Predictions on Nokia's new platform strategy: new OS for the US

Nokia must compete on an ecosystem to ecosystem basis.

In addition to great device experiences we must build, capitalize and/or join a competitive ecosystem. The ecosystem approach we select must be comprehensive and cover a wide range of utilities and services that customers expect today and anticipate in the future.

Nokia CEO Discusses Q4 2010 Results – Earnings Call Transcript – Seeking Alpha

These kind of statements are signaling that there will be fundamental changes announced.

Here are my guesses for the February 11 announcement:

  1. There will be a multiple OS strategy
  2. The US market will be the first to see a new non-Nokia OS. I would guess Windows Phone with AT&T.
  3. Low end devices will remain with Symbian due to price considerations for the chipsets, components.
  4. 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.

    • carlitos

      I have it on what I consider fairly good authority that there is an x86-based nokia phone that is close to launch (2011 when I heard about this in Nov of 2010). This was specifically an intel partnership which points to mee-go as the OS. I wonder if this has been dropped?

    • ARJWright

      There will be a lot of angst because of your post; hope you are ready for the fun that Eldar Murtazin had also participated in some weeks back.

      #4 on your listing there is an interesting call, especially since Nokia had Maemo, and it was more than ripe for them to do alone as the platform they needed. If that were to happen, it would mean that one tide internally definitely didn't win against the other that was pushing org/attitude changes. Which again speaks to what worked and didn't work in Nokia's execution over the past years.

      • asymco

        #4 is the one I have the least confidence in. I had to put it there because three phone OSs seems too many. Being exposed to Microsoft is a vulnerability that might get some sympathy for extending the MeeGo franchise but I think it's going to be not much more than token support.

      • Maemo was so close to being what they needed but not quite. It's definitely more of a tablet OS than a phone OS as anyone with an N900 will tell you. The UNIX underbelly is too easy to prod at for a consumer OS. Give it to an iPhone user and they'll use 10% of the OS and be confused by the other 90%.

        The problem there is it's not built on Qt and that is Nokia's development strategy going forward and it's a great one.

        As to signs of the internal struggle within Nokia, the lead on Maemo/MeeGo, Ari Jaaksi, left some months back to work for HP. You can either see that as a sign that MeeGo is in trouble or that after 5+ years of developing Maemo but never getting past the 'experimental' product stage, it was time to do something.

    • If that's becoming a reality – 3 OSes, err … ecosystems – Nokia will face a ginormous bill for R&D, support and stuff. Not a nice picture for expenses in the balance sheet.

    • "Meego will be phased out"
      Was it ever phased in?

    • Fred

      LG is disappointed with its Windows 7 results.

    • r00tabega

      #2 is very likely, IMO.

      Nokia didn't hire Elop for his proven management skills… Elop is the bridge to Microsoft, a software/OS vendor that's hungry to get into mobile and has failed on their own.

      Given the love/hate relationship Microsoft has with HP, HTC, Motorola or any of the other manufacturers who've built WinMo/WP7 devices and also Android, I feel Microsoft sees Nokia as a fresh start.

    • AMM

      #4 is very unlikely. Nokia is ready to launch their first MeeGo device in MWC in Barcelona in February and I can't see them backing out of that anymore. Also, I don't think Windows Phone is a long term strategy, but rather a geographical solution of getting something out of the US markets.

    • ayedee

      I doubt this will happen, but sort of fun to think about… On Feb 11 they announce support for Android applications via an embedded virtualization layer, along with a "Nokia Android Store". They keep control over their OS destiny while still being able to "join a competitive ecosystem".

      • Sergio

        You'd think they've had plenty of time to engineer MeeGo 'close enough' to Android to make this option easier than going with MS, wouldn't you?

        • asymco

          I'm pretty sure this was not a decision driven by R&D considerations.

        • what is this fascination with owning your own linux kernel? meego has no ecosystem.

        • Sergio

          It's a matter of control – and of all phone manufacturers Nokia would normally strike me as the least willing to be held hostage by the likes of Google and Microsoft. Maybe they are confident in their cross-platform toolkits and think they can play both Android and WP7 until MeeGo is ready.

