May 15th, 2012. Karachi, Pakistan. Tomorrow Nokia is about the announce the next step in the evolution of their Next Billion strategy, bringing the next billion users to the Internet through their low-end mobile phone or feature phone business. I would like to take this opportunity to take a look at how and where Nokia’s low-end strategy is evolving.I am a developer by trade, Nokia shareholder and user by night and I follow Nokia intently as a hobby. On occasion I like to write about topics that may not get enough attention or the attention is scattered. My previous postings have included the Burning Symbian Blog (
http://mynokiablog.com/2012/02/14/mnb-reader-stories-the-burning-symbian-blog/), where I discussed Nokia’s comments on Symbian’s fragmented codebase and difficulties in keeping it fresh, and the Fact Checking: What was said at Nokia AGM (
http://mynokiablog.com/2012/05/04/mnb-reader-generated-fact-checking-what-was-said-at-nokia-agm/). I mention these as a background, because Nokia’s AGM appearances are one of my sources, having been present on site in the past years. I have also been attending Nokia World in the past years, including last year. Rest comes from Internet inteviews and publicly available leaks, as well as my own technical knowledge and experiences. So, what I’m doing is piecing things together, but I am not an insider. Just to make that clear.
Current state of Nokia’s low-end
So, what do we know about Nokia’s low-end strategy. We do know that on February 11th, 2011 Stephen Elop divided the new Nokia strategy into three “pillars”: Smart Devices, Next Billion and Future Disruptions. Symbian and Lumia went to Smart Devices, of course the former to be discontinued by 2016 – and now it seems likely new Symbian devices will stop coming much sooner. After that, Smart Devices will be all about Lumia and Windows Phone, at least for the foreseeable future. The third pillar, Future Disruptions, got what was left of MeeGo and of course the Nokia Research Center efforts, little is known what is cooking there, but at the latest Nokia AGM Stephen Elop mentioned new materials (think bendy, think water resistant etc.), new user-experiences (think swipey), new ecosystems and new power management. The second pillar was the Next Billion, the low-end mobile phones strategy. The current low-end efforts below Symbian went in there and indeed on February 11th Stephen Elop said Nokia would increase efforts in this realm. They would be putting in more money and resources to their low-end efforts. But to do what?
Nokia’s current low-end offering consists of the Series 30 and Series 40 platforms. Despite the name-similarity to Series 60, Series 30 and Series 40 are not Symbian devices. That is a common misconception so let me repeat: Nokia’s low-end platforms have nothing to do with Symbian. Instead, they are offspring of the original Nokia phone operating system (think Nokia 2110), sometimes referred to as the Nokia OS. Series 40 is the Internet and Java app enabled feature phone version, Series 30 is the basic dumb phone operating system for phones costing a tenner or two. These are mostly targeted at emerging markets, developing countries. Current Nokia phones with the first number starting with 1, 2 or 3 are Series 30 and Series 40 devices. Also all the Nokia Asha devices are Series 40 devices. Eventually, when Nokia’s transition away from Symbian and MeeGo (as it currently exists) is complete, all that will be left is Windows Phone in the high-end and the mid-range, and then the low-end – currently meaning the Series 30/40.
We also know Nokia is facing increased competitive pressure not only on their smartphones, but also on their low-end business due to the proliferation of cheap Chinese mobile phones and Android. This also means the low-end is changing increasigly from dumb phones to smarter phones. Indeed, Stephen Elop pointed this out in the infamous Burning Platform memo and Nokia again mentioned this in their latest quarterly earnings report (Q1/2012) as a reason for greatly diminished low-end sales figures. Nokia bought some time last-year by finally bringing in a very competitive dual-SIM offering to the low-end (with which they were years late), but now they are again facing the need to renew the low-end due to the fierce competition and advancements in the space. What will Nokia do?
