Thursday, June 25, 2009

Nokia platform proliferation

Nokia made two major extensions this week to its platform strategies — one in handsets, one in infrastructure. Both are about finding growth in the face of increasing commodization.

For more than a year, I’ve wondered when Nokia’s Maemo and Intel’s Moblin were going to tie the knot. With Tuesday’s announcement, it’s clear that neither side has made an exclusive commitment, but both parties seem inclined towards something more than a dalliance.

Both Maemo and Moblin are Linux-based platforms for mobile devices such as tablets or netbooks. For Nokia this more about netbooks than being about phones. For Intel, it’s a chance to break into the phone segment, which it once tried (and failed) with XScale (which 3 years ago Intel sold to Marvell).

Nokia still has both the highest volume and broadest product line of any cellphone maker, as well as unparalleled global distribution through telecoms operators. Nokia is not going to share control with Google in the commodity (i.e. Open) Handset Alliance, so combining the two similar Linux platforms is a way for it to attract at least a few allies going forward.

However, this muddies the Nokia platform strategy considerably. Unlike its rivals, Nokia had a fairly focused platform strategy with the S40 and S60. Going beyond the limited Maemo experiments could muddy its platform waters considerably. What does it mean for Symbian, the technology it bought last year and is now open sourcing? LinuxDevices is pro-Linux, anti-Symbian, and now assumes Linux will displace Symbian:
The partnership news further suggests that the rumors that Nokia is moving forward with Linux -- and not, it seems, Symbian -- devices that combine MID and smartphone characteristics, are true. It also appears that Nokia will likely focus on Linux for its future high-end smartphones, while leaving a soon to be open-sourced Symbian to handle less powerful smartphones and feature phones.
I think this is wishful thinking on the part of a pro-Linux analyst. Unless Intel and Nokia plan on joining LiMo or Android, the world isn’t ready for yet another Linux-based handset platform.

Instead, the Nintel (Innokia?) alliance will be growing the segment in between smartphones and laptops, which will be distinct devices from either one. Will they make phone calls? Yes, but using earphones and not by putting it to your ear.

In this regard, they are aimed more at the low end of the laptop segment — and thus at Microsoft — rather than the high end of the smartphone segment. Presumably an alliance with Oracle’s will be necessary to support Microsoft Office documents needed by users of these devices. (This may also be aimed at Apple, which has both smartphone and laptop products and is rumored to be working on a tablet-sized iPhone).

Intel hopes this will head off the predicted shift of netbooks from Atom to Netbook. I am not sure that I agree that it will work, since Qualcomm is working hard with Android to extend its ARM-based processors into the Netbook territory, and TI is also working hard to move upmarket.

The other major announcement was that Nokia Siemens Networks is buying Nortel’s CDMA and LTE infrastructure unit for $650 million, less than the $850m it offered five months earlier for a slightly larger product portfolio. This is a consolidation of a fragmented industry that delivers North American market share to NSN, mainly Nortel’s relationships with Verizon and Sprint

It’s not clear how NSN really benefits from the Nortel acquisition, given that the CDMA business is facing end of life (even if existing customers like Sprint desperately want an support path). Although LTE is the growth path for Verizon (not Sprint), Nortel’s LTE efforts never got very far before Nortel gave up. NSN gets some sales contacts as well as 2,500+ Nortel workers, but with it new platforms that it needs to maintain — not necessarily conducive to achieving scale economies.

It appears as though this is aimed at outlasting Alcatel (which now owns Lucent’s CDMA business) and Ericsson in the war of commoditization against the Huawei and ZTE. Based on an earlier interview, reported:
In a recent interview with, Tarek A. Robbiati, the chief executive officer of CSL, Hong Kong’s first-placed mobile carrier, predicted that Chinese vendors will come to dominate the global mobile infrastructure market. “Further consolidation will come in the next three to five years. In the end there will be only three [infrastructure vendors] left, and two of them will be Chinese. The European vendors are just too slow,” he said.
The chauvinism of a Hong Kong operator against European manufacturers would be expected, but Robbiati had a Euro-centric career since graduating from London Business School in 1996 — including work as an equity analyst for Lehman and a finance VP at Orange — before moving to Australia in 2005 and HK in 2007. So if he’s frustrated with European vendors, it’s the voice of experience.

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