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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.
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.
It happened to Apple once already -- the founders forced out, and bean counters making cuts and skipping investment in new stuff. It works, for awhile, and profits even increase, but eventually they start lagging behind. By that time, the first few bean counter CEOs have ridden off into the sunset with millions in reward for doing a "good job" on the profits.
(-1: Post disagrees with my already-settled worldview) is not a valid mod option.
Nokia came out with an internet tablet back in 2005. I have one sitting on my desk right now. The problem with Nokia wasn't innovation, nor is innovation Apple's strength. What (the consumer part of) Nokia lacked was a understanding of how to market products other than normal phones. Add to that, it was *too* engineering focused - case in point, Symbian was difficult to code for, but battery life was excellent due to the design of the OS. Add to that Symbian was too entrenched.
Nokia had a good plan - they wanted to develop the OS from their tablets into a modern smartphone OS (Maemo/Meego), while at the same time, develop Qt so that developers have a good API and dev environment to code in. This code could then be portable across Symbian, Meego and desktop OSes.
If Nokia was able to fully execute this plan, I doubt that they would be in a worse position than they would be now. Microsoft saw this as a threat (and opportunity to find a reliable HW partner as WP7 was driving the major manufactures away) and nipped it in the bud.
:. Ultimate Control Dedicated/VM Servers
"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.
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.
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...
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.
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!