Google Wallet Re-Launch

I was a small part of the initial Google Wallet launch in 2011 and have been a hopeful champion for last 11 yrs (20+blogs). I’m a big fan of the strategy here, a much bigger platform/enablement strategy than the previous flex/p2p effort.  

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Software Secure Element – HCE Breaks the MNO NFC Lock

Visa and MA have both created HCE Apps which will REPLACE the SE based CARD EMULATION apps. This is a FANTASTIC development for BUSINESS and for Android. Now you can create apps that leverage payment, loyalty, … It is also a fantastic development for CUSTOMERS as you will be in control of the TSM and card provisioning. You will be able to load ANY CARD you want.. not just the Chase and Amex cards that are in ISIS.

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BIG Changes to NFC: Payments Part of the OS

What does this all mean? Payment will be part of the mobile platform.. It could manifest itself as NFC, or a QR code, Bluetooth, … or it could be a restructuring of services that that make up payments (authentication, instruction, settlement, confirmation, receipt, …).

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Nokia, Apple, Android, Value Creation and Distributed Innovation

My firm belief is that we will start a mobile “boom” that will dwarf what we have seen with the WWW. The “Mobile TAM” in marketing alone.will be over $750B.

10 April

Description: http://static.seekingalpha.com/uploads/2011/10/29/48158-131993377233806-Stephen-Rosenman.jpg(Cool title…? You can tell I’m an engineer)

I was catching up on some reading this Easter weekend and saw one of my old MIT Technology reviews lying around. Article was on Nokia’s new CTO Henry Tirri (Dec 2011). Question came to mind: to what extent does technology influence Nokia’s future success? Is Apple’s current success built on technology?  Of course, although any CTO’s job gets harder when their CEO is forming alliances that are 100% potential and 0% market traction…. Oh I forgot Elop also sold your own OS to Accenture so there is “no way back”. (For more background on Nokia/MSFT see this UK Guardian Article).

What factors will influence success in Mobile? Obviously it is not R&D, as Nokia’s 2.9B EUR ($3.8B) budget was roughly twice Apple’s $2B (see global 2012 R&D Spending report from Battale). Most would agree that Nokia lost in connecting the phone to the internet.. No amount of internal R&D could have led Nokia to build an equivalent network.. yet they did not fully realize the value that consumers could unlock … at least not much beyond e-mail. (RIM suffered from a similar myopia.. security vs usability locked into the corporate environment).  Nokia’s R&D engineers thus toiled away with features they could control and build.. That is what engineers do.. Nokia thought the battle was in feature/function.. and hundreds of specialized designs for many global “segments”. However the consumer opportunity that Apple discovered was not in hardware, but rather in delivering new ways to connect consumers to all things digital… particularly networks (internet, home, social, entertainment, …  and eventually office).

Will “Apps” be the key to unlocking the value of mobile?

In the press last month, we saw the analysis by Flurry that Amazon is kicking Google’s rear in App store revenue (89%), and that Google itself makes 5x more on IOS than Android.  Other recent research from groups like ABI Research reported that mobile app revenue was $8.5B with 39% due to in app purchases (Gartner says $15B). Personally I find both these numbers a little hard to believe, given Google’s Android revenue is $550M and Apple announced back in July that it paid developers $2.5B (cumulatively over life of AppStore). Best guess for Apple’s FY11 Appstore sales is somewhere around $1.6B (see my July Blog)

Total App Store ECOSYSTEM revenue from these Big 3 is therefore approximately

$1.6B + $1.42 (Amazon’s 89% of Apple’s) + $0.55B = $3.57B

Could it be possible that these big 3 contributed less than 50% of global App Revenue? Not likely (sorry Gartner/ABI). As an investor, I’m not keen on Apps as a long lived mobile environment outside of entertainment (subject of another blog). Suffice to say my view is that “apps” are only a temporary technology metaphor for connecting clusters, goods and data. Although not a fan of “apps” I am very grateful that the App environment exists, as it is driving much innovation within a “developer community” (per Platform).  Having thousands of brilliant engineers from around the world work to deliver value benefits us all.  Which brings me to the topic of distributed innovation.

