75 Comments

Summary:

Nokia is insistent on using MeeGo for its smartphones in the future, but the company hasn’t yet provided a compelling reason why. Meanwhile, competitors with mature smartphone platforms are selling millions of handsets. It’s time for Nokia to stop the MeeGo experiment and embrace Google Android.

Last week, Nokia’s new executive vice president of the Mobile Solutions unit, Anssi Vanjoki, essentially banked the future of his company on its MeeGo handset platform. MeeGo was created this past February through the merger of Nokia’s Maemo and Intel’s Moblin operating systems, both of which are Linux-based. Compared to every other currently available smartphone operating system, MeeGo is a relative babe — the first developer build with an interface arrived just one day before Vanjoki’s public commitment to use it. And this relative newness amidst established platforms is one of many reasons why Nokia should stop MeeGo efforts now and embrace Google’s Android platform.

I address this argument in more depth in our most recent GigaOM Pro research report (subscription required), but many of my thoughts revolve around the same central theme — there are a number of reasons not to use MeeGo, and Nokia has yet to provide a compelling reason why it should use MeeGo. And while Nokia tries to find one while continuing to evolve MeeGo, Android devices are selling at annual rate of 58 million handset per year.

The Finnish handset maker can save money, reduce development costs and still play to its hardware design strengths with Android. Between unique hardware and — if Nokia felt the need — a customized interface, Android-powered Nokia handsets would rival those of HTC, a company that embraced Android early on and is enjoying more than 66 percent year-over-year revenue growth. While HTC thrives thanks to Android, Nokia is instead reducing already low sales expectations. Maybe MeeGo needs go away before it actually arrives on smartphones.

Read my full argument here.

  1. Dennis Victor Wednesday, July 7, 2010

    The problem extends far beyond the OS for Nokia though. Most of their recent handsets are poorly built plastic mobile phones. That, in my opinion, is their biggest obstacle. People will compare them directly to Apple, HTC, Sony Ericsson – and quickly notice how “plasticky” most Nokia phones are. And if they’re actually solid, they’re priced too high. Often above even the iPhone.

    Have to admit, I can understand why such a prominent mobile company wants to set the stage with a home-grown OS. Even if it looks like they’re fighting a losing battle, they are still the biggest mobile company in the world and they probably see it as an obligation to defend that turf.

    If Nokia went Android, they’d essentially be selling out an enormous part of their Corporate Brand integrity. I’m betting they just haven’t sunk low enough to do that just yet. If anything, MeeGo at least looked very fluid and intuitive on the tablets, so there’s hope still.

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    1. Which Nokia handsets are you referring to? In which countries are these handsets priced above the iPhone?

      My two most recent Nokia handsets are the N86 and the N900 – the N86 cost about 2/3 of the price of an equivalent iPhone and the N900 was slightly less than an iPhone 3GS 32GB.

      I have an iPhone too and in comparison, I find neither the N86 nor the N900 to be “plasticky” and “poorly built”

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    2. Two points:

      1) Most of Nokia’s recent handsets have been budget to mid tier and therefore do feature cheaper materials prominently. Models like the E72 and the forthcoming N8 feature more metal and are priced accordingly.
      2) Your pricing doesn’t take into account carrier subsidies.

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    3. Dennis,

      While I think the OS question that Kevin raises is a very legimate one to consider, I don’t agree with you that Nokia’s hardware are plasticky as you say, at least regarding the N900. I have the N900 and it feels very well made and solidly built…

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      1. I have to agree with Mark and ArchiMark – hardware isn’t the issue. I find the N900 is extremely well built and the new E73 Mode may be the most solidly built handset I’ve ever used.

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    4. which nokia model is more expensive than iphone ? I hope you are not referring to subsidized prices. Nokia phones generally has better hardware quality than even Apple. Their batteries last long, their cameras are much better than what Apple, Motorola, HTC produce. What they lack is good User Interface and good OS and of course a viable appstore.

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    5. which nokia model is more expensive than iphone ? I hope you are not referring to subsidized prices. Nokia phones generally has better hardware quality than even Apple. Their batteries last long, their cameras are much better than what Apple, Motorola, HTC produce. What they lack is good User Interface and good OS and of course a viable appstore.

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    6. I am not sure if adopting Android would amount to “selling corporate identity”. Although Nokia is a huge company, it does not have any influence in the smart phone market and Nokia cannot choose to ignore this market for obvious reasons.

