On Tuesday my friend David Wood of Symbian published a passionate rebuttal to a Forbes article about how the iPhone has won the hearts and minds of Silicon Valley, while Nokia has failed.
The article by Brian Caulfield aptly portrays Nokia as the Rodney Dangerfield of the cell phone industry:
Welcome to the kangaroo court, Silicon Valley style. Nokia may sell a phone somewhere on this planet every 18 seconds, but among the digerati in the Valley, that doesn't get the Finnish handset giant much respect. Here, the natives are all toting iPhones and BlackBerrys and raving about new horizons on the mobile Web.Unlike David, I think the article is pretty fair — at least from an American standpoint, which is all it claims to be. The article notes Nokia’s global dominance and calls the verdict a “kangaroo court” (i.e. completely unfair).
Tech blog impresario Michael Arrington [said] "I believe that Nokia and Symbian [the software that powers its smart phones] are irrelevant companies at this point," he pronounced from the stage.
Quite a verdict, considering that Nokia sells close to half of all smart phones worldwide (and 40% of all phones) and has 9,200 applications written for its phones. In early July it plunked down $410 million to buy the portion of Symbian it didn't already own.
However, the point of the article is Nokia’s failure to have much of an impact in North America, either with the tech industry or with consumers. Lord knows that it’s trying, by moving its CTO to Palo Alto. It’s also clear that Nokia as the most aggressive US university outreach program of any mobile phone company, with multi-man year efforts at Stanford, UCLA and MIT. But its handset share and mindshare are almost off the radar.
So it’s indisputable that Nokia’s (and with it Symbian) so far has lost in the US market, including the high-end smartphone market that they dominate in the global market. The iPhone and Blackberry are winners and Nokia is an also-ran. The question that the Europeans (and Japanese and Koreans) are asking is: so what?
The so what is that before the iPhone, efforts to kickstart the mobile Internet have largely failed, at least in the developed countries. Operators and manufacturers come up with all sorts of technologies and businesses but they’re not getting adopted.
The iPhone is getting used and is getting the mobile Internet adopted. It’s also winning the hearts and minds of third party software and services — both for the cool factor, but also because it has users that will try these technologies. I know both geeks and housewives that swear by it, just as the Mac is gaining share on Windows in the desktop.
Ease of use is a big deal, and Forbes gets it even if Nokia doesn’t. I will probably never own an iPhone until they end the Cingular exclusive. However, I do own a Nokia E65, which is a pretty good phone, a mediocre PDA and a useless web device. Overall, the S60 user interface lacks the consistency and regularity of the iPhone or even the early Palm PDAs.
The iPhone-like design is certainly the way forward in North America. It’s possible (but by no means certain) that it’s also the way forward in Europe and Asia.
In a standards war, we assume that winning third party developers feeds the positive feedback loop driven by network effects. However, winning third party developers is no guarantee of success. The Mac had cool apps in the 1980s and 1990s but later got crushed by Windows 95. In Symbian, the UIQ APIs had far more apps but S60 sells more than 80% of the Symbian phones (and thus UIQ is being phased out in favor of S60). Palm did a great job of winning ISVs which did nothing to solve its long-term slide in new products (and thus market share).
Most marketing problems have a basis in fact. Successful companies usually assume that marketing problems are because the market isn’t getting their message (NB: Microsoft, Intel) — but often it’s because they’re not listening to the market. Nokia (and its soon-to-be subsidiary Symbian) can continue to shoot at the messenger, or they can respond to the iPhone challenge by making their products easier to use and more compelling.
My hunch is that Apple has at least another year or two before Nokia gets its software act together. (And if Nokia doesn’t, then Microsoft, RIM, LG or Samsung will). So, as when it faced Windows 95, Apple better have something up its sleeve to further advance innovations when competitors catch up to its first mobile phone act.