Is Nokia Doomed?

There’s been a lot of discussion regarding whether or not Nokia is Doomed or not.   The people who say Nokia are doomed basically point out that Nokia doesn’t have any attractive products at the high end, and at the low end the margins are extremely thin.  The high end products suffer from the Symbian being essentially dead (even Nokia is recommending that developers not develop native applications for Symbian, but to use Qt instead), and Nokia doesn’t have much of a development community following it, and it certainly does have much in the way of 3rd party applications, either targetting Symbian or Qt at the moment.

So what do I think of the whole debate between Tomi and Scoble?  First of all, I think there is a huge difference in American and European assumptions and perspectives, and a big question is whether the rest of the world will end up looking more like Europe or America vis-a-vis two key areas: cost of data plans, and whether phones become much more application centric.

Tomi took Apple to task in the comments section of his 2nd article for not having an SD card slot (how else would people share photos with their friends?) and for not supporting MMS in its earlier phones.   My first reaction to that was:  Um, isn’t that what photo-sharing sites are for?    Is it really that hard to attach a photo to an e-mail?  And then it hit me.   In Europe, data is still like MMS a few years ago — a place for rapacious carriers to make way too much money.  Many European telco’s don’t have unlimited data plans, and charge by the megabyte — and even if you’re lucky enough to live in a country which does have an American-like data plan, the cost of data roaming is still incredibly expensive.  In contrast, in the US, I can pay $30/month for an unlimited data plan, and I can travel 2000 miles south or west and it will still be valid.   Try doing that in Europe!   The US had consumer-friendly data plans much earlier than Europe did, and so perhaps it’s not surprising that Nokia has engineered phones that were far more optimized for the limitations caused by the Europe’s Wireless carriers.

The second area of debate where I think Scoble and Tomi are far apart is whether phones of the future are fundamentally about applications or well, making phone calls.   Here I don’t have proof that this is a fundamentally European vs. US difference, but I have my suspicions that it might be.   Tomi spent a lot of time dwelling on how Nokia was much better at making phone calls (i.e., better microphones, better radios, etc).   And my reaction to that was, “Who cares?  I rarely use my phone for making phone calls these days!”   And that was certainly one of the reasons why I gave up on Nokia after the E70 — its contacts database was garbage!   It was OK as a phone directory, but as a place for storing multiple addresses and e-mail addresses, it didn’t hold a candle to the Palm PDA.   And that’s perhaps the key question — how much is a smart phone and about being a “phone”, versus being a “PDA” (and these days I want a cloud-synchronized PDA, for my calendar, contacts, and todo lists), and how much is it about applications?

This is getting long, so I think I’ll save my comments about whether I think Meego will be an adequate savior for Nokia for another post.  But it’s worthwhile to talk here about Tomi’s comments about most smartphones being much cheaper than the “luxury” iPhone, and so it doesn’t matter that Nokia’s attempt in the higher end smart phones has been a continuous history of fail.   First of all, it’s worth noting that there are much cheaper Android phones available on the market today, which are price-competitive with Nokia’s low-end smartphones (i.e., available for free from T-Mobile in the States with a two year commitment).  Secondly, the history in the computer market over the last twenty years is that features inevitably waterfall into the cheaper models, and prices will tend to drop over time as well.  Apple started only with the iPod, but over time they added the iPod Nano and the iPod Shuffle.  And it would not surprise me if they introduce a lower-end iPhone as well in time as well.   It would shock me if they aren’t experimenting with such models even as we speak, and have simply chosen not to push one out to the market yet.  So even if you buy Tomi’s argument that the high-end smartphones don’t matter, and you only care about volume, and not about profit margins (talk to the people at Nokia that will need to be laid off to make their expenses match with their lowered revenue run rates; I bet they will care), the question is really about whether Nokia has time to execute on the Meego vision before it’s too late and the current application-centric smartphone ecosystems (Android and iPhone) start eating into the lower-end smartphone segment.   More on that in my next post.

29 thoughts on “Is Nokia Doomed?

  1. Minor correction, but relevant I think: roaming charges are orthogonal to data plan pricing. As a comparison, I can get an unlimited data plan (3Mbps) for &euro10,- in The Netherlands (or even €5,- for 1Mbps).

