What is Nokia up to?

Posted by Minnaar Pieters 13 Nov 2009
On Wednesday morning I headed over to the Nokia The Way we Live Next event in Cape Town. Richard Mulholland did an excellent job of explaining the current mobile landscape. During the presentation a few things were highlighted that really did make me think. Needless to say, the topic soon shifted to that other company who has a fruity name. No, not the Canadian guys.

Nokia was started many years ago, but only stepped into the cellular business in the last 2 decades, with a simple mission. They wanted to put phone in every person's hand. They went about this is by creating specialized handsets for every person's needs. For example, one person might want a big screen, another might need a qwerty keyboard. And this has evidently worked out very well for them.

What has however happened in the last 3 years is that the era of the very powerful hardware with custom software is fading away quickly. We are seeing a shift towards the phone as a platform, more than a focus on hardware (when is the last time you worried about how many megapixels your phone has?). People are interested not only in what the phone can do, but more significantly, what the phone might be able to do in future.

Buyers of the future do not want to be bombarded with 50 different phone models in a cellphone brochure. They want the phone that has the most potential. Case in point - in 2007 the two most notable phones that were released on the market was the Nokia N95 and the original, non 3G, iPhone. At that point in time, the N95 was streets ahead in terms of hardware (except maybe for the screen). Take a look at this 2 years later. The N95 has lost the attention of Nokia, and you are pretty much expected to have upgraded to something newer by this point. Not so much the case with the iPhone. Apple has continually upgraded the phone up until today. True, it might not have the features of the newer iPhones, but its value has increased over time, and the device is much, much more powerful than the day you might have bought it. Before the iPhone, this idea of a phone as a continually upgrading platform was unheard of. Now why would Apple keep updating the software of phones it has stopped making?

Richard made an excellent point - up to now, cellphone manufacturers considered buyers of the phone as the most important part of a successful business strategy. What has now happened is that buyers are still important, but there is a certain group of people who makes or breaks your phone these days - developers. If your phone is OS is difficult to develop for, there will be a lack of apps, which will lead to a lack of sales, seeing as the cellphone as a platform is what is important to buyers these days. If the platform is easy to develop for, developers will rush to be part of it. Phone manufacturers of the future must start looking at other forms of revenue - true, smaller, better, cooler looking phones will always sell, but the revenue models for manufacturers will now change. They will make their money by sharing the income generated by applications. It is for this very reason that Apple has now officially taken over Nokia in terms of handset profits.

Obviously Nokia needs to shake things up with their current business model - and the way they are getting into the "phone as a platform" market is through Maemo. Symbian has become somewhat clunky, but most importantly, is very complex to develop for - the amount of variation out there has made it prohibitively expensive for developers to test their software on the hundreds of Symbian handsets out there. If you were a cash strapped start up - would you write for a platform that has only one model, or a platform that has thousands of handsets out there, all with their own unique issues?

While I dont expect Nokia to shift away from Symbian, I do see Maemo becoming their more sacred OS. If they can keep the number of devices running Maemo low, while making it affordable as well, they might very well have a real chance at giving the iPhone a go. Developers might like to develop for the iPhone, but the backlash in terms of Apple's padlock is starting to happen. The developer of Facebook for iPhone (which is arguably the most popular app on the phone) has publicly stated he has given up his efforts with the iPhone. These developers that have grown tired of Apple will want to develop for something else - so far it looks like Maemo and Android will be the eager candidates. Android already has the slight disadvantage in that soon there will be too many variations of models that run the OS out there. While the "openness" of Android is great, every manufacturer of Android phones want to create a differentiator in their product line, which leads to more variations that developers have to cater for. Hopefully Nokia will keep the Maemo OS on only a few devices, with a hopefully generic hardware set (same resolutions, relatively similiar capabilities).
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I am a R&D Analyst in Stellenbosch South Africa who has a immense passion for all things tech related. I embrace technology, open source and web standards, and I participate and contribute to the social web.