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Stephen Elop: Android’s Success Is Apple’s Fault, And Beware The Boxes

Nokia (NYSE: NOK) may be on the ropes — having just today lost its CTO as he took an indefinite leave of absence — but CEO Stephen Elop is still slugging away in the handset maker’s comeback strategy. Today, he laid out some of Nokia’s biggest challenges and opportunities, making the case for how Nokia would become the strong third player in the market by focusing on courting developers, being the first OEM to give Windows Phone pride of place, and being the operators’ best friend.

In a keynote at the Open Mobile Summit in London today, Elop also repeated what he has been saying for weeks now: “All those rumors are baseless. Nokia is not for sale.” The response comes amid persistent rumors that both Microsoft (NSDQ: MSFT) and Samsung are interested in buying the company.

Credit where it’s due. Elop kicked off his speech with a backhanded hat-tip to Apple: “Apple (NSDQ: AAPL) in 2007 introduced a high water mark in terms of saying, ‘This is what users expect…But Apple did this in a very Apple way. It was closed.” But that led to something much worse, he says:

“Apple created Android, or at least it created the conditions necessary to create Android. People decided they could not play in the Apple way, and they had to do something else. Then Google (NSDQ: GOOG) stepped in there and created Android… and others jumped on the Android train.”

As is the way with Elop — the man who crafted the now-iconic, very evocative burning platform memo — he also sketched out a cunning picture of the differences and similarities between Apple and Google by illustrating their ecosystems as boxes:

Apple’s box is closed, of course. But look at Google’s: “Google’s open box still has flaps, and we don’t know what those flaps will do.” Later, he spelled it out a bit more: “If you counted the number of lines in Android code you might get a different perspective on how open it really is.” It has more proprietary code than one would assume, he argues.

He says he views Apple and Android — not Samsung and HTC — as its chief competitors. He says he even welcomes these other OEMs into the Windows Phone ecosystem.

By the numbers: Elop says that today there are 1.3 billion people using Nokia’s devices. It’s adding 140,000 new registered users every day who download 6 million items from our store every day.

The problems with Symbian and Meego: Symbian is the world’s most widely distributed operating platform, he says. “It has served us well for many years but we recognised that was challenged.” Meanwhile, “The challenge we face with Meego is that…we have to cover a lot of price points from developed to emergeing markets and we did not think Meego could get there fast enough.”

The rock and hard place of differentiation and commoditization: He claims Android devices all look and act the same, and “If it’s too hard to differentiate on a platform, commoditization steps in. But then
differentiation starts to creep back in through fragmentation.” He recalled when he worked at Macromedia with (now Adobe (NSDQ: ADBE) CTO) Kevin Lynch, who spoke before him: “When Kevin and were out flogging Flash and talking to docomo, J2ME had already fractured into 70 different variations.”

Why Windows Phone 7 has not done very well so far. Windows Phone scores better than Android and iPhone with consumers, but OEMs are doing their best work for Android. For Nokia our best work will be for Windows Phone. You will see waves of families of devices that deliver on the promise of Windows Phone 7.”

On the priority ahead for courting mobile operators and developers: “Apple has a [eyebrows raised] certain relationship with operators. Google is feared by operators because of the revenue opportunity. Our strategy is to be as friendly to the operators as possible.” Later, he says part of that will include helping operators create local, customized apps to take advantage of local services on offer. And he said that many want to take advantage of wireline infrastrucutre, in their data schemes using technology like RCSe. “We are very focused on working.” Obviously, the issue of carrier billing for apps will also be key. He claimed that developers that implement carrier billing get 60 percent better revenues from their apps than those who don’t.

What else is ahead: [Pointing to a woman holding up her iPad to record him:] “I can’t even see her face. It’s clear that there is some innovation left to do. The ecosystem is very much starting around mobile devices but you will see that broaden.”

