Busy Week in Mobile Culminates in…Microkia
February 11, 2011
It’s been a busy week in mobile news. HP revealed the fruits of its Palm acquisition from last April – the WebOS powered 10″ TouchPad tablet, Pre 3 “full sized” smartphone, and the diminutive Veer smartphone. Admittedly, the HP lineup looks very compelling – WebOS looks like it was made for a tablet. We found out the price of the Motorola XOOM Android 3.0 (Honeycomb) powered 10″ tablet – at $799 it’s 30 bucks less than a fully pimped out 64GB, 3G sporting iPad, but there’s no option to cheap out on the 16GB WiFi-only version because there isn’t one. There’s more to say on both the HP and the Motorola fronts, but the big news came earlier today with potentially industry changing announcement from Nokia – notice I said “potentially.”
The story leading up to the Microsoft-Nokia nuptials is not exactly a fairy tale. Nokia has seen its stock price tank from a late 2007 high of almost $40 to a close of $9.36 today – down another 14% on the news of the Microsoft engagement. The company is bleeding market share at a rate that – if continued – would see the company disappear in a few short years. It lost 7% (38% to 31%) of the smartphone market in a single quarter between Q3 and Q4 2010. This can be tracked back to 2008 when it still enjoyed a majority market share. Not to belabor the point, but Average Selling Price (ASP) is tanking, mindshare only exists in a negative context, developers have flocked from Symbian to more lucrative iOS and Android, and MeeGo is a no-go. On the upside, Nokia is flush with cash from the good ol’ days and continues to be profitable in a rapidly growing market.
Looking at Microsoft in the mobile context returns similar results. Windows Mobile was one of the original smartphone platforms (along with Symbian). We can complain about all of the things it wasn’t, but it was a strong contender in the nascent smartphone market. Apple turned its mobile world upside down, and Microsoft simply wasn’t nimble enough to recognize the ramifications and act. Windows Phone 7 shipped in late 2010 – almost a year after it was announced, 3.5 years after the first iPhone, and 2 years after the first Android-powered smartphone. Last month at CES Microsoft CEO, Steve Ballmer, said the next version of Windows will be optimized for tablets, which we should expect toward the end of 2012 if history proves a reliable indicator (3 years between Windows releases) – again 3.5 years behind Apple and 2 years behind Android.
So there you have the tale of the tape. Nokia has fallen behind in the rapidly evolving mobile device market, and Microsoft has never caught up. Nokia’s new CEO, Stephen Elop (a Microsoft executive until September 2010), likened Nokia’s dilema to being on a burning platform in an open letter to employees a couple of days ago. He’s right, Symbian is a burning platform, but did he just make the crew jump from the burning platform into the icy North Atlantic? The short answer is yes, yes he did. But it’s not because of the choice of Microsoft and Windows Phone, although he was probably blinded by his history with, and affinity for Microsoft. Android wasn’t an option due to commoditization – they would have turned into HTC (not bad if you’re HTC, but not so hot for Nokia). Certainly iOS wasn’t an option, although it would have been fun to watch Stephen trying to charm Steve Jobs and Tim Cook into “working something out.” Of course RIM would be out, not only because they compete on hardware too, but because BBOS wouldn’t move them ahead at all. The only other viable option would have been working with HP on WebOS. Hey, that might have worked out really well! I’d be willing to wager that HP would have been amenable to that kind of discussion since they don’t really want to be in the smartphone business (they wanted WebOS for tablets).
Back to the real problem here. This market is moving at light speed. A new iPad will come out this spring with a dual-core processor likely running at 1.2 or 1.4GHz. A new iPhone will be coming out this summer sporting the same dual-core processor as the iPad, and both will have new and improved features and functionality. It will keep the bar high. Android phones and tablets will be running on the same fast dual-core processors with better graphics and a very compelling Honeycomb (version 3.0 of the OS). Stephen Elop said 2011 and 2012 will be transition years for Nokia, and that Windows Phone powered Nokia devices won’t ship en masse until 2012. Having read everything up until now, what does that mean? If you said “too little, too late” you win. When Microsoft announced Windows Phone almost a year ago to the day at Mobile World Congress 2010, I said “too little, too late”. When Windows Phone devices started shipping in late October 2010, I said “too little, too late”. Windows Phone sales have been disappointing – so much so that we saw devices subsidized down to $0.01 within a couple of months.
And now when someone asks me what I think of Microkia, I’ll say “too little, too late”.
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