The Nokia Phoenix

I wrote in May of last year asking, only partially rhetorically, if this would be a make-or-break year for consumer electronics giant Nokia.  And like many other pundits, I’ve offered my previous employer sound survival advice on more than one occasion [1][2][3] .  Based on recent financial reports, nobody listened.

All facetiousness aside, here around the halfway point of this year it makes sense to look at the company’s situation again and see if any of Nokia’s remaining strengths can lift it up and turn it around.  

Capacity and Reach

The one thing I was constantly impressed by when working for Nokia was the company’s manufacturing and distribution prowess.  Its supply chain depth and expertise is second to none.  Bottom line, Nokia can build and deliver like nobody’s business.

If that was all it took to put out the world’s most desired and respected consumer products then Nokia has the deal sewn up.  But the best logistics in the world don’t make up for shortcomings elsewhere.  It just means you can ship more of what nobody wants than anyone else.

Mechanics and Innovation

One of my complaints as an employee was that there didn’t appear to be a clear Nokia product identity.  Yes, there were certain shared characteristics within product families but nothing that ever shouted “Nokia!”.  I heard colleagues and customers express the same concern but somehow word wasn’t getting where it was needed.

While I’m discouraged by some Nokia moves the past few years, I’m thrilled to see the branding part coming together.  I can look at an N8 and E7 and see the relative DNA.  I can see Symbian Anna and MeeGo 1.2 Harmattan interfaces and know that, despite significantly different underpinnings, the user interfaces are produced by a design team with a cohesive vision.  Love those squircles!

Some other peeves are being addressed, like pentaband capability on high-end models.  Combine these progressions with Nokia’s winning camera and display technologies and you have a really compelling offering.  In fact as far as I can see Nokia has failed to capitalize on what it does better than most.  Yes Symbian was too slow to evolve, and still has some quirks, but customers will ignore some annoyances IF the device does certain, expected  things Very Well.  Apple proved that with the first iPhone iterations, omitting features that other smartphones already had but creating a highly-compelling user experience that led zealots to not only overlook but even defend iPhone shortcomings.

Nokia needs to cultivate zealots of its own, and actually had a powerful contingent until touchscreen devices became de rigueur.  I’ve been harping on the company to improve its outreach efforts, and see promising signs here and there, but still no heavy PR push as is needed.  But that may well be largely device-driven; Nokia’s best product, the upcoming N9, doesn’t run the Windows Phone 7 OS on which Nokia has pinned its future.  Outreach campaigns may well be waiting, understandably so, for those Microsoft-powered phones.

Conventional Wisdom

The analysts, however, are already writing Nokia’s epitaph.  Many believe Nokia has already passed that make-or-break point.  Tomi Ahonen has been especially critical, which is interesting given his more favorable assessments in the past.

And when you read glowing reviews that pick the N9 over iPhone, you wonder if there isn’t a sort of self-defeating insanity infecting Nokia’s upper ranks– given that CEO Stephen Elop has hinted that the amazing MeeGo-capable N9 will be a one-off product.

Reinvention

But the reality is that no company is dead until it’s, well, completely nonfunctioning.  Nokia is hurting now, hunkered down and licking its wounds.  It may well not survive long enough to be a power player again, especially if the stock keeps declining.  Its prospects certainly haven’t been helped by Elop’s original provocative statements about impending product endings.  But… the company still has a wealth of resources, and I believe it can pull itself together and succeed again.

When I was a Nokia employee (2005 through 2009) it was easy to get caught up in unrealistic expectations.  Say what you will from the outside, within the company there was an energy, a living spirit of Can-Do that could have led to greater things– had it not been squandered by executive arrogance.

That focus on possibilities served the company well in the past, as it morphed from one distinct industry to another, and can again.  A fog of complacency settled over the upper ranks during the late 2000s, and maybe the resulting rapid market loss was necessary to shock them out of it.  Some analysts believe that Windows Phone may well be the vehicle to launch it out of the ashes.  And there are also interesting things going on with S40!

Assuming Nokia can hold on through the next year or so, it also has some exciting technologies in the wings.  Like solar charging and haptics on steroids.  I’m cautiously optimistic my favorite employer can fly again!  As a stockholder I need to be.