Who has said and what
We have two main sources for information on Nokia’s low-end business, the Nokia CEO Stephen Elop and the design chief Marko Ahtisaari, best known and mostly loved for his work and presentation on the Nokia N9. He is one of the brilliant minds behind the resurgence of design at Nokia. Also the son of a former Finnish president and Nobel peace price winner Martti Ahtisaari. Let’s turn to Nokia’s “Jony Ive”, Marko Ahtisaari, first – who heads not only Nokia’s design efforts, but the user interface and user experience efforts as well. Oh boy, does he love to talk design and usability. And for us who like to follow Nokia’s progress, it is good that people talk. Talkative people spill the beans, even if sometimes you kind of have to read between the lines and piece things together from multiple sources. But what he is saying is often shedding light on not only where Nokia’s design might go, or what happens with Lumia, but also on what happens in the low-end and also the future disruptions.
In a recent interview Marko Ahtisaari stated that Nokia has two use-paradigms: Windows Phone and swipe (not to be confused with swype keyboards) Now, from many accounts – one more time even at the latest Nokia AGM this month – it is clear that Nokia does not wish to fundamentally change the Windows Phone Metro user experience for fear of fragmenting it and losing the Windows 8 halo effect. We should expect Nokia to differentiate on Windows Phone as their plans progress, but not in a way that majorly changes the use-paradigm. But what about the second paradigm Marko Ahtisaari mentioned, swipe? He goes on, in several interviews in fact, expressing the beauty and future developments of this user-experience. He confirms it will live on, but does not mention where exactly. Let Stephen Elop take it from there. When the Nokia N9 was released, Stephen Elop confirmed it would be the last MeeGo device, but developments from it would live on in other products. Design and unibody manufacturing processes, of course, in the Lumia range as one example. He too said the swipe user-interface would live on, and has confirmed in subsequent interviews that same thing, but that where and how would be a “space to watch”.
Well, we are watching that space unfold tomorrow in Karachi, Pakistan. But let’s continue with what Stephen Elop has said. In particular, let me point you to the Mobile World Congress 2012 interview with The Verge (http://www.youtube.com/watch?v=RMtpsccJRxg). Fast forward to 3:20 where the interviewer asks about Lumia 610 (currently Nokia’s most affordable Windows Phone) and questions the need for lower end devices beneath that. Elop answers that Windows Phone can and will still come down in price – I will get back to that in a bit – but that there is a line below which Windows Phone can’t easily go. A place where you’re “short on memory, short on processor capacity, you may not have a GPU” to quote Elop. He goes on to confirm that in those very low pricepoints something else (read: other than Windows Phone) has to happen there, and that Series 40 is Nokia’s current answer to that space. Elop furter says, they anticipate that “there’s a platform covering the smartphone pricepoints and something beneath that for the very lowest pricepoints as we go forward”.
Obviously Windows Phone is the smartphone platform, but the below that there is only the word “something”. Note, he does not say the existing Series 40 again in this context, he says “something… as we go forward” clearly implying some changes, something new in this space. This is very much in line with what Elop has said in other interviews after February 11th 2011 as well. It is this “something” that I am trying to explain with this post. But that is not all he says to The Verge. The interviewer asks where does he think that separation line is in the price range – Lumia 610 is mentioned at 189 euros and that Windows Phone can go below that, so the interviewer asks if this something Elop is talking about could be priced at less than a 100 euros. Elop answers that a lot of it depends on how component prices evolve and that it is not a firm line. Most interestingly, he goes on to say that there is probably going to be overlap between “the high-end of the low-end and the low-end of the high-end”. He further clarifies that he is not talking about mid-range, but apparently includes mid-range in the high-end… what he is talking about is overlap in the high-end of the low-end, very low in pricepoints where things may overlap.
So, the Lumia will still go down in price, but at some point in the low-end there is expected to be overlapping products. Where could this be? In the past few years Nokia has sold Symbian products in the product ranges starting with the number 5 and up, like the Nokia 500 Symbian device, which was priced at 150 euros on launch. Due to Asian cultural issues, Nokia avoids the number 4, so ranges starting with 3 and below that have been the basic phones. Windows Phone as of today stands at number 6, the Lumia 610. Elop says it will go lower and indeed the Lumia 610 specs suggest that the same base-spec of processor and RAM could be pushed lower with e.g. a cheaper chassis and less storage capacity. Clearly a Lumia 510 is a likely future product and products in the 1, 2 and 3 ranges are the “something” below, probably not going to see a Lumia product any time soon. Currently the low-end’s range-topping Asha 303 is priced at 115 euro (all the prices I mention are launch prices, before subsidies and taxes).
