Nokia's new maps

In among the various announcements this week at Nokia World (including the N97 and completion of the Symbian purchase), was the third installment of the Nokia Maps saga.

Yes, location-based services will be crucial to the success of mobile devices and services. And the Nokia approach seems to acknowledge that its customers use both handsets and PCs, and that it needs to seamlessly support both. However, Nokia is going head to head with Google and Microsoft (not to mention Yahoo and AOL’s Mapquest).

I guess this explains why Nokia spent $8 billion to acquire Navteq 14 months ago. Nokia seems to see it the lynchpin of winning adoption for Nokia Ovi, its mobile phone portal. And if you want to make an all-in-one portal, maps (like search and email) seem to be an essential element nowadays.

Overall, Nokia’s corporate strategy seems to emphasize the value of internalizing and integrating rather than partnering and using open innovation. So the challenge from investors will be to demonstrate that owning mobile hardware, software and services (while competing with operator-owned services) creates more value than buying the pieces on the open market (or letting its customers choose the best technology for their needs).

While I understand that from a financial standpoint that Nokia hopes services will provide growth as equipment sales flatten out, I’m not sure why Nokia thinks they will be particularly good at these other things. Successful firms focus on where there competencies are, and partner with those that provide complementary goods and services. Nokia could build (or acquire) new competencies, but the general pattern is that such diversification destroys value.

In particular, I’m not thinking of a lot of precedents for a hardware company that’s been a success in the services business. IBM provided VAN (Value Added Network) services in the 1980s and NEC partnered to run Niftyserve in Japan in the 1980s and 1990s. But that was when these services were hard to do — when these became commodity businesses, they had no particular advantage.

Google is diversifying the other way, from services into providing software for handsets (competing with Nokia’s handsets). Is Nokia obsessed with competing with Google (and Microsoft) for Total World Domination? It didn’t work out too well for Scott McNealy or the crew of the HMS Sun, as its 20th century Captain Ahab squandered the 1990s in his futile quest to destroy Moby Microsoft.

Nokia's new subsidiary

Largely lost in the announcements at Nokia World is this press release

Nokia acquires Symbian Limited
December 02, 2008

Espoo, Finland - Nokia today announced that it has completed its offer to acquire Symbian Limited. All conditions to Nokia's offer to acquire Symbian Limited have been satisfied and it has received valid acceptance of greater than 99.9% of the total Symbian shares that Nokia did not already own. Symbian is the software company that develops and licenses Symbian OS, the market-leading open operating system for mobile devices.

The closing of the offer is a fundamental step in the establishment of the Symbian Foundation, announced on June 24, 2008 by Nokia, together with AT&T, LG Electronics, Motorola, NTT DOCOMO, Samsung, Sony Ericsson, ST-NXP Wireless, Texas Instruments and Vodafone. More information about the planned foundation can be found at www.symbianfoundation.org.

All Symbian employees are planned to become Nokia employees on February 1, 2009.

After 10 years, Symbian is gone as an independent company. Although the acquisition marks an important milestone to the plan announced June 24, the more important milestone will be (as noted) when the employees get all shuffled around and dispersed to Nokia divisions after Feb. 1. The bulk of today’s Symbian Ltd. — software engineers and associated QA and management — will presumably end up somewhere within handset R&D.

One major unknown (and for now unknowable) is how loyal Symbian handset makers (beyond Nokia) remain. Nokia’s always had a difficult time balancing its internal goals against attracting competitors to share an ecosystem. There have also been a series of one-off problems that seemed to jinx the other participants: Motorola’s ongoing saga, Sony Ericsson’s withdrawal from much of the world, and the emphasis of the Korean vendors on cool hardware rather than usable software.

Something that will be resolved sooner is the nature of the Symbian Foundation. The most successful multi-firm open source consortium is the Eclipse Foundation, which lists 17 names on its staff page. By my guess, this is a small fraction of those portion of Symbian employees that today work with the Symbian ecosystem — the “few hundreds” mentioned in a June interview.

Presumably the goal of the foundation (as with any consortium) is to be supported by a broad base of members rather than getting most of its money from one or two highly motivated members. Nokia will pay for a thousand employees (in R&D) but will its partners (with their smaller smartphone sales) pay for hundreds of foundation employees?

