(This was supposed to be a comment in Tomi Ahonen’s great blog, but since it doesn’t allow us to post very long comments, I turned it into a blog post.)
Thanks for answering, Tomi.
I am catching up with your 2011 posts, and I loved the Elop Effect analysis. I was a bit skeptical at first that we had a case of Osbourne effect, but now you convinced me. I witnessed the reaction of friends when I told them about 11-2, and that is really Osbornic. Although I still think the exact case of mobiles is somewhat unique, so it’s hard to really fit it into the existing “theory”.
The same goes for comparing the mobile wars with e.g. the VCR and PC wars. There are some differences that I am still not sure about how to take them into account. I’ll try to write down my concerns here.
In the VCR case we had strong forces pushing for a “monopoly” of a standard. Video stores and movie distributors would definitely prefer to avoid having more than one video format. And the standard involves lots of hardware parts: the tape and cartridge must have specific shapes, use specific materials, etc. So this is really a case where it’s clear that “there can be only one”. When pundits claim that this is the case in the mobile platform wars, I like to call it the “Highlander hypothesis”.
One place where I certainly believe that exists in mobile is regarding communication standards. Different countries will eventually set into a single communication standard. In the USA we have some weirdness, but we are seeing LTE emerge as a winner there and in other places for the next generation of data transmission. But what is important to notice here is that the users don’t see this going on. They may be affected by having trouble moving from one operator to another and finding out their devices are not compatible. But this is not something that happens every day, and these problem tend to disappear.
This second war is similar to the first because there are _hardware_ standards involved, and you can’t escape that. It’s easier to build a device that supports multiple communication standards, though, than building a video-cassette player that supports both Betamax and VHS. And this easiness is reflected into the products.
Now, in the PC wars we have something a little different. The origin of device incompatibilities are not hardware related, but software. The Highlander Effect was caused here, specially in the 1980s and 1990s, because companies only like to release compiled binaries. You need a “compatible” computer to use their software, and can’t run in other machines. But it’s not something related to the shape of a cartridge or antenna frequency. It is more about the fact that program compilation has the secondary effect of “encrypting” the program, making it very very very difficult for you to use it in any other platform.
Anyway, this compatibility problem naturally led to fights between companies and users. People had to negotiate in order to have some program ported to different platforms.
Today this still exists, but you can’t deny that multi-platform tools only get more popular. And there is also more SAAS, and virtualization is withing reach of most people who need it. At the very least we have HTML and other web technologies making a lot of stuff available to every platform. These Internet standards made all kinds of computational devices, from desktops to mobile, very much compatible between each other. Incompatibilities are becoming restricted to some few things. Even in the case of games, if a company uses tools like OpenGL it makes it easier to release a title to multiple platforms.
So here is one question for you: How do you see software incompatibility affecting the industry? And for how long will the existence of some apps in only some stores will be something important? Will that end with a single Highlander platform and a single store, or will that end with apps becoming more and more portable and available in the stores of different platforms?
Now another issue. In the case of the Osborne effect your consumers stop buying your products waiting for your next release. The fidelity is still there, it’s just the flame of passion that goes out. This is one important difference form the Ratner effect, where the brand is affected, and you lose consumers to competitors. There is a third party involved.
Another peculiarity of the mobile wars is that we have the influence of the operators. But they seem to be only strong in some countries like the USA. It’s a fourth party in the problem!
So, I was trying to understand how exactly Elop’s attitudes can affect Nokia considering who are their competitors, and what is the influence of operators in each part of the globe. Is this a very very very difficult question? 🙂 How does the Skype thing works anyway?… And how much does that affect the whole of Nokia’s revenue?
The reason I ask is because it is obvious that a big part of the media (at least the media I read) believes the USA market is everything, while it’s not. And Nokia’s recent release of the WP7 was obviously targeted to the USA, they themselves admit that. So I was trying to understand how much these CES announcements will help Nokia or not. What is and what can be the importance of the American market to them? Is that the most critical action by Nokia to get back at the top 3 mobile companies, or do they need more help in other markets?
Thanks so much again for your thoughts and answers, I don’t always have the time to read your long analysis, but it certainly has great content. And I wish I had seen you here in Brazil! 🙂