Mobile Mambo

If I were a young pup just starting out into the big, bad, brawling world of technology marketing, I’d run like the Devil himself were chasing me into the mobile market.

It is a wild place, with zero loyalty between vendors, customers, partners, and technology. It is currently one huge cesspool of competing interests, awaiting a shakeout, collapse, and consolidation.

But since we — as an alleged society — have only started to explore the potential of carrying and wearing wirelessly connected computers, the market-wide shakeout is still a long way off.

What better challenge exists for a marketing maven than making a buck in utter chaos.

Which brings me to Nokia (I’m betting my friends at Nokia just soiled themselves).

Nokia is a smart group of folk. They saw the early rise and global opportunity of the mobile market, and were one of the first firms to profit on the hardware side. But both they and Motorola (another of the early success stories) were recently floundering as the mobile hardware market became hypercompetitive, and they are not creating perpetual advances in product design.

Nokia appears to see how the market has changed, and is taking steps to dominate once again. It shows. Nokia’s profits were up 44% in the latest quarter, and Motorola’s profits fell 84%.

Nokia is doing a number of things which show they understand that the market is bifurcating (dividing into two branches for those of you with a public education) and that they have opportunity on both ends.

Nokia is making good money on the bottom of the market, selling cheap handsets into parts of the world that are jumping directly from third-world status to unwired and Internet ready (imagine having never seen a wired telephone in your life). Most of their recent 44% profit rise came from being the low cost, commodity device maker.

But they also understand that the high end of the market drives early adoption, that today’s luxury features are tomorrow’s commodity ante, and that buying the core technology (instead of licensing it) reduces overall cost per unit.

This week Nokia bought Trolltech. For those who have never set foot in the Open Source space, Trolltech makes a number of nifty user interface tools, including Qt, which is the basis for KDE, the dominant Linux desktop interface (no slight to the Gnome crowd, but KDE really is slicker). Being an open and portable technology, it is used in mobile applications as well.

But Nokia gets Qtopia, Trolltech’s framework for building mobile applications. Qtopia rides atop the operating system, and works best on mobile Linux, as Nokia’s competitor Samsung has done. Trolltech has enough Linux experience that Nokia would be able to build their own Linux stack for mobile device, leverage Google’s Android, or partner with all of the mobile Linux foundations … or all of the above.

And it gives them a top-shelf solution for application development and deployment, which is still the big opening in the mobile marketplace.

The point (which leads to my next point) is that they are bringing in-house all the expensive software components of mobile devices, and in the process they are dropping their per unit cost of manufacturing. This adds to their profitability on the high end of the market, allows them to move high-end features profitably into the commodity realm, and kick their competitor’s butts at either extreme.

Gawd, I love a good marketing strategy, and they all start with blocking your competitors.

Also recall that Nokia recently bought Navteq, one of the top makers of GPS software and mapping databases. Nokia will generate income from Navteq sales to even their competitors, while reducing to near zero the cost of adding GPS functionality to their products. GPS is the next big demand item for mid-range cell phones, and Nokia has positioned themselves to dominate that segment of the market and drive ubiquitous adoption down the road.

You have to applaud Nokia for market insight, agility, and the willingness to change the rules of the game by changing the economics of manufacture for handsets. Bravo!


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