Nokia-Symbian: Brilliant or Clueless?
News Analysis. Nokia's Symbian buy makes the company the top provider of handsets and mobile operating systems, as measured by market share. But does Nokia have a strategy? |
The answer is hugely important because Nokia now has everything to lose, and Apple has so much more to gain.
Quick recap: Today, Nokia snapped up the remaining Symbian shares it didn't already own. The move gives Nokia full control of the dominant mobile operating system and stronger competitive position against four major or up-and-coming competitors: Google's Android, Apple's iPhone 2.0, Research in Motion's RIM OS and Microsoft's Windows Mobile.
The suddenly, rapidly changing mobile handset market has caught Nokia unprepared:
- Apple and Google are aggressively courting mobile developers.
- Apple will launch a mobile application store next month.
- iPhone will reach 70 countries by year's end.
- MobileMe will sync data between iPhone, the cloud and PCs.
- Nokia has volume, but mostly among lower-cost devices.
- Newer Nokia smart phones are oh-so five years ago.
S60 is a great mobile operating system, and Nokia plans to at least partly open-source it. But my eWEEK Labs colleague Jim Rapoza raises the right concerns about the strategy. As he explains, carrier control is perhaps the biggest problem, especially in the United States. I have a great experience using the Nokia N95, but that's with an unlocked, unsubsidized, high-cost device that relies on Nokia hardware, software and services for the punch; I get nothing but 3G access from AT&T.
Nokia needs to make Symbian something more before Apple makes iPhone 2.0, with that built-in application store, so much better. The most successful platforms share one, and only one, significant attribute in common: Somebody makes money. Windows beat Mac OS in the late 1980s and early 1990s because Microsoft provided a platform around which lots of third parties made lots of money. With iPhone 2.0 software, Apple looks ready to make up for some of its past mistakes by creating a platform around which application developers and other third parties can cash in.
Nokia wouldn't have to worry if not for Apple's bold distribution plans and lower cost of subsidized iPhones. The new iPhone 3G will launch in 22 countries on July 11 and expand to at least 70 countries by year's end. While the mobile lists for $199, already some carriers are offering free devices for a higher monthly service fee.
Broad distribution at lower price is driving Wall Street financial analysts nuts. I've been reading about crazy upward revisions on iPhone shipments. Yesterday, Pacific Crest Securities analyst Andy Hargreaves warned his previous 15.5 million-unit shipment estimate for Apple fiscal 2009 was conservative. "We believe the iPhone, along with the Apple Store service and third-party software, has permanently changed the smart phone market," he wrote.
Smart phone market is where Nokia comes up short. Nokia sells the majority of its handsets in lower-cost categories or, to a much less degree, the specialized digital media market (e.g., N Series phones). Last week, Nokia announced the E71 smart phone. It's one of the thinnest smart phones on the market, but its huge QWERTY keyboard and Moto Q styling are oh-so 2005. Meanwhile, the futuristic iPhone looks more like 2010.
What Nokia has lots of is marketing. Nokia's mobile device marketing is simply the best on the planet, and that's no offense to Apple. Ad campaigns like "There's a Thing in Your Pocket" or "Jealous Computers" promoted the N95. The latter campaign featured people making movies using the N95, during which time jealous computers attacked them. So the campaign showed off the technology in use, while making a vivid point about the mobile as PC replacement. Newest marketing campaign: "Open to Anything."
Like Apple, Nokia aggressively markets its handsets. Many Americans wouldn't have seen the ads, outside of the Web, because of Nokia's limited U.S. distribution. Nokia understands the importance of good marketing, which with Apple sets it apart from most other handset manufacturers.
Nokia's other strength is its weakness. Many Nokia handsets easily outperform the iPhone, in terms of photography, movie making or mobile blogging capabilities, application platform extensibility, and hardware features. But Apple is doing much more for convenience. For example, the iPhone's 2-megapixel camera pales in comparison to the 5-megapixel camera on the Nokia N82 or N95. But Apple makes it much easier to scan through the photos (using fingers), view the images (with larger, glass display) or transfer to the PC or Web (plug and sync). I predict that for the mass market easier usage will win over better features or hardware.
Interestingly, at Ovi, Nokia has many of the services already in place to compete with Apple's MobileMe. Nokia has got the pieces of an Apple-killing strategy—and commanding market share leadership—but they're not yet assembled together.
Symbian ownership is a good start for Nokia, but the company has got to start running at Internet speed if it's going to stay ahead of upstarts Apple and Google. To succeed, Nokia must woo developers and better provide a platform from which third parties can profit. If Nokia loses the developers, one or both the upstarts will leap ahead. Apple economics will be about the applications, and Google economics will be about search and advertising. If Nokia economics strategy is n-Gage then, gulp, it's game over.
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