Original URL: http://www.theregister.co.uk/2011/02/16/nokia_had_choices_but_couldnt_take_them/

What sealed Nokia's fate?

It's the bureaucracy, stupid

By Andrew Orlowski

Posted in Mobile, 16th February 2011 16:51 GMT

"Nokia and Symbian was the last of the European software business, it's gone overnight. That's depressing," an industry veteran told me on Friday afternoon.

As I wrote several years ago, Nokia was a company that could set global standards for consumer electronics, and do so from a cold and remote corner of Europe, using its own R&D. Americans thought this claim was either cute or hyperbolic - but with its central role in mobile communications, and its deep pockets, I didn't think it was far-fetched for Nokia to rival Sony across the home. With a Microsoft partnership, that's not impossible, but it's unlikely - and Nokia won't be putting its own vision to the market, but putting its badge on somebody else's.

For me, the most remarkable part of Nokia's decline is how deeply it thought about the future, for so long. Nokia had prepared for the shift away from commodity voice phones many years ago. In the late 1990s it handing out copies of The Innovator's Dilemma for its management to read. Anyone looking for a single scapegoat or a defining moment should be disappointed, however. What slowly strangled Nokia was its inability to execute its plans effectively.

Nokia N95 S60 menu

Let's look at the problems Nokia was confronted with, and its responses.

The masterplan

As Charles Davies pointed out in our Symbian retrospective, the late Noughties were the first time that an outsider could break into the top tier of phone manufacturers. Packaged chipsets allowed new entrants to the make reasonable 2G (not yet 3G) phones by 2007. Nokia had pioneered high functionality consumer smartphones in 2002, starting with the 7650. This looked like great timing: GPRS networks were coming online and 3G not far behind. Every 18 months Nokia could produce smaller, more integrated electronics. From a producer's point of view, it was perfect. From the punter's point of view, all was not well, though.

Symbian smartphones became increasingly complex and buggy. They brimmed over with features, but users had to pay a premium to add a data plan to use them fully. The features were hard to find, too. So smartphones remained a niche for technology enthusiasts. (Symbian was turning a tidy profit by 2006).

Then Apple entered the market with a device that was a merely-OK phone, but offered something radically new: a new user interface that made much of the functionality manufacturers like Nokia had built into their devices quite usable. And Apple had a bundled data plan, so trying it all out was risk-free.

At last, here was an integrated mobile device that didn't suck. Pure-play PDAs had disappeared, but their replacements left a nasty taste. Both reading and writing about these were no fun.

"After years of writing about smartphones, I've seen the established players become lazy and complacent, go down blind alleys, or standardize on horrible designs and feature sets," I recall. "So the iPhone should focus minds wonderfully - it should raise the bar for everyone." Believe it or not, that was one of my more Unpopular Opinions.

Conventional wisdom decreed that this vanity exercise would be quietly snuffed out by the operators - possibly ending Apple's ambitions in the mobile business.

So Nokia wasn't alone in dismissing the iPhone, and its usability, as a gimmick. This gave Apple the time it needed to catch up. Demand was overwhelming, allowing Apple to relax its one-operator-per-market policy, and gradually work in the many missing features: an app store, 3G, and MMS for example. Nokia simply thought producer-power would crush the users' revolt.

"Here's an ecosystem we made earlier..."

But it had a "Plan B", and had been considering it for years. In 2002, I'm told, Linus Torvalds convinced Nokia to create a Linux unit. The skunkworks bore fruit in 2005, and Nokia backed it strongly, maintaining an high retail profile for it in the United States.

The 770 Tablet couldn't make cellular phone calls, but it made things easy that were difficult on its Symbian phones, such as web browsing. Nokia believed that given time, open source would give it a thriving third-party application "ecosystem".

According to the now-departed Anssi Vanjoki, Nokia believed it would take five iterations to get its Linux platform right, as a mass market smartphone. In the fourth iteration, with the 900, Nokia added cellular telephony. Vanjoki hinted the fifth would arrive in 2010. It never did.

nokia's 770

Nokia had also learned the hard way that Symbian was too complex for all but the most dedicated developers. It needed a cool new API. Belatedly, at the start of 2008, it bought one. Trolltech's Qt was widely admired and proven in the marketplace Skype and Google Earth used it. Here was the killer application framework Nokia had already needed.

But Nokia took so long bringing Qt to Symbian and Linux that the job even wasn't really finished three years later, when Elop announced his revolution last Friday. Since Qt already ran on Linux this is quite an achievement. Or quite a non-achievement. Trolltech co-founders Eng and Noord, and CTO Schilling had all long since departed.

So Nokia had a Plan B, and it had a compelling developer story. But it was too late. What killed Nokia's ambitions then was not stupidity, but its bureaucracy.

The bureaucracy ensured Nokia couldn't execute on its ideas, just when it needed to rapidly and with relentless focus. As late as 2009, Nokia's services chief, would-be media mogul, and honorary American Tero Ojanpera was dismissing the competition as "that fruit company". And with leadership as contemptuous of the market as that, anybody who upset the status quo was going to get in trouble. Projects dragged on, lost in political in-fighting.

I find this quite astounding. It wasn't as if Nokia was so wedded to one legacy success (say, a mainframe) that it didn't see the opportunities in its successor (say, a minicomputer). It wanted to build the successor, but its bureaucracy wouldn't allow it to.

Before starting this piece I'd wanted to focus on three mistakes that were important. But there was only really one factor.

Nokia N900

Nokia even had a whizzy new UI for the N900.
Shame about the font, though

The problem Stephen Elop faces now is not a technical one. I'll offer another Unpopular Opinion here: that WP7 is really remarkably good already. If it wasn't called Microsoft Windows Phone 7, and had it instead originated with a plucky startup more people would be able to appreciate it better. The Microsoft imprimatur ensures WP will never be cool - but does at least give it some assurance of backing.

Elop is correct in identifying Android as a mad sharkpool of manufacturers thrashing around in pursuit of a tiny profit, eating each other in the process. If he had to plump for an OS to license, of the two, WP was the better choice.

Elop's problem is that historically you can't really take a large bureaucracy and expect a lean, mean fighting machine to emerge. You usually just get a smaller bureaucracy. ®