Go forth and innovate!

By The Informer

Imagine the scene: a wood panelled alcove adjoining the Nokia boardroom. It used to be the sauna where all important decisions were made, but since the Americans took over now houses the executive coffee machine. Stephen Elop, Jerri DeVard, and Timo Ihamuotila are all helping themselves to a cupful of Finland’s finest, Presidenti.

“Hey did you hear what Bosco Novak [chief of customer operations and executive board member of Nokia Siemens Networks] said the other day?”

“No, what?”

“He said that failure is the path to innovation. He said that we operate in a world where we’re not allowed to fail and that’s a huge challenge to drive innovation in our eco-system. We need to be able – to be prepared, to fail.”

“Phew. You know for a moment there I was beginning to think we were in real trouble. But it looks like we’re going great guns! Hey, Steve, have you heard…”

Philosophically speaking, it’s a sound argument. This is an industry that’s very unforgiving of failure and the history books are littered with big names that didn’t stay the course. “In my count, if I do something that I’ve never done before seven times out of ten, I fail.  So innovation goes very closely with failure,” Novak said. But the clue is in his next comment: “And in a world where we’re not allowed to fail as an industry as companies that are publicly traded…  there’s a huge challenge for each one of use to drive innovation in our eco-system.”

It’s the publicly traded bit that’s the problem. Shareholders don’t tolerate failure because it hurts their investment. Yet what he said next was very brave and very true. When it comes to preparing for the future data crunch the telecoms industry is “building fantastic networks- but clearly we are building the wrong networks. What we’re doing is a big mistake. Our thinking today is still static – we need to become much more dynamic. We have not built a network that matches the flow and connectivity in our society. In our view in the future connectivity has to be designed to take those fluctuations into account – a liquid network.” The Informer wasn’t there to see that speech but he thinks Novak should have got a standing ovation.

Or maybe He’d been hob-nobbing with his Ericsson counterpart before the show, and they’d both agreed to put the shivers up the audience in a bid to drum up some business. Still, Johan Wibergh, executive vice president and head of business unit networks at Ericsson’s speech was less compunctious and more mercenary. Wibergh said that Ericsson expects up to 50 billion devices to be connected to the internet by 2020 and that it would be necessary to move to a fourth generation network to be able to deliver the services required.

“Today’s networks are not up to it, they won’t scale. We will need to move to fourth generation of IP networks.” It’s a roundabout way of saying “buy our stuff.”

But back to NSN—and what Novak did get was a €1bn cash injection from its parent companies Nokia and Siemens, along with the appointment Jesper Ovesen as executive chairman of the board. Ovesen most recently served as CFO at Danish group TDC and will fill in for Olli-Pekka Kallasvuo, who has elected to step down from his position on the NSN board.

Half a billion Euros is a lot to drop, but Nokia chief Elop had other things on his mind this week. Having been in the hot seat for exactly a year now, Elop is no stranger to delivering bad news to Nokia employees and soothing words to shareholders. He’s also a master of corporate doublespeak and the phrase “Go forth and innovate,” may soon become a staple.

On Thursday Elop announced the continued “realignment” of Nokia’s workforce and a “plan to gradually shift the focus to customer and market-specific software and sales package customisation.” What this actually means is Nokia is closing down its device manufacturing plant in Cluj, Romania, which will put 3,500 people out of a job by Christmas.

It’s a bitter pill for the marketing team to swallow, made more so by the fact that the Romanian plant, opened in 2008, was the cheaper replacement for Nokia’s expensive German manufacturing operation in Bochum. Remember that story? It dragged on for some time and Nokia was hauled over the coals during the controversy which saw 2,300 workers axed from its plant.

Now the less costly Eastern European employees are facing the same prospect, as Elop admitted that Nokia’s high-volume Asian factories provide greater scale and proximity benefits. A review of the long term role of manufacturing operations in Salo, Finland, Komarom, Hungary, and Reynosa, Mexico is also underway. More details will be revealed by the first quarter of 2012.

Additionally, planned changes in the Location & Commerce business, formed from the merger of Navteq and Nokia’s social location services team, are estimated to impact a further 1,300 employees as Nokia seeks to bring “efficiencies and speed” to the organisation. The company plans to concentrate its Location & Commerce development efforts in Berlin, Boston and Chicago, and plans to close its operations in Bonn, Germany and Malvern, US.

In the almost traditional double whammy of PR suicide, the long suspected reasons for ex-CTO Rich Green’s departure from Nokia have this week become clear. The Finnish firm’s first and last Meego-based handset was released Tuesday, while the OS itself was formally decommissioned with a view to what’s left being assimilated by the LiMo and LinuxFoundations.

Meego was the Linux-based mobile software platform Nokia developed in conjunction with Intel, designed to go toe to toe with Android and iOS on top end smartphones. However, development of the platform moved too slowly for Nokia to benefit and when the firm offloaded Symbian to Accenture in favour of Windows Phone, Meego’s days were always numbered. Green officially left last week after an extended leave of absence and some sour discussions with Elop, the Informer assumes.

