Microsoft Buys Nokia: The Rule of Three

Hola Todos!

I apologize for being quiet for a while.  August was a great month to be outside and have fun the family.  In addition, I have my tenure packet due this October so between that and classes, DigNuggetville has not been as active.

That said, one of the biggest stories of the week has been Microsoft buying Nokia.  In short, Microsoft HAD to make this deal happen.  The future is mobile and Microsoft is still not a major player in this marketplace.  Moreover, Microsoft has a $7 Billion marketing deal with Nokia – the only smartphone manufacturer to use the Windows Mobile OS.  Microsoft has not been able to convince any other smartphone company to use their OS and if something were to happen to Nokia, Microsoft would be locked out.  In summary, this deal had to get done.

Beyond the fact that neither Microsoft nor Nokia is market orientated, my biggest thought on these events is The Rule of Three.  Without question, the smartphone marketplace is maturing (which is a major reason why we will see the more affordable iPhone 5c next week) and when marketplaces mature, the number of major players reduces.  Usually in highly competitive, lower growth zero-sum marketplaces, the only way to gain market share is to steal it from your competitors.  If this is the case, only a few firms will survive that cutthroat environment.  Therefore, there will be room for a #1, a strong #2 and finally weak #3 with perhaps a few small niche players.

Just as recent has 3 years ago, there were 6 major OS players in the market: iOS, Android, Symbian, Palm, Windows, and Blackberry. As I said many times in class, there is no way all those firms will survive.  This Microsoft deal places an enormous amount of pressure on Blackberry.  Microsoft has deep pockets, Blackberry does not…meaning something is going to happen to Blackberry relatively soon. Either they are going to go under due to the market strength of Apple, Android and the deep pockets of now Nokia or someone such as Samsung or Amazon who does not want their mobile future anchored to Android is going to buy Blackberry.

Something to think about today…

 

Best regards

Dr. Dan-o

 

Daniel M. Ladik, Ph.D.,

Associate Professor of Marketing

Stillman School of Business

Seton Hall University

 

 

Will.i.am is More than Just a Musician

Hola Todos!

Every so often, something just catches my eye.  We all know that our smart phone cameras are better than most point and shoot cameras we used in the past as evidenced by the sharp decline in sales of point and shoot cameras over the past two years.  Besides who wants to carry two devices?  Moreover, its much more difficult to share photos in a point and shoot.  Did I mention neat filters?

So it is not surprising that we’re seeing innovation in the smart phone – camera space.  However, it is very surprising who is doing this innovation – not Apple or any other consumer electronics company.  It’s Will.i.am – of the Black Eye Peas!  Check out this video of his high-end camera add-on to the iPhone.

Something to think about today.

 

Best regards,

Dr. Dan-o

 

Daniel M. Ladik, Ph.D.,

Associate Professor of Marketing

Stillman School of Business

Seton Hall University

 

 

 

 

iPhone 5: FINALLY!

Hola Todos!

In the eyes of Apple zealots, it seemed if yesterday would never come; the day when we would finally see the iPhone 5.  Well, it finally arrived and to my surprise is was EXACTLY as expected – more on that in a moment.

In general, everyone was pleased with the specs and the press coverage. One journalist has even called it the new “gold standard” for smartphones.  Here’s a round up:

 

-Review from Mashable

-Mashable chart comparing iPhone 5 to its three closet competitors

-Apple 2.0 listing of all the stats/facts/details from yesterday’s event

-Apple 2.0 compiled commentary from the Wall Street Analysts

-Minute by minute how the Apple’s stock reacted yesterday afternoon

-90 Second version of the Keynote

-Full 90 plus minute version of the Keynote

-Apple Inc. video of iPhone 5 and all its features

 

Back to my earlier comment, what was missing from yesterday’s keynote was “surprise.” Pretty much everything – at least all the major specs – were strategically leaked to the press well in advance. The only real surprise, other than a incredibly improved iPod touch, is the rapid and aggressive rollout of this new phone – Apple’s biggest launch in the history of the company.

What makes yesterday so surprising was that in more than one interview earlier this year, CEO Tim Cook said Apple was going to “double-down” on secrecy.  If yesterday is the “new normal” then where was the “doubling down?”

Only a few possible explanations can explain Apple’s new-found opening up: (1) CEO Tim Cook is moving away from Steve Jobs-like secrecy and the “doubling down” is nothing but lip service, (2) iPhone 5 is “too big to fail” as a percentage of Apple’s overall revenues and Mr. Cook is risk-adverse, or (3) Mr. Cook is very, very, very concerned with competition and all the leaks to the press were more to the other players in this sandbox.  Not that I believe any of these three are mutually exclusive but nonetheless, how Apple behaves with new product launches is something to follow in the coming months.  Next up…something in October.

Something to think about today

Best regards,

Dr. Dan-o

 

Daniel M. Ladik, PhD

Associate Professor of Marketing

Stillman School of Business

Seton Hall University

 

 

Market Orientation: Nokia is NOT Market Driven nor Market Driving

Hola Todos!

