“Nokia’s days as innovator are over.” That’s TechCrunch’s blunt assessment after Nokia and Microsoft announced their agreement to make Microsoft’s Windows Phone OS the dedicated smartphone OS for Nokia going forward.
Today . . . [Nokia's] boss effectively ended Nokia’s history as an ecosystem of its own, laid down its guns, and gave in to a Windows Phone future.
In effect, the February 11 deal seems to make Nokia a captive OEM handset maker for Microsoft’s smartphone software. As such, Nokia becomes a Microsoft shop. In the high-margin smartphone arena, Microsoft/Nokia (that’s the pecking order) will compete against Apple, Google/Android, RIM, and HP/Palm. Nokia’s Symbian OS will be relegated to feature-phone markets, and eventually phased out. Nokia’s MeeGo smartphone platform has been downsized to a project.
No Microsoft/Nokia phones until 2012?
When will we see the heralded Microsoft/Nokia smartphones? No Microsoft/Nokia phones were shown at the announcement. One report states that Microsoft/Nokia phones will not be generally available until 2012. That’s a long wait. By then we may be up to iPhone 6 and maybe Android “Mascarpone.” Nokia will also be competing against Windows Phone handsets made by HTC, Samsung and LG — unless these suppliers feel the new deck is so stacked against them that they migrate en masse to Android.
The future of the Nokia brand
In my previous post, The Nokia brand on the brink, I laid out key brand issues for Nokia prior to the February 11 announcement. I will follow up that post when I have more details on the full Nokia/Microsoft agreement. Right now–on Day 1– it certainly appears that the Nokia brand is destined to be an eventual sub-brand of Microsoft.
Many eyes in the brand world will be focused on Nokia tomorrow (February 11) when new Nokia CEO Stephen Elop announces a long-awaited turnaround plan for the struggling mobile phone giant. The event in London is a big deal because, quite frankly, the Nokia brand is on the brink. In smartphone market share and profits Nokia has been battered and bruised by iPhone and Android. Its brand has been hammered, too, virtually knocked off the map in the US.
A big announcement to address some big brand questions
From a brand perspective, the February 11 announcement will hopefully answer a multitude of pressing brand questions: What’s Nokia’s new brand vision? What’s the new brand strategy? How will Nokia lead its customers in ways that Apple and Google can’t match? Will the brand be energized to deliver a full suite of customer value, as a complete customer experience, or will it be downsized to the brand of a supplier? The latter would signal a major step down for a visionary market leader.
This was a brand problem from the get go
In my view Nokia needs a sweeping brand reformation because its many problems (and they’re very serious problems) stem from a gradual but deep dereliction of brand. Nokia’s troubles were a brand problem from the get go. There was no overriding brand vision to overcome the device-centric silo-ism that fragmented and smothered Nokia’s own forces of innovation. Without that vision to orient R&D to strategic customer outcomes, market opportunities were missed and massive development budgets accomplished little.
Mindset problems are brand problems
A common critique of Nokia is that it suffered from an insular, “prove it to me” mindset that shot down new ideas and thwarted initiative and change, enabling Apple and Google to run away with the smartphone market. I would argue that mindset problems are brand problems. They’re a “way” of preserving operational status quo. They can pull the plug on brand vision, and they can cripple the holistic view of the customer that products need to innovate successfully. A common result is products that frustrate users.
Elop: Nokia must now fight “a war of ecosystems”
Elop has laid out Nokia’s challenge in his fiercely blunt “burning platform” memo to employees. (Well worth reading in its entirety.) After citing the painful details of how Nokia lost its market leadership to the iPhone, Android and other competitors, Elop concludes:
The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, e-commerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyze or join an ecosystem. [emphasis added]
So that’s Nokia’s newly defined task: how to build, catalyze or join an ecosystem. I find it a bit strange, though, that customers are not included in the ecosystems described.To me, customers are the most important part.
The brand as prime mover of the ecosystem
In the February 11 meeting I’d be looking for a more customer-focused concept of ecosystem to emerge, one with fewer elements than Elop lists, and one with deeper brand relationships. As I see it, the customer is the focus of the ecosystem, and the brand is the prime ecosystem mover. It’s brand vision and values that give the ecosystem meaning and direction, and make the ecosystem productive. And I would make it one ecosystem, not many. A multitude of ecosystems creates potential conflicts and might even generate debilitating intra-ecosystem rivalries.
