Tag Archives: iphone

Why the Lumia will not save Nokia

A day later we have the first reviews of the new Nokia models – the big Lumia and the cheaper Lumia.

The judgement from analysts appears to be favourable overall: Intuitive user interface, great camera and solid build. We need to balance this against the fact that both are in need of some weight loss, but the conclusion is that the phone is a credible offering. So, Nokia have a chance of rebuilding their success with this?

Absolutely not.

How can this be the case?

The phone is pretty good. Nokia is an established global manufacturer and it offers something innovative to the market.

Yes, yes and yes. And the answer is still the same. These will not save Nokia.

Instead of looking at what a load of geeks think, look at what market analysts are saying (those who advise whether to invest in a company or not). At the end of the day, Nokia was trading DOWN by 15.9%. Nokia launches its most important products – ones that will determine whether it has a future – and the analysts sell rather than buy shares?

Why?

Nokia launches a great phone, the geeks love it, and the shares get hammered?

To make sense of this we need to only remember one fact. Analysts (predominantly) buy/recommend shares of companies that meet one condition – they are expected to make more money in the future than they do today.

Thats it. Owning shares is about making money. Nothing else.

If the company promises and delivers spectacular growth, then the share price will quickly increase. Slow increases in growth result in slower rising share prices, and falls in growth will drop the share price. It is that simple. It is about growth.

Making money for shareholders requires companies to increase profit, from generating more revenue, from greater sales. Internal costs and a number of other factors play into this, but essentially it is whether the company has something that is going to sell by the bucketload for a good profit.

And the analysts don’t think that Nokia is going to sell loads of these. If it does, there are questions of whether it can do this at a margin that is expected.

The analysts are right.

So why will Nokia not sell loads of these. Two words: Apple and Android.

Next week Apple announces a new iPhone. This is predicted to sell more than all the other iPhones sold to date combined. Apple will not just sell iPhones by the boatload, it will do this at a higher profit level than anyone else can come close to.

If that wasn’t bad enough – this week Google announced that Android has 1.4m activations per day. That is 1.4 MILLION new Android devices being switched on and registered. Every day. 1.4m, again, and again … And the number is increasing every week. Not just phones, but also tablets. Tablet sales may slow, but they are there and they are growing. Nokia doesn’t have a tablet. Microsoft will launch Windows 8 next month, and this will increase tablet sales, but this will not help Nokia. Even if Nokia did announce a tablet, it is hard to see how it could compete against the iPad and the increasingly crowded and low profit Android marketplace.

Against the behemoths of Apple and Android, Nokia is simply irrelevant.

The other point that is often missed though is that it is not just about the phone, but the ecosystem. Apple doesn’t just have one source of revenue, but several. From the phone itself (the iPhone is the most expensive mainstream smartphone), from the phone contract (Apple gets more than anyone else), from accessories, from content and application purchases (30% goes to Apple). Let’s be clear about this – Apple has built a 21st Century money making machine. And it is only just starting to scale this. With potential moves into TV and emerging markets, there is still a lot of potential growth left.

Google’s Android ecosystem is nowhere near as mature or profitable, but Google also has other businesses that Android compliments – not least of all search. All that data from hundreds of millions of phones provides the intelligence to keep Google search secure in first position as well as providing a global market that will pass a billion users in the next couple of years.

So, despite making a very good phone, the maxim ‘too little, too late’ appears to be perfectly apt.

Apple’s iPhone Business Alone Is Now Bigger Than All Of Microsoft

If you are Steve Ballmer, the CEO of Microsoft and reading this headline you can:

… dismiss competitors, you can challenge analysts who predict tough times ahead.

… invest in new products at the same pace you always did [typically a 3 year product cycle].

… follow what has worked in the past confident that it will work in the end [and dismiss those who question this].

This is the strategy for Windows and Office, and it worked pretty well, but is showing signs of fading (words saturated and market should be ringing here).

This has been the strategy with Bing and Windows Mobile. Which isn’t working so well.

But as time progresses, the evidence starts to mount against you that your approach is not working.

The competitor sells more than you had hoped, their market share grows, but you maintain your long term view.

Then BLAM! a statistic arrives that hits like a bucket of ice-cold water being thrown over you.

That statistic is here.

“Apple’s iPhone Business Alone Is Now Bigger Than All Of Microsoft”

Steve, time to wake up and do something about this.

Time to rethink.

You can keep arguing … all the way to irrelevance, or you can start to tackle this seriously by aggressively accelerating timescales and focusing resources on the battles that you NEED to win, rather than a load that you want to win. Now is the time to prioritise and shift resources. Stop doing what you don’t need to. Win what you must.

The IT industry graveyard is littered with companies that argued against analysts and customers, saying it is a marketing problem – “that they just don’t get it“. Microsoft just fired a load of it marketing people. RIM is the latest company that has recently adopted this strategy.

But there is one problem … it doesn’t work.

Consumers and in particular phone buyers ARE generally well informed. They have friends, they can see kit. They play with the kit in stores.

Go to mobile phone stores, the Microsoft phones are there. They look pretty good, but next to them is an iPhone … and guess what people are buying. My son played with the Microsoft phone, he thought it was OK. Pretty good. Better than an iPhone? No. He is aged 7.

I’m not going to write a quick fix here; with three short steps, ten bullet points or an action plan of what should happen, because there is only one thing that you should start to do … start listening. Firstly to the people inside Microsoft, and secondly to your customers.

Not the senior career VPs and SVPs. Not the group presidents. All of these sold out their backbone years ago, or left. Listen to the new starters passionate about Microsoft. Listen to those who are trying to be heard. Listen to those who email you, write TechReady papers, and build demos. Listen to those in the labs, those who code their own apps, those who want to beat Apple with great products and innovation. There are a whole load of them, but recently their voice has been muted as they were worried about speaking out.

Give the permission to speak out. Get out of the office and go see people.

Then listen.

Then provide the resources for them to do it.

Not everything will work, but prototype fast, and kill even quicker.

Reward trying and pushing for big goals [tip: you don’t today, you fire them]

Listen to customers. Listen to small businesses, partners, analysts.

If the answer isn’t very quickly becoming clear, and very very obvious what steps are needed then you are the wrong guy to fix this, so appoint someone who can, and focus your efforts and helping them.