Will N 97 do it for Nokia? (gain Tech leadership)

The 3rd week of June 2009 is momentous in terms of the ground breaking new launches that we would have redefining the smartphone space. Palm is alll set for a return with its highly touted Pre challenging the iPhone. There are guesses and second guesses on whether Pre would be the iPhone killer. iPhone gets the 3.0 makeover which essentially puts it in par on many other departments as far as smartphone capability is concerned. However, iPhone will all be about the Apps that they can bring to the table. Nokia N 97 on the other hand is Nokia's flagship salvo to claim its own technology leadership space in the smartphone category. In as much as it will be against the iPhone, the battle between N 97 and iPhone will be one between Device and Markets. This article com compares the N 97 against the formidable iPhone on various departments.

N 97 versus iPhone
The fight between web-based and mobile-based players has officially started this week. On Monday, Apple announced its latest phone, the iPhone 3G S, which will go on sale next week. And on Saturday, Palm started selling the much-hyped Pre.
This comparison seems like one of hardware vs. applications. If this is a smartphone device market, the iPhone is four year late. If this is an app awareness market, Nokia is one year late. Analysts world over are watching these launches as a toss up between Device driven smartphone market or Apps driven smartphone market.
The Nokia N97 seems to have better hardware, where the iPhone 3G S and its App Store are second to none. The latest iPhone marketing campaign was smart enough to pinpoint the main competitive advantage into their next wave of customers: "there is an app for that."
The average iPhone user seems to behave either as a teen or a teen at heart, and loves having fun with useless and exciting apps thrown away as rapidly as they are downloaded, like a Facebook app. More than 1 billion downloads later, less that 5 percent of those who downloaded an iPhone application are actively using it after 21 days and only 10% of apps retain the audience attention, according to a PinchMedia survey. Nokia's target market demographics may be different, more for professionals and professional use.
The other differentiator for Apple is the "user experience": Understanding it, being in control of it and finding joy in handling it. Something that Apple does perfectly, and Nokia's Symbian-Interface does not do as well. Apple's forte is their vast experience with user industry-leading GUIs.
Neither T-Mobile and AT&T, the two US operators that could have subsidized the Nokia N97, has picked it up (yet?). As a consequence, at more than $600 Amazon price, the N97 is unlikely to be a threat to the latest iPhone in the US
Each of these devices can be bought for far less than the Nokia N97. The 16GB iPhone 3G S will sell for $199. And the 32GB model, which has the same amount of built-in memory as the N97, will cost $299 when the phones go on sale next week. Apple has also cut the price of its 8GB iPhone 3G, introduced last year, to only $99. The Pre, which also has a slide-out QWERTY keypad and a touch screen like the N97, is $199 with a $100 mail-in rebate.But there is a catch; these low-priced smartphones come with strings. Consumers must sign a two-year contract to get the discounted prices. And in the case of the iPhone and the Palm these phones are exclusive to one carrier. Subscribers are also charged an early cancellation fee if they terminate their contract before it ends.Even with early termination fees, the iPhone and Pre are still less expensive than the N97. For example, a new AT&T subscriber buying the 32GB iPhone 3G S will pay $300 for the device. If this subscriber cancels his service before the two-year contract ends, he will pay at most $175. Adding the early termination fee to the cost of the phone, the iPhone subscriber will still only pay $475 for the device. This is about $225 less than what he'd pay for the Nokia N97.
Just look at Sony Ericsson's Xperia X1, which went on sale last year in the U.S. with a price tag of $800. The phone has largely been a flop in the U.S.
Nokia must realize that it can't really compete in the U.S. smartphone market without a carrier subsidy. And it's difficult to understand why the company would not be able to strike deals with U.S. carriers. After all, it is the largest cell phone maker in the world.Perhaps Nokia doesn't think the U.S. market is worth the trouble. Even though the U.S. offers the biggest growth opportunity in smartphones, which also happens to be fastest growing segment of the mobile market, analysts say that Nokia could still maintain a market share position in the 30 percent to 40 percent range by selling devices throughout the world. But the U.S. market represents an untapped opportunity that could prove very lucrative for Nokia. And the longer it takes Nokia to bring an affordable hit phone to the U.S., the harder it will be for the company to get its fair share of the pie.