Keep the ecosystem simple
The Apple iPhone ecosystem is hugely successful and not complicated. It exists for the benefit of customers, to make the purchase and use of iPhones as easy and delightful as possible. Apart from the wonderfully designed iPhone and iOS, the ecosystem is iTunes, the App Store, Apple retail stores, the developers who craft the apps, the apps, Apple customer service, and iPhone customers who provide feedback. Much of the ecosystem is embedded in the iPhone itself. The moving parts of the ecosystem are kept to a minimum. It’s through the focus and quality of the ecosystem that everything “just works.”
An alliance with Microsoft?
The latest rumors are that Nokia will announce an alliance with Microsoft to feature Windows Phone 7 mobile OS on Nokia smartphones. This would be a sea change for Nokia, which has heretofore produced both devices and software, and desired to own the full user experience. The Nokia brand has been the Nokia handset running custom Nokia software. Nokia’s Symbian OS is used worldwide, and its new MeeGo OS was slated for upcoming smartphones.
A prediction on what to expect on February 11
Horace Dediu of the highly respected Asymco blog has ventured his predictions of what the February 11 announcement might bring.
There will be a multiple OS strategy
The US market will be the first to see a new non-Nokia OS. I would guess Windows Phone with AT&T.
Low end devices will remain with Symbian due to price considerations for the chipsets, components.
MeeGo will be phased out in phone products but development will continue for tablets
This may seem like a radical departure, but in many ways it’s not. Nokia has nothing to lose in the US as its platforms have zero traction. By maintaining Symbian for low end devices, they can still aim for differentiation where Nokia feels it still has distribution and cost leverage. This strategy will also allow speed in time to market.
I would add that in the US a Nokia/Microsoft mobile phone alliance might be considered in last place behind iPhone, Android, RIM’s new Blackberry touchscreen OS and the new HP/Palm webOS phones and tablets.
Where does all this leave the Nokia brand?
Where does all this leave the Nokia brand? There are some serious brand implications in the above February 11 scenarios. Here are some key questions that the Nokia meeting will need to address:
An agreement to use Windows Phone OS means that as a brand Nokia no longer owns the complete user experience. It’s now shared with Microsoft, at least in US smartphones. Doesn’t this diminish Nokia’s brand stature?
A Nokia handset running a Microsoft OS is hardly a “Nokia smartphone.” It’s half Nokia, half Microsoft. Who owns the brand voice? Whose vision will lead customers?
By giving up the smartphone OS Nokia apparently downgrades itself to a device supplier. As such, it’s no different than HTC, Samsung, LG, etc. Doesn’t this weaken Nokia’s potential hold on customers?
If Nokia adopts Windows Phone OS for its smartphones, Nokia becomes dependent on Microsoft for smartphone OS innovation. The Nokia brand could be compromised if Microsoft fails to innovate as fast as iPhone and Android, to name only the top two competitors. How does the Nokia brand handle this?
If Microsoft makes the OS and Nokia makes the device, who directs and manages the ecosystem? Whose ecosystem is it? For that matter, whose customer is it?
A strong, well-managed brand will let all of its stakeholders sleep well at night: customers, employees, shareholders, partners, the public, and Mother Nature. They can all sleep soundly when the brand does its job.
Strong brands have a unique and wondrous power to deliver value—and to mitigate risk—throughout their entire ecosystem. Let’s see how each brand stakeholder in the ecosystem benefits from the brand:
Strong brands offer superior quality, comprehensive warranties and responsive customer service. They are accountable to their customers for their products and services, and this translates into market offerings that customers can trust. Customers know that the brand has their back. And knowing this, they can drift into pleasant dreams.
Companies with strong brands are the best places to work. The brand sets clear standards, and brand principles infuse operations at every level. Everyone is accountable up and down the line. A unified vision and mission focuses the work, making everyone more productive. Fulfilling work leads to fulfilling sleep.
Strong brands take care of business (and shareholders) in ways that optimize operations and mitigate risk. They build equity above and beyond product offerings. The operating brand principle: “The closer you look, the better we look,” is something shareholders can take to the bank. And sleep on.
Strong brands make the partnership stronger. They can be trusted to do the right thing. It’s weak brands that cause the 3 a.m. wake-up calls.
Brands are a public trust. Strong brands earn that trust by being accountable to the public for their products, services and corporate actions. The public sleeps well knowing that the brand will stand up for what’s right as much as it stands out on its own behalf.
Strong brands take care of Mother Nature. She has no money, no purchase intent, and no brand loyalty whatsoever, but her strength is brand strength. Mother Nature sleeps soundly because strong brands know that any wasteland is a dead zone for brands, too.
