Is Nokia Doomed?

There’s been a lotofdiscussionregarding whether or not Nokia is Doomed or not.   The people who say Nokia are doomed basically point out that Nokia doesn’t have any attractive products at the high end, and at the low end the margins are extremely thin.  The high end products suffer from the Symbian being essentially dead (even Nokia is recommending that developers not develop native applications for Symbian, but to use Qt instead), and Nokia doesn’t have much of a development community following it, and it certainly does have much in the way of 3rd party applications, either targetting Symbian or Qt at the moment.

So what do I think of the whole debate between Tomi and Scoble?  First of all, I think there is a huge difference in American and European assumptions and perspectives, and a big question is whether the rest of the world will end up looking more like Europe or America vis-a-vis two key areas: cost of data plans, and whether phones become much more application centric.

Tomi’s 2nd article, in response to Scoble’s, “Nokia is still doomed” post, was quite interesting to me, especially in the comments where he takes Apple to task for not having an SD card slot (how else would people share photos with their friends?) and for not supporting MMS in its earlier phones.   My first reaction?  Um, isn’t that what photo-sharing sites are for?    Is it really that hard to attach a photo to an e-mail?  And then it hit me.   In Europe, data is still like MMS a few years ago — a place for rapacious carriers to make way too much money.  Many European telco’s don’t have unlimited data plans, and charge by the megabyte — and even if you’re lucky enough to live in a country which does have an American-like data plan, the cost of data roaming is still incredibly expensive.  In contrast, in the US, I can pay $30/month for an unlimited data plan, and I can travel 2000 miles south or west and it will still be valid.   Try doing that in Europe!   The US had consumer-friendly data plans much earlier than Europe did, and so perhaps it’s not surprising that Nokia has engineered phones that were far more optimized for the limitations caused by the Europe’s Wireless carriers.

The second area of debate where I think Scoble and Tomi are far apart is whether phones of the future are fundamentally about applications or well, making phone calls.   Here I don’t have proof that this is a fundamentally European vs. US difference, but I have my suspicions that it might be.   Tomi spent a lot of time dwelling on how Nokia was much better at making phone calls (i.e., better microphones, better radios, etc).   And my reaction to that was, “Who cares?  I rarely use my phone for making phone calls these days!”   And that was certainly one of the reasons why I gave up on Nokia after the E70 — its contacts database was garbage!   It was OK as a phone directory, but as a place for storing multiple addresses and e-mail addresses, it didn’t hold a candle to the Palm PDA.   And that’s perhaps the key question — how much is a smart phone and about being a “phone”, versus being a “PDA” (and these days I want a cloud-synchronized PDA, for my calendar, contacts, and todo lists), and how much is it about applications?

This is getting long, so I think I’ll save my comments about whether I think Meego will be an adequate savior for Nokia for another post.  But it’s worthwhile to talk here about Tomi’s comments about most smartphones being much cheaper than the “luxury” iPhone, and so it doesn’t matter that Nokia’s attempt in the higher end smart phones has been a continuous history of fail.   First of all, it’s worth noting that there are much cheaper Android phones available on the market today, which are price-competitive with Nokia’s low-end smartphones (i.e., available for free from T-Mobile in the States with a two year commitment).  Secondly, the history in the computer market over the last twenty years is that features inevitably waterfall into the cheaper models, and prices will tend to drop over time as well.  Apple started only with the iPod, but over time they added the iPod Nano and the iPod Shuffle.  And it would not surprise me if they introduce a lower-end iPhone as well in time as well.   It would shock me if they aren’t experimenting with such models even as we speak, and have simply chosen not to push one out to the market yet.  So even if you buy Tomi’s argument that the high-end smartphones don’t matter, and you only care about volume, and not about profit margins (talk to the people at Nokia that will need to be laid off to make their expenses match with their lowered revenue run rates; I bet they will care), the question is really about whether Nokia has time to execute on the Meego vision before it’s too late and the current application-centric smartphone ecosystems (Android and iPhone) start eating into the lower-end smartphone segment.   More on that in my next post.