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31 responses to “The Nokia Phoenix

  1. debernardis

    We know Nokia does the best hardware, with features, durability and style. Why do they engage in thar ecosystems struggle at all?
    Make excellent, shining devices, open your hardware, let people install the OS they like more, like with computers. Maybe give a basic OS preinstalled, then forget the OS and dedicate yourself to what you are number one about.
    Sooner or later it’s going to be like that, for all hw vendors.

  2. Pingback: The Nokia Phoenix | Tabula Crypticum | Leader of Phone

  3. All I know is that I see a lot of speculation over speculation. First on the reasons some products fail and others are successful. And all this thing about Nokia planning to exterminate Symbinand Meego, and, as you said, “pinning their future” to WP7… I understand the statements will cause unease, but we will not know until things happen, and the matter hits the fan.

    Nokia lost a lot of marketshare to the new people entering the smartphone market. Do we know how well the other companies are retaining their new consumers? Will the new iphone an android consumers be totally faithful to their first choices, or are they fresh elastic minds that are totally willing to try other things?…

    I know I just bought a (not yet delivered) N8. Say what you want of the “outdated interface”, still is the best camera, still has and AMAZING design. And all the talk about burning platform and “Symbian doomed” and N9 last meego or not… I don’t really see how that all fits into the mind of the consumer when he is set to buy it.

    It all just serves to generate noise that the tech press feeds on. “Oudated UI, doomed platform, boooo”…

    What I think is really important, and that is something I felt while making my final decision, is that Nokia should advertise all the small fixes… There is a lot of old, outdated material out there from 2010 saying things fmr the N8 that are not true anymore, or that will be fixed with Anna. E.g., the dragging of the home screens. A silly little stupid thing that makes all the difference. They must show that this changed. And I also learned that in the beginning you couldn’t easily share pictures form the gallery, but then an update fixed that. They may be late, but they are delivering all that. What is the next thing they will complain? Video calls?? Oops, wait, they already had that ages ago!… Let’s say, hmm Angry Birds??….. Now that would be a great joke.

    The move to Qt was the one fundamental thing that had to be done, and they did it, and it’s delivering great results. And will be better. The burning platforms were the old symbian sdk and the GTK stuff in Maemo. They evolved from there in the best way possible. WP7 is just some crazy orange kayak they are putting a foot on to take pretty pictures.

    If they weren’t making some little bet in any other external platform, and the only real alternative was Android, we would be saying they were being arrogant. And between the two, WP7 is a good choice. More space to stand out with their great hardware, and possibly some personalizations… And Microsoft was needing a new Partner, Google wasn’t.

    I only hope the press continues to generate all this positive buzz about Meego and N9, asking Nokia for Meego. I hope this is the strategy all along…

    • It’s funny how the press and public will forgive Apple and even Microsoft for putting out products requiring updates, but not Nokia. For whatever reason, Nokia is not cut the same slack. You’re right about pointless speculation, but I think it comes down to one thing: the “Connecting People” company has failed to connect. That comes down to PR, as many have asserted. More than anything else, Nokia needs to work on its identity, its message, and its perception with the people. As you note, everything else is in place.

      • Problem up to date was that in Nokia products there was no clear strategy of upgrades. By default each phone was single product hardware+software and maybe “we will throw some updates”.

        Apple and Android changed rules – if there is no clear strategy on updates phone is useless (that is not true but this is general perception). And highly publicized waiting for updates of Maemo and Symbian didn’t help.

      • Agreed, vvaz, and thanks for bringing that up. I should have.

  4. Nokia definitely needs to stick with what they do best, which I think they’re doing with the N8 (camera). Meego on the N9 shows promise and Windows Phone 7 isn’t all that bad either. What I really want to know is what will Nokia do if Windows Phone 7 flops and Meego takes off? Fire Elop?LOL!

