Tag Archives: Nokia

Why did Microsoft buy Nokia?

Why did Microsoft buy Nokia?1 Why did the company choose to spend €5.44 billion of its cash reserves to buy a company that was already a close partner for Windows Phone, and which it had committed to pay billions in “platform support” cash2 to use its operating system?

Here's the official reasoning:

Building on the partnership with Nokia announced in February 2011 and the increasing success of Nokia’s Lumia smartphones, Microsoft aims to accelerate the growth of its share and profit in mobile devices through faster innovation, increased synergies, and unified branding and marketing. For Nokia, this transaction is expected to be significantly accretive to earnings, strengthen its financial position, and provide a solid basis for future investment in its continuing businesses.

The part about “faster innovation” is curious. Nokia never had a problem with innovation: it holds one of the largest patent portfolios in the tech industry, and collects billions of dollars per year to prove it. But what it always had was a problem with bringing that innovation to market. Nokia engineers were talking about single-button touchscreen smartphones years before the iPhone, but failed to bring their brilliant prototypes to market.

And failing to bring great concepts to market is something that Microsoft, too, has been guilty of. Potential innovations like the Courier floated around and then died. The company had prototype ereader hardware around years before the Kindle, and failed to bring it to market. In both cases, the reason for the failure to bring innovation to market was simple: protecting the Windows brand. If it doesn't run Windows (or isn't called Windows), Microsoft won't ship it – no matter how innovative it is.

What about the other reasons? Marketing, branding and advertising? What “synergies” (read: cost savings) can the two companies find there? Microsoft/Nokia might be able to drive better deals for ads and consolidate its work into a single agency, but there aren't billions of dollars of savings to be made there.

Marketing? If Microsoft wants to sell anything, it's going to have to ramp up the quality and quantity of marketing. Samsung outspends everyone else enormously when it comes to marketing, and even the cash reserves of Microsoft won't make up for a gap that big. Can Microsoft really compete with a company that spends more on marketing than Apple, HP, Dell, Microsoft and Coca Cola combined?

Maybe it could if the quality of its marketing was up to Apple's standards. But take a look at the advertising and marketing work for Surface and I you'll see why I have doubts it can deliver. When you create a tablet computer and choose to emphasis how great it works with an optional £100 keyboard, you're either trying to cover up the product's deficiencies as a tablet, or utterly missing the point.

Branding? Only if you ditch the Nokia brand. Otherwise, you have two brands, which is confusing and expensive. And given the license to “Nokia” that Microsoft has paid for, unlikely.

So if the “official” reasons make such little sense, why did Microsoft buy Nokia? Ben Thompson makes a good case that the Microsoft/Nokia deal was driven by an immanent switch to Android – or bankruptcy:

I theorize that Nokia was either going to switch to Android or was on the verge of going bankrupt. (I suspect the latter: part of the deal included €1.5 billion in financing available to Nokia immediately). And, had Nokia abandoned Windows Phone, then Windows Phone would be dead.

Which brings us back to that point about how Microsoft's failure to bring innovative products to market could be ascribed to its determination to protect Windows. Nokia was either going to go down the tubes, or admit defeat and move into the Android camp. This would have killed Windows, and condemned the Windows brand to the PC ghetto. And Windows is sacred: a few billion dollars of offshore cash (which Microsoft couldn't bring back into the US anyway without incurring lots of tax) is a small price to pay to “protect” the sacred cow of Windows.


  1. Yes, I know it's only bought the devices and services divisions and that the new/old Nokia will continue on. But to all intents and purposes, Microsoft has bought what most people think of as Nokia. 

  2. It may actually turn out that the billions in platform support would have ended up more than the amount Microsoft paid for Nokia. Looked at purely in this way, this is a good deal. 

Symbian is dead! No, wait, Symbian is not dead!

Symbian is dead! All hail Meego!

“Nokia’s premier range of devices, the N Series, will bid adieu to the Symbian operating environment and go MeeGo full time after the introduction of the N8. That’s what we’ve just heard directly from the Finnish horse’s mouth”

But wait!

“Nokia will naturally keep Symbian around — of course there’s a whole Symbian^4 to come — but will utilize it on more mass market devices as it seeks to push smartphones further down the product hierarchy.”

Argh!

Which platform do they expect application developers to focus on? The mass-market Symbian or the more powerful Meego? If people think Android fragmentation is bad they should remember: At least Google isn’t actively trying to fragment its own platform.

