Blackberry and Nokia: Twilight of the cellphone idols

June 17, 2011

Nothing dates quite like fashion, and nowhere is this truer than the technology sector – as Blackberry-maker RIM and Nokia are finding to their cost. In 10 years’ time, it’s conceivable that Blackberry will be no more than an extension in someone else’s brand repertoire, and Nokia – still, if only just, the market-leading brand in handset manufacturing – will have no more resonance than Ericsson does today. They are the brand equivalents of Shelley’s Ozymandias.

Salience in the consumer technology sector is all about keeping abreast of the latest trends. And it is clear that Nokia and RIM have not. Nokia has failed to conquer the smartphone market, while RIM has failed to continue dominating it. Both companies are now beset by lengthy delays in product launches, increasing investor pessimism and, that natural corollary, plunging share prices.

At a technical level, both these companies seemed singularly blind to the two-pronged threat from the iPhone and Android operating system until it was right on top of them. Nokia has belatedly discovered, under its new chief executive Stephen Elop, that its smartphone operating system is not up to snuff and is having to broker a last-minute and doubtful marriage with Microsoft’s superior version. RIM, on the other hand, had grown complacent about its apparently unassailable position in the elite corporate sector, with the result that it failed to adequately prepare for the advent of the touchscreen phone and the 10in tablet.

A case of sclerotic corporate cultures fatally mesmerized by their legacy of previous success? Only up to a point. Nokia and RIM, looked at more strategically, are victims of haphazard technological convergence. Who, 10 years ago, could have seen that mobile communications would come to be dominated by a formerly ailing computer manufacturer and an ingredient brand dreamed up by the world’s largest search engine? And who, even once the trend had become established 3 years ago, would have had the corporate courage, or foolhardiness, to bet all their assets and legacy on it being the inexorable path of the future?

It’s a sad truism that companies spend billions of dollars every year on insight and trend-spotting. But usually lack the judgement or willpower to make proper use of it.

UPDATE 4/7/11: “RIM is the Wang of mobile phones.” That was how Charles Dunstone (CEO of Carphone Warehouse Group) referred to the Canadian Blackberry-maker at last week’s Google ThinkMobile conference. Wang was a classy corporate-oriented computer company that specialised in just one thing, word processing. But it was blown away by Microsoft’s Office. Wang filed for bankruptcy in 1992 and eventually disappeared into Netherlands-based Getronics in 1999, never to be seen again. I wish I had thought of that parallel first, Charles…

Stephen Elop’s fiery eloquence leaves Nokia looking a burnt-out case

February 10, 2011

I have no idea whether Nokia chief executive Stephen Elop’s announcement tomorrow of a pact with Microsoft will involve the ditching of Symbian mobile operating software in favour of Windows Phone 7.

But one thing I do predict is that nowhere will eloquent Elop’s now notorious staff memo make an appearance in Lucy Kellaway’s much feted annual FT corporate bullshit awards.

There was no elephant to be seen in any room, no going forward (that part presumably comes tomorrow), and no low-hanging fruit whatsoever.

Instead we had a terse, carefully constructed piece of prose that is a classic of its kind. It spared no illusion, but was rich in an almost poetic imagery that took in the Piper Alpha oil rig disaster and made a nod to ‘the boy on the burning deck’ along the way. Not the sort of thing you get from CEOs every day, is it? And, for that reason – and others  as well – I suspect Elop’s name will be hallowed in business schools for years to come even if what he does with the Nokia brand is not.

There are many things to be admired in “Burning Platform” (which appears in a literal sense to be an allusion to Symbian), but I would single out Elop’s searing indictment of Nokia’s faulty marketing strategy as the most notable. It’s the sort of detached corporate insight that only an outsider could bring – although most would have kept it to themselves and their boards:

We are still too often trying to approach each price range on a device-to-device basis.

The battle of devices has now become a war of ecosystems, where ecosystems include not only the hardware and software of the device, but developers, applications, ecommerce, advertising, search, social applications, location-based services, unified communications and many other things. Our competitors aren’t taking our market share with devices; they are taking our market share with an entire ecosystem. This means we’re going to have to decide how we either build, catalyse or join an ecosystem.

This is one of the decisions we need to make. In the meantime, we’ve lost market share, we’ve lost mind share and we’ve lost time.

Elop’s image of a desperate man plunging 30 meters into icy waters to escape the burning oil rig may be unique, but it is not without parallel. The Wall Street Journal has helpfully assembled a clutch of similar memos from high profile CEOs attempting to ride out a corporate crisis. They were equally embattled, if not equally eloquent. There’s the  Microsoft “Internet Tidal Wave” memo in 1995, in which Bill Gates highlights the web-threat to PCs; the “Commoditization of the Starbucks Experience” call to arms by chairman Howard Schulz in 2007; the 2006 Yahoo Peanut Butter Manifesto, in which an executive pointed out the internet company was spreading itself too thinly to survive; and John Pluthero’s morale boosting memo to Cable & Wireless staff, roundly condemning “an underperforming business in a crappy industry.”

I’m not sure they’ve all had the fully desired effect. I wonder if Elop will be any more successful?

UPDATE 11/2/11: So, Elop is going for the Windows Phone 7 deal after all. He’s chucking Nokia’s upmarket MeeGo specification, but keeping the mid-market Symbian operating software – for now. Early traders on the Helsinki stock exchange seem to agree with the somewhat spiteful verdict of a Google executive, perhaps smarting from Android’s exclusion from the Nokia picture: two turkeys do not make an eagle. They marked down Nokia shares a savage 10%. But it’s early days. Both Microsoft and Nokia, though on the backfoot, have huge latent market power. And we should not underestimate the willingness of the mobile operators to embrace a wider spectrum of competition within the smartphone sector, which will have the desirable byproduct of buttressing their own market position against those impudent upstarts Apple and Google.

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