Nokia CEO Stephen Elop wrote in his 'Burning Platforms' memo what he felt was wrong with Nokia. This is very reasonable-sounding stuff from Nokia's new CEO, to help explain why Nokia was so much in trouble. Let's be very clear, and first copy his exact words here. This is what Stephen Elop wrote about ecosystems and Nokia:
"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, catalyze or join an ecosystem."
Since that 'Burning Platforms' memo, we have heard on February 11, that Stephen Elop decided to end Nokia's own smartphone platform, Symbian, the heart of Nokia's current ecosystem. He also announced Nokia would not proceed into the previously-announced migration path, to the newest smartphone operating system, MeeGo. Instead, Stephen Elop announced that Nokia would replace Symbian with Microsoft's new Phone 7 (since renamed Windows Phone 7) operating system for smartphones. We should assume, that he felt WP7 is more suited for the 'war of ecosystems' against Apple's iPhone iOS ecosystem and that of Google's Android, HP's webOS etc.
While it all sounds great, a bizarre thing happened between February and today. According to dozens of executives we spoke with, Nokia developers have abandoned Nokia's platforms and even more alarmingly, are not embracing Microsoft's WP7 ecosystem instead. So let's examine the evidence. How do the three systems compare?
Open or Closed Ecosystem
Nokia's original Symbian operating system was an open source operating system. It was built with the support of essentially every major mobile phone maker (Motorola, Sony, Ericsson, Samsung, Siemens, Panasonic etc).
Nokia's intended replacement operating system, MeeGo, was also an open source operating system based on Linux, that Nokia jointly developed with Intel.
The selected operating system Microsoft WP7 is a proprietary operating system, it is very closely managed and controlled by Microsoft and Nokia would have no control in that evolution. To me this does not sound like Nokia changed to a better ecosystem. Maybe it's just me. Maybe it gets better with the developers.
Developers
Nokia's old' operating system, Symbian had a vast army of developers, using the system which is notorious for being very clumsy and difficult to develop for. But there was a large army, literally hundreds of thousands of developers worldwide who knew Symbian development (by some accounts, Nokia had 220,000 registered developers Ed.).
The new intended OS, MeeGo, was built on industry-standard tools based on Linux, for which there is ample available programming competence. There are hundreds of thousands, if not more than a million of developers competent in Linux.
The selected Microsoft WP7 OS is not using industry standard tools and is not Linux based. Any developers would need to learn new skills. The total developer community is only measured in the tens of thousands, far less than either for Symbian or MeeGo.
Apps
Nokia's Symbian platform has been around for more than a decade and has a vast array of apps and services. Its Ovi store had become the worlds' second most used app store, generating downloads that only Apple's iPhone App Store could exceed.
The intended MeeGo ecosystem would be using Nokia's Ovi store and could access Ovi apps and content, and if designed using Qt the common tool for Symbian and MeeGo, the apps would run on both platforms.
The selected Microsoft WP7 platform has the smallest number of apps and its app store is the least-used app store of the major internationally launched smartphone platforms. Nokia announced the company is going to rename Ovi Store into Nokia Services. How and if these two stores are going to co-exist... only time will tell.
Migration Path
Nokia's Symbian has traditionally had a migration path and Nokia even built a migration from Symbian to MeeGo via its developer tools called Qt. Thus any apps now developed for Symbian would also run on MeeGo. The developers of Symbian were particularly pleased with this extra effort that Nokia had invested in its ecosystem.
Nokia's intended OS, MeeGo would then benefit from the migration of most current Symbian content.
The selected Microsoft WP7 operating system did not have a migration path from Symbian. It did not have a migration path to or from MeeGo. It did not even have a migration path from the previous Microsoft OS, Windows Mobile. The previous Microsoft developers were particularly upset that Microsoft refused to support them in migration.
Android Compatibility
The old Nokia operating system, Symbian, did not natively have any compatibility with Google's Android, but through the Nokia developer tools of Qt, any Qt developer could create apps for both platforms. In this way, recently, Symbian developers through Nokia's Qt, acquired a partial compatibility with Android.
Nokia's intended new OS, MeeGo was built on Linux just like Android, and was an open source OS just like Android; thus most software modules etc would be compatible and in many cases actually interchangeable. In any case, Qt the Nokia development tool allows app development for both platforms, simplifying greatly application development work.
Microsoft's WP7 is not compatible with Android. It's not even compatible with Microsoft's own previous OS, Windows Mobile 6.x. Also, bear in mind the company decided to shift away from Qt and spin it off to Divia.
