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Nokia Insider On Why It Failed and Why Apple Could Be Next
An anonymous reader writes "The former chief designer of Nokia explains how the company's success and its corporate culture stopped it from taking risks and left it open to being beaten by Apple. He now sees the same warning signs emerging at Apple. Quoting: 'I look back and I think Nokia was just a very big company that started to maintain its position more than innovate for new opportunities. All of the opportunities were in front of them and Nokia was working on them, but the key word is a sense of urgency. While things were in play there was a real sense of saying "we will get to that eventually."' He worries Apple is now in a similar place: 'Nokia became more of a maintainer, more of an iterator, whereas innovation only comes in re-invention and Nokia waited too long to make the next big bold move ... that is now Apple’s challenge. Apple has arrived at a very safe place, it is responsible for something everybody loves, so it feels it has to keep it going.'"
Oddly enough, this comes alongside news that a different former insider, Thomas Zilliacus (who was Nokia’s former Asia-Pacific CEO), has founded a company called "Newkia" in the wake of Microsoft's acquisition of Nokia. His goal is to take on former Nokia engineers and set them to building phones again — this time, running Android.
Nope, Nokia wasn't defeated from the outside, it committed suicide.
Getting Balmer to cough up 7B for this iterator didn't seem like failure if you ask me. Not to mention they still keep some IP to themselves.
When the foot seeks the place of the head, the line is crossed. Know your place. Keep your place. Be a shoe.
A guy discusses how Nokia totally drops the ball and then link baits it by adding Apple? And, let's be very serious here - there is no similarity between Apple now and Nokia before their fall - Apple is still releasing innovative products with several new innovations obviously on the very immediate horizon). While they may not reinvent an entire market every year, they are most certainly not sitting on their hands doing nothing. Nokia, by contrast, fell from grace because they didn't change at all when the market around them underwent a massive shift in direction. Anyone who thinks Apple would succumb to a similar failure is either INCREDIBLY anti-Apple and wants to hate on them any chance they get or they are completely out of touch with reality.
Or they are adding "Apple" to a blog post to link bait.
Imagine a game where you can choose between two options:
A - Try to move up: 1/5 you move up. 4/5 times you go down.
B - Try to stay: 3/5 you stay. 2/5 you move down.
In such a game, to place yourself in front, a good strategy is to try to move up until you reach a certain point where you're the first and then stay there, forcing everyone else to risk moving up.
There's a limited amount of people with a limited amount of money. It's not important how far ahead you are but whether you're the first one.
Assume the strategy is good and accept the times you move down as natural and only push when you're behind. Don't judge the strategy for the times where you move down.
"take on former Nokia engineers and set them to building phones again — this time, running Android"
Nokia needed to innovate, and an example of this is to build the same phone everyone else is? Good luck with that.
My sister got a newkia after her old car was totalled. Personally I wouldn't be caught dead driving one.
Getting Balmer to cough up 7B for this iterator didn't seem like failure if you ask me.
When Nokia's market cap was $245 Billion circa 10 years ago and as high as $150 Billion as recently as 2007 then that counts as a HUGE failure.
Apple, under Jobs, definitely didn't suffer from a risk-averse willingness to uncreative iteration (How many more incremental generations of the bestselling-product-ever iPod Mini could they have squeezed out when Jobs basically said 'Hard drives make me sick, fuck the Mini and go build me a Nano, I don't care if it actually reduces storage capacity until you get to the higher-end model a generation later."? However, Apple also (mostly, the 'why not make the shuffle a featureless rectangle for no reason, even though we had a version that was only slightly larger and incorporated the iconic control-wheel design?' was not a clever move) had the virtue of having a good idea waiting in the wings when they exercised their willingness to take an already-successful product out and shoot it.
That's possibly the even trickier part: there are very strong incentives to be a conservative, risk-averse, iterator when you are on top, so people tend to do so; but there's also a well-developed literature on 'just sitting around and milking your cash cow is how you get eaten by hungry upstarts'. Trouble is, unless you actually have lots of good ideas, like those hungry upstarts just outside the gates, staring at you, doing some cargo-cult management and killing random cash cows won't actually save you, just reduce the amount of delicious cash-milk you get to collect before you die.
