"When two elephants fight, the loser is the jungle." --Ancient proverb
And so it begins.
The Apple-Nokia war finally got underway on August 29, when Nokia announced an array of new music-capable phones and an online music store. The two companies had been eyeing one-another like wrestlers outside the ring for more than a year. Apple entered the mobile phone market, but only in the US, where Nokia is a non-factor. Nokia openly declared that it's a computing company (link), but its non-phone products so far have been different flavors of lame.
But the August 29 announcements put Nokia and Apple on a path to direct confrontation. I haven't seen a lot written online about the importance of this conflict. I think that's probably because many of the people who follow Apple's business closely are based in the US and have trouble taking Nokia seriously because it's a secondary player here. Meanwhile, Nokia's most ardent followers are in Europe, and look at Nokia's actions in light of its regional conflicts with SonyEricsson and the European mobile operators.
But when you stand back and look at what's happening in the industry worldwide, it's clear that Apple and Nokia both want very badly to be the dominant mobile computing company for young adults. That makes a huge, relentless conflict between them inevitable. They're like two armies trying to take the same hill. One's coming from the west, the other from the east, so there's not a lot of fighting at the moment. But as soon as they reach the hill, there's going to be an explosion.
I don't know who will win, but I'm pretty sure that the main losers will be all of the other device companies and mobile operators who happen to be hanging around on the hill.
My advice to them: Run.
What Nokia announced, and why it matters
On the 29th, Nokia announced four phones, two new data services for its phones, and a new brand. Let's start with the services.
The Nokia Music Store is just what the name says, an online music store run by Nokia. It'll be accessible by both PC and selected Nokia phones. The N81 and N95 will be able to talk to the store directly, while for a number of other Nokia phones you'll be able to buy music on your PC and sync it to your phone (Nokia calls this process "sideloading").
Nokia will offer more purchase options than iTunes does. You can either buy and download individual titles (for one euro a song, a euro cent above iTunes), or you can subscribe to the store and stream all the music you want to your PC (but not save it) for ten euros a month.
Nokia positions the streaming service as a way to discover new tunes, after which you're supposed to buy and download the ones you want to keep. I can understand the practical reasons for not streaming from the store directly to phones -- there would be issues with data charges, network capacity, latency, and so on. But I don't know how users will feel about that. If I had a streaming account on my PC, I think I'd expect to have the same service on my Nokia phone. And why wouldn't you want to discover new music while you're on the go?
The bigger problem is that the 120 euros you pay a year for a streaming service is 120 songs you could have bought and kept forever. That's one new song every three days. For comparison, the average iTunes user buys three songs a month. A music subscription service is a great way to get access to a lot of music quickly, but unless you want a colossally large music collection, it's a huge financial drain in the long run (I wrote more on the economics of it here). No wonder the music industry loves the idea of subscriptions (link).
The re- rebirth of nGage. The other new service Nokia announced was a mobile game store. You'll be able to try games for free on your Nokia mobile or PC, and then after purchase you can use them on the PC or sync them to your phone (curiously, Nokia calls this process "installation.") Nokia also promises multiplayer and community features.
Price per game will be six to ten euros, and Nokia says you'll be able to pay by credit card or through your phone bill if the operator enables that. No word on what the revenue split is.
The service sounds pretty interesting to me. The most confusing thing about it is the name. The nGage service won't work with all of Nokia's N-series phones. I know there's no official tie between N-series and nGage (the names were apparently chosen separately), but try explaining that to a typical customer in a store. Nokia has struggled and failed for years to explain to customers the S60 platform that it uses in a lot of its phones; picture adding yet another layer of confusion on top of that (link).
I think the other important challenge to nGage is flash. There's a huge supply of free flash-based games on the web, and a lot of them are the sort of quick-reward, easy to use games that seem to do well on mobile devices. The biggest barrier to using them on mobiles is that Adobe charges for the mobile flash player, and so relatively few mobile phones have it installed. A small installed base of phones means that most developers don't target mobile flash. If Adobe ever drops the charge for the flash player, or if a free flash-equivalent comes along (perhaps a mobile version of Microsoft Silverlight), it might become very difficult to convince people to pay for nGage games.
I know nGage provides a higher-quality gaming experience than flash, but I'm not sure most mobile users will care enough to pay.
Ovi is a new brand that Nokia will use as a wrapper for all of its mobile services, including games, music, maps, photo sharing, and presumably more to come (link). I guess that makes sense from a convenience standpoint -- there will be one website (ovi.com) where you can go to discover all of the Nokia services (Nokia employees say that it will also be a gateway to the services of other companies as well ). Unfortunately, Ovi apparently won't work as a compatibility mark: the phones that can use one Ovi service can't necessarily use another. For example, many of the phones that can run nGage games can't directly connect to the music service. A brand is most effective when it represents a coherent idea or consistent product. I think Ovi creates an expectation of coherence but doesn't deliver it. It just says that Nokia's in the service business, which Nokia cares about but is not something that concerns users
If Nokia doesn't make all the Ovi services work on all its data-capable phones quickly, I think the varied incompatibilities between the Nokia services and devices are going to be a nightmare to explain at retail.
The four new phones
The N95 8GB adds more memory to Nokia's flagship Swiss army knife phone, which includes a 5 mp camera, improved 3G, WiFi, and GPS. This is the one that online reviewers always compare to the iPhone. It works with both nGage and the music store, and its base price is 580 euros before subsidy.
The N81 is a slider phone with WiFi and 3G, and has dedicated buttons to access both nGage and the music store. It'll sell for 430 euros pre-subsidy.
The 5310 is a slimline candybar phone that can play music synced from the Nokia music store. It cannot access the music store directly. It has dedicated music controls next to the screen, and its base price is 225 euros.
The 5610 is similar to the 5310, but adds a slider and built-in camera. Its base price is 300 euros. A lot of online reviewers have been comparing this and the 5310 to the SonyEricsson Walkman phones, and I think that was probably Nokia's thinking. But hold that thought because it's not necessarily how things will work out.
What's the impact? A huge amount depends on execution. How well will Nokia's new services integrate with the phones? How easy will it be to play songs and games? How many titles will be in the Nokia stores, and how good will they be? Services and mobile devices often live or die on the little details of usability, and we can't judge that for Nokia yet because we can't play with the new products and services.
But Nokia's direction is very clear. It wants to be in the mobile Internet services business, as both a developer and publisher of content and services. It's going to tie those services directly to its phones. And knowing Nokia, it'll keep iterating on both the phones and the services until it gets them right.
That's why Apple and Nokia are now at war. Even if Nokia's current products turn out to be lame, it's going straight into the territory that Apple has been pursuing ever since the first iPod shipped.
Apple's new products. I should add a little context on Apple's recent product announcements. In September, Apple made a lot of changes to the iTunes and iPod lineup. The move that got the most attention was the price cut of the iPhone from $599 to $399. I'll write more about that below. The other changes that stood out to me were:
--iTunes can now be accessed via WiFi on the iPhone and iPod Touch. This corrects a glaring weakness in the original iPhone. It's interesting that Apple apparently hasn't enabled the iPhone to talk to the store over a cellular connection. That may be because the network the iPhone uses in the US is too slow to easily download music, or it may be that AT&T doesn't want a lot of data traffic going over its network when the phone's data plan is flat-rate.
--The video version of the Nano, starting at $199, is a heck of a lot of technology in a very cute little package.
--The iPod Touch is basically an iPhone without the microphone and cellular radio. It makes a really interesting PDA for people who want to buy a basic voice phone and carry their entertainment separately. It's priced at $299.
(As an aside, I have a request: Once the iPod Touch starts selling like gangbusters, would someone please go find the person at Sony who decided the Clie handheld business was a dead end, and kick them in the shins?)
Relative strengths of the competitors
Or, how to piss off both Apple fans and Nokia fans in the same post.
Apple and Nokia are very different companies. Here are their relative strengths:
Resources. No contest. Although Apple is a very successful company, Nokia has vastly more financial resources.
Logistics. Nokia is one of the greatest logistics companies on the planet. It churns out hundreds of millions of phones, changes models frequently, and almost everything works properly. If Nokia were running the US Federal Emergency Management Agency, New Orleans would be 20 feet above sea level by now. Apple, by contrast, does a very competent job of managing contract manufacturers in Asia. Advantage Nokia.