Meego will now transition to something called Tizen – a Linux-based open source OS shaped by the LiMo and Linux Foundations and supported by Intel. According to the blurb it’s a cross-architecture software platform, which supports multiple device categories including smartphones, tablets, smart TVs, netbooks and in-vehicle infotainment systems. The initial release of Tizen is targeted for the first quarter of 2012, with the first devices expected to come to market in mid-2012.

It sounds like a noble proposition but it’s just a shame that Tizen seems to suffer from the “too many cooks” problem that dogs many open source initiatives, from the get-go. And all the time iOS, Android, which is a more tightly controlled Linux project, and soon Windows will be steaming ahead before Tizen is even off the blocks. Although he’s an evangelist of the open source manifesto, the Informer has already written this one off as death by committee. So he’s tempted to pick up Nokia’s long awaited N9 – the company’s first and only commercial Meego device – as a piece of telecoms history.

Something that looks like it might be more of a goer is Amazon’s Kindle Fire, launched as one of four new additions to its device portfolio this week. There’s the Kindle (basic), the Kindle Touch, the Kindle Touch 3G and the Kindle Fire, which are all e-readers, with the exception of the Fire which is a tablet.

As tablet computers are media consumption devices rather than productivity tools Amazon is, by the nature of its core business, well placed to compete. It can offer high-quality hardware at a minimal price point, based upon its expectations for the future sale of content. “And this is exactly what it has done,” said Informa analyst Dave McQueen. The new Kindle Fire is priced at just $199. This is in stark comparison to $499 for both the entry-level versions of the Apple iPad 2 and Blackberry Playbook.

“Using its trusted brand plus growing content and ecosystem, Amazon today created new e-reader segments whilst dramatically dropping their prices to make way for a fully-fledged touchscreen tablet device, the Kindle Fire,” said McQueen. The analyst believes that Amazon will finally prove to the world that size doesn’t matter but value for money does, which will be a big lesson for RIM with its Playbook and for other players who have already tried to launch tablets with 7″ screens. This launch could mark the second phase of the market development for tablets, where product differentiation, brand competition, and price elasticity will be the main drivers.

Indeed, RIM’s PlayBook, which has had a lukewarm reception, suffered a blow this week after the limits of the Blackberry runtime for Android apps were revealed. RIM has talked up the functionality of the QNX-based tablet with a developer framework that would allow Android apps to run on the device, thus expanding its potential.

However, it now appears that severe limitations, including VoIP support, maps support, in-app purchasing and cloud functionality as well as incompatibility with anything build in the Android native development kit, will put paid to RIM’s plans of universal acceptance.

Over to embattled Samsung now, which is getting a good kicking from Apple over patent disputes, and has signed a deal with Microsoft of all companies, granting its usage of the US firms licenses applied to the Android operating system.

Under the deal, Microsoft will receive unspecified royalties for every Android device that Samsung sells. The deal follows a similar agreement with HTC in the US, and means Motorola Mobility, now owned by Google and locked in dispute with Microsoft, is the only major Android-gadget vendor in the US that hasn’t plumped for such a deal. This certainly lends credence to Microsoft’s claims that Android infringes upon its property, although it might be that Samsung is too stretched to fight a battle on two fronts, given that it’s getting such a roasting from Apple. Then again, HTC and Samsung both make Windows Phone devices, Motorola doesn’t. Coincidence?

If failure is the path to innovation, innovation is certainly the path to patent hell.

Onto a different path now and British carrier Everything Everywhere, which operates the Orange and T-Mobile brands in the UK, has launched a machine-to-machine (M2M) platform, developed in partnership with French-headquartered MVNE Transatel. The operators also announced a collaboration with Redtail Telematics focused on the telemetry space.

The platform will compete with similar offerings from Vodafone and Telefónica O2 and offers enterprise customers an interface that enables them to manage their own portfolio of SIM accounts. While the deal with Redtail, sees the telematics firm’s more than five million connected devices in the automotive aftermarket connected by the Everything Everywhere network. The firm said it was also looking to move into global logistics, connected health offerings and cross-border offerings.

The Informer is going to sneak in a reference to the iPhone 5 now, which is expected to be unveiled on Tuesday, after invitations to a press conference were sent out…blah…blah…blah.

Moving swiftly to close this edition of the chronicle and it would be amiss of the Informer not to mention Philippe Keryer, executive vice president of the networks operating segment at vendor Alcatel-Lucent, who revealed that in a recent study, 84 per cent of Germans admitted that they would rather give up their cars or their partner than be deprived of their internet connection.

Keryer said that the data is proof that consumers have become addicted to internet devices, causing a shift in influence in the telecoms industry. The Informer thinks its proof of the old adage: Marry in haste, repent at leisure.

Haters gonna hate,

The Informer.