32 Responses to “Stephen Elop: Android’s Success Is Apple’s Fault, And Beware The Boxes”

  1. kEiThZ


    The other posters may be taking it overboard but their sentiments are not misplaced.
    If you were the CEO of HTC why would you start supporting Windows Phone 7 knowing full well that Microsoft has given a special deal to Nokia?  How is that a level playing field?

    Next, Windows Phone 7 allows no OEM customizations on the look and feel.  The UI looks the same.  Great for users.  Terrible for OEMs who want to stand out from the pack.

    All this together, means the other OEMs aren’t going to support Windows Phone 7 enthusiastically.  And if they don’t app developers won’t.  And if the app developers don’t consumers won’t either.  See where this is going?

    Nokia could have easily customized Android while keeping Symbian alive.  They could have made Ovi maps a proprietary app pre-installed on Nokias for example. They could have the interface more Symbian like to have an easy transition.  Elop wanted the transition money.  So he took it and now he’s forced to talk up Windows Phone 7 because he’s bet the farm on it.

    They’ll do okay.  But when all is said and done, Nokia will be a shadow of its self in about 3-5 years.  And you can blame Elop (and the other executives) for it.

    • “when all is said and done, Nokia will be a shadow of its self in about 3-5 years.”

      Yes. But that was true before Elop joined. Symbian was an old relic, and it showed. MeeGo was a bad UX and was going nowhere in the marketplace. Nokia had failed, year after year after year, to give themselves a credible roadmap from an OS and content standpoint. The company was/is too big, too slow, too disjointed to produce a good, integrated UX.

      So pick your poison:
      – carry on with Symbian 3 and have a second-rate OS
      – continue to fracture your internal resources and work also on meego, which is slow to emerge, and somewhat ugly
      – adopt android and be a commodity hardware vendor
      – buy PalmOS (cheap)  to do something different and integrated with hardware…oops missed that opportunity
      – partner with MSFT to bring together the synergies of a good OS with no OEM support, and a good OEM with no credible OS

      I think the last option – IN 2011 – was the best. The synergy is clear, the possibility of winning is there. The question for me is how does Nokia make sure they get their share of the winnings if this partnership works out. It seems like MSFT benefits far, far more. Of course, I haven’t seen the confidential contract.

  2. amcuri

    Guys, please pay attention to the business side of this strategy and not your feelings regarding android and apple.

    The connotation on Elop Flop or whatever  others are writing is pure personal feelings from people that REALLY do not understand the mobile business or lack the respect towards great executives with an AMAZING track record.

    Open your mind, Apple and Android are not the last cookie inside the package :) also, if one leaves the US centric world, you will notice that these OSs are not that powerful around the world and today we are all in a globalized culture if you like it or not.

    Elop is right. Why he would choose to build 2 teams like mentioned in the comments (android and WP7) to have 2 bets while the first option does not bring anything new to the table as we already know how Google operates. Why provide a revamp solution to a company where others are already 2 years ahead in development and customization? Why create a phone that is basically the same as the one from your competitor? This is no secret, just good view of an outsider.  Its true that a lot of proprietary code in the android are creating more headaches than ever as well……any developer that created apps for it knows this very well. From the OEM stand point, that’s called “hand breaks” for future endeavors.

    WP7 on the other hand has the power from the developers that lives off the Windows OS. That’s over 1 million “senior” developers that survives on the windows platform alone. which, in turn, makes WP7 much more robust in terms of support and future development. No wonder the Wp7 store reached 20k apps way before any other app store out there. And, I don’t have to remind you, that WP7 share still very very low compared to the other OS, which makes the announcement on the apps very surprising for the rest of the ecosystem.

    Back to the strategy, why they should select an OS that will only power a player like google and nobody else. Why make ties with a company that is making “big waves” to get what they want with your number 1 partner (that’s the carriers btw which still counts for over half of handset sales in the world) Now, when you look at microsoft and his ties to it, the nokia share holder should be very happy (not with current stock price, but long term prospects). He is going to bring billions in up front revenue for its selection of WP7. Did I say BILLIONS? Yes, it seems everyone forgot this part of the deal. He will be able to customize the WP7 to the next level with consumers (it will be a closed platform as the others, but as MS needs this as much as anyone, they will/are making exceptions to Nokia that will create the differentiators). Also, on the business side, which matters most for shareholders, the upfront money that microsoft is providing will generate the necessary margins that Nokia needs to compete and survive on the short term. Once again, this is pure business and not a popularity contest.