Telephony experience. Another huge Nokia advantage. Designing phones and getting them qualified on networks is really tricky, and Nokia knows how to do it better than anyone else.
System design skill. This is Apple's core competence; it knows how to design hardware and software together to create a beautifully integrated system. Nokia's phones often appear as if their hardware and software were designed by completely different groups and slapped together at the last minute (because, in many cases, that's exactly what happened). This works great in commodity phones, but if the competition is for who can create the most elegant data experience, Nokia is at a huge disadvantage.
Brand power. Wow, this is a tough one. Apple has one of the coolest brands on the planet. Nokia's brand is beloved in Europe, and in most of the world it personifies upward mobility (except in the US and Japan). I call this one a tie.
User interface. Apple knows how to design these. The kindest thing you can say about Nokia's interface designs is that they're better than many other phone manufacturers. But that's like comparing a three-legged dog to a two-legged dog. Nokia's trying to get better -- at the announcement event, it showed video of a forthcoming device with an iPhone-style touchscreen (link). But for now, this one's clearly a strong Apple advantage.
Cleverness. Hey, it's Steve. Nokia's management is extremely smart, but you look to them for great operational execution, not brilliant strategy. After all, this is the company that brought us the original nGage.
Industrial design. I'm going to get flamed by the Nokia fans for this, but Apple has a clear advantage in design. The comparison: Nokia sometimes creates a great design. Apple rarely creates anything less than a great design.
Music solution. You'd think this would be an overwhelming advantage for Apple, but its arrogant handling of the music companies has made them even more desperate to tear Steve Jobs' throat out. They're anxious to work with someone like Nokia. Apple still has an advantage, but it has opened the door to competitors more than it had to.
Breadth. Nokia can fight on more fronts, and might be able to outflank Apple. For instance, Nokia's revived nGage game service gives it a second interesting offering for young people, whereas Apple is limited to just music and video. This is why I think Apple's decision not to open the iPhone to third party app developers is a huge mistake. If Apple had the help of third party developers, it could more easily fill out its software portfolio.
How they'll fight
Nokia wants a war of attrition. It will try to force Apple to compete on more fronts than it can afford to cover. I think we should expect to see a broad array of services added to Ovi quickly, aimed at enticing young adults in all sorts of different ways. Nokia will probably also launch a blizzard of media and entertainment phones with varied features, in the hope that a couple of them will hit sweet spots in the market.
Apple's game is to keep Nokia off balance and grab the most important opportunities. Think of a fencing expert: dodge, feint, and then stab the other guy in the heart. Apple currently has a product advantage -- its music service is already working. So it will try to capture as many customers as it can before Nokia gets its act together.
Apple can also use Nokia's size against it. Nokia has a huge product line and has to position each product carefully within it. Apple has only one phone, so it doesn't have much to protect. That's where the iPhone price cut comes in. The iPhone had been positioned against the n95, at the top of Nokia's product line. With the price cut, the iPhone is now looks much closer to the middle of Nokia's line, the phones that were supposed to be aimed at SonyEricsson.* Nokia can't slash the pricing of the n95 without screwing up the prices of its entire line, so with one price action Apple accomplished two things -- it can reach a lot more customers, and it forced Nokia to go back and rethink its competitiveness.
We should expect more surprise moves from Apple. It's more important for them to keep Nokia off balance than it is to please every customer. I think that's why Apple was willing to piss off the iPhone loyalists with a sudden, large price cut.
*Because of varying subsidies, it's hard to tell what the actual street price comparison between the new n95 and iPhone will be. The current n95 sometimes gets subsidized down by several hundred dollars if you buy a multiyear service contract. Maybe the new n95 will be subsidized down below iPhone prices. Maybe the iPhone will be subsidized too. Or maybe now that Nokia's offering its own services the operators will refuse to keep subsidizing the n95. We need to wait until the iPhone and Nokia's new services premiere in Europe this fall.
Impacts of the war: Alas, the innocent bystanders
The common denominator between Apple and Nokia is the imperative to move quickly. Nokia wants to broaden the competition fast, Apple wants to keep surprising Nokia with new features, products, and other changes. That's going to accelerate the pace of change in the mobile industry. And the accelerating pace of change, rather than anything in particular that Apple or Nokia have done today, is the biggest challenge to the rest of the industry. The other players have been struggling to keep up with the current rate of change; what will they do when Apple and Nokia step on the gas?
I've seen these situations before. You think you're just about keeping up with a competitor, and suddenly they disappear in a cloud of dust. I believe that's about to happen in mobile phones.
A shift from hardware design to systems design. Let's look at which companies have been most successful in smartphones: RIM creates e-mail phone systems that combine hardware, software, and services. DoCoMo and the other Japanese operators drive systems designs that combine hardware, software, and services. The iPhone does the same. Previously, those competitors were confined to particular countries or relatively small vertical markets, but now the world's biggest phone company is trying to do the same thing. That raises the competitive bar for everyone else in the industry.
What are companies like Samsung and Motorola supposed to do? They don't know how to create their own services, let alone integrate one well with a phone. In the music market, there are a lot of third party services out there, but none of them have been effective so far at challenging iTunes. I think they're not strong enough to change the competitive situation. Same thing for the operator services.
So the music phone market looks ugly. What's worse, if Nokia and the systems companies extend their new design approach to other data markets, the traditional mobile phone companies might be cut out of most of the big growth opportunities. They need to learn a new set of skills instantly, and they're far behind the curve.
The interesting potential exception to this situation is SonyEricsson, the leading vendor of music-enabled phones in Europe. Their hardware's nice, and they have a clean user interface that looks inspired by the iPod. Because I'm in the US, I don't have a good read on how smoothly the SonyEricsson phones integrate with operator and third party music stores. Is the experience as easy as using iTunes?
The Register says that Omnifone's Music Station is a promising possibility (link), but it's a subscription service costing 3 euros ($4.11) per week. For that same price you could buy 216 songs on iTunes per year, and at the end of the year you'd actually own something.
I really have trouble seeing the long-term economic benefit of a music subscription service for a user. If you subscribe to one, please post a comment and educate me.
SonyEricsson's management hinted to Time Magazine that it may create its own music service (link). If so, it had better hurry up. I have a lot of respect for SonyEricsson's hardware designs, but if it's limited to music stores with weird business models and ones that don't integrate seamlessly with its phones, it's going to have a very hard time outcompeting an accelerating Apple and a Nokia that's learning to integrate solutions.
Microsoft: Reverse course, again. This is the situation in which Microsoft could have stepped in to offer a music service to the phone companies challenged by Nokia. But in an exquisitely ironic move, Microsoft basically shot its licensed music store initiative last year in order to support the proprietary Zune. Now it can't step up to the opportunity.
Oops.
Microsoft is probably too late to recover in music, but as Nokia adds new services there should be a lot of opportunities to license equivalents of them to Nokia's competitors. Microsoft should focus less on selling its own OS, which scares the phone companies, and more on delivering services they can build into their phones.
And oh by the way, it's time to bury Zune. The iPod Touch just lapped it. If Microsoft wants to lose money on proprietary hardware, it should focus on Xbox. At least there it's buying market share for its money.
The operators lose control. They were struggling to establish their own services suites back when things were moving slowly. Now that Apple and Nokia are shifting into high gear, I don't see how the operators can keep up.
You can find very different scenarios online for where this will lead. Andrew at the Register predicts that the operators may strangle Ovi by refusing to sell any phones that support it (link). He has a good quote from someone who knows both Nokia and the operators:
The operators own the relationship with the customer. They're not going to allow Nokia to own it.
On the other hand, Richard Windsor, the excellent telecom analyst working for Nomura Securities in London, said in an e-mail brief that the operators are doomed:
Through their inaction, mobile operators have squandered the opportunity to be the service integrator for mobile and are left with the prospect of offering nothing to users except commodity data packets.