Open/Distributed Innovation

Open Source is a model most of us are well familiar with. (further reading… I ran across a very nicely done paper from 2 MIT students: Implication of Open Innovation and Open source to Mobile Device Manufacturers).  Given that mobile, advertising and payments are all networked businesses… it seems  business models supporting distributed innovation will advance at a faster pace than those where only a single entity controls the entire product or supply chain.  For example, Amazon, Samsung, Motorola, LG, HTC, Verizon, ATT, Vodafone, .. all make much larger investments in the Android platform (than in IOS). (I would love to see an analysis of combined capital investment in android platform)

However, this distributed innovation hypothesis is NOT playing itself out (ie Apple). Apple’s 1Q12 showed iPhone revenue alone was $24.4B, which is bigger than all of MSFT revenue combined.  Analysts have shown that Apple now garners 75% of mobile handset profits, with only 9% of handset market share.  So while Samsung alone has outsold Apple in Units this quarter (41M vs. 32.6M), and Android just topped 50% market share (vs Apple’s 30.2%).. Apple’s handset business PROFITABILITY dwarfs that of all of the competition (COMBINED).

So… What are the factors of competition today? Can someone else change the game?

Most would agree that Apple has won through a focus on design and customer satisfaction. Nothing looks as good, or works as reliably as an iPhone. It brings a consumer’s digital life together; it is also the channel by which we stay connected when we are not at home. Description: C:UserstomDocumentsPersonalblogmobile_os_satisfaction.gifApple’s unique ability to control design and manufacturing quality has obviously provided many benefits (which customers have proven willing to pay a premium for).

The big downside in distributed innovation is complexity, there is a need for a “channel master” or chaos reigns. Many Android users witness this chaos when an app won’t work on a new hardware/OS combination.. Distributed innovation is not something that established businesses are good at. It has proven most successful in product PLATFORMS where the pace of change in each component is changing at a rate where no one company can make the capital investment to remain competitive (ex. Moore’s Law, PC architecture through present day). Intel played a very important role in this process, as it worked outside the scope of the CPU in areas such as: Intel Architecture Lab (IAL, developed common standards like PCI),  stimulated external innovation (developer training, testing, Intel Capital), industry marketing, patent/licensing. Intel defined what the PLATFORM was.. something that is common sense to us today.. but rest assured it was not given to them, rather it was something that they stepped into and took leadership of.

As we look for where the form of mobile competition may change, it would seem to be outside: hardware, software and network bandwith. With respect to hardware, features have recently begun to surpass “good enough” . Samsung’s Galaxy Nexus is an excellent example of how focused hardware innovation has enabled them to surpass the iPhone’s capabilities. If hardware is good enough, and not the primary factor of competition, it must be software, services or data that will drive competition in the next phase…

If platform is decided on software only.. then software platform with most open standard and most users (ANDROID) should dominate as any connected devices (handsets and everything else) have lower cost and more ability to “specialize”, particularly if intelligence is in the network (not the device).  But software is currently not the point of competition either… If not DEVICE software.. then what?

Stage 4 – Shift from Integrated Platform to Value Orchestration

Keeping with the assumptions above:  hardware becomes “good enough”, platform/software become “ubiquitous”, patents are widely shared (ok this is a joke.. checking if you were sleeping), and the mobile phone transforms into the networked device “bridging” the virtual and physical world then value (and profitability) will shift from platforms executing transactions to entities coordinating interactions.  This interaction of entities is what I refer to as Value Orchestration, certainly not a concept I developed. A January 2001 Harvard Business Review Article: Where Value Lives in a Networked World put it this way:

In more general terms, modern high-speed networks push back-end intelligence and front-end intelligence in two different directions, toward opposite ends of the network. Back-end intelligence becomes embedded into a shared infrastructure at the core of the network (cloud), while front-end intelligence fragments into many different forms at the periphery of the network, where the users are. And since value follows intelligence, the two ends of the network become the major sources of potential profits. The middle of the network gets hollowed out; it becomes a dumb conduit, with little potential for value creation. Moreover, as value diverges, so do companies and competition. …. In a connected world, intelligence becomes fluid and modular. Small units of intelligence float freely like molecules in the ether, coalescing into temporary bundles whenever and wherever necessary to solve problems.

This orchestration hypothesis seems to have proven itself in PCs as margin shifted away from the integrated manufacture to component “performance” differentiation (ex. peripheral price/performance) then again to software finally transforming again to orchestrators and “connected” businesses that orchestrate network value (like Amazon, Facebook and Google)…. as hardware evolves into a commodity like business.