      While MeeGo may be a great platform, why should users or developers adopt Nokia with Meego when they have other proven and mature offerings. In my response to Nokia’s strategy, I firmly believe that Nokia will be better off adopting Android and focusing on quality hardware rather than spread its resources in developing both hardware and software.

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  2. [...] for a developer and end user point of view, respectively. There were claims that Nokia will, or should, go to Android as it's next system, this would, supposedly, save Nokia seemingly failing stock. [...]

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  3. Nokia is trying to reinvent itself as a software and solutions company. With Qt round the corner, Nokia has a realistic chance for a fightback. Adopting Android now would just be a stupid move.

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    1. They’ve been trying it (and announcing it repeatedly) since the late ’90’s. Ovi has made progress in Europe (not sure of their user numbers), but elsewhere Nokia has suffered for trying openly to challenge carriers for control of users.

      They’ve never been good at recruiting a developer community, preferring instead to buy companies and assemble their own portal. They need an app market, and it isn’t clear there is time or space to create their own.

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      1. By “elsewhere” you mean USA. Maybe you should check situation in India, China and Middle East. There Nokia is even more stronger than in Europe. There’s whole world outside of USA and Europe.

        And what about the Forum Nokia? One of the largest developer community in a world. Nokia already have AppStore of their own – Ovi Store.

        Maybe you should check your facts.

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    2. One caveat… if the world moves from native apps to HTML5 apps it will level the playing field for a number of players. But permissions are supposedly complex for HTML apps – where you give a native app permission once to access a range of phone resources, HTML apps apparently require a series of permission requests each time you use them. Seems solvable, but it’s annoying now.

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  4. I don’t think the situation is as dire as is being painted here. Also, remember US & Europe are not the world’s center as far as mobile services are concerned.

    Nokia’s primary strength is in Emerging markets – i.e. BRIC economies and Africa. Remember, Android is activating 160,000 phones a day spread out over 5-10 handset makers. Nokia alone sells 1-1.5 MILLION plus phone EVERY day.

    Remember, 3G is in its infancy in Nokia’s core markets – China, India and others.. Nokia has strong presence, customer loyalty and carrier relationships in these markets. The number of attractive apps is key…but do not forget that in these emerging markets, the app stores are being run and controlled by carriers (which I think is a smart thing to do for the carriers) not by phone makers..

    So leveraging MeeGo (which is Linux bases) plus its carrier relationships and brand presence in the world’s largest and fastest growing markets

    And if Apple’s poor performance and lack of any significant market presence in China and India are anything to go by, then Nokia has plenty of juice left..

    Comments welcome

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    1. Nokia intends to use MeeGo in high-end smartphones, so if successful, it will take a while to trickle down (if ever) to the emerging markets. I don’t disagree with you that Nokia’s area of strength is in emerging markets, but MeeGo isn’t targeted for those areas.

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      1. I agree with you that it is designed for high end phones initially with probable trickle down in the following 12-18 months. I disagree with you that ‘high end phones’ is the same as US and Europe markets only.

        As the largest mobile markets in the world (read BRIC) start moving to 3G which can support data services and apps, and users familiar with Nokia start trading up (probably in the tens of millions) to Nokia 3G phones with apps provided by respective carriers, you could see the momentum shifting.

        I would give it till 2012 for this to happen. If for some reason, Nokia is not sucessfull (which I highly doubt) then, and only then, 2 yrs from now, should Nokia consider alternatives. Even then who knows how the ecosystem will look then.

        I think your suggestion that Nokia make the switch now is premature, at the minimum and seems to ignore ground realities of Nokia’s market strength

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      2. You may be right (and part of me hopes so, in fact), but I’m basing my thoughts of the target markets directly on Nokia’s public strategy plans. See: http://nokiaexperts.com/symbian-s60-s40-meego-nokias-strategy/

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      3. For one, I won’t base any ‘research’ note on publicly available strategy documents from a company. Honestly, do you think the top guys at Nokia say – ‘ Hey let’s publish our strategy for all important smartphone market, so we can get the smart people out there to tell us if we are right or wrong. Hey..maybe Steve Jobs will read it and tell us if are doing it right’ Duh :-)

        One needs to look under the cover, do some actual ‘research’ into options that Nokia may have, before coming out and saying they have lost the war (even though its hardly even started in 80% of the world-wide customer base) and they should hand their future to an OS that sell 1/10th of what they do.