Who will be right? It depends on Nokia's ability to generate user demand for its services. If the users want the services, the operators will have to go along with it. I assume Nokia understands this and is prepared to do a big marketing push. Unlike Nokia's previous efforts to set up content portals, this time it has to succeed or it surrenders the future to Apple. So the conflict with Apple also locks Nokia into a war with the operators.
Isn't this fun?
If I were running a mobile operator, I'd stop trying to create my own services bundle, and focus on enabling as many Internet companies as possible to deliver services on my network, in exchange for a small cut of their revenue. An operator with the innovation of the open Internet behind it might be able to keep up with Nokia and Apple. But an operator working alone will be very lonely indeed.
What does it mean for users? You'd think that all this new competition would be good for users, and in many ways I'm sure it will be. But Apple and Nokia are both showing a disturbing tendency to keep everything proprietary. The iPhone is not open to third party developers, and at this point Ovi appears to be about marketing Nokia services, not opening up the richness of the Internet. (To be fair, Nokia employees say that will change, but I'm not sure if they mean that they'll offer access to any Internet service, or just to some selected ones that they cut a deal with. I suspect it'll be the latter.)
Welcome our new Apple and Nokia overlords. There's a disturbing possibility that we may end up exchanging one set of walled gardens for another. They'll be lavish, beautiful gardens, far better than the operators' truck farms for data. But we may not get the open data marketplaces that a lot of people have been hoping for.
If you want to read other perspectives on Nokia vs. Apple, check these out:
-A confident view from Finland (link)
-A cautious view from Jupiter Research (link)
-An outstanding article by Mark Halper at Time, with quotes from Nokia and SonyEricsson (link).
75 comments:
Michael
One of the best blog posts I've read. First rate. I'd like to see a commentated view from you as we move through the various rounds of the battle.
Scot,
Hello Michael,
Nice and deep post as usual.
I have 3 questions following up :
1) MVNO : do you think one of the two may try to set up an MVNO
to secure the precious airtime resource ?
On this, Apple has less historical relationship with carriers.
For Nokia, this will be a very risky move.
2) Desktop/Laptop : as handtops are entering the computing performance of
mainstream computers users, do you see one of the 2 attacking this market with
an handtop coupled with automatic wireless connexion to big screens and inputs at
home ?
On this, Nokia has no legacy market to protect.
For Apple, this may inpact the lucrative Mac market.
3) Google : as rumors said, Google may join the battle royale with an already
top class services' arm coupled with Linux based software platform to licence to
OEM such as HTC. How do you position G vs. A and N ?
Regards,
Julien
Excellent, excellent post, Michael. This post is the reason I keep coming back - thanks.
So what are you really saying about Windows Mobile? Are they so far out of it in your opinion that they don't matter? In your previous "one size fits one" model, do they have nothing to add?
It is also interesting to note that the letters P-A-L-M never showed up in your posting. Are they really that far out of the play?
"I really have trouble seeing the long-term economic benefit of a music subscription service for a user."
Hint: it's about access.
Do I want access to 3 million songs whenever I'm near an internet connection or do I want to restrict myself to the maybe hundreds of songs I've purchased and downloaded?
You might as well turn the question around: why would I want to pay for the hassle of storing all my music on my own hard drive in stead of relying on the super-huge hard drive provided to me by the service operator?
I am not a subscriber to a streaming service (they're hard to comy by here in Europe), but I am a beta tester of Spotify.
Great post, btw!
Erik
Great post - as usual. Your blog is one of the most worthwhile of the myriad of mobile-related ones...
I agree that Motorola, Samsung and LG look a bit pitiful with their music offerings right now.
Also, SE imho has the potential to play with the big boys, but right now, they don't have any music download service I'm aware of in Europe. Their Walkman handsets haven't even been compatible with Sony's own Connect Music Store due to the lack of ATRAC codec capabilities (a shortcoming I never really understood to be honest).
I think that Apple will be quite successful with music-focused handsets, but I don't see them coming up a good camera phone, which is the other large portion of the market and reason why people migrate to new handsets fairly regularely. And that is a niche that SE (with their Cyber-shot brand) and Nokia (by offering devices with general multimedia focus) have pretty much all of the market.
Maybe this should not be underestimated too...
Good post, Mike. A lot of interesting thoughts went into this piece.
A few comments/thoughts from my end:
- Not sure that a phone and a music players makes the perfect marriage. But there is certainly a market segment for that.
- Majority of music (97% I think, according to Jobs) on a ipod are pirated. And Mike you pointed out that ipod users today, on average, buy 3 songs a month. If these numbers were correct, wireless access on a phone to the music stores shouldn't be that big a deal, whether it is subscription-based or a la carte style.
- Ipod touch is a very interesting product. Is it a PDA or not? I thought Jobs hated the concept of PDA:)
Jeff Hawkins was right when he said "personal computing is mobile computing." Too bad that Palm has not executed well on that vision.
Great post once again.
One thing that however bugs me is the simplicity of the picture. Nokia and Apple are at the forefront of this battle but I strongly believe Google and Microsoft will be just as a big part of it. Microsoft has previously indicated this (and they have MONEY) and Google is just Goole.
Also I could see a big part of the war unfolding in partnering with the household Internet companies, and the one gathering a nicer portfolio there having a certain advantage.
For sure we will be entering the era of an gruesome war for mobile computing.
This may be just the time that the remaining phone manufactures will join together and form a standard platform. With this new platform music and the rest would become aplication to be installed on the phone of the users choice or the network of choice. Operators are now starting to offer flat rate data plans; these plans make the use of WAP or other application more attractive thatn the bundled apps for sale on a per use rather thatn per data transferred.
The internet would not be anything that it is today if it were controlled by either computer manufactures or phone companies. The mobile internet will be no different.
One thing that bother me about these new phones is the reliance on WiFi to enhance services. This makes for inconsistancy in performance and makes me ask the question: if all the investment in 3G technology not supposed to provide for broadband performance over the cell networks? is that not what we are paying for? I do not want my home broardband connection tied up transfering data too my phone when I am already paying for data plan. If anything WiFi in my phone should allow me to wirelessly tether my laptop or PC to access data via my phone and cut the cord.
Michael - absolutely fantastic post. To anonymous - I don't think MVNOs stand a chance in the marketplace, frankly.
There's just no value-add, imo. They still have to buy the airtime from the carriers. Had Google gotten what they wanted in the upcoming auction, maybe, but with things remaining the same in terms of reselling airtime, I don't think MVNOs stand a chance.
A big issue at least in europe will be if specific phone models are locked into specfic price plans. This is the apple model so far. This will not go over well in europe.
You mentioned something about subsidies. I have noticed this works very different in the US and europe. In the US the subsidy varies phone to phone on one model you might save $50 and another $400. In europe there either are no subsidies or its a flat rate for all phone models. Mabye 120 euros more for any phone in the shop without a contract versus the two year contract price. Also many operators are now offering plans with favorable rates fi you do not take a subsidy. These are becoming very popular; I believe many europeans are starting to reject buying subsidised phones now that the options are more transparent(before the new plans were introduced most shop owners would kick you back cash in place of a subsidised phone but you had to ask the right way)
One thing that I believe will be huge for nokia is that most of the new phone they are releasing have built in SIP VOIP capability. This not only allows making free or much cheaper calls over 3G networks via voip providers. It is also possible to map a local landline phone number to your phone(these are much cheaper to call in europe.) You can also have number for multiple countries and with certain data plans that also offer free data roaming eliminate roaming charges.
This is all huge since it actually saves people lots of money. The operators may try to stop this but will not be sucessfull just as telecom in developing countries have not been sucessfull in preventing voip access. But phone manufactures that make it easy by intergrating SIP into handsets will win in the end.
Also since voip looks just like other data you will not be seeing this on any of graphs showing how data plans are being used; in other words its going to be real hard to track.
Thanks for the comments. It takes a fair amount of time to write a long post like this, so it's good to get feedback.
Scot wrote:
>>I'd like to see a commentated view from you as we move through the various rounds of the battle.
I can't cover all the things that are going to happen, but I'll do my best to help keep score...
Julien wrote:
>>Do you think one of the two may try to set up an MVNO?
Funny you should ask. There's an article in BusinessWeek saying that Apple might bid for spectrum in the upcoming auction in the US. That would be more than becoming an MVNO, it would mean becoming an operator.
