed to dominate or defeat Microsoft, Apple, RIM, Google, the entire handset industry, the network equipment suppliers, and of course the mobile operators. Even the US government tries to fight only two wars at once; Nokia has been fighting at least five.
There are so many examples of Nokia's busted plans that I don't know where to start. The Symbian adventure, in all of its permutations, is an obvious one. Nokia has gone through a number of different organizational structures, each of which was supposed to optimize it to compete in the new world of computing and internet. But the one that sticks out at the moment is Nokia's venture in tablet computing.
Don't get me wrong, I do know the differences between an iPad and an n900. They are dramatically different devices that reflect profoundly different design philosophies. But both were designed for a similar high-level goal -- to make computing and web access mobile. Nokia shipped its product first, more than three years ago. Apple shipped last year. Apple is selling seven million units a quarter, while n900 sales are what, a few hundred thousand? Nice, but not a new industry. I know Nokia has learned a lot, and has built a lot of infrastructure, but at some point you have to generate revenue rather than just having a great learning experience.
What do you do, Mr. Elop?
I think the biggest challenge facing Stephen Elop is that he needs to preserve the strengths of Nokia even as he undoes their effects. Expenses have to come down, but at the same time he needs to invest in innovation. The company must keep its manufacturing strength, even as it adopts a design philosophy that undercuts manufacturing efficiency. People at Nokia have to be free to innovate independently, but when left to itself the Nokia culture tends to seek consensus and compromise.
I suspect that given all these changes, even motivating the Nokia workforce may become a challenge. The Nokia people I've talked to love the company and desperately want it to get better. But nobody could live through the last few years without getting a bit burned out. Now the CEO says your home is on fire and you need to jump into freezing water. Would that memo motivate you to work harder, or would it motivate you to work on your resume? I was discussing the memo with several of my old friends from Apple today, and one of them joked that the message to employees was, "Everybody come to the communication meeting Friday! Oh, and you might want to pack up your personal belongings and bring them, just in case." On Friday, Nokia's people will need to see a carrot -- an attractive, plausible vision for the future of the company -- rather than just a stick.
I'll be watching carefully for that vision. We're hearing rumors that Nokia is planning to shift away from its current operating systems and build on top of Windows Phone 7. I doubt that's the full story. For one thing, Nokia can't completely cut off its current software and switch to something else; there would have to be a long transition. Besides, in the Nokia earnings call last month, Elop dropped some hints about his plans. He talked about maintaining two platforms, one aimed at the mass market and another at the high end. He said Nokia's biggest challenge is at the high end, so that's where I would expect a change is most likely. Elop also went out of his way to praise the QT software layer, so I would be very surprised if it's killed. If Windows Phone is in Nokia's future, I think we'd see it at the high end, paired with QT. So we'd get a hybrid OS with Microsoft's plumbing and Nokia APIs.
That would be a bold move, but it's also extremely complicated. I remember when Palm tried to build its future on Windows Mobile, and gave up in disgust a couple of years later when Microsoft licensed Palm's innovations to other phone companies. How would Nokia restrain Microsoft from doing the same thing again? Elop worked at Microsoft, so I'm sure he has some ideas.
Overall, it sounds like a high risk strategy, almost wickedly clever. Exciting stuff. And yet I keep remembering how Nokia's other wickedly clever strategies have worked out.
Note: I've added more commentary on the Nokia announcement here.
Quick Thoughts on the HP Announcement
I like the products, I don't like the event.
What's impressive
I like the devices. I am disappointed that the tablet doesn't have a stylus, but HP is clearly going for the media player space, and it's a worthy competitor there. The Android tablets and PlayBook start to look kind of weak in comparison.
I like the idea of a smaller smartphone. It's something Apple should have done with iPhone. (It did the same thing very successfully with iPod; why not iPhone?)
I like the integration between the phones and tablets. That's a smart move. The more HP can make this a competition of product families, the more of a disadvantage the Android cloners will be at.
I like the apparent attention to detail in all of the products. As you'd expect from a team headed by a former Apple guy, HP/Palm understands hardware-software integration and how to make a product feel good to use. Even if you never buy one of the HP products, you'll benefit from what it's doing because HP is challenging everyone else in the industry to step up their design and integration skills. Samsung and Lenovo, take note.
And I love the idea of putting this same OS on personal computers. It's bold, it's scary, it's...uh, it makes HP look a lot like Apple. Maybe instead of "Think Beyond" they should have called the event "Think Similar."
And how ironic that HP is moving toward having its own OS just as Nokia is moving toward (reportedly) running someone else's.
What's not impressive
I disagree strongly with the timing and content of the announcement. I am not talking about the length of it. Yeah, they went too long, but it's not a big deal in the ultimate scheme of things. I think there's a much deeper problem here. Good marketing is like a fan dance -- you don't reveal as much as people think you do, and you always leave them wanting a bit more. HP built up the expectation that its new products would be available immediately, and then announced stuff that will ship sometime in summer, if not later. We don't even know prices yet. This gives competitors a huge amount of time to react, and more importantly the products themselves are going to seem old by the time they ship.
This isn't a fatal mistake, but I think it would have been far more effective if HP had discussed the products only in a "secret" event for developers. The news still would have leaked, but rather than being disappointed we would have been tantalized and eager to hear more in the months to come.
HP may be developing products more like Apple, but it's still marketing like HP.
What's impressive
I like the devices. I am disappointed that the tablet doesn't have a stylus, but HP is clearly going for the media player space, and it's a worthy competitor there. The Android tablets and PlayBook start to look kind of weak in comparison.
I like the idea of a smaller smartphone. It's something Apple should have done with iPhone. (It did the same thing very successfully with iPod; why not iPhone?)
I like the integration between the phones and tablets. That's a smart move. The more HP can make this a competition of product families, the more of a disadvantage the Android cloners will be at.
