Nokia’s Strategy: Dumber Phones, Smarter Websites

Posted on: March 27, 2010
Posted in Mobile, Strategy

Yesterday Nokia acquired Novarra, a company that makes browser technology for low-end mobile phones. While Nokia’s exact strategy is unknown, they said Novarra will be used to deliver new services to mainstream Series 40 devices later this year. Series 40 is what powered old-school candy bar Nokia phones that everyone in the US used earlier this decade (see above photo).

This acquisition is a classic example of the innovator’s dilemma: Nokia is trying to make the mobile web smarter for dumber phones, while Apple, Google make smarter phones for the mobile web.

Disruptive theory says Nokia is focused on the sustaining trajectory—how do they protect market share in basic handsets (non-smartphones). This sustaining trajectory is opposed to the direction of disruption, which is feature-rich smartphones.

Disruption causes massive changes in the landscape of industries, killing / weakening companies like Nokia over time. Incumbents simply lose customers and wither away. It’s unlikely Nokia will die, but it feels like they are holding on to the past instead of innovating at the high end (think of the distraction this acquisition is to Nokia’s already fragmented smartphone strategy). Nokia missed the smartphone adoption in the US and they will miss it globally.

Why? Because rapid innovation in processing and software is going to make smartphones accessible for the masses. The majority of people in emerging markets don’t have access to computers (desktops, laptops). Instead their primary access to the internet is their mobile phone. Mobile devices must be computers, not just phones. And people will demand real browsing and e-commerce on phones with large screens, not some marginalized compromise.

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