    Roaming basically is an extortion scheme for international travellers, which happens quite a lot more in the EU than in the US: depending on the carrier and country, I have seen prices of up to &euro9,50 per MB (!) for international mobile data usage. These roaming charges apply to all communication (including speech, sms, mms), and are generally opaque.

  2. ?? Get your facts straight.

    I know for certain that in Germany, UK and the Netherlands mobile contracts are way way WAY cheaper than in the US. Simple reason: The country have much denser population hence building a mobile network is cheaper.

    I pay 5€ for unlimited data and also get a landline number for my phone (Homezone). That is all I pay. I even got a HTC Diamond with that contract.

    I don’t want minutes ( I use my landline SIP over UMTS), nor do I want unlimted texts. In Germany I don’t need to buy all that crap.

    So your point is?

  3. I’m a year into owning my N900, so I really hope Nokia’s doom can hold off a few more years. I think the N900 was a good attempt, but it fell woefully short in the U.S., primarily because there are no carrier subsidies. As for criticizing Apple’s lack of MMS, the N900 doesn’t have MMS support out of the box, either. Meego sounds promising, but it remains to be seen if that promise will come to anything.

  4. Nokia a very capable of throwing together some hardware and coming up with a good-on-paper phone. The N900 looked amazing 14 months ago when I first started seeing leaks and press photos. The UI looked a little rough but it was a new OS (or rather a re-imagining of Maemo 4) and a full Linux distro. I pre-ordered and have been using it as my only phone since it arrived.

    It quickly apparent that the hardware wasn’t the weak point of the phone. While it has a ravenous and very skilled community of open-source developers that have done a lot of “firsts” with the technology, there has been barely any real support from Nokia. They pushed out their top phone and forgot all about it.

    Worse than that, they were totally incompetent at running the various services that they tried to tack on to the phone under their Ovi umbrella brand. A few dozen VPs later and several branches of that brand have closed.

    Anyway you can read more of my rant against Nokia on my review of the N900:

    I’m not saying Nokia is doomed. Basic “feature” phones are still the majority of the market. They just need to recognise that their strategy of doing everything is costing them lots of money and delivering sub-standard products that they’re expected to maintain (even if they don’t).

  5. First I have to agree Arno, data plans within a country are cheap: in germany you get an unlimited data plan for 10EUR, albeit throttled to 64kb starting from 200-1000MB depending on the carrier. A real unlimited data plan without throttling can be added for 20-30EUR.

    I think the problems are somewhere else. First, most people I know are reluctant to spend even 10EUR for mobile Internet. They simply are not interested — sending E-Mails on the go is nothing not tech people care for. Second, the IPhone (without subsidiary) is about 700EUR, which is far too much for most people. That is even more most would like to spend on a Laptop. Good Android phones start at 400EUR, which is still a lot of money. Nokia phones start at 150EUR and you can do phone calls and send sms with them, which is what most people will ever do with it.
    And I think there is another difference between Germany (and probably Europe as a whole) and the USA. AFAIK mobile phone usage is cheaper here than in the US. Most people I know do not have an call plan with fixed monthly charges, but simple pre/postpaid plans. The ones that have a plan have this “homezone” stuff, where you can be called on a landline number or can do calls to the fixed telephone networks for free.
    So, if you pay between 10EUR and 30EUR per month on you mobile phone plan, adding 25EUR for a “top of the line” phone like the IPhone is something most people are not interested in. It is simply too expensive.

    Maybe there will be a cheaper IPhone (which I doubt), but it will still be above 400EUR. Hence only tech people or enterprise customers (where they do not have to pay the phone by themselves) will buy such phones.

  6. You wrote: In contrast, in the US, I can pay $30/month for an unlimited data plan, and I can travel 2000 miles south or west and it will still be valid. Try doing that in Europe!

    Of course you can’t, namely because in the US you can travel 2000 miles and still be in the same country which is impossible in Europe.

    In this case you can’t compare a country, the US, to the European Union (countries).

    Try roaming in Canada and you will see how good your data plan is! 😉

    That said the EU is trying to change this practice but I bet it’ll take years given how much money they make by overcharging like that.

    FWIW I pay 50€ for 4 daytime hours of calls (+ 4 “free” at night) and 1 GB of data per month (what they call “unlimited”).