It's hard for me to picture Apple tying itself down with that much fixed infrastructure, though. The cost wouldn't be the price of the spectrum, it would be the expense of building out the network.
Would they do an MVNO? Maybe. Many of the MVNOs in the US have failed, but Apple would not care. The music player market was considered a backwater before Apple created the iPod.
Or maybe (and I'm speculating) if Google creates a wireless network Apple could work with it...
>>do you see one of the 2 attacking this market with
an handtop coupled with automatic wireless connexion to big screens and inputs at
home ?
You mean the old docking station idea? I think you're right that Nokia could do that more readily than Apple. Nokia doesn't have a PC business that it could disrupt with a docking station. I don't know if Symbian OS is set up to handle it, though, or if Series 60 apps could scale to a larger screen. Not easily, I think.
>>How do you position G vs. A and N ?
I'm waiting to see what Google does. I thought about including Google in the post, but it was already too long, and besides no one outside Google knows what they're really planning. Most importantly, we don't know how the Google phones will be funded. Google has said in public that it would like to see a phone that was entirely ad-supported -- you'd just give it to people for free.
That would disrupt the market pretty good.
Whatever Google does, it'll just add to the acceleration of change that Nokia and Apple are already driving. So more pain for the other players.
Jeff wrote:
>>So what are you really saying about Windows Mobile? Are they so far out of it in your opinion that they don't matter?
I wasn't saying much of anything about Windows Mobile. I'm not sure how they'll play in this whole thing, but the competition appears to be shifting away from OS and toward services. If Microsoft pairs WM with a lot of great mobile services, maybe they can be an alternative offering for some of the phone companies. But it's late in the game to start that -- ideally, they ought to be offering it right now.
There will still be a market for phone OS's, naturally, so WM doesn't necessarily go away. But the OS becomes commodity plumbing -- it's not a control point, and you can't charge a lot of money for it, ever. So as a business it's not attractive.
>>It is also interesting to note that the letters P-A-L-M never showed up in your posting. Are they really that far out of the play?
No company with a well-known brand is ever completely out of play. The odds against them just get longer.
Erik wrote:
>>Do I want access to 3 million songs whenever I'm near an internet connection or do I want to restrict myself to the maybe hundreds of songs I've purchased and downloaded?
That's a really tough question. If I have to pay for that streaming bandwidth, and can't use the songs when I'm on an airplane or out of coverage, I think I'd go for the songs I own. But Americans are out of coverage a lot more often than folks in Europe, so maybe this is one that'll work differently in various parts of the world.
Christian wrote:
>>Their Walkman handsets haven't even been compatible with Sony's own Connect Music Store due to the lack of ATRAC codec capabilities (a shortcoming I never really understood to be honest).
Whatever the reason, SonyEricsson made a good move -- Sony just shut down its store.
>> I think that Apple will be quite successful with music-focused handsets, but I don't see them coming up a good camera phone
Me neither. I think Apple's play is in data devices that also happen to be phones.
Anonymous wrote:
>>- Majority of music (97% I think, according to Jobs) on a ipod are pirated.
This is an interesting one. I think the actual report has been that most of the music on the average iPod came from somewhere other than the iTunes store. It could be ripped from CDs that the owner bought legally, it could be music purchased elsewhere, it could be pirated. I don't think I've ever seen a reliable stat on the actual sources.
>>And Mike you pointed out that ipod users today, on average, buy 3 songs a month. If these numbers were correct, wireless access on a phone to the music stores shouldn't be that big a deal, whether it is subscription-based or a la carte style.
But if it's subscription-based you can't keep the songs on the device -- they must be streamed every time they're played. So there's a huge difference in network traffic.
>>Ipod touch is a very interesting product. Is it a PDA or not? I thought Jobs hated the concept of PDA:)
I'm sure he wouldn't be dumb enough to call it a PDA, but if you look at its features that's exactly what it is.
Erkko wrote:
>>Nokia and Apple are at the forefront of this battle but I strongly believe Google and Microsoft will be just as a big part of it.
That's cool. I wasn't trying to boil the whole ocean. The thing that got me started on the post was when I realized that the dynamic between Apple and Nokia alone would change the industry.
>> Microsoft has previously indicated this (and they have MONEY)
I don't question Microsoft's will or money. What I do question is their strategic vision and ability to implement quickly. I hope they can get their act together -- the industry needs more competitors.
>>Google is just Goole.
Sure is, but Google's implementation history is spotty. I can't guess at their impact until they show us what they've developed. We don't know if the Google phone will be coming from Good Google (the company that made Google Maps and Google Earth) or Bad Google (the company that made Google Video).
>>For sure we will be entering the era of gruesome war for mobile computing.
Yeah!
Anonymous wrote:
>>This may be just the time that the remaining phone manufactures will join together and form a standard platform.
I'd like to see it, but even if they started now it would take two years to develop, and I think they'd be too late. The time to start was several years ago.
This is why I said their best hope is to just open up to everyone on the Internet and help them with billing. Jump in with the fish, the water's not as cold as you think it is -- and it's better than being eaten by the polar bears on the shore.
>>The internet would not be anything that it is today if it were controlled by either computer manufactures or phone companies.
I totally agree.
>>The mobile internet will be no different.
I hope you're right, but we need the phones to allow installation of new software. So far both Apple and Nokia restrict that -- Apple's phone is more or less closed, and Nokia's requires security certificates that drive developers batty and will be completely unacceptable to the web apps crowd.
Hey Nokia, you wanna really make friends in the developer community? Turn off the security certificates and add an open billing API to Ovi.
>>if all the investment in 3G technology not supposed to provide for broadband performance over the cell networks? is that not what we are paying for? I do not want my home broardband connection tied up transfering data too my phone when I am already paying for data plan. If anything WiFi in my phone should allow me to wirelessly tether my laptop or PC to access data via my phone and cut the cord.
Bravo. Nicely put.
Ricky wrote:
>>I don't think MVNOs stand a chance in the marketplace, frankly. There's just no value-add, imo.
Is that because the whole MVNO idea is stupid, or just because none of the MVNOs have added enough value to justify their cost structure?
There was once an MVNO that was fabulously successful. It was called RIM Blackberry in the early days, when it used the Bell South paging network. So it can be done...
Anonymous wrote:
>>You mentioned something about subsidies. I have noticed this works very different in the US and europe. In the US the subsidy varies phone to phone on one model you might save $50 and another $400. In europe there either are no subsidies or its a flat rate for all phone models. Mabye 120 euros more for any phone in the shop without a contract versus the two year contract price.
Really? I thought the subsidy on the n95 was a lot bigger than that. I'm not saying you're wrong, just that I think I'm getting different stories from different sources.
>>Also many operators are now offering plans with favorable rates fi you do not take a subsidy. These are becoming very popular; I believe many europeans are starting to reject buying subsidised phones now that the options are more transparent
Sweet! Let's hope the rest of the world copies Europe.
>>One thing that I believe will be huge for nokia is that most of the new phone they are releasing have built in SIP VOIP capability.
Good point! I haven't seen any discussion about that in the new Nokia phones.
Wow. Add together all of these changes, and if you're an operator it must feel some days like the ceiling is falling in on you.
And the process is just starting...
Excellent post.
It's ironic that the two main reasons that Nokia is so big today are usability (of the early phones - Apple could not have done better) and device sexiness (interior aerials, the clip on fascias etc). Virtues which appear to have been lost by the wayside, but are always paramount for Apple.
Operators still call a lot of the shots and own the customer, but are sitting on dwindling revenues from an increasingly rickety business model. A few times you make the risky assumption that operators would act rationally and sensibly - history suggests otherwise. They could still derail everything, cornered beasts desperate to keep the whole grape so no-one can have a slice of the watermelon.