At Nokia World, Symbian Foundation executive director (designate) Lee Williams gave one of the keynotes. Williams was the obvious candidate, as a member of the (former) Symbian board and the outgoing head of Nokia’s S60 software development (a distinction that will go away once S60 and Symbian are merged). He also had experience as a manager at Be Inc. (the Apple spinoff) before and after it was acquired by Palm.

Alas, the first 15 minutes of the talk is exceedingly platitudinous, as executives seem wont to do with a large captive audience.

The useful part of the talk is the last eight minutes, beginning with the phrase "In terms of the goals of the foundation at a very concrete and practical level …” The basic message (in R&D speak rather then MBA speak) is that Symbian OS will leverage its economies of scale and scope to maintain its lead over all rivals. He emphasized three major goals

• A complete platform in 2009, and with it a more compete platform — in terms of devices, third party applications and platform maturity — than any rival.
• Hardware agnostic. 7 chipsets, 5 baseband modems, plus other chipsets and components
• “A real ecosystem” of a wide range of firms, small and large, with no one party advantaged

Obviously paying the Symbian engineers to keep updating the OS will work as long as Nokia pays the bills, and there should be some great improvements of efficiency and effectiveness after Nokia removes the Symbian/S60 schism.

The long term question is outside participation and financial support for the Foundation outside Espoo. In theory, open source should attract third party participation but in practice it rarely works that way: when a single firm sponsors an open source community, usually other firms choose not to participate due to a lack of accessibility. The IP may be open but the production and/or governance are not.

IBM gained outside supporters when it created Eclipse it created the open source Eclipse Project, but today that remains unique. Symbian was already fairly open — certainly as open as many standard consortia — and for now it’s not clear whether Nokia owned (with a smaller open source foundation) will be more open (in governance) than the previous arrangement.

Nokia's new phone

This morning at Nokia World in Barcelona, Nokia launched its latest smartphone, the N97.

The intro video positions it as “the N97 mobile computer,” and other Nokia talks continue the theme of mobile phone users in the developing bypassing PCs and laptops and going straight to a (Nokia) mobile phone as their Internet access device. This positions S60 (and Symbian OS) as more directly competing with laptop operating systems, something it has not attempted to do in the past.

Of course, the main thing about this “phone” are the non-phone features. It continues with the same highly regards 5mp camera as the N95 and N96. In addition to the GPS, it is the second Nokia to feature an integrated compass, with obvious benefits for navigation devices. And like most smartphones (except the Vodafone/Verizon crippled BlackBerry Storm), it has Wi-Fi in addition to 3G.

It joins its major rivals (such as the iPhone and BlackBerry Storm) in having a 3.5" touchscreen display. Since the S60 phones have not historically been touchscreen, this — and the demo video — suggests major UI changes that we won’t understand until real live phones are available.

The N97 certainly raises the bar on screen resolution, with a 640x360 screen vs. 320x240 for the N96, 480x360 for the Storm and 480x320 for the iPhone 3G. In addition to the screen (and unspecified UI changes), the other major change is the slideout keyboard, reminiscent of the Danger Sidekick, the Google G1 or various LG (e.g. F9100) and Samsung (e.g. Glyde) phones.

The N97 is vaporware — as much as 6 months off — so I suspect that its advantage on screen resolution will be short-lived. Nokia’s decision to go with a physical keyboard (shades of the Nokia 9000 but much smaller) is a different (and perhaps prescient) take than Apple and RIM (thus far) on the smartphone Internet experience. Nokia and RIM can afford to experiment with keyboard and non-keyboard devices, whereas I suspect Apple’s limited scope (and its uncompromising vision) will keep it in the non-keyboard camp for several more years.

In addition to the timing, the other thing that may limits the N97 impact is the price: $700 or €550. Yes, Nokia’s high-end N series phones have been their most sophisticated devices, but with priced befitting a king, they have played to a limited (largely business) audience. Given the current economy this may be a difficult time to launch such an expensive device.

To offer a conclusion, I can’t do better than Om Malik’s assessment this morning:

The very fact that Nokia is only now getting out touchscreen phones shows that as a company it is stuck in bureaucratic quicksand, with a culture of consensus that makes it difficult to respond to new challenges. Nokia — and I have been following them for a while — has become one of those companies that, much like Microsoft, is good with announcements, not so great with the follow-up.