Smartphone market share

Apple smartphone growth puts competition in the shade

Canalys has released its smartphone market share figures for Q1 2010, and the big winners are undoubtedly Apple, HTC and Motorola, all of which posted treble-digit growth in unit shipments compared to the equivalent quarter of 2009.

Smartphone market share

To put that into a little context: Apple’s worldwide market share increased by 4.4%. This increase is almost the same as Motorola’s entire share of the market, even after the excellent growth it showed over the quarter. Continue reading

CrunchGear catches the TechCrunch bullshit bug

Apparently, Apple is now responsible for via killing hardware innovation throughout the industry, at least according to John Biggs.

Remember when Apple bought up all the Flash memory? Well, Apple has also cornered the market in touchscreens. A few months ago I spoke to one inventor who had a horrible time trying to grab capitative touchscreens for a project, even at the smaller electronics markets. Manufacturers knew that something from Apple was about to drop so they drove up prices, resulting in a standstill in innovation.

By pricing the iPad at about $500 on a good day, Apple has forced Asia’s hand. The company clearly did plenty of deals with Foxconn and the rest of the suppliers down the line and while folks like LG are making a mint on screens and other components, they have essentially closed the spigot overseas leading companies like Asus and Acer to announce that they won’t try to compete.

This also explains why other companies just couldn’t get past the resistive touchscreen for so long. Suppliers knew that Apple was sniffing around and so they kept prices high. As a result we had almost two years of me-too garbage coming out of Samsung, Sony, and Nokia until – at long last – the smaller touchscreens are ubiquitous.

First: Where’s the actual evidence that Apple ever bought up all the flash memory? Sure, there was a rumour they had bought a vast amount of supply. But as I remember it, other manufacturers seemed to have no problems shipping the hundreds of products which also feature flash memory. And prices for flash devices as a whole came down.

Second: high quality capacitive glass might well be in short supply. Apple might well have bought up a lot of supply from key manufacturers. And John’s friend who wanted 100 or 1,000 panels for whatever his project was might well have found it hard to buy them in those numbers.

But do you seriously think for one second that if Nokia or Samsung (who MAKE panels) or any other major player wanted to launch a product and went to a manufacturer with a potential order for 10 million panels, they wouldn’t find a way to get what they wanted?

If Nokia went to a manufacturer of capacitive touch screens and said “Hey, we’d like to buy lots of them. By the way, we sell three times as many phones as Apple” who do you think that manufacturer would make first in line for supply?

Sure, it might take some time to make it happen. But the biggest customers get the best deals, and in LCDs Apple is by no means the biggest customer.

Third: Apple is a master of supply chain management. One of the main characteristics of the Steve Jobs era is that, thanks largely to terrific work by Tim Cook, it does not hold much inventory. And that includes inventory of parts. The idea that Apple is buying up a year’s worth of any kind of part is laughable.

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Nokia app store passes one million downloads a day mark

Brand Republic:

Nokia‘s Ovi application store is now attracting one million downloads a day around the world, the company has claimed.The store was launched in May last year, allowing the handset manufacturer to join the progress in apps being made by rivals such as Apple and by Google’s open source Android platform. Ovi Apps include Ovi Maps, as well as business tools and games.

To put a little context around that, Apple is currently running at about ten million downloads per day, from an installed base significantly lower than Nokia.

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2009: The year tech blogging died

Most years are full of idiocy. But I think I can make a decent case for this year being the worst on record, at least from the perspective of writing about technology.

This was the year when tech writing plumbed new depths of stupidity, repetition, and sheer unadulterated circle jerking. It was the year when blogs picked up each other’s stuff, no matter how ridiculous, and strove to take it to the next level of dumb. You get what you pay for – and with tech writing, nothing could be more true.

There were three perfect examples of the tech blog world’s increasing descent into infantilism and irrelevancy. These were, in no particular order, the CrunchPad; the Apple Tablet; and pretty much everything written about the iPhone and market share.

Example One: The CrunchPad
TechCrunch – which almost defines awful tech blogging on a daily basis – was guilty of probably the worst example of narcissistic stupidity with its foray into actually trying to make a product.

Now making products is hard. Very hard. I have nothing but admiration for people who get up off their behinds and ship a product, because it’s a tough thing to do. Even the shittiest products usually take thousands of man-hours and thought to bring to market. In fifteen years of writing about tech, I’ve been privileged to know hundreds of people at companies all over the world who have managed to ship stuff. It’s tough.