        • Hamranhansenhansen

          So you can make something good enough to develop its own ecosystem. It is fundamental to Apple's success. Also, to make profits. Linux represents only a few percentage points of handset profits while OS X represents over 50%.

    • CndnRschr

      North America is an experimental market for Nokia – agreed. Their lack of traction here is palpable. Will be interesting to watch. Is Nokia about to back another dead horse?

    • I see more advantage in Nokia adopting Android than I see in Nokia adopting WP7 for these reasons. Nokia is capable of making excellent hardware which means it can participate at the lucrative high end if its offerings have an ecosystem.
      1) WP7 isn't high end ready yet.
      2) WP7 won't allow customising the UI of the phone
      3) Android will allow UI customisation.
      If slick Nokia hardware ran a nicely skinned UI (see for a tasteful skin on Android that looks nothing at all like Android) Nokia wouldn't be seen as an Andoid phone by punters who will otherwise understand that they can run (in theory) any app from the Android Marketplace. Voila! From the punter's point of view a unique Nokia phone with slick hardware and slick software and the Android Marketplace but looking like no other Android phone. A lot better than where they'd be otherwise.

      • I'm sure I'm being too simplistic about this, but I have to ask: Is hardware really a selling point in the mobile phone industry? Don't people buy a brand or an ecosystem to a much greater extent than a particular processor or screen (or even avoid certain brands regardless of the hardware – think Apple-avoiders or Apple-only users)? A phone is a phone in most people's eyes. The question is not what it runs on but what you can do with it or what you perceive you can do with it. And can companies really differentiate themselves with high-end hardware? Apple has the Retina display and other manufacturers have keyboards or larger or smaller screens. But none of the manufacturers listed above have unique access to processors except for Apple. If they are running Android, they still have to run on hardware to Google's specs (or am I wrong about this?) and all the manufacturers will be competing for and with the same basic innards of the phone. A slightly larger screen size or inclusion of physical keyboard isn't much differentiation.

        • Depends on the "customer". A few years back carriers in the UK were refusing to stock certain handsets because of the amount of returns they were getting so yes, hardware is important to some customers.

          Most of the phone manufacturers customise their own silicon taking ARM cores, adding or subtracting bits and getting Samsung, TI or whoever else to make it. Apple is no different to Nokia there except in marketing. The A4 is essentially a Samsung Hummingbird as used in the Galaxy S sprinkled with an Apple logo.

    • this has been my view for a while now. I think meego will be deemphasized and they will see how it goes on a tablet. I think they will try wp7 and be the primary enterprise partner for msft in the USA. I think elop is going to cut a deal with msft that gives him some control of what he can put on the wp7. He wants his services and probably a cut of the search revenue to go with bing. meego and symbian on phones will not fly in USA. symbian will continue to get fixed till it can stand up to android and people won't laugh.

      • As far as I can tell, it's only really the US tech press that are going apeshit over a MeeGo powered phone largely because they've got some irrational dislike of Symbian. More sensible people think its going to be used in exactly the same way as Maemo – ie. in Internet Tablets.

    • Bob Shaw

      In US, the smart phones is a more matured category with 4 dominating OSes (iOS, Android, Windows Phone 7 and Blackberry). Also success of the smart phone in US requires support from the carrier as most smart phone purchases are postpaid. There are four major carriers in US with two dominating the high end e.g. Verizon and AT&T. From a carrier perspective, it may be more attractive to support new smart phones that use one of the existing OSes. Also in the prepaid world, Nokia already has the N8 available. All in all support from the carrier may be the reason if Nokia chooses to introduce a Windows Phone 7 or an Android based smart phone at a carrier.

      As far as tablets are concerned, the role of the carrier is not that significant. Besides it is a new category (about 1 year) with only one dominant player (iPad), So new entrant has a good chance of success with a new OS. RIMM's upcoming Playbook tablet also has a new OS. Therefore Nokia's MeeGo tablet has a chance to succeed solely based on its merits without worrying about name recognition of OS. So Nokia may go for tablets with its new MeeGo OS jointly developed with Intel. Also as Horrace pointed out that Tablet is an extension of PC, so the Intel name recognition in PC should help with the MeeGo tablet.

