Tag Archives: Microsoft

Could the alliance with Microsoft kill Nokia?

The last two years have seen Nokia’s market share and company value completely crater.

It has gone from being the global leader, to a company struggling to survive and define its future. The writing was on the wall a long time ago, but the last two years have  seen an implosion of every corporate metric, apart from losses, which continue to escalate.

The cause of this is pretty straight forward. Nokia made lousy smartphones. Simple as that. The world wanted smartphones; Nokia’s offerings didn’t make the grade, so they didn’t sell.

– The Blackberry was more secure and suited to enterprises.

– The iPhone redefined usability (something Nokia was never great at) – and provided a usable ecosystem of content (again something that was always terrible with Nokia devices).

– And Android provided a free credible operating system to every OEM who wanted it.

Symbian was acceptable for a while, but iOS and Android showed that a new OS was needed.

Nokia was slow to respond and the marketplace was never going to wait.

MeeGo, Nokia’s next generation OS never matched iOS and was dogged by a failure to deliver. The decision to kill this had a logic, but it also carried a risk which Nokia could lose control of its own future … and it has.

So Nokia was left as a company that could make good hardware, but failed dismally on the software.

Given this, the decision to focus only on Windows mobile seemed sensible. It provided a credible mobile OS, protection from legal attacks (Microsoft knows about IP and protects itself well) and the chance to ally with a major force in computing.

But … what seems to have been missed in many of the discussions is that this decision brought trade offs too.

A strategy is not just defined by what you do, but also what you don’t do (or no longer have the option to do).

– Nokia was unable to make phones to benefit from the Android juggernaut (and be a part of the 1.4m daily activations)

– Nokia is reliant upon Microsoft for new features to be implemented and adopted (and Microsoft is not agile)

– Nokia is dependent upon Microsoft release cycles for updates and the ability to counter competition it faces (as opposed to threats Microsoft faces)

– Nokia is reliant upon approval from Microsoft to develop its ecosystem … you could argue that it doesn’t own the ecosystem anyway. It is just a functional part of Microsoft’s ecosystem.

Nokia has stated that it wants to own and develop its ecosystem. By partnering with Microsoft, this will not happen. Whatever Nokia thinks – Microsoft wants to own the ecosystem. It will agree to allow Nokia to be a key partner, but owning the ecosystem? Absolutely not.

So, does the dedicated alliance with Microsoft provide Nokia with an overall positive or negative result?

Nokia has a partner that is committed to help keeping it alive through challenging times, but the company health is still very poor with an uncertain and worrying outlook. It may be saved for now, but is this at the expense of its long term viability and critically, its independence?

Judging by any accepted measure: revenue, cash flow, market share, handsets shipped, customer satisfaction, partner confidence, share price … Nokia is in big trouble. To reverse this position would require massive sales of Lumia phones – globally, at a price point that provided Nokia with viable, attractive and sustainable margins. It is this last bit which is hard to see happening any time soon. With Android having 1.4m activations per day – it is clearly the market leader – at least in the lower end of the market and for sheer numbers. With Apple about to launch the iPhone 5 next week and iOS 6 later this year – it is hard to see how the growth of Apple will be impacted. To most consumers, the iPhone is the default choice and Nokia offers little to change this. In fact, if you include the ecosystem as a key decision factor – Nokia is not a serious competitor at all. The Lumia scores well on usability with many reviewers, but a search of phone discussions will show that the Windows 8 interface and tiles do not appeal to everyone. And Nokia has no ability to offer anything else.

Even if Windows phone does gain traction in the market, other OEMs are watching this carefully. Several competitors including Samsung have announced Windows 8 phones (even if they didn’t actually have one built yet). So, should the Lumia start to sell and find that people want Windows phones, it will face increasing competition from other manufacturers. This is exactly what Microsoft wants to happen, directly in contrast to what Nokia wants.

The truth of course is that Nokia was in trouble before the Microsoft alliance. The failure of its R&D teams, the lack of focus on a changing market, the lack of discipline in delivering innovation were all clearly evident before the former Microsoft executive, Stephen Elop took his role as Nokia CEO. The board at Nokia must have known what Elop would do. There was only going to be one strategy when you appoint from the Microsoft top tier, but was this the right strategy?