Map Support
Nokia's Symbian was built to include Nokia Ovi map support, the most used mobile phone mapping solution on the planet, and free to users. Nokia's intended MeeGo operating system had full Ovi map support.
The selected Microsoft WP7 operating system did not have Ovi map support, but it would be added, which would remove a unique Nokia benefit, and a free of charge to Nokia's big rivals who manufacture Windows Phone 7 phones - Samsung, LG, HTC and SonyEricsson.
The only way Ovi Map (Nokia owns NAVTEQ, world's largest map provider) would remain exclusive if Nokia keeps it inside Ovi Store/Nokia Services and refuse to make it available to other Microsoft App store users.
Carrier Support
Nokia's Symbian was expanded through the Ovi store to provide full carrier app store support, with carrier-billing, the preferred billing and payment option by all app developers. Ovi had become the app store with by far the biggest carrier-billing reach, passing over 100 carriers/mobile operators who supported Ovi carrier billing.
Nokia's intended MeeGo ecosystem had Ovi carrier support built in. The selected Microsoft WP7 ecosystem had no carrier billing support, but it gained that through the Nokia partnership, thus all the work Nokia had done to build the widest reaching carrier ecosystem was now gifted to Microsoft.
Now, while Apple can claim that they're the biggest store in terms of number of apps, statement that the company paid 2.5 billion USD (to date!) to App Store publishers is a pathetically small amount when compared to app, ringtone, wallpaper and news pushing carrier-billed business. For instance ringtone business is generating around 3.5 billion dollars annualy, while wallpaper business brings 1.2 billion dollars in EMEA markets alone.
Advertising
Nokia set up its mobile advertising arm in 2008 and has expanded that considerably now through Navteq.The intended MeeGo OS would benefit from all Nokia advertising developments including Navteq.
The selected Microsoft WP7 OS did not have any meaningful advertising platform, an area where Microsoft was seen to severely lag Google, Apple and Nokia. Now Microsoft gains the Nokia ad platform compatibility in upcoming WP7 versions.
Carrier insights
The Symbian ecosystem has had from day 1, the full support of NTT DoCoMo as one of the founding members, the Japanese mobile operator/carrier giant, who started the whole mobile industry and invented the mobile internet and launched 3G, near field, Wi-Fi mobile phones etc.
The intended MeeGo ecosystem had from the beginning the support of China Mobile, the world's largest mobile operator, alone twice as big as all USA carriers/operators added together. The selected Microsoft WP7 ecosystem is not supported by any carrier/operator. Thus you should not be surprised to see Intel putting Sean Maloney, one of key people in the whole company (rumored to be CEO after Paul Otellini retires) - to lead the China division. The company also deployed Nick Knupffer to Hong Kong. Nick is one of Intel's most skilled public relations experts and he'll lead the APAC team. Intel also poached Jon Carvill from GlobalFoundries, all in a bid to gain traction in the all-important China market with their MeeGo platform.
End users
And then on end users. The Symbian platforms has passed 400 million units sold (vs. about 200 million iOS and 100 million Android and 20 million all flavors of Microsoft phones). The Symbian system on Nokia Ovi Store has over 200 million active handsets (vs. about 100 million iPhone and under 70 million Android and under 10 million Microsoft of all flavors). And Symbian Ovi store active user base has grown past 60 million.
Nokia's intended MeeGo system had not launched by February 11, so it had no active users and no devices of any kind in the wild. However, the MeeGo OS would benefit from compatibility with Ovi, so for any developers counting the accessible market for MeeGo, they could in many cases count the full population of Ovi users.
But Microsoft's WP7, one year from launch, has not passed 10 million total devices sold. It does not have 10 million active users. And none of the past Microsoft or Nokia/Ovi users would be compatible with the current WP7 version. This is turning back on an ecosystem that bought over three billion Nokia phones, as the company shipped its billionth phone in 2005, and sold another two billion over the past six years.
Language Support
Nokia's older Symbian and the Ovi store had developers in most countries and especially the Ovi store was supporting the most languages of any app store. The new intended MeeGo OS with Ovi would have the same international language support as Symbian and Ovi.
The selected Microsoft WP7 OS has the least international language support, is essentially only a Western Hemisphere based ecosystem with English, French, Italian, German and Spanish languages supported. The company also took the same approach with Xbox 360 console - six years after launch, the console is only available in 36 countries.