I like the apparent attention to detail in all of the products. As you'd expect from a team headed by a former Apple guy, HP/Palm understands hardware-software integration and how to make a product feel good to use. Even if you never buy one of the HP products, you'll benefit from what it's doing because HP is challenging everyone else in the industry to step up their design and integration skills. Samsung and Lenovo, take note.
And I love the idea of putting this same OS on personal computers. It's bold, it's scary, it's...uh, it makes HP look a lot like Apple. Maybe instead of "Think Beyond" they should have called the event "Think Similar."
And how ironic that HP is moving toward having its own OS just as Nokia is moving toward (reportedly) running someone else's.
What's not impressive
I disagree strongly with the timing and content of the announcement. I am not talking about the length of it. Yeah, they went too long, but it's not a big deal in the ultimate scheme of things. I think there's a much deeper problem here. Good marketing is like a fan dance -- you don't reveal as much as people think you do, and you always leave them wanting a bit more. HP built up the expectation that its new products would be available immediately, and then announced stuff that will ship sometime in summer, if not later. We don't even know prices yet. This gives competitors a huge amount of time to react, and more importantly the products themselves are going to seem old by the time they ship.
This isn't a fatal mistake, but I think it would have been far more effective if HP had discussed the products only in a "secret" event for developers. The news still would have leaked, but rather than being disappointed we would have been tantalized and eager to hear more in the months to come.
HP may be developing products more like Apple, but it's still marketing like HP.
CES 2011 Takeaway: Crap Load of Smartphones Upon Us
CES 2011 is the talk of town right now. If you have been following the usual tech blogs (Engadget and Gizmodo), you'll notice no shortage of Android-powered phones and tablets on the horizon. If you think choosing a smartphone in 2010 was getting tough, I pity the fool that is looking to pick one this year. In short, 4G is everywhere, CPUs are on steroids and Android 3.0 is hot. Some interesting ones include:Smartphones to look out for:
Motorola Atrix (ATT 4G, Dual Core CPU with Laptop Docking!!!)
Motorola Droid Bionic (Verizon, LTE 4G)
Samsung Infuse 4G (ATT 4G phone, Android, 1.2GHz)
LG Optimus Black (2MP Front-Cam, Thinnest for now...)
Sony Xperia Arc (Sony's comeback to Mobile Phone?)
Tablets to look out for:
Motorola Xoom
BlackBerry Playbook (RIM's attempt to win back marketshare)
Asus Eee Pad Slate (i5 CPU, Windows 7)
T-Mobile (LG) G-Slate (Android 3.0, 4G)
Noteworthy: Pioneer's in-car infotainment decks of the future: Pandora connected via iPhone
Breaking News: Verizon to Sell Android SmartPhones
Verizon Wireless could start sell Android devices in as soon as a few weeks time. Looks like Google and Verizon are officially working together to conquer the mobile space. I certainly hope Verizon would not cripple any good features from their Android devices as they've demonstrated historically.This is big news for the industry and will surely help Android gain the momentum to dominate the mobile space as I've predicted.
Source: Yahoo! Finance
Garmin nuvifone is here
Or atleast the nuvifone email is here. I received this few minutes ago. The nuvifone G60 is available exclusively from AT&T and will be sold for $299 with a 2-yr contract and after a mail rebate. In short, the phone is a touchscreen GSM quad band, 3G and WiFi capable. Mr. Obvious will tell you it is a GPS phone famously dubbed after Garmin's popular nuvi GPS handheld.
Smartphone will out sell Desktops by 2010
According to this Switched article, analysts believe by 2010, smartphone sales will exceed desktops. Hence the reason why Dell and Asus have taken the plunge in smartphone development. The way I see it is that full size computers will still be around but will be left with professionals who need its supreme processing power for specialized tasks. Smartphones, netbooks and tabloids will be evolved to the point where average consumers can do "most" of the daily tasks ie. simple spreadsheet, writing a letter or book report, ecommerce, bill paying and use any "cloud-computing" solutions.
Smartphones as GPS Navigation Still LONG Way to Go
Whenever friends or family ask me to recommend a good smartphone w/ GPS for navigation, my general response has been "don't use your smartphone as a full-on GPS". I know this sounds a bit against the usual mantra of "smartphones are meant to do everything" but there is just no way a smartphone can replace dedicated full time devices (ie. GPS, Computer, Camera, etc...). Please don't get me wrong, I am definitely for using my smartphone for everything possible, for the most part, as fillers. On serious tasks, I still pull out the dedicated devices.When it comes to driving, I prefer to have a dedicated GPS unit. Considering what iPhone's App store charges for voice guided navigation (usually $10/mo or $100 for lifetime), you can afford to buy a dedicated GPS unit for your automobile. Of course one could argue that a low end GPS w/o subscription doesn't offer real time traffic, but I'll take the better GPS experience from dedicated unit anyday and can still answer calls and look up traffic info from my smartphone. You'll find this USA Today review helpful in explaining why I would pass on using my iPhone as a GPS navigation solution. Another good reference is from Autoblog on why iPhone 3G GPS navigation is inadquate.
So what is GPS good for on a smartphone you ask? Well, for one, it is great to have it to know exactly where you are on foot and/or provide basic driving instructions in the event if you do not have a GPS unit. GPS combined with internet/search function makes it easy to look up for a store or restaurant nearby. There is also the Geo-tagging function with GPS when used with your smartphone camera. My argument is simple, you probably won't take your smartphone as a dedicated camera at a wedding or ceremony (thats what your dedicated point-n-shoot or DSLR is for) so why would you think you can get by with your GPS navigation with only a smartphone?