Elop was right in pointing out that Nokia had a burning platform, but doing this publicly before he had the answer ready to sell was certainly not a smart move. All it did was undermine Nokia, accellerate the collapse of sales and lose confidence with consumers, partners and developers.

By allying with Microsoft, Nokia took a huge risk – because in doing so it forgoes some of the strategic options that may have helped its position.

But was there a better option?

– Could Nokia have delayed or downplayed the Microsoft announcement and delayed the implosion of Symbian sales. Absolutely. This would not have changed the ultimate collapse of Symbian, but may have slowed this down and kept confidence with partners until Windows powered phones were shipping.

– Could it have developed an Android phone, that although it would mean entering a crowded market, would have potentially slowed the growth of Samsung, delivered much needed ongoing revenues and kept its brand and reputation relevant. Absolutely. Margins would be lower, but revenues, jobs and manufacturing capabilities could have been protected. This was never a viable long term strategy, but for the short-medium it term offered a pragmatic strategic option. Unlike Samsung, Microsoft, Apple or Google, Nokia does not have a diversified portfolio of businesses, able to sustain an unprofitable part whilst the core survives. With Nokia, phones are the core business. Perhaps this is one area where Elop was the wrong choice. Would another CEO have recognised the danger of the Microsoft partnership and demanded more independence? I think so.

– Could Nokia have continued to develop MeeGo? Against Apple and Android, it is hard to see this being credible, but as a way to demonstrate innovation, build intellectual property and provide some worst case scenario resilience and autonomy, there is a logic to this. Not at the massive scale it was, but certainly as a niche OS, particularly if this was focused on a particular vertical or industry.

So was the decision to ally with Microsoft the right one?

It depends on what you measure and when.

Nokia is still alive … just.

But if you measure a company’s health by its share price – which is crude but valid – then to go from almost $40 to $2.46 in less than 5 years could never be judged a good outcome.

The story isn’t over, and we have seen other companies recover from similar weak positions, but the outlook is not good. Perhaps allowing customers to actually buy the product that you have just announced would be a start.

As with all market leader failures, the merit of strategic choices and the rejected options will remain the mainstay of MBA Case Studies for years to come. Of course, it is not over – but with the big announcement made, the new phones being announced (not launched), it isn’t looking good.

UPDATE: Sep 3rd 2013. Just under a year after this post was made, Microsoft announces they are buying the phone business of Nokia. Stephen Elop will step down from Nokia and rejoin Microsoft.



Nokia Lumia basic marketing fails

I wanted Nokia to do well with the Lumia launch.

I’ve had a lot of Nokia phones, and I’ve never been disappointed with the build or the phone itself.

Well, before Nokia made smartphones that is. I found every one of their smartphones painful to use, so I never bought one.

And that is the problem. Neither did many other people either.

Nokia simply didn’t make good smartphones.

So when Nokia (who can make great hardware) decided to partner with Microsoft, things were looking up. Strategically I think the decision to align exclusively with Microsoft was very risky, and may still cost Nokia its survival – but Microsoft can write good software and has some great design people.

And then the launch …

I’m interested – tell me about it.

1) Looks good, attractive design, I like the tiles, great camera, Windows 8 seems really promising …

You’ve got me … I am a potential customer – and I’m waiting for the two last pieces of information.

2) How much?

3) When can I buy it?

… and then the event finished.

Without answering two of the three important questions:

1) Tell me about it and why I should buy it – TICK

2) Tell me how much it will cost me – FAIL

3) Tell me when I can buy it – FAIL

What the heck!!!

You announce a new product, with no price and no information on availability?

Has anyone at Nokia marketing ever heard of Apple?

Do they understand how Apple work?

Apple follows the above steps to a tee.

Every time without fail.

1, 2, 3 … we get excited and we go any buy it. Apple has closed the doors to competitors.

The sad ones even queue outside (you all know the stories)

BUT Nokia announced vapourware. Simple as that.

Without a price, without a date at which I can buy it, it is vapourware. It doesn’t exist.