Attrition will definitely be Nokia's strategy for taking on Apple as they could crush them financially, but I suspect Nokia's iterations will be slow and the battle with the operators will take a bigger toll - European phones are basically free, and whilst some people don't mind paying in return for reduced monthly outgoings most people won't do the maths. Many that do are likely to stick with their old phones and negotiate the contract price down, which won't help anyone except the consumers. Annoy the carriers, and risk rapidly losing market share - Nokia are the only manufacturer who could pull it off, but as a comparison Carphone Warehouse reigned supreme as the largest independent phone seller in many European markets and Vodafone dropped them as a retailer; carriers will take big risks to maintain their dominance. They could continue to offer Nokias but refuse to subsidise them competitively, and things could go nasty - Ovi could end up stillborn. Luckily for Nokia, operators don't like iTunes so much either and the iPod touch could screw up Apple's bargaining positions outside the US.
The really scary thing here for me is the idea of Nokia trying to iterate the OS/UI faster. The history of S60 - always underpowered, confusing and buggy - does not inspire confidence :) Likewise Apple could easily get exhausted trying to keep up on the phone front. It'll be interesting!
As an aside, I would point out that Symbian apps are locked down, because the potential for mischief is huge - but Nokia creates a lot of phones with every Java API, and Nokia leaves them as open as basic security measures could ever allow for developers to use (the US carriers lock them down on subsidised handsets, of course; SE are similarly enlightened, Moto want to screw developers for money, Samsung and LG appear to have no clue). Sensible developers code in Java when at all possible as Symbian is still a tiny %age of the market and has all the headaches...
Nokia's financial resources don't make any more difference than Microsoft's mammoth finances did with the mp3 player market. I could just as well argue that Apple has the vastly superior software, intellectual, creative and marketing resources compared to Nokia.
Nokia lacks a real OS running a real browser on it's phones, for example. That's a huge advantage that no one but Apple can leverage. Think of all the software that Apple can potentially use on the iPhone just because it already uses the OS X foundation.
s"Resources. No contest. Although Apple is a very successful company, Nokia has vastly more financial resources."
In fact, Apple and Nokia are both fabulously wealthy, enough so to be considered equal in this regard. Nokia has more assets (something like 22 billion Euros), but Apple is just under $20 billion and has more than half of that in "cash." I'd give them both a checkmark in that row.
Who loses from this?
The consumer? Not likely. Competition usually results in better products and services. Let's face it, mobile phone service is lousy, slow and expensive. No wonder that people hate their service providers.
Apple? No. Because this is a new market for them. They have little to lose in competing like crazy. Besides, they are making money on each iPhone sold.
Nokia? Sure. Why? Because they had it easy. They were the king of the hill and their competition was not forcing them to strain very hard.
The other smart phone manufacturers? Yes. Why? because they were poor competition even for Nokia.
Pundits like yourselves? Yes. Why? Because you have bet on anti-competitive tactics. All your contacts in the industry are useless now. You are just as much an observer as we consumers are. What Apple or Nokia does is less important than what the mass of consumers do.
It's going to be a wild roller-coaster ride over the next few years. Lean back and enjoy it. Don't bet on the losers the way you are now.
Lou Wheeler
From the consumer's standpoint, I would say Apple's iTunes brand means music, so I would definitely put them far ahead of Nokia there - the brand's much better established and is largely beloved by users. Also in the US Apple is a far stronger brand than Nokia.
If Nokia can't make all its services work consistently with all its phones, Apple wins the game for any customers that can afford their prices.
I don't think the financial capabilities of the two companies matter. Both have ample funds for the fight.
The iPhone is a much deeper and richer device than its competitors. That's a huge advanatage that competitors are going to struggle to meet.
Remember what Steve said about the phone: The killer app is making calls. All brands of phones can make calls. It's questionable at this time as to how much these services actually matter to the consumer.
iPhone's real weakness is call quality, which is highly variable. I've had excellent calls and I've had calls I've been embarassed to make.
Since I use it more as a portable Internet, email and media device than a phone, it doesn't affect me too much, but other customers are going to have more problems.
I think it will be a huge struggle for Apple to get iPhone's cost down to reasonable levels. Right now, it's pretty expensive to build. Of course so is a N95, but I still agree that Nokia has the edge on building cheap devices an selling them by the truckload.
On the other hand, where did Nokia lose their user interface chops? I remember admiring the UI on the early Nokias as beautifully simple an well thought out. But then I tried a modern one and it's all fiddly buttons, often without labels, and a very poorly thought out menu structure. What happened?
if there not good for downloading music or streaming video/musio than what is the point of 3G/3.5G/4G networks? If its all about low bandwidth applications residing on the phone then where are the 2.5G operators offering fantastic pricing in place of investing in expensive liscences and infrastructure?
over the last ten years there has been an interesting reverse globalization going on with cell phones. Ten years age motorolas were the most tough/durable phones favored by constrution and government, nokia was the phone of choice for bussiness people for its quality, simplicity, and consistancy betweeen models, siemans was a hit with youth, sony and ericison had a special coolness factor. This seemed to be the case around the world with these brands. Today different brands dominate across segments within the given geogrphic areas. Handset companies seem to be excelling in their home markets with the RAZR standard in US, nokia big in europe, sonyericoson big in asia, siemans confined to germany and surroudings.
This tells me handset companies do indeed have a special connection to their customers; one that only a local company completely understands.
Nokia has "vastly larger financial resources"? The balance sheet of both companies are almost the same. The cash reserves for Nokia is $12.12B, while for Apple it is $13.77B. If at all, Apple has a bit more financial resources than Nokia,
Just to make it clear
Nokia
Revenues 51,592.5
Profits 5,402.5
Apple
Revenues 19,315.0
Profits 1,989.0
http://money.cnn.com/magazines/fortune/global500/2007/snapshots/670.html
http://money.cnn.com/magazines/fortune/global500/2007/snapshots/6652.html
Realy intresting post and you pretty much nailed it at least for me.
Oh and of course
Nokia
Assets 29,823.9
Apple
Assets 17,205.0
Lack of security certificates is why Apple can't offer 3rd party development. They are very annoying but are also critical because of the damage that can be done by phones which don't have them.
Mobile phones are hyper-attractive ecosystems - there are many possible vectors for infection. The only security measure Apple can adopt is to deny 3rd party development.
This is a deficiency of OSX (the wonderful operating system you describe). Linux has SELinux and Symbian has Platsec.
Apple will have an equivalent to Platsec eventually. Then you'll be describing how important it is, no doubt.
What a funny article! Nokia has had fifteen years to do something interesting with it's phones and hasn't. Apple has been in the phone business less than 6 months and already is the number one selling "smart phone" in the United States. And of course, there's that whole iPod thing.
How does Nokia have "vastly more resources" than Apple? Do you mean financial resources? I mean, their market caps are about the same size. Their cash position is about the same size. Their roughly comparable in resources as far as I can see. Can you explain where the "vastly" comes from?
Second, I went thru your list, which is a good one, and tried to see where the weaker of the two companies had an insurmountable hurdle. I really didn't see any insurmountable hurdles for Apple, but I did think the hurdle for Nokia to create a well-integrated UI was quite large, and potentially insurmountable. Unlike Apple, which has been building their OS for decades, can Nokia build a comparably powerful UI on Symbian?
Is it easier for a computer company to become mobile, or is it easier for a mobile device company to create a computer?
Synthmeister said...
>>>Nokia's financial resources don't make any more difference than Microsoft's mammoth finances did with the mp3 player market. I could just as well argue that Apple has the vastly superior software, intellectual, creative and marketing resources compared to Nokia.
Nokia lacks a real OS running a real browser on it's phones, for example. That's a huge advantage that no one but Apple can leverage. Think of all the software that Apple can potentially use on the iPhone just because it already uses the OS X foundation.
Seems to me that you don't know much about Nokia/Symbian - Symbian is a very capable mobile OS. Now that Nokia starts equipping their phones with fast processors and decent amounts of RAM, I assure you they can built as much stuff upon that platform as Apple can upon their Mini-OS X.
And for the "real browser" lack: Are you aware that Nokia's S60 OSS browser stems from the very same base as Safari? It is also a fork of KHTML/Webkit. And, surprise, is able to work with every one of the iPhones "web-apps" just as well as the iPhone itself.
And that browser has been around for 2 years, so go figure - I wouldn't be surprised in the least if they add in-browser flash support too in the future...which is a simply painful lack of current mobile browsers.
So, no, neither Safari nor Mini-OS X are much of an advantage.