T-Mobile Mytouch 3G Available to Public Today
If you've been patiently waiting for the 2nd Android smartphone officially sold in the U.S. (and from T-Mobile), wait no further. The Tmobile Mytouch 3G (aka HTC Magic) is finally out and about for $199 and a two-year contract. Choose from three colors (black, white and red)This phone is pretty slick with a uber thin casing because it doesn't include a physical keyboard. With T-Mobile's 3G network, WiFi and aGPS running over a plethora of Google's goodies (Map, Talk, Gmail, Google Voice, and lots more...), this phone is one of the best contenders out there. Of course, I couldn't live with myself unless I mention the lacking of a 3.5mm headphone jack. Now go get yours!
Incase you want to know how this phone stacks up against other smartphones, Billshrink.com put together a nice little comparo chart here. Looks like Mytouch 3G is a no brainer in terms of average spending of its lifetime!
Toshiba TG01, promising or another WM dud?
Toshiba's latest smartphone creation, TG01, has been the buzz in the mobile market lately. Aside from its uber-thinness at 9mm and a minimalist design that resembles the iPhone, its whats inside that is truly special (no, I am not talking about its mundane WM6.1).Whats interesting about the TG01 is the CPU known as Snapdragon which is a product of Qualcomm. This CPU goes up to 1GHz in processing speed while keep a very low power draw thus has high potential of keeping this smartphone with longer battery life. TG01 is the first phone ever to feature the Snapdragon processor.
Whats interesting about this phone:
* 1GHz Snapdragon CPU with low power usage
* 8GB internal memory w/ microSDHC slot supporting up to 32GB expansion
* Toshiba's "split menu" touch user interface hiding the ugly WM6.1 OS
* Toshiba claims to have taken its TV technology and shared it with the gorgeous 4.1" display
* 800x480 WVGA resolution, 802.11b/g, 3G, GSM Quadband and 3.1MP camera
Whats not cool about this phone:
* WM6.1
* Lack of a 3.5mm headphone jack (microUSB adaptor required)
(full spec here) (TG01 gallery here)
I think this phone has high potential and has big time sex appeal, I just wish it would have been equipped with Android and a 3.5mm headphone jack (by now missing this feature is unacceptable).
HTC Hero Revealed, Only Looks Thin from this Image
When I first saw this image, I was kind of excited about this new phone from HTC. Maybe its the rounded corners and iPhone-like icons or perhaps the 'preceived' thinness from this shot or the black border around the LCD which resembles the new aluminum MacBook design. Whatever it is, I was kind of disappointed after I clicked-thru Engadget's gallery.The phone is a bit thick and still has the annoying looking chin. The good news is that it has a 3.5mm headphone jack, runs on Android (Not the total Google Experience, no logos or over the air OS update feature) but has the latest "SENSE UI" by HTC (much like the TouchFlo), more spec info here.
Overall, this phone is pretty capable of running side by side with the best of them out there. If only they got rid of that little chin...
iPhone Users Making Pain for AT&T Data Network
Wall Street Journal's article "Demands on Network Are an iPhone Hang-Up" has given me a whole new perspective on AT&T's charge for its unlimited data plan for iPhone 3G ($30/mo). I have made countless remarks against the higher rate on this blog; my argument has mostly been based on that increasing data plan cost may keep consumers from engaging, hence taking a step backward in the mobile evolution.
Boy, was I wrong on two counts.
1). $30 per month unlimited data did not deter people from signing up. It turns out the $199 iPhone entry price is more than enough of a sweetener for people to sign up for data. It could be that I work in NYC and live in a town full of young professionals, but the amount of people I encounter with iPhone 3G is insanely high. Perhaps this was their strategy all along, going after people with higher disposable income whereas I am speaking for general public as a whole.
2). At $30 per month, I guess AT&T isn't making out like a bandit considering average iPhone owners use up to 4x the data bandwidth compared to other smartphone users. This puts a huge amount of stress on AT&T's network thus requiring them to invest more money into system upgrades to keep up with demand (otherwise, users will complaint and may even be driven away to competition).
I am at a lost at this point. My old data plan from AT&T was $20 per month w/ 200 free SMS (Media Max 200); this plan is nearly identical to the original iPhone data plan. When I upgraded to a 3G iPhone, I had to pay $35 per month to get equivalent service. That is a 75% increase from before, yet, we are being told even with such increase, AT&T's network could be hurtin. I gotta tell ya, something is not adding up right.
Boy, was I wrong on two counts.
1). $30 per month unlimited data did not deter people from signing up. It turns out the $199 iPhone entry price is more than enough of a sweetener for people to sign up for data. It could be that I work in NYC and live in a town full of young professionals, but the amount of people I encounter with iPhone 3G is insanely high. Perhaps this was their strategy all along, going after people with higher disposable income whereas I am speaking for general public as a whole.
2). At $30 per month, I guess AT&T isn't making out like a bandit considering average iPhone owners use up to 4x the data bandwidth compared to other smartphone users. This puts a huge amount of stress on AT&T's network thus requiring them to invest more money into system upgrades to keep up with demand (otherwise, users will complaint and may even be driven away to competition).
I am at a lost at this point. My old data plan from AT&T was $20 per month w/ 200 free SMS (Media Max 200); this plan is nearly identical to the original iPhone data plan. When I upgraded to a 3G iPhone, I had to pay $35 per month to get equivalent service. That is a 75% increase from before, yet, we are being told even with such increase, AT&T's network could be hurtin. I gotta tell ya, something is not adding up right.
Some Serious HTC Magic Coverage on SOGI
Occassionally, I would pop my head over to SOGI, a Taiwanese mobile site for the latest news Taiwan has to offer (basically HTC). Sure enough, they got some hot off the press review and shots of the HTC Magic.The screenshots of cupcake 1.5 update and onscreen keyboard looks pretty good. The HTC Magic is much better than the Dream (or G1) in my opinion.
Head on over for a good view yourself.
