Is S40 Nokia’s Future?

Nokia’s S40 operating system has long been relegated to non-multitasking offerings in its stable of devices.  Simple to implement and use, it’s the ammunition for Nokia’s carpet-bomb-the-developing-world-with-cellphones strategy. Symbian, and then Maemo, and then MeeGo and now Windows Phone 7 have been touted as the operating system(s) for the rich high end (excluding Vertu and some other exceptions).

The thinking seems to have been, “Get low-end Nokia devices into the hands of those who can’t/won’t yet use or afford smartphones, and then migrate them upward when the time is right”.

Great tactic in theory, but it has so far failed to succeed as needed.  For Nokia, anyway.  

Background

Understanding why is not difficult.  After joining Nokia’s US operations in 2005, I was astounded to newly discover N- and E-series devices. To my limited American experience, Nokia was the majority owner of the grocery store end cap, devoting its energies solely to cheap cell phones… especially pay-as-you go products for companies like Tracfone.  So in my mind, Nokia was synonymous with the low end.

If I had been alone in that assumption, Nokia would have been fine.  But history clearly illustrates that as America’s desire for smartphones ramped up, Nokia lost out.  So I can only imagine I’m not so alone.

The reasons for Nokia’s US decline are more complex than simple purchaser  perception, but that one is key.  If Nokia had succeeded in educating US citizens about its high end offerings, and how the company was about much more than “disposable” phones, then service providers would have surely been besieged by irresistible demands that Nokia smartphones be made available as subsidized options.  But because purchasers saw Nokia in a  single low light, that didn’t happen.  Handset manufacturers who did a better job of promoting their high end succeeded instead.  And ultimately, a consumer electronics company with no low-end handset legacy at all came out of left field to dominate with its iPhone.

This wasn’t limited to the United States, either.  Nokia worked the low and mid ranges in India, too, hoping to get the upgrade action going there.  Despite initial success, though, as observers suspected Nokia has recently seen competitors move in to capture many customers.  Retention, again, has been a problem.

Foreground

So we’ve covered the past.  Let’s talk about the future.

Nokia dropped some strong hints about its plans for “the next billion” at its Nokia Connection 2011 event.  Development framework Qt, HTML5 and operating system S40 have been recently discussed in such semantic proximity lately that the only reasonable conclusion is that Nokia is taking a new tack:  rather than pulling handset owners up to the world of smartphones, it will instead push that rich functionality down into price points that a few years ago would have been unfathomable.

Let that process for a minute.

As much as Nokia has stumbled during the past few years, it very well could make this work!  They have the expertise, the logistics, and surely the desperation required to change the smartphone game in a way that most competitors will be unable to meet or beat.  Beef up the power on low end devices and use Qt to create a truly breathtaking experience for users unused to smartphone niceties.  CEO Stephen Elop has already declared that a full touch UI is coming to S40.

Of course this comes with a caveat: these users don’t want complex.  Not all of them choose S40 for cost; many select it for its simplicity and responsiveness.  Both come courtesy of avoiding multitasking and third-party applications.  Now, putting high-powered CPUs into these handsets will certainly mitigate performance hits– but if Nokia is going to utilize Qt for UX/UI solutions, then they will have to expect pressure from third-party developers.  Clear, strong guidelines and a rigorous test/approval process should help.

Bottom Line

Before such a bold initiative could work, however, Nokia still has to battle ongoing perception problems.  Its strategy for the past several months has been flexible to the point of chaos.  Consumers, developers and service providers are confused, frustrated and as angry as Rovio’s birds.

Mobile pundits have long urged Nokia to start taking PR seriously.  Rethink retreats such as the closing of consumer-friendly flagship stores.  Ratchet up the advertising.  Improve outreach to bloggers like me.  Work like never before for that next billion.

If they don’t, they’ll be seen as disposable as those end cap phones.

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20 responses to “Is S40 Nokia’s Future?

  1. You mention that Nokia wasn’t successful in moving folks from feature phones to smartphones, the numbers don’t agree with you. In the past 3-4 years (speaking before Elop), Nokia actually had been successfully transitioning both devices and revenues towards smartphones and away from feature phones. During this time, their average selling price per mobiles droped, but at a much lower rate than the increase of those using smartphones as a percentage of their overall marketshare.

    Not to belabor the point, but Nokia displayed about 5 years or so ago a graphic that laid out their intentions. That was for Symbian to transition to Qt, and then replace S40 as the platform of choice for the masses. Maemo was to take over as the halo platform and that would suffice for technology trending moments. What’s happened is that S40 has been given Qt and is now taking a larger role in Nokia’s attempt to connect the next billion or so mobile users, and Windows Phone is becoming the smartphone platform of choice. Because of Nokia’s existing momentum with S40, this not only makes sense for them to continue, but allows efforts like the N9 to speak towards the kinds of disruptions that effect a larger body of folks – for example, look at the Touch and Type models and imagine the N9’s swipe-based UI there. That’s disruptive as all get out, especially against Brew, Bada, Android, and several others whom are just aiming for price at this point.