David H Dennis hat gesagt...
>>>Also in the US Apple is a far stronger brand than Nokia.
Well, Nokia is much stronger in Europe and Asia I'd say - a market that is easily ten times as big as the American market.
>>>The iPhone is a much deeper and richer device than its competitors. That's a huge advanatage that competitors are going to struggle to meet.
In which way is it "much deeper and richer"? With it's current shortcomings, and cheaper and more capable DIRECT competitors from Samsung and LG and their driving forces like Vodafone, it might face an surprising uphill battle in its current form here in Europe, at least that's what I think.
Anonymous said...
>>>Nokia has had fifteen years to do something interesting with it's phones and hasn't. Apple has been in the phone business less than 6 months and already is the number one selling "smart phone" in the United States. And of course, there's that whole iPod thing.
Nokia hasn't done anything interesting with it's phones? Have you been sleeping during the last few years?
And somehow I'm pretty sure that the semi-smart iPhone won't continue to out-sell proper smartphones over a longer time. This was the result of the initial discharge of the hype surrounding this device, but not something continuous imho...
Great post Michael, though I do disagree with some details.
Firstly, just to clear up some common misunderstandings about Platform Security on S60: applications can be self-signed, which takes a few seconds with a standard tool, unless they use special device capabilities (such as access to all files on the device). Self-signed apps require the user to explicitly permit the capabilities the app requires at install time, but that's all. So there are no real barriers to app developers on S60 (except writing for Symbian OS, of course). And I agree with an earlier poster that other OS's will require some form of PlatSec eventually, and Symbian is not standing still on their signing process -- they're serious about getting this right.
As for OS's being unimportant, I heartily disagree. Services on mobile devices that actually function, will require code to be spread between the device(s) and the web servers. Furthermore, the code on the device(s) will need to be tightly integrated with the device's native framework. Java and javascript is fine for games and other trivialities, but borderline useless for serious applications. So Apple's decision to lock-down OS X on the iPhone is doubly short-sighted.
However, Apple didn't have a choice in locking down the iPhone's OS. While Nokia's UI is clunky and, to be honest, sub-optimal, Apple's UI only works because it is so heavily constrained in terms of features offered. It's not remotely scalable, and rather than solve this problem, Apple has simply ignored it (see http://smartdreaming.blogspot.com/2007/03/why-iphones-ui-wont-scale.html for more explanation). You can see how strong Apple is at UI design by looking at the desktop OS X UI. While undoubtedly superior to Windows and Linux, it is hardly revolutionary.
This theme, that Apple's strengths are very shallow, is a constant one: Apple's design experience is shallow (currently three PC designs, and four media-player device designs, and a few accessories); Apple's brand is fragile (because Apple has such a small range of product, messing up one of them would have a huge impact on the brand); Apple's partnerships/relationships are shallow compared to Nokia's, and so on.
I agree that Sony Ericsson, with the technical nous of Ericsson and the consumer electronics skills of Sony, is really one to watch out for, too. Their UIQ 3 phones are the nicest actual smart phones (able to have their native software extended) out there at the moment. But don't count Motorola out, either -- if they can ever get their act together.
Have fun,
Malcolm.
I'll grant that Nokia has a good browser, but I stand by my observation that the Mac OS will allow Apple to do things and have synergies with their phones that no one else can have. Apple's mini-OS is built on a real OS, i.e. an OS that runs on laptops, supercomputer clusters, desktops, servers as well as iPods, iPhones, and Apple TVs. Once people are used to using a piece of software on one Apple device, the rest of the Apple ecosystem will just seem that much more intuitive and enticing.
Does any Nokia phone even have 8 gigs of memory? What's taking them so long to get a decent amount of memory in their phones? That tells you something about the limitations of the OS. (Yea, yea, I'm sure it's lean and mean, too.)
Also, don't be so sure Apple will keep the iPhone OS locked down. That option will be open.
And as far a Apple having a shallow product line, I couldn't disagree more. Dell and Gateway (RIP) would love to have such a shallow product line. Apple's product line is not shallow but very focused on their strengths, target markets and exploitation of their vast intellectual property. Sure, they "only" have three desktops computer lines and two laptop computer lines, but that allows them to cover 90% of the products people want to buy and limits their exposure to risk, inventory management, R&D, logistics, etc., etc. Back in the 90s, that was one of Apple's huge weaknesses—they had about 36 different kinds of computer models and it was a confusing morass of redundancy, overlap and lousy forecasting.
Take their iPod line. They cover every price point from $79 to $399. That doesn't seem like a shallow product line to me. And you can bet they will do something similar with the iPhone—16 gig iPhone by December! (Anyone want to take bets?) By this time next year, I bet there will be a $299, $399 & $499 iPhone. I wouldn't be surprise to see a nano-phone either.
Most electonic manufacturers would do well to imitate Apple's "shallow" product line-up.
Synthmeister said...
>>>Does any Nokia phone even have 8 gigs of memory? What's taking them so long to get a decent amount of memory in their phones? That tells you something about the limitations of the OS. (Yea, yea, I'm sure it's lean and mean, too.)
N91 8GB was their first, available ever since fall 2006 (yeah, that 3/4 of a year BEFORE the iPhone), after it's 4GB predecessor was on the market for over half a year.
And now, there is the N95 8GB, the N81 8GB, and a lot of handsets that support the upcoming 8GB microSD's, so memory is NOT something Nokia's getting behind.
And btw: Look up your facts...this statement alone makes you look rather ignorant, so if you don't have ANY clue about Nokia/Symbian, don't act as if you had. Thanks.
>>>I stand by my observation that the Mac OS will allow Apple to do things and have synergies with their phones that no one else can have. Apple's mini-OS is built on a real OS, i.e. an OS that runs on laptops, supercomputer clusters, desktops, servers as well as iPods, iPhones, and Apple TVs.
As obvious from the statement above, you don't really have any "observations" regarding Symbian is a *REAL* OS too, with multitasking, native apps and everything else you coould want. And it's becoming compatible with the UNIX API declaration standards (POSIX), and you can be sure that this will cause a flood of ported applications...
Going by your logic, Motorola's Linux based phones are just as "superior", as Linux is even more scaleable as OS X...which is rather not true.
Actually having an OS that is tailor-fitted to a mobile device is rather an advantage than a disadvantage in my eyes - less unnecessary clutter...like the A2DP issue: obviously the current OS X version is incapable of A2DP, which reflects on both the iPhone and the Macs - NOT a good thing whatsoever.
You neglected to have a 'vision' category, whose checkbox on Apples' side overshadows anything else on the list. Afterall, you're writing an article comparing one of the oldest, strongest cell phone manufacturers in the world to a company that just rolled out version 1.0 of their first phone. A year ago, nobody in the cell phone industry could even have conceived of such a thing.
The corporate mindeset that ran wih the status quo for a decade is going to have an incredibly difficult time playing with Apple.
Wow, I probably should have titled the post, "The War Between Nokia Fans and Apple Fans." In addition to the comments here, the post was linked to by several discussion boards in the US and Europe. I've been looking at the comments there, and the pattern is just what you'd expect -- the folks in the US tend to believe Apple is the strong favorite; the folks in Europe tend to say Nokia will win.
My two cents -- if you think either company is a walkover, chances are you don't really understand both of them. They are both excellent, powerful organizations, but with very different strengths.
Thanks for all the comments...
raddedas wrote:
>>A few times you make the risky assumption that operators would act rationally and sensibly - history suggests otherwise. They could still derail everything, cornered beasts desperate to keep the whole grape so no-one can have a slice of the watermelon.
That's an excellent point. I should have done more thinking on what the operators might do. The big constraint on the operators' actions is the users themselves -- if people demand a particular device or service, the operators will cave. Nokia knows that, and I think they will try to generate demand.
This also helps explain why Nokia created the Ovi brand in the first place, which had kind of puzzled me. If they have a single brand, they can advertise the heck out of it.
Prediction: If you live in Europe, brace yourself for a huge Ovi marketing campaign this fall.