The long term investor risk for Apple is that it will not be able to shift to a value orchestration role, and its handset business (while excellent) will no longer garner 75% of industry profits. Where will the high margin businesses develop? If we take a network view, opportunities to create value exist in interaction between clusters (ex. Retailer to consumer, Facebook community to Retailer) and within a cluster (ex Supply chain, healthcare , …etc.).  Within this cluster matrix, l like to take a Clayton Christensen view: “what problems are there that the mobile phone can solve”? which each “opportunity” assigned 5 key measures:

1) TAM (Consumers, $ Volume, Growth, …)

2) Disruptive innovation measure – price/performance (ex. Mobile targeted advertising vs. Coupons)

3) Information Control. Who owns it, how is it obtained, accuracy, privacy,  (impacts pricing power)

4) Key Alliances and stakeholders

5) Execution risk (ex. Compete with Facebook vs. Building a mobile application for a retailer)

Much of Value orchestration is dependent on data. Consumer data is highly fragmented in the physical world, do consumers/clusters want it consolidated? What are the benefits? Where is it stored (node or cloud)?  The HRB quote above painted a picture where “small units of intelligence float freely like molecules in the ether, coalescing into temporary bundles whenever and wherever necessary to solve problems”. Perhaps it is my time as a senior director within Oracle that has ruined my views on data.. but if it floats freely …how on earth can anyone organize it? Doesn’t someone need a directory? for at least one side? How can intelligence be “self assembling” in business?

My firm belief is that we will start a mobile “boom” that will dwarf what we have seen with either the internet, PCs or the industrial revolution. How big? Will at the top of my list for calculating the basis of a “New Mobile” TAM is marketiDescription: C:UserstomDocumentsPersonalblogUS Marketing Spend.JPGng.. With the US alone accounting for over $750B .. how much of that spend is targeted?

Because mobile is at the intersection of both virtual and physical, the network is larger.. it touches every consumer, every business and every “cluster”…  it is therefore many orders of magnitude more complex.  In this dynamic environment, small companies are much better positioned to deliver “focused”, simple orchestrated solutions between clusters.

Examples of Cluster ochestration:

  • Machine-machine interaction (mobile to open hotel room door)
  • Person-Person interaction (health history, alergies to Doctor)
  • Consumer-Retailer interaction (ex Mobile marketing in brick and mortar retail)

As intelligence develops, it will aggregate (ex Google/Facebook). I covered this topic back my December post Building Networks “The network forms around a function and other entities are attracted to this network (affinity) because of the function of both the central orchestrator and the other participants”.  Given that each node and cluster is resource constained.. they maintain connections to a finite number of “efficient” orchestrators/networks. Early networks build very substantial momentum..

Summary

Wow.. this went on too long..  They say a blog over 2 min of reading is a looser.. hey.. you get what you pay for.

Given the mobile device’s unique ability to serve as a point of convergence between the virtual and physical world, a Stage 4 evolution will take place where handsets are cheap and ubiquitous and networks are high speed dumb pipes (both low margin businesses). This Stage may be the leverage point where Apple’s competitors gain differentiation. Perhaps if they had some cash.. and a few bright people they could respond. 🙂

There are certainly many scenarios where stage 4 could evolve from. Orchestration requires both back end “cloud” infrastructure and localized intelligence. Both entail a complex interaction of: data, distribution, platform, cluster relationships, business intelligence, control, regulation, trust, … to deliver value. Companies like Google, IBM, Oracle, Facebook…   should be able to succeed in the central function.  If any of them agree with this blog.. they should actively endeavor to build “interfaces” and standards by which small companies can deliver the localized intelligence.. much the way Facebook has started giving some access to data.

Sorry for size

Comments appreciated.

OpenNFC – Game Changer

OpenNFC has a tremendous impact on MNO NFC business models. MNOs invested tremendous effort in developing NFC, now they are having their legs taken out from under them by a contactless vendor and the handset manufacturers. For ISIS to succeed they must run much faster and expand scope from a narrow payment pilot (over next 18 months) to building a platform that can compete AND interoperate against Android

24 February 2011

Monday I wrote about Apple’s “NFC Twist” and how a multi SE environment impacted MNO’s NFC business case. From Monday (I hate to quote myself.. but it keeps from following the link)

The champion of Multi SE architecture is Inside Contactless (OpenNFC).. a very very smart “Judo” move that leverages NXP’s substantial momentum (in integrated NFC/controller/radio) against itself. Inside’s perspective is that there is no reason for the ISO 14443 radio to ONLY be controlled via NFC (treat it like a camera). Inside’s OpenNFC provides for “easily adaptable hardware abstraction software layer, which accounts for a very small percentage of the total stack code, meaning that the Open NFC software stack can be easily leveraged for different NFC chip hardwalet multiple applications and services access it”. Handset manufactures love this model.. MNOs hate it. As I stated previously, closed systems must develop prior to open systems as investment can only be made where margins and services can be controlled. OpenNFC changes the investment dynamics for MNOs, and provides new incentives for Google/Apple/Microsoft, … to transition their closed systems into NFC platforms.