  7. @5: … the IPhone (without subsidiary) is about 700EUR, which is far too much for most people. That is even more most would like to spend on a Laptop. Good Android phones start at 400EUR, which is still a lot of money. Nokia phones start at 150EUR and you can do phone calls and send sms with them, which is what most people will ever do with it.


    I agree with you that many people use the low-end Nokia’s as effectively feature phones, even if they happen to be running Symbian, and thus, might have been classed as a “smart phone” by Tomi when he argued that Nokia was doing just fine in the “smart phone” segment; it’s just that the average smartphone only costs $120, unlike the “luxury iPhone”. I think that was a totally bogus argument when he made it, and I called him out on that in a previous draft of my blog post, but I decided to save that for the next post when I plan to discuss whether or not Meego is doomed.

    For a long time, people have bemoaned the US system of selling carrier-subsidized phones as being horrible for innovation, and locking people into carriers for two years. Certainly it has made carriers the gate-keepers of what phones could and couldn’t be sold in large numbers in the US market, and there’s a lot that’s very bad about that arrangement.

    But I wonder how much that has really helped the smartphone segment, because while people might not be happy paying $500 for an Android phone, they do seem to be much more willing to pay $199 plus a two-year commitment on a mobile plan which is $10 a month more expensive than a plan without a subsidized phone. So while Europeans have looked down on Americans for having subsidized phones with lock-in contracts, and have prided themselves on how much better their system might be, it may be that there are tradeoffs in both directions, and that for smartphones, the subsidized model may in fact have some benefits.

  8. @6: Of course you can’t, namely because in the US you can travel 2000 miles and still be in the same country which is impossible in Europe.


    Sure, but that’s my point. Sure, it’s easy to make cheap wireless data plan if you only have to make it work something work in a teeny-tiny area. France is the second largest country in Europe, and it has a size which is roughly twice that of the US state of Colorado. People may complain about Americans rarely visiting other countries, but keep in mind how far one can travel and still be in the States. If Europeans travel an hour or two, in many cases they can end up in another state; especially if they are using one of those high speed trains that they are so justly proud of. Great! But then your data plan is rapaciously expensive, for the the same kind of usage that someone in the States might use. I think that’s got to have an impact on how much people use data plans, and how much they depend on cloud-based storage on a mobile device.

    Quite frankly, even though I work for Google and carry an Android phone, I’m not sure how happy I would be depending on the cloud-centric model of computing, because if it’s cheap 80% of the time when I’m in my home country, it’s really uncool when I travel outside of my home country and all of sudden all of my cloud-based applications and data is no longer trivially reachable.

    So the question is, 5 years from now, will the US devolve to become more like Europe’s data wireless plan, where maybe it works fine if I’m in the state of Massachusetts, where I live, but if I drive a few hours and end up in the state of New York, I suddenly have to start watching every megabyte of data that I consume? Or will Europe become more like the States?

    And if it is latter (and I hope fervently it is the latter), how might that change how Europeans perceive cloud-centric mobile devices?

  9. Teddy, you have no idea about the mobile industry. After Apple shocked the market with the iPhone i think Nokia is the only one out of the phone makers to stand strong. Look at Moto, SE, LG, BB, Palm, MS.. those are companies you should be worried about. You mention how great Palm was, well Teddy if they’re so great where are they now? Nokia is doing fine, they’ve had their low in 09/10.. but that’s the past, they’ve recouped, they have their own App store and if an app maker fails to write the same app on all leading platforms they’d be stupid and leave money on the table cuz someone else will do it.

  10. The EU regulators are looking into banning roaming charges between EU country operators. So in a few years (if this goes trough) the EU will look more like US in this way, except of having just a few operators, like the US has, there will be *hundreds* of competing network operators across the EU.

    Most people in the EU use dumbphones (a LOT of them are Nokias), buy them outright and pay around 10-20€ per month. So if Nokia does make their midrange have Symbian^3 and higher, they *will* get a crazy ton of users that will actually use (or try to use) their services.

    So for geeks the competitions will be iOS, Android, MeeGo and WinPho7, but for the lower level (80%+ of the actual mobile phone users) Nokia might retain their market share by pushing Symbian and Qt down the stack and then upsell people to MeeGo by making sure that all the Qt based apps work in both OSes.

    There is no ‘too late’ in the tech world. With enough money, quality and innovation the incumbents can be unseated.