Samsung I7500 Smartphone, Android Done Right!
As my subject line suggested, Samsung folks have been studying all the complaints and grips about the HTC/Tmobile G1 and launched their iteration with style and performance. Engadget has the details on specs so I won't go there. What I will mention is why it will be superior over the existing G1.1. Physical Appearance: Much more refined looking and get rid of the annoying looking chin. This image rendering looks more professional duty by design and looks to have all the buttons much more accessible and laid out.
2. Feature rich + improvement: WOW! AMOLED display at 320x480. 5 Megapixel camera w/ LED flash. Tri band 3G (900/1700/1900) 1,500mAh battery (much needed improvement over G1's meager 1150mAh) and finally, in the words of Barney Stinson... "wait for it...wait..." 3.5mm audio jack!!!
This thing is pretty exciting. It just might convince me to make the switch again! Looks like Samsung is back and on top of the mobile biz.
Checking in on smartphone and Twitter usage
Over at Rubicon, we just did a quick consumer survey to check the status of a couple of hot topics in the tech industry, smartphone adoption and use of Twitter. I thought you might be interested. Here's a summary of what we found, and links to the full articles:
Smartphone adoption: RIM leads. In the US, about 10%-11% of the adult population uses smartphones. RIM has just under half of the installed base, followed by Apple at about a quarter.
The users of different types of smartphone have different feature priorities. iPhone users rate web browsing as their #1 feature, followed closely by e-mail. RIM users rank e-mail the most important feature, Palm users choose calendar, and Google phone users are partial to mapping. The profile for Windows Mobile users is similar to RIM's, but less enthusiastic about e-mail.
Mobile phone feature priorities of iPhone users compared to all mobile phone users. Percent of US users ranking a feature in their top four.
I think this is more evidence of something that I've been saying for a while -- most people buy phones more like they do appliances than like computers. They decide which functions are most important to them, and then pick the phone that does those things best, rather than looking for the best general-purpose device.
That's not to say that flexibility doesn't matter at all, but it's secondary. For example, adding third party apps is the #4 priority among iPhone users, and close to tied with several other features. It will be interesting to see how the priority evolves as Apple continues to advertise the daylights out of the app store.
For the full article, click here.
Twitter is a form of entertainment. Usage of Twitter is rising very rapidly -- as of April, it gets more daily visitors than cnn.com in the US, according to Alexa.com.
Our survey showed that the Twitter user base has more than doubled in the last six months. About 10% of US computer users have tried Twitter so far, and about a third of those people have stopped using it. You can decide for yourself if that's a big number or not, but a certain amount of churn is inevitable in any new web service.
Twitter awareness and usage among US PC users.
Most Twitter users say they are casual users of the service, and that it doesn't play an important part of their personal or business lives. The most active 10% of Twitter users say it does play an important role in their personal lives, but not in their business lives.
The overall pattern of usage indicates that for most people Twitter is currently a form of casual entertainment. There's nothing wrong with that, but the future of Twitter will depend on how that usage pattern evolves. Will Twitter become as important as e-mail, or will it be a fad like citizens' band radio (link)? It's too early to tell. But it's already clear that it's a separate medium with its own rules. Companies looking to use Twitter should make sure they understand how it's used; it's not the same as blogging.
For the full article, click here.
Smartphone adoption: RIM leads. In the US, about 10%-11% of the adult population uses smartphones. RIM has just under half of the installed base, followed by Apple at about a quarter.
The users of different types of smartphone have different feature priorities. iPhone users rate web browsing as their #1 feature, followed closely by e-mail. RIM users rank e-mail the most important feature, Palm users choose calendar, and Google phone users are partial to mapping. The profile for Windows Mobile users is similar to RIM's, but less enthusiastic about e-mail.
Mobile phone feature priorities of iPhone users compared to all mobile phone users. Percent of US users ranking a feature in their top four.
I think this is more evidence of something that I've been saying for a while -- most people buy phones more like they do appliances than like computers. They decide which functions are most important to them, and then pick the phone that does those things best, rather than looking for the best general-purpose device.
That's not to say that flexibility doesn't matter at all, but it's secondary. For example, adding third party apps is the #4 priority among iPhone users, and close to tied with several other features. It will be interesting to see how the priority evolves as Apple continues to advertise the daylights out of the app store.
For the full article, click here.
Twitter is a form of entertainment. Usage of Twitter is rising very rapidly -- as of April, it gets more daily visitors than cnn.com in the US, according to Alexa.com.
Our survey showed that the Twitter user base has more than doubled in the last six months. About 10% of US computer users have tried Twitter so far, and about a third of those people have stopped using it. You can decide for yourself if that's a big number or not, but a certain amount of churn is inevitable in any new web service.
Twitter awareness and usage among US PC users.
Most Twitter users say they are casual users of the service, and that it doesn't play an important part of their personal or business lives. The most active 10% of Twitter users say it does play an important role in their personal lives, but not in their business lives.
The overall pattern of usage indicates that for most people Twitter is currently a form of casual entertainment. There's nothing wrong with that, but the future of Twitter will depend on how that usage pattern evolves. Will Twitter become as important as e-mail, or will it be a fad like citizens' band radio (link)? It's too early to tell. But it's already clear that it's a separate medium with its own rules. Companies looking to use Twitter should make sure they understand how it's used; it's not the same as blogging.
For the full article, click here.
Watch out for RIM
Based on what you read in the press, you'd think Apple had conquered the entire smartphone market, or maybe that they invented it in the first place. But to me the most surprising story in recent smartphone sales isn't Apple, it's the continuing rapid growth of Research in Motion.
Check out the latest numbers from Gartner (link). As you know if you've been reading this weblog for a while, I have very little faith in third party market share numbers. They're compiled from shipments self-reported by the vendors, and are subject to all sorts of inaccuracies (link). But they do give a very rough picture of what's happening in the market, and the picture they've been drawing recently is mildly astonishing.
