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Nokia users, myself included, have been up in arms with complaints of build quality issues and lacklustre high end device hardware. All the while, Nokia's competitors appear to be catching up, releasing devices with more multimedia features, more powerful hardware, and better, more intuitive, flashy user interfaces. The Finnish tech titan's reputation has fallen in the minds of hardcore gadget enthusiasts, a demographic Nokia has long dominated. This is an unfavourable position to be in, especially with Nokia being a benefactor of the gadget enthusiast community's word of mouth advertising.
But are these moves missteps, products of inept leadership and poor planning? Or could I have missed something? Is it possible the latest moves are in fact evidence of delicate yet astute risk calculation? Could it be that Nokia has devised the impossibly perfect business plan to continue to dominate in a metamorphosing market? I'm beginning to rethink my previous analysis, and admit I may have allowed my preference for Nokia hardware and expectations as a consumer to cloud my objectivity. Allow me to elaborate.
Nokia's latest flagship device, the N96, while a lovely device, is a disappointment for me and most loyal Nseries flagship owners. Despite boasting incremental updates to the previous flagship, the legendary N95, the actual internal components are a computing power downgrade, and several caveats from the previous flagship models still exist, like the lack of any lens protection for its high end optics. And though I find the N96 to be lacking effort or unique qualities befitting a premium brand's flagship, I believe this is the perfect device to unleash on the market. Before my email inbox becomes inundated with hate mail, allow me to explain how I've come to this conclusion. It's all in the clues.
Nokia has alot of R&D invested in the S60 3rd Edition Feature Pack 2 OS. I'm sure they intend to wring every last dollar from the platform to see a better return on investment. They could've created a much better device, but they don't intend for their flagship Nseries owners to heavily adopt this device anyway. If you've never owned the top of the line Nseries, the N96 is supremely appealing. This is good for two reasons. First, they can continue to attract new consumers. Secondly, it keeps their loyal high end customer base from quickly upgrading. Now what sense does it make to create a device loyalists shouldn't want?
Nokia is facing fierce competition from all corners. RIM, WinMo, Apple, and newcomer Android have all exhibited updated platforms and or devices, many better than Nokia in various aspects. It is of utmost importance that Nokia get its next generation operating system and interface right to maintain their dominant position. Mistakes in the next few quarters will be pronounced. The market is in a crossroads of consumer adoption and building loyalties. Consumers are spending longer examining their smartphone purchases, making the subsequent quarters a virtual audition. A bad impression could cause new consumers to close the door to Nokia and pledge loyalty to an alternative. So their focus is almost entirely on the S60 5th Edition Touch UI OS. The real flagship device will be based on it, not 3rd Edition.
Had they announced the real flagship now, everyone would withhold purchasing Nseries devices for the next couple quarters. Profits are too important, and lack of sales can be detrimental in today's economy. So they threw the market a bone. They're wise enough to know most loyal flagship owners won't defect to another manufacturer due to what I call "faith based" and "politically based" factors. Many have faith Nokia will right the ship, used to the outright hardware dominance Nokia is known for. Others refuse to buy anything from Microsoft or Apple, regardless their quality, to show they disagree with their business tactics on a political or fundamental level.
They know a few will leave for perceived greener pastures. In fact, if you listened to recent interviews of Nokia executives, they admit they'll be losing in the short term, and won't war for marketshare just for the sake of gaining a larger share. They're content to lose a little, confident 5th Edition attached to their suite of services will be enough to regain any lost ground. In the meantime, they'll hedge bets that none of the latest devices will satisfy the NSeries faithful, and the ones that may will release too close the release of 5th Edition, giving more reason to await a high end Touch UI-enabled device.
This is a risky plan indeed. But Nokia knows if there are Nseries defections, it'll be to comparable high end devices like the HTC Touch HD and Sony Ericsson Xperia X1, which aren't very prevalent as of yet anyway except in web articles and reviews. I am willing to wager that the day the Touch HD and Xperia X1 released in the big markets, Nokia will begin leaking info on its next touchscreen flagship Nseries device. And the biggest threat and open source compatriot, Android, has yet to grace any high end equipment so far. And the N95's hallowed reputation, and the N96 positioning as its upgrade, are enough to persuade new buyers to experience all the things they've heard about flagship Nseries devices.
They'd love to have beaten Android to market with its 5th Edition OS, but it always pays to see the competitor's hand before making a play. Plus, they can allow Android to educate the consumer on relatively new terms like open source, DRM, multitasking, unlocked, and other things they'll use as selling points. These same benefits of Android will apply to the future Symbian Foundation OS, and they won't have to waste the dollars on consumer education, instead saving to heavily market 5th Edition and their Touch UI and Maemo 5 devices.
