iPhone will attack Sony Ericsson but lose out to Nokia in Europe

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The iPhone is called a Smartphone by the US press. This is a misnomer, but it doesn't really matter. When the iPhone is introduced in Europe in a few months, its is initially going to compete with Feature Phones from Sony Ericsson and Nseries "multimedia computers" from Nokia. My prediction: The iPhone will give Sony Ericsson a severe beating, but will eventually lose out to Nokia.

This is what the manufacturers are thinking about their high-end phones:

• The device philosophy of Sony Ericsson is: Phones with one additional feature. Sony Ericsson have their "Walkman" series of music phones and their "Cybershot" series of camera phones.
• The device philosophy of Nokia is: The mobile phone is the new computer. The Nseries phones are "open platform devices" where you can connect to any network and install whatever software, service or life hack you need to support your digital lifestyle.
• The device philosophy of Apple is: Phone, iPod and Internet device on a closed platform.
  

The iPhone is currently a closed device with very basic functionality, but it has turned the "mobile phone world" on its head. Its a beautiful but expensive device. It does not do a lot, but what it does, it does better that anyone else.
Sony Ericsson makes a lot of money from their Walkman branded phones, phones that are marketed as music players. The only problem is that they are truly miserable music players compared to the iPhone. The iPod and the iTunes ecosystem has set the standard for portable music players and Sony Ericsson does not even come close.

The trouble with the Sony Ericsson Walkman phones is not the phones themselves. The trouble is that Sony Ericsson depends on the operators to deliver the music to the phones and the operators are messing up. The experience of putting a song onto a handset , whether it is by downloading over the air or by side loading from a PC, is just poor. This has led to speculations recently; people buy phones for their music playing capabilities, but are they actually playing music on them?

Apple does not suffer the same operator dependence when it comes to user experience for the music player. Any customer who want a phone + music player device is likely to select the iPhone over a Walkman phone. This may force Sony Ericsson to lower prices.

Nokia on the other hand is taking steps to avoid the operator trap that Sony Ericsson currently sits in. How? Well, by copying Apple. According to Anssi Vanjoki (the guy with the $103,600 speeding ticket) Nokia will "copy with pride". And why not? As Russel Beattie points out in his (too busy but otherwise excellent) blog:

...it will take Apple several *years* to come up with a competing product that has anywhere near these level of features. Apple just doesn't have the mobile hardware chops to do it themselves. [...] They don't have the experience, know how or partnerships to get it done and still be profitable.

As I have pointed out before, the iPhone ease-of-use is nothing magic. Apple has done a fantastic job, and the most fantastic part is that here is a company that has the balls to actually do it.

But Apple has created a closed walled garden product and who wants to live in a walled garden? Tying the device to a particular operator, not letting anyone install as much as a small Java game or a ringtone on the device without Apples consent?? Please! Do you think we live in Albania or the US or something?

Nokia have to do 3 things right to rule the universe:

1. Get their user interface together and
2. deliver an operator independent experience as delightful as iTunes
3. on a open device

EDIT: fixed the loose/lose typo.

Comments

[Free Paid Software]

this is nice post guy... help me alot... thanks

[Morten Hjerde]

Jim: Thanks for pointing out my spelling error. Yes, it's supposed to be "lose out".

My point is that Apple's walled garden approach is going to be a problem for them in the long term. They may believe operator exclusive agreements is the only way maximize profit right now, but the trend is away from closed systems.

Sony Ericsson is very strong over here. I believe they compete for the number one position in some markets like the UK and the Scandinavian countries. The iPhone can deliver a better "music phone experience". But if Nokia gets their open platform strategy in shape for the consumer market, that will be a much more exciting ecosystem.

[Jim Hughes]

*loose* out to Nokia? Just which definition of loose is that? http://dictionary.reference.com/browse/loose

Lose I can understand; in fact, maybe it's because Apple are too uptight and not "loose" that the iPhone will lose out to Nokia.

There's another huge difference between Nokia and Apple, Nokia's vast range of phones cover almost every niche of the mobile marketplace, from cheap payg devices, featurephones, RAZR or Blackberry clones (but smarter natch), to their flagship Eseries and Neries ranges. Apple are a one trick pony in comparison.

[wansai ounkeo]

I do agree that iPhone will hit Sony Ericsson hard, but not hard enough to drop SE from the game though.

I disagree on how bad SE walkman phones are. Apart from 1 small irritant, the walkman experience is generally extremely well received by the consumers with their newer walkman phones. I have a w950i and that's a great walkman (sound is superb) Not only that, unlike the iPhone, it is the Walkman phones that are quietly introducing the mobile music market to what a smartphone is actually capable of. In case many didn't know, SE walkmans are typically full featured smartphones onto themselves, able to deliver an open platform with a graphical user interface that is generally easy to use out of the box. SE's software isn't all bad either. Many consider it to be almost as usable as iTunes. In fact, where the walkman trumps itunes is that they mount as hardrives on the computer desktops, allowing full file and MP3 transfers as simple as copy & pasting (this may have changed with the iphone update?)...

Otherwise I agree with the rest of your posting... I think you'll agree with me that having all that OSX on a mobile device is just pure wastage when iphone is almost completely walled off. The ability to expand the use of your devices has a value that's hard to calculate (ringtones, software, themes etc...)

[Hampus]

I think you have a very good point. The user experience is not better than its weakest link - and the SEMC phones are truly crippled by the broken experience of buying and getting songs to the device. Nokia is fighting this by adding their own services (such as Nokia Music Store), but fail in that the devices are "the new computers" instead of doing a handful of things really well.

In the long run I think Nokia might be the winner as a platform strategy is smart if they can enable third parties to create substantial revenue for themselves and therefor innovate. (Look at Facebook for example - where the Where I've Been-app was just acquired for 3$ million by tripadvisor.)

At the same time if SEMC can add a good service - or any way to "get out of the device" - they might take a lot of market shares with maintained ASP...