There have been rumors that Microsoft would one day buy Nokia’s devices business ever since Microsoft’s Stephen Elop became Nokia’s CEO. But in retrospect the clearest sign that real action was imminent came in February, at Mobile World Congress.
It was in Barcelona that Elop announced the opening-up of Here, Nokia’s mapping, navigation and augmented reality (AR) suite. Nokia made it so that other platforms could use Here and other developers could build on top of it.
At the time, I noted that Nokia was likely hedging against a “post-smartphone future” (I was thinking more generally than “Nokia’s post-smartphone future”) where new platforms, such as some kind of AR-friendly smart glass, were taking over:
“If that happens, if people have maps in front of their eyeballs more than they do now, if augmented reality becomes more than a nice idea with few essential use cases, then we’re looking at a wave of service innovation that is hard to imagine in the current smartphone paradigm. There will be limited opportunity for hardware differentiation — the quality of these core mapping and AR services will be where most of the action is.”
So what does Nokia still hang onto while it sells its devices and services business to Microsoft, apart from its NSN networking business? Here, and its Advanced Technologies division, which deals in new sensor, materials, cloud and web technologies. In other words, it still has the two key units to take it into a wearables-centric future, on both the location-based services and associated core tech development sides.
Hello Glass: you may have a heavyweight rival platform on the horizon. But that’s future-gazing, of course. Just days ago, Nokia also unveiled its Here Auto platform, which will be a very serious contender in the automotive infotainment and mapping scene – a highly lucrative landscape that’s only just starting to open up.
Nokia’s emerging future
Here will serve another purpose for Nokia, too. One part of Nokia’s devices business that has attracted little attention in the Lumia-focused Microsoft takeover furor is its Asha line, which is focused very much on emerging markets.
The problem is, although it has seen an admirable refresh of late, Asha is a platform in decline. Its main competitor is Android, which has until recently been the only other smartphone platform (and a more fully featured smartphone platform at that) that could reach so far down in terms of price points. And now Microsoft owns it — according to Stephen Elop, Asha will be used as an “on ramp” to Microsoft services, so it doesn’t sound like the company will put a huge amount of further development effort into it.
BlackBerry, you may be surprised to hear, also remains a critical rival to Asha in some parts of the world – in South Africa, where I’m from, loads of people, rich and poor, still use BlackBerrys because the Canadian company has struck cheap or free data deals with the local carriers.
Now, BlackBerry is quite plainly on its way out (I would hope someone would rescue the low-end BlackBerry line, but it’s unlikely) and so, quite probably, is Asha. Which leaves the emerging markets with cheap Android and maybe cheap Windows Phones too, if Microsoft uses the Nokia devices business buy to keep pushing price points down.
But that’s not the full lineup — there is one very serious dark horse, in the form of Firefox OS. Mozilla’s nascent smartphone platform appears to be enjoying genuine support from the carriers (and not just in emerging markets) who are fed up with the Google/Apple smartphone duopoly and, certainly in the emerging markets, Firefox OS now looks best-placed to step in where Asha is faltering.
And what location-based services component does Firefox OS use? How will its (potentially) millions of users find maps with local transit and traffic information? You guessed it: Nokia Here. How long will it be before forks of Android also start picking Nokia over Google as the supplier of this piece?
If Nokia has until now been competing with the Android phone makers, it is now competing with Google itself on the core services side. And location is where everything is at — it’s the most obvious feature of any new smart glass technology, and will probably also be fundamental in building future mobile commerce operations. Context is king, and Nokia knows how to play this game of thrones.
My colleague Om Malik reckons the Microsoft deal is a terrible idea on the hardware front, and he may be right – Nokia as a phone brand may be doomed. But even if that happens, Nokia the remaining company and the long-term brand still has a lot up its sleeve.
Nokia was an incredible hardware outfit in terms of design — up there with Motorola in its heyday – but its biggest strength was in finding out what people all around the world need, and delivering on it. I don’t know any other phone manufacturer that employed an ethnographer.
The Finnish firm is now very well placed indeed to design and develop new location-related user experiences. Its Advanced Technologies unit is almost certainly already working on new wearables ideas, and – if Firefox OS takes off – Nokia gets to address both the low and high ends of the smartphone market (through its continuing Microsoft partnership) simultaneously. And now it doesn’t have to worry about the ultra-competitive, race-to-the-bottom mobile hardware business while doing so.
Goodbye Nokia the phone hardware company. Hello Nokia the location-based services company, the real Google rival. It’s yet another new era for the one-time galoshes manufacturer and, believe it or not, the future looks promising.
Michael Halbherr, the head of Nokia’s Here unit, will be speaking at our Mobilize conference, which is running from 16-17 October in San Francisco.