Also, they've gotten a good look at everyone's next generation interface, including venerable Android. Most of Android's wow factor was its clear and concise interface. Having the opportunity to compare notes and make adjustments will ensure they're more prepared to take on Android, Apple, and others with the best UI possible. I had initial doubts about the interface, but seeing Android's interface actually gives me new confidence. Android's interface design is implemented by The Astonishing Tribe, or TAT, using their Kastor Engine technology. TAT is the same firm helping Nokia develop the 5th Edition interface from the ground up, so expectations are even higher.
This falls into my theory on Nokia's plan for world domination. Nokia just wants to make it to 2012, when 4G will be more prevalent. Then, the mobile carriers will probably cease to exist as they do today, becoming more of an infrastructure provider, or what the telecom industry calls a "dumb pipe". I foresee the carriers will either becoming vendors or buyers of the IM/VOIP providers like Skype, Fring, Palringo, and Gizmo, or provide ad subsidized voice network access to compete. Tariffed voice networks will become superfluous, as faster networks, the prevalence of netbooks and UMPC's, and the advent of advertising channels on our devices, VOIP will become a more common low cost or free alternative for voice communications.
I believe this is why Nokia was diplomatic in its dealings with developers, removing the integrated VOIP application from its latest devices. The next generation OS will allow developers to create more compelling application UI's, including those with a VOIP component. Nokia knows the best app interfaces spur adoption rates, not only for the app and service, but the OS upon which it works and looks best. And Nokia's own suite of services will be attached to two open source platforms, Symbian and Maemo. Nokia may one day even create its own VOIP application and service in the future to becoming totally independent of the carriers, a position they've seemed more than willing to take lately, learning that operator exclusives slow sales and usually only benefit the carriers.
Of course, nothing's guaranteed. Nokia could fall on its face and fail miserably. Android could be what the iPhone could've been, and adoption could go through the roof. But Nokia wouldn't take these type of risks without having supreme confidence, which they should. They've only been the mobile technology leader for the past four years. Nokia obviously have a captivating trick up its sleeve. Will it be enough to entertain the crowd? We'll know more in the coming half.
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I too share your thoughts regarding the N96, and its internal components, also build quality regarding some of the later N95 models also.
I really do hope Nokia has something nothing short of amazing up their sleeve.
Good Fundamental Analysis! I am not really sure if that will be enough to entertain Nokias “fanatics” in the next months. Lets see what Nokia does…
I can't see the 5800 coming up with something fantastic, but I'm pretty sure MWC next year will amaze us. Eldar had also said that Nokia will release a phone next year that will take down the competition.
Great analysis Christopher!
I'm glad you were able to enjoy my point of view. One point in my article, Muhammad, was that Nokia feels it really doesn't have to yet. Most of the products attracting its base of fanatical gadgeteers won't be widely available, since almost everyone else lacks the production capacity to deliver in such large quantities early, as they can. By the time the seemingly more attractive competition is released, they will have flood the blogosphere with rumors, spy photos, and possibly unveiling ceremonies. The 5800 “Tube” device will provide a glimpse into the OS, but attract few high end users. The real magic begins late mid 1st quarter, I imagine, right after the Touch HD, Samsung Pixon range, and XPeria line get underway.
To tell you the truth Chris, I really can't wait for that quarter. I'm very curious to see what is capable of replacing my N95-1, considering I only buy a new phone every 2-3 years, and when I do buy one, it's always the best in the market
I believe the 5800 will do almost as much for Symbian in the US as the G1 has already begun to do for Android worldwide. I know the US is alot smaller piece of the pie, but its the only piece Nokia doesn't control. If Nokia can capture 8-12% of the US market in the next four to six quarters, which isn't impossible with the proper marketing and products, their global dominance will be insured for years to come. What happens next is very crucial for Nokia's long term plans.
…by the way, I wrote this:
“I foresee the carriers will either becoming vendors or buyers of the IM/VOIP providers like Skype, Fring, Palringo, and Gizmo, or provide ad subsidized voice network access to compete. Tariffed voice networks will become superfluous, as faster networks, the prevalence of netbooks and UMPC’s, and the advent of advertising channels on our devices, VOIP will become a more common low cost or free alternative for voice communications…”
“Nokia may one day even create its own VOIP application and service in the future to becoming totally independent of the carriers, a position they’ve seemed more than willing to take lately, learning that operator exclusives slow sales and usually only benefit the carriers.”
…and then read this in my RSS reader:
http://symbian-freak.com/news/008/09/nokia_to_a...
Its almost magical how I envisioned them as an independent provider out of the box, depending on a VOIP in the long term. Many of the big VOIP provideres catering to mobile users attract users with a free multiformat instant messaging service. Now the question is, will Nokia provide a free multiformat messaging service and bundle a VOIP service, as most messenger application distributors have done? Have they laid the foundation to become totally independent of carriers, and created the perfect self-sufficient communications equipment and service provider monopoly??
