Wednesday, September 11, 2013

Doro Liberto 810. Is Doro now Scandinavia's hottest smartphone brand?


Good bye (Sony)Ericsson. Good bye Nokia. These former global smartphone leaders from the Nordics are going East. They're going West. But who's left in the middle? Doro, that who! Who?

Yes, there are still some smartphone players in Scandinavia. There's Finland-based Jolla of course, stirring up a potentially exciting potion in their mobile cauldron. And then there is Doro, a Swedish phone vendor who has been in the handset longer than many players on the market today.

Doro makes no secret of their niche intentions: the vendor is going after the senior market with simplicity. It's back to the basics with Doro devices.

So, here is the lastest Doro product: the Android-based Doro Liberto 810. There are few details on the company's website about the product (no price or intimate specs), but specs might not matter much to its intended audience. It is a touch display phone with a camera and limited screen litter by design.

Doro handsets tend to cost a bit more than mainstream handsets with more features stuffed. Minimalism always comes at a cost.

The Doro Liberto 810 3G Android smartphone: a little less for a little more.

I'm wazed and confused: why is the value of TomTom still beaten down and off the map?

Back in June of this year, when Google announced the purchase of navigation app maker Waze for $1 billion, I was sure that the next big deal to be announced would be a purchase of TomTom. TomTom is a leading vendor of navigation devices, but the real value in TomTom is their Tele Atlas digital maps unit. TomTom purchased Tele Atlas in 2007 for €2.9 billion or around $4 billion at the time. What's amazing is that TomTom's current enterprise value is $1.4 billion, or less than half of what it paid for Tele Atlas six years ago. And around 1/3 the current value of Yelp.

Over the years, smartphone vendors have been busy paying top dollar for location-related companies. Apple, for example, who previously told the world to "get lost" with their own-branded maps and navigation services, recently bought Locationary and Embark, to begin bringing more maps talent and code in-house.

Yet in the on-going location frenzy, TomTom and Tele Atlas were left alone -- and rather unloved. Many industry and Wall Street analysts (and I) have predicted that TomTom would be bought out by someone. Apple, Toyota, Microsoft. Somebody. But this hasn't happened yet.

Now this leads one to question the value of digital maps altogether. Has maps data been so commoditized by Google and crowd-sourced approaches that complete collections are worth practically nothing? I have to admit that I'm not sure what's going on here. Perhaps all the value has moved up the stack to services that run on top of maps.

So far for TomTom, the journey has not been much of a reward. Will anyone find value here?

Verdict: TomTom is hands down a loser in the location frenzy.

Tuesday, September 10, 2013

Microsoft's Pepsi Challenge. Would RC Cola buy 7-Eleven to take on Coke and Pepsi?

I do like Microsoft's Windows Phone. It's solid, swift, and smooth. But, unfortunately, rather lonely and disrespected.

So, Microsoft decided to make an honest partner out of Nokia by putting a ring on it after its original strategy full of good intentions went to hell: the one-for-one switch of market share from Symbian to Windows Phone never took place. I believe that the Nokia board decided that it was time to pursue other options after a drop in smartphone market share from 30 to 3%, the exact inverse of "to decimate." The exclusivity period was coming to a close and Microsoft could not afford to be left out of the mobile game altogether.

Now, Microsoft's hope is that by vertically integrating distribution, logistics, and design, it will allow the company to speed up and increase market acceptance of its mobile platforms. Whether Nokia can help bring out the best in Microsoft will take a few years to conclude, but Microsoft is soon to be one very wide and deep company.

Once again, I'll us my cola analogy for the mobile market. No matter how huge Microsoft is, they are still the RC Cola of the mobile world. Would RC Cola challenge Pepsi's market position if RC Cola and 7-Eleven became one? Or the two also owned some major bottling company? Or a global shipping firm? Is Microsoft addressing the apathy towards Windows Phone and their confusing tablet platforms with their purchase of Nokia's handset unit? No. Microsoft appears to be working on the wrong side of the equation.

The challenges now for Microsoft are greater than ever. In mobility, it looks like Microsoft will always be the bridesmaid, never the bride, no matter how nice the dress is. Rather than offense, Microsoft is stuck on the defensive end, desperately trying to protect lost ground. The hour is late and there is little room for error.

For Microsoft, this is no game of craps. The stakes are high, and it will take more than a sales network to threaten the existing duopoly while fending off new, young, ambitious market entrants. It's time for Microsoft to wake up and smell the coffee.

Will Nokia bring out the best in Microsoft?

Friday, September 06, 2013

PowerPoint Palace. Nokia's destiny was embedded in its HQ's namesake all along.

And today, a short history lesson...

In the very late '90s, a meeting took place between top Microsoft and Nokia executives at Nokia's sparkling new headquarters in Espoo, Finland. Literally a stone's throw away from Helsinki, Nokia House is a beautiful place with water views on three sides, a mostly unused helipad, and a slightly subsidized lunch menu that had some of the best food in town.

