Category: Theory

Theory.

Nokia's Burning Ships strategy

In the recent series of exposés on Nokia’s new strategy I sought to paint a background for what caused such a dramatic decision:

This gives a backdrop to the decision, but it does not explain the most crucial part of the decision: why did Stephen Elop decide to maintain an exclusive platform for Nokia rather than a multi-platform approach as chosen by successful competitors such as HTC, Samsung and Sony Ericsson. Continue reading “Nokia's Burning Ships strategy”

The lives and deaths of mobile platforms

When Stephen Elop said that Nokia and Microsoft sought to create a “three horse race” he implied that there were only two viable mobile ecosystems today. With that statement he sought to deprecate or declare “end of life” two platforms: Symbian and MeeGo, implying that Nokia’s efforts at being the third way failed.

However, he also implicitly declared irrelevant a larger set of market participants. In fact, the market is awash with platforms. Far more than the three or five that Stephen considered.

Continue reading “The lives and deaths of mobile platforms”

The certainty of unforeseeable growth: The rise of ZTE and Huawei

  • According to rumors, Huawei shipped 30 million phones last year. The target for this year is 60 million of which 15 will be smartphones.
  • According to IDC ZTE is now the fourth largest mobile phone vendor with 51.8 million units in 2010. Assuming 70% for 2011, ZTE could ship 88 million units in 2011, 25 million of which would be smartphones.
  • These data imply that ZTE and Huawei will ship nearly 150 million phones in 2011 of which 40 million would be smartphones.
  • That would imply approximately 7% share of the global smartphone market for these two companies together.

Continue reading “The certainty of unforeseeable growth: The rise of ZTE and Huawei”

Two turkeys don't make an eagle, but no penguin will ever soar.

Vic Gundotra of Google tipped off the world two days in advance that on Feb 11 Android would play no part in Nokia’s strategy. To be sure, Elop said that Nokia didn’t choose Android because of “differentiation challenges and commoditization risk” (begging the question of how these challenges and risks are mitigated by licensing another openly available OS).

But I won’t weigh the merits of one module vs. another. Rather, the more pertinent discussion should be on why license instead of build. Clearly, Nokia threw in the towel. Not because they could not build, but because their building processes could not create greatness.

But can greatness ever come from modularity? I’ve argued that it can’t. I’ll maintain that argument as long as what is being built is not good enough. In other words, as long as innovation remains relevant, improvements will be absorbed and rewarded. Once innovation exceeds what can be absorbed, the basis of competition will shift to convenience and price which are best served with a modular business architecture.

Android is a fast follower. The first Android prototypes looked like Blackberries because that was the input paradigm of 2006. When capacitive touch was shown to be a better input method, Android reacted swiftly. When app stores created a new medium Android reacted swiftly. When the iPad demonstrated that computing can be done in new settings, Android reacted. At such time when there will be nothing to follow Android will be the king of the last commoditized innovation, but as long as there is something worth inventing Android will be there to reproduce it.

This is not a judgement, but an observation: Nokia and Microsoft may not make an Apple but neither will Android ever create the future.

Changing places: Microsoft trades HP for Nokia

The juxtaposition of HP’s strategy of increased independence and Nokia’s new strategy of increased dependence can’t be more striking.

HP is probably Microsoft’s biggest customer. As the largest licensee of Windows it probably generated more revenue for Microsoft than any other company. The fact that HP invested in a new operating system for its mobile efforts shows a level of discomfort with the lack of strategic leverage.

Nokia, on the other hand, has been resolutely independent in its software strategy. For over a decade it held out against licensing any OS, especially one from Microsoft. The pantomime theatrics that took place over that decade will make a great case study some day.

Continue reading “Changing places: Microsoft trades HP for Nokia”

The (iPod)Touch(i)Pad

The world’s largest PC company just launched a “media tablet[1]”. Conflating the iPod Touch and iPad brands into “TouchPad” HP joins RIM in announcing an integrated OS/device product to compete as a platform vs. iOS and Android (and to some degree even against Windows).

There are others waiting in the wings. Presumably, Microsoft is hard at work to release a tablet-compatible Windows sometime near the middle of this decade. MeeGo is also going through its gestation period targeting Atom-based tablets. John Gruber notes the excitement around tablet platforms in his article about this post-PC renaissance in computing alternatives. I also noted that the end of the PC era was marked by the end of WinTel at CES.

