Ex-Nokian comment: I got another guest writer to participate. He wished to remain anonymous too. So from now on, his text:
For quite some time now I have watched people on all sides endlessly argue over what Nokia under Stephen Elop have done, especially around the “burning platform” of Symbian. As the speed of Symbian’s decline has accelerated, the vitriol and bitterness have grown to insane levels. Some commentators are more of a Murdoch tabloid/Fox News, combining outrage, dubious (if not verifiably false) statistics, a heaping helping of circular logic, tied all together with loud volume and attacks/comment censorship on all those who disagree. While my attempts to rebut the histrionics of some bombastic analysts have been unsuccessful (see: the aforementioned censorship), the emergence of DC has given me a space to contribute without fear of censorship. So now I, either a current or ex-Nokia employee (I will not tell which or where), am going to offer my contribution to the debate:
The current dominant narrative goes like this:
- Symbian was doing fine, having just hit record sales in Q4 2010
- Stephen Elop’s “Burning Platform” memo killed Symbian sales by causing the Ratner Effect (hurting sales when the leader publicly says the product is bad) and the Osborne effect (hurting sales by revealing/promoting the future product too far in advance)
- Symbian would have been fine were it not for this, and then we point to charts that show Symbian sales going up until Feb 2011 “Elopalypse”, and then going down from there
- Therefore, Elop and the Burning Platform memo killed Symbian, and with it, gravely wounded Nokia. If it weren’t for this, Symbian sales would not be collapsing.
The argument is compelling because it seems logically sound and easy to explain and understand (and seems to have lots of empirical proof, because look how bad the Symbian sales are now!) But just because an argument seems compelling does not mean it is correct. Everyone in this current argument is having a debate confined to the walls of a windowless sauna and never looking outside. Here is an alternative:
The Nature of Change
When change happens–in nature, in society, in business, whatever–it ultimately boils down to 2 kinds: endogenous and exogenous.
- Endogenous change comes from within–something the organism or organisation does itself.
- Exogenous changes comes from the external environment and affects the organism/organisation.
If someone dies because they are old or ill, that is endogenous. If someone dies because they are eaten by a bear (or hit by an angry bird 🙂 ) that is exogenous.
Now look at the argument, which is never “how Samsung and Apple killed Nokia” but always seems to be “how Elop killed Nokia.” It is always “Elop/Nokia did this, and did that, and did that also.” In this view, Samsung, Apple, Google are like passive blobs–like liquid that will expand to fill any space but only once Nokia itself vacates that space.
Are Samsung, Apple, Google at all passive?
No! They are ferocious and aggressive competitors with billions of dollars in the bank, huge brand recognition, and global reach (all 3 are on display in India where Samsung are offering suitcases of cash to Nokia Priority Dealers that become Samsung shops). As if they weren’t unethical enough with their slavish copying of Apple’s designs…
People debate what Nokia did as though Nokia was the sole factor in its marketplace success or failure. Ironically, those who focus entirely on the endogenous “blame Elop” argument are guilty of the very same Nokia-centric myopia that got Nokia into so much trouble in the first place!
Let’s be good engineers and test the hypothesis
Simply put, my hypothesis is that Nokia’s challenges were exogenous more than endogenous, and even if Nokia had stuck with its original strategy, the sales trajectory of Symbian devices would be crashing like they are now.
How can we test this hypothesis?
- hop in the time machine and make Nokia do the original strategy
- observe the performance of peer companies with similar strategy
We obviously cannot do #1 (curse that Elop, he cut the Nokia time machine R&D budget 🙂 ). Although we will get a taste of it with upcoming Jolla phones and seeing if they are a mass market success or a niche product (that I hope is profitable, because even as a fan of Lumia, I love my N9 and want a Jolla 🙂 )
Can we do #2? To do it, we need a company that:
- Was in a similar strategic dilemma as Nokia
a) Strong brand and sales, seen as a big player in the market
b) Sales stagnation in Western markets masked by strong performance in emerging markets
c) Widely-used but aged OS with poor support as a platform for 3rd party app development
- Pursued a strategic plan similar to Nokia’s pre-Feb 11 plan
a) Continuing to promote and sell the original OS (avoid Ratner effect and Osborne effect)
b) Develop their own next-generation platform that they control, not WP or Android
c) take sole responsibility for developing the ecosystem around it—carrier relationships, 3rd party developers (apps!), cloud services, PC connectivity etc.
d) do so for both the current platform and the next-gen platform simultaneously
- Happened in the same market period (2010-2012)
If the hypothesis of the anti-Elop side is correct, a company that pursued such a strategy will succeed in both sales of the legacy platform and development of both ecosystems.
The best part is, we have such a company to compare to! Research in Motion, the venerable BlackBerry maker!
