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Friday, June 15, 2012

Nokia struggles as phones become emotional commodities

My heart was bleeding blue yesterday as the Salo R&D site is closed. This was the epicenter of the business for twenty years. Many of the iconic phones were developed there, many of the heroes of Nokia walked the halls of the center. This is where I started my Nokia career. The place is a small sleepy town en route to Turku, the second most important city in Finland. The highway 1 compared to its importance was a winding road through the Finnish forest. Once in Salo it was heaven of technology, the sheer knowledge of the sandal wearing engineers was amazing. I have memories for life. Thanks to everyone for the time, if I only can help you now, I will!

 Nokia is saying that the market has changed faster than anticipated. It is mindblowing to think that the founders of GSM are 'out of business', Ericsson, Motorola and Nokia.

I really like the last batches of phones and particularly the Lumia 800, I really thought it was a stunning design. Others also liked it, it was different and fresh. Yet, like Stephen Elop says it is now a war of Ecosystems, rather than a battle of devices.

There is so much truth in that statement, but yet this is maybe where the problem lies. Consumers do not care about eco-system they care about getting stuff done, and communicating. For those tasks all eco-systems work well enough, and when things are good enough the consumers lose interest. The phone has become an emotional commodity.

The phone is absolutely not a commodity, the entry barriers are high, the technical sophistication is high, yet consumers take all of this for granted. The phone is just a natural part of digital life, like a hammer. A tool every household has, but no one gets excited about.

 All the conversations are about apps, all the sex appeal is in apps and all transformation takes place in apps, and this space is a jungle. In this some make magic and create billions in wealth, others fall into the sediment of long lists.

Recently a friend asked what phone she should buy, a question I have answered a thousand times before, and there has always been a good answer. Now there is not, it depends, do you use Mac, or do you want to store your stuff in the cloud? Do you use PC, will you use lots of apps, do you want local apps, will you buy content, do you have content, do you want to??? Remember she asked what phone she should buy. . . In the end, I said it doesn't matter they are all great, pick the one you like most.

When you get this kind of answer, then thoughts gets focused on price and that is a signal of commodity.

The emotional commodity state of phones is rather worrying, and as you can get a brick with mostly screen from €100 to €600 then you start wondering what is the real difference is, and as Manufacturers panic, they go down the rabbit hole of gigahertz, gigabytes and other commodity jargon.

This leads me to believe we are in the calm before a new emotional gadget storm, discovering the gadget that we all want to talk about, show off and rave about. Perhaps the era of wearables and intimate electronics?

 

10:50 AM | Permalink

Comments

The Salo RnD site has not been closed so you can stop bleeding now

Posted by: TJ at Jun 15, 2012 5:37:17 PM

Totally agree we are entering the era of wearables. For the wrist, Pebble has kickstarted awareness for the wider market (let's see how they deliver) and MetaWatch are upping their offering. Let's see what the killer apps really will be - not just notifications, but ground-breaking and invaluable solutions.

As for Nokia: those leaving need to seize the opportunity (half full-half empty mindset ;) and go forth! Finland needs a broad range of new businesses and innovation, not only high-tech startups.

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