Nokia is still the smartphone share leader, with about 41% unit share. But that's down 10 points from a year ago, on a shipment decrease of about 17% year over year. RIM is number two, with over 19% share and shipments up about 85% year over year. Apple is in third: 11% share, up 110% year over year.
So, roughly speaking, in smartphones Nokia is about twice the size of RIM, and RIM is about twice the size of Apple.
I have to put a caveat on that. Quarterly share and shipment growth fluctuates a lot depending on whether a company has just introduced a new product or is clearing inventory in preparation for a launch. So you have to look at several quarters:
Unit smartphone shipments, worldwide, in thousands. Source: Gartner.
That gives a slightly less apocalyptic view for Nokia. It had particularly huge shipments in Q4 of 2007, so it's down year over year, but overall its shipments are flat rather than collapsing. RIM and Apple are both definitely growing fast, though, with Apple's shipments fluctuating a lot as it adjusted inventory before and after the shipment of the iPhone 3G.
But let's put this all in perspective. The definition of "smartphone" is very sketchy; the way Gartner uses the term today, it refers to basically any phone that has an externally-programmable OS in it. Nokia deploys the Symbian OS in all of its high-end phones, so they are all classified as smartphones. So RIM's not really beating up on Nokia's smartphones, it is currently out-growing the entire top end of Nokia's product line. Project out the current trends for a year, and RIM would be close to overtaking Nokia in smartphones. No matter how you parse the numbers, that's pretty amazing.
Why don't you just die already?
This situation is all the more surprising considering that conventional wisdom has said for years that RIM was doomed. First e-mail phones were just a fad, an extension of the pager market. Then they were just a vertical product that only a few specialized groups like stock brokers would care about. Then Microsoft was on the verge of destroying RIM (not once, but every time a new version of Windows Mobile came out). Then RIM was fated to fall into irrelevance unless it licensed Blackberry clones. And on and on...
Fortunately, RIM completely ignored conventional wisdom and stuck to its core business. The rewards have been immense. In its most recent quarterly report (in December), RIM had a revenue run rate of about $12 billion a year, up more than 60% year over year, and profit of about $1 billion a year. The company now employs about 12,000 people. For comparison, RIM's revenue is now about the same as Apple's was four years ago.
Companies with $12 billion in revenue aren't supposed to grow 60% a year, especially when the economy is gasping, so I'll be intensely interested to see RIM's next quarterly report on April 2. In this economic climate I won't take anything for granted. But keep in mind that Nokia is already making ominous noises about its sales (link), while RIM says its unit growth has been accelerating (link).
Face reality
I think the big message from these numbers is that the analysts and press have done a terrible disservice to all of us by creating the fiction that there is a unified smartphone market. That hides the real news. For example, IDG's writeup on the Gartner sales report focused on overall growth of smartphone sales and didn't even mention RIM until the sixth paragraph (link).
I use the term smartphone "market" here for convenience, but as I've said before, there really isn't a single unified smartphone market and there probably never will be, because different people want different things from their phones (link).
If you look carefully at the shipment numbers, this is blindingly obvious. The smartphones from RIM (and Apple) are differentiated products that have special features appealing to particular segments of users (RIM for e-mail fanatics, Apple for entertainment-hounds). They solve customer problems in unique ways that people can value, so their sales are relatively resistant to an economic downturn. Not immune, but I think they're likely to fall less than the others.
And since Apple and RIM serve different markets, they can grow rapidly side by side. One doesn't usually steal sales from the other.
But Nokia has never had a strong play with this sort of product. Most of its smartphones are bought as high-end mobile phones, purchased by technophiles and status-conscious people with money. When the overall phone market slows down, they slow down too.
The analyst numbers told Nokia a comforting fantasy that it was the dominant smartphone company, when in fact it was a very secondary player in the markets served by RIM and Apple. I think this let Nokia avoid the agonizing changes in product development that are required to make a truly differentiated smart phone.
Instead, Nokia has gone off on tangents attacking Google, Microsoft, iTunes, and just about every other target I can think of in computing. It's a bit like a guy at his home putting up wallpaper in the upstairs bathroom while out in the yard his car is on fire.
I continue to be intrigued by parts of Nokia's strategy, especially the Ovi services suite. Nokia will be able to push Ovi out to hundreds of millions of mobile phone users. In theory, that might be a very powerful way for the company to build a mobile data business. But it could be crippled if the most data-hungry users have already been siphoned away by Apple and RIM.
What happens to RIM?
The question about RIM is what are the natural limits on its growth. Not everyone wants an e-mail phone, although RIM has already stretched the market a lot more than I thought they could. But I think the bigger threat may actually be within the company. Beyond about $10 billion in revenue, a tech company starts to require different management techniques. There's enough going on that management has to delegate much more than it did in the past, and processes have to be set up to ensure quality work and smart decision-making in the lower reaches of the company. That transition is incredibly hard for the leaders of a startup to make, and I wonder if the bug-filled launch of the Blackberry Storm wasn't a symptom of a company growing beyond its processes.
On the other hand, RIM has such a long history of beating my expectations that I'm not going to bet against them again.
Check out the latest numbers from Gartner (link). As you know if you've been reading this weblog for a while, I have very little faith in third party market share numbers. They're compiled from shipments self-reported by the vendors, and are subject to all sorts of inaccuracies (link). But they do give a very rough picture of what's happening in the market, and the picture they've been drawing recently is mildly astonishing.
Nokia is still the smartphone share leader, with about 41% unit share. But that's down 10 points from a year ago, on a shipment decrease of about 17% year over year. RIM is number two, with over 19% share and shipments up about 85% year over year. Apple is in third: 11% share, up 110% year over year.