It seems plausible that Lumia will go down to the 150 euro price and we know Nokia’s feature phones go up to around 120 euros. What is interesting is that perhaps the future line isn’t that magical number 4. Perhaps “something” from below might even go to the 500 model range, but that is just speculation on my part. What we can be pretty sure, though, is that when talking low-end, even the high-end of the low-end, we are talking about devices that are below the 200 euro price-point, not more than that. From 200 euros and up it will be all Windows Phone, I expect.
Coded messages
What will Nokia do in this low-end space, ranging in the 100-300 product ranges, perhaps all the way up to 500s? In the less than 200 euro pricerange, perhaps from 10 – 150 euros? These will form Nokia’s low-end strategy, the push to bring the next billion Internet users online through Nokia mobile devices. What will replace Series 30 and Series 40, if anything? First some speculation to help with the conclusions below. I expect Nokia to use the Asha brand name for all low-end product in the future. I don’t know this, I just guess that is how it will be, of course they may use different names. But for the sake of clarity in this article, let me call all Nokia’s low-end products Asha and all Windows Phone products Lumia. So, by Asha I mean whatever that “something” at Nokia is below the Windows Phone threshold. It may or may not be called Asha on launch, but I will call it Asha here for brevity.
So, in the future there will be, roughly speaking and with the disclaimer above, two product ranges at Nokia: Asha and Lumia. Ashas in the numbers 100 – 300, perhaps 500. Lumia models numbered from 500 to 900 or something like that. I guesstimate Asha pricing ranging from 10 – 150 euros and Lumia ranging from 150 – 600 euros. There are not firm price estimates, but just something to put you into a certain frame of mind. Ashas will run a few different platforms, where as the Lumias will run Windows Phone. Currently Ashas run Series 30 and Series 40 (again, nothing to do with Symbian, but a classic Nokia feature phone OS). Over time I expect Series 30 to go away and be eventually replaced with Series 40 as dumb phones get smarter. Nokia will continue, for the foreseeable future, to produce these very cheap phones – I think – and as long as they do, they will probably use a mix of Series 30 and Series 40 in that space as applicable. What is most interesting, though, is what will happen above those very, very, very cheap devices. What will happen in the, say, 80 – 150 euro range. This is where Nokia’s low-end changes will likely first manifest themselves. And also interest a larger audience here, of course.
The first hints of this future came in the leaked Nokia video with Stephen Elop in June 2011 (http://www.youtube.com/watch?v=F6oidCTUw4s). At around 16:30 on that video, here is what Elop says when discussing priorities at Nokia: “In mobile phones it’s very much about Sonic, it’s about full touch activity that’s going on, it’s about the work we have to do around Series 40 to ensure it continues to help us in the future, it’s the Clipper program and the underlying Meltemi software effort, delivering on those programs. Deliver and launch. Deliver and launch.” Not only does this confirm that Series 40 will play a role in the future as well, it mentions three interesting codenames: Sonic, Clipper and Meltemi. In subsequent leaks it has been suggested that Sonic is a full-touch Series 40 operating system version (probably building on the Series 40 Touch and Type devices like Asha 303) and Meltemi is sort of MeeGo or Maemo-lite, a Linux/Qt experience for the low-end. Also in June 2011 came the confirmation Nokia will bring the Qt development framework to “the Next Billion”, suggesting that somewhere, somehow in the low-end Nokia’s previous smartphone development platform Qt would play a role. “Qt will be a core component in the Nokia strategy to bring apps to the next billion.”
One final piece of major information was received some months ago, when it was announced that Nokia had purchased Smarterphone, a company that specialised in a low-end, platform-independent feature phone operating system. It was later speculated this was mainly go gain the knowledgeable employees, but so far the reasons behind this acquisition are unknown. And so unknown too are its implications, just to make that clear.