As I always said in class, it is much easier to find non-market orientated firms than market orientated ones.  The other day when reading The Wall Street Journal, I found 2012’s exemplar firm on how to be non-market orientated.

For a quick review, market oriented firms have three main characteristics: (1) an incredibly strong external orientation towards customers, (2) an incredibly strong external orientation towards competition, and (3) incredibly strong internal communication within the firm.  Most firms do #1 and #2 well.  These two orientations are relatively easy.  Its #3 is where most firms do not do well (or at all).  Too many companies have functional silos (e.g., divisions, SBUs, offices, etc. that are relatively independent and do not talk/plan/coordinate together).  Non-market orientated firms have mostly an internal orientation for items #1 & #2 and item #3 is non-existent.  Companies that have mostly internal power struggles and are dominated by politics are mostly non market-orientated.  For more detail market orientation along with the two main types, market driven and marketing driving, click here.

In “Nokia’s Bad Call on Smartphones” journalists Anton Troianovski and Sven Grundberg detail many of Nokia’s non-market orientated missteps in the smartphone marketplace.  What follows are some select quotes from the article and then my commentary afterwards.

This year, Nokia ended a 14-year-run as the world’s largest maker of mobile phones, as rival Samsung took the top spot and makers of cheaper phones ate into Nokia’s sales volumes. Nokia’s share of mobile phone sales fell to 21% in the first quarter from 27% a year earlier, according to market data from IDC. Its share peaked at 40.4% at the end of 2007.”   – – Notice Nokia’s peak was the same year the iPhone hit the market and one year before Android.

More than seven years before Apple Inc., rolled out the iPhone, the Nokia team showed a phone with a color touch screen set above a single button. The device was shown locating a restaurant, playing a racing game and ordering lipstick. In the late 1990s, Nokia secretly developed another alluring product: a tablet computer with a wireless connection and touch screen—all features today of the hot-selling Apple iPad. Consumers never saw either device. The gadgets were casualties of a corporate culture that lavished funds on research but squandered opportunities to bring the innovations it produced to market.”  Ouch – the next set of quotes emphasizes the lack of interfirm communication component of market orientation.

Nokia is losing ground despite spending $40 billion on research and development over the past decade—nearly four times what Apple spent in the same period. And Nokia clearly saw where the industry it dominated was heading. But its research effort was fragmented by internal rivalries and disconnected from the operations that actually brought phones to market.”  Politics and functional silos KILL market orientation.  R & D didn’t work with marketing who didn’t work with operations – let’s not forget about senior leadership.

In 1996, the company unveiled its first smartphone, the Nokia 9000, and called it the first mobile device that could email, fax and surf the Web. It weighed slightly under a pound. “We had exactly the right view of what it was all about,” says Mr. Ollila, who stepped down as chief executive in 2006 and retired as chairman in May. “We were about five years ahead.” The phone, also called the Communicator, made an appearance in the movie “The Saint” and drew a dedicated following among certain business users, but never commanded a mass audience. Nokia’s smartphones had hit the market too early, before consumers or wireless networks were ready to make use of them. And when the iPhone emerged, Nokia failed to recognize the threat.”  Here – we have a clear failure of the 2nd part of market orientation – an incredibly strong external orientation towards competition.  Plus senior leadership at Nokia failed to look forward and see where the market was headed.

One team tried to revamp Symbian, the aging operating system that ran most Nokia smartphones. Another effort, eventually dubbed MeeGo, tried to build a new system from the ground up.  People involved with both efforts say the two teams competed with each other for support within the company and the attention of top executives—a problem that plagued Nokia’s R&D operations. “You were spending more time fighting politics than doing design,” said Alastair Curtis, Nokia’s chief designer from 2006 to 2009. The organizational structure was so convoluted he added, “it was hard for the team to drive through a coherent, consistent, beautiful experience.”  Wow – no interfirm communication or coordination – more like creating a competitor within you own company? What make this all worse is senior managers in the C-suite supported this strategy, then was divided as some supported Symbian and others backed MeeGo.  Much time, money and resources were spent on Symbian and MeeGo in internal battles and competitors Apple and Android took advantage of opportunity by the distracted #1 player.

The irony of this whole Nokia story is that after all that time, money and resources were spent on Symbian and MeeGo, BOTH were scrapped as Nokia took Microsoft’s cash and switched over to Windows mobile.  OUCH!

In closing, just about everything in the Nokia story above (except the cameo part in a movie) was mirrored by the 2011 exemplar for non-market orientation: RIM and their Blackberry smartphones.

 

Something to think about today…

 

Best regards,

Dr. Dan-o

 

Daniel M. Ladik, PhD

Associate Professor of Marketing

Stillman School of Business

Seton Hall University

 

Topic Talk Tuesday – A Glimpse into our Mobile Future

Hola Todos!

Today’s Topic Talk is from Chris Valley, Manager – Emerging Solutions at Deloitte Consulting.  I could not agree with Chris more here as the FUTURE will be mobile.  It’s been amazing to the watch the rapid evolution and adoption of mobile but more importantly, how mobile is disrupting industry after industry.