    • I guess I wasn’t specific enough: I meant for markets like the US. But anyway, I was referring to customer numbers, and I can tell you that what was presented to me as an employee showed negative retention in general and nowhere near the numbers we needed moving upwards in feature sets.

      And I remember that original game plan… I was still working there. I really thought Nokia had the right ideas just (and belaboring another point) flawed execution.

      I do think this shift can work, too, but we’ll see…

  2. Those retention numbers… those are such a bugger. Would have been one thing if the market didn’t gain additional entrants. But, it did. Nokia did better than all the others with this. Heck, they actually still haven’t finished and have time to. Moto, SE, LG, etc., they have had major issues and gamble only on smartphones. Samsung seems to be pushing ok, but I wonder how long and which direction. Like Nokia, they can’t hedge their bets everywhere, but also can’t have a single point either.

    In either case; glad for this piece. Would be nice to get others chatting about these kinds of market effects, not just the usually-loudly-stated, “hey, Nokia, we don’t know you enough to want to see your successes” argument.

  3. “rather than pulling handset owners up to the world of smart phones, it will instead push that rich functionality down into price points that a few years ago would have been unfathomable.”

    Old news, old man! I think it was over a year ago I got a feeling this particular avenue may happen and tweeted about it. :P …without throwing out a 100 random ideas and saying “YA! I got one right!”

    One serious question now:

    If we assume S40 is the future, does it have the potential to be better than S^3 and avoid all the issues that have plagued Nokia over the years? Especially since Nokia has put so much effort into avoiding the use of the Symbian brand name?

    Why, if S40 is the future, abandon S^3, something they could just as easily reinvest the effort of “S40 improvement” into instead and possibly have a better product than S40 could ever be?

    I ask that not doubting it, I have fully believed they’d be doing this for quite a while as it only makes sense, just my usual devil’s advocate self.

  4. Yeah, I have _no idea_ what can happen in the future, both for Nokia and the mobile business in general.

    I think they have been doing a great job with S40. Damn, they got Maps, some of them have nice cameras, you can share GPS-tagged pics on flickr, send e-mails, whatever… I really don’t understand the division between “featurephones” and “smartphones”. I think if it has a browser and reads/sends e-mail and takes pictures, it is a damn “smartphone”, period. and if you need “apps”, well, S40 has them too! So, really, what is missing??

    Crazy mobile facts:
    1_ Why people separate so drastically S40 “featurephones” from “smartphones” e.g. Iphone, Androids, etc? The difference is really not so much on functionality, but on a few little details of the interface. One of them is the thing Nokia very smartly made the “central focus” on the N9, the swipe. Really, people dismissed Symbian^3 in favor of Iphone etc __JUST BECAUSE__ you can’t nicely drag the icons and widgets in the home screen. That silly thing is really a big deal, that is what is crazy.

    2_ Price and profit… These phones sell a lot. According to wikipedia, there are like 1.5 billion S40 phones out there. That’s 25% of the whole Planet Earth, dude. A quarter of the world population has been turned by them into mobile-cyborgs. Nokia is pretty much the one organization closest to the geeky goal of taking over the world. They sell a million S40s every day. Symbian wasn’t selling bad too. But even so, although that looks successful, the company can’t make a profit??? How come?? I mean, how hard it is to increase a buck in the phone prices? Would that make the sales drop from 1 million to 100 thousand phones a day? And there is also the market share thing, even they are selling a lot, and increasing the sales, they are actually losing because the market exploded. This is a really maddening situation. The problem is not just “how to sell phones to the next billion”, is “how to make money selling phones to the next billion”, or worse: “how to make _more money than anybody else_ selling phones to the next billion”. And the more I think of it, the less I understand, and start to be concerned not because I would like to know to win the money, but really because I want to know the answer, out of pure curiosity.

    3_ Back on a technical side… If it’s not strictly functionality that make the S40 a second-class product, it should be specs then. But I feel we may be approaching a “singularity” in the handset space. That’s why I have this crazy prediction that I’m making: the iPhone 5 will be single-core. I know there is a big chance I will be proven wrong, but I can’t help but feel this suspicion… Apple will decide to keep the high performance on the Ipad, and nerf the phone. But it also may be that they will release two phones, the more expensive one with dual core, let’s see. Anyway, Android benefited from dual cores because it’s too heavy. N950 is a late 2010 product, so it couldn’t be dual, but maybe they felt they really didn’t need it for the N9, for example.

    I actually predict this failure of dual cores taking up the smartphone world just because this happened in the netbook space. Dual cores have been around for some time, but didn’t make it to “the next 100 million” or whatever. It was just not strictly necessary. It’s like the market for dual core netbook saturated very fast. Sooner or later the market for dual-core smartphones might suffer the same…

    4_ America’s quirkiness. What’s WRONG with you guys? I read a lot of mobile news form a America, and always have a hard time understanding the difficulty to adopt GSM, and the complete power of the operators… I arrived here last week, and wanted to buy a phone. I wanted just the chip — hoping to get a N9 later, I confess — and people thought I was mad. Later I found I could not use the chip in any of the phones I was going to try using, and tried to see if I could buy an unlocked phone. Now that is when people really thought I had gone crazy!