We’ll have to wait a bit for Apple’s iPad killer app in education.
In recent months I made the (speculative) case that a new Apple tablet that integrated textbooks, lectures, course materials and coursework could have a transformative impact on higher education. You can see my reasoning in the following posts:
Like many others I tuned into Apple’s January 27 launch event to see what Steve Jobs and company envisioned for their new tablet computer.
Apple’s education initiative is not ready for prime time
The iPad name certainly works as a learning tool, but about 20 minutes into the launch event it became clear that Apple’s education initiative was not yet ready for prime time. It was not going to happen during this keynote. There was nothing said (or demoed) about the iPad and textbooks, when we know that Apple has been meeting with textbook publishers on how the iPad could raise textbooks to a whole new level. There was also no mention of any learning or education apps, or of an enhanced iTunes University infrastructure, or of key university partners, or other elements that would naturally flow from an integrated education initiative with Apple in a central role.
Ready for the fall semester?
Apple does have some time on its side. The iPad itself won’t be commercially available until late March (for the Wi-Fi version), and in April for the 3G version. This window allows Apple more time to finalize new features and apps, and to establish working relationships with its many partners in an educational iPad ecosystem. A spring iPad education launch could position the iPad as the ideal off-to-school computer for the Fall 2010 semester.
Why buy your kid a crummy netbook when the iPad can be fully integrated with the education process?
A muted launch event
Education is a game-changing market for the iPad, but I didn’t hear the word “education” once in the official video of the launch event. Steve Jobs and others rhapsodized about the iPad as a supremely portable device for browsing, watching videos and movies, reading ebooks, newspapers and magazines, and playing games. The few demos were lackluster or rushed. No wonder the general reaction to the launch event was muted. Where was the game-changer? How did the iPad point beyond itself to some greater good? Where was its unique contribution to culture, to make a difference that matters?
We witnessed the introduction of a beautiful and highly capable tablet computer with no compelling reason to embrace it beyond its (limited) coolness. What crucial problem did it solve?
Why Apple didn’t refer to the iPad and education
If the iPad has so much potential in education, why didn’t Apple at least mention what it planned to do with the iPad in the education arena? It all comes down to impact, and how Apple builds its brand. The Apple brand aims to command every context in which it appears. It’s a diva; it owns the stage. To command a context Apple “reinvents” a key aspect of culture by enabling new ways of being and doing via Apple technology. The brand is transformative. An Apple launch event is therefore a conceptual and paradigmatic breakthrough as much as a technology breakthrough. In this approach, either you launch the complete product and brand ecosystem, and the new paradigm, with all guns blazing and all trumpets blaring, or you keep everything completely under wraps until the time is right. You don’t dribble. A piecemeal launch is worse than no launch at all.
Thus the January iPad launch became a device launch only. The education initiative will follow, in command of its own context, with select partners, evangelists, champions and endorsers, when the time is right.
Two signs of things to come
I did observe two signs of things to come in Apple’s education initiative, however. One was almost hidden in the keynote itself, the other lies in an interview with a highly-regarded VC after the launch.
The intersection of Technology and Liberal Arts
The iPad keynote did reveal a significant sign about what’s coming in education, although it’s tucked away at the very end of Steve Jobs’s presentation. Go to the 1:31 mark on the official Apple video and look at the image on the screen. Steve is discussing how the iPad represents the “intersection of technology and liberal arts.” Liberal arts? As in, um, a college curriculum? Yes indeed, but that’s as far as he goes. Behind Steve on the screen is a street sign that shows two intersecting streets: Technology and Liberal Arts. How are they related? What’s Apple’s game-changing role? Since when is “Liberal Arts” an Apple focus? All this is brought up at the end of the keynote. We’re left hanging.
BTW, don’t be surprised if this is the first image you see when Apple announces its iPad education initiative. My sense is that it came from a separate presentation.
John Doerr on the iPad’s education potential
John Doerr, one of Silicon Valley’s the world’s leading venture capitalists, sees great education potential in the iPad. Is he in a position to know something? He does manage the $100 million iFund. Check out his initial comments as he’s interviewed by Om Malik just after the iPad launch event. (John’s segment begins a few seconds into the video; that’s David Carr pictured below.)
John says he’s particularly excited about what the iPad can do in education, with the iPad’s potentially “transformative” effect on American education and education worldwide. As I noted in a previous post, an iPad education initiative may enable a student in Oxford, Mississippi to take a class offered in Oxford, England.