  11. i’am from europe and i think the picture you’re painting is utterly misleading.
    i pay roundabout 12$ per month for an unlimited data plan.
    that’s literally nothing. i’ve been to the us a couple of month ago and was literally shocked by the bad infrastructure outside of urban areas. while we have hsdap everywhere, i wasn’t even able to place a call due to bad or no reception in some areas in the us (using a quadband phone).

    so please bear in mind that you’re writing about EUROPE and not about AFRICA.

  12. Ted, I was so delighted to see you mention the Palm in comparison with Nokia’s smart phone lineup and their contacts handling. I have an ancient Palm Centro and an N900 that I got a year ago, and I *still* have not switched over for daily use, primarily because of the PDA functionality which I found inferior to that of the Palm. Trying to get my contacts and calendar moved properly was quite a saga (see website link for details) and I never successfully managed it, although I hope to try again soon with their latest firmware release.

  13. flo says: so please bear in mind that you’re writing about EUROPE and not about AFRICA.

    In Uganda, we pay about $10-$15 per Gig. There are no roaming charges because you just buy a new SIM card for $1 at the border.

    I don’t see why Nokia should be doomed. If I were buying a new phone, I’d like to buy the n900. The problem is that Nokia isn’t focused enough. Apple only has one phone, but it’s really really good. It annoyed me when the n8 came out. I was excited to see a new phone and then it turned out it was a crappy old Symbian phone. People only buy those things by mistake. Nokia is just taking advantage of people’s ignorance and it feels dirty.

  14. Nokia is not the only big player with a commitment to Meego. Intel wants it to succeed as well. Meego’s potential seems strong: the platform should be first class, and Nokia’s latest smartphone enhance its reputation as a hardware manufacturer. With its brand strength, distribution and market share, Nokia is still a sleeping giant rather than an endangered species.

  15. Huh. This is really the first time I have heard the claim that mobile usage in the US is cheap. The rates you mention don’t look like they are cheap. I live in Finland, a country less densely populated than the US, and I pay 10 euros/month for my unlimited and unthrottled data plan (as part of a fixed 2 year plan including a N900). To me it seems network access, mobile or not, is rather ridiculously expensive in the US.

  16. @11, @15:

    Keep in mind that comparisons between the US and Europe are very misleading, because unlimited service in “all of Finland” isn’t a terribly big area, geographically speaking. When I pay $30/month, I get unlimited data service at HSPA+ speeds across all of the United States. Yes, coverage maybe spotty in some rural areas, but I’m guessing you probably don’t have full high speed coverage in the Northern parts of Finland, either. 🙂

    As I said in my post, I can travel 2000 miles south or west of my home in Boston, and still have unlimited coverage. You can’t do that Finland, because your country smaller, and wireless roaming between countries is $$$ expensive. Maybe most people in Europe are more parochial, and never go more than 20km from the place they were born — but I like being able to travel from Massachusetts to New York and know that I’m still covered by my wireless plan. When you have full roaming working across all of Europe, come back and then we’ll talk.

    @10: Aigars,

    From your lips to the ears of the E.U. regulators, but my guess it may more difficult to do than you suspect. One of the reasons why roaming is much easier across the US is precisely because we have a few very large wireless carriers. Suppose you have some really tiny carrier, based, say, in the country of Luxembourg. It’s a really cute (as in really tiny) country, being somewhat smaller that the Rhode Island in the States. As such, the effort setting up wireless coverage for all of Luxembourg is probably somewhat less than, say, all of Germany or all of France. Also, in countries that have a large number of wireless users will be able to amortize the cost of the infrastructure (but not of the actual bandwidth) across the larger base of users. So later probably explains why wireless is relatively cheap in Finland.

    Now assume that some country that is relatively small, has a huge wireless using population, etc., offers an unlimited wireless plan for say, 5 euros a month. Now assume other its citizens regularly travel all over europe and consuming network bandwidth of other wireless companies. If the UK can scream about plumbers from Poland coming over to “steal” jobs from the Brits, I can also image other countries’ wireless carriers complaining about those freeloading Finns using all of their wireless bandwidth and not paying for the privilege.

