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Nokia’s New CEO: Challenges

hardware, mobile internet By September 12, 2010 Tags: , , 41 Comments

by Jean-Louis Gassée

Here we are, back from last June’s Nokia science-fiction romp. The company has finally elected a new CEO to replace OPK, Olli-Pekka Kallasvuo. 43-year-old Stephen Elop’s bona fides are in order: As President of Microsoft’s Business Division (since January 2008) he was in charge of the Microsoft Office money machine and was part of the company’s “Leadership Team”. He was well-paid (the 2009 proxy pegged him at $4.8M, excluding longer-term items) and rumor placed him at the top of the short list to succeed Ballmer…

So what possessed Elop to take the Nokia job?

The answer must be that he’s been given the opportunity to make his mark. Having seen Microsoft from the inside, he must have realized that he was being groomed to be no more than a competent caretaker. He might even have decided he wouldn’t get, or wouldn’t want, the big prize, the CEO crown. So, I speculate, he went for the challenges of a turn-around situation.

The goal is clear: Restore Nokia to its former glory as the ne plus ultra of smartphones. But the path to this renaissance isn’t a straight shot—it’s an obstacle course.


Mr. Elop’s most immediate challenge lies in Nokia’s financial performance. During the last three years of OPK’s tenure, Nokia lost 75% of its market cap, plunging from $40/sh in 2007 (the year the iPhone came out) to less than $10 today, although with a nice 2% uptick following the CEO announcement:

A more direct way to look at the numbers challenge is a single datum: Today, Nokia gets about €155 ($196) per smartphone, down from €190 last year. In the meantime, Apple gets more than $600 per iPhone. (See the June 2010 Financial Times story here.)

It gets worse when the total average number is considered, smartphones and not-so-smartphones together. That average now hovers around €60, which means Nokia sells very large numbers of low-end phones that yield very little profit. They’re in great danger of being squeezed by the incoming low-end Android horde.

But the numbers are a mere proxy for the bigger trial: The product itself, the smartphone.

Once the category leader, Nokia is now struggling to catch up with HTC, Motorola, Samsung and, of course, RIM/Blackberry and Apple. Pugnacious Nokia die-hards adhere to the company’s sisu, but the market has spoken—and it enunciates more distinctly every quarter. See this Business Insider chart:

Given today’s market turbulence, one can’t help but admire the charter’s ability to “see” as far as 2014—but the trend is obvious. Will upcoming products such as the N8 reverse it? Early reviews are mixed. For Nokia, the N8 isn’t likely to do what the Razr did for Motorola in 2003 or what the latest Droids are doing now. Motorola’s conversion to Android seems to have righted the ship and Sanjay Jah, the Co-CEO in charge of the company’s mobile business, is on his way to leading a self-sustaining entity, one that could finally be spun off as planned.


Today, Nokia pushes devices that use older Symbian S60 stacks, newer Symbian^3 and Symbian^4 engines, as well as a mobile Linux derivative: Meego. Imagine the chuckles in the halls of Cupertino, Mountain View, and Palo Alto. Even with plenty of money and management/engineering talent, updating one software platform is a struggle. Ask Apple, Google, or HP, and the chuckles quickly become groans. Nokia thinks it can stay on the field when it’s playing the game in such a disorganized fashion?


Smartcameras in our future?

hardware By August 2, 2010 17 Comments

I have two cameras in front of me: My smartphone and a Canon’s S90. And I wonder: Why isn’t there an app store for this neat compact camera?

I can download any number of third-party, post-processing photo applications to my smartphone. I can crop, filter, stitch, frame… And there will be more applications tomorrow. With my “real” camera, I’m stuck with yesterday’s features.

As the saying goes, the better camera is the one you always carry. (By the way, “Better Camera” is the name of a smartphone application…) In that sense, smartphone cameras have a major advantage, they’re always at the ready.

But…smartphones cameras have tiny sensors, tiny lenses, tiny flashes. While the technology improves with each new generation, smartphone cameras will always lag behind the resolution, speed, and depth of single-purpose compact cameras, with their better lenses and bigger sensors. And, yes, compared to even “realer” cameras such as DSLRs, the compact cousin has much to learn, but try stuffing the callipygian Nikon D3s in your pocket.

Wouldn’t it be neat to have the superior picture taking capabilities of the Canon S90 (or other competitors such as the upcoming Panasonic LX-5) and the benefits of downloadable third-party applications to perform more in-camera processing and editing, to say nothing of smartphone-like communication capabilities?