>>As an aside, I would point out that Symbian apps are locked down, because the potential for mischief is huge - but Nokia creates a lot of phones with every Java API, and Nokia leaves them as open as basic security measures could ever allow for developers to use
I've always thought the lockdown issue was a red herring. Microsoft, Palm, and (I believe) RIM ship unsecured phones and don't require certificates, and the operators have been happy to carry them. If there's user demand for a phone, the security requirements are one of the first things to go out the window.
Synthmeister wrote:
>>Nokia lacks a real OS running a real browser on it's phones, for example.
There's no way you can say that Symbian's not a real OS. If anything, it's too real an OS -- it's very complicated and therefore hard to develop for.
The reviews in Europe for Nokia's browser have been good, and I've used the browser in the 770 tablet and it's pretty nice. Safari's fantastic, but Nokia is not nearly as far behind as many people think.
>>Think of all the software that Apple can potentially use on the iPhone just because it already uses the OS X foundation.
There's a lot of Symbian software too, and Nokia has been iterating on it for a long time. You're right that Apple has an advantage, but it's not insurmountable -- if Nokia moves quickly. That's the risk for them, in my opinion. Moving fast in software has not historically been their thing.
Kirke wrote
>> In fact, Apple and Nokia are both fabulously wealthy, enough so to be considered equal in this regard.
They both have a lot of resources. But Nokia's yearly net income is a lot bigger. Apple would be dumb to get into a war of attrition with them, and I really doubt that's the plan anyway.
David wrote:
>>From the consumer's standpoint, I would say Apple's iTunes brand means music, so I would definitely put them far ahead of Nokia there - the brand's much better established and is largely beloved by users. Also in the US Apple is a far stronger brand than Nokia.
I agree, but unless you've talked to people in places like India, you have no idea how powerful the Nokia brand is in most of the world. It means modernism and achievement, it means you've arrived. It's a huge aspirational thing in places like China. And it's the house brand in much of Europe (one of the few brands to successfully establish a pan-European identity; most brands in Europe are still tied to a country).
It's very hard for folks in the US to understand this, because in the US Nokia's brand is on a par with something like Peugeot -- a strange European thingie that's not relevant to my life. But take my word for it, Nokia's a different company elsewhere.
>>The iPhone is a much deeper and richer device than its competitors. That's a huge advanatage that competitors are going to struggle to meet.
That's why I'm so interested to see Nokia stepping up to the challenge.
>>iPhone's real weakness is call quality, which is highly variable. I've had excellent calls and I've had calls I've been embarassed to make.
Also lack of a keypad, to many people. (I know, I know, some people are fine with that -- but a lot are not.)
>>On the other hand, where did Nokia lose their user interface chops? I remember admiring the UI on the early Nokias as beautifully simple an well thought out. But then I tried a modern one and it's all fiddly buttons, often without labels, and a very poorly thought out menu structure. What happened?
Good question, and I don't know the answer. Probably they lost it in the same place where Motorola lost its hardware design skills. Anyone want to comment?
Anonymous wrote:
>>if there not good for downloading music or streaming video/musio than what is the point of 3G/3.5G/4G networks?
An outstanding question. I think a lot of the initial investment in 3G was based on fear of being left behind rather than logical analysis of what the networks would do.
Some cynics have suggested that the goal of the operators is like the owner of a health club -- they want to sell you a service and then hope you'll never actually use it. I don't think the operators are that sly, but there are definitely cases in which if everyone actually adopted a service they'd bring down the network.
Anonymous wrote:
>>Today different brands dominate across segments within the given geogrphic areas. Handset companies seem to be excelling in their home markets with the RAZR standard in US, nokia big in europe, sonyericoson big in asia, siemans confined to germany and surroudings.
Siemens is just a shell brand now, but otherwise you're right that the situation is very different in various parts of the world.
>>This tells me handset companies do indeed have a special connection to their customers; one that only a local company completely understands.
One size doesn't fit all. It's one of the most important facts about the mobile market, and a huge difference between mobile and PCs.
Tim wrote:
>>Lack of security certificates is why Apple can't offer 3rd party development.
So why exactly were Palm and Microsoft and RIM allowed to ship millions of phones without certificates for their apps? And how come nobody used those phones to bring down the networks?
The security threats on mobile phones are real but overstated. AT&T used the same arguments to try to keep third party hardware off the US fixed-line phone system in the 1970s.
>>The only security measure Apple can adopt is to deny 3rd party development.
Oh, please. You mean poor little Apple couldn't create a sandboxed development environment for a phone that they spent several years developing? If they felt it was a priority, they would have made it work.
>>Apple will have an equivalent to Platsec eventually. Then you'll be describing how important it is, no doubt.
Not if developers have to go through the same certification garbage they endure on Symbian.
Anonymous wrote:
>>How does Nokia have "vastly more resources" than Apple?
I was thinking income and people. They even own their own factories. It takes Nokia time to move, but when they build up momentum they're an awesome force. Finland is one of the most expensive places on the planet to do business, but Nokia has managed to out-compete Asian clone-vendors on price. Apple absolutely does not have that sort of power. They have other forms of power, but not that sort of brute-force logistical muscle.
>>I did think the hurdle for Nokia to create a well-integrated UI was quite large, and potentially insurmountable.
Agreed. The interesting question is, can Nokia make its phones good enough that its greater variety of models, and lower pricing, can win the day? I spent years at Apple selling a more elegant UI against Windows, and I didn't enjoy how that turned out.
>>Is it easier for a computer company to become mobile, or is it easier for a mobile device company to create a computer?
That sounds like one of the old "Zen of Palm" parables. It's extremely hard to go in either direction.
Christian wrote:
>>I'm pretty sure that the semi-smart iPhone won't continue to out-sell proper smartphones over a longer time.
There's no such thing as a smartphone market, anyway -- it's a constellation of different markets with different needs. Comparing iPhone sales to something like RIM sales is pointless because they serve completely different user bases.
But as for current iPhone sales, you can never tell anything from the first quarter's sales. Some of the early Nokia brick phones had huge shipments in their first quarters -- and then sales dropped to almost nothing because the channel was stuffed with unsold inventory.
Malcolm wrote:
>>applications can be self-signed, which takes a few seconds with a standard tool, unless they use special device capabilities (such as access to all files on the device). Self-signed apps require the user to explicitly permit the capabilities the app requires at install time, but that's all.
And because of that, the developers hate it (at least the ones I've talked to.) Users are afraid to use the apps.
>>As for OS's being unimportant, I heartily disagree. Services on mobile devices that actually function, will require code to be spread between the device(s) and the web servers. Furthermore, the code on the device(s) will need to be tightly integrated with the device's native framework.
APIs matter a lot, but the underlying OS is just plumbing and a commodity. I wrote on the topic here.
>>Apple's UI only works because it is so heavily constrained in terms of features offered. It's not remotely scalable, and rather than solve this problem, Apple has simply ignored it
Interesting perspective.
>>You can see how strong Apple is at UI design by looking at the desktop OS X UI. While undoubtedly superior to Windows and Linux, it is hardly revolutionary.
I like the iPhone UI a lot more than the Mac OS X UI. For my taste, the current Mac UI has been tarted up with a lot of gratuitous eye candy that interferes with ease of use (transparency is a great example). To me, the first responsibility of a UI is to be extremely easy to use, then it's supposed to be pretty. Apple inverts that far too often for my taste.
But I think on the iPhone they generally got the balance right.
>>This theme, that Apple's strengths are very shallow, is a constant one
But you left out Apple's expertise in systems design (hardware + software + services). In that they are world leaders, and it's the key to success of a mobile data device. Nokia is nowhere near them on that, and I believe they don't fully realize the importance of it yet. It's an incredibly difficult subject for them because their processes are all set up to divide phone development into sub-pieces rather than integrate it.
>>Don't count Motorola out, either -- if they can ever get their act together.
I would love to see them kick butt -- I have a bunch of old Palm friends over there. But it's so hard to take on a new initiative when you're cutting headcount.
E.J. wrote:
>>The corporate mindeset that ran wih the status quo for a decade is going to have an incredibly difficult time playing with Apple.
You know, if it was anyone other than Nokia I might agree with you 100%. But they have a weird history of retargeting themselves into completely different industries.