For Banks, Handset Manufacturer and Startups…

I cannot understate the importance of this approach.  My guess is that Apple, Motorola and RIM are all planning to pursue “OpenNFC” .  Multiple applications can now leverage the 14443 radio IN ADDITION TO the MNO controlled (SWP/SE) environment. Applications can then ride “over the top” independent of carrier controlled (TSM Managed) OTA provisioning.

In business terms, what does this mean? ISIS was founded under the assumption that it controlled the radio and all applications accessing it under NFCs  secure element (SE)  single wire protocol (SWP). Nothing could use the radio unless the ISIS TSM (Gemalto) provisioned it. Visa, Mastercard, Amex were all looking at a future where the BEST they could do was exist as a sticker on the back of the phone. In the OpenNFC model, the radio can be accessed directly through the handset operating system (assuming the OS integrates to the Inside OpenNFC controller).  This provides the ability for applications on Android and iPhone to access the radio. In this model, Mastercard DOES have the ability to get PayPass into the phone. My guess is that one driver of MasterCard’s hiring of Mung-Ki Woo from Orange was his unique perspective on how to make PayPass work within this InsideContactless model.

For ISIS? This is a tremendous impact to their business model. Perhaps something they cannot recover from. MNOs invested tremendous effort in developing NFC, now they are having their legs taken out from under them by a contactless vendor and the handset manufacturers. For ISIS to succeed they must run much faster and expand scope from a narrow payment pilot (over next 18 months) to building a platform that can compete AND interoperate against Android. Yeah.. that big. Their advantage is in control, security and provisioning. Unfortunately, because they have focused on the “control” aspect as the centerpiece of their  business model, they have developed no alliances. In this, ISIS may well follow the failure of Canada’s Enstream. A group that got all of the technology right but failed to develop a sustainable business model.

Start-Ups

Start building to OPEN NFC. Game IS ON. Assume that Android and iPhone will let you access the radio…. For a fee.

For Consumers

CHAOS. What do you do when 5 applications all want to submit your payment.. .or read an RFID.. which one do you use?  For a view on the mess this will cause, see the Stolpan whitepaper

I believe this approach benefits Apple much more than Google. Apple’s platform “control” and QA testing will be essential to getting this off the ground. My guess is that Apple will have only ONE NFC payment option.. APPLE PAYMENTS. Perhaps a gatekeeper model where multiple cards can be store but Apple collects a fee.

Although Apple has an advantage in control. Google has the opportunity to deliver a much better value proposition to consumers, businesses and application developers. I’ll stick by my Axiom that new networks must start as closed systems delivering value to at least 2 parties. But can Apple compete with its Gosplan (USSR State Planning) like controls against open Android?

Background

NFC Background for non-techies reading the blog, there have been many, many global pilots of NFC.. but no production rollouts. From my previous blog

What is NFC? Technically it operates on the same ISO/IEC 14443 (18092) protocol as both RFID and MiFare so how is it different? I’m not going to get into the depth of the technology (see Wikipedia), but the biggest driver was  GSMA/NFC Forum’s technical definition (UICC/SWP) that ENABLED CARRIERS to control the smart card (NFC element). This in turn enabled carriers to create a business model through which they could justify investment (See NFC Forum White Paper).

Mobile Apps will Die

As Google evolves Android into an open mobile platform, the “app” revenue model will evolve as well. Just as with Apple’s Mac experience, it will be difficult for Apple to attract continued investment. Given the tremendous talent at Nokia, MSFT, Google, RIM.. I’m sure they see the analogy to the 1994 example I have provided above. An “open” mobile browser with enhanced features would destroy the Apple ecosystem. App developers would choose “open” first (IF they could monetize their investments).

16 February 2011

Yeah.. thought the headline would make you read this one. This was the theme of yesterday’s  WSJ article covering a NYC Mobile Monday Confab. I agree with these young CEOs, as I’m sure would James Gosling, Grady Booch, Marc Andreesen, Alan Kay (and the Xerox PARC team). Most of the readership of this blog are business/payments folks, and probably don’t recognize the names or the technical dynamics at play. Objective of this blog is to give a business perspective on a “death of apps” dynamic as these business execs are the ones who actually fund (and take the risk) on these technical approaches.

Let me start off with 2 stories

Story 1 – 1994

A long, long time ago (1994)…  Netscape launched and gave ability to view basic HTML. The experience was rather dry, with even “drop down” boxes a major accomplishment. There was very little transacting, and the internet looked like one big marketing brochure. Early stage corporate use was limited to “employee directory” kind of functions, and interactive employee applications were built on … wait for it… POWERBUILDER, VisualBasic, or … for the more advanced companies… Smalltalk (an excellent language and my personal favorite). IBMs OS2 Warp was easily winning the enterprise war against Microsoft’s 3.1, a release which required a TCP/IP add on (Win95 came the next year in 1995). 

