Of Nokia And Connecting People

Hi Folks,

Been a while since I've blogged. My humble apologies, blame it on busier work schedules on the back of a new role I assumed at my workplace and the hunt for a new apartment.

Anyway, the news of the week has been the big announcement from Nokia - of a strategic partnership with Microsoft, made by Nokia CEO Stephen Elop. (Elop is an ex MS guy who took over as Nokia CEO in 2010.)

Nokia is one of the top mobile handset manufacturers in the world and probably the leading manufacturer of mobiles and smartphones in India. What does this announcement mean and what ramifications does it hold for the company and the users of its devices? 

In simple words,what this means is that Nokia is relegating Symbian to be the OS of choice for its "lower end" devices and turning to Microsoft and Windows Phone 7 (WP7) for its "top end" handsets. 

I have 2 points to make about Nokia's strategy here. And before I get into it, let me make something clear. I have been a big Nokia user myself. I believe that they make great phones with die-hard hardware! (Excuse the pun!) I have written in one of my previous blogposts how I believed (maybe still do) that the N8 is a cutting edge device when it comes to hardware. But over the last decade the company has dropped the proverbial ball on more than one occasion.

1. Nokia has always positioned itself as a leading innovator in mobile technology with its "connecting people" tagline. But top level management decisions did not always help the company live up to this philosophy in true spirit. In 2000-2005 (I'll call this the pre-smartphone era), Nokia dropped the ball once when it fell behind on hardware. The company was making great phones but slow on adopting newer technologies. They were outdone by companies like Sony Ericsson who took the lead in launching phones with advanced music and camera capabilities through the Walkman and Cybershot series. Nokia played catch up by launching XpressMusic phones and cameras with Carl Zeiss optics (which IMO were still behind Cybershot in picture quality). This caused them to lose customer base and share in the market. During this period, I too switched away from Nokia to Sony Ericsson for my cellular needs. 
2. From 2005-2010 (I'll call this the smartphone era) a major transformation occurred in the mobile industry.  Manufacturers had saturated themselves with hardware choices like WiFi, Camera, Bluetooth, GPS, 3G, etc. that they could offer to the consumer. Apple launched the iPhone and introduced the concept of 'Apps' and an 'App Store' which became the standard with the industry. Suddenly, the smartphone battle changed from hardware to software. Nokia, Motorola, Sony Ericsson and Samsung among others joined together to form the Symbian Foundation to develop the Symbian OS. Until 2008, there were 3 major OSes - Apple's iOS, Blackberry OS by RIM and Symbian. While the battle continued for software standardization and supremacy, the biggest change in hardware occurred - the proliferation of touch screen technology! While all manufacturers tested the waters on touch screen technology, the remained skeptical and through their weight (wrongly so in hindsight!) behind the development of Blackberry style hardware QWERTY keyboard toting handsets. Apple on the other hand put all their resources behind the iPhone and optimized the software for touch technology. Nokia made a series of mistakes here which together represent the dropping of the ball for the second time. 
1. They entered the Touch Phone market late with the launch of the 5800 Xpress Music and what was worse, they opted for resistive screen technology over capacity screens that Apple was using on its iPhone (which is now the standard for smartphones of today)
2. For their first touch screen phone (and for the few that followed) they made use of the existing Symbian OS instead of a wholly new OS. While Symbian was a good OS, it was not built for use with touch input, simply because the technology was not used in a big way when the OS was conceived! Nokia was trying to throw a touch user interface over an OS that was never built for the technology in the first place and the flaws were there for everyone to see. All one had to do was use a iPhone to understand the difference in user experience. Nokia's partners at Symbian slowly began to walk away and by 2009 Nokia was left as the only company that owned the Symbian Foundation.
3. Nokia made another mistake when they tried to re-invent the wheel. By 2008, Google's Android OS was gaining traction and Samsung, Motorola and HTC who were struggling to keep share in the smartphone market dedicated their energies towards developing good Android devices. This paid off for them over time as can be seen in the success that these companies have in the market today. But Nokia suffered from escalation of commitment from the Symbian Foundation which it was left holding when the other partners left. So they tried re-writing the Symbian OS with focus on touch input - the result was Symbian^3 which the N8 and C7 run on. The results are there for all to see. While the OS is a huge improvement of its former self, there is still a big gap in capabilities from iOS and Android and most importantly, developer backing for Apps! Nokia at the same time was working on Maemo (ring any bells?) - a linux OS (like Android) for top end phones. The only Maemo phone that Nokia ever launched was the N900, which met with little success. The Maemo project changed focus after merging with Moblin (from Intel) and was re-christened as MeeGo. Nokia's stand was that they did not want to jump onto the Android bandwagon like everybody else with a myopic view for growth. They wanted to differentiate themselves in the long run and had a vision for MeeGo to be their OS for top end smart phones while Symbian would continue to be their OS for lower end devices.
4. Cut to 2011 and Nokia announces that they are pulling the plug on MeeGo and partnering with Microsoft to offer WP7. We all go like WTF???  While I wont go so far as to call this a "mistake" right away, I would like to point out a few things here. Why all the wasted effort over Maemo/MeeGo and Symbian^3 and what happens to the company's dream of differentiating itself with a robust in-house OS? What about the vision? And if you are going with a 3rd party OS, why WP7 and not Android? Elop during his announcement said "We talked to our friends at Google, and there are some attractive elements [with Android], but we felt we wouldn't be able to differentiate ourselves,"
   "There's a commoditisation risk using Android and essentially value moves out to Google." While that may be true to some extent, there are 2 things one cant deny - WP7 still is in its infancy in terms of capability while Android is going big guns and looking to topple iOS. There is a much much bigger developer backing for Android when compared to WP7. Secondly, its not about philosophies alone but about growth. Nokia really needs to grow today to retain its position in the mobile market and to survive. It would serve the company well to partner with the growth engine of today i.e. Android. If tomorrow WP7 becomes bigger than Android, there is nothing stopping the company from offering that on their devices. But Elop is the CEO and Nokia chooses to walk along Microsoft Avenue while HTC, Samsung, Motorola, LG etc. are laughing their way to the bank with Android's success. 
   Only time will tell if the Microsoft partnership is a wise decision or a nail in the coffin for Nokia, but one thing is for sure, 2010 has marked the beginning of the "Android era" in cellular technology and there was many a night when I dreamed of the N8 running Android Gingerbread! :)