Fixing Nokia

Reproduced from a Forbes article by Lionel Laurent:http://www.forbes.com/2009/07/27/nokia-mobile-motorola-intelligent-technology-nokia_print.html

No one at Nokia is sleeping easily these days.

While reporting a second-quarter sales drop of 25% and a profit dive of 66% earlier this month, the mobile phone giant admitted that it had to "develop new skill sets." And how.

Despite its weak quarter, the Finnish company is still at the top of the sales charts, moving 100 million units on a quarterly basis. Industry watchers are worried that it is starting to look a lot like Motorola in the mid-1990s--a mighty incumbent losing its edge to rival upstarts. There's concern that Nokia is a hardware whiz living in a world increasingly dominated by software; and despite its forays into online services and application stores, it needs a big refresh to catch up.

So, what should Nokia do?

Improving its user interface for handsets would be a good start. Nokia's Symbian operating system is still widely used, but the "S60" interface is showing its age. Gartner Research analyst Carolina Milanesi says that while Apple's rival iPhone interface is very smooth and "horizontal," requiring only one or two steps from the start menu to perform a function, S60 takes the user "deeper and deeper" into a Web of choices and processes. The problem is exacerbated by Nokia's attempts to shoehorn S60 into new touch-screen phones, whereas Apple's system used touch-screen technology from the beginning.

A better interface would also help Nokia close the gap between its online services, which offer everything from applications to music, and its technology-rich handsets. For instance, Nokia's high-end handset, N97, has a more powerful camera, better map navigation and wider multimedia capabilities than the latest iPhone. But N97's less sophisticated interface limits the user's ability or desire to connect with Nokia's services, giving Apple a clear advantage.
DnB Nor analyst Fredrik Thoresen says the gap makes it nearly impossible for users to access Nokia's online services. "It's a hassle. I've never done it," he says.

It's surprising that Nokia has fallen behind, given that it first announced its foray into online services back in 2007 with an app store it would call Ovi. Indeed, the company appeared ahead of the game in controlling the end-to-end chain from hardware to software. But integrating these services has proven difficult, partly due to resistance from network operators--fearful that Nokia is stealing their thunder--and also because Nokia's user base is so broad that even something as simple as a one-stop online shop threatens to become an unwieldy behemoth.

But if Nokia can keep hammering away at Ovi, which launched in May, giving it mass-market appeal with an improved and easy-to-use handset interface, all the company would need to add is a killer touch-screen design. Oppenheim analyst Nicolas von Stackelberg thinks Nokia should use capacitive touch technology, a la iPhone, which responds more accurately to the finger's electrical conductivity.

In terms of Nokia phones' display screens, MKM Partners analyst Tero Kuittinen says the ideal size is 3.5-inches, which would make playing games and browsing the Internet a lot easier. He also believes Nokia should release more touch phones at $200 and below, like the music-oriented 5800 and upcoming 5530, to gobble up users in low-end emerging markets before Apple and BlackBerry maker Research In Motion get there.

"The game of migrating new features into cheapie phones is the one that turned Nokia into a behemoth in 1997 to 2007," says Kuittinen. "That is the game that must be the core of the comeback plan in 2010 and beyond."

And a comeback is exactly what Nokia should be planning. For the past two years, the company has rested on its laurels in the face of Apple's success. By admitting it has new skill sets to learn, perhaps Nokia is ready to fix its problems, catch up to Apple and maybe even surpass it in the software and design arenas.

Let's hope Nokia can silence, once and for all, its comparisons to Motorola.

Yahoo: The road forward?

A new era at Yahoo began the minute when Carol Bartz signed the agreement with Microsoft, giving the right to conduct searches on Yahoo’s huge network of Web sites to Microsoft in exchange for 88 percent of the revenue generated by Microsoft’s Bing. Having finally offloaded its search business to Microsoft; all Yahoo has to do is figure out what comes next.
Yahoo is first and foremost a media company and is in the business of attracting as many people to its properties in hopes of selling lucrative ad deals on those pages. While Google is has the best combined relevant search results and efficient advertising, the ads on pages model has not always worked on the internet.
The tie up with Microsoft Yahoo seems to signal that Yahoo doesn’t have the ability or the will to take on Google directly. Carol Bartz has been arguing that the company should focus on what it does best and leave the technology to others.”We’re not a search company,” Bartz had said earlier, discussing how Yahoo is a different company than Google or Microsoft. Now that she’s made that distinction official, what is Yahoo?

It’s where people find relevant and contextual information.”It’s news, it’s sports…home page, mail. It’s a fabulous place.” (The definition thus being very diffused). That’s a content company, turning the focus to how Yahoo should produce the kind of content and services that will keep existing users coming back for more and attract new ones to the site. One wonders if Yahoo just turned itself into a bigger version of AOL.
On the services side, some areas, like Yahoo Mail, Flickr, and Messenger, are clearly where Yahoo is unlikely to take its foot off the gas pedal. Same for Yahoo’s mobile strategy, a part of the Internet that is very much up for grabs, unlike the more mature PC-oriented Internet experience.
So Yahoo isn’t getting out of the technology business entirely. Yahoo will continue to need ways to keep its new home page hooked into the wider world of social networking, real-time communication, and things not even thought of yet, and that will require smart, savvy engineering.On the content side, Yahoo will have to figure out whether it needs to expand its current offerings, pare down some of the less frequently used products, or tap the outsourcing strategy in this area as well. There’s been quite a lot of turnover in recent years at Yahoo, but there are probably enough people left who remember that the last time Yahoo tried to play a prominent role in designing its own content, it didn’t end well.
Is Yahoo on a path to becoming the world’s biggest content aggregation site?There’s enough guaranteed revenue in the deal to keep things quiet for a while, but it’s going to take two years–at minimum–for it to substantially shape the company. What will Yahoo look like then?
Ref: http://news.cnet.com/8301-17939_109-10299313-2.html?part=rss&subj=news&tag=2547-1_3-0-20