    How is Nokia supposed to work in this space totally hostile to what they represent? There are also very complicated relations between all players here, it’s not something simple like three different chocolate manufacturer competing in the candy market. Only the carriers are competing like this. But other companies have very different business if you look at the bigger picture. Google, Apple, Microsoft, HTC, Samsung, Intel and Nokia are all _very different_ companies. The relevance of that to the topic is that S40 is one area that is very peculair to Nokia, so if they can use that even more to their favor, that’s great. But if the American market is not nice to them in principle, and if the product has inherent strange characteristics that can render them completely unattractive, and you can’t sell them while making a good profit, and you fail to capture new consumers even though you seem to be doing quite well, then I don’t know, maybe it’s time to move into a completely different business like manufacturing tires and boots or something!

  5. Nokia are now obviously trying to go it from the low-end up instead of the mid-tier down. They need this since WP7 won’t be able to run on low-end specs anytime soon – and probably can’t work on T9/QWERTY small-screen candybars at all. Nokia can’t try to do what Motorola and SonyEricsson are trying, i.e. abandoning the mass market, so they need something there. I have no idea what this means regarding the technical basis for S40, what problems they’ll encounter there, and how viable this strategy is on low end hardware. I’d hate to see another Symbian-like disaster where an OS is punished into doing things it was never intended to, and development ends up mainly dealing with the fallout.
    And while this certainly puts Qt on a whole lot of devices going forward, the fact that the top-end devices are left out is worrisome. Instead of Nokia having a unified ecosystem, with one store spanning all platforms, and the platforms migrating to Qt as the common application development layer, they are now part of two different platforms.

  6. I was a serious Nokia fan until I had eaten the forbidden fruit (iphone) and won’t look back until Nokia can do better than Apple. My main reason is the Apple’s AppsStore, the amount of free USEFUL apps are overwhelming, not to mention the paid ones. Nokia obviously still does not know why they are losing so badly, their hardware are decent but the lack of software available for these hardware are basically useless on these phones. I have never had so much playing on a mobile phone until I got the iphone, and I simply can’t put it down.

    Nokia can stick to Symbian for all they want as long as they can get more developers to develop quality apps for their phones. Those app on the OVI store are really a joke, limited number of useful apps and full of useless junk that will only impress a 3 year old.

    Being at the top in the past had made Nokia complacent and oblivious to what the consumers want. The mobile phone business is a totally new game now, people are using phones as laptop equivalents for work and entertainment. Having good hardware without good software support is as good as having a low end phone that can only make phonecalls.

  7. Nokia made the E71 which was a great initial smartphone, but then spent too much time and enegry making incremental increases (E71x, E72, E73) with little to show for it. That and the N8 was 6 months late to the dance (again possibly because they lost focus). S^3 is not dead (as the N8 and the E7 show) nor is Meego, but lack of follow through and giving customers what they want is going to challenge Nokia. S40 may be where they excel and their bread and butter, but to my mind Windows Phone will not likely save Nokia.

  8. Come on! Any linux based OS will be regarded as enemy by Nokia’s CEO, stephen elop. A horse from Microsoft.

    When wp7 gets lower price enough, S40 dies.

  9. Pingback: The Nokia Phoenix | Tabula Crypticum

  10. Nokia made a big mistake in trying to convert former dumbphone owners to smartphones… They didn’t realize that:

    A: Many dumbphone owners have no desire or intention to move to smartphones, and

    B: Many current and future smartphone owners are young and have little experience with dumbphones. Their iPhone might be their first handset…

    Because they tried to develop Symbian3 into something a dumbphone owner might recognize and feel familiar with, they made too many compromises and bad decisions that led to the usability-mess that S3 is today.

    I’m afraid they might make the same mistake with S40.

    The distinction between mid-end and low-end is more or less obsolete today. The cost of components is so low that a 600mhz CPU only costs a couple dollars more than a 1ghz CPU. (600 Mhz is already considered low end in Europe.) And in a year or two you’ll see 1ghz and doublecore CPUs in lowend phones even in India and Africa. That’s why you’ll eventually see WP7 even in lowend phones, and why Nokia has to be very careful that the market doesn’t make its S40 plans obsolete…

  11. Hardware is irrelevant to the same people who are coming from a dumb phone and don’t care about smart phones.

    Apple doesn’t use the fastest or latest technology in their devices and they still sell a lot, because the experience is fluid and simple.

    Nokia doesn’t use the fastest in their devices, but does use the latest, and sadly, they don’t sell a lot because their experience is not simple. But it IS fluid, with some exceptions.

    The current majority smart phone consumer wants simple, which is an oxymoron of what a smart phone is suppose to be about. So they buy the iPhone, which IS the dumbest smart phone on the market, because it offers a simple experience with almost no pitfalls or “How do I do that?” moments.

    Consumers dislike their technology being smarter than them in America. These are the people who do not deserve even using this kind of technology as it makes manufacturer’s further lower the IQ needed to use them and it’s one big “intuitively” stupid circle.

  12. Pingback: Randall Arnold: The Nokia Phoenix | MeeGo

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