You don't want conservatism to crib-death the upstart ideas that could genuinely save you from succumbing to old age and laziness; but you also want to be careful to recognize that, if you are in fact ossified and uncreative, that milking the situation for all it's worth and then cashing out gracefully beats the hell out of increasingly desperate flailing as you bleed out.
I'm due for a phone upgrade soon, and I'm currently looking at whatever mid-range Android phone is the best value for money.
I have a good job, but I'm simply not willing to spend 40GBP a month on an iPhone (plus 200 upfront costs) when a 20 a month Android phone will let me make calls and check Facebook just as well.
If the iPhone 5C exists and is competitively priced, then maybe Apple will get back in the game, but at the moment, they're stumbling in the smartphone market.
Summation 2
"Apple has arrived at a very safe place, it is responsible for something everybody loves, so it feels it has to keep it going."
Not quite. Apple is responsible for something many people love. Not me. I much prefer the features of Android to the point that I wouldn't consider an iPhone. iOS is an inferior product for functionality (specifically, customizability of the user interface) and it doesn't play well with non-Apple software and has excessively restrictive controls on what the user can do with their device. I have other issues with Google (their data use policies). There's room in my mind and wallet for a new player with better for the customer data use policies and an Android-like feature set.
To summarize: if you're not selling the next big thing in the next product cycle - no matter how big you are, and Apple is literally the biggest - then you will face certain doom.
Frankly that sounds like all kinds of ridiculous. I don't particularly like Apple, but I don't sense any sort of stagnation, they have a fairy wide portfolio of products, and have they committed any serious foibles in recent history. They could afford not coming up with the next two big things and still not suffer mightily. Some might point at Microsoft, Nokia and Blackberry as cautionary tales of not innovating. To which I would respond: Microsoft's current ills can be largely attributed not to not innovating, but to half-assed innovation at the expense of its core businesses (while if it had stayed boring it wouldn't presently be undergoing so much restructuring); Nokia was and is largely a phone maker which did not diversify enough when it had a chance while also making a wrong bet on the future of phones, while Blackberry, ah... Blackberry is a monkey in the time of chimpanzees.
The beginning of the end for Nokia happened around 2004, when UMTS arrived in Europe, and Nokia made an intentional business decision to not support EDGE, and to basically walk away from CDMA as well (even though at that point, probably half the phones sold by Verizon and Sprint were Nokia, as well as the majority of high-end phones sold by AT&T and T-Mobile).
As a result, their phones became useless paperweights in the US as far as anybody who ever used data was concerned. EDGE wasn't exactly "high speed", but compared to GPRS, EDGE is just "annoyingly slow" compared to "uselessly slow". Circa 2005-2008, EDGE was the best that existed in most of the US anyway... T-Mobile hadn't even started deploying HSPA yet, and AT&T's HSPA data existed in maybe two dozen cities.
Nokia presumably wrote off the US market because, in terms of total unit sales, it was roughly equal to Portugal or Switzerland. What they overlooked was the importance of mindshare... half the world's tech blogs and web sites are American, and as far as anyone in America was concerned, by ~2007 Nokia had effectively ceased to exist. At best, they were a company that used to be popular, and now just made throw-away low-end phones sold to people in remote African villages.
Other companies learned their lesson. Today, companies like Sony-Ericsson are working as hard as they can to break their Qualcomm addiction(*), and make a point of getting their phones into the hands of American reviewers who live in cities where T-Mobile has good HSPA+ coverage.
(*) Qualcomm insists on licensing LTE radio firmware to carriers rather than manufacturers, which means it's basically impossible for a manufacturer to sell phones capable of using LTE on AT&T or T-Mobile without the active involvement of AT&T or T-Mobile, and de-facto impossible to sell a phone built with a Qualcomm LTE chipset that's carrier-agnostic and capable of doing LTE on both AT&T and T-Mobile.
It's technically possible to use a separate non-Qualcomm chipset (like Beceem's) for LTE, but the price premium is fairly stiff (about $100, by the time the phone gets to retail stores). That's why companies like Sony-Ericsson (who desperately want to break the stranglehold American carriers have over the American phone market as gatekeepers with economic -- or in the case of Verizon & Sprint, real -- veto power) have eagerly embraced chipsets like the Renesas MP5232 and MP6530, which will enable them to make phones capable of doing LTE on AT&T and T-Mobile, and break the "LTE Lock-In" AT&T in particular has been working overtime to exploit as a way of making their nominally-GSM network into one that's as de-facto proprietary as Verizon's.