A legend was built up around acrimonious talks between then Nokia CEO Jorma Ollila and Microsoft's Bill Gates. The two companies intended to discuss the future of the mobile computing world. Nokia was the mobile leader at the time. Microsoft was the computing leader. The talks were destiny between giants. (At one point, the two would have a combined market cap approaching one trillion dollars.)

Nokia House would come to be known as "PowerPoint Palace" within certain circles, for the most part an endonym used around the four corners of Nokia's globe. Whether or not this term was a pejorative I never knew. I think that some wore the name with pride, and it did accurately describe the slide-based communications culture of the company. As one Nokia employee once said, slightly in jest: "Stop talkin' and just send me the fuckin' slides."

The apocryphal origins of the term "PowerPoint Palace" are worth a quick blog entry here, given it's an easy-going Friday morning, a breezy end to a historic mobile week. The term is said to have originated from the mouths of Microsoft executives —perhaps even by Bill Gates himself— who were shocked at the number of PowerPoint slides they had to endure as they met with various Nokia unit heads. Yes, even Microsoft people were amazed at Nokia's intoxicating use of PowerPoint. While Nokia House didn't manufacture hardware, it was a factory of sorts.

So the irony makes for weekend thinking: PowerPoint Palace didn't just describe the stream of deliverables coming out of the building, it described the company's fate. This will be fun to follow and I wish both segments of the company all the best.

PowerPoint Palace: a crystal castle on a shining sea.

PIC source: harrypwt via Flickr.

Thursday, September 05, 2013

The planned IBM-ification of Nokia is almost complete. So, who's next to be Sega-fied? Get ready for the dance.

Sometime in 2011 I predicted that Nokia would exit the handset business within three to five years. I just didn't think it would be Microsoft which bought the unit. Not that it matters. (I had been thinking Huawei, ZTE, or maybe even Foxconn.)

The writing was on the wall. To me, the pattern was clear: Nokia execs had the historic experience of picking up and leaving a business when all the lower-lying fruit had been picked. When the margins begin to fade, it's time to move on. Take for example, the set-top box business. Nokia was a top vendor of equipment to television broadcasters (and the world's #1 supplier of digital set-top boxes for a while), but when most of the profitability evaporated, Nokia picked up and left the industry altogether. Computers, displays, televisions. And there are other examples. Push aside sentimentality and adjust to the realities ahead.

Let's consider for a moment what IBM achieved under Louis Gerstner, as this was a big influence on Nokia. For many Nokia executives, IBM was not just a case study, not just an example, it was an idol. When IBM picked up and left the commoditized hardware industry in 2005, selling the ThinkPad and related sub-brands to Lenovo, IBM proved that it was possible to re-invent and refocus a company. Elephants could indeed dance. Old business models and ways of working would have to be placed to the side to make way for change.

IBM placed more emphasis on services leading up to and after the end of the IBM PC era. And Nokia executives realized that the same changes which took place in the PC industry would smack the handset business within a few years as well. It was time to prepare the company for similar changes. Nokia executives talked more and more about software and services. The company was reorganized adn re-reorganized. An "S&S" unit was created, service related companies were acquired. Maps, music, money, and more. Acquired growth. Organic growth. All options were on the table. The checkbook was out. Employees were shuffled around.

So now it appears that the IBM-ification of Nokia is nearing completion. While I had predicted that a large Chinese vendor would likely buy Nokia's handset business when the time came, Microsoft serves the same purpose: one potential Nokia strategy is complete. I'll even offer some conjecture now and say that Microsoft will further sell off much of what they are buying from Nokia, getting rid of factories and logistics and perhaps even the feature phone unit altogether.

There is already some speculation that Nokia proper might re-enter the smartphone business with Nokia-branded Android devices in 2015. I'm not buying that unless there is some fantastic value-added they can discover. By 2015, smartphone ASPs and margins will have slipped further down toward the bottom of the consumer electronics life cycle. With luck, Nokia will be deeply busy with services and solutions, working with hardware and platform vendors of all sorts: smartphone manufacturers and auto makers, cloud-based internet services and big-data gatherers.

Next on deck is BlackBerry, a company I already predicted would soon leave hardware behind for services of some kind. Perhaps some vendor looking for a world stage will license the BlackBerry brand.

And prepare for more placement changes from vendors such as Apple and Samsung. As any fund investor knows, past performance is no guarantee of future results. When the company that completely dominated an industry only a few years ago essentially exits the business, it's time to get ready to jump to the next hot thing.

I think about the recent news articles covering a potential strategy shift at the world's largest shipping company, Maersk, where executives talk about moving away from the shipping business to more profitable services. I commend their foresight. I've heard Maersk described as the IBM of Denmark, and that Danish elephant is getting ready to dance. And more.