So what happens next?

Unable to actually buy a Lumia, I wait until next week and see what Apple have to say.

I know they will launch the iPhone 5. I know they will tell me the price, and I know that they will tell me when I can buy it. I also know that it is probably going to be from the 21st September.  And then any window that Nokia potentially had to attract me and millions of others have gone.

Some will wait. Most won’t. Few will care.

Microsoft and Nokia will market hard and shout, but the timing was wrong.

Sorry Nokia. You should have announced the price and availability.

I know that there are lots of valid reasons to explain Nokia’s position and timing …

– As a spoiler to Apple (mmm … can’t imagine Apple were quaking)

– As a spoiler to Amazon (nope, different markets)

– As a precursor to Windows 8 launch (to keep excitement in advance of Apple and the Windows 8 launch)

Or the most likely reason …

– To guarantee that they got some coverage of a product that is pretty good before Apple launched the iPhone 5 and dominated every blog, magazine and advert –  although Microsoft almost certainly demanded that the phone be held back until the full Windows launch.

The delay does give Nokia and Microsoft the ability to announced agressive pricing AFTER the 12th and thereby position Apple as being expensive and the Lumia as being affordable, but Android phones are already out and more affordable, so this is risky and unlikely to dent Apple’s strategy.

Another reason is to prevent an Apple response to an agressive pricing strategy (which is valid), but also provided Nokia/Microsoft an opportunity to undermine the launch pricing of Apple – so this has been missed.

I hope Nokia knows what it is doing.

Nokia and Microsoft will have a clearly defined plan. Here is what I would do:

1) Ship Lumia phones globally to stores NOW. Have these ready to go.

2) Watch Apple’s launch on the 12th and make the final decision about pricing. You could change this. Hold off on this until you see what Apple do.

3) Announce AGGRESSIVE pricing to disrupt with immediate availability before the 21st September.

If you don’t do this – hold back until the Windows 8 launch and launch then, but don’t expect anyone to care.

They will all have bought/ordered iPhone 5’s.

Cloud computing is dead

Isn’t that what you say when something is no longer growing in popularity?

Visiting the grandly named Cloud Computing World Forum in London (in reality a cloud computing exhibition) this week confirmed my suspicions. It was a much smaller show than previous years, relegated to the 1st floor of Earl’s Court, and noticeable only for the lack of innovation and energy from a topic that was supposed to be the next big thing in computing.

A quick check of Google Insights confirms this. Since mid-2011, interest in cloud computing has been falling.

But why?

Why is it that a technology which was supposed to disrupt the very fabric of computing and change the way enterprises work be falling in interest?

The answer I’m afraid is incredibly mundane, it is because the hype bubble has been punctured. Not with a big ‘POP’ but a slow puncture.

After years of hyperbole and overselling, cloud computing has been called to account and brought into the real world with a bump. The era of cloud hype is well and truly over.

So does this mean that cloud doesn’t matter, that cloud is not real and it will all go away?

No. Quite the opposite.

In a hype, life is good; there are no problems that cannot be resolved, no challenge that cannot be addressed. New pure play companies enter the market quickly and established leaders, bundled with legacy technology and old ways of working (but also profits, trust and experience) are prematurely dismissed as outdated.

Then reality hits.

And this is where we are today, in the post-hype phase.

We know that:

  • Cloud computing isn’t right for all circumstances
  • Security challenges remain
  • Legal and contract issues are more complex than we thought
  • When you do the math, the savings are not as big as we first though

But … despite all of this, there are very real benefits. None of the issues are insurmountable.

So whilst cloud is not a panacea (it never was), if we address the issues cloud can deliver real benefits.

So, we are now entering the era that cloud WILL disrupt companies.

This post-hype phase is when the real change happens. It is now when disruption really starts.

