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

Stephen Elop, Nokia

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.”

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