Let us see if they fit the hypothesis:
- Was in a similar strategic dilemma as Nokia
a) Strong brand and sales, seen as a big player in the market yes
b) Sales stagnation in Western markets masked by strong performance in emerging markets yes
c) Widely-used but ageing OS with poor support as a platform for 3rd party app development yes
- Pursued a strategic plan similar to Nokia’s pre-Feb 11 plan
a) Continuing to promote and sell the original OS (avoid Ratner effect and Osborne effect) yes. To this day RIM are making and marketing new devices based on BB7
b) Develop their own next-generation platform that they control, not WP or Android yes. BB10
c) take sole responsibility for developing the ecosystem around it—carrier relationships, 3rd party developers (apps!), cloud services, PC connectivity etc yes
d) do so for both the current platform and the next-gen platform simultaneously yes
6) Happened in the same market period (2010-2012) yes
Heck, they even used Qt, come from a snowy country, and had Canadian leadership in the CEO office 🙂
Test results part 1 – device sales
So, if change in this market has been primarily endogenous, BB sales should not plummet like Symbian sales have. What happened?
Well that’s awkward. RIM did everything Nokia should have done to promote its old system, and yet the sales still collapsed! The strategies of Elop-Nokia and RIM were totally different. The only constant between RIM and Nokia is they were both facing the same competitors—Apple and Google/Samsung.
Even more interesting is when RIM’s sales started collapsing on this chart. Do you see which month it is? It is February 2011! The month of the “Elopocalypse”! So what is more likely to explain how sales of Nokia’s and RIM’s legacy platforms at the same time?
- Market circumstances beyond the control of any one company caused massive disruptive change and hurt all players that weren’t Apple or Google/Samsung
- Stephen Elop is so bad that he can magically destroy two companies at once with his evil powers
While everyone argues whether Elop set the platform on fire or not, they ignore that the platform was struck by a lightning storm
That is sales. The other side is apps. How has RIM done at both preserving its current ecosystem and growing its new one?
Test part 2 – app ecosystem
For the legacy BB platform, even though more BB7 devices are sold than WP7 devices in a quarter, high profile app developers are announcing the end of support for Blackberry (just like Symbian, massive unit sales do not automatically translate into thriving ecosystem). Earlier this year, visual voicemail provider YouMail announced they were dropping support for BlackBerry (and got into a public spat with RIM’s VP of developer relations in the process). Kayak, the popular airline booking site, also dropped support for BB earlier this year. This week, the New York Times ended their support for BB (by comparison, last month they just released a brand new 2.0 version of their Windows Phone app). And unless you’re on a PlayBook, you still can’t play Angry Birds on a BlackBerry device.
How is the future BB10 ecosystem development going? According to the WSJ, not so great, as RIM is “bleeding developers”. Developer interest in BB7 is declining rapidly and so is support for BB10. By comparison, WP7 interest has dropped after the WP8 announcement, but the decline is offset by interest in 8 (71% of all mobile developers surveyed said WP8 increased their interest in the platform)
Additionally, the announcements of big-time companies supporting BB10 are sparse: Trufone, Gameloft, Poynt, Mippin. Their inability to get a Netflix app for BB10 (a bellwether app or sorts for both developers and consumers looking to see if a platform is “safe”, at least in countries where Netflix has a presence) is a legendary sore spot for RIM. As it is now, Netflix won’t make a BlackBerry version even if RIM did all the work for them. Similarly, TextPlus has more faith in Windows Phone than to BB.
And Skype? Well Microsoft owns Skype, so I don’t think it would be a super high priority for them (especially when they need to do a lot of work to make Skype suck less on WP7 haha 🙂 )
Comparing 3rd party developer support for WP and BB seems to suggest that Microsoft have enough money and weight to ensure that what little oxygen there is for a “third ecosystem” will go to them. MeeGo would have been one more platform competing with MS’s dollars for developer attention for that 3rd place spot.
Some people could say “oh well of course MS will win for 3rd place, they bribe developers with their $$$!” Well, that is almost certainly true (although they do bring more to the table than just money). But that’s not some part of the equation you can choose to ignore for moral reasons or whatever. One way or another Microsoft would win. Nokia could either win with them or lose against them.
In this post I have offered a reasonable alternative explanation for why Symbian sales would have collapsed regardless of whether Elop did what he did. It wasn’t Nokia’s strategy that killed Symbian; it was better platforms that killed Symbian—the same thing that killed BlackBerry. It was an exogenous disruption. I don’t expect a lot of die-hard Elop-haters/Symbian-lovers to change their mind in this, but I hope I have made a difference to more cool-headed, open-minded people who want to see Nokia succeed.
I am not saying that Elop made no mistakes. Plenty of mistakes were made by Elop and his executives. Symbian sales would probably have tanked a few percentage points less, but make no mistake they would have tanked. Whether the CEO was willing to say the legacy platform was inferior to competitors or not, the market was willing to say it for him, with their wallets.