August 2011
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Month August 2011

Entries 5 Total

Nokia vs. Android

Aug 22, ’11 3:15 PM

Two years ago Nokia sold 30% of its smartphones in Western Europe. Today it sells 15% in that market. Its unit shipments went from 5 million to about half that and its market share went from 55% to 11%. Its rank in the market went from first to fifth.

The fall is exceptional and dramatic. The two charts below show smartphone market shares. The top chart shows global share and the second shows Western European smartphone shares (European share data sourced from IDC).

The other perspective is shown the the following chart which shows actual units shipped.

Continue Reading… Comments (81)

HP’s decade-long departure

Aug 19, ’11 10:35 AM

HP’s sudden departure from a business model that has sustained the company since inception is symptomatic of the passing of an era. Yesterday HP announced that it would exit the PC and tablet computer business, focusing on higher-margin “strategic priorities of cloud, solutions and software with an emphasis on enterprise, commercial and government markets.” In other words, HP is fleeing upmarket, away from a core that it will abandon to device makers.

HP management conceded that the disruptive impact of the iPad forced their hand but that hand was already quite weak from a decade of over-serving the market. The last decade offered plenty of opportunities for incumbent PC companies to adjust to the realities of mobility. However only one computer maker made the transition.

Why is that?

Consider how HP and Apple faced the changes in the PC market almost exactly a decade ago.

  • On September 3, 2001, HP announced that they would acquire Compaq.
  • On October 23, 2001, Apple announced the iPod.

The rest, as they say, is history.

Continue Reading… Comments (225)

The Critical Path #4: Acquisitions – 5by5

Aug 17, ’11 9:02 AM

The Critical Path #4: Acquisitions – 5by5.

Ryan Irelan speaks with Horace Dediu about Google’s planned acquisition of Motorla Mobility and the potential ramifications for competitors.

Comments (65)

Google’s Strategic Mistakes Drove Motorola Buy – Horace Dediu – Harvard Business Review

Aug 16, ’11 3:17 PM

My thanks to Eric Hellweg, HBR editor, for offering the opportunity to write in the Harvard Business Review blog and the help in editing and sharpening the message.

You can read the article here:Google’s Strategic Mistakes Drove Motorola Buy – Horace Dediu – Harvard Business Review.

Please use the forum at hbr.org for discussion.

Comments (10)

The perils of licensing to your competitors

Aug 15, ’11 12:02 PM

Google’s acquisition of Motorola is clearly designed to be an acquisition of Intellectual Property rather than an entry of Google into the phone business, but the impact on the business will be felt in many ways.

It is surely going to send some Android vendors scrambling. The situation is not without precedent however. The history of governance and ownership of Symbian shows how the licensing of platforms by licensor competitors leads to unintended consequences.

Symbian was formed to be governed in a way very similar to the original Android via the Open Handset Alliance. The company was owned by a consortium of phone vendors.[1] The shares were not equally distributed however with Nokia holding a larger share (though not a majority).

Although nominally involved in decision making, the smaller shareholders never felt entirely comfortable with the arrangement and over time some sold their shares and left the group even though they continued to license the OS.

Eventually Nokia ended up acquiring the company outright and open sourced the code. However, by then the product was obsolete and the only licensee was Nokia itself.

The lesson (and warning) was that a licensor that is also a licensee makes other licensees uncomfortable. The supplier is also a competitor. This is classic channel conflict and never ends well.

Open or not, with or without equity, these arrangements are always unworkable.

So Google’s promise that

“This acquisition will not change our commitment to run Android as an open platform. Motorola will remain a licensee of Android and Android will remain open. We will run Motorola as a separate business. Many hardware partners have contributed to Android’s success and we look forward to continuing to work with all of them to deliver outstanding user experiences.”

seems naive at best.

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Notes:

  1. Before its outright purchase by Nokia in December 2008, Symbian Ltd. was owned by Nokia (56.3%), Ericsson (15.6%), Sony Ericsson (13.1%), Matsushita (10.5%), and Samsung (4.5%). The company’s founder shareholders were Psion, Nokia, Ericsson, Panasonic/ Matsushita and Motorola. Motorola sold its stake in the company to Psion and Nokia in September 2003. Psion’s stake was bought by Nokia, Matsushita, Siemens AG and Sony Ericsson in July 2004.
Comments (192)