Fair enough statement.... but oddly enough, as long as I've been into computers and I.T.? I still vastly prefer my iPhone to any of the Android devices I've tried using in its place.
To address your points specifically?
Customization of the UI is something I don't necessarily consider "inferior", simply because what's provided doesn't allow as much modification. The REAL question is how much you like what they give you initially. (To use the way popular "car analogy" on Slashdot once again? With very FEW exceptions, vehicle dashboards are not user-configurable at all. Many accepted standards have been kept to, such as placing a speedometer someplace more or less directly above the steering column, and placing a fuel gauge just to the left of it. Several items like a tachometer are absent or present, depending on the particular vehicle's design, but you'll always find an odometer in about the same place, turn signal indicator arrows done a similar way, etc. etc. This arrangement works quite well, and most people don't feel a pressing need to rearrange it. If you asked most drivers about preferences for the dash, they'd talk mainly about the styling details ... whether they preferred chrome rings around the gauges, or if they liked the gauge needles to be white instead of red.) That's how I view the iPhone. You can still pick custom "wallpapers" to change up the look a bit, and you have control over arrangement of the icons on multiple screens. Without jailbreaking and using unsupported hacks, no ... you can't "go crazy" with it, radically changing the UI. But that also means businesses writing instructions for configuring the phones can safely write them ONE time, based on a single sample iPhone, and the instructions will make sense for pretty much all iPhone users. It means someone who mastered his/her iPhone can easily share knowledge with any other iPhone user. So the ONLY valid benefit I see to all the customizing possible on Android is if you really dislike what Apple has done with iOS and find the UI unworkable/frustrating enough that you need a totally different design. Again, fine if that's you. But iOS works great for many millions of satisfied users every day.
Not quite sure what "non Apple software" you're upset the iPhone "won't play well" with? It supports the latest Bluetooth connectivity standards, so in that regard, links up with all manner of non-Apple branded devices just fine. Yes, it's designed around Apple's iTunes as the preferred "central management hub" for placing media on it. But 3rd. party alternatives exist too, including programs that will let you download music FROM your iPhone to save onto a computer, instead of Apple's default "one way" setup where content only syncs TO the phone. Overall, I find I use smartphones as essentially "stand alone" devices anyway, once I have them initially configured. There's only so much outside software it needs to work with?
It introduced me to the concept of the S curve in terms of the innovation life cycle and it has great examples of how disruptive innovation can negatively affect a business that's at the top of their game when they fail to adapt to the change.
That's what I always liked about Google. They were constantly trying to do the disruptive innovation themselves; trying to replace their cash cows instead of just improving them. Recently it seems Google has dropped this culture though, so it's inevitable they'll be replaced themselves.
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Okay, listen. I know it's popular to bang the 'Apple is failing to Innovate' drum, but it's STILL NOT TRUE.
The problem is that people are compressing the last decade of work into a much smaller space than it deserves. Apple doesn't release huge, blockbuster game-changing products every year. Not even every couple of years. It's MANY years between cycles. The time between the iPod and the iPhone was a long time. The iTunes music store was its own special story. Yeah, the iPhone has sort of settled into a pattern, but it's still a very good phone.
People are looking to Apple to change the PHONE industry again, and they probably won't. They changed the music player industry ONCE, and iterated on that until it wasn't relevant anymore. Apple will continue to make a good phone--even a GREAT phone--but they probably won't ever really be the industry leader again.
Apple will find a new market to disrupt. It's easier than trying to disrupt the market you're entrenched in. Is the next thing a watch? Maybe iWatch refers to a TV (that would be a big surprise, wouldn't it--it's the sort of misdirection that I would expect from them). In all likelihood, it's something that people won't be able to predict, just like the iPhone was.
Stop asking Apple to a) really, truly innovate faster than they have before; and b) ask them to innovate in a space that they're already making money in. That's not the way they've ever worked.
