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Nokia: Banking People

If I ran Nokia, I would probably do two things:

  1. I would set upon transforming the company into a retail financial services powerhouse, focusing in particular on developing markets like India and Brazil; and
  2. I would buy Skype.


I don’t have time to articulate the whole thesis here (and besides, if they want the whole thesis they can hire me!) There are some hints in my Platforms, markets and bytes presentation.

The Economist has a good summary of the fix they find themselves in. I think they are at risk of becoming the new Microsoft, in that they buy all sorts of neat, smart start-ups (including a minority investment in Obopay), only to then kill them. According to the Economist, they are trying to adapt and having some success especially in markets like India:

All this will no doubt help Nokia come up with better, if not magic, products. The firm may even reach its goal of 300m users by the end of 2011 because its efforts are not aimed just at rich countries, but at fast-growing emerging economies where Nokia is still king of the hill, such as India. There, services such as Nokia Money, a mobile-payment system, and Life Tools, which supplies farmers with prices and other information, fulfil real needs, says John Delaney of IDC, another market-research firm.

Which only strengthens my view that their path to salvation lies in (yet another) complete re-invention, this time to a 21st century, sixth paradigm, retail financial services platform (built on a mobile substrate.) They might even want to keep (at least some of) their handset engineering know-how: it might come in handy for building handsets that are particularly well adapted to mobile financial services.

In any event, if Nokia want their share price to go up, they better hurry up and change their frame of reference. I mean really, who would you rather compete with? Apple? Google?

Or Citigroup?

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  • alexisrichardson
  • Can't argue with this--only push it even more so. Nokia needs to think 'blue ocean' strategy. And that is almost certainly not going to mean more handsets or better handsets. The Ngage and the 800 series together were 'worse' than an iPhone. And now there is a substantial lock-in around the developer ecosystem, they may simply have to admit that medium term they have lost the handset battle. This can happen to large firms (look at Ericsson or Motorola in handsets)

    While they still have a base, you could be right: mobile banking in the so-called third world could be a place to go. In fact, their new head of design cut his teeth as a youngster in Kenya and Tanzania, so who knows...

  • Nokia are a frustrating company. They've actually done some really good stuff with some of their acquisitions - for example, after acquiring Trolltech they released the Qt libraries under a reasonably permissive open source license and have (as far as I can tell) generously funded futher development. This open source/open standard approach stands in fairly stark contrast to Apple's "our way or the highway" approach to using their technology, and even Google's somewhat limited open source releases.

    Of course, the fact that I like Nokia's [acquired] technology doesn't mean that they've got a good business model. I think they're suffering somewhat from being caught in the middle of a market that is growing in so many directions. They haven't got Apple's ability to focus, or Google's ability to plug their new stuff into an existing money factory, and they're trying to compete on many fronts by acquiring innovators in those areas.

    In fact, the Trolltech/Qt acquisition is a good example. Qt is a pretty excellent software library for cross-platform software development - I've used it to make software applications which can (by virtue of Qt) run on Windows, Mac and Linux and - in theory though not in practice yet) - on Symbian phones. But Nokia's pre-existing "next-gen" operating system, Maemo, is based on a branch of Linux that uses GNOME for its front-end, as opposed to KDE (which is Qt-based). It's not a disaster, but it's sub-optimal and reflects the rather ad-hoc, acquisition-based approach rather than the somewhat more integrated approaches of Apple and Google.

  • I'd suggest their 'frustrating' nature comes from not knowing which way to turn: the classic curse of being big and 'stuck in the middle'. The GM analogy in my reply to Byla above I think is particularly apt (at the risk of horrifying Nokia directors and shareholders if the comparison resonates with them!) If I'm right (about them being the GM of their current industry,) Nokia won't disappear overnight, or perhaps ever, rather they will have a decade or two long, slow, silent slide into irrelevancy or perhaps even bankruptcy. But it is far from too late to change the future. They are almost at the top of their game now, so it would be the perfect time to hatch the complete transformation I suggest. Time for the caterpillar to start spinning its cocoon.

  • byla

    the problem everyone is facing these days is how to get operators on board. Doing micropayment service would be sooo much easier if operators would join the game. Instead of that, everyone in mobile world is pulling in its own direction and huge web players (google predominantly, perhaps eventually paypal, apple is not big here) will overpass them with their own solution.

    So what would you say to, lets say, ericsson, who is the biggest supplier of network technology in the world and possibly the only company that could force standards, to do in the future? Shouldnt this services, like micropayment, owning the address book and so on, be in ericsson's interest as well? I mean, they do not own the handset, but they have the biggest influence on network structure. And since mobile operators are still owning the show, ericsson is in a much better position for ideas like that, than anyone else.

    My take on Nokia: invest even more in OVI (lots more), invest in Maemo (it is brilliant) and invest in just simple best handsets in the world. In all segments.

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