Tag Archive for 'Nokia World'

Nokia World ’09 – the importance of Maemo 5

Published on September 9, 2009 in Vendors. Closed Tags: , , , , , , , , .

nokia-world-09-smallThe most important announcement at last week’s Nokia World 09 show was the arrival of Maemo 5, the company’s new smartphone software, together with the N900 – the first device using it.

Maemo 5 and the N900

The announcements have been widely covered in the press, but it’s worth reflecting on the relevance of them to Nokia and the market.

Maemo 5 is the next evolution of the company’s Linux operating system, used in earlier products such as the N800 and N810. It has been fermenting quietly within Nokia for about 5 years and the improvements in the latest version are mainly aimed at bringing a desktop computing experience onto a mobile device.

This fits the aspiration of the top end of Nokia’s product range, which is to push mobile devices up into the computing space. Nokia’s Windows 7  based Booklet 3G laptop / netbook, which was also announced for Nokia World, is a complementary step.

The main upgrades to Maemo for this version are in the areas of speed, performance, PC-style multi-tasking where you leave the apps running all the time, a brand new user interface (UI), a Mozilla based browser, integration of VoIP into the operating system, adding support for Microsoft Exchange and designing in renewability at all layers of the software to enable a healthy roadmap.

When announcing Maemo 5 Anssi Vanjoki, EVP of Nokia’s Markets Unit, said that Nokia had always envisaged 5 steps to achieving the ideal new software platform, and that this is step 4 of those. That does not mean that the current version is just work-in-progress, more that there is already work going on for the next release, which will presumably incorporate greater integration with the Qt framework, HD media and other goodies.

With the release of Maemo 5 came the launch of the N900, the first device to use the software. This is a slightly smaller, but higher spec version of earlier tablet devices with cellular connectivity built in for the first time.

The N900 was designed to fit the features of the software and has been welcomed for its speed, memory, screen, improved keyboard, gaming abilities, range of media formats supported plus better handling of video. However, it has also been criticised for its blocky shape and general ugliness, with one person unkindly describing it as a “stepping stone”.

The core applications on the device (contacts, messaging etc) are all new for the N900 and are designed around web use cases. For example the contacts book shows VoIP addresses next to phone numbers, as well as social network links.

In addition there are 20 other applications available for it at launch including Ovi Maps, Skype and others. There is a lot of work going on porting Linux applications from earlier Nokia devices and desktop Linux to the N900, so the range of applications will rise quickly. Initially these will be available through a special site – Maemo Select – but we can anticipate that the Ovi Store will carry them soon.

Importance

For Nokia the release of Maemo 5 is a logical next step. It has not had a major software platform release for about 8 years since Series 60 on top of Symbian, and there is a clear need for a new platform that is designed from the outset to work with the web.

From a short time of testing the N900 at Nokia World, I think the software looks very capable and introduces a number of interesting new ways of doing things.

The N900 is of secondary importance to the software – though of course you need devices to ship the software. But we should think of the N900 as only the first attempt to exploit Maemo 5.

Actually, although it is not beautiful, the N900 feels much nicer to use than the N97 and starts to show what Nokia is capable of at this level. It is almost what the N97 should have been.

One key task for Nokia will be to turn the applications side into a consumer proposition. For earlier versions the apps were easily available and well organised but very geeky, with names like “gstmjpg” and “irtrans-irserver”. Nokia will need to make it as easy and user-friendly as on the Apple App Store to get applications, but without alienating the Linux community who have contributed such a lot to the development path.

Another key task will be to ensure that the applications are computing-grade and really serve the high end, rather than simply parroting what’s currently available in Symbian / S60 and constraining the appeal of the device by bringing historic Nokia smartphone-think to it. So, for example, it needs a proper office suite, a high quality RSS reader and high-grade PIM applications.

Both of these tasks are really important for the market’s development since consumer users have so far rejected the relative unknowns of Linux on netbooks in favour of the tried and trusted Windows, with all the applications and file format compatibility that comes with it.