      • carlos

        i would not put windows 7 in this group yet.

    • Steve

      Nokia is toast. There is no path back to prosperity except to maybe buy their way out, and the missed that chance with Palm.

      Nokia has been a deer in headlights for 5 years and it’s over. RIM will see a similar fate, but at least they are trying to fight back.

      • Palm were and still are insignificant except for their patent portfolio. Nokia didn't need another OS that was less technically proficient than their current OSs.

    • WaltFrench

      The ecosystem comments are interesting, a sharp contrast to their recent decision to shutter the Ovi Music Store.

      OK, assuming music is part of a phone's ecosystem, who has a music store that needs some volume?

      Down to one company, AFAICT. The language is not encouraging that they have found a plug-in ecosystem for Meego.

      In the US, Nokia has only opportunity cost in picking a weak partner. In their bread-and-butter market, they say they want differentiation from the coming surge of smartphones (mostly, Android).

      Here's an easy prediction: whatever they do, the decision will be cited as the reason they get bought out—go down in flames, as Palm did—in 6–24 months. Nobody will remember that 4 years into the iPhone revolution, Nokia still did not have software and ecosystem with which to compete.

      • Nokia have NOT shuttered the Ovi Music store. It's at

        What they did was kill off their Unlimited subscription service. ie. They killed off their Zune Pass style offering leaving only their iTunes Store style offering.

    • gctwnl

      If they do this, they have given up on having their own ecosystem. It tells the world that they do not trust their own capacity to build and operate such a system. It lacks a vision on how the user experience of a Nokia-smartphone user must be (as that is going to be sourced from the outside). It tells the people working there that the management are accountants more than entrepreneurs.

      "Nokia must be able to maintain sustainable differentiation" doesn't sound like joining WP7. And the N8 was supply constrained also does not point in that direction. But we'll see on the 11th. If they talk about "catalyze, build or join" and expand on that, even teaming up with Google is not out of the question. Google could use some IPR ;-). Android could be for Nokia what Darwin is to Apple. something to build your proprietary stuff on. And with Nokia the RoW leader, Google could protect their advertising turf over there. It will be difficult for Google to do this with a straight face, though ("open… (cough!)")

    • ChuckO

      What was title of your post about the Android being the OS of the hardware losers? I have one for you if you decide to write one specifically about Nokia going with Windows Phone in the US: A Confederacy of Dunces.

    • Weego!

    • KenC

      I came to the conclusion today that Elop's hint at a new OS meant WP7, and not Android. What made me conclude that were the numbers for WP7. They originally announced shipping 1.5M WP7 phones in 6 weeks. Some part is to fill the channel in 30 countries and 60 carriers. Then they announced the other day that 2M WP7 phones had shipped by quarter end. That means, 500k phones were shipped to carriers in the 5 and a half Xmas shopping weeks. Either sales slowed dramatically, in the busiest shopping season, or sales have been slow all along. It seems reasonable to assume somewhere between 500k to 1M WP7 phones have shipped. That's terrible for a Microsoft launch with a marketing budget of over $100M.

      Realizing that, I came to the conclusion Microsoft would need Nokia as much as Nokia needs Microsoft. Ballmer won't blame WP7 for failing. He'll blame his OEM partners just like he blamed them for the PlaysForSure failure. He'll come up with the Zune Redux strategy where he decides they need a quality manufacturer who can make great handsets. Enter Nokia. They make great hardware, that Ballmer thinks can show off their great software. Nokia needs to improve their performance in the US where Microsoft has its strength, and Microsoft needs to improve its performance internationally, where Nokia is particularly strong in BRIC countries.

      I think this works because both companies will decide they need each other. Anyway, that's what occurred to me after reading some of Elop's hints earlier today.

      • r.d

        My guess would be a bidding war between Microsoft and Intel.

        Intel also needs a partner for their chips for phones and tablets.