Three forces now come together to make change possible:

  1. Suppliers and buyers are more informed and are working to address the known challenges of cloud. Products evolve that are practically usable inside enterprises (and don’t circumvent security or compliance rules). Products are developed that better address the needs of enterprises and deliver on the promises made, and finally better management tools emerge. Perhaps the total benefits will be less than we were originally expected, but the savings and benefits are there. With these blockers now removed, enterprises are now able to implement these technologies into their organisations.  As cloud suppliers have matured, gained access to supplier lists, passed financial diligence checks and completed proof of concepts we get down to business.
  2. Another change that has happened is that the old world suppliers, the ones from the pre-cloud era – the ones that enterprises actually run their businesses on – have adapted their products and services to better embrace cloud principles. Many will be evolutionary, rather than revolutionary products – but for business customers, that is exactly what they want. Safe, secure products that deliver more value, hopefully at lower cost, from suppliers they know and trust – and have experience in managing.
  3. The final piece of the jigsaw is that companies IT departments are now thinking about how to implement cloud based products and technologies are are adapting and evolving strategies, roadmaps and service visions to be cloud compatible.

Together these three bring create an environment where change can happen, and this is why the post-hype era is the one that brings the disruption.

How will you know that we are in this phase?

  1. Cloud suppliers will start to win major contracts. Having worked through procurement hell, companies are finally signing contracts. Revenue growth may have slowed, but the contract value is increasing. Cloud is now set as a default by traditionally conservative organisations (e.g. US Federal Government)
  2. Cloud companies that have shown an ability to grow are being acquired by old world suppliers that have failed to successfully developed cloud products quickly enough internally (SAP – Ariba and SuccessFactors, Oracle – Rightnow, Taleo, Vitrue, Microsoft – Yammer)
  3. And the final one … attendance at Cloud Shows and exhibitions falls, because it is now just part of business as usual.

So the era of hype for cloud computing is dead.

The era of cloud truly disrupting companies … this is only just beginning.


As PC manufacturers suffer in 2011, Apple stormed ahead. Lesson: DESIGN MATTERS

2011 was the second worst year for PC sales in the US.

  • HP fell 5%
  • Dell fell 8%
  • Acer fell 14%
  • Toshiba fell 2%

Q4 figures for 2011 being particularly bad for HP as the botched sale or not of its PC division resulted in a loss of customers confidence and a corresponding fall in sales of 25%.

So, a terrible year all round?

Well … no. Not for everyone.

One company bucked the trend in the US. Increasing sales in Q4 by 18%.

You know the name of course, Apple.

Before you dismiss this, it is worthy of some examination.

In an economically challenged year when consumer confidence fell and jobless figures rose, the company that bucked the trend for sales was a manufacturer of premium products. If you want a computer, whether for work or business Apple is not the cheapest option. Of course, any comparison depends on your requirements, but it would be hard to argue that Apple are the least expensive choice for most requirements.

So at a time when you would expect price sensitive buying the opposite happened.

Or did it?

If you ask look carefully at what people wanted, perhaps this is a clearly predictable outcome.

Instead of focusing (as the PC industry typically does) on chip speeds, memory size, hard drive space, blah blah blah … you focus on long term value, a great user experience, beautiful design, and build quality then you would count out most of the PC industry. Most PCs are functional and provide good bang for the buck, but in the user experience stakes … are awful.

For many people, price will have been critical, so however much they may have wanted an iMac or Air, the price of the Apple world was simply too much, so PC sales have not completely collapsed.

An analyst would point to a number of supporting factors for this: A new operating system, value of Apple stores, strong marketing and the not least the benefits of a very positive brand. They may also talk about a competitors’ lack of vision or the growth of the Apple ecosystem and the resulting pull through effects.

But they would be missing the real driver. All of these matter, but there is a much stronger one.

Anyone who has spoken to a recent switcher from PC to Mac would tell a different story. New to Apple buyers talk about the user experience (they don’t call it this of course), the design, the beauty, the ease of use. Seriously – they do. People who don’t care about computers become attached to Apple products. It happened with the iPod, the iPhone and is pulling through to the desktop and laptop. It is also why Apple dominates the tablet market despite hundreds of much cheaper competitors.

This change is not good news for the PC industry, because most PC makers are really bad at the things that Apple is great at. I don’t just mean poor, or not very good, I mean BAD. Products keep being released with the most basic of design flaws.

