Drawing lessons from The Innovator's Dilemma is harder than it seems.
In the early 2000s, Nokia's management team often referred to the book. CEO Jorma Ollila has said that he tried to build a corporation that would avoid the traps described in the book. Yet when we look back now, it seems obvious that Nokia was coasting on increasing profit margins and incremental innovation to drive its featurephone and Symbian smartphone lines.
How did that happen? My impression is that Nokia misjudged their market position. They saw themselves as the upstart innovator as compared to traditional PC vendors.
Just before the iPhone was unveiled, Nokia introduced the N95 smartphone with the tag line "This is what computers have become." In Nokia's eyes, their phones were going to disrupt computers in a few years. But they were beaten by Apple's better vision of what the disruptive mobile computer should look like, and they never recovered from that punch.
It took about 3-4 iPhone generations before Apple finally caught up to the immense feature set of the N95 (which was released a year before iPhone 1). I remember I was live video streaming on N95 (Qik) before video recording was even possible on iPhone!
They peaked with the N95, it was good for it's time (March 2007) especially since we didn't get the iPhone in the UK till November 2007. It was popular at the time in the UK with early adoptors.
However, the N96 (Feb 2008) was a poor product, hard to read email on, browse the web and tons of bugs in basic features, with basically no software updates in all the time it was out. All of this on a product cost much the same as the iPhone. I wrote about this a while back: https://rythie.com/blog/blog/2009/09/17/dont-buy-a-nokia-n96...
They didn't see (nor did many) that the highend/smartphone market, would basically be the entire market. They needed to double down on N95/N96 and highend phone quality, but they were all over the place trying to make 100s of different phones.
I remember when the iPhone 1 was introduced there were comments here that it will inevitably kill Nokia. At the time I was wondering what those guys are smoking :)
Me too, but I thought that because I assumed the ceo of Nokia would order his engineers to drop whatever the fuck they where doing this second, start a death march, and build him an iphone.
I think they already had one, in the N800 line that was to become Maemo/Meego/Tizen/Sailfish. They just didn't want to put all wood behind that arrow. I never understood why, exactly, and I still don't.
Because Nokia was selling billions of phones and most of them were not full-feature smartphones.
In Nokia's mindset, especially on a continent where people paid full price for phones and didn't get subsidies from the carriers like US users, web enabled smartphones were a high-end luxury or business item. The cash was still in the meaty part of the curve, selling candybars and semi-feature phones to economy users and the 2nd-3rd world.
Perhaps the iPhone wouldn't have been as big an initial smash if everyone had to pay $800-$1200 out of the gate.
You could argue that the cash is still in the meaty part of the curve - much of Android's growth has come from smaller, lower-powered phones, and the biggest change in KitKat was reduced memory usage so that the latest Android features could fit on low-end phones that had previously been limited to Gingerbread.
I guess Nokia didn't figure on Google managing to fit an iPhone-like interface on commodity hardware.
Actually the 'continent' (I assume you mean Europe - if not, sorry then I am wrong) without subsidies where people pay full price for phones is a bit of an urban myth. At least for the time.
In fact in at least the larger countries (Germany, UK, France) people very much had to rely on anywhere between 12-24 months contracts to get subsidized phones. Remember, even (the higher end Nokia or Ericsson) feature phones cost several hundred dollars then.
I remember having paid 200 DM for my Ericsson T28 way back in the day which would have cost 3x as much if I didn't get it with a contract.
It's probably hard to make a leap of faith that will leave 95% of your engineers fumbling in the dark after being robbed of their Symbian/Windows environment, while that organisation is making record profits.
The iPhone 1 was just a glorified iPod without 3rd party apps, it excited mostly Mac users, not obviously something to "drop everything" over. Even now iPhone has less than 15% market share. Android was arguably a more obvious threat.