    So I suspect those EU bureaucrats will have their work cut out for them in terms of trying to figure out some kind of fair settlement plan that will work well for large countries and small countries, countries with lots of wireless users and countries with comparatively fewer heavy wireless data users, countries with highly cosmopolitan wireless users versus countries with highly parochial wireless users.

    Please don’t take this the wrong way, but between the messed up wireless roaming situation, and the inability of your governments to settle the Euro crisis, I’m actually rather glad I don’t live in Europe….

  17. @16 troll much? Mobile data, even at the $5ish/Mb EU capped rate, is still better here than the East coast USA in my experience. Coverage is essential. The main way the US wins for smartphones is that some cities have free municipal wifi which seems very rare here.

  18. Nokias failure to meet the iPhone threat was just a question of priority, the N770 from 2005 did result in a phone in 2009 which was way to late. The chaotic situation (lets call it non-homogeneous) in the EU telecom market results in better mobile service IMHO, but it might very well have some thing to do with how Nokia set their priorities.

    I know Sony-Ericsson, coming from a similar background to Nokia, has stated that they lost focus on the smartphone side, but then they went and produced the X10 line which is an amazing set of phones (especially the X10 mini).

    The cumbersomeness of roaming in the EU has nothing to do with it, the dataplans probably not either. Maybe the monopoly/regulation in the US market helps, I don’t know, I just think Apple engineered the shit out of Nokia.

    tytso, you know a great deal about EU, I’m impressed, but don’t make broad statements.

  19. @16:
    sry, but i can’t agree on that. i think you’re comparing apples with oranges. it seems like you’re forgetting, that there is an enormous difference between countries and states. you’re country being bigger is a pretty lame point.
    let us talk again, when your unlimited data plan covers the entire northern american continent.

  20. My guess is that 99% of europeans only leave their country for longer period when they are on holidays. So roaming costs don’t really matter to most people. You infer Nokias doom by your geeky frequent flyer world view? How often do you leave the US?
    Europe was and is always way ahead of US in the mobile space. We send billions of texts when US send thousands. We have sub-10€ data plans that work for most use cases and you don’t have to buy unlimted voice and text to get a subsidized phone.

    Bottom line in europe people get better service a lot cheaper and more people use smartphones (the ones with long battery life)

  21. Oh and if you willing to pay a stupid amount like 30€ for data in Europe Vodafone or T-Mobile or Telefonica will give you a data plan that works in all the countries where they have networks.
    That just isn’t useful to most people, so they buy useful cheap ones for their country where they are 99% of the time.

    Why do Americans always have everything supersized? Get unlimted text, voice, data and an iPhone for just 150$ a month! It’s super cheap! … Yeah, right.
    ( )

    We don’t eat so much fast food and don’t drive so many SUVs and call mp3 players “mp3 players” not iPods, maybe, just maybe people in Europe are just different.

  22. Oh, and for the 150 bucks you get terrible service and broken phone calls for free with that iPhone. It’s the deal of century. Millions of Americans can’t be wrong.

  23. @Tom,

    Actually, I’m travelling all the time. I generally clock between 80,000 and 120,000 miles on airplanes every year, not counting train travel. This year I’ve visited Australia, New Zealand, Brazil, and Spain, so it’s actually been a relatively light year for international travel compared to previous years. I didn’t actually make it to Japan and Germany in 2010. (And this doesn’t include stop-overs where I didn’t clear customs at say, London Heathrow).

    Stacey and I get 500 minutes of voice calling, unlimited text, and unlimited data for our two Android phones, and we pay $109 for the two of us on a family plan. So that works out to just under $55/month for the two of us, on T-mobile. Having unlimited data is just nice. We don’t have to worry about keep track of the data plan when we’re using Google Maps for Mobile to give us driving, walking, and public transportation options. (The last is just wonderful when we’re in some city like Portland that we don’t know well, but which is rich in public transportation options.) I can comparison shop in stores by scanning barcodes and getting information about what that item might cost at other stores or on-line via Google Shopper, and so on. Google Goggles is another really cool tool that I’d only use if I didn’t have to worry about every single megabyte that I use when I’m 2500 miles from home (roughly the distance between Portland and Boston).

    Compare and contrast that to some poor mobile user in Luxembourg, who might travel 45 minutes by car, and whoops! Roaming rates apply. Do you really think this is a good thing?