Enterprises had a desktop mess, applications had to be installed with all of their supporting libraries, on multiple machine types, with multiple operating system versions, hardware versions, most of which conflicted. Fortunately internet browsers began to develop more and more functionality, with scripting and embedded virtual machines of their own. “Light” applications began to migrate to the browser with a significant advantage in cost to deploy and a slight disadvantage in functionality. As browsers and standards further evolved, more applications changed their architecture, attracting more top tier developers. Fat client apps became an ugly legacy (for all but Microsoft’s Office applications).

Lessons learned: multiple proprietary architectures won in “functionality” but lost in cost to develop, cost to deploy and cost to service. Greater investment in a “sub standard” approach enabled faster growth, focus and subsequent adoption. Open architectures allowed multiple parties to create profitable businesses, and further invest.

Story 2 – Fat Mobile Applications

I had a tremendous global team at Citi, quite frankly some of the best and brightest people I have ever worked with at any company. As head of channels for Citi Global Consumer, mobile (outside of the US) was in my domain. Banks are highly driven to reduce cost to serve and acquire. Mobile was (and is) a channel with much experimentation. At Citi I took a look at 6 key mobile initiatives within the last 3 years to look for patterns of success/learnings that could be leveraged. We had developed “fat client” mobile applications in US, Germany, Japan, Mexico, AU as well as SMS based applications in PH, SG, IN, Indonesia, … In every case fat client mobile applications failed.  Why? Technology, user experience, cost to deploy, MNO “support”, …  The testing matrix of handset types, OS types, screen size, OS versions, …. was just not manageable.

Perhaps the biggest learning of all.. is how mobile is viewed by the customer. As my head of mobile in HK (Brian Hui) told me “what is so urgent that the customer can’t wait to get back to their PC”? Customers want speed and simplicity in their mobile interactions. For services like “what is my balance”? Fat clients are not needed. Even today, bank mobile applications are largely a competitive “me too”, as deployment costs to support 3 platforms (RIM, iPhone and Android) are much lower than prior “universal” support attempts. Although the statistics are not widely published, more than 3x customers access their bank through a mobile browser than through their bank’s mobile application (not everyone has an iPhone.. imagine that).

Proprietary Closed Systems must go first in NEW markets… then evolve or fail

As I mentioned in my previous blog, history has shown that closed networks form prior to open networks (in almost every circumstance). Closed networks are uniquely capable of managing end-end quality of service and pricing. This enables the single “network owner” to manage risk and investment. How can any company make investment in a network that does not exist, it cannot control, at a price consumers will not pay, with a group that can not make decisions or execute? Answer: Companies cannot, it is the domain of academics, governments, NGOs and Philanthropic organizations.

The principle challenge in evolving a closed business platform is financial. The margins associated with maintaining “control” of a platform are substantial… they are very hard for any company to give up (ie Microsoft, Apple, IBM). Just take a look at today’s WSJ regarding Apple’s subscription service plans. Apple wants to take a 30% cut of everything ever sold to its platform… for eternity. Can you imagine Microsoft asking to take a 30% cut of every fee on any item viewed or played on a Windows PC? How do you think Amazon or the music industry feel about this? Every iPhone App developer? It must feel like a Faustian bargain at best.

Apple’s big advantage today is app revenue, as it provides:

  • Terms and Control
  • In App Billing
  • In App Advertising
  • Consumer Payment Management

Yet I digress…. what about fat apps? This is why I like Google’s model, and why it will be so hard to compete against them. As Google evolves Android into an open mobile platform, the “app” revenue model will evolve as well. Just as with Apple’s Mac experience, it will be difficult for Apple to attract continued investment.  Given the tremendous talent at Nokia, MSFT, Google, RIM.. I’m sure they see the analogy to the 1994 example I have provided above. An “open” mobile browser with enhanced features would destroy the Apple ecosystem. App developers would choose “open” first (IF they could monetize their investments). Every handset manufacture and MNO has incentive to develop and invest in a “kill the app” mobile browser standard to compete with Apple and change the competitive dynamic.

One exception I see is in mobile “secure” applications. In this the GSMA and NFC Forum are absolutely brilliant… they have defined a common standard.. unfortunately the business model to monetize it has not yet developed. They had the right technical team design it.. can they get the right business leaders to make is successful? (see related blog)

Excellent TechCrunch Article on HTML 5  Feb 5, 2011

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