There is word that Nokia has a whole arsenal of touchscreen phones coming in the latter half of 2009. Let’s hope they can get their mojo back and start coming out with great devices — especially ones that will make me go back to using Nokia devices on a daily basis. Until then Apple and its iPhone has the pole position all to itself.

Eroding away any semblance of accountability

If accountability among today’s lying and cheating politicians and business leaders is bad, it seems like it will only get worse.

USA Today reports on a large-scale survey of American high school stduents:

Students cheat, steal, but say they're good
[Posted Nov. 30, 2008]

NEW YORK (AP) — In the past year, 30% of U.S. high school students have stolen from a store and 64% have cheated on a test, according to a new, large-scale survey suggesting that Americans are too apathetic about ethical standards.
...
The Josephson Institute, a Los Angeles-based ethics institute, surveyed 29,760 students at 100 randomly selected high schools nationwide, both public and private. All students in the selected schools were given the survey in class; their anonymity was assured.

Michael Josephson, the institute's founder and president, said he was most dismayed by the findings about theft. The survey found that 35% of boys and 26% of girls — 30% overall — acknowledged stealing from a store within the past year. One-fifth said they stole something from a friend; 23% said they stole something from a parent or other relative.

"What is the social cost of that — not to mention the implication for the next generation of mortgage brokers?" Josephson remarked in an interview. "In a society drenched with cynicism, young people can look at it and say 'Why shouldn't we? Everyone else does it."'

Other findings from the survey:

• Cheating in school is rampant and getting worse. Sixty-four percent of students cheated on a test in the past year and 38% did so two or more times, up from 60% and 35% in a 2006 survey.

• Thirty-six percent said they used the Internet to plagiarize an assignment, up from 33% in 2004.

• Forty-two percent said they sometimes lie to save money — 49% of the boys and 36% of the girls.

Despite such responses, 93% of the students said they were satisfied with their personal ethics and character, and 77% affirmed that "when it comes to doing what is right, I am better than most people I know."

This story certainly rings true, as we find Internet plagiarism is something many high school students used for years without getting caught and punished. The reaction of school administrators was appalling — mostly a mixture of denial and rationalization.

I don’t know what the root cause is, because there are so many possibilities: the self-esteem movement, the general decline of societal morality, Baby Boomer parents who taught their kids to rebel against authority, the decay of the public schools. During my recent visit to Chile, the country seemed in some ways more honest than the US, despite being surrounded by countries where corruption has been a way of life for centuries.

But whatever the cause, the impact on free markets will be terrible. A free economy requires millions or billions of decentralized self-regulating market transactions, and corruption erodes away at that system and will eventually bring it to a halt.

When dishonesty is rare — as in smalltown America once upon a time — then sanctions are workable, but when it is rampant, there are few remedies. eBay abandoned efforts at self-policing honesty after they proved vulnerable to abuse. Regulation to enforce honesty won’t work, because the government cannot be involved in every transaction.

Plus, students who get ahead by cheating will become workers who try to get ahead by cheating. These are ones who put their efforts into learning how to cheat rather than learning how to do a good job. Not the sort of work force that delivers quality goods and services, raise productivity and thus raise the average standard of life in our country.

The good kids don’t cheat because it’s wrong, not because they worry about getting caught. I don’t know where we get more good kids, but we certainly need them.

Consumer smartphone that's winning businesses

In this morning’s Wall Street Journal, Apple has a full page ad advertising its #1 ranking in US business user customer satisfaction as reported by JD Power and Associates. In a near tie for second were RIM (BlackBerry) and Samsung, with HTC, Motorola and Palm (Treo) posting below-average scores. Nokia apparently had too few US customers to be measured.

The BlackBerry was tops this year and its score was essentially unchanged. The iPhone passed it, setting a new standard for customer expectations of a smartphone. (This news came out in early November but I didn’t see it at the time).

It’s clear that did Apple did well because its competitors failed to deliver. 24% of users reported a software problem. Of those, 44% have to reboot their phone once a week, and 34%have an application error or free at least once a week.

Smartphones are small portable computers, with many capabilities and governed by software. It’s not surprising that the best results come from firms that understand software, manage the complexity and focus on delivering a quality user experience. Unfortunately for Apple, by showing the way to its competitors, it will help (some of) those competitors become more capable.C’est la vie (c'est la guerre).