So when Mike Arrington – the blowhard’s blowhard – decided he was going to create a product – the CrunchPad –  ship it at an absurd price point, and all within the space of a year I was prepared to applaud. Then I remembered this was Arrington we were talking about, and knew without a moment’s uncertainty that it was going to implode at some point.

Lo and behold, it imploded. Why? Because making stuff is hard and writing about it is easy, and Arrington confused being a big wonk in the tiny world of tech media with actually being a serious businessman capable of harnessing the energy to ship a product.

What the CrunchPad demonstrated perfectly was the tech blog world’s hubris and utter lack of perspective. Just because you can bang out 200 words about what some drunk coder from Company X said at a party doesn’t make you capable of defining, designing and building a product – nor of harnessing other people to do so. And, more importantly, making a product which you and your tech blogging friends think is cool is an almost guaranteed method of creating something that no one else in the world will want.

Example two: The Apple “Tablet”
More words were probably written about this nonexistent product in 2009 than about all the great hardware that every company not called Apple actually shipped. Google now lists 1.8 million documents referencing “Apple tablet”. That compares to 20,700 documents referencing “Acer Tablet PC”. One of these companies has actually shipped tablet hardware. The other has not. Can you guess from those Google figures which one is which?

“Nonexistent?” you say. “But I’ve read all the details on TechBlogDailyShit, it’s launching in March with an OLED screen and will kick Amazon’s butt/save the publishing world/cure cancer!”

No. No. No.

What you have read is a load of stuff that bloggers in desperate search for page views have made up on the basis of bar-room rumours, anonymous emails, stuff some random guy posted on Twitter, and just general shit. No one, outside of probably a hundred people in and around Cupertino, have a solid line on what Apple is doing – if, in fact, it is doing anything.

Almost everything you have read about an Apple tablet is geek wish fulfilment, from people who stared at a lot of Star Trek merchandise when they were young and really, truly wanted a tricorder. This is standard practice with a lot of sites that cover Apple: they assume Apple is designing products not for ordinary people, but for them, the tech blogging elite. Well guess what: they’re wrong! Apple wants its products to sell outside Silicon Valley, so it does not take Robert Scoble as its typical customer.

Outside of possibly the Wall Street Journal, almost no media sources are doing any serious investigative reporting to actually find out what Apple is doing either. Why? Simple: Doing real investigative tech reporting takes time, effort and balls. What’s more, if you’re a tech blogger you don’t have to do it because you can write some second-hand speculative bullshit about the “Apple Tablet” and it will get you lots of page views. This will lead to some “blog network” owner like Arrington or Nick Denton paying you more, because you are paid on page views. And all without you having to make a single call or talk to a single real person. Result!

Seriously, the standard of investigative tech reporting now is so low that it makes me long for the days of MacOSRumors. Those guys had standards compared to what we have at the moment.

Example three: The iPhone and market share
Here’s a strange thing about the world of tech writing: there is an obsession with market share winners and losers which isn’t seen in any other product area. Of course, companies talk about their market share in all realms, whether they make cars or sell groceries. But what they don’t do is imagine that they will DIE AS A COMPANY unless they have what amounts to a legal monopoly.

In tech, though, we do this all the time. Nokia is DYING because its market share is falling compared to Apple. Apple is DYING because its market share isn’t as big as Microsoft. Microsoft is DYING because twelve and a half customers have stopped using Office in favour of Google Docs. Google is never dying, for reasons I have yet to fathom – I suspect they are either the golden child, or they simply give out better freebies than anyone else.

Is Mercedes dying because its share of the luxury car market isn’t over 80%? No. Is Samsung dying because it doesn’t dominate TVs? No. Is Bosch dying because it doesn’t sell the majority of drills in the world? No. Only in tech do we play this bullshit game.

Tech bloggers constantly play the zero sum game. For Apple to win, Microsoft must lose. For Microsoft to win, Google must lose. For Google to win, Apple must lose. And nowhere is this more obviously seen at the moment than in the world of the mobile phone.

The funny thing is that prior to the launch of the iPhone, you really didn’t see much writing about the mobile phone market that worked this way. No one wrote screaming headlines about Sony Ericsson dying because Nokia took a few points of market share that month. People didn’t talk about the impending end of Nokia when Motorola was sweeping all before it with the original StarTac.

Only with the influx of “tech geek bloggers” post-iPhone did you suddenly get the same kinds of breathless bullshit that characterised the computer media applied to mobiles. All of a sudden, these guys became experts in the dynamics of the mobile phone market and brought the same depth of analysis to it that they’d brought to things like the question of whether Duke Nukem Forever would ever get released.