Continue reading “The (iPod)Touch(i)Pad”

Why focusing on a few products is hard

“Focus is about saying no.” This quote is perhaps apocryphal but it’s credited to Steve Jobs. It’s not a novel idea. Many companies chant this mantra but do they really understand what focus implies?

Focus is the antithesis of portfolio theory. Portfolio theory is a great concept. Every pedestrian in New York City has experienced it. While the weather is fine, street vendors sell their regular wares, but when a rainstorm appears it seems everyone is selling umbrellas.

The idea that you keep umbrellas in stock seems very prudent. It’s a hedge that people will need a different product under different circumstances. Maintaining a product portfolio is a way of selecting a collection of products that has collectively lower risk than any individual product. The formulation of this even earned its creators the Nobel prize.

But “focus” is the willful rejection of this theory. By saying no to alternatives you increase risk disproportionally to the reward. If you have the means to maintain a portfolio it certainly seems imprudent not to do so.

So why would someone want to focus?

The answer is that too much diversification is dangerous. It’s dilutive to everything the company uses to create value: its resources, its processes and its priorities. It dulls the mind and tarnishes the brand.

So focus is not just saying no. It’s being supremely confident in what you say yes to. It’s having the ability to call the winners and the losers. A company that lives and breathes product gains this confidence. A company that puts markets or profit formulas first never obtains the confidence to focus, inflates its portfolio and thus risks everything.

The Apple doctrine

The best way to get to the essence of any company is by evaluating its priorities. These priorities are like an unwritten constitution. The analog in theology is dogma which when codified becomes doctrine. In law it’s common or case law.[1] In business, priorities are hard to discern and are usually only anecdotally observed.

At Apple the top priority is the product.

Sounds trivial, but very few companies place product first. Those who do tend to be producing creative works (e.g. movie or advertising studios, companies built around a creative process). Most companies place either production or distribution first.

Placing product first forces the bizarre behavior that Apple is well known for: being innovative and quixotic. It makes them foolish and hungry. Sometimes it even makes them catastrophically destructive to competitors.

Continue reading “The Apple doctrine”

Calling the end of innovation in mobile computers

People are lining up to call the market for mobile phones. Analysts and amateurs alike are connecting points on charts and predicting with confidence the future of mobile platforms. Consensus is forming that there is no future but a quiescent state. By the acclamation of pundits, the survivors are declared to be iOS and Android. They are also predictably arranged in a way similar to OS X and Windows. End of story.

Except for one thing. Continue reading “Calling the end of innovation in mobile computers”

The Asymco way

When I started Asymco.com I did not have a plan. I did not have a policy or vision statement. I wrote what I found interesting. I knew nothing of blogging or of web publishing as a business. Over the following nine months I learned a few things. I also learned a bit about how web publishing (and publishing in general) works.

My observations were brought into clear focus by this brief overview of the core values of web publishing summed up by this leaked document form AOL: “The AOL Way“.

  • AOL tells its editors to decide what topics to cover based on four considerations: traffic potential, revenue potential, edit quality and turn-around time.
  • AOL asks its editors to decide whether to produce content based on “the profitability consideration.”
  • The documents reveal that AOL is, when the story calls for it, willing to boost traffic by 5 to 10% with search ads and other “paid media.”
  • AOL site leaders are expected to have eight ideas for packages that could generate at least $1 million in revenue on hand at all times.
  • In-house AOL staffers are expected to write five to 10 stories per day.
  • AOL knows its sites are too dependent on traffic from AOL.com, and it wants its editors to fix the problem by posting more frequently, with more emphasis on getting pageviews.

This codification of values has inspired me to put in writing my own priorities for Asymco:

  • Learn by writing. Teach by listening.
  • Improve. Move the intellectual ball forward.
  • Illuminate topics which are bereft of analysis.
  • Be notable. “The proliferation consideration.” How likely is the idea to being widely re-published?
  • Review. Encourage participation by reading all comments and reply to as many as possible. Police comments with zero tolerance.
  • Repair. Declare and correct errors.
  • Select. Publish only when the contribution is unique. Avoid redundancy, clutter and noise. Don’t waste reader time.

Many have asked: What about the business model? I’m afraid there isn’t one. I’m still naive enough to think that if I build a great product then everything else will take care of itself.