    Anyone that participates on the PC era knows how much this can be a differentiator. Take Intel for example, the “Intel inside” logo on PCs generated a healthy supply of parts and support for Wintel. Intel spends an average of $2 billion dollars paying OEMs to include that little logo outside their cases. This was all marketing budget from intel, that generate over $8 billion in revenues every year for it. That lilttle logo revenue was able to drop PC’s part prices in a whole new era because, like phones will be soon if not there yet, the PC became a commodity, and margins started to play a big part on the success of a healthy business.

    On the carrier side, I would like to point out that, even though people like to bash the carriers (me inlcuded for their wallet garden), the direct billing makes a big difference for content providers. Maybe not so much in the US where all the population have credit cards nowadays, but for the rest of the world it is – Credit card penetration is less then 50% in over 90% of the countries in the world. Also, without the carriers, you would not be able to buy your iphone for less then $600 bucks btw. We would probably not even have this discussion right now if wasn’t the carriers that allowed that.

    So, with these little details in mind, its safe to assume that Elop bet was well designed to bring the biggest handset maker in the world ready for a come back. if it will work or not, we will have to wait and see. But, as I am a WP7 VERY satisfied user, I think they will make Apple and Android a good run for their money.

    Go Elop and show the world what a “visionary” you will be in a couple of years.

  3. The kiss of death is: “Our strategy is to be as friendly to the operators as possible.” Later,
    he says part of that will include helping operators create local,
    customized apps to take advantage of local services on offer.”

    Sounds like he wants to facilitate the mobile move to the cable buisness duopoly model. Most people detest the content and dumdpipe gouging process the cable providers offer and he thinks were going to embrace that Dell-like bloatware but just on the Win mobile platform whole heartedly? I would pick apple over something like that and I HATE apple. I think Elop needs to find a new line of work.

  4. Snoggler

    welcome other OEMs? real competitions are actually Google and Apple??? and all the time talking up a OS that isn’t event owned by Nokia….it doesn’t get any more obvious he’s working for MS and treating Nokia simply as a pawn in MS’s Mobile strategy.

  5. Anonymous

    The last guy who talked baseless crap about Android was the head of Symbian.
    For christs sake if you talk about the competition at least take the time to understand what you are talking about.Or in other words… Nokia will go down all the way… at least now i’m sure. 

    • It is by far the most open mobile OS and significantly more open than iOS.  As for the malware, that’s a result of it being open, and negligible at best.  I know of no one that even considers it anything more than a media talking point. Interestingly enough, your statement nearly contradicts itself.  Its like saying, the notion that you left the front door of your house open is a joke, its closed and locked, but good luck with people walking right in.  Is it closed, or is it open to Malware?  My guess is that we’re hearing from an iOS user that has never picked up an android phone, enjoyed the customizable nature of the phone, and actually considered that maybe… just maybe someone is doing something better than their beloved apple.  They must be doing something right if iOS is working to look more and more like Android. 
      I wish Nokia luck, but it seems they’re putting all their eggs in the most fragile basket and hoping it holds.

    • That would be counter productive on Microsoft’s part.  So why would they do that.  Microsoft has not got it’s foot settled in the modern mobile industry.  But they are make tremendous strides on the back-end of their ecosystem that will make it the most friendly to operator, OEM, developer which will only produce great things for the consumer.  Money is one of them, and by that time Microsoft will be able to make sure their prices stay competitive.  They will know when people can’t afford phone.  One of Microsoft’s biggest disadvantage is that they’re so big, but it’s also one of their biggest advantage because they can put a lot of people in a lot of places.

