Using Android would put them in direct competition with (very) low-margin Chinese manufacturers. This is what Apple got right: if you have your own operating system and ecosystem nailed down correctly, people do not mind paying larger margins, and you are in a different game.
I guess this is what Nokia is aiming for with Meego. But, despite the excellent work of the Qt trolls, it doesn't really seem to get off the ground...
I think Nokia is already capable of producing phones cheaply, in good quality. For all I know, they even might have some factories in China already.
As an Android fan, I can only say: all I want is a really good Android device. Some are good enough (Nexus One), but there is still room for improvement. And Nokia probably would be able to pull it off. It is very unlikely that they'll go that route, unfortunately.
Yeah, but it worked for Apple only because they were first (more or less). Nokia can't go that way. Their only hope is to adopt a successful OS and produce top-notch phones.
Nokia has always produced top notch phones. Their only problem is that it looks like they couldn't write decent software for phones if their life depended on it (randomly shuffling browser bookmarks every time I open the IMAP-client? Come /on/...)
Right, that's my point--I've been using Nokias since 2001. If they built an Android phone, its phone bits could be dramatically more usable than stock Android.
The number of cellphones that are actually running Android, iOS, Blackberry, WP7, etc. compared to the total number cellphones is very small. Nokia has a lot of room to get market share for a competing OS.
Also, if the average user of the above OSes does not download a lot of apps for that platform, the stickiness of the platform is reduced and Nokia could benefit if it could come up with a coherent OS / developer strategy.
There is almost nothing to get off the ground yet… Running meego on some cheap netbook is meaningless, I can put anything there and I'm going to use it in the same way, I want some tablet or smartphone form device.
I'm not sure there is enough room in the high end market for anyone other than Apple. I don't think the new tablet market is going to be nearly as tolerant of fragmentation as the phone market.
Using Android would put them in direct competition with (very) low-margin Chinese manufacturers.
This is the "Android is the race for the bottom" argument. It is perplexing how it keeps getting a free pass on here.
Nonetheless, for the sake of argument let's go with the notion that Android really is the domain of "(very) low-margin Chinese manufacturers" (ignore that the top selling devices are high-end devices like the Droid X, Galaxy S, Desire Z, etc), would having their own OS really defend Nokia from competing with them?
Of course it wouldn't. Android isn't taking marketshare from Android -- it's taking it from every other maker. You can't stick your head in the sand and pretend that somehow that helps your margins. Consumers generally consider every other option available out there.
This is what Apple got right: if you have your own operating system and ecosystem nailed down correctly, people do not mind paying larger margins, and you are in a different game.
It's interesting to consider that in the PC space Apple used to control their own hardware, even developing their own chips. It was a disaster. Now they use commodity hardware with a glossy shine, and it has dramatically helped their bottom line: They differentiate on top of the common, and that is their secret to success. This is almost entirely the case with the iPhone as well, where the processor is made by Samsung, the wireless chipset by broadcom, the screen by various manufacturers, etc.
The whole "the iPhone model proves the case" analysis is a profound example of a confirmation bias. You can't throw a corpse without finding a dozen counter-examples where such a "go your own way" model was an absolute, unabated disaster (including about 90% of Apple's existence), yet somehow that conclusion keeps getting restated like it's a scientific fact. It's absurdity.
No, it's not. There are always counterexamples, but in your argument you completely ignore margins in the PC and laptop market. The vast majority of laptop and PCs are sold at low margins. Since most manufacturers cannot compete one software, they compete on price. One of the few vendors that makes large margins has its own operating system. Of course, Macs are nice hardware-wise, but most people will switch 'because it is not Windows'.
This doesn't mean that every company differentiating on software-succeeds.
ignore that the top selling devices are high-end devices like the Droid X, Galaxy S, Desire Z, etc
The smartphone market is relatively small and new, as is Android. The race to the bottom has just started.
The cell phone market, in the US at least, is very different than the PC market. Since phone carriers subsidize the manufacturers, we've actually seen margins remain relatively high.
We certainly haven't seen a race to the bottom. To be clearer, the subsidy model changes the equation. The reason for getting you on a new phone is to get you to reup a $2000 contract. If you have a phone that drives this (iPhone) then the cost of the phone is worth it to the carriers. If the phone doesn't do that (Kin) then it doesn't matter if the phone is free.
Until the US market sells unlocked phones directly to consumers (as the dominant way to distribute phones to consumers) there will not be a race to the bottom.
UPDATE: And one other thing. Since the carriers largely lock down their networks, you can't just buy a generic smartphone from cheapphones.com and have it work (at least not on the 3G/4G networks). So we also have the added factor of very limited shelfspace. Whereas in the PC market, there are tons of PC makers and DIY.
Realistically, the carriers probably won't have more than 10-15 smartphones available at any one time to purchase (testing costs money), and have good relationship with a handful of phone manufacturers -- all of which work to avoid a race to the bottom.