    • I’m very entusiastic about meego and I’m considering buying an N9. But Meego will never take off. It doesn’t have enough apps to satisfy consumers. Many games and apps is developed for iOS and Android and afterwards ported to symbian/QT which may mean poor quality and that the app is avaliable much later than in the competitors app store.
      Many apps isn’t even made for Meego/QT and when consumers get a hint of this they will naturally, and understandable, leave out Meego/QT.
      Meego have potential because it is so different (and might even superoir) but becuase the app part it will not succed nomatter how much both you and I want it.
      Furthermore I have some difficulties seeing why WP7/8 should not be succesful. It has a growing app store – many developers, too huge companies to back it up and Nokia is not the only one to use WP – Samsung, LG ect will also implement WP7… But it will not happen this year – maybe 2012 or 2013 when there is a solid amount of devices, apps and developers.

  5. I am afraid you are too optimistic. While Tomi rants are becoming borderline ridiculous his numbers are convincing – Elop destroyed Nokia as we know it. It will have take years to just get marketshare above 10%. And Nokia will need to increase sales as fast as Android or iOS were able to do in the past. Really hard to believe Nokia will be able to do it.

    Add to this fact that in marketing they will be toting WP7, not their own brand. Some of steam will go sideways and people will buy WP7 phones from other vendors (you can observe similar doings in Android purchase decisions).

    Problem is with top ranks – sorry, for reiterating old paranoid theories but Elop is through and through MS man. For him 10% marketshare will be great success. Because for MS phone system it will be. But for Nokia who created that segment of the market it will be disaster. Especially when you start counting profits. For company of this size you have to keep big marketshare to be profitable – with falling sales you will have to slash jobs and suddenly(?) you have no resources to invent new things and put them into massmarket production. I am pessimistic.

    • I can’t really blame you for that assessment. Right now Nokia really could go either way, and the apparent momentum favors your opinion.

    • Elop had been hired by Jorma Ollila. Ollila had been elected years ago by shareholders. Since end of 90s prevailing part of shareholders are US financial companies. Do I have to draw lines between dots for you further? During last AGM 90+ % shareholders has not said a word _against_ Elop’s plan. Don’t get me wrong – I’m last person to whitewash Elop. But amount of sheer *wisdom* at top is so… thick. It will take ages to cleanup top layer – probably natural mortality is more efficient than any reductions at Nokia’s top: actual exec departure after Elop hiring and until his firing platform bruahahaha shows that only ballast left at top and smart/able had left company… You see it in downspiralling share price and credit rate sliding. Do you need more lines between dots???

  6. its not tomi only, all analyst are making eco.

    wp7 have failed with samsung all the others players. market simply doesnt want the fancy interface that only fools americans and microsoft it’s even loosing marketshare there.

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  8. I’m really annoyed at the tech media for the way they discuss Nokia, I’m annoyed with Nokia too- for releasing good phones too late. I wanted a replacement for my N95 8Gb, went for an N97 mini, sold it, now want an E7 or an N8, or maybe an N9, none of them are perfect for me so I’m also thinking about a 2nd hand N86. I want the camera from the N8 but with a proper keypad, not necessarily a QWERTY, just normal buttons would do. The E7 not being able to focus close up means it’s nbo good for taking photos of documents like I do, apart from that I’d go for it. I’ve had loads of Nokias over the years, been using SYmbian handsets since my 6600. I like Nokia, hate Apple, dislike MS and don’t trust Android, or anything Google. I want to stay with Nokia and for them to do well, they should too- if it wasn’t for idiots being obsessed with their pathetic iphones. Nokia need to sort themselves out- telling everyone that they were giving up on Symbina (and Meego) was a bad move- I think Symbian is really good- it can easily handle what I hit it with- photos, spreasheets, texting, calling, contacts and reminders, all at the same time too. The iphone thing really annoys me- it does NOTHING my 5 year old Nokia can do, less in fact, still people think they’ve got a good handset, even at the mad prices. I hate facebook too but that’s another story- similar though- it does nothing I can’t already do yet everyone flocks to it. People are stupid and just follow each other. Madness. I don’t want Windows 7 on my phone, I want Symbian. Change your mind Nokia (if you’re listening that is….)

  9. To put it short, Nokia had a big market share because it had variety among its low-level, mid-level and high-end phones. By variety I mean same software on different hardware devices and same hardware with slightly different software versions and / or updates.