Chris, the floor is yours…

 

Microsoft recently released a video (click here) on how they envision technology helping people make better use of their time, focus their attention, and strengthen relationships while getting things done at work, home, and on the go. There were a number of remarkable concepts that are explored throughout the video- but I was most interested the aspects that related to how the general public will be using their mobile devices in the future.

Mobile has really blasted off within the last year and we have seen amazing innovations within both the hardware and software space. Mobile internet usage is expected to eclipse desktop usage within the next two years and ultimately mobile devices will replace our credit cards, house keys, remote controls, cameras and a variety of other products that we use in our daily lives.

I’ve captured time codes and highlighted two KEY topics (Mobile Life Management & Near Field Communications) that caught my attention and that I thought were worth discussing.

Mobile “Life Management” (.33 and 1:26 into the video)

A recent study by Ground Truth, a mobile measurement firm, revealed that approximately 60% of the time spent on the mobile Internet is spent on social networking sites and apps.
Within the video we see a man and a woman access their devices for information. I found that the interfaces were fascinating visual representations of a person’s “life information” on a very small screen. As people’s life’s become even more inundated with information we will need help with how we are able to prioritize and process communications from work, family, friends as well as all of the other content we consume on a daily basis.  I’m curious to see the innovative solutions for how all that information can be brought together so we don’t miss that important business meeting, a photo from a friend, or a great deal from a nearby store.

Near Field Communications (NFC) (:44 and 1:49 into the video)

Near-Field Communication (NFC) has been heavily promoted this past year as it relates to mobile commerce—but I’m even more interested in the capabilities tied to NFC as a personal identification  system. Our devices will become our keys to access data stored on the cloud, to board a flight, to access more information about products and to make purchases.

In the video we see a woman checking into her hotel room and a key appears on her device—allowing her to skip the entire check-in process.  Later on we see a gentleman using his mobile device to interact with subway billboard. The ad is “aware” of the consumer and able to interact with the user one-on-one. Ad agencies and marketers should be salivating at the possibilities here.

It’s a fascinating video and although at times it starts to look like Minority Report outtakes – there are some thought provoking ideas for where our mobile devices are headed—and maybe it inspired someone to come up with an idea for the next cool mobile app.

Something to think about today…

Best regards,

Chris Valley,
Manager – Emerging Solutions at Deloitte Consulting

Thoughts on Apple 4GS & Stuff

Hola Todos!

While Apple did “move the bar” today with the announcement of the iPhone 4GS, I believe it was more evolutionary then revolutionary in terms of iPhone and the smart phone market.  I doubt anyone was surprised with any of the “highs” of today’s presentation at Apple.  Apple aficionados like myself expect more because that what makes Apple different for every other tech firm on the planet.  Now if Steve Jobs walked out on stage around 2:20 and said, “Tim, I got ‘one more thing….’” and handed CEO Tim Cook the iPhone 5 and then walked back off the stage, we would have been talking about that for the rest of the year.

Beyond the disappointment of no iPhone 5, the new voice control system called Siri is a major bonus (although just in beta at the moment and only available for iPhone 4GS) that will keep iPhone ahead of its competitors by changing the way people communicate and interact with their mobile phones (e.g., apps, phone calls, calendar features, etc.).

From a marketing strategy perspective, the biggest news was the announcement of the iPhone “family” of product offerings: from the free 3GS, a $99 iPhone 4, to the two higher-end price points for the 4GS ($199 for 16GB, $299 for 32). I fully expect Apple to see strong market share gains because iPhone is now targeting both the low end and the higher end of the overall cell phone market.  Couple that with adding a third carrier, Sprint, here in the US, Apple is building a fortress that will be difficult for the competition to topple.

On a final note, Apple did a poor job “managing expectations.”  Apple did little to quell the rumors of iPhone 5 and much of the news yesterday/today as well as the stock were down overall.  All Apple needed to do was send a back channel message to an influential reporter like Walt Mossberg of The Wall Street Journal two or three days in advance, therefore, tempering any expectations of something “incredible” happening yesterday.  Think about it this way.  Apple knew they do not have one of those magical – ‘one more things…’ up their sleeve AND this was going to be new-CEO Tim Cook’s first dog & pony show on is own.  Let’s just say, for Apple’s standards, they probably would have like to have yesterday as a do-over.

Best regards,

Dr. Dan-o

Gaining/Losing Marketshare in a Rapidly Growing Marketplace

Hola Todos!

The following post on the surface looks like some Apple zealot defending his turf.  The smartphone/tablet/mobile OS marketplaces offer the most interesting storylines in tech (if not in all of business for that matter.)  These marketplaces are moving at a pace never seen to the best of my knowledge.

From a marketing perspective, marketshare is always one of the most interesting marketing metrics to follow in rapidly growing and evolving markets.  Can you imagine increasing sales by 75% and losing 1/3 of your marketshare?  That can happen very easily if a firm is not careful (Are you listening RIM? This can and will happen to you).

Check out and review approximately ½ through his argument the “comparing Apples to Apples” section of the article.  In my option, this is the most interesting section of the article.

Enjoy!

Dr. Dan-o