Examining the case for Nokia Netbooks

Lap Top makers Lenovo, Dell, and Acer have announced their ventures into the smart phone space. I had covered a few of these in earlier blogs.
http://technologyandtelecom.blogspot.com/2009/02/smartphone-debut-dells-mephone.html
http://technologyandtelecom.blogspot.com/2009/02/lenovo-promising-smart-phone-debut.html
http://technologyandtelecom.blogspot.com/2009/02/toshiba-timeline-iphone-in-its-sights.html

Now, the king in the mobile space, Nokia takes the battle to the enemy camp by announcing its foray into netbooks. Olli-Pekka Kallasuvuo mentioned in a recent interview that Nokia was “actively looking” at the laptop market as the cellphone and mobile PC markets get closer and closer to convergence (read article http://www.reuters.com/article/technologyNews/idUSTRE51O6Z320090226). This had created the immediate buzz that it was expected to create around the technology geeks and followers around the world.However, this is more than i-fight-you-at- your-home-while-you-fight-me-at-my-home motive out here (meaning Nokia fights the lap top makers with its entry in that segment, even while Lap top makers try to prey on smartphone space). For starters, Nokia was already the largest computer maker in 2008, if the smartphone population are allowed to be counted in as computers.

An interesting line of thought that has featured in Nokia Conversations (Nokia's informal PR window to the world) is about how "mobile lifestyle" is fusing with "mobile computing" even as internet apps change the mobile phone from a medium of communication to projectors of our selves in the cloud. (Suggest the article as a compulsary read). Essentially, there are three major take outs from the article
1. Mobile devices will have to evolve to more creative usages in networking people.
2. The Cloud will be a platform where people would needto project themselves as a means of communication with others
3. Hence the need for a netbook device!

The article very beautifully explains the device story behind the need to graduate from Mobile Computing to Cloud enabled netbooks. So Nokia's device strategy follows the convergence story as it unravels and transitions from a N 97/ iPhone to netbook!Interesting times, as industries converge and new paradigms emerge. However the question that pops up is, whether Nokia is doing things one too many? Its 2007 - 2008 strategy has revolved around services and even after a while, Ovi is not exactly "there" in terms of consumers, services, applications and stickiness. The opportunities for Nokia's software services would surely outweigh the cost of building a commodity consumer electronics device.

The first reaction to this one is Nokia shouldn't be looking at the netbook space. They've got enough on their plates at the moment, the new devices need attention and promotion, it will confuse the marketing message, there's very little profit in commodity devices...

On the other hand the Netbook can be seen as a natural device extension of the Ovi platform which links up from the consumers to the crowd.

My take on this is Nokia should be looking at its services eco system foremost. Netbooks will seriously not be an differentiator in the age of content and the internet. Investements in the netbook may not be both time, investment and attention consuming for very little returns.

Nokia - Skype: Jinxed as partners?

The MWC (Mobile world Congress) was a spectacle this year as well (as every year!). The Mobile world had a sneak peek into New Technologies, new devices, new services and new partnerships happening around.

One of the most promising partnerships annpounced was that of Nokia and Skype.According to this partnerships, Nokia would integrate the Skype VoIP software with its N Series flagship N 97 on the S 60 platform for its consumers in Q3,2009. This would enable consumers to sync their phone address book with their Skype contacts and make calls over VoIP to them. A computer call would be free and users will pay Skype for voice calls to Cell phones or landlines. Skype as an application is free for download to cell phones. However it would require a 3G service or a Wi Fi zone to allow this service better.

This is a classic case of convergence media being offered to consumers (who now have a choice of making a call through their cellular operator as well as VoIP). Skype is the biggest beneficiary of this partnership as it piggy backs Nokia's reach in geographies where the lap top will take some more time to estanblish itself. Thus Skype, Internet and VoIP will leap frog emergence of lap tops to tap into the VoIP technology.

However there is an unexpected backlash from UK operators, O2 and Orange who obviously view this partnership and the technology ofered being disruptive in nature. The sources cited state that the partnership of Nokia and Skype would wrest away control of their consumers by offering easy access to an application that could hurt their call revenues.

To quote verbatim:

Mobiletoday.co.uk’s source said to them that this was yet “another example of [Nokia] trying to build an ecosystem that is all about Nokia and reduces the operator to a dumb pipe…But if you spend upwards of £40 million per year building your brand, you don’t want to be just a dumb pipe do you?” The source added, “Nokia have tried several ways to own the customer over the years and operators have had to say no.”

The adjectives to describe the operator outrage are "furious" and "venting their anger" amongst others. Operators have also stated that they wouldnot stock up Nokia devices if Nokia doesnot strip the application. Thus we have an interesting situation out here, since Nokia wouldnot want to walk back on its MWC partnership with Skype for fear of a loss of face. However inability to do so, may jinx the N 97, a device where Nokia is betting a lot to fight back on the smartphone platform. It doesnot have a US carrier for N 97. Not having a UK carrier could be worse for them. It needs the operators to subsidize the N 97 for the smartphone users. We may see Nokia walking back on the Skype partnership after all, at the end of it.

PS: One would remember Nokia's earlier attempts at trying to have a eco system of consumers all for itself without sharing it with its eco systems partners. An earlier example was the Comes with Music service which it started short circuiting the operators (who also saw this as a competition to their own music stores).