Sonic and Meltemi
Clearly a lot of “something” is going on in the Asha range in the future. During the Q1/2012 earnings reporting and at the Nokia AGM this month, Stephen Elop confirmed they would be launching new devices in the low-end this quarter to compete with the low-end touchscreen Androids. Later we found out the when and where would be tomorrow, Pakistan. Many leaks have already shown as the potential launch devices without keyboards: a 305/306 and 311. First with dual-SIM, both full touch devices with capacitive displays and lot of touch gestures. The leaked manuals have shown a variant of the swipe operating principle first seen in the Nokia N9. Leaked screenshots have shown user-interface graphics almost identical to the Nokia N9. Putting this into perspective with what Marko Ahtisaari said, and what Stephen Elop has said, it is clear that we are seeing the first steps of the Nokia swipe user-experience (yes, with squircled icons and all) coming to Nokia’s low-end. We are seeing first steps of Nokia N9′s user-interface, or many elements of it at least, living on in new devices. We are seeing what is the other one of the two Nokia user-interface paradigms in the future, in addition to Windows Phone in the higher end.
This is, the Nokia N9 interface look, I expect, what all Ashas will eventually look and feel like in some capacity. But what will the devices Nokia launches run tomorrow? In all likelyhood a new version of Series 40, codenamed Sonic. The leaked screenshots, if real, even have some references to S40. The product numbers are in the 300 range, so I expect the pricing to be in the 100-120 euro range. This will continue to come down in price and will be Nokia’s first and cheapest response to the onslaught of cheap Chinese/Android full touch phones. The user-interface will probably look quite a bit like Nokia N9, or an evolution of it, and have some smartphone-like capabilities, but of course most will still consider it a feature phone. It will probably run Java apps, feature the proxied Nokia Browser and Nokia Maps without GPS. There won’t be a GPU, I estimate, nor do I think it will feature Qt – although it would indeed be huge news if it did. I think the overlapping app-platform for Nokia’s low-end will still be Java for quite some time, with Qt perhaps only available in the very high-end of the low-end.
Moving forward from tomorrow, the high-end of the low-end should appear. Maybe by Q4/2012, or Nokia World in September. This is more clouded than tomorrow, with questions ranging from what role will the Smarterphone acquisition play, to will Meltemi be released. Assuming Sonic is not launched tomorrow with Qt, and Nokia has promised to deliver Qt to their low-end devices in some capacity, in all likelyhood this will be through Meltemi, which is a low-end evolution of Nokia’s Maemo/MeeGo efforts – also known by a name of wind like Harmattan and older Maemo versions. In short, Meltemi is expected to be a mobile Linux operating system – like the MeeGo 1.2 Harmattan in Nokia N9 – with the swipe user-experience like all the other future Ashas (although some lower-end Ashas, without Meltemi, will of course be without touch screens). Expect a low-end range-topper full touch device at first, perhaps in the 150-200 euro pricepoint, perhaps at the 500 model-number range (or the 300 range). Maybe with a GPU, maybe not. Then as price of chipsets falls, the Series 40 Sonic would move downwards to even lower priced devices and Meltemi would move downwards to the 100-120 range.
So, in time, Nokia will have a whole range of mini-N9s running a very similar-looking operating system beneath the Windows Phone range, perhaps even overlapping with the Windows Phone range a little. Nokia could even release a low-end tablet for emerging markets with this experience, should they so choose. The low-end will be more diverse than the higher end (which will be all about Windows Phone at Nokia for the foreseeable future, I expect) as far as platforms go (Series 30, Series 40, Meltemi), but eventually most will feature the same N9-like user-interface and run Java apps (plus Qt for the high-end). No shared app-path with Windows Phone is a minus of this strategy, but I expect Nokia try to leverage their experience in locally relevant apps in emerging markets to combat this issue, where as Windows Phone will handle the developed world and more app-centric devices. But make no mistake, this will be a challenge for Nokia compared to Android. Device prices will range from perhaps 10 to 150 euros and model numbers from 100 to 300 or perhaps 500 ranges.
Moving on from that, these efforts also allow Nokia to develop their own user-experiences, work that will also continue in the Future Disruptions pillar of the strategy. Should the need or wish ever arise for Nokia, they might then take these efforts back to the high-end as well. And that is how I estimate the future of Nokia’s low-end at this time. Feel free to comment and correct!
. [Sorry not much in the way of posting today - Exam in a few hours:/].
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