Manufacturers scrimp on design throughout the whole process, they cut corners on build quality to save a few cents, install junk-ware which kills speed and offer support that is usually painful for most.

And they wonder why they are losing business?

And here is the bad news. It  is only going to get worse; as people tell their friends, as they become part of the Apple closed wall ecosystem the personal switching costs to go back to the PC increase. With disjointed and badly designed ecosystems  and no added value from competitors they are not even going to be contenders. Talking a good story doesn’t cut it. Most Mac buyers have PCs at home at the bottom of draws that testify to the failure of the PC as a long term investment. The performance slowdown, the problems with rogue code and viruses and the slow start times being ecliped by the Apple experience.

Companies should pray that Apple decides to stay a premium provider, because if Apple decides to go for growth by releasing a lower priced range, then there will be a bloodbath in the PC market.

So is this a fait accompli?

Is the end nigh?

Are there any routes to survive?

How to compete

Option A – innovate product+service

  1. STOP looking only at the product, look at the whole product+service experience from pre- to post- sales
  2. Focus on the experience. Be the company YOU would want to buy from. Fix your service problems.
  3. Find the gaps, segments and customers where you can improve and then innovate, innovate, innovate (the process and experience)
  4. Focus on designing excellent, fun and rewarding experiences (remember, it is not just about the product, but product+service)
  5. Build on these, keep innovating and develop passionate buyers
Difficulty: Hard
Reward if successful: Your business stays alive to grow and has a solid base of buyers. You may be a smaller company, but if executed well should be more profitable and stable.
Answer this question: If I was a buyer, would I buy this? Why? Then test this with real customers.

Option B – Business as usual

  1. Focus on reducing costs to win on price. Fail to develop a service mentality.
  2. Ignore Apple, continue on with business as usual. (You may talk about design, but this is likely to be copying Apple)

Difficulty: Easy
Reward if successful: Cut-throat competition and no ability to value add. Highly volatile business with high costs, ever reducing margins. What you do win will be hard fought and low profit.

Answer this question: Can I control and manage my costs better than my competition? Do I have a predictable and flexible build model?


So is the lesson, innovate or die?

No. You can carry on as usual, but are going to find life very challenging. Margins will continue to be under pressure, you will be worried about another competitor making a slightly better product and at a slightly cheaper price, but you can continue. Of course this a challenging life, as you have no long term value to bring. You know this and so do your customers. Should the market suddenly shift, you will be unable to compete.

If you are a PC manufacturer you should be calling Microsoft now and demanding that it pulls its finger out and starts getting products out of the labs and into the OS.

The game is not over yet, but it is not getting easier.

10 other ideas to help:

  1. Hire passionate people – find young smart people and hire them. Then LISTEN to them
  2. Build diverse teams. If you have a team of engineers you will build things may be efficient, but are ugly and will fail in the market. Hire designers, artists and people who care about people.
  3. Travel the world, watch, learn and understand. Embrace ideas.
  4. Start breathing design, understand it, live it, demand it.
  5. Cut your development and prototype timescales, build or partner to be able to quickly prototype. What is your MPT (minimum pro
  6. Release innovative ideas and prototypes – build energy, interest and passion in your company
  7. Test new ideas live, release products under other brands if you need to, make limited editions, test the market with live products
  8. Make feedback as honest as possible, setup user panels, hear the harsh truth first hand, encourage honesty
  9. Find partners … be open-minded and innovative in who these are
  10. Set metrics that encourage innovation and the changes that you want.

So no easy answers or magic bullets (there never are – which is why they are called magic!), but there are options to survive.

One final point to executives in the PC market, whether software or hardware …

Don’t complain about Apple. You could see this was happening. Everyone else did.

Now the question is whether you want to sit back and let this happen, or are going to embrace the challenges and innovate and design a way out of this? Your call.


