Nokia's Brave New Strategy: Laptops

31 Comments

nok_1760_111441Nokia (s NOK) sells a lot of $50-$100 phones. In places like India, where I just returned from, Nokia’s ringtone is part of the urban soundscapes. It accounts for about 40 percent of total global handset sales. Much like McDonalds and Coca Cola, Nokia is everywhere. (Except in the U.S., but that is a whole different story.) Like those big, lumbering mature companies, it is unable to move nimbly.

It has yet to launch a credible touch screen phone to compete with LG, Samsung, HTC and every other handset maker. Simply put, Nokia facing innovator’s dilemma has become calcified with caution and is unable to invent markets. Instead of fighting off iPhone and other touchscreen phones, Nokia is thinking about selling laptops. Yes, you heard that right. Nokia will consider making PCs. Chief Executive Olli-Pekka Kallasvuo told Finnish national broadcaster YLE (via Reuters) that the company was looking at getting into the PC business.

Maybe it is Nokia’s way to handle competition from Lenovo, Asus and Acer. This is quite amusing because most of these PC makers redefine the word “loser” when it comes to making money. You might hear some analysts say that it is a good idea since mobile operators want to sell connected netbooks. I am not convinced that netbooks can be very profitable. If Nokia does indeed get into the PC business, it will be running and wheezing after more nimble competitors. You only have to look back at its failed attempts to sell underpowered tablets to know how this PC experiment is going to end.

What do you guys think about Nokia’s new likely diversification into laptops?

31 Comments

Bobby

Some might argue that if Dell can think of possibly getting into the smartphone biz, why can’t a smartphone / mobile phone manufacturer go the other way. Well I think today Nokia needs to stay very focussed on the fantastic job of making superb phones and try and make solid biz phones that emulate a PC .. Nokia is already doing this if one has to go by the 2009 roadmap. There’s gonna be a huge demand for 3G/HSPA/Wimax/LTE smartphones .. it’ll be wiser to strengthen their core technology around simple but USP laden things battery life / more processor speeds (upwards of 1Ghz .. there is talk of 1.5Ghz … who needs a laptop), etc etc .. I agree with Om – thers just no need for a netbook anymore. Be Niche be profitable .. please be with the evolution of smartphones instead.

knujlla

Om and Olli,

There is another article about this interview over at http://www.theregister.co.uk/2009/02/26/nokia_laptops/

And the translation there is:

“We don’t have to look even for five years from now to see that what we know as a mobile phone and what we know as a PC are in many ways converging,” Kallasvuo told broadcaster YLE when questioned about Nokia’s aspirations towards the lap. “We are looking very actively also at this opportunity.”

Olli

Om,

Maybe you should just go to the source & ask the tv host who did the interview: heikki.ali-hokka(at)yle.fi

ronald

For Google I can understand the motivation to get into that market.

Business value = Eyeballs * intent

They got the eyeballs now they have to increase intent to sell more valuable ad space, as higher the intent as higher the ad price. For this they really need to know personal data, since intent can be calculated out of the context a person is searching. To make up a freaky example. Am I just a car fan and looking at the new Porsche or am I in the market for a new sports car and have visited a few car dealers in my area?
This distinction can easily be made with personal data available to my search, best in combination of data from a personal device I carry around.
In the end Google could provide a better user experience with more relevant data no matter the form factor.

Nokia can do what? Compete on price? There were MP3 players before before iTunes, separate Office applications before MS Office. In the end integrated experience won.
Or maybe Nokia’s spreadsheet shows that Google is just Google and all the data point to price and execution and they can compete on that.
Nokia always seemed to me like Sony in the consumer device area (not game console), they really don’t get Software, it always feels awkward even if all the features are there.

Om Malik

@Olli

Any recommendations on the Finnish translation person. I really don’t know many folks there, and the ones that I know are well on the move today :-)

Olli

Om,

The original TV interview can be seen here: http://www.yle.fi/java/areena/dispatcher/1923984.asx?bitrate=1

It’s in Finnish, so I guess it won’t do you much good. ; ) Maybe you might want to get a third opinion from a native speaker beyond the Reuters reporter & myself?

My point wasn’t about your thesis about Nokia, merely that the source behind your article is a misinterpretation of the original interview. And thinking about this a bit further, if Nokia was to move to the laptop business, would they announce it in a TV interview in Finland? I don’t think so…

derek

I think they certainly see that the mobile market is changing where more powerful computing devices are required/desired. Good for them for recognizing it unlike Moto. This model at least let’s them break a little bit away from carrier lock, use more wifi technologies, open up their architecture to developers, play NDS games, etc.

Not unlike many large companies, my understanding of Nokia’s internal ops is that they have a bunch of fiefdoms and encourage a kind of cut throatism in development, so it may never see the light of day anyway and is a nice PR play.

Om Malik

@Olli,

Is there a chance you can provide a link to the original post and suggest how best to get a translation for the interview. I would like to amend my article to reflect the correct tone.