        It is going to be fun watching this scenario come true.

      • Tatil

        Microsoft is not categorically against hardware and software integration. It is doing that well with Xbox and still putting in some effort into Zune. I can see MS buying a phone maker, although Nokia might be too big. They tried it with Danger, but now that it failed, MS may try again. Motorola might be a better fit though. It does not have a large OS development team that will become redundant and it does not have a large low end phone business that is lucrative, but strategically insignificant for MS.

      • It would surely only benefit Microsoft. Microsoft 'shipped' 2m WP7 licences of which I'd imagine a fair chunk are still in stores and not sold. Disaster. I've never seen ANYONE with a WP7 phone in the UK.

        Meanwhile, Nokia sold 5m Symbian^3 handsets last quarter and would have sold more if they were constrained by supply issues.

        Also, I don't get the call for Microsoft as an ecosystem. Nokia phones already support Exchange, in the USA they support Zune Pass and usually come with MSN clients. App development/stores? Ovi is already factors bigger.

        • KenC

          I know most think that Elop will choose Android if he chooses another OS for their high-end phones, but I think as Horace points out, you need to read the transcript carefully, where he stresses the weakness, particularly in the US. While Android is successful in the US, adopting it would only give them also-ran status. Adopting WP7 would put them at the start of WP7 adoption. They probably could negotiate a nice subsidy from Microsoft, as Ballmer wants to get in the smartphone game, as much as Nokia wants to stay in it. I think the two pieces fit too nicely for it to be anyone else.

    • They need to use Android or they will be toast.

      Nokia is the biggest phone maker in the world, they make about half a billion phones each year, it's insane. The thing is, Nokia makes phones that sell at an average below $20 each, most are being sold in developing countries actually. And even though Nokia makes about 15 times more phones than Apple, they make less than 15 times the profit that Apple does.

      Nokia could make the industrys best sub-$100 Android phones, at that price with no subsidy or subscription contracts required. That would completely disrupt the whole iPhone and high-end Android and WP7 market in one swoop. That would focus the market in the area where Nokia is best, at making small margins and large volume.

      If Nokia CEO doesn't go 100% full speed on Android, he is a moron, nothing more.

      • Nokia's ASP rose from €65 to €69. Their smartphone ASP rose from €136 to €156 in the last quarter. Far from the $20 price you suggest.

      • asymco

        Nokia mobile device ASP was €69 or $93.15 in Q4 2010, up from €64 in Q4 2009 and €65 in Q3 2010.

        I suggest you also re-calculate the ratio of the profits.

    • unhinged

      Actually, I think that the need for differentiation means avoiding both Android AND WP7. That leaves HP as the most logical partner – HP said they're not going to use WebOS in phones (but will put the software in printers and other devices), meaning that a deal with Nokia would be win/win. Nokia can also offer HP the branding rights to overcome the US resistance to their existing offerings.

      I think it would be a cost-effective experiment, anyway. 🙂

      • asymco

        WebOS is an interesting alternative, but probably not a real option. The first is because it's not available for licensing (though that might change) the second is because Elop stated repeatedly that he wants to join a competitive ecosystem. WebOS is undeveloped while Windows Phone is underdeveloped.

    • Tatil

      It is one thing to have multiple OS for phones with vastly different capabilities. Symbian for low end, MeeGo for smartphones is OK. However, I doubt Nokia can successfully support more than one smartphone OS. It will be a mess, neither one will have enough resources. Apple is months away from its second generation tablet and fifth generation iPhone, while Nokia is still trying to figure out which way to go… Sad…

    • ste

      Where is "5. High end devices outside the US" in this list?

      • asymco

        Good question. My guess is that Nokia will stay with Symbian for non-US markets for the time being.

    • Sander van der Wal

      MeeGo is dead.