Nokia intended the N900 to appeal to Tech Enthusiasts – one step out from the Geek group who bought the N800/810, but not mass market. However, the interest this device has generated suggests that it could appeal much more widely, especially if there is a good range of useful apps available in an easy way. We can expect to see it ranged and subsidised by a number of carriers.

The N900 is also likely to play a useful role in helping Nokia re-build its brand in the US.

And what about Symbian?

There has been a lot of poor quality journalism in the last month about how Maemo will quickly be the death of Symbian. This is based on the perceived weakness of Symbian in serving high-end devices.

We should remember that Symbian in its new organisational form incorporates both the original Symbian operating system and Nokia’s Series 60 UI and runtime layer.

Although the original OS is now old, actually it is highly capable and it is good at running on devices which do not have a high spec processor and Gb of working memory. This makes it a sensible choice for smartphones lower down the range.

As far as I can tell most of the major weaknesses in the current Symbian come from Series 60, especially the touch UI which was a huge missed opportunity that set Nokia back at least 2 years. Nokia is fully aware of this and is sick of hearing about it. As I understand it there is a proposal in the Symbian system for a major overhaul to parts of S60 which, if approved, could appear in release 4, due in around a year’s time.

So, yes, that gives Nokia a problem in that it must get through the next 12 months making the best of a poor UI in its top-end Symbian smartphones (or sell the N900 to those buyers). But it still has a strong platform for serving lower smartphone price points, and for giving its competitors a hard time at those levels. The newly launched 5230 at a recommended price of €127 is a great example of what can now be done.

And this means that Symbian is a real growth story, with much higher volumes likely over the coming 2-3 years than ever before.

Nokia World 09 – Company level view

Published on September 4, 2009 in Vendors. 1 Comment Tags: , , , , , , .

This is the first of a series of posts on various things coming out of the Nokia World show that took place this week in Germany. To start with I’ll focus on the corporate issues. In other posts I’ll focus in on key areas within the business.

At Nokia World this week the company’s management continued, strengthened and expanded on the themes it used in the last results call – namely that the mobile phone industry is in the early stages of the biggest change in its 20 year history.

The key messages from the management were:

  • In the new world it will be solutions that will drive the market, rather than just devices or just services
  • In the new world competition will take place between competing eco-systems of industry players, rather than those active in a single category such as phones
  • Nokia intends to be at the heart of one of the eco-systems
  • Nokia is undergoing a transformation to address that opportunity
  • It has recently fallen behind in some areas of the phone market, but has listened and is fixing things quickly – it is also on an aggressive push with smartphones
  • It is further focusing its efforts on a few key services for retailing to consumers
  • And it is also starting to scale its internet infrastructure, so that others can start to play a fuller role in its eco-system
  • We will be able to judge the success in 14 months if it hits its target of 300m active users of its services generating revenue of €2bn per annum

Much of this is what Nokia has been saying for the last 2 years since it launched its Ovi strategy. It continues to remind people of the case it is making, presumably because it feels there are many people who either don’t get it yet, or don’t buy into it.

For example, its share price is up on its low for the year, but is roughly where it was in September 2004. The financial markets are currently attaching very low value to its long-term push into services.

I suspect the biggest issue is that many people do not yet believe in Nokia’s ability to make it work.

The company’s reputation has suffered this year with the lack of an “iPhone killer”, the Ovi Store launch and the issues people have had with the new N97 flagship device. In its efforts to catch up Nokia seems to be rushing things to market even though it knows they are not properly ready,

This is dangerous in the same way as it was for the dreadful British Leyland car manufacturer in the 1970s, which worked out that it would cheaper to cut down on Finished Goods QA and to fix things when customers brought their cars back and complained. It was cheaper, of course, but it had a disastrous effect on the company’s reputation and brand.

That is an unfair comparison. British Leyland was a mess from top to bottom and a standing joke in its industry – Nokia is an awesome competitor and highly respected. But Nokia just cannot afford to launch things that are as poor as the Ovi Store and N97 were at launch.

