Nokia’s Opportunity: Building an NFC Ecosystem

Most of you have read Stephen Elop’s scathing internal assessment of Nokia yesterday: “Burning Oil Platform”. Today NFC software start ups are locked in by both handset manufactures and MNOs…. could Nokia leapfrog Apple by enabling companies to invest, and go to market, in NFC?

8 Feb 2011

Most of you have read Stephen Elop’s scathing internal assessment of Nokia yesterday: “Burning Oil Platform”.  Although I will probably get laughed at for this… I’m actually quite high on Nokia. At least the CEO knows there is a fire.. which is the last phase in the Kubler-Ross Five Stages Of Grief ( 1. Denial and Isolation. 2. Anger. 3. Bargaining. 4. Depression. 5. Acceptance). Now what?

Nokia and Motorola are very similar in many respects. Both have heavy (VERY HEAVY) engineering driven cultures. This engineering excellence has led them to their current market position, and these teams are just tremendous. The downside of the engineering focus is that areas like Marketing, sales, and alliances have always taken a seat far in the back of the bus. When handset competition was driven by feature/function this was no issue.. but Apple and Google have changed the nature of handset competition and how consumers perceive value. Beyond the number of apps available to consumers, it is the number of BUSINESSES that are investing in the platform. Google and Apple have created platform ecosystems that enable many businesses to enhance the platform at a pace that a single company can’t match (sorry Apple), in new dimensions (Apps, in app advertising, NFC, …et), with new business models (see previous blog).

Elop has the right background to change this, and has a number of opportunities to put Nokia into a position to uniquely compete. My suggested focus: create a platform ecosystem around NFC, with Europe and a few Asian markets (SG, HK, AU) as the launch pad… Find a model where you make Google a partner. Why? It aligns with your core competencies, and your competitors are failing in the NFC platform. Apple is seeking too much control, and Android has poor focus beyond the broken US market. What if Nokia was Google’s key partner outside the US?

For those outside the MNO world, what I’m suggesting is heresy to many in the Nokia Symbian world. Its like telling the French that they should throw away their dead language and force adoption of English. Elop’s challenge is creating a platform business akin to what he ran at Microsoft. This takes ability to partner…. partnerships mean deciding on WHAT you must focus on. In Smart Phones… where is the competition battle? If it is App Stores can Nokia get a critical mass of developers writing to its platform as it looses the US market?  Where is the revenue opportunity? Is it the handset?

I’m certainly not suggesting that Nokia completely abandon Symbian… but what about providing an option? What if their phones were the only ones that could support multiple OS? Run any application? In the NFC model I’m suggesting, OS should not be the competing factor.. what Nokia needs is other companies investing in its platform. NFC seems to be a key prospect given the trajectories of other efforts.

As an example.. handset manufacturers control the “keys” to NFC’s secure element. Industry insiders guess Apple is planning to keep them from the MNOs.. could Nokia take a more “open route” by creating an global independent TSM… a “java” kind of approach. Today NFC software start ups are locked in by both handset manufactures and MNOs…. could Nokia leapfrog Apple by enabling companies to invest, and go to market, in NFC?

Nokia is not a dumb contract manufacturer. It is one of the best handset engineering companies in the business. WHAT it is engineering to is the operable question. An OS generic NFC ecosystem approach seems to be supported by over 130 NFC Patents as well (second only to Sony). This NFC Communications World article does a tremendous job outlining Nokia’s NFC Platform business model. Beyond the NFC ecosystem, Nokia is already assuming an equally broad leadership role in LTE, a world where all of your consumer electronics will will communicate with each other and your phone. Therefore, I disagree completely with Venture beat that Microsoft is the partner of choice.. Nokia’s plans should be one that makes OS the commodity.. let the customers and the market decide.

NFC Patent Portfolio
NFC Patent Portfolio

The first challenge for Elop is cultural. As a generalization, Motorola is rather hierarchical and autocratic, where Nokia takes on the Finnish consensus driven management culture. Given that Nokia’s primary asset is people, it is very difficult for Elop execute a “Steve Jobs” type of vision and command/control without destroying his organization. Is the burning oil platform analogy the first step in building the case for change? I would expect his next announcement to be a big vision… how will the stars in the Finnish company react?

Thoughts appreciated

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