The idea of ecosystem in the Intenet, media, technology and mobile industry is normally understood as a closed input-output model of devices, services, content and respective parties, companies, suppliers, creators and consumers. One clear example of this well working one-company-band is Apple. Apple has created one very closed, controlled and profitable system with stable input-output model . In Apple’s ecosystem model output is divided into parts e.g. monetary profits of Apple, application developers, content and media creators and providers. All those parties also gain reputaion and Brand advantages through Apple’s ecosystem.
Chart TAIC-SIMO model.The real Internet, media and mobile communication Ecosystemconsists of all companies acting on same line of business or on part of it. Typically the companies arestruggling to get best resources from a limited professional reservoir. North Korea might be a closed business and operational environment, a closed ecosystem with loyal and committed people only for one master of the house. When Nokia is talking about their “own ecosystem” they probably want too reach North Korea’s independence.
Where is Nokia in the Ecosystem space?
Chart “Nokia was swallowed into Microsoft’s embrace“. Microsoft is the boss when leading the third horse. Microsoft “bought” Nokia and Navteq for $US zero (0), Skype for 8.5 $ Billion, Yahoo for XXX $.
Ecosystem in case Nokia. In organizational change year 2004 Nokia established ES (Enterprise Solutions), M (Multimedia), BI(Business Infrastructure) beside NRC (Nokia Research Center) and NET (Nokia Networks). This structure followed Juhani Risku’s model „Mobile Arena” from year 2002 which was an internal base for new business model combining Nokia’s existing assets like mobile phone and mobile network manufacturing. Since 2004 Nokia had very wide and innovative ecosystem thinking in strategies and corporate presentations for investors, analysts and journalists. This coherent mobile technology and media thinking was created some years earlier than Apple’s strategy of all-embracing ecosystem which was mainly built on top of iPhone after year 2007.
There are two different ways to think ecosystem: a limited and functional one-company-system, and an industry wideecosystem where all companies, actors and consumers form one complex and ever changing and dynamic structure. Today 2012 Apple is still very close to its own ecosystem but Nokia, Samsung, ZTE and other companies are sharing the resources and markets of the industry wide open ecosystem.
To survive and rule one’s ecosystem happens through systemic products, services and content. Systemic means creation, management and governance of integrated and seamlessly functional input-output of a complex and dynamic business or industry (IKEA, Apple, Google). Mainly companies act as one party in a larger systemic branch (Samsung, Intel, any OEM company, any component manufacturer).
In media, technology, Internet and operator businesses the ideal systemic model is TAIC-SIMO model (Risku 2011). Apple has based its business successfully on this model, Google is acting with the same model but with different emphasis in details. Companies like Amazon, Microsoft and Facebook are trying to enter wider business footprint through TAIC-SIMO model by building consortiums (Microsoft-Nokia-Skype-Yahoo) or trying to penetrate to adjacent businesses (Amazon to tablets, Facebook to phones).
TAIC-SIMO model has been successfully run by strong visionary leaders like Steve Jobs at Apple, Sergey Brin and Larry Page at Google and Jeff Bezos at Amazon. Notice that there are no exiting successful examples of TAIC-SIMO model executed by mature corporations with externally hired leaders.
Microsoft entering TAIC-SIMO ecosystem
Microsoft’s attempt with Nokia, Skype and Yahoo is a trial to combine several billion dollar corporations to march towards one common direction. Challenges are extremely demanding: Microsoft has nothing to lose, Nokia may die out if Windows Phone fails, Yahoo has no future without Microsoft’s funding and Skype may survive when it reaches critical mass of 500 million users (Q3 2009). Microsoft’s consortium is astonishingly unbalanced and tangled in their separate strategies, capabilities and future business prospects.
Microsoft itself is extremely unbalanced in leading TAIC-SIMO type of business: Microsoft has 1) Windows OS, 2) Office package, 3) Bing search, 4) IT consulting and software for companies and 5) Xbox game station. Like MeeGo + OpenOfficeOrg + HotBot + Oracle/Accenture + Nintendo (MOHOAN) collective executive board leading the most diverse and complex systemic business in somewhat decent way! Microsoft’s product and services portfolio is fragmented into 80 % of software plus 20 % of games (yes, the kiddy thing!). Now they got phones, phone calls and another search weakling to wrestle with. Into the bargain the whole group is probably the modern version of Soviet leadership model. It just doesn’t work in business.
Apple can easily survive with its own mainly walled ecosystem of media content, mobile services, consumers and developers, earning huge profits. By the same time Nokia is a small part of an open and ever changing and complex ecosystem which is comparable to ecosystems in the nature: somebody is on top of the food chain, Darwinian laws matter, your company is an enemy to the others and it may be eaten or killed, your fellow creatures may betray you. Also internally the fittest leader who survives is not often the smartest and most diligent but a fruit of business nepotism.
In an open ecosystem company leaders may cause collapses never knowing what happened. This is one of the main reasons for Nokia’s free fall in smartphone and mobile media businesses: from year 2004 there were not a single person in the Board of Directors and Executive Board who would have been competent, visionary and leader in the Internet, media and mobile experience and mobile communication business areas. The Board members and top management even had no education, experience or track record in the new business environment. Apple’s and Google’s persons in charge had this all and therefore they succeeded.
Three Charts “Nokia swallowed into Microsoft’s embrace“. Three visualizations of Microsoft’s zygote, inseminated by Nokia, Skype and Yahoo. This impregnation is an initial arrival for Microsoft to Screen and Access businesses. Microsoft consortium is missing Media and Operator dimensions of TAIC-SIMO model.
Chart 1: Basic MS group, Chart 2: Nokia’s position, Chart 3: Nokia’s position clearly.
When Nokia’s CEO Stephen Elop says that Nokia is the third horse in the war of ecosystems (in mobile communication) he does not recognize that Nokia has only one small screen when competitors have five different ones (phone, tablet, laptop, PC, TV), Microsoft offers only the UI User Interface and Bing search engine, Yahoo does not yet add any value and Skype does not fly yet. At the same time Apple and Google dominate their own ecosystems and the open common ecosystem overwhelmingly. There might be space for a third and fourth player but probably only in the open ecosystem where all actors already have found their places.
For Nokia and Microsoft it is a zero-sum game where you have to win consumers, developers and media content providers on your side with sublime and compelling systemic solution which is way better than the existing ones. A new company may have some details in the systemic solution better than the competitors have but how to convince consumers to switch from their satisfying or good service to a version 1.0 solution. One extreme factor for staying with your present host is the lock-in effect of device UI, brand, data storage, contextual and usability habits and personal contacts.
Good example of differences in ecosystem thinking through application developers:
- Apple has very committed and loyal developers to create applications, games and content for AppStore. There are obvious reasons for this: Apple has easy coding language, good SW support for application creation, monetary process to pocket the gains, “Apple atmosphere and hype”, good marketing of applications. Apple also has a very loyal user tribe. They love Apple’s products and services and Apple Culture. All those factors