I prefer a new phone every 6-12 months, and always the top of the line, top of the industry model. Nokia usually made the choice simple, and its users are spoiled. We're used to going out, buying the flagship E or Nseries model, and smiling our way home. Now each model must be scrutinized, and careful thought must be taken to choose the proper device. For someone intending such long use from their device as you, Meraj, this is of paramount importance. 3 years is a long time to be behind technologically.
I stayed 3 years with a Nokia 6600, and let me tell you Chris, that they way I used to update it with software didn't make me feel anywhere behind anyone else.
Now it's a different story, as journalists we have new phones every week, so even though I keep one device for a long time, I will have new phones every week, and the same will apply shortly to you.
Magical vision? Maybe you have an insider in Nokia lol.
I also got the press release pending on my Firefox tab, was thinking of writing something later on. Well, let's see how OZ will prove useful to Nokia, it will probably be in the medium term or even long term timeframe that we'll see the change, I think.
Oh, and concerning the 5800 in the US, there are so many touchscreen phones in the market right now that Nokia will have a hard time making through. Being a XpressMusic it means that it can have “Comes with Music”, and that, is surely a winner.
I too share your thoughts regarding the N96, and its internal components, also build quality regarding some of the later N95 models also.
I really do hope Nokia has something nothing short of amazing up their sleeve.
Good Fundamental Analysis! I am not really sure if that will be enough to entertain Nokias “fanatics” in the next months. Lets see what Nokia does…
I can't see the 5800 coming up with something fantastic, but I'm pretty sure MWC next year will amaze us. Eldar had also said that Nokia will release a phone next year that will take down the competition.
Great analysis Christopher!
I'm glad you were able to enjoy my point of view. One point in my article, Muhammad, was that Nokia feels it really doesn't have to yet. Most of the products attracting its base of fanatical gadgeteers won't be widely available, since almost everyone else lacks the production capacity to deliver in such large quantities early, as they can. By the time the seemingly more attractive competition is released, they will have flood the blogosphere with rumors, spy photos, and possibly unveiling ceremonies. The 5800 “Tube” device will provide a glimpse into the OS, but attract few high end users. The real magic begins late mid 1st quarter, I imagine, right after the Touch HD, Samsung Pixon range, and XPeria line get underway.
To tell you the truth Chris, I really can't wait for that quarter. I'm very curious to see what is capable of replacing my N95-1, considering I only buy a new phone every 2-3 years, and when I do buy one, it's always the best in the market
I believe the 5800 will do almost as much for Symbian in the US as the G1 has already begun to do for Android worldwide. I know the US is alot smaller piece of the pie, but its the only piece Nokia doesn't control. If Nokia can capture 8-12% of the US market in the next four to six quarters, which isn't impossible with the proper marketing and products, their global dominance will be insured for years to come. What happens next is very crucial for Nokia's long term plans.
…by the way, I wrote this:
“I foresee the carriers will either becoming vendors or buyers of the IM/VOIP providers like Skype, Fring, Palringo, and Gizmo, or provide ad subsidized voice network access to compete. Tariffed voice networks will become superfluous, as faster networks, the prevalence of netbooks and UMPC’s, and the advent of advertising channels on our devices, VOIP will become a more common low cost or free alternative for voice communications…”
“Nokia may one day even create its own VOIP application and service in the future to becoming totally independent of the carriers, a position they’ve seemed more than willing to take lately, learning that operator exclusives slow sales and usually only benefit the carriers.”
…and then read this in my RSS reader:
http://symbian-freak.com/news/008/09/nokia_to_a...
Its almost magical how I envisioned them as an independent provider out of the box, depending on a VOIP in the long term. Many of the big VOIP provideres catering to mobile users attract users with a free multiformat instant messaging service. Now the question is, will Nokia provide a free multiformat messaging service and bundle a VOIP service, as most messenger application distributors have done? Have they laid the foundation to become totally independent of carriers, and created the perfect self-sufficient communications equipment and service provider monopoly??
I prefer a new phone every 6-12 months, and always the top of the line, top of the industry model. Nokia usually made the choice simple, and its users are spoiled. We're used to going out, buying the flagship E or Nseries model, and smiling our way home. Now each model must be scrutinized, and careful thought must be taken to choose the proper device. For someone intending such long use from their device as you, Meraj, this is of paramount importance. 3 years is a long time to be behind technologically.
I stayed 3 years with a Nokia 6600, and let me tell you Chris, that they way I used to update it with software didn't make me feel anywhere behind anyone else.
Now it's a different story, as journalists we have new phones every week, so even though I keep one device for a long time, I will have new phones every week, and the same will apply shortly to you.
Magical vision? Maybe you have an insider in Nokia lol.
I also got the press release pending on my Firefox tab, was thinking of writing something later on. Well, let's see how OZ will prove useful to Nokia, it will probably be in the medium term or even long term timeframe that we'll see the change, I think.
Oh, and concerning the 5800 in the US, there are so many touchscreen phones in the market right now that Nokia will have a hard time making through. Being a XpressMusic it means that it can have “Comes with Music”, and that, is surely a winner.