Nokia Continues to Spin Its Wheels

Two months ago I (and many, many others) speculated or hoped that the changes in Nokia's top management augured well for a change in strategy. In particular, I wondered how they might now respond to the challenge from iPhone and Android. The choice is stark: Symbian is old and difficult to upgrade to compete on features in a timely fashion or switch to Android. Those aren't the only choices since even Windows is now showing some promise. However they haven't diverged too far from their previous trajectory by banking on MeeGo.

The question I have to ask is how exactly does this decision help them? They know they have to do something, and fast, but I suspect that pursuing MeeGo will only delay their ability to effectively compete. MeeGo remains feature poor in comparison to iOS and Android, and those platforms continue on a fast development pace. Yet their stated reason for sticking with a unique platform is to differentiate themselves from others.


There was an interesting article in the Wall Street Journal this week on Nokia's current direction that is well worth reading. I'll quote a few lines from that article in this post.

Though the go-it-alone strategy puts Nokia in competition with an increasingly powerful Google, the rise of smartphones has forced cellphone makers to differentiate their products and generate profits increasingly through the software they offer. Using Android or another platform would likely leave Nokia in the steadily lower margin business of hardware.

Alberto Torres, Nokia's executive vice president for MeeGo computers, argues it also would tie its hands in distinguishing its smartphones with new innovations, ultimately benefitting Google's search business at Nokia's expense.

Referring to other handset makers that have adopted Android, he said in an interview at the Dublin developers meeting this week: "Frankly, some of these alternatives in the market are not necessarily providing a lot of opportunity for innovation, and that is what we hear from people who are using those platforms at the moment."

Nokia has said this before and I still don't buy it since they are not at all clear at stating just what it is that will demonstrate their innovation. That is, what will MeeGo allow them to do that Android cannot? Innovation does not just mean different, it has to mean something unique or better. Instead we hear again about the Ovi store, their developer community and proprietary applications.

Nokia also has spent heavily to catch up to the iPhone and Android with its own platform and set of software services, under the brand Ovi. Those investments include its $8.1 billion acquisition of digital map maker Navteq in 2007, which competes directly with Google Maps.

Pairing with Google at this point would mean negating all of those investments, said Roberta Cozza, an analyst with Gartner. "Putting everything into Google's hands would mean all the work on Ovi would be gone, and I am not sure what that would change for them," she added.

This is misleading since it is certainly possible to put their maps applications onto Android and still keep their Ovi brand. They can even negotiate with carriers to choose their proprietary apps over Google's for the Android devices they market. I am left wondering if they are feeling uncertain about competing head-to-head with Google and prefer to use platform lock-in to promote their apps while also barring others.

The danger is that they could lose both the phone and software business if Nokia smart phone products continue to lag and the carriers simply go with the platforms, and device vendors, that give their customers what they want. As time goes on, that list is less likely to include Nokia, with or without MeeGo and Ovi. App developers will continue to make the same decision, leaving Ovi with a growing application gap.

Nokia's decision to push MeeGo over Android stems in part MeeGo's capability to support not only smartphones, but a variety of products consumers use including tablets, televisions and even automobiles, [Gartner] says.

This is obviously false, and I am astonished to hear it from anyone, especially an analyst that follows the industry. By next year the market will be awash in Android tablets and a growing list of other devices. In contrast, MeeGo is still in catch-up mode.

Nokia has to seriously -- and I do mean seriously -- determine how they can be different with a compelling platform and portfolio of products and services. One can only hope that they do know and are choosing to play it close in their public statements for the present. Nokia is a good company so when the new management team comes to a point where they are able to implement major changes, they may do so. To succeed they need good hardware, user interfaces and a few innovative apps and services, all of which are within their ability. However none of this requires Symbian or MeeGo.