Money - M-Banking, M-Tail, M-Money - in 2009
And on Symbian and Ovi, Nokia launched Nokia Money in 2009. While not specific to Symbian or Ovi, the two were compatible with Nokia Money. Bear in mind that Nokia Money was launched at the request of carriers and banks in mobile-developed markets. Nokia furthermore committed in 2010, before Stephen Elop was hired, that all Nokia smartphones (i.e. on Symbian) from 2011 would have 'near field' technology which is vital for mobile wallet applications, as developed first by Symbian partner NTT DoCoMo in Japan.
Nokia's MeeGo was set to be all NFC enabled, by Nokia plans prior to Stephen Elop. Instead, Elop selected Microsoft WP7 which does not have NFC handsets nor NFC support currently. Elop even cancelled many early Nokia NFC smartphones.
What Elop Has Done
He talked the talk. He did not walk the walk. Stephen Elop inherited what was by all accounts the world's most open and most wide-reaching ecosystem. He said an ecosystem must be more than devices. He said it needs apps, developers, maps, money, advertising, etc.
If your argument is that the ecosystem is the decisive factor for winning in mobile in this decade, as Stephen Elop seems to suggest, and many in the mobile industry believe; then look at what he did.
I am not talking which OS has the best user interface or which OS is the easiest to use, or which OS is the cheapest to make or which OS has the most handsets. If we consider only the ecosystem, then consider the following:
- Symbian has more apps than WP7.
- Symbian has more developers than WP7.
- Symbian has more users than WP7.
- Symbian was open source which WP7 was not.
- Symbian had carrier billing support that WP7 didn't.
- Symbian had an actual carrier onboard to support its evolution that WP7 didn't.
- Symbian was co-developed not developed by a monopoly like WP7.
- Symbian offered a migration path which WP7 didn't.
- Symbian even had somewhat a level of compatibility with Android (via Qt) which WP7 didn't.
- Symbian with Ovi had the biggest language footprint and biggest Ovi maps support.
That, what was arguably Nokia's first attempt at an ecosystem, call it Nokia's prototype, was then evolved into MeeGo, where the development was with Intel, world's largest semiconductor company, using an open source platform built on Linux (something Microsoft didn't have) and where every benefit included the above, or added even more ecosystem thinking that Microsoft didn't have, including obviously most of all, a friendly migration path from Symbian, and Linux software module compatibility with Android (again, something WP7 does not have nor will it have in the future).
If Stephen Elop says it's a war of ecosystems, he owned the world's best ecosystem now. I am not saying that Symbian was the easiest to develop to (Android and iPhone are far easier) but as a whole, open source, carrier billing, languages etc, Symbian was the best ecosystem. The company only needed to cut down the balooning costs and become more decisive, not spit in face to an installed user base of almost half a billion people.
Stephen Elop tossed that aside. Did he select MeeGo, which is everything Symbian was, except far easier for developers, and even more open and even more standardized with the industry? In fact, MeeGo is by far the most open platform of any smartphone OS and ecosystems counting all the new ones today.
No. Stephen Elop selected the most restrictive, most limited, least successful, most anti-developer, most anti-carrier ecosystem out there. In Microsoft WP7, when considered as an ecosystem, Nokia was going backwards, and all benefits of the Microsoft-Nokia partnership would indeed help build a better ecosystem but not for Nokia.
All gains would go to Microsoft, using Nokia's assets and years of work, to fast-track the Microsoft OS and ecosystem to be more viable. This was not a decision made in the best interests of Nokia. Not if ecosystem is the decision criterion. The beneficiary of Elop's decision, if thinking ecosystems was all Microsoft. That is why we have to consider Stephen Elop the Microsoft Muppet. He is being controlled by his former boss Steve Ballmer, the Microsoft Muppet Master.
If you think ecosystems, Nokia has thrown away the strongest current platform, and instead of replacing it with an even better one, Nokia has instead selected the weakest ecosystem out there. As American saying goes, can they polish a turd and create a winner? I think this is key evidence of Stephen Elop's incompetence as a Nokia CEO and is another reason why he needs to be fired now, while it is still possible to reverse that decision, and save what is left of Nokia's decade-long work into building an open source based true multiparty ecosystem.
There is more to this saga. The time for Nokia is running out. I will return with the real crisis of the moment in the next edition of this study into the biggest management failure of the mobile telecoms industry, as we count down to the firing of Stephen Elop, CEO of Nokia. Or - the disappearance of a brand.