The real importance of evangelism

If you thought no one from Microsoft really cared about anything other than selling you the next version of Windows and the latest XBox Kinect controller you couldn’t be more wrong. The company has a number of people whose (lucky) job it is to understand how technology can help society and have conversations about what author and conductor Benjamin Zander would call the ‘Art of the Possible‘. These are not really jobs in the traditional sense, more ‘a calling’, or a place to put those who just won’t shut up about how technology can really make a difference in society. Whilst most people concentrate on how technology impacts their lives, these people focus on how technology can positively help others’ lives. This is a critical difference, because a lot of their time will be spent campaigning for disadvantaged groups, arguing for the voice of the excluded and generally making a nuisance of themselves. And good luck to them, because through each one of their meetings, presentations and discussions they really do make a difference. Not that they will admit this, or those who change their minds will admit to being influenced.

The UK has one of the leading exponents of this role in Dave Coplin. I’m not sure what his title is these days, but it will have the word ‘evangelist’ in there somewhere. If you haven’t seen him, you can find his work on The Envisioners website. If you get a chance to see him speak, then I recommend it. Firstly, he doesn’t really fit the typical ‘look’ for Microsoft, but more importantly if you want to know what Microsoft really thinks about the bigger issues around technology, then speaking to Dave is a great way to understand this. I promise you that you will not be disappointed.

So why does this matter?

Why are Dave and his role important?

Whilst we often see so called ‘technology evangelists’, most are nothing more than salesman. They care about selling you a product, about closing a deal and about signing a contract. Real evangelists don’t. They care about selling you an idea. They don’t care about closing the sale because they know that if they sell you the idea, then you will come knocking on their door asking for the product, not just once, but again and again. In fact they won’t sell you a product, they will point to a sales guy. If an evangelist does want to close the deal, then he isn’t an evangelist, just a good salesman. So now you know.

A good evangelist will become a trusted advisor in the way that a salesperson can only dream of (and never achieve). Selling an idea or a vision transcends any single product. More importantly though, what they will have done is enrol you not just as a fan, but a passionate supporter. If an evangelist does their job right, they light a fire in your imagination. They don’t tell you how their product or service is better, they help you understand how lives can be better. Seriously, an evangelist focuses on the person, not as something to sell to, but as a human being; the most important, most valuable asset imaginable. What an evangelist will do is help you how understand how to make lives better.

Take one of the most famous evangelists, Guy Kawasaki. He started with Apple, but his passion and vision was always bigger. He is now a best selling author and a highly in-demand speaker. The common factor in everything he has done is that it is all about making things simpler/better/easier for the person. Whether selling, planning their lives, developing their career, it is all about the person. The human being. Take any great speaker and you will see the same thing. What matters is the focus on the human. Listen to President Clinton speak about the improving the developing world, Bill Gates about eradicating malaria. Take Ghandi, Mandela, Dr Martin Luther King – it always comes down to people. To humans. The narrative is always about people.

It is a pity that more companies don’t recognise this and invest in people who care about making their products and their company matter by having a real dialogue with customers and society at large. This is not about giving your company a cool spokesperson. In fact the opposite. The best evangelists can go and do go off-script. They will be brutally honest about failures in a way that has PR people cringing, but through this they show their honesty. They know the risks in speaking out – and those risks are real. So when they do this, they are saying, “you matter, because my job may be on the line over this“. How many people that you meet from a company can you say that about? Certainly too few CEOs. Again, if we look to CEOs who care about people, who were willing to speak out and take a position, you find them leading great companies. Richard Branson and Virgin, the late Dame Anita Roddick and the Bodyshop, and Yvon Chouinard the head of Patagonia, a company that not only promotes its green credentials, but lives them daily by supporting protests and risking its name by challenging corporations and governments. More recently we have Blake Mycoski, the founder of Toms Shoes, a company that gives a pair of shoes away for everyone that it sells.

Are you starting to see a pattern here?

The reason that evangelism is important is because it is always about something bigger than the company. It is about people. About human beings. Not sales targets, but real people.Whether that evangelist is the CEO themselves or a role like Dave’s what matters is the willingness to have the dialogue.

Change takes time, and not all companies are founded or grounded in the ethics of Patagonia or Tom’s Shoes, but starting a dialogue is absolutely possible. Appointing an evangelist may not change the world overnight, but it will show that you are at least prepared to talk about things that matter and listen and engage with your most vocal critics to understand what is possible.

Benjamin Zander would approve.