As often happens in businesses that have 'missed the boat' on a marketplace change, a new leader comes in an decides to shake things up. By definition, they know little about the company's history and relative strengths - they just see the weaknesses and feel that change is what they were hired for. And naturally, lacking some vital info, the tendency is to 'go with the Microsoft playbook' and reap the glory when Microsoft is proven right. And with Elop's past history with Microsoft, that approach was a given.
Except that Microsoft's playbook itself is in 'missed the boat' territory, and those 'bold and brilliant' managers that play that game don't seem to have figured that out. And of course, the money guys on the boards are completely clueless, so the game goes on.
There was no reason Nokia couldn't have succeeded with Android. Their strengths are in hardware, industrial design and a large, relatively loyal customer base. That customer base is currently providing what little success Nokia's having with their Lumia line - and it took the low end versions of that line to do it. I.e., those customers didn't want Windows Phone - they wanted a cheap, attractive Nokia phone. They could have had that two years earlier with Android, and they could've done it without fighting the battle of the missing apps. In short, they could've been the Samsung of Europe. They could've even done it while testing the waters with Windows Phones.
But you don't get to be touted in the business press as 'bold and brilliant' by hedging your bets. And you don't get to be rehired by Microsoft and short-listed for the CEO slot without that 'bet the shop on MS' attitude.
Posted from my Android phone. Oh, I can change this? There, that's better...
The summary is missing what we can see from the outside - Nokia had plenty of "skunk works" projects going on which could be seen from the outside even if the former chief designer wants to pretend they could not be seen from the inside. I'm hoping that it's misquoting him and he's not just trying to sweep under the carpet that he starved some successful projects that spawned products which sold well on nothing but word of mouth.
> "The former chief designer of Nokia explains how the company's success and its corporate culture stopped it from taking risks" [...]
Adopting a Windows-only strategy wasn't taking a risk? Well, hmm. Maybe not. It practically guarantees single digit adoption. But I can't believe that this was Nokia's goal.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
That technological dead end of Symbian sold 53.7 million units in the second quarter of 2013 while their flagship line of WP8 apparently sold 7.4 million.
Everyone needs to look at numbers instead of lies by the guy that talked down the share price to prepare Nokia for a corporate raid. When something cut off at the knees by the CEO is outselling his pet project five to one you know that the CEO is not working for the company that he's supposed to be running.
I would have opted for the name "Yeskia"
There's a long recent history of Nokia management monkeying around with things, and infighting between the departments (for example, the Symbian folks successfully grabbed projects away from the Maemo folks and otherwise inhibited Nokia's attempts at developing any more future-proof alternatives). And it seems pretty obvious (was fairly obvious at the time, and is blindingly obvious now) that the Board hired Elop to prep for a Microsoft sale. At every level of management, it was just politics and a complete lack of faith in the engineering abilities down below.
I'm not guaranteeing that it would've all worked out fine without management interference, but both the scope and malignancy of the bureaucracy within Nokia is fairly well known at this point. And, in the rare cases when individual engineers would actually get a chance to directly contribute to something, it very often turned out quite well. Felipe Contreras, for example, a device adaptation engineer, thought that the N9 would benefit from a gesture where swiping down from the top would close an app. This fit really well with the N9/Harmattan swipe motif, but he couldn't convince the project management to assign it to be programmed in, so he just went and learned the language the UI/UX bits were written in, wrote it himself, and managed to get it silently included in the version that shipped with the N9. You had to know to add a config file in the right place with the right text in it. With the first update released, however, that gesture was enabled by default. With the UI/UX the way it is, swiping down to close something just makes intuitive sense and feels right, and it was just one engineer not even working directly on that part of the device that made it happen, and only really in that weird moment of Nokia's history when people found themselves working on a flagship device that management was now saying was no longer their flagship.
How many other ideas and features were strangled in their cribs by management? How many useless and misguided goals were set by that same management, monopolizing the time that entire departments had for things that any engineer on the ground could have told management was pointless? Certainly, I think, it was a primary reason for Nokia's inability to keep up.
I remember sigs. Oh, a simpler time!
Huh?
Nokia's market cap four years ago was $40B. Twelve years ago, it was $60B.
$7B is chump change in comparison. MS has written down entire acquisitions as worthless after spending almost as much.