I have to disagree. I worked with someone who got an iphone the first week they where available; it probably involved standing in line for a day or something ridiculous. But while the videos that Jobs did where pretty amazing, when you held it in your hand and played with it, my thoughts where 1 - holy shit I need this, and 2 - using fb on this thing is going to be like crack. Maybe I was over optimistic, but I was pretty confident everyone with an ipod or a train/bus commute was going to have one pretty soon.
I still believe any ceo of a cell phone manufacturer who got one (and they all should have purchased an iphone on the first day) and didn't immediately see the future unfolding in front of them is incompetent.
I'm not so surprised, because if you followed the market at that time closely, the iPhone was much less of an obvious innovation than it is in retrospect.
For starters, we'd had PDAs with touch screens for years, and they were hot in the business market for a while, but remained a niche product. Even when they got built in phones.
We'd had tablets since at least '99 (I worked on the software for one in '99 and we were certainly not first), and they'd remained a niche - either underpowered or overpriced (the latter typically being pretty much laptops with a swivel display).
When we tried to build interest from partners in our tablet in '99, it quickly became clear the market was not at all ready. People didn't understand why they'd need or want a product like that. Ericssons "Screen Phone" suffered the same fate, and quietly disappeared. (Though both the tablet I worked on, and the Ericsson Screen Phone were limited severely by being tied to ISDN base stations rather than truly mobile).
And it stayed like that for several years.
If you'd played with that stuff, the iPhone looked like an evolutionary step of a niche product.
If you were intimately involved with these markets at the time, it'd be easy to assume that the tepid response was still going to be the case when the iPhone arrived, and that at least you'd have plenty of time to see how the market was maturing before needing to respond. Let someone else make the expensive market lessons for you.
It's one of those cases where being too close to the technology was a disadvantage for many, because it meant not so easily seeing that this was the evolutionary step that finally would tip things over into creating excitement amongst regular people.
You had to learn how to print a new alphabet just so on a Palm Pilot. An iPhone gave you a virtual QWERTY keyboard. It was arguably slower to use for some people than the Palm shorthand, but any idiot could figure out how to use it. The rest is history.
Having an app store on the device probably helped as well, as you could easily add little features that mattered to you with much less hassle than a Palm Pilot.
I loved my Palm Pilots, but iOS (and Android) killed 'em dead.
Absolutely - all of the devices I mentioned had usability problems that are obvious in retrospect. But they were not so obvious for users steeped in this technology when looking at the first versions of the iPhone.
For my part, I was not at all interested in the iPhone: The keyboard was useless to me. I have big hands. The error rate I get with the iPhone keyboard made my (long discarded by then) Palm Pilot seem like the futuristic sci fi device. It wasn't until I tried one of the keyboard replacements for Android, on a bigger device, that I started preferring an on-screen keyboard.
Today I'm happily using SwiftKey on a 5.6" Android phone, so I'm back to swiping, though whole words rather than character by character, and I'd not rule out going to 6" next time. Going to an on screen keyboard felt like a massive step down after I'd tested friends iPhones. And a touch screen that didn't work with a stylus (without a massive tip) felt like a big step backwards.
The iPhone was obviously superior to dumb feature phones when it came. But lots of people in the industry had not had dumb feature phones for several years by then, and had learned to cope with (work around) or even like the things that the iPhone solved. That easily makes you blind for how other people will take to it.
In the early 2000s, Nokia's management team often referred to the book. CEO Jorma Ollila has said that he tried to build a corporation that would avoid the traps described in the book. Yet when we look back now, it seems obvious that Nokia was coasting on increasing profit margins and incremental innovation to drive its featurephone and Symbian smartphone lines.
How did that happen? My impression is that Nokia misjudged their market position. They saw themselves as the upstart innovator as compared to traditional PC vendors.
Just before the iPhone was unveiled, Nokia introduced the N95 smartphone with the tag line "This is what computers have become." In Nokia's eyes, their phones were going to disrupt computers in a few years. But they were beaten by Apple's better vision of what the disruptive mobile computer should look like, and they never recovered from that punch.