    • arvleo

      For Nokia in emerging countries Ecosystem & Brand are the way to go.
      1) They till recently( best my knowledge) were still selling a ~ 1 million phones a day
      2) Nokia's support for operator billing in 127 countries and 91 operators, potential customers in emerging markets can actually buy the applications, even if they don't have (or want to use) credit cards
      3) Would probably concentrate on low end segment where they have built apps(easy to use for illiterate farmers) to lock in customers as switching cost would be very high due to "un"learning curve once they are used to the UI. Customers who are not educated find it very difficult to switch to new UIs and if Nokia does a good enough job they would stay.
      Of course all this means low margin volume sales…but at least they are better than none.

    • Nokia needs to get up from down below, there aren’t almost any good Nokia smartphones, where’s Windows7 on Nokia? They keep on going on Symbian which is really bad OS… Time will tell what the future of Nokia will be.

    • Why do you think WP7 is the likely candidate?

      It's not sold well (2m licences), has less features than Symbian and has less apps. It's ecosystem is way worse than Ovi. Unless Microsoft are paying Nokia to do it, I can't see the benefit to Nokia. WP7 is low end software on high end hardware – pointless.

      If they are to use another OS, and I think that's unlikely, I would bet on the one horse that is showing major growth, Android. I would guess they'd do it via an Android compatibility layer running on MeeGo which has already been written and available on the WeTab MeeGo tablet.

      • asymco

        US market weakness. Elop mentioned it several times in the Q&A. I don't think Nokia would touch Android with a ten foot pole due to IP issues.

        • But WP7 is weak in the US also.

          Good point about IP issues with Android.

          Nobody has mentioned RIMM as an ecosystem partner yet. Outside possibility maybe with QNX having a Qt port as well.

      • ChuckO

        Going with Windows Phone 7 for the US initially sounded like madness to me but it may make sense AND signal Nokia's desperation. They need a way to get some phones offered through Verizon and AT&T maybe WP7 is the most efficient way to accomplish that. Try to get some traction. It's a Hail Mary pass of a strategy but probably the best they can do in the US.

    • I think one twist is Qt. I believe Nokia would probably be interesting in choosing a platform where the Qt story fits well. At least for Android and WebOS there seems to be some Qt development going on.

      On the services side WebOS could be nice match. Think for example Nokia Maps, music and other services for WebOS.

      And if Nokia can't survive alone, then how about merging with HP? HP is already on both enterprise and consumer markets. Nokia Networks could also somehow fit into the picture. In developing world Nokia has strong brand. Maybe use that brand to get market share for low end HP equipment (think netbooks etc) there. HP for enterprise and high end, Nokia for consumers. HP has a history of pulling through this kind of mergers..

      As a result, Nokia would probably drive down the development on Meego side. Symbian and Series 40 would still fly. Qt would become the way to develop software for WebOS, Series 40 and Symbian.

      • Qt is too big to fit on S40. It doesn't run well on Symbian^1 or the older 3rd Edition phones like the E72.

        WebOS might gain from adding Ovi services but what would Nokia gain (other than money for providing services). WebOS is so tiny as to be insignificant to their bottom line.

    • RobDK

      I guess the basic problem for Nokia is that, even after 4 years since the iPhone’s introduction, they have yet to develop a coherent top end ecosystem strategy, let alone bring anything to market!

      The consequence is rapidly falling margins and profitability, which again reduce necessary R&D.

      It is pretty clear that Elop’s 11th Feb presentation will be make or brake for Nokia, and that some of the outcomes will be a humiliating bitter pill to swallow for many Nokia employees and supporters.

      • They have a top end strategy, it's just not delivering as fast as the others. S40 on low end, S^1 (still) on middle, S^3 on mid to high end, MeeGo on tablets, Ovi services on the back end. Qt for cross development. It's not working and they need to step up a gear as Elop said "change faster".

        Their margins were down 0.9% from Q3. Profits UP 10%. ASP on their smartphones up €20 or so btw. Not as disastrous as some paint.

        Their results weren't bad but in context with what everybody else was doing, not great either. Nokia growing their smartphone sales by 40+% would normally be great but when almost everyone is doing 80+%….

        • Problem is Symbian (whatever symbols you jazz it up with) just doesn't cut it and maybe never will

        • I could say the same about any of the current OSs with just as much flippancy.