So, roughly speaking, in smartphones Nokia is about twice the size of RIM, and RIM is about twice the size of Apple.
I have to put a caveat on that. Quarterly share and shipment growth fluctuates a lot depending on whether a company has just introduced a new product or is clearing inventory in preparation for a launch. So you have to look at several quarters:
Unit smartphone shipments, worldwide, in thousands. Source: Gartner.
That gives a slightly less apocalyptic view for Nokia. It had particularly huge shipments in Q4 of 2007, so it's down year over year, but overall its shipments are flat rather than collapsing. RIM and Apple are both definitely growing fast, though, with Apple's shipments fluctuating a lot as it adjusted inventory before and after the shipment of the iPhone 3G.
But let's put this all in perspective. The definition of "smartphone" is very sketchy; the way Gartner uses the term today, it refers to basically any phone that has an externally-programmable OS in it. Nokia deploys the Symbian OS in all of its high-end phones, so they are all classified as smartphones. So RIM's not really beating up on Nokia's smartphones, it is currently out-growing the entire top end of Nokia's product line. Project out the current trends for a year, and RIM would be close to overtaking Nokia in smartphones. No matter how you parse the numbers, that's pretty amazing.
Why don't you just die already?
This situation is all the more surprising considering that conventional wisdom has said for years that RIM was doomed. First e-mail phones were just a fad, an extension of the pager market. Then they were just a vertical product that only a few specialized groups like stock brokers would care about. Then Microsoft was on the verge of destroying RIM (not once, but every time a new version of Windows Mobile came out). Then RIM was fated to fall into irrelevance unless it licensed Blackberry clones. And on and on...
Fortunately, RIM completely ignored conventional wisdom and stuck to its core business. The rewards have been immense. In its most recent quarterly report (in December), RIM had a revenue run rate of about $12 billion a year, up more than 60% year over year, and profit of about $1 billion a year. The company now employs about 12,000 people. For comparison, RIM's revenue is now about the same as Apple's was four years ago.
Companies with $12 billion in revenue aren't supposed to grow 60% a year, especially when the economy is gasping, so I'll be intensely interested to see RIM's next quarterly report on April 2. In this economic climate I won't take anything for granted. But keep in mind that Nokia is already making ominous noises about its sales (link), while RIM says its unit growth has been accelerating (link).
Face reality
I think the big message from these numbers is that the analysts and press have done a terrible disservice to all of us by creating the fiction that there is a unified smartphone market. That hides the real news. For example, IDG's writeup on the Gartner sales report focused on overall growth of smartphone sales and didn't even mention RIM until the sixth paragraph (link).
I use the term smartphone "market" here for convenience, but as I've said before, there really isn't a single unified smartphone market and there probably never will be, because different people want different things from their phones (link).
If you look carefully at the shipment numbers, this is blindingly obvious. The smartphones from RIM (and Apple) are differentiated products that have special features appealing to particular segments of users (RIM for e-mail fanatics, Apple for entertainment-hounds). They solve customer problems in unique ways that people can value, so their sales are relatively resistant to an economic downturn. Not immune, but I think they're likely to fall less than the others.
And since Apple and RIM serve different markets, they can grow rapidly side by side. One doesn't usually steal sales from the other.
But Nokia has never had a strong play with this sort of product. Most of its smartphones are bought as high-end mobile phones, purchased by technophiles and status-conscious people with money. When the overall phone market slows down, they slow down too.
The analyst numbers told Nokia a comforting fantasy that it was the dominant smartphone company, when in fact it was a very secondary player in the markets served by RIM and Apple. I think this let Nokia avoid the agonizing changes in product development that are required to make a truly differentiated smart phone.
Instead, Nokia has gone off on tangents attacking Google, Microsoft, iTunes, and just about every other target I can think of in computing. It's a bit like a guy at his home putting up wallpaper in the upstairs bathroom while out in the yard his car is on fire.
I continue to be intrigued by parts of Nokia's strategy, especially the Ovi services suite. Nokia will be able to push Ovi out to hundreds of millions of mobile phone users. In theory, that might be a very powerful way for the company to build a mobile data business. But it could be crippled if the most data-hungry users have already been siphoned away by Apple and RIM.
What happens to RIM?
The question about RIM is what are the natural limits on its growth. Not everyone wants an e-mail phone, although RIM has already stretched the market a lot more than I thought they could. But I think the bigger threat may actually be within the company. Beyond about $10 billion in revenue, a tech company starts to require different management techniques. There's enough going on that management has to delegate much more than it did in the past, and processes have to be set up to ensure quality work and smart decision-making in the lower reaches of the company. That transition is incredibly hard for the leaders of a startup to make, and I wonder if the bug-filled launch of the Blackberry Storm wasn't a symptom of a company growing beyond its processes.
On the other hand, RIM has such a long history of beating my expectations that I'm not going to bet against them again.
Smartphone Mobile Experience Progresses Nicely
A little over a year ago, when I was shopping for a laptop, I really wanted a laptop that was 4lbs or less (in the ultra-portable category) with high performance. I thought this would give me the freedom to experience mobile computing on the fly. At the time I was looking at the Sony VAIO S series as well as Dell's XPS M1330 both will cost me roughly $1800-2000 with a reasonable spec. I ended up with a 15.4" MacBook Pro because of its sheer power and graphics capability. In the back of my mind, I always thought I'd pickup an ultra portable later on.Throughout the past year, some interesting things happened. MacBook Air, Netbooks like the Eee PC and extreme ultra portables have arrived the scene. While small, their cost and low CPU performance never made me think twice about them. Yesterday, I saw an amazing offer from Dell XPS M1330 with reasonable features for as low as $800, I still did not find myself intrigued at any of the options mentioned above. Why is that?