The fact that they called the iPhone “the Jesus phone” tells you all you need to know about their lack of perspective and ego. Mobile phones were dull and stupid and now the computer guys were coming along to SAVE YOU ALL.

Earth calling tech bloggers: shut up, you don’t know what you’re talking about.

Where next Columbus?
I’d like to end this post on a high note, but I’m actually not in the mood for happy endings. There are some really sharp writers in the world of tech, but the problem is that they struggle to be heard over all the bullshit. Old hands like Kara Swisher and Mary Jo Foley do real reporting. Newer guys like CK Sample at least know how to write stuff which is entertaining, fun and (mostly!) accurate. John Gruber is always good value, even if he’s wrong rather more often than his biggest fans would admit.

But most of the best tech writing at the moment comes from people who don’t actually do it for a living. Odd posts, here and there, that shine light on to some small part of the tech world that they deal with on a daily basis. I’ll leave you to find them, but here’s a clue: they usually aren’t linked to from any of the big blogging networks.

(Photo by Vicki’s Pics, under a Creative Commons license)

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Why the Google Phone will not be released to the public

Image representing Google as depicted in Crunc...
Image via CrunchBase

The hype machine is in overdrive. Google has confirmed that it has issued special Android-running “dogfood” phones to some of its employees, and every tech blog is speculating about when this will be released to the public and how it’s going to change the world.

I’m willing to bet that Google will not release a Google-branded phone in the next year, unless “Google branded” means what it did with the T-Mobile G1 – a subtle logo on a phone sold by other companies.

Why? Three reasons. Before we get to these reasons, though, let’s look at what people are actually talking about.

First, Google is not getting into the hardware manufacturing business, except in the way it already does with the Google Search Appliance. The Google Phone is, according to all the reports, made by HTC. It’s not built to Google’s spec, but instead is reported to be a rebadged HTC Passion, a phone that’s long been in the development pipeline.

Second, at present (as Google has stated in its public blog post) this is a testbed phone distributed to employees only. Phones like this are designed to be used for development purposes, and are commonly called “dogfood” – as in the old programmers phrase “to eat your own dogfood”, meaning to use software that is still in development to iron out issues. If you’re interested in how dogfooding works, that’s a great description of it in Zachary Pascal’s book about the development of Windows NT.

And, in terms of things we know, that’s about it. So is this a herald of a phone released to the public under Google’s name? I think not.

1. Google’s lack of experience

The first reason is simply that Google doesn’t have the infrastructure or experience to support a sizeable consumer hardware project. It has no support system, no outlets, no distribution – in short, none of the things that what would be a major hardware launch actually requires. Neither does it have any experience in consumer hardware products.

At this point, someone will probably point to Microsoft and Xbox as an example of how a software company can more into hardware quickly. But this ignores the fact that Microsoft had been in the hardware business for years, on a much smaller scale, with mice, keyboards, and other peripherals. This gave it a valuable set of experience of hardware and how to market and sell it. Had Microsoft launched Xbox without this experience, I doubt it would have been a success.

2. Where’s the network in this?

Second, there’s the Network Effect. No, not that network effect – I mean the fact that in order of a phone to be useful, you need a contract from a phone network.

When selling phones, manufacturers face two choices: they can either sell the phone “off contract”, at full price to consumers; or partner with a network, which buy phones (at full price) and sell them with the up-front cost hugely reduced, getting the cost back over the course of the contract.

This is why you can buy an HTC Hero unlocked in the UK for £369, or get it for free with a 24 month contract on the 3 network. Unsurprisingly, very few consumers choose to buy the phone for the upfront cost.

In fact, Nokia has suffered massively from this in the US, where its smartphones have tended to be sold unsubsidised and thus have had minimal impact. People don’t want to pay $500-600 for a phone – period.

That’s why the talk of Google selling its phone off-contract is, frankly, silly. Why would anyone other than the kind of hardcore geek who MUST have the latest phone pay full price to buy one with a Google logo on it, when they can get the same phone with an HTC logo on it for much less money upfront? Even if the HTC Passion becomes the Google Phone exclusively (something I doubt given HTC’s record), there are many other manufacturers of Android phones and many good devices coming down the pipeline – and consumers will buy them if they’re free/cheap upfront.