          They all have issues that make them more or less acceptable to individuals.

        • "I could say the same about any of the current OSs with just as much flippancy"

          But on iOS, Android, WebOS and MeeGo you would be plain wrong (can't comment on WP7 and Bada as I have never used a device running them). They do cut it. But only iOS and Android have the vibrant elopsystems.

          I don't think it's flippant to criticize Symbian. It truly is pants. You'd have to be a peculiar kind of contrarian to think otherwise.

          The company needed to get behind Maemo a year and half ago and didn't. Now it may be too late

          (PS I am a 15 yr Nokia user, currently with an N900, but just about to swap to a Blackberry)

        • I'm not being contrarian. I have genuine reasons why I prefer Symbian phones. "It truly is pants" is being particularly flippant about something.

          iOS lacks features I use every day such as SIP, a full bluetooth stack and true multitasking. It's picky about which media it supports too. I'm used to just shoving DivX files and MKVs on a USB stick and plugging it in to my Nokia C7. As both of us are N900 users (it's my second phone but without a sim in it), you'll appreciate the comparison and why the iPhone does not cut it there. The walled garden, tethering via USB only and expense also rule it out. Lack of over the air syncing unles you spend money on MobileMe. I could make a bigger list if you'd like.

          Android fares better for me especially now they've added SIP in v2.3. However I don't really want a 4" screened brick with poor battery life. The email client sucks (yeah I kow, use K9 or Gmail). I don't use the Google ecosystem at all – The only thing I use is Search and the Webmaster tools. I used an HTC XDA back in the early 00s and it was the biggest piece of junk I've ever used.

          Blackberry – Never been interested in it. No need for BBM or anything like that.

          WP7 – even more restrictions than the others, no multitasking and I'd bet the Mac sync support is awful.

          WebOS – Irrelevant.

          Bada – never tried it. Samsung switch OSs so often that I'd not trust it to stick around. Samsung have an awful record on Symbian for not updating firmware.

          I held on to using a SE P910i for quite a long time as there was nothing better until I HAD to buy something and the Nokia E71 was the least bad of the bunch. The hardware was superb – solid with huge battery life.

          I nearly bought an N900 next but it's just too chunky for me and the battery life sucks. And a pen driven resistive screen is so 2006. I had one on trial for a while and couldn't live with it.

          So, it was a Nokia C7-00 next and it's pretty much perfect for me. Solid hardware, good battery life (2 days use is not unusual) and the S^3 UI is pretty slick to use – not fancy like some Android phones – but workman like. Yes, it has issues such as a limited email client, ancient browser and the default touch keyboard is poor but these are all being worked on. It has the best twitter client on any platform. JoikuSpot is a life saver too. Syncing with my Mac is flawless OTA. SIP works well enough once you get past Nokia's awful settings app. Ovi Maps is easily the best sat nav app on any platform and I use that a lot.

          I then picked up an N900 for peanuts (£175). Part of my job is linux server admin. The fact I've VNC, a full ssh client(and server), a proper keyboard and a browser that is as good as a desktop browser is worth it for that alone for me. I wouldn't use it as my only phone though – it's too big and battery hungry. It's in a case in the bottom of my bag usually ready for remote admin work using the C7 as a hotspot if needed. No SIM in it.

          As I said, "They all have issues that make them more or less acceptable to individuals" and I have specific needs that aren't addressed by the other platforms. I would think Android will get there fairly soon, though I'd rather not be tied to Google's services, and Apple never will get there as they'd rather keep their phone dumb.

          N900 to a Blackberry – now there's a culture shift. Geek to teenager.

        • John Coogan

          But who cares what phones you prefer and why? That's not the question here.

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    • If they phase out MeeGo in smartphones this won't solve their problem at the high end and adopting WP7 without also dipping a toe in the Android water would be nuts.

      My prediction is that they will try to get behind MeeGo this year, while preparing a contingency plan of WP7 and Android for 2012, possibly led by some experimentation in the US market this year (per your AT&T prediction).

      Anyway. Anssi's urine trap beckons.

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