Potential scope of Apple’s “killer app” for education
To summarize from my previous posts, the iPad’s ability to combine textbooks, lectures, class materials, course notes, class work and reference materials in an interactive, networked device could make the iPad a handheld university, a portable and immensely powerful learning platform. Combined with an expansion of Apple’s iTunes University, iTunes distribution network, and working arrangements with textbook publishers and universities, the iPad could enable Apple to become a leading brand of education. The “killer app” is the integrated system (and ecosystem) that Apple brings to the table: the affordable, portable iPad, operating software, apps, partners, iTunes ecommerce for purchasing textbooks and other learning materials, iTunes U for courseware distribution, networking and infrastructure. All this could conceivably power campus learning, distance learning, and elements of non-university schooling as well. The whole soup to nuts.
Why the iPad needs to make an impact in education
After the iPad launch many commentators called the iPad the definitive media consumption device, perfect for web browsing and for buying music, videos, movies, books, and newspapers from Apple’s online stores. This is the iPad as a (mostly) passive device. It creates consumers who sit there and buy things, much like traditional TV.
While there’s obviously great profit potential in such a consumption-focused device, is that the legacy Apple (or Steve Jobs) desires—to create the second incarnation of the boob tube?
I don’t think so. Apple often describes its products as making contributions to culture. To quote Apple COO Tim Cook:
We believe that we’re on the face of the Earth to make great products, and that’s not changing. We’re constantly focusing on innovating. We believe in the simple, not the complex. We believe that we need to own and control the primary technologies behind the products we make, and participate only in markets where we can make a significant contribution.
If you want to make a “significant contribution” you don’t settle for a digital consumption device. You aim higher, to a proactive learning platform that improves education and pays cultural dividends many times over, across every country in the world. That’s how you build the brand.
Apple’s iPhone has raised the bar for mobile brands in many ways, but perhaps Apple’s biggest iPhone brand advance is its ecosystem of developers to keep new mobile apps coming at a furious rate. To compete with the iPhone you now have to have your own app store and a powerful developer ecosystem crafting waves of irresistible apps. That’s a fairly high hurdle. Palm, Nokia, Research in Motion (BlackBerry) and Google (Android) are all chasing Apple in the brand ecosystem race.
Brands are moving from the showcase to the commons
I would argue that what is happening in mobile brands today presages what will happen to brands in general as mobile apps become the currency of culture. Going forward, the true measure of a brand will be how it transitions from the showcase to the commons, as brands use mobile platforms to enrich and extend social networks. As I’ve noted previously, brands will be recast as applications, as unique ways for customers to get things done. Brand creativity, imagination, moral sense and powers of expression will be embedded in the apps, not imprisoned in a package or an ad. The more these apps surge forth from the ecosystem, the more universal the brand.
Your brand ecosystem is a big part of your identity
In the mobile universe, your brand ecosystem now makes up a large part of your identity. Customers know you, experience you, and view you through your ecosystem. It tells the world how alive you are, and where you’re going. You can’t really be a “smartphone” without one.
Palm: a slow launch for the brand ecosystem
Palm still faces major brand ecosystem challenges for its new Palm Pre smartphone. It is paying the price in reduced sales. Eric Savitz at Barron’sreports on market research that says Pre sales will likely fall below estimates, raising questions about Palm’s ability to compete with Apple and RIM (BlackBerry). A key factor is Palm’s slow development of competitive apps for the Pre, and the slow roll-out of the Palm Pre Application Catalog. These are critical ecosystem issues.
As the flood of iPhone apps demonstrates, your brand ecosystem helps you innovate, too, keeping your brand fresh. There’s something new every day.
For Palm, this is another critical issue, as noted by the Globe and Mail:
“[Lack of apps] is going to be a huge Achilles heal for Palm,” said Carmi Levy senior vice-president, strategic consulting with AR Communications. “What it’s done is compromised the company’s ability to capitalize on the bump that you usually get when you launch a new device. So there’s huge amount of publicity surrounding the launch and then a couple months later things settle down because you’re not getting headlines like you used to get. It’s during that critical phase that application availability drives attention.”
Apple has changed the brand game in mobile
Apple, of course, has changed the brand game in mobile. Customers now expect handsets to be slick mini-computers, with the ease of use and applications of advanced computer technology. Handsets are now exemplars of innovation, not ham-fisted compromises. That places the mobile game clearly on Apple’s turf. It makes the brand ecosystem element all the more critical for Palm and other mobile players. To out-brand Apple you have to out-app Apple—somehow.