How long will it be before American consumers take notice of Nokia? And for those who Nokia can win over, what’s next? Will the next generation of Nokia fans know the company for cell phones? or something else?
For a window into the future, it helps to look at the past. And for me, it takes one word Hakkapeliitta. As in the Nokia(n) Hakkapeliitta 10, the best snow tires ever made. Yes, among other things, Nokia used to make automobile tires. Great tires. And definitely the best snow tires I’ve ever used. Sorry, Bridgestone, the Blizzak is a wonderful tire, but it’s no Hakka 10 when you’re driving a rear-wheel drive car in deep snow.
I bring up the snow tires, because Nokia has made some wonderful products over the years. And the company has a history of re-inventing itself and spinning off businesses the company sees as a dead end. The telecoms equipment group is now a joint venture with Siemens. And Nokia’s networking team just got rid of the company’s ambiguous security appliances division. And let’s not forget Symbian…which is no longer a joint venture and is now a nonprofit.
Nokia is the antithesis to IBM, a company that still makes mainframes and makes billions supporting 20-year-old software.
So it’s plausible that Nokia will — one day — spin out smartphones and just about everything else we’ve known them for.
Will Nokia be in smartphones a decade from now?
I say this as someone who’s been using a Nokia N95 8GB for the better part of a year…and who has only begun to find all of the features. I finally got the FM radio to work this morning, and I’m wondering why I need anything other than this device. It’s got a 5MP digital camera, an FM radio, podcasting, Internet radio, GPS, navigation, e-mail, calendar, Office access, and connectivity to third-party e-mail and calendar services.
But it’s clear that the market for $600 smartphones is getting pretty crowded. Apple’s iPhone is a wonderful device that is chomping away market share. Heavy subsidies definitely help make this possible (anyone tried to buy an unlocked iPhone? ouch! That’s $699 for the 8GB iPhone 3G. The 16GB iPhone 3GS is closer to $1200).
But smartphones themselves face numerous other challenges — namely in convincing people to use all of their features. These are phenomenal devices, but in the end, they’re telephones.
Even though mine is an iPhone family, my plans are for an N97 when prices fall and I decide to upgrade to a 3G data plan.
So Now You’ve Got Me, What Next?
That’s where things start to fall apart in the U.S. market. Smartphone is a crowded category, and Nokia is de-focusing the CDMA handset business. Which leaves the GSM operators (AT&T and T-Mobile) as their only go-to-market options. AT&T has the U.S.-exclusive on the iPhone, so I doubt that Nokia will get much help there on smartphone, and T-Mobile has other device manufacturers onboard as well, including the TMo-branded G1 Google phone (from HTC).
1) Mobile Internet Devices
I like the always-on capability of a mobile device. And I get tired of turning on a computer or sitting in a chair with a hot laptop in my lap.
And while I like the appeal of a netbook, that’s just a smaller, slower laptop with just as much heat and boot time. I’m not impressed with the battery life, either.
And why bother when there are devices such as Nokia’s N810 Internet Tablet on the market today. You can get one for $199 at Expansys. Not perfect, but a wonderful little device with a QWERTY keyboard and instant availability. A new version, also running Linux, is expected on the market this fall with 3G (or 4G) and Wi-Fi connectivity. I can’t wait.
These devices give Nokia the option to go to market with additional 4G operators such as XOHM and Clearwire. It’s an option.
2) Online Services
Nokia is a global company that sells into many different markets. And in those markets, Google isn’t always the bogeyman. This is the reasoning behind services such as Ovi – a service that offers added value for smartphones as well as simpler devices. Ovi is an excellent platform for delivering e-mail to people in developing markets. So while Ovi might not make sense to a user in the U.S., it does make sense in many other places.
But here in the U.S., I’ve tried to use Ovi to integrate contacts and calendar with Gmail and Google, but that hasn’t worked. So I stopped using Ovi and installed Mail for Exchange for S60. Now my Gmail contacts and Google calendar sync with my mobile telephone. Sorry, Nokia, but someone didn’t think this one through. I’d still be using Ovi if the company had adopted a Google-friendly roadmap.
In other countries, Nokia has been pushing forward with music as well. I don’t buy this value prop, either, for the U.S. market. So as I see maps and navigation coming online at Nokia, I’m struggling to understand what Nokia seeks to do.
A Media-Friendly Strategy?
I see numerous options for Nokia, but I’m wondering how the company that claims to reinvent itself, will make this next transition. Is it media? Services? Or electronics?
It’s easy to turn Apple and Google into the companies to beat. But it’s also important to understand what these companies do, and how they make money. For Apple, music is a means to an end, defining an integrated value proposition across computers, media players and mobile devices. For Google, it’s a bunch of free services built around the advertising revenue stream. Google can afford to gamble with new services, because there’s such a large Internet advertising revenue stream paying for it all.
So what’s it for Nokia? The company has demonstrated that they can make the best telephones in the world. They’ve demonstrated that they can make exceptional smartphones. But how will the company make money?
- If Ovi is the plan, I’d expect Nokia to spend far more marketing and driving traffic to this online property. The online media business relies heavily on Traffic Acquisition Costs (TAC) as part of the equation. Google and Yahoo! each spend hundreds of millions (if not more) of dollars on TAC to drive users to their PC and mobile online properties.
- If Nokia intends to remain a leader in consumer electronics, then the company will need a footprint in the home. Television is a major platform, and how will Nokia play there?
Whatever it is, don’t mourn the loss when the company gets out of one business. As with the Hakkapeliitta, they came back and offered something else equally as excellent.