So has Nokia listened and fixed things? Yes … and no.

Olli-Pekka Kallasvuo, CEO, said in his keynote that the apps and services he was announcing are all “available today on the Nokia Betalabs site”.  Naturally the site was immediately swamped and it took me most of the day before I could download them. When I came to install the new Maps application it took 7 attempts, a lot of unhelpful error messages and 30 minutes help from a Nokia employee before it would work.

In fairness to the app this was because of (known) N97 issues, not because of anything wrong with the app.

To address those issues it is launching its first pure software product – the N97 2.0 software – in October.  Yes this has large number of bug fixes, but it’s also the first step to providing incremental value on a device by upgrading the software, as Apple does with the iPhone. This is a good new position for Nokia.

But it’s clear that there is still work to do before all parts of the company glide along beautifully in sync.

And to address that Nokia has recently announced that the Devices and Services division will become be supplemented with a new Solutions division, under a single head, with the aim of ensuring that plans are properly co-ordinated and executed. An essential move.

On the services side Nokia showed real progress with two good moves and an update on existing services.

First was the announcement of closer integration with Facebook. Interestingly this does not use Facebook Connect, but is built on a framework that Nokia has built for pulling feeds in from a wide variety of social networks. Facebook is (quite naturally) the first to go commercial, but we can expect large numbers of social networks to be integrated in the coming months, something no other handset vendor is in a position to do. In the long term this will work with the Contacts Book in the phones but for now it is used in separate apps.

Incidentally, this integration with Nokia will be the first time that Facebook will be using location information on its site. And it is real kudos for Nokia as a web platform provider that Facebook chose Nokia for this, rather than Google.

Second was the opening of the APIs for Maps and Navigation, allowing web and mobile app developers to use the functionality in their sites or apps. This follows 6 months of collaboration with a select group of developers and is a very important step. By allowing the use of high functionality APIs, Nokia will start being taken seriously as a web platform provider by large numbers of developers. It will also strengthen the Ovi proposition for users, making it more worthwhile for them to sign up to an Ovi account.  For now this is limited to Maps and Navigation but we can expect to see other APIs coming along in areas such as messaging, music, contacts.

On the existing services Nokia said that its Life Tools service trial in India has been a success and will be scaled up, and that its Ovi Messaging service is getting good uptake in the market.  Both have the potential to generate many millions of users and revenue.

So Nokia’s Services target is interesting.  It will ship around 500m phones between now and the end of 2010, plus it has many more in the market which can already get access to Ovi. So it needs something like a 50% take rate to hit its Active Users target (an Active User is one who has used an Ovi service in the last 6 months). This is quite ambitious, but looks achievable.

If it does hit it, those users only need to spend €6.7 each per year to achieve the revenue target.  Clearly some of the services have very low revenue per user, but others are much more valuable. Maps, for example, is ~€60 per year; Comes With Music adds ~€50 to the value of a phone. So the revenue target is not so ambitious.

Interestingly, when asked if the Services would be profitable in their own right on hitting 300m active users and €2bn revenue by end 2010, a senior spokesperson became uncomfortable and evasive. Looks like break-even is some time after 2010.

Also, Nokia’s definition of Active Users is not ambitious. One activity on Ovi in 6 months is not very interesting. Roughly 50% of Facebook’s users log in daily. A high proportion of Google’s base use its service many times a day.

In ramping up the services there is a balance to strike and some big opportunities to get it wrong.  Some network operators do not want Nokia’s services and there are stories of tension in sales meetings as Nokia is being forces to sell just the handsets without bundling the services in. There are also rumours of investment trade-offs between services and handsets, leading to gaps in the handset portfolio for next year.

Nokia’s strategy is very carefully thought out and – if it works – the company will occupy a clever and valuable position in web services as mobile usage goes more and more onto the web.

Success with this is going to be all about executing it properly and we are starting to see real progress.  Demonstrating that the solutions approach is adding value to the company will also be a key aspect, so that it can carry all of its stakeholders and a sceptical financial community with it.