        Plus, remember – its all about the software..so if you give it up, what do you have…nada, zilch, zero…

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      4. Understood – the company may not be playing all of its cards publicly. I agree with you there, but not so much on the comment about giving up the software and having nothing. HTC is proving that statement wrong every day and Samsung is reiterating it (but hedging their bets with Bada).

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  5. I will simply repost what I did on Pro (wonder why comments between the two aren’t more integrated):

    Android makes little sense to any company who is concerned with service revenue that’s vertically attached to a mobile platform. Given your logic here, Apple and MS should also go Android, but, we know that neither are happening – at least not at the level of allowing anything more than the occaional service hook into the platform-service.

    MeeGo is a Nokia-researched and designed opportunity to not just have control of the mobile platform, but the hooks into the services that platform enables. It started years ago when some enterprising folks at Nokia understood that Symbian was not as well positioned for a connected-platform and Memo was born, and that continued through Maemo’s development stages, developer and comment relations, and their larger internal change to be more open in regards to processes and strategies. The Moblin merge pretty much fell into their lap, as both Intel and Nokia see the same things regarding platform monetization around connectivity and services at the client-user level. And now all parties are positioned to be something like Android, minus Google (mostly) and Apple.

    That’s about as win-win as Nokia needs now.

    Plus, to move to Android, and the resulting PR fallout will take more time to harness than they will be given time to do so by media and many markets. Essentially, this is a roll for all the marbles, as it should be.

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    1. “MeeGo is a Nokia-researched and designed opportunity to not just have control of the mobile platform, but the hooks into the services that platform enables. It started years ago when some enterprising folks at Nokia understood that Symbian was not as well positioned for a connected-platform and Memo was born”

      Just so I understand: you believe that Maemo was successful for Nokia?

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      1. Kevin as a long time user of Maemo I defiantly believe that it was successful for Nokia. Not in sales numbers but I don’t think they ever expected it to be. Where it was a success was in proving that Nokia can build and work in the Open Source world, it also allowed them recruit the Linux devs they need now.

        I think Nokia have made the right decision to build their own system and at the same time completely open source it. This way they can use there considerable resources to be controllers of there own destiny while at the same time attracting other manufactures to Meego. From an OS point of view Maemo/Meego is already very strong. From a UI point of view time will tell but one thing you can’t say is that they are starting from scratch here.

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    2. Yes, I think it was successful, but not from the aspect of customer-facing aspects of their mobile business. From about the release of the N810, it seemed as if Nokia knew that they needed to change the company before changing the customer, hence MeeGo being deemed a step 5 pf 5 to their corporate strategy.

      Maemo wins included creating a mobile ecosystem from scratch, redefining the relationships between manufacturer and suppliers, good and bad lessons of leveraging’community’ for certain aspects of planning and developmet work, and probably the most important success for Nokia, exposing the flaws in their organizational hierarchies as it relates to communication and strategy execution.

      Doen’t mean they played these successes into anything more than a cult-type product, but it does very publically show the direction the company has wanted to go.

      Step 5 is the end-user, or customer facing play. Given these lessons, success is a requirement, not an option. And neither, therefore, is Android.

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      1. Fair points, but many of them apply to Palm and webOS as well – without HP to buy them, the new OS and mobile ecosystem Palm created would either continue to be a niche player or wither on the vine. Still, I like your “success is a requirement, not an option approach.” I know Nokia has a ton of bright folks that can make that happen.

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    3. I agree with ARJWright for the reasons he’s outlined. Moving to Android would be an absolutely insane idea short term and doesn’t make much sense in the long term either.

      Think about it. Nokia’s strategy is clear – Symbian powers the democratised smartphone available to the masses at a wide range of prices and needs. For the more demanding customer there will be MeeGo which is versatile, new and shiny. Sitting across both is the Qt framework.

      Android simply doesn’t offer anything compelling to Nokia for their current and targetted customer basis. Fundamentally the OS is unimportant. It’s what it can do, how it performs and what runs on it and, frankly, once you strip away proprietary UIs Android hasn’t got anything to worry Symbian let alone MeeGo.

