Predictions on Nokia’s new platform strategy: new OS for the US | asymco.
Here are my predictions from January 27 for the February 11 Nokia strategy announcement followed by the actual quotes from Nokia’s press release: Continue reading “A review of Asymco Predictions on Nokia’s new platform strategy”
The world’s largest PC company just launched a “media tablet[1]”. Conflating the iPod Touch and iPad brands into “TouchPad” HP joins RIM in announcing an integrated OS/device product to compete as a platform vs. iOS and Android (and to some degree even against Windows).
There are others waiting in the wings. Presumably, Microsoft is hard at work to release a tablet-compatible Windows sometime near the middle of this decade. MeeGo is also going through its gestation period targeting Atom-based tablets. John Gruber notes the excitement around tablet platforms in his article about this post-PC renaissance in computing alternatives. I also noted that the end of the PC era was marked by the end of WinTel at CES.
“Focus is about saying no.” This quote is perhaps apocryphal but it’s credited to Steve Jobs. It’s not a novel idea. Many companies chant this mantra but do they really understand what focus implies?
Focus is the antithesis of portfolio theory. Portfolio theory is a great concept. Every pedestrian in New York City has experienced it. While the weather is fine, street vendors sell their regular wares, but when a rainstorm appears it seems everyone is selling umbrellas.
The idea that you keep umbrellas in stock seems very prudent. It’s a hedge that people will need a different product under different circumstances. Maintaining a product portfolio is a way of selecting a collection of products that has collectively lower risk than any individual product. The formulation of this even earned its creators the Nobel prize.
But “focus” is the willful rejection of this theory. By saying no to alternatives you increase risk disproportionally to the reward. If you have the means to maintain a portfolio it certainly seems imprudent not to do so.
So why would someone want to focus?
The answer is that too much diversification is dangerous. It’s dilutive to everything the company uses to create value: its resources, its processes and its priorities. It dulls the mind and tarnishes the brand.
So focus is not just saying no. It’s being supremely confident in what you say yes to. It’s having the ability to call the winners and the losers. A company that lives and breathes product gains this confidence. A company that puts markets or profit formulas first never obtains the confidence to focus, inflates its portfolio and thus risks everything.
Picking up the discussion of vendor share, I used Canalys estimates of platform shares to visualize the effect of Android on the smartphone market:
Continue reading “Android and iPhone: Conquistadors or pioneers?”
The best way to get to the essence of any company is by evaluating its priorities. These priorities are like an unwritten constitution. The analog in theology is dogma which when codified becomes doctrine. In law it’s common or case law.[1] In business, priorities are hard to discern and are usually only anecdotally observed.
At Apple the top priority is the product.
Sounds trivial, but very few companies place product first. Those who do tend to be producing creative works (e.g. movie or advertising studios, companies built around a creative process). Most companies place either production or distribution first.
Placing product first forces the bizarre behavior that Apple is well known for: being innovative and quixotic. It makes them foolish and hungry. Sometimes it even makes them catastrophically destructive to competitors.
The smartphone market has grown threefold in the span of three years. However, as noted previously, the share of units running a licensed OS has not grown dramatically. The following chart shows the vendors’ shares with the same brown/green dichotomy between licensed and unlicensed OS’s.
Continue reading “Smartphone users still prefer branded phones”
The smartphone market grew to about 100 million units last quarter. That’s nearly double what it was a year earlier and triple what it was three years earlier, the year the iPhone made its debut.
Few markets grow this quickly, especially as this tripling happened during one of the worst recessions for a century. 100 million units a quarter is not a small number. The rate at which smartphones are growing makes clear the trajectory of where all phones are going.
As I’ve shown in profitability charts, vendors have been benefiting to differing degrees. The overall smartphone market with individual vendors is shown below: Continue reading “Comparing Share of Growth: Integrated smartphone vendors held their own in Q4”
In a recent post I pointed out that Apple’s R&D was about 2.2% of sales in the last quarter. Bernstein took a look at the R&D for Nokia and presented a chart showing the difference between the mobile industry players in terms of total expenditure on R&D.
I took inspiration from that to plot the Devices R&D for both Nokia and Apple over the entire 2010 period. I also compared that with sales and computed the ratio between R&D and sales.
The result is shown in the chart on the left.
Bottom line: Nokia spent 10.2% of phone sales in 2010 on phone R&D while Apple spent 2.5%.
Bernstein goes on to argue that at least for Devices,
Nokia spent $3.9bn in R&D in 2010, almost 3x the average of its peers, 31% of the industry’s R&D total spending, for an output that we can qualify as visibly disappointing.
To relate the $3.9 billion for Devices into head count, they estimate that Symbian projects employ 6,200 people; MeeGo and Qt 1,800; Services 1,800; and S40 1,800. Hardware headcount is assumed to be 4,700 and 900 more for fundamental research.
People are lining up to call the market for mobile phones. Analysts and amateurs alike are connecting points on charts and predicting with confidence the future of mobile platforms. Consensus is forming that there is no future but a quiescent state. By the acclamation of pundits, the survivors are declared to be iOS and Android. They are also predictably arranged in a way similar to OS X and Windows. End of story.
Except for one thing. Continue reading “Calling the end of innovation in mobile computers”
Prices provide accurate, independent signals about where, when, and how to create and deploy value-creating innovations. The mechanism of free markets signals what should be rewarded and what shouldn’t. When comparing competitors, prices are the best indicators of differentiable positioning.
However, prices are sometimes anomalous and subject to transient market conditions. It’s therefore important to observe pricing over a long time frame.
This chart shows the average selling prices for all phones sold by the eight publicly traded phone vendors (covering approximately 70% of the market) since mid-2007.
There is remarkable stability in the pricing of the competitors. One could argue that only Motorola and LG saw significant swings in price. (Apple’s instability in 2007 was due to the revenue sharing deal for the 2G iPhone on AT&T).
Motorola pared down its portfolio (and its market share) and as a result has seen a doubling in ASP. LG had a rapid rise and rapid fall as its feature phone business boomed and busted.
But otherwise, pricing trends are subtle: down from Nokia and Samsung. Slight decrease for RIM and HTC and stable for Apple. In a future post I’ll dive into the relationship between pricing power and share.
