How Nokia can beat the iPhone

Posted by Rob Enderle

Despite a number of initial teething problems, Nokia's Lumia 900 may be the closest a Windows Phone 7 device has ever come to beating Apple's wildly popular iPhone. 

Although the handset is selling rather well, I doubt it is giving Tim Cook many sleepless nights; rather, he is getting those from the US Department of Justice. However, over the years many other leading products have been successfully overtaken.  

How Nokia can beat the iPhoneRemember, Apple displaced the Walkman, RIM displaced the Palm PDA, which itself was displaced by the iPhone. Plus, Nintendo was displaced by Sony who was displaced by Nintendo who was displaced by the Xbox.

In every case the dominant player had similar advantages to Apple in that they clearly were earning more money, had far more content, and a larger installed base.  And, I expect, each thought they were equally unbeatable.

Nokia and Microsoft are clearly two industry heavyweights with the resources to beat Apple. The obvious challenge? Strategy, execution and timing.  

The Stumble

Before we begin, I should point out that many of the above-mentioned displacements were helped by the dominant vendor stumbling. Sony tried MP3 players - which in many ways - were sleeker than the rather clunky first iPod. But Sony, even though it actually owned a massive number of music titles, was so worried about piracy that it wrapped the players with the ugliest DRM I’ve ever seen and rendered them practically unusable. In contrast, Apple focused on ease of use and capacity, essentially stealing the market. Still, Cupertino likely wouldn’t have done as well had Sony gotten its act together before Apple.

Similarly, Sony lost the market with the PlayStation by trying to use its gaming dominance to force their Blu-ray platform to beat the more cost effective HD-DVD standard. The result? A system that was estimated to cost (that’s cost to build) over $1,000 at launch in a market that had generally rejected a gaming system selling over $300 at retail. Some estimates had the Japanese-based corporation losing more than $400 per system. Unsurprisingly, even Sony couldn’t afford that kind of loss, and so opened the door for the far more reasonably priced Wii and Xbox wins.  

As noted above, RIM beat Palm on the market turn from PDAs to smartphones.  RIM used the lever of a two way pager as a feature to eclipse the PALM PDA - then built the better smartphone eco-system for business. Subsequently, RIM missed the point that users, rather than companies, bought most phones and Apple took the market from RIM because RIM stayed with a company approach and then tried to chase Apple.  

In short, it is less likely that any of the above-mentioned dominant companies would have lost the market had they stayed focused and not screwed up. Really, Sony remains the most telling, simply because it had the stronger brand and was vastly more powerful - collectively - than its competitors, but simply failed to step up and defend its position.

Of course, betting on Apple stumbling, at least under Jobs, was a fool’s bet. However ,Tim Cook’s Apple is having issues that, like the price fixing charge from the DOJ, which indicate the new Apple is vastly different than the company overseen by Steve Jobs.

Beating the iPhone

To beat Apple's iPhone, competitors need a device that is unique, simple to communicate (market) and of high value to the buyer. As you may recall, the Xbox was largely initially driven by the game Halo, iPod by the ease of ripping and populating music, the Blackberry by two-way paging, and the iPhone by its elegant simplicity. In fact, if you think about it, Apple’s sustaining feature isn’t really a feature at all, but rather a process that conveys a message of elegant simplicity which appears to resonate well with its brand.  

While there may be numerous uses for a new smartphone, I find that I've been using mine as a super-remote. I’ve tried out Qualcomm’s Skifta, Microsoft’s Sync, and Aha Radio - with each offering advantages and disadvantages. Unfortunately Skifta, a DLNA technology, doesn’t work on Windows Phones or in cars, Aha doesn’t work on Windows Phones, most cars, receivers or TVs. And while Sync does work on Windows Phones it also works on Apple and Android devices but only some cars (mostly Ford), no aftermarket, and not in the home at all. It strikes me that if you could create an app that was uniquely useful like Skifta, Aha Radio, or Sync but worked on most all devices you could have an iPod like platform.  

However, given Cupertino's recent price fixing problems, the company is likely limited in the types of negotiations it can participate in that would allow an Apple device to achieve such broad utility and capabilities. Meanwhile, Google continues to think that marketing Android is someone else’s job.  

Wrapping Up:  The Experience Goal

Look at two Aha Radio Receivers - the Kenwood DNX-9990HD and the new Pioneer APPRADIO lineup.  Your smartphone and tablet apps display and execute on the receivers, your connected radio stations come with you into the car, and even your navigation experience is improved. Taken to the next level, imagine all of your custom media content, settings, navigation locations, contacts, email, and apps moving from car to car with you, along with your tablet or your phone. 

At some future point, even your seat settings, temperature settings, and other unique aspects of your current car could travel with you on a phone or tablet, and even into the home. You could begin listening to a song or watch a movie on a plane, move to the back seat (hopefully) of your car or Taxi on the drive to your hotel and finish up on your hotel TV.

To me, such as scenario would be as compelling as any of the market models if it was easy to use, complete, and well marketed.  Microsoft and Qualcomm both have core technology that could do this and Aha could be acquired. But short of something like this I doubt, even if Apple stumbles, any one company will be able to displace them. Competitors need a hook big enough to catch a market, but it could be done and likely will be done eventually - it's just a question of who will do it.