For one, the smartphones have really stepped up over the past year. iPhone in its current firmware version has drastically improved since its first days (albeit still lacking copy & paste function). Google G1 has arrived offering a new flavor in open source mobile experience. BlackBerry(s) have been refined including its all new touchscreen interface. Even the boring old Windows 6.1 is now sexier thanks to HTC's overlay.
But what does this mean? It means that smartphones have finally leveraged light and robust applications to carry a very focused functions which gets our job done whenever we want to: ie. check your emails or chat online via IM, look up weather conditions for local or traveling destination, get a stock quote, grab a movie review to help you decide what to rent/buy, look up side effects of a medication, check flight status, and so much more can be retrieved on your little smartphone from anyone at anytime.
I didn't bring my personal laptop on my last trip visiting friends and family to the West Coast. My iPhone managed to get me through the entire trip for all the basic computing needs. I was even playing a FaceBook game called Mob Wars over Safari in the non-mobile friendly site. To be fair, I did bring my work laptop along simply because I was in the middle of a project integration and VPN is required to access some information. Perhaps that will be the next step for smartphones. As for me, the chances of me picking up an ultraportable laptop in the near future is slim so long as my MacBook Pro is still going strong.
HTC Dream aka Google G1 First Impression
Through a very special connection I have, I managed to obtain a special edition of the Google G1 smartphone to use (for as long as I want, if I choose so...). This phone may be the first, official unlocked version which allows me to use any GSM Sim card over any network. This phone has been approved and unlocked by Google developers so it wasn't a hack or anything. Lets get right to it. Remember, this is just a first impression. I played with this phone for about 30 minutes since I opened it up so I could form a different opinion in a few days time.
Physical Appearance: if compared to an iPhone or BlackBerry Bold, the G1 is, sadly, not all that attractive. Its matte finish black is minimalist at best. There are minimal amount of buttons which is good and the main functions like phone, power/hangup, back, home and menu is sufficient for its purposes. There is a BlackBerry like trackball which surprisingly is very handy to use on its Android software. I find myself using very little of the touchscreen as I have bee
n trained to rely in via an iPhone. Speaking of G1's touchscreen, it does require more effort to press on screen to execute a command. Even though this phone does have a slide up keyboard, its relatively thin for having such luxury. The battery cover is kind of a pain in the ass to open, it clips onto the back over a few plastic tabs, I fear that if I swap out my SIM card in n' out a few times, it could break the darn thing; easily one of the poorest battery cover design in the history of all cell phones. The LCD is sharp with good color and contrast, but it fails to impress me as I find the iPhone and BlackBerry Bold's display much crisper than the G1.
Android OS: this firmware is what I called "love it and hate it" relationship. I can find it quite robust at times and love the fact that all the menu's and layout is overly simple to figure out. But at times it can be very un-intuitive. Simple functions like Zoom in and out (which is very important) is not executed well here. The internet browser is capable of full webpage browsing but is not as polished as the mobile Safari but better than the Nokia browser. There is one area this browser out performs others; the ability to load previously visited pages quickly, something the iPhone is not very good at. Having a full QWERTY keyboard can enhance the mobile experience, it comes in real handy when typing in WEP passwords to wifi access points. The email program is basically Gmail (only?); which requires you to have a Gmail account if not already. It works great with one drawback, it doesn't zoom in or out of a graphical HTML email like the iPhone mail app. The camera works but results is mediocre, again, losing out to iPhone camera which I always thought was one of the best on a phone. I haven't had time to checkout the market place for additional applications; I will report back in the near future. I plugged in my AT&T sim card for this test and phone calls are loud and clear; however, I can't seem to figure out why it won't let me surf the web via my unlimited data Media Max 200 plan. I will ask my "connection" to ask Google engineers tomorrow and go from there. [UPDATE: after some research, I seemed to have figured out how to get EDGE data connection via my AT&T SIM. The connection is pretty quick over EDGE despite that G1 is setup for T-Mobile's 1700MHz 3G network]Major complaint: Google Account required (not a very open but understandable strategic move). Basically the entire sync is based on having a Google account. The notion itself is understandable and even respectable, my big gripe is how much I hate Gmail's contact or address book and it forces me to use it. I have a problem with Gmail's contact in that it is trying to be too smart, hence adding random names and not giving me a whole lot of control in the way I like my contacts groupped or listed. On top of that, when ever I decide to upload a clean contact list and delete the old ones to avoid duplication, it wipes my Gtalk contacts out. I wish the phone would allow me to just sync to any desktop contact book instead while giving me the option to sync over Google Accounts wirelessly as an option.
Overall: I am trying to spend more time with this device before jumping into conclusion. With iPhone currently reign supreme, I am having an open mind to accept the G1 as is. From a physical attracation standpoint, this phone is not going to win any beauty contest. In terms of raw functionality, I see a lot of potential. I haven't played with the new BlackBerry phones (Bold, Storm) a whole lot but from what I am seeing thus far, the Anroid-powered G1 is definitely up there in terms of smartphone functionality. Stay tuned for more of my mobile experience using Android in the near future.
A Bunch of Nice Smartphones Coming Soon
Few weeks ago, I wrote an article about "Exciting Windows Mobile Smartphones" which was to show a bunch of upcoming smartphones that are very attractive to a mobile fanatic like myself. Since then, a slew of smartphones have begun to show face and I am here to list a few from my watchlist:
Samsung Omnia aka SGH-i900 (GSM, $800-900, WM Pro 6.1, already available, 3G but not US Supported). The Omnia is a Windows Mobile Professional power house. Like the iPhone, a large LCD w/o keyboard gives it a clean design (resolution is 240x400) Featuring a built-in 8 or 16GB of storage and if that is not enough, you can always add another 8 or 16GB microSD for storage hogs. Samsung has put in a unique TouchWiz UI similiar to HTC's touch-flo layer on top of the basic WinMo control. Also included, is full version of Opera Mobile allowing desktop-like web browsing.