You see, elephants have to do more than dance these days: they have to reach new heights.

Wednesday, September 04, 2013

Battle of the brands. Will the Nokia brand name be Microsoft's next of Kin, or will there be a Halo effect?

Patents, distribution, manufacturing, design, a fantastic contact network? What exactly was the icing on the cake for Microsoft in buying Nokia's handset unit?

It could be the brand. In much of the developing world, the Nokia name remains a strong and trusted stamp of approval. While Steve Ballmer cannot even pronounce "Nokia" correctly, the brand name still means something to so many around the globe. Although Microsoft won't be using the Nokia logo on smartphones, it can use the brand on lower-end phones and could do some clever co-branding as it upgrades the developing world from dumb phones to smartphones.

Each year when branding consultancy Interbrand releases their list of the world's most valuable brand names, Nokia is consistently ranked among the best. While I always found the values they assigned to brand names rather random and a bit suspicious, even if their calculations are in the ballpark, Microsoft got one heck of a deal with the Nokia brand. Not long ago, back in 2009, Nokia was ranked as the world's fifth most valuable brand. That year Interbrand placed a value of $35 billion on the Nokia logo: so, throw out all the chairs and patents, buildings and pens, and Nokia would still be worth $35 billion according to Interbrand.

OK, that was 2009. Let's look at what's happening now. According to Interbrand's 2012 report, Nokia brand was the 19th most valuable brand on the planet, worth around $21 billion. This means someone has some explaining to do. How could Microsoft buy Nokia's handset unit for around one quarter of what the brand name is supposed to be worth? Either Interbrand or the Nokia board are way off on their numbers.

Brand building takes decades in most cases. I was quite certain that an Asian tech vendor would come along and take over Nokia's handset unit for the attraction to the logo in developing markets. But unless a counter offer comes a long within the next few months, Nokia is to be a Microsoft sub-brand, a sort of next of kin. Hopefully for Microsoft, there will be a halo effect.

From Interbrand:

Tuesday, September 03, 2013

European Mobile Crisis reaches a critical phase.

There was Ericsson, Nokia, Siemens, Alcatel, Philips. In mobility, Europe led the way. They set the standards. Literally. The had the users.

And then there were none.

If the future of computing is in mobile devices, Europe has a void. But fear not. The hardware business was already on a downward spiral. Now to encourage to latest and greatest in mobile software and services. The best in mobile health and well-being. Small is the new big.

Microsoft does buy Nokia ('s handset unit). Make me a pair of orthopedic shoes for I stand corrected. So, is the future of Microsoft's new Sidekick in Danger?

Woops. I got this one completely wrong. Back in January 2012 I wrote a blog entry entitled "Breaking news: Microsoft still isn't going to buy Nokia. And Franco is still dead." And here we are: the top business news today is that Microsoft is indeed buying Nokia's handset unit.

I had been hearing rumors for more five years about Microsoft acquiring Nokia. It was water cooler talk when I worked at Nokia's headquarters in Espoo, Finland. It was hot chatter among many industry analysts and Wall Street brokers: Microsoft needed Nokia's manufacturing prowess. Its distribution network. Its partners and patents. And none of it made any sense to me.

With contract manufacturers such as Compal and Foxconn in the world, why would Microsoft need to buy Nokia? Why would a company of 100,000 employees add another 32,000 in order to be quicker and more nimble?

This does give off a slight odor of desperation on the part of Microsoft.

If Microsoft were to lose Nokia to Android when their current arrangement comes to a close, Microsoft's smartphone market share would dry up. Already a niche player as is in handsets and tablets, Microsoft is certainly reading the writing on the wall: the best of the PC world is behind us. The world has now really moved beyond the PC.

I can imagine that this is a sad day for many in Finland. It's the end of an era. And looking back at Microsoft's mixed track record of expensive acquisitions, one has to wonder about the future of Nokia. Microsoft's $6.2 Billion aQuantive purchase and subsequent write down. Its $500 million purchase of Danger in 2008, and shut down a few years later. Massive, WebTV, Yammer, and almost Yahoo! Microsoft has made some good investments too, but I have to wonder if Microsoft's latest Sidekick is simply a shot-gun wedding.

The $7.2 billion dowry Microsoft is paying (which includes licensing fees for some of Nokia's key patents) is almost half of what Google paid for Motorola, and only $1 billion more than Microsoft paid for aQuantive. And ironically a lot less than Nokia was valued at before it partnered with Microsoft to abandon Symbian for Windows Phone. So Microsoft could be getting a deal here.

So, I that non-prediction I made about Microsoft and Nokia was wrong. But I've also said several times that Nokia would be leaving the handset business within the next few years, with some other company taking the Nokia name. I'll call it a wash, with one prediction in the debit column, one in the credit column.