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The App Approach: A Dead End?

August 11, 2011

From the amazing statements department. Flash. Venture Beat’s “Nokia Exec: Android and iPhone Focus on the App Is “Outdated” caught my attention. For this write up, let;s assume the fellow is dead wrong. I am okay with headlines written for Bing and Google indexing subsystems. I am also okay with wild and crazy statements from cash strapped azure chip consultants, search vendors worried about making the next payment on the CEO’s company car, and unemployed English majors explaining that they are really social media experts. In an economic depression, words are worthless. When one has nothing to lose, is the approach “Go for broke?’

The assertion reported by Venture Beat’s Mobile Beat online publication was quite interesting. First, Nokia is not hitting any financial home runs. Say what you will about Apple, the outfit has a nifty balance sheet. Even the Google which is a giant ad system is able to “give away” a mobile operating system and make big waves. One example is the factoid that hundreds of thousands of Android-based devices are sold every time I check the weather in Harrod’s Creek.

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A happy quack to http://zekjevets.blogspot.com/2010/02/alternative-racism.html 

Here’s the statement that snagged me. (This is a longer quote than we normally use, but I want to get the context right. Please, navigate to the Venture Beat original for the full story. Also, note that I have put in bold face the items upon which I wish to comment.)

Nokia’s future phones will merge the latest Microsoft Windows Phone software based on the Mango update (which Weber said has had great reviews) with Nokia’s hardware, which he said boasts reliability and phone call quality. Weber cited state-of-the-art imaging technology and battery performance as areas Nokia phones would excel in. Weber also said Nokia may beat competitors on pricing, thanks to the company’s significant global reach, which gives it economies of scale. Moreover, Weber said the company will launch its superphone portfolio with a focus on U.S. market, because he said winning in the U.S. market is what it takes to win globally. He also confirmed that Nokia will back the launch with the company’s largest marketing effort to date, though wouldn’t go into specifics. Weber called Android and the iOS phone platforms “outdated.” While Apple’s iPhone, and its underlying iOS operating system, set the standard for a modern user interface with “pinch and zoom,” Weber conceded, it also forces people to download multiple applications which they then have to navigate between. There’s a lot of touching involved as you press icons or buttons to activate application features. Android essentially “commoditized” this approach, Weber said.

Whew. Let me do an addled goose style run down.

  1. Reliability and call quality. In my experience the phone is only part of the reliability and call quality equation. There are networks involved. I have worked throughout the world and reliability and call quality has more to do with where I am than the handset. In the arctic circle my Treo 650 worked like a champ. In the hollow near my pond, I can’t get a coherent squawk from my BlackBerry. So how’s Nokia going to fix this? Nokia can’t. Baloney.
  2. Imaging and battery performance. Whoa, horsey. Putting a better camera in a phone is a question of economics and technical tradeoffs. The battery issue is a big deal. As crazy as Research in Motion’s present management set up is, the company does have good battery technology as does Apple. Nokia? Better get that pony aimed at the battery corral is my advice.

  1. Pricing. The smartphone sector incurs big costs. Nokia may be talking about pricing, but it has to reach economies of scale for its global business as Apple sucks up lots of manufacturing and component resources. Also beavering away are the Android crowd. Nokia? Well, getting the economies of scale is going to take cash, lots of it going forward. Maybe I am missing something but in the cash skirmishes, Nokia may be showing up with a thinner wallet.
  2. Superphone! No, a superphone portfolio. Okay, Apple has zero iPhone portfolio. It has a few models and big margins. Google and its pride of partners have lots of models. There is considerable difference between the Apple approach and the Google approach. The winner is the outfit with the money. Right now Google has the money. A superphone sounds good, but a superphone portfolio sounds even better. The problem is that the money seems to be flowing to the company with the more limited, higher margin product, not to the company with a large number of partners, devices, and “flavors” of software. Nokia is following a path that may not lead to a pot of gold.
  3. Marketing. Yep, great. How does marketing work today for Nokia? Right, not so well. Enough said.
  4. The Android and Apple platforms are outdated. I am struggling to take this statement as a serious one. With new gizmos for Android arriving more frequently than my daily New York Times and fanboys cranking out hints that a new iPhone is arriving in time for the holiday season. Nokia is not synonymous with rapid cycle innovation and, here in Harrod’s Creek, Apple and Google are.
  5. Forcing people to take actions. In the long dead world of direct mail, the best direct mail marketers knew that making an envelope opener tear out a square, lick it, and paste it on a card increased involvement. The idea of successfully completing a task no matter how simple improved response rates. When Google and Apple “force” people to touch, stab, and slide their greasy paws on an Android or iPhone device, the user is getting hooked via the sense of satisfaction of getting something right and the kinesthetic activity itself. Nokia, maybe this “forcing” stuff is not such a bad idea? Search is becoming a utility, an app, by the way.
  6. Commoditizing. Yikes! Last time I checked the niftiest mobile devices were the most expensive ones. There are commodities like bulk shiploads of borax and there are commodities like a new iPhone. Nokia may be confusing the economics of bulk chemicals with the economics of mass produced high value knowledge products.

But there is a problem. What if the fellow is correct?

Nokia, over and out.

Stephen E Arnold, August 11, 2011

Sponsored by Pandia.com, publishers of The New Landscape of Enterprise Search

Written by Stephen E. Arnold · Filed Under Business strategy, Feature, Mobile, Technology 

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