Who opened the door to nowhere? Nokia and its Ovi services

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The Finnish for door is Ovi. I recently received a research request from Nokia’s Ovi services so that they can find out why I wasn’t using their services since I had registered and tried them out. The fact that Nokia is so on top to do research is a good thing and something that other service providers would do good to learn from.

ovi survey

Many of the questions focused on what other services I used and one of them asked about what they could do differently. As I was completing the survey I was reminded of the title to an old Jam & Spoon track ‘Who opened the door to nowhere?‘ as it seemed to outline the problem Nokia faces.

Ewan put it bluntly in his Mobile Industry Review newsletter when he talked about writing a report for an investment bank with a working title of ‘The Nokia Ovi Store: Systemic Industry Failure And Why The Market Says No-Thank-You ‘.

Why Nokia reminds me of Yahoo!?

Nokia reminds me of two distinct points in the history of Yahoo!. Firstly in the handsets business, the company has admitted that it has been left behind by competitors including RIM and Apple. This is rather similar to the situation that Yahoo! under Terry Semel, Jerry Yang and Carol Bartz have found themselves when we entered the Google age.

Let us not forget that even Amazon’s A9 service couldn’t compete against Google, so there is no shame in it. It will be interesting to see just how expensive a car crash Bing will end up being.

Sometimes disruption happens. Disruptions are difficult because changing behaviours is hard.

Disruption is a difficult thing to deal with, even when Yahoo! got back to having a broadly comparable product to Google in the search space, it still couldn’t stop the drift of users to Google. This is because we are stuck in our ways, once you get us to form a habit its very hard to get the average person out of it again.

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Every time I drive up the M6 motorway I always miss the junction 20 turn-off for the M56 to go home. I know the junction is coming up as I have driven that road time and time before, yet I can’t get out of the cycle. Now imagine the challenge that rivals to Google faced. Robert X. Cringely used to talk about the 10-times rule, that is in order for a product to demolish an established market leader it has to be 10 times better in some way that is meaningful to the customer.

So even if Nokia provides a web email that is good as Gmail, a phone that is good as the iPhone, an application store that is as good as iTunes or a mapping product that is as good as TomTom or Google they won’t necessarily see a discernable reason to go Nokia. At the moment getting to be of an equal quality to rival products is something that Nokia aspires to do in its 2010 business plan outlined to investors.

In order to win, you have to make decisive, non-linear changes. So when Apple got its mojo back, it positioned itself has a product that just worked (and there was a modest premium to pay for that), Yahoo! Mail defended itself against the onslaught of Google’s GMail by offering an unlimited capacity email account, though they carefully gamed how much capacity you could use over time.

The second point in Yahoo!’s history that reminds me of Nokia is the end of Tim Koogle’s period as CEO. Yahoo! had grown from being a web directory to acquire Four11 for its webmail service, ZDNet’s Yahoo! Internet Life magazine and a plethora of brand licencing deals; overpaying for Mark Cuban’s Broadcast.com along the way. The company was stretched six ways from Sunday with several non-core interests and declining revenue from advertising as the economy went into a post-dot.com downturn.

Nokia is a similar situation with feature phones, a large smartphone range that struggle to differentiate between each other, wireless broadband hardware, web services, telecoms equipment and an interest in expanding into emerging markets like smart grids. Nokia has announced that it will rationalise its smartphone range, halving the number of phones on offer.

The key question that this hinges on is what does Nokia really mean? Because that is the key to having a slimmed down, agile, successful company in the future.