Wednesday, November 26, 2008


Nokia is at a turning point. Long the dominant supplier of mobile phones worldwide, it faces new deep-pocketed competitors in Google & Apple, plus structural changes in the industry. Nokia is losing market share and needs a clear strategy.

The mobile phone industry has matured rapidly. Until very recently, companies competed by offering features - a better camera phone, more storage for music, a more colourful screen. The big manufacturers created vast portfolios of phones tailored to different market segments and geographies - camera phones, music phones, children's phones, smartphones, and economy phones.

Smartphones have now converged on a standard set of these features. The next battlefield is the software platform that ties it all together. Apple and Google have turned their phones into general purpose digital devices - in other words, personal computers. They are competing by attracting third party application developers to take advantage of the computing power in their phones. The Apple store, for example, is one of the key selling points behind the iPhone, with more than 5,000 applications already created.

To attract this kind of ecosystem, you need to develop a strong platform. Apple have done this by porting Mac OS to the phone. Google have developed Android. Various other vendors have combined forces to develop LiMo, using Linux. Unfortunately for Nokia, their operating system Symbian is not popular and needs significant investment. Nokia have taken control and will open source the OS. But by the time it's complete, it may be too late.

Nokia have pushed into software and services. "Comes with Music" is an innovative attempt to establish a new business model for digital music, but it's losing money. The purchase of Navteq enabled Nokia to move into location-based services. Neither has yet attracted much interest by the consumer. This is an uphill battle.

A new approach

Nokia is still a profitable company, and it still has marketshare dominance. It just needs to follow the principles below:
Device Convergence
Now the platform is all-important, simplify the device portfolio. Nokia should be offering no more then 3-5 phones in each country, each based off the same platform. After all, Apple have only got one phone, but they're still the second biggest smartphone manufacturer in the world!

Also, now phones are becoming general purpose computers, why not merge with a PC company such as Acer or Dell? The platform should work across all shapes and sizes, perhaps extending upwards from mobile through the Netbook format.

The web is your platform
Fighting against Windows, Mac OS and Linux is a fool's game. Instead, Nokia should align themselves to the biggest platform of all ... the web. Nokia should become a platinum sponsor of Firefox, who are writing an amazing-looking mobile browser, and make it the whole front end to their phones. Creating code for a Nokia phone would then be easy - any web designer could do it.

Nokia could create Firefox extensions to give the browser power over local features such as the microphone, camera and accelerometer. Nokia would instantly have the biggest group of developers and the most third-party innovation of any mobile platform, and they would have the future on their side.

Partner with Silicon Valley
The hotbed of software innovation is Silicon Valley. Writing applications is a totally different business to selling hardware, and Nokia is going to struggle with its services strategy. Nokia should partner, not compete, with Silicon Valley. Why create your own email application if you can just recommend GMail? Why create your own photo application if you can just recommend Flickr? Why not partner with Facebook and Twitter to provide the next level of communications?

Remember, the web is your platform, not the operating system. So please, no more do-it-yourself services after music and maps.

Each of these principles could be easily achieved in a year or so. But they would establish Nokia on the right side of the changes taking place in the mobile industry.

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