      It is a gross error to think that today’s high end market is what should drive the development of an entire phone strategy because it’s so darn fickle. Motorola tried to play that game with the RAZR and lost heavily. Apple are in real danger too (although with their legions of followers to a lesser degree unless they keep making silly QA errors). Nokia and Samsung realise where it’s really at – the mass market. You don’t win that with one product and by jumping on what’s currently fashionable to techs and of little interest to Joe Public.

      As for Android’s sales numbers, well lets see what Gartner and IDC have to say before making extrapolations. ;)

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  6. I think you are undervaluing and underestimating Nokia and the position it holds worldwide. Yes they have 0 market share in the US but its influence worldwide with carriers is huge. All the way to backend infrastructure and full network operations in many countries that tie to handsets.

    Just like Apple, they need a refresh in management and “1” great handset that delivers the old Nokia quality and assurance of great service. Apple did it with “1” handset with an OS from scratch! Why cant Nokia? I wouldn’t advise Nokia to go the android route. Why should they and hand over their destiny to Google?

    Today they have the perfect organizational structure to obtain the results they are getting. Time to tweak!

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  7. I disagree with Nokia giving up to Android. The biggest maker of mobile phones should not lose control of the operating system, because it is what will reward the highest margins in the future.

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    1. The risk of not using android is going Bankrupt. The reality will soon don upon them. You seriously think Nokia can create a product much more advanced than the rest of the world (open sourced Android) and sell it at a premium when they are already so far behind and have never demonstrated any sort of excellence in UI/software design. It is either low margin or no margin. And what are they going to do for apps?

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  8. Hi Kevin,
    I agree with you 100%. Had made exactly this statement in my blog in the middle of May: http://funwithandroid.blogspot.com/2010/05/why-dont-nokia-and-blackberry-ride-on.html

    Only addition I would make to your remarks is that they apply as well to RIM….

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  9. Hi all,

    From what I can tell, most folks who think that Nokia should not go the MeeGo route base it on the assumption that MeeGo is a super competitive, cool new UI which they will deliver and wake up their smartphone efforts. Last I checked, Intel was a Semi company, trying to break into the smart-phone market (an effort going on for > 5 years with low success) and Nokia hasnt delivered an uber cool UI in years – so why should it change now? We need to be a tad skeptical – happy to be proven wrong. Personally, I too think that they need to not hand their destiny to Google (with all its Android success) and give it a serious shot. However, they better deliver with MeeGo, else they will really go down the tube.

    Also – I am a little tired of hearing their success in BRICs yada yada. Reality is that they are being squeezed by low cost Asian guys on low end and Apple/others on high end. So the arguments around their “strength” are a little backward looking. When you own a high market share, you are left defending it and things head only in one direction – down. The stock market is valuing them ~0.5x sales, because it doesnt see growth! If I were a dev today, I’d make a beeline to develop for largest audiences and they come from Apple & Android. Just my 2c.

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  10. another Intel bashing article from gigaom..you guys need to put some thoughts before writing up here so that it will have some sense..

    “there are a number of reasons not to use MeeGo, and Nokia has yet to provide a compelling reason why it should use MeeGo.”

    regarding your statement, nokia needs to go with meego..

    FOR THE SAME REASON as Apple has ios and google developed Andriod.

    brand differentiation and controllability. after all Nokia pioneered in its symbian platform and you are heavily under estimating Nokia’s ( and ofcourse Intel, as you always does) capability.

    Meego is developed with core idea of connectivity and cloud based services and which WORKS on multiple types/form factor devices.. no other OS can work so..(atleast as of today).. as the cloud based services evolve, there is lot of potential revenue from non-cellular connecting devices.. (mobile/laptop/gaming/energy contollers/cars/refridgerators..you name it..any thing that can be connected to network)..

    your thoughts are misguided,dubious and devious.

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    1. This post really has little to nothing to do with Intel, so that criticism is falling on deaf ears. ;)

      You do make a good point though: “as the cloud based services evolve, there is lot of potential revenue from non-cellular connecting devices.. (mobile/laptop/gaming/energy contollers/cars/refridgerators..you name it..any thing that can be connected to network)..”

      I agree completely. Now if you had to pick an OS for those devices, which would it be? My money would be on Android, but that’s just me.

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    2. We should agree on a rule for tech debates, analogous to the Hitler rule of arguments, whereby the first person who invokes a networked fridge loses the debate.

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      1. +1 Paul! :)

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