Technically, such a hybrid is easier said than done. Add the circuitry (processor, memory, communications) of a smartphone to an existing compact camera and, done poorly, you’d get a “feature-rich” monstrous contraption that does more than either donor product, but that does none of them as well. Cost would also be a challenge.

But the idea is in the air.

Years ago, enterprising geeks found a way to break into and modify Canon’s DIGIC, the camera’s on-board image processor.


Antennagate: If you can’t fix it, feature it!

hardware, mobile internet, Uncategorized By July 18, 2010 85 Comments

…and don’t diss your customer, or the media!

Rewind the clock to June 7th 2010. Steve’s on stage at the WWDC in San Francisco. He’s introducing the iPhone 4 and proudly shows off the new external antenna design. Antennae actually, there are two of them wrapped around the side. Steve touts the very Apple-like combination of function (better reception), and form (elegant design).

And now we enter another part of the multiverse. Jobs stops…and after a slightly pregnant pause, continues: The improved reception comes at a price. If you hold the iPhone like this, if your hand or finger bridges the lower-left gap between the two antennae, the signal strength indicator will go down by two or even three bars. He proceeds to demo the phenomenon. Indeed, within ten seconds of putting the heel of his left thumb on the gap, the iPhone loses two bars. Just to make sure, he repeats the experiment with his index finger, all the while making a live call to show how the connection isn’t killed.

It’s not a bug, it’s a feature! It’s a trade-off: Better reception in the vast majority of cases; some degradation, easily remedied, in a smaller set of circumstances.

Actually, it’s a well-known issues with smartphones. Steve demonstrates how a similar thing happens to Apple’s very own 3GS, and to Nokia, HTC/Android, and RIM phones. Within the smartphone species, it’s endemic but not lethal.

Nonetheless, adds Apple’s CEO, we can’t afford even one unhappy customer. Buy in confidence, explore all the new features. If you’re not satisfied, do us the favor of returning the phone within two weeks. At the very least, we want you to say the iPhone didn’t work for you but we treated you well. If you fill out a detailed customer feedback report, we’ll give you an iPod Shuffle in consideration for your time.

One last thing. Knowing the downside of the improved antennae arrangement, we’ve designed a “bumper”, a rubber and plastic accessory that fits snuggly around the iPhone 4’s edges and isolates the antennae from your hands. The bumpers come in six colors—very helpful in multi-iPhone 4 families—and costs a symbolic $2.99.

The antenna “feature” excites curiosity for a few days, early adopters confirm its existence as well as the often improved connections (often but not always—it’s still an AT&T world). The Great Communicator is lauded for his forthright handling of the design trade-off and the matter recedes into the background.

If you can’t fix it, feature it.

End of science fiction.

In a different part of the multiverse, things don’t go as well.

Jobs makes no mention of the trade-off. Did he know, did Apple engineers, execs, marketeers know about the antenna problem? I don’t know for sure and let’s not draw any conclusions from the way Jobs avoids holding the iPhone 4 by its sides while showing it off to Dmitry Medvedev:

There’s a more telling hint. Apple had never before offered an iPhone case or protector of any kind, leaving it to third parties. But now, for the iPhone 4, a first: We have the bumper…at $29, not $2.99. (And which, by the way, prevents the phone from fitting into the new iPhone 4 dock.)

As usual for an Apple product, the new iPhone gets a thorough examination from enterprising early adopters, and many of them discover the antenna gap “feature”. As one wrote Jobs:

It’s kind of a worry. Is it possible this is a design flaw? Regards – Rory Sinclair

Steve’s reply:

Nope. Just don’t hold it that way.

Steve, No! Don’t diss your beloved customer. No tough love with someone who’s holding your money in his/her pocket.


Thus spake Steve Jobs: The PC isn’t dead yet

hardware By June 13, 2010 Tags: 31 Comments

Daniel Lyons, the Newsweek tech writer notorious for his Fake Steve Jobs blog, penned an epistolary piece last week (R.I.P., Macintosh) in which he asks and answers the question: “Is Apple ignoring its signature line of computers and laptops? Yup.”