Assuming that Nokia can't change is as dangerous as assuming that Apple can't adapt to the phone market.
Like Anonymous already said
Nokia
Revenues 51,592.5
Profits 5,402.5
Assets 29,823.9
Apple
Revenues 19,315.0
Profits 1,989.0
Assets 17,205.0
http://money.cnn.com/magazines/fortune/global500/2007/snapshots/670.html
http://money.cnn.com/magazines/fortune/global500/2007/snapshots/6652.html
I'm not sure it will be an all-or-nothing battleground as you allude to. Even if Nokia were to dominate in terms of total sales worldwide, Apple can still own a significant portion of the US market and win.
In fact, Jobs' modest target with the iPhone reflects what he said about the PC wars: there's a lot of room for a lot of players to co-exist.
Re: the smaller players who "have no clue": maybe in sophisticated markets everyone wants broadband wireless on their mobile devices. But there are still a lot of people who just want a simple phone with maybe a camera; no PDA, no Internet accessibility. I suspect the market for this simple phone is still going to outnumber that of sophisticated devices significantly, so the "simple" players will still have a large field to roll around in.
The war may be on, but I believe Apple will not engage Nokia on most battlefields. Just like with Macs in the PC world, I believe Apple will be content to carve out a profitable piece of the mid-to-high end for 2 to 4 years. Apple will engage on other battlefields only when they are ready, and then only with some sort of twist that changes the battlefield.
I believe Apple signed up its European partners for the UK, France, and Germany before iPod touch was announced publically. Those comments that they are still in discussions is true only in the sense that there's the rest of Europe to talk about.
You've written about converging mobile, media, Internet, and personal computing. Apple is doing just that and successfully leveraging one piece to gain good terms from others and positioning in another piece.
Nokia's already dominant in mobile and is just preparing to move into the other three (ovi is still just a press release), whereas Apple has significant presence in those three (plus retail) and has products already in mobile. And Apple's already very close to the consumer, even in the mobile space though just in the US, while Nokia is not close to the consumer in any space except the European mobile space.
Most also seem to believe it's easy to create an Internet media store, even though there's really been only one successful store (maybe 2 if you count eMusic). It's really much harder than it looks, especially because of content licensing.
I am interested if either apple or nokia get involved with the sprint/clearwire WiMax network coming up. The potential for this network to completely transform mobile computing is huge. If my sources are correct they have 200 Mhz of bandwidth between them. I believe that is about twice everything out there today combined. This network will be able to support streaming content and infact there are trials already in the making for mobile interactive media. We are also stating to see a tie in with ICO a satellite phone providor with another huge chuck of spectrum and a license that allows use of the spectrum on the ground as well as by satellite. ICO is part of the same Craig McCaw group as clearwire and nextel before being bought by sprint and before that McCaw cellular before that became AT&T. These companies(sprint, clearwire, and ICO) have a closer relationship than what may be obvious and are the only ones with the bandwidth to back up the most interesting offerings if they take off.
Apple is tied into AT&T here in the US; Nokia is not. A CDMA/EVDO/WiMax Nokia for this future network would indeed be very interesting; although nokia has tradtional not been very good with non-GSM phones(perhaps the reason for lack of market share and status in CDMA dominated america) Very interested in seeing who makes the first handheld devices for this network. This is also the network that has the potential if done right to catpult the US past europe and Asia on the technology benchmark. Any devices will therefore get attention.
Another potential player is terrestar also building a hybrid satellite and ground network. They have just selected nokia to construct the ground network. It will be 100% 4G HSPA/UMTS. Although terrestar seems to be targeting government and enterprise users not consumers.
Ruhayat wrote:
>>Even if Nokia were to dominate in terms of total sales worldwide, Apple can still own a significant portion of the US market and win.
I agree that they could coexist, but I don't think either one wants to. Read Nokia's quote in the Time magazine article about not being in the habit of losing. The egos are engaged on both sides.
Did you ever see the movie Highlander? Not a great flick, but it has some resonances to this situation.
>>I suspect the market for this simple phone is still going to outnumber that of sophisticated devices significantly, so the "simple" players will still have a large field to roll around in.
You are completely, 100% right. The problem for the phone vendors is that most of the profits are in the sophisticated phones.
Nokia is well on its way to dominating the simple phone market. Even Moto has given up. Because of Nokia's volumes and efficiencies, it's very hard to beat them in commodity phones.
If I were running a handset company, I'd try to do data phones aimed at niches and needs that Apple and Nokia aren't yet targeting. There's a lot of room for creating new markets, rather than fighting for the music phone space.
anonymous wrote:
>>I am interested if either apple or nokia get involved with the sprint/clearwire WiMax network coming up.
Nokia is already involved. I've heard nothing about Apple's plans.
Nokia is big in Australia, and I have owned Nokia and Sony Ericsson phones before getting a Blackberry (now onto a Pearl).
The Pearl's media handling is crap - navigate through a list of folders like on a windows box, and its pretty ordinary.
But core ability of being able to interact with my work's Exchange server very handy.
As for "subscription" service, I use the internet radio streaming function in iTunes for free! Click on the genre I want, pick a station, and voila!
If I was really keen, I suppose I could even use something like RadioLover to save music down to my hard drive (and hope the Feds don't come checking...)
This one's for people living in the US and not knowing the power/market of Nokia. ;)
While every phone can have custom ring tones, everybody, and I mean everybody (in the Netherlands ;) ) recognizes the standard Nokia tune. And just to give you a hint of the power of this tune: if you're driving in a bus, and you hear the famous 'tadadada tadadada tadadada dum', at least five (and often more) people will grab their phone and look whether it's theirs. Nokia actually managed to - more or less - have people associate their tune to mobile phones in general. And that's power. Every time a phone rings (and yes, for some reason many people use this tune) it's a commercial for them.
That being said...I don't have a mobile phone, and I don't want one...and hope that the iPod touch will convince Palm to come up with a new (big screed) PDA (without phone function, but possibly with VoIP) rather rather than another Treo.
Great blog!
About not opening up their systems for 3rd parties: I think the main reason for that is for Apple and Nokia to retain their agility. It's sad, but certainly not a mistake. It's nothing less than a neccesity in a 'phone war'.
what matters with flash lite is not that the player costs(which it shouldn't anymore, the ten bucks was ridiculous before), what matters is if it is pre-installed. we're starting to see phones that have pre-installed flash lite 2.0+.
(that it's 2.0 or newer matters a lot)
besides, j2me is perfect for the type of games you usually see made with flash on the web. I'd argue that it's better than flash lite actually, for games.
full flash on mobile devices still takes time(n800 does somewhat, it's not a phone though).
however, you could get a big load of free j2me timekiller games right now(without warezing). ngages point is to provide those games that take more work than a tetris clone.
has flash based games killed pc games? no.
Just wanted to point out that the Nokia/Loudeye music store is based on Microsoft WMA codecs and DRM technology (as are pretty much all online music stores except for iTunes): http://press.nokia.com/PR/200502/980518_5.html
Interesting article, although I think you're pretty blinkered. Ironic that you start off with a quote about elephants and yet largely ignore the elephants in the room - namely Microsoft and Google.
After a long period of hostility, relations between Microsoft and Nokia have thawed considerably in the past couple of years, to the point where there is active collaboration in some areas (not least the Nokia music store). Nokia and Microsoft both see Apple as a common enemy, and will align themselves against this threat, especially as they are much less a mutual threat with Nokia being hardware focused and Microsoft software and services.
Similarly, Google wants in on this space - the opportunity for an ad-driven company like Google is immense, and they are very likely going to attack the low end of the market with a free or near-free phone. Apple makes money on high-end hardware so is unlikely to see Google as a threat, so this pits Google and Apple against Microsoft and Nokia - and that is a very different battle to just Nokia vs Apple (I expect RIM and perhaps HTC will be swallowed up by the Nokia/Microsoft alliance, and Microsoft will vigorously defend its resulting hold on the enterprise market).
Anyway, one thing is certain - we are in for interesting times, and the MOs are not going to know what hit them - normally I would expect them to throw in the lot with one side or the other but in this case they may all end up siding with Nokia/MSFT as Google is to much a threat to their modus operandi.