    Q: Why Nokia lost much of its market share?
    A: High-end and mid-level phones were all Symbian except for N900. Symbian on Nokia’s hardware many years ago DID every thing an iPhone / Android brags about being able to do now. The only problem with Symbian was and still is ___usability___. Now that both iphones and androids are easier to use than a symbian, Nokia lost its high-end phones market share. In addition, low-level grey scale phones were dominating once like floppy disks. Now they are fairy tails. So, Nokia also lost its market share of low-level devices. With the fierce competition put from Google on to Apple, prices significantly dropped and thus mid-level phones are usually abandoned for slightly more expensive device that is reasonably considered a high-end.

    Q: What Nokia needs to do re-gain its market share?
    A: 1- re-define low-level phones for its current / ex customers and reach out more for them.
    2- manufacture a plethora of high-end phones that are better than Androids and iPhones in terms of usability. (These are basically meegos and WP on various hardware devices with promised and fulfilled updates)
    3- re-design its old website that looks and is unintentionally retro!
    4- do a firmware update for Ellop’s mind, and if fails fire him.

  10. Pingback: Could/Should Nokia abandon Windows Phone and get back to MeeGo? : My Nokia Blog

  11. People talk nonsense about “the Osbourne effect” without really understanding it, and Tomi Ahonen (who’s getting more psychotic by the day) blames Elop for destroying Nokias marketshare with the WP7 announcement.

    But if you look at the stats, its clear that Nokias decline in sales started already in 2010, only to accelerate in the 2nd quarter this year.

    The reason is simple and has nothing to do with Elop. Nokia just doesn’t have any competitive handsets that consumers want to buy!

    And no, Symbian and Meego is exactly the reason why it went that bad, anand would only drive Nokia further in the ditch.

    Look at Meego… What… Over 3 years of development (dont forget about Maemo!), and all they have to show for it is ONE commercially available handset? Or Symbian… Years and billions of dollars in development, and the result is a sub-par UI, that takes a year to develop a simple update and proper browser for!
    (we probably won’t see Anna till Sept/Oct)

    WP7 is the future, and the only way Nokia will stay relevant and competitive…

    • The damage was indeed underway already, but Elop’s careless comments provided the tipping point.

      And WP7 is unproven, so calling it the future is still highly speculative. MeeGo actually had more momentum in the company. After all, I am now using a MeeGo (compatible) handset today (N950), not one running WP7.

      • Come on Texrat… surely a smart guy like you can see why the Feb announcement had little impact on sales…

        You and I cared about it, cause we read up on mobile news, but the regular Nokia consumers? Most of them still dont realize that the OS is due for a change. And when the WP7 Nokia is released they won’t necessarily think of it as a WP7 phone, but just as a cool, new Nokia.

        More to the point, even IF customers realized that the OS was about to be obsolete, most people get a new phone every two years, and would be unaffected by the change.

        Talk of the Osbourne effect is nonsense in this case, as phones are relatively cheap, and get replaced every year/second/third year. Computers, back when the Osbourne effect was observed, were a completely different beast. They cost 10000-20000$ in todays currency, and lack of support/becoming obsolete was a real concern.

        Regarding WP7, yes its unproven, and the current version is not much more than a beta of sorts comparable with the first iOS or Android 1.5. But the Mango version is showing significant improvement, and there’s no reason to doubt that the OS will mature just as fast, or faster than the competition.

        And the biggest reason why I think WP7 will be a success? Carriers want and need an alternative to the duopoly of iOS and Android, and since this is Microsofts (and now Nokias) last chance of being a player in mobile, they’ll keep going at it, and will keep throwing money and manhours at it until they succeed.
        (like they did with the xbox)

      • I was speaking in a broad sense. But anyway, Elop’s careless comments had a chilling effect on Nokia’s business, and that would of course include sales. To ignore that is naive.

  12. Apple’s iPhone caught Nokia off-guard, and then, trailing behind, came Android. Nokia’s transition from Symbian to Meego was already on its way, but Nokia didn’t speed it up as it should have done. It was brilliant, and with the evolution of hardware (cheaper and faster each year), I can’t see a reason why all Nokia’s smartphone couldn’t eventually be Meego-powered.