Some might argue that Google could reduce the up-front price of a Google Phone on the grounds that it will increase their overall ad revenue over the course of the phone’s lifetime. But this would be a massive punt for the company, as there is no way of definitively showing ROI on a project like this. While they could show that X number of ads had been served on their phone, how many of those ads would be served anyway on another Android phone, an iPhone, or even a Nokia or BlackBerry? Working out the incremental revenue delivered, which would be required to work out how much the company could afford to subsidise the phone, would be impossible.

3. What’s unique about the Google phone?

Third, there is the issue of uniqueness. In order to be a success, there would need to be something other than the Google brand that differentiated it. Given that Google doesn’t make hardware, that means one thing: different software. And that’s the one thing that Google cannot do with Android.

Why? Because the moment that it started keeping “good” Android features to itself, it would alienate current and future Android phone makers, and fragment the platform. And that’s exactly what it wants NOT to do at this stage of the game. Android is already beginning to suffer from fragmentation. Anything which increased this will be avoided.

Could it offer additional, branded-phone-only services? Yes – but what would be the benefit to it doing so, over offering the same services on subscription (or even free) to the wider Android audience? Google has historically trod a very careful line with its services, making them as widely-available as possible for a very simple reason: The wider they are available, the greater the potential for ad revenue from them.

Show me the money

Put simply, unless Google has some unique business plan or completely radical technology that no one knows anything about – in other words, unless they have some magic pixie dust to sprinkle – it makes no sense for the company to release a unique, category-dominated Google Phone. We might get an HTC Passion, Google-branded in the way that the T-Mobile G1 was, sold through networks – and hey, that might be a very good phone. But it won’t be anything like the predictions we’re seeing now.

Remember when the iPhone was early in its hype-cycle, and how it was referred to as the “Jesusphone”? What we’re seeing now is a classic case of “Jesusphone” hype, the need of the tech blogging world to find a next big thing and portray it as massively different to what we have. The truth is more prosaic, and more dull. Category-defining products happen rarely, tectonic shifts in markets come along only occasionally. But hey, it keeps the geeks amused.

Update: John Gruber digs a little and finds the Google Phone identifies itself as “Nexus One” (smart reference). He’s also hearing that it’s GSM, but only works on T-Mobile’s 3G band.

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Scoble is right about iPhone users. But the game isn’t over yet

Robert Scoble has a post up about why Apple’s key advantage is the breadth of the app store. And he’s right – but the game isn’t over yet.

85,000 is the headline figure, and what it allows Apple to leverage is a classic “long tail of usefulness”. For me, 99.99% of those applications are (to me) useless crap that would have no bearing on whether I stick with iPhone. Unfortunately for everyone else, that still leaves 8 or 9 apps that act like heavy anchors, dragging me back to Apple’s platform.

But suppose Nokia, Android, or whoever got the developers of those apps to port them to their platform? Great! They’ve won me as a customer. But the problem is that this is a long tail: maybe four or five of those would be common ones, but three or four would be ones which only me and a relatively few other people wanted. So the actual base of applications that are “must haves” would be much wider, in the low thousands at a guess. That’s a long way from Robert’s claim that you need all 85,000, but it’s still a pretty daunting number.

And the experience of Apple in the 90′s, when the Mac was on the back foot, proves that it’s no good having “equivalent” applications – once people get used to having app X, they want app X, not app Y which does pretty much the same thing.

However, there’s a catch: it’s worth remembering that most people haven’t bought smart phones yet. Smartphone penetration remains comparatively tiny, and in the biggest growth markets for phones (Africa, BRIC) it’s still dirt-cheap simple phones which are driving the growth.

And people are used to buying phones on hardware features: the best camera, for example, is a big influence. That’s why Apple has been advertising with “there’s an app for that” – raising a flag for the one big advantage they have. But until you actually use a phone which is infinitely malleable via applications, it’s hard to appreciate why it’s so cool. So it’s not a totally easy sell.

(As an aside, this is the reason why the iPod Touch is so important: it’s a “gateway drug” for the app store. You might not buy an Apple phone, but you might replace your old iPod with the touch… and then find that you love the apps. At which point, you’ll buy an iPhone next time.)

So the game isn’t over yet, and there’s plenty still to play for. But Apple has a head-start, and if I was a betting man, I’d place my money on the iPhone. Essentially, it’s Apple’s lead to throw away – but, as others will no doubt point out, Apple has thrown away leads before.

(Update: John Gruber’s written an interesting response to this, and I’ve written a further response posing what I think is an interesting question: What happens when there aren’t 100,000 apps on the store, but one million?)

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