The columnist claims that with the iPhone and the iPad as the Dear Leader’s new pets, Steve Jobs has kicked the Mac to the curb (or kerb for our British readers). Lyons backs his claim with the following evidence: Apple’s 2010 WWDC was focused on the iPhone OS only; there were no Best Applications awards for the Mac, only for iPhone/iPad apps; and, drum roll, the iPhone OS was renamed iOS (the name is licensed from Cisco, just as the iPhone moniker was).

Lyons may be onto something, but in his desperate quest for page views at Newsweek (itself kicked to the curb by its soon former owner, the Washington Post Company) our columnist has yielded to the crass motives and hyperbole he loves to lampoon.

Yes, Steve Jobs said the PC (including the Mac) isn’t “the future”, but he didn’t go on to euthanize it.

Let’s go back to the evening of June 1st, 2010. We’re at the D8 conference discussed here last week. Steve Jobs is interviewed by Walt Mossberg and Kara Swisher; you can find the entire 95-minute video here.
(Sorry, iPad users, it’s Flash…but, wait…nevermind. Although the interview shows up as Flash on my antique personal computer, when I watch it on my iPad, behold!, the site detects the iPad client and spews an H.264 video stream. We can take this as a sign that the WSJ doesn’t want to miss the advertising revenue of 100 million iPod Touch/iPhone/iPad devices out there, and as a preview of what other sites will do, as well. And perhaps it’s a problem with my old desktop machine or older eyes, but the video look better on the iPad than it does on my PC.)

I’m watching the video as I write this. It completes and, in places, corrects my recollection of the event. Whatever one thinks of Steve Jobs—and the video won’t change many minds—the conversation contains a number of gems, such as Steve’s pithy view of the enterprise market (between 28:30 and 29:15), his take on the Adobe controversy, his pronouncement of carriers as “orifices” (that was a few years ago, recalled by Walt for laughs), the importance of editorial functions (Jobs doesn’t want us to “descend into a nation of bloggers”), how he looks at his job (around 59:00), and more. I know an hour and a half is a lot, but pay attention to what’s said and not said and, just as important, the face and body language.
The bit about the future of the PC comes between minutes 45 and 51. There, Apple’s CEO lays out his vision of the post-PC era in a string of very carefully weighed statements, interspersed with personal insights into the changes in user interaction brought about by the new very personal devices.

As Apple unties the software platform from the iPhone, one can imagine a number of iOS-powered devices in its future. Apple won’t necessarily follow HP’s example, but the latter has made it clear that they’ll use the newly-acquired Palm WebOS in devices such as printers. This is a high volume business, one where the traditional embedded software is user-hostile. Just imagine a Palm Pre screen grafted onto a printer.


The 2010 Tech Watch List

hardware, mobile internet, software By January 3, 2010 Tags: 2 Comments

Looking back at last year’s “Things to watch in 2009”, I’ll narrow the field a little bit: no more discussion of the auto industry, electric car markitecture notwithstanding, nor disquisitions of congress shenanigans, too much raw sewage material. Let’s stay with safer and generally cleaner/happier computer industry topics.

Microsoft 2.0 a.k.a. Google.

What is known: In its heyday, Microsoft strived to be all things to all people, from Office applications to Consumer Electronics (Windows CE), to Enterprise Computing (Exchange, Windows Server, SQL and Jet Servers and more), to mobile phones (WIndows Mobile just re-christened Windows Phone), to games (MSX and now the Xbox), to the Internet Explorer, .Net and now various Windows Live offerings and the Bing search product. And even more, such as various attempts at image processing for pros and consumers.
Now, we have Google with a similarly all-embracing land grab on the Web, from books to smartphones, from CAD software (yes, Sketchup) to music, video, “office” applications, collaboration, digital photography, application hosting, a payment system and more.

What is worth watching: When will Google’s “organic” growth start showing its limits? No tree ever reaches the sky. Google’s current strategy is eerily similar to Microsoft’s old “jump on anything that moves”. And, yes, it is smart to make Google a universal destination by using advertising revenue to finance free offerings that, in turn, channel more viewers to Google advertising.
But, eventually, the organism starts drowning in its toxic waste, meaning Google will face management tasks beyond its reach, or advertising revenue wont be able to subsidize everything else for ever, or it will slip and miss an important emerging trend such as social networks, see Facebook below.

Or, Google will become too powerful for the public good, destroying competition only too well and politicians will have their way with the Mountain View company. Unless Google learns, gets the better lobbyists and has its way with us like Wall Street, Big Pharma and Telecom companies, to name the best, do.