Nokia was not some edgy web design garage startup trying to get acquired by one of the big boys. They WERE one of the big boys. There is no other way to describe this situation as a complete and utter failure of Nokia's management to cope with changing market conditions since 2007 and how they impacted the way Nokia did business: the migration of large portions of the revenue in the sector to smartphones, the death of Symbian, the rise of iOS and Android and their respective ecosystems.
This failure is not relative. It is absolute. What's hard to see is what MS actually gets out of this. The public rationale is nonsense. I thought it was for the patent portfolio, but that's excluded. The theory that it's to stave off impending bankruptcy, a switch to Android, or both makes a bit of sense. It might also be just so MS can exercise more control over how the market perceives WIndows Phone. They can conglomerate the financials for Nokia and Windows Phone into a larger group and cherry pick the numbers they like for release (the way they do with Skype, Xbox, and the Entertainment division.) This might stop reporting on poor Nokia device sales from reflecting badly on Windows Phone. Nokia's bankruptcy wouldn't have looked good for Windows Phone, either.
https://www.google.com/finance?q=NYSE:NOK&sa=X&ei=jgcqUuaRJ8WE4gShyoHQBQ&ved=0CCsQ2AE
Yes, the iPhone has huge pixels:
Retina(tm): 326 ppi
4.99" 1080p display: 441 ppi
2GB of memory takes up a lot of space? Really? Hmm, and here I am silly thinking that they would cram more transistors into a given die size. I guess that's just crazy - oh wait, that's what manufacturers usually do. Moore's law and such. ;)
I know several people who use the IR blaster. I started using mine - it makes a fantastic universal remote. :-)
an SD card is slow? No slower than internal flash, if you compare to a class 10 card.
I've owned an iPhone 3GS, an iPhone 4, and I have a now-ancient Macbook Pro (aka paperweight - Core Duo processor) and a Sawtooth mac (aka doorstop) and also a couple of G3 Blue & White Macs hanging around. However, I think that Apple is shoveling shit out the door when it comes to the iPhone, if you want to comparison shop. The iPhone is stuck in 2010, while everyone else has passed them on.
I don't suppose you're an Apple fanboi who worships everything they shovel out the door?
The Christian Right is Neither (Christian nor right). See: Matthew 23, Matthew 25, Ezekiel 16:48-50
Apple is very lucky that they created the first smartphone with mass-market appeal - otherwise the new guy would have completely wrecked their iPod business.
Well, I'm pretty sure "luck" doesn't enter into it. Firstly, while I'm no fanboy, Apple had already demonstrated their skill in taking the MP3 player from geek toy to user-friendly, desirable mass-market device, and that was at a time when they had no track record outside the computer industry (and nor did many computer companies). Apple- the computer manufacturer known for Macs- stole the portable music market from the once dominant Sony (who- to be fair- equally squandered their techncial lead and mindshare and deserved to lose it) and the established consumer electronics manufacturers.
So the fact that they- with no real previous mobile phone experience- were able to enter a market dominated by mobile phone companies (like Nokia) and *again* steal that market by popularising a paradigm shift suggests that it being pure "luck" is unlikely.
Secondly, it's been observed (and is common sense) that Apple would have known very well that a device like the iPhone would be likely to decimate sales of the iPod, which was around its peak at that time. But Apple would also have known that (just like the MP3 player) if they hadn't done it, someone else would- though perhaps later rather than sooner. So rather than have someone else eat their lunch, it made sense to do it themselves. (They may also have guessed that the smartphone market would have been even more lucrative and with potential for expansion).
It's to Apple's credit that they had the foresight to do the opposite of what most companies in their position would have, i.e. not released the iPhone for fear of damaging their current cash cow, sat on their laurels and only done something when it was too late, the market had shifted and the new leaders were companies that'd had no such entrenched interests to protect.
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Pick any numbers you want, they were all declining before Elop came on board in 2010. Hell, look at a stock chart, NOK vs. the S&P or Dow: the indices started recovering in early 2009, Nokia kept declining all the way to today. That's why they were desperate enough to hire him and follow his all-in on Windows Phone strategy.
Cozy vendor deals with monopoly networks in portions of the US don't mean shit when compared with global sales.
That's what Symbian fans have always said, turns out they were wrong.
0 1 - just my two bits