Regardless, my thesis about Nokia facing a tough road ahead isn’t going to change anytime soon, unless they change as a company. :-)

Om Malik

@David,

I used the 5800 and it is as bad as any one of the touch screen phones, though Samsung Insight is pretty far along. Regardless, it is NOT a worthy competitor. And I wouldn’t take one for free. Seriously, not joking about it.

Olli

This one is a canard caused by inaccurate translation / not capturing the tone of voice in the translation.

In the original Finnish language TV interview, which I saw myself, the host asked CEO Kallasvuo, whether Nokia’s going to move to the laptop business at some point. Kallasvuo answered something like “we’re looking at this opportunity also” with a neutral “never say never” tone – he was by no means actively stating that Nokia’s moving into the laptop business, as the Reuters article suggests.

Nicholas Paredes

When Nokia created Symbian with the old Epoc resources, I was hoping that they would get it. Like Netscape, they refused to move into new areas and missed a market. Psion created the NetBook profile, and Nokia could have furthered the cloud efforts and created the “terminal.” Instead, we have retreads of Windows, Linux, and hopefully one day OS X.

Where Nokia could have created a profitable model is through subscription, as they do with phones. If I got a NetBook with a $30 connection fee, that may be of interest to many. It probably does take low margin producers to keep the costs in line though.

yetanothertechie

If the 3G attach rate goes up in netbooks, and it probably will, then Nokia will have much better pre-existing distribution channels to service providers worldwide than most trdiyional netbook manufacturers.

Atlanta Homes

This is the opposite of what should be happening. As marketshare starts to dwindle on laptops where it is gaining on smart-phones, why aren’t the laptop companies buiding smartphones. In 5-10 years laptops will be close to extinction with the smartphone doing most of the work.

JT

Think ARM-powered, Maemo-running small netbooks. Cheap CPUs, free OS.
Why do you think Nokia contributes heavily to Mozilla?
Why do you think Maemo is the first platform mozilla mobile ever ran on?
Hell, it might even please google because of the cloud-based approach.

deepwaterthinking

It would be great to see a nokia version of one laptop per child. As you say they are huge in the developing world and could distribute easily to the remotest village. Combine that with nokia wimax base-stations and we could see a really interconnected world. They’d have to create a beautifully simple user interface, which they might struggle with, but it would certainly be interesting to see. Nokia Information Communications Entertainment would be nice!

David

“It has yet to launch a credible touch screen phone to compete with LG, Samsung, HTC and every other handset maker.”

Well, the Nokia 5800 is better than all LG, Samsung and non-Android HTC phones… It’s only missing applications to be a really cool alternative to them (….ok… I don’t compare it to an Iphone)

Kontra

Steve Jobs called and he says he’s fully behind Nokia’s move. It’s one more road-kill.

DD

Nokia has the internet tablet running their own version of Linux called Maemo, and have also acquired folks like Trolltech who own QT GUI framework which is very powerful. So Nokia actually has the software expertise to pull off something like this, they really need to focus on quality of their software and user experience. Their N series phones have proven that they can make really good hardware.

Also, Nokia has re-invented themselves once when it sold off everything (TV, Tires, etc) and focused on cellphone, and they can re-invent themselves again. They are still going strong in most countries, so if they do things right, they can succeed.

Martin Lawrence

I assume they see netbooks as an emerging market they don’t want to be left out of.

Stacey’s article “Smartphones and Netbooks” argues that, chip-wise, a netbook it is not far from a smartphone.
The same can be said for the OS: Android is set to power next generation netbooks.

Plus, Nokia’s channel (carriers) are salivating to add netbooks to their portfolios – add a SIM card, and sell data contracts galore.

Look at Nokia’s DNA: they excel at designing, managing the manufacturing process and the distribution channel of digital consumer devices. Yesterday feature-phones, today smartphones. Tomorrow?

You are right in that the margins are probably razor-thin, but I would assume that Nokia is quite used to that.

What sounds awkward is the wording: “notebook” sounds very last century. I assume what Olli meant is “netbooks” but that got lost in translation.

just me

a nokia version of a netbook running s60 is more likely and no doubt the sucessor to the N internet tablet range. It will also run firebox for mobile.

Markus Göbel's Tech News Comments

Olli’s quote needs interpretation.

I expect something else than just boring Windows laptops. It must be something handier, inspired by the Android netbooks they talk about now. Maybe a Symbian netbook or finally a great Nokia Internet Tablet with faster CPU and 3G.

Most of my work is browser based and emails. I don’t need a full fledged PC OS anymore. My N810 would have been my favourite toy, if it had a better browser and 3G. Now it’s my T-Mobile G1.

Rob Adler

I don’t want to say Nokia’s success is impossible without seeing an actual product and a business plan. But this seems to be a reflexsive response to the notebook cos moving in on their turf than a well thought out idea.

The fact the PC/notebook makers are jumping headlong into the smartphone market tells you the grass isn’t greener on the computer side of the fence. Moreover, Nokia doesn’t have distribution channels for computers in place. Are they planning to sell netbooks in their app store? That would e quite a download.

BTW. There is one computer maker that has found success in the handset business. But none of the PC makers have done it – yet.

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