Nokia turned in some fairly abysmal numbers, putting itself in an admitted “zero-margin” space. That shouldn’t come as a major surprise, but it does make it clear that there’s something fundamental going on in the communications space that’s overturning a lot of old thinking—or at least it should be overturning some.
The Nokia problem was created by the classical irresistible-force-versus-immovable-object phenomena. The communications market has gone consumeristic, and with that change has come a radical acceleration in fads and changes and a radical devaluing of some of the more traditional assets like “quality”. How long should your phone last, when within two years you’ll think it’s obsolete anyway? The new consumerism hit hardest at the traditional Euro telco vendors, the guys who grew up selling products to their own and nearby national phone companies. Nokia was one, and they’ve never accepted the changes in the market—probably because they couldn’t accept them culturally.
That raises, I think, one of the most significant questions of this age in networking. Are we creating a new market simply because we have old players locked in place by culture, by “employee inertia” as one in our survey called it? I’ve said, with some degree of “pith” that “large companies thrive on mediocrity because mediocrity is the only thing you can get enough of to build a large company.” It’s starting to look like this semi-joke is all too true. I’ve talked with executives in big network vendors and while they are individually aware of the challenges of the market and even of their special assets in meeting them, they seem powerless to mobilize anything to create positive results. Are startups different because they’re small enough to create true entrepreneurship internally by being selective about hiring? Or is it more complicated?
I return to my “flag-waver” theory. A charismatic leader waving the Banner of Something Good can attract a band of followers. But no matter how charismatic the leader is and how Good the Something may be, after the first couple dozen any new attractants are simply too far from the center to be moved by the fundamentals. They’re following the crowd, and now it’s simply a mob.
Microsoft has a similar set of issues as it tries to trot out its answer to the Tablet Craze, Windows 8. On the one hand, it wants to sell a new version of Windows to every human walking Planet Earth (and if other planets are inhabited, they’d be OK too). That means that Windows 8 has to build on the Windows brand without creating angst because it won’t run on any current PCs or run any of the current (or past) Windows apps. On the other hand, it has to compete with tablets based on iOS or Android, both of which have touch-specific GUIs and were designed to operate disk-less. The more tablet-like Windows 8 is, the more likely it is that current apps won’t run effectively on a tablet-specific version, which means the more likely it is that there isn’t just one “Windows 8” but several, a rumor that Intel’s CEO spread earlier in May.
However Microsoft might fare in this space in the long run, and whether rumors Microsoft might buy ailing Nokia to grab a handset and tablet business for itself—or at least a nascent business—are true, there’s surely going to be a major competitive dust-off in the tablet market. That will focus all eyes there, most of the money there, and further complicate the fortunes of the network vendors who have to support a service and usage evolution for their carrier customers when neither the vendors nor the customers can swing the marketing banner up to the vertical on their own.
