In Stephen Elops February 2011 “Burning Platform” memo he likened Nokia’s position to that of a worker standing on a burning oil platform in the North Sea faced with the choice of either remaining on the platform he knew and hoping to survive the inevitable, or hurling himself into the sea.
The parallel being Nokia could try to continue the mobile fight with Symbian, or recognize the market was shifting from a mobile device/OS business to a connected services business accessed and shared across a range of devices and strike a deep partnership with, and dependency on, Microsoft.
What’s interesting to note is in the memo Mr. Elop focused on the impact the iPhone and Android has had on the mobile phone market and the resulting decline in Nokia’s market share. And while he referred to the ecosystem play he made no mention of the broader opportunities for Nokia. In fact, in its February 9, 2011 article regarding Nokia’s shift in strategy, the Wall Street Journal in their intro paragraph referenced the “… multiple strategic challenges to the mobile phone company”.
Is Nokia just a mobile phone company? Is the battle really only about phones? Are the iPhone and Android phones Nokia’s real threat? I don’t think so, and I bet Mr. Elop doesn’t think so either.
Mr. Elop recognizes consumers want services across a range of devices: phone, tablet and television, or better stated small, medium and large screens. And if he already has a group working on Xbox integrated TVs then he really is making the broad strategic bets needed to restore Nokia to, and maybe even beyond, its past glories.
Nokia Needs More Than Just Phones:
- As Mr. Elop so clearly articulated, it is now an ecosystem battle and to be a dominant hardware player a manufacturer needs to play across phone, tablet and TV. (Note: the idea that Nokia is building a tablet should be a forgone conclusion. It is a logical, but not a bold, strategic bet).
- Even as the dominant provider of Windows Phones, the projected third, maybe even second place player in Smartphone market share, the numbers still lag behind the peak device volumes Nokia drove at its height. Nokia needs to sell phones, tablets and TVs/big-screens to recapture the revenue streams it once enjoyed.
Microsoft Needs an Integrated Xbox/Kinect/TV Play:
- The Xbox One looks to be a solid evolution of the gaming console, and the new integrated TV experiences they demoed at the launch show they are working on evolving the TV interaction experiences. That being said, hanging an extra box and a separate visual/audio controller like Kinect off of a television is not an elegant solution, especially in a living room. Gamers in dorm rooms? No problem, mainstream consumers who primarily want to watch TV, or the evolution of TV? they aren’t going to want the extra boxes, cables and power cords cluttering up their room.
Does Nokia Have the ID Chops to Deliver Devices Consumers Want Hanging on Their Walls:
- They used to. The minimalist, Nordic design aesthetics of earlier Nokia phones were devices consumers lusted after. In fact I’ve always felt that Nokia, had they been focused on the right things, could have designed the original iPhone. To me that device screamed Nordic design aesthetics and I would have expected it to be sold at Ikea and come from someone likeBang & Olufsen… or Nokia.
- And I don’t think Xbox/Microsoft TV has even a glimmer of hope against Apple TV, or Google TV with TV makers like Samsung or LG. Don’t get me wrong, LG and Samsung are great companies with strong consumer product businesses, but I fully expect their approach will be to design a range of nice TV sets and then build in Android. Microsoft will buy their support to deliver integrated Xbox TVs, but there will be no differentiation when it’s hanging on the wall. And with a higher BOM and OS cost, they will be priced higher than the identical looking set with Android and Google services.
Nokia needs more than phone, and Microsoft needs an integrated TV play. Can they win? It will be a long time before we know but I don’t think they stand a chance if they’re not already deeply invested in this.
Would this be too bold a strategic bet for Nokia to make? Keep in mind at one time Nokia used to make TVs but dropped that segment of their business to focus on mobile phones, and now the market is coming full circle. And, it’s not nearly as bold a bet as the strategic bet a Finnish rubber boot manufacturer once made to enter the mobile phone business.
clarkb... 