> "Since the carriers largely lock down their networks, you can't just buy a generic smartphone from cheapphones.com and have it work (at least not on the 3G/4G networks"
I believe that's a temporary situation with a clear end in sight. LTE is rolling out with a unified SIM standard, right? 4G should finally bring the US a market where you can consider phone and carrier separately.
>Since the carriers largely lock down their networks, you can't just buy a generic smartphone from cheapphones.com and have it work (at least not on the 3G/4G networks).
Not true of the GSM carriers, at least. I have a Nokia N86 which I bought unlocked from Amazon; it works fine on AT&T's 3G. And the Nokia N900 was sold only unlocked, and works on T-Mobile's 3G.
That's good to hear. I'd figure that TMo would be early on this. Surprised to hear about ATT. I know in the past I've tried and was stuck with EDGE. Almost certainly not the case with CDMA.
You say race to the bottom, I say fierce competition in a free(-ish) market i.e. the basic driver of capitalist progress. At least we agree that it's only just started.
Yes, true. 'Race to the bottom' may be a bit too negative. I guess one downside is that it is tough for new players in the market, since selling in large quantities is required.
On the other, thanks to competition, Acer Laptops are now available at a little over 300 Euros. The free market made computers accessible to nearly everyone in the Western world (and hopefully everywhere in the future).
Actually, one of the impacts of Android (and Linux generally) is to reduce the barriers of entry and allow new players to produce relatively small runs.
I'm not really interested in some Chinese conglomerate I've never heard of's idea of of a touch based tablet or phone OS. But I'll happily buy some oddball phone or tablet running Android. In fact I just did buy a ZTE Blade, and think it's pretty stunning for the price. I'm also considering a 7" Android tablet from a range of unlikely sources including Archos and the Dixons group.
No, it's not. There are always counterexamples, but in your argument you completely ignore margins in the PC and laptop market.
Just to digress for a minute, a related memes that I keep reading is "Apple is comfortable in their very profitable niche".
Through most of Apple's history, their niche was remarkably unprofitable. In 2001 Apple lost $52 million dollars, while Dell made $3.19 billion. How does that play into your theory? In 1997 Apple lost $1.08 billion dollars, while Dell made $747 million.
I could find counter-example after counter-example.
The smartphone market is relatively small and new, as is Android. The race to the bottom has just started.
Competitiveness is indeed just kicking off in earnest. No company is immune to it, and pointing to Apple's tremendous success at leveraging iTunes and their iPod franchise into a lucrative smartphone initiative in no way can be applied to anyone else. Again, there are endless counter-examples (how's Amiga doing these days? Atari? The ST was a pretty great machine, so they must be storming the margins), yet you demonstrated a perfect and remarkably myopic confirmation bias to demonstrate a competitive lesson.
Through most of Apple's history, their niche was remarkably unprofitable.
Yes. And it is common knowledge that Apple was notably mismanaged company during the nineties.
Explain Apple's popularity, taking OS X and iOS completely out of the equation.
Now think why Jobs refuses to set up licensing contracts with other vendors. Those iMacs and iPhones don't look so interesting anymore if you can get a HP computer/phone with OS X/iOS two third of the price, one and a half times the performance. I am pretty sure the majority of the Mac users that I know would've bought HP.
Explain Apple's popularity, taking OS X and iOS completely out of the equation.
Steve Jobs and his quest for perfection.
Now think why Jobs refuses to set up licensing contracts with other vendors. Those iMacs and iPhones don't look so interesting anymore if you can get a HP computer/phone with OS X/iOS two third of the price, one and a half times the performance. I am pretty sure the majority of the Mac users that I know would've bought HP.
Apple can easily compete on price with anyone nowdays. They choose not to in (low to mid range) computing, but the iPod/iPhone/iPad are ultra-competitive price-wise with anyone out there.
The real reason is because Jobs believes controlling the entire experience (both the hardware and the software) gives the best experience for the user. He may well be right, so long as he is in charge of the experience (cite: any other company that tried the same strategy).
Steve Jobs is a genius, but he's also 55. He's a once-in-a-generation leader, and Apple is lucky to have him.
>I am pretty sure the majority of the Mac users that I know would've bought HP.
Its funny you say that. Apple Cinema displays used to be the exact same LCD display as HP displays, except they had a FireWire and USB hub built into them. They also cost $400 more.
Even if Apple licensed to clone vendors again, it's unlikely HP would produce third third the price and one and a half times the performance. Apple's Pro lines remain competitive with the market.
Apple also led the way in doing things like putting accelerometers in laptops and swivel/tilt controls, Etc. HP could have done that with their hardware on the windows side (and written/loaded drivers for the hw) but choose instead to sell a bland box. Perhaps this is why Apple's hardware offerings continue to look interesting in light of cheaper alternatives.
I guess this is what Nokia is aiming for with Meego. But, despite the excellent work of the Qt trolls, it doesn't really seem to get off the ground...