  6. sleepd

    Bizarre. Symbian competes with Apple and Google and Nokia is more or less in charge of that, not WP7. Unless he has some backdoor relationship spelled out with Microsoft on becoming their design reference handset. In which case they might as well have bought Nokia. 

    Unless he said anything else that didn’t make it into this brief summary, it’s otherwise oddly irrelevant. 

    • “Symbian competes with Apple and Google”

      …in the same way that me and my fat cousin compete with Usain Bolt.

      But you’re right that if Nokia succeeds with Windows OS, it’s unclear how they capture the fruits of that success vs. delivering it to Redmond.

  7. Stop all the loud talk Elop, you can talk all you want but for as long as you have not a single handset against Apple and Android, all your talk will simply help you breathe when you and your Nokia shit go under water. Go back to your job fixing your organization, stop giving speeches and writing memos!

  8. Elop gets it wrong when he says, “People decided they could not play in the Apple way, and they had to do something else.”

    There was no “Apple way” … Apple simply built a phone, os, and ecosystem around this and went to work. Apple did not invite others to play the game they changed. Others were playing the game already but in a different manner.

    To say any company could have done this is certainly simplistic, but true.

    • “People decided they could not play in the Apple way, and they had to do something else.”

      “Verizon decided they could not access the iPhone, and they had to do something else.”

      AT&T’s exclusive on iPhone was the catalyst for the emergence of Android as a market success. Carriers hate Google in so many ways, that adopting Android phones was a bitter pill for them to swallow, but they needed a decent market response if they could not sell iPhones. They tried Symbian. They tried Blackberry. Didn’t work. Then, they held their noses and tried Android.

      • RIGHT @openid-52571:disqus you get it…

        Any vendor could have done something, but they were content doing nothing. Mostly though they were locked into doing nothing thanks to the carriers as you say.

        However, Nokia, RIM, and a few others could have done something. They chose to do nothing.

  9. Xembly

    I struggle to understand Elop. He should have played a 2 Os strategy Android + Win. They are/were big enough . Why only make one bet ? If that fails Nokia fails .No second chance. Should have created a chinese wall and made two division , one android and Win. And say. Slug it out.    MS will due the usual and walk away with all Nokias IP after 2 years and the ability to make their own devices. Ref most MS partners. What happened to Nortel (and countless other partners).

  10. “He says he even welcomes these other OEMs into the Windows Phone ecosystem.”

    Such words should be coming from someone at Microsoft. Is this guy the Nokia CEO or a Microsoft exec? If other OEMs join the WP ecosystem, who wins? Nokia or Microsoft? At one point he says the other companies (HTC, Samsung) are doing their best work for Android and that’s the reason WP is not succeeding. Really Mr. Stephen “Flop”?

    • Matthieu Siggen

      I suspect that he would be delighted if Samsung and HTC released great handsets for WP7. The idea is that it would help growing the market and building momentum for WP7.  This would in turn give Nokia the opportunity to compete in a much bigger market. At the moment WP7 sounds a bit like a niche market.

    • Elop is right

      First of all, you should stop this childish name calling. This is a public forum.

      Second, if other OEMs join the Windows Phone ecosystem, both Microsoft and Nokia wins. It is the strength and scale of the platform that makes the pie bigger. Bigger pie, bigger opportunities.

      And he is spot on that Windows Phone is a better platform than Android, but OEMs are currently only focused on Android. Android only succeeded because there was nobody else. OEMs simply had no other OS to put on their smartphones. They have a better alternative now in WP, but it is going to take a big fight to win the OEMs.

    • adv_adv

      I agree 100%
      Look at HD7 omnia 7 or what its called, they are just as powerfull as the android parts, and they have the same HW, good camera’s, good screens and so on.
      but the phones feel empty and there isnt anything htc and samsung can do about it! so ofc they go for android when they can make it a samsung, or a htc, seperate themself, and still be apart of the common platform.
      I must say android is just getting faster and faster, and better and better, old devices from 2.1-2.2-2.3 my iphone just got useless after a while, opposite is happening on android for me.