    But now, after Elop talked trash about Symbian, downgrading MeeGo just because he stated so (angrying to the bone a soon-to-be heavyweight on mobile silicon, the biggest chip manufacturer on the planet, Intel), and betting all his company on an already failing OS, Nokia’s very own survival is at stake.

    I wish Nokia the best. I’d hate the day when I’m “forced” to buy an Android handset.

    • Caught off guard? Sure, but they had three years from then to do something about it, so its not much of an excuse any more.
      (especially since the iPhone didn’t do anything that Nokia didn’t have the know-how or technology to do themselves)

      Regarding Meego, it was already doomed, regardless of Elo, because of the delays and problems inherent in the project.

      A: Meego was supposed to be used in conjunction with Intels next generation Atom CPU. But Intel has little experience with the kind of CPU that a cellphone uses, and its possible that it’ll never meet the kind of efficiency necessary. In either case there were (and still are) significant delays with getting it ready. Meego suffered (also) as a result of this.

      B: Another reason for Meegos delay was that it was chock full of bugs. Getting rid of them would mean that Meego would never have been ready on a feasible schedule across several form factors.
      Look at the Business Insider story where the head of technology at Nokia admits that they couldn’t get more than 4 Meego handsets ready… BY 2014!
      (As nice as the N9 is, its also a victim of this. Which is why the CPU and the rest of the guts of it, is based on 2009-early 2010 technology)

      C: Why did Meego take sooo long to develop? Part of the reason is that Nokia just sucks at software (and always have sucked at it. Which is why its an excellent idea to have Microsoft take care of that aspect.)

      But another big reason is the very nature of Meego.
      The open source/open development community based approach coupled with multiple partners just doesn’t make for speedy and efficient development. A lesson you’d think Nokia had learned with Symbian…

      Just look at the speed of development of Android, iOS and WP7 next to the glacial pace at which Symbian and Meego grew. Both have been in development for YEARS without much to show for it.
      (The N8 has been out for almost a year, disregarding the original delays and STILL don’t have a proper browser or keyboard!)

      Nevermind the political/philosophical aspect of open/community development, it just doesn’t make for speedy or very efficient development on something as complex as a cellphone.

      (One of the advantages of the N900 was supposed to be the community and its resources. But hobbyists and enthusiasts aside, just look at the applications available for it. Look at them from a regular consumers perspective. From a functional and design based approach they’re all horrible and plain ugly.)

      D: And lastly, there’s the whole ecosystem-thing. Despite Nokias best efforts, they’ve never built much of an ecosystem around their phones. On iOS and Android you can purchase, download and consume not just apps and music, but also TV shows, movies, magazines and books. That’s the future, and Nokia can’t get there without Microsoft.

      Nokia has also always been lacking in regards to apps. (disregarding their fuzzy and obscure Ovi store stats) It’s clunky to develop for, Nokia doesn’t have as many, or as skillful developers as other platforms, and Nokia always had a problem with monetizing apps, making their customers buy and use apps. Microsoft on the other hand, has excellent developer relations, is the easiest and most efficient to develop for, and has a vibrant developer scene (from zero to over 20.000 apps in less than a year! And that’s despite of somewhat lackluster sales!)

      Even if Nokia COULD build an ecosystem rivaling what Microsoft already has, it would take them years. The two companies complement each other excellently, and only together does Nokia and Microsoft have a chance to be the third smartphone platform. THAT’S why Meego must die, and why WP7 is the future and the best bet, regardless of which OS is technically or philosophically the “superior” choice.

      Lastly, let’s keep on mind that all of this isn’t just Elops flightful fancy. Nokias board of directors as well as the rest of the VPs and top management have come to the same conclusions, agrees with him and support him. Now there has to be a good reason for that, dont you think?

      • I am using a Nokia MeeGo Harmattan device (N950) today. I cannot get a Nokia WP7 device, however.

        Also, I would not laud the board too much– they are the same people who presided over Nokia’s decline. As for Elop, his track record doesn’t inspire much confidence… and his tendency to “shoot from the lip” identifies an immature CEO.

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

  14. The basic Samsung Galaxy Tab 10.1 was released to the UK today – Thursday – and good luck to them too but can it compete in today’s market? By the time the variations that make it appealing for peeps (and I obviously don’t just mean memory here) become available won’t it have become a little passe?

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