    And if it really is true that most Europeans never leave their country except when they are on vacation — I pity you Europeans. I guess that whole cosmopolitan image thing was just a fake, eh? 🙂

  24. tyso: the cosmopolitan image is not true for most europeans I guess. They might visit many more countries than your average American, but still most of the time they are at home (even on the weekends)

    55$ for your contract is not bad, but from what I hear T-mobile american network isn’t the largest. In Germany such plans are now about 30€ (for everybody, you don’ t have to be married)

    Have you checked how much data you really use with your unlimted plan and your heavy use?

  25. Tom,

    I average around 1.5GB — 1500MB — per month. Some web searching shows the European Commission capped the cost per megabyte that carriers could charge (in their own country, not even when roaming) to 0.8 Euro per MB as of July 1, 2010. For me, that would be 1200 Euro per month. Nice! And of course, I use my wireless data service much more when I’m travelling — when I’m in California (2500 miles away from home) or Chicago (837 miles from home) or more recently when I was on vacation in Hawaii (5000 miles away from home). If I had travelled that distance in Germany (which is about the size of the state of Montana), would I still be in the same country?

    I hear you when you keep asserting that states are different from countries. But the amount of cell towers you need to provide coverage in a given area is the same whether those cell towers are in a state versus a country. (And besides, as long as Germany benefits by having a stable Euro to benefit its export-driven economy, it’s going to be forced to keep bailing out the peripheral countries like Portugal, Ireland, Greece, Spain, and Italy, and as long as the EU is forcing national wireless carriers to cap their data plans to a “reasonable” rate of 0.80 Euro/MB, which means it’s passing when looks to me like Federal laws, the differences between “country” and “state” are starting to blur a bit, don’t you think? What does “Ever Closer Union” mean to you? I mean, you don’t need a passport when you travel between Germany and France; I don’t need a passport when I travel from Boston to New York. Someone from Germany doesn’t need work papers when they work in Ireland; I don’t need to get special permits if I want to move to California and get a job. And the rivalry between fans of the Red Sox and Yankees sports team is probably just as great as between the Germany and French teams during the World Cup…)

  26. Re low end iPhone: does the iPod Touch qualify? I can make calls on it with any of several apps that work over wifi, and you’ll notice that other iPhone features are slowly creeping into the line.

  27. Oh, Germany and French supporters _might_ get along, but you have nothing like the rivalry between German and Dutch or English fans in US. I don’t think that the Red Sox have whole countries of fanatics + media etc behind them (with the Sun always bringing up Panzers and the war again. Before the English loose that is 😉 ). You might be right about most things, but World Cup and Europe is a whole different story. Come to Germany next time our team plays in the World Cup.

    Europe and the US might look very similar from the outside, but the cultural and language differences are still a major stumbling block and roaming is still crazy expensive, but I just checked my contract and I have to pay 5cent per megabyte abroad. Very expensive, but at least there is a price cap at 60€, so on Holiday I might just say: “Fuck it” and use my phone without too much worry.

    Oh and Europeans have a very different perception of size. Your comparisons might be correct, but they are not how your typical European would think. There are big countries and small countries. Monaco and Austria are small. France and the US are big. That the US is 17.61 times bigger than France is not something people worry about. Just like that Austria is 43011 times bigger than Monaco. Geeks think that way, but normal people just have their drawers with bigger and smaller than what they know (or live in) unless they really think and investigate (just like I just did. Thanks Wolfram Alpha 😉 )

  28. Yes, European travelers are indeed getting pretty screwed on data. The reason is that we travel less, so there is little incentive to fix the problem. (the EU has a big “Free movement” program to get us to travel more, but that is another story).

    Equating that with all of EU getting bad data deals is not correct. For our actual usage-patterns, it is fine.

    Here in Sweden I am paying 6.5€ for 1Mbps truly unlimited data (no throttling). 3/10Mbps is 11/27€.
    I usually never bother switching to wifi unless i need to download something quickly or accessing my phone via SSH (all carriers seem to block incoming traffic to phones).

    All that said, I do hope the EU does something radical about the data roaming charges. We regularly get stories about people going on holiday, forgetting to turn some data-sucking app off, and getting huge bills.
    The most common advice seems to be to just buy a pay-as-you-go-SIM where you are going and use that instead.

Leave a Reply

Your email address will not be published. Required fields are marked *