BlackBerry Bold (GSM, est $300, BB OS, release in Oct, 2008, 3G AT&T), the blackberry bold is kind of an old news but it has yet to be released. Its the latest revision of the tried and true QWERTY form factor that made BlackBerry(s) famous. I had a full write up on how important this phone will be for BlackBerry here.
BlackBerry Thunder aka 9500 (CDMA, Verizon, est. $250 contract price, BB OS w/ Touchscreen, release in Q4, 2008, 3G EV-Do). The first ever Touchscreen BlackBerry without a keyboard has definitely rocked the industry with its presence (or phantom presence). This phone has long been in the rumor and I am still surprised to see it come true. From the pre-release photos, I see a very slick product that is known for its reliability and communications ability which will give the iPhone's design a run for the money. Although this unverified video seen here hasn't impress me with its UI and response time, so I hope the video is fake. In any case, this phone should be a strong contender for 2009.
HTC Dream or G1, aka Google Android Phone (GSM, est. $199 contract price, Android OS, est. release 10/13/2008, 3G Tmobile USA). HTC Dream is going to change the smartphone and mobile industry thanks to the first-ever Google Android OS. It will be the first device from the Open Handset Alliance setforth by Google and there are tons of 3rd party applications coming out soon. With Google's massive support for everyone involved, I strongly believe this phone is going to rock the house. On top of the amazing hardware specs (3G, WiFi, Graphics Acceleration, large touchscreen LCD, full QWERTY keyboard, etc.), the Android OS is going to include a full suite of Google apps (Gmail, Gmap, Gtalk, Docs, Picasa, etc.). I may not be able to get this phone right away as I am already tied to an AT&T contract, but you can be sure I will be buying an Android-powered phone shortly. I also anticipate this phone to be as successful for T-Mobile as the iPhone has been for AT&T.
HTC Touch HD (GSM, Unknown $$$, WM Pro 6.1, releasing Q4, 3G, hopefully 3G US also). HTC Diamond has been talk of the town, unfortunately, when compared to the iPhone, it falls a little shy with the LCD screen size and the lack of 3.5mm audio jack has been a turn-off for me personally. Well, HTC has heard their users loud and clear with the Touch HD. An enormous 3.8" LCD touchscreen with 400x800 WVGA high resolution which of course playsback the famous Touch-Flo beautifully. Engadget just got done with a hands-on test with one, overall verdict is positive. Because of this phone, I am now holding off from buying a HTC Diamond.
So these are some of the upcoming smartphones that I am looking out for in the near future, if I missed any good handsets, feel free to give me a shout-out.
Samsung Omnia aka SGH-i900 (GSM, $800-900, WM Pro 6.1, already available, 3G but not US Supported). The Omnia is a Windows Mobile Professional power house. Like the iPhone, a large LCD w/o keyboard gives it a clean design (resolution is 240x400) Featuring a built-in 8 or 16GB of storage and if that is not enough, you can always add another 8 or 16GB microSD for storage hogs. Samsung has put in a unique TouchWiz UI similiar to HTC's touch-flo layer on top of the basic WinMo control. Also included, is full version of Opera Mobile allowing desktop-like web browsing.BlackBerry Bold (GSM, est $300, BB OS, release in Oct, 2008, 3G AT&T), the blackberry bold is kind of an old news but it has yet to be released. Its the latest revision of the tried and true QWERTY form factor that made BlackBerry(s) famous. I had a full write up on how important this phone will be for BlackBerry here.
BlackBerry Thunder aka 9500 (CDMA, Verizon, est. $250 contract price, BB OS w/ Touchscreen, release in Q4, 2008, 3G EV-Do). The first ever Touchscreen BlackBerry without a keyboard has definitely rocked the industry with its presence (or phantom presence). This phone has long been in the rumor and I am still surprised to see it come true. From the pre-release photos, I see a very slick product that is known for its reliability and communications ability which will give the iPhone's design a run for the money. Although this unverified video seen here hasn't impress me with its UI and response time, so I hope the video is fake. In any case, this phone should be a strong contender for 2009.
HTC Dream or G1, aka Google Android Phone (GSM, est. $199 contract price, Android OS, est. release 10/13/2008, 3G Tmobile USA). HTC Dream is going to change the smartphone and mobile industry thanks to the first-ever Google Android OS. It will be the first device from the Open Handset Alliance setforth by Google and there are tons of 3rd party applications coming out soon. With Google's massive support for everyone involved, I strongly believe this phone is going to rock the house. On top of the amazing hardware specs (3G, WiFi, Graphics Acceleration, large touchscreen LCD, full QWERTY keyboard, etc.), the Android OS is going to include a full suite of Google apps (Gmail, Gmap, Gtalk, Docs, Picasa, etc.). I may not be able to get this phone right away as I am already tied to an AT&T contract, but you can be sure I will be buying an Android-powered phone shortly. I also anticipate this phone to be as successful for T-Mobile as the iPhone has been for AT&T.
HTC Touch HD (GSM, Unknown $$$, WM Pro 6.1, releasing Q4, 3G, hopefully 3G US also). HTC Diamond has been talk of the town, unfortunately, when compared to the iPhone, it falls a little shy with the LCD screen size and the lack of 3.5mm audio jack has been a turn-off for me personally. Well, HTC has heard their users loud and clear with the Touch HD. An enormous 3.8" LCD touchscreen with 400x800 WVGA high resolution which of course playsback the famous Touch-Flo beautifully. Engadget just got done with a hands-on test with one, overall verdict is positive. Because of this phone, I am now holding off from buying a HTC Diamond.So these are some of the upcoming smartphones that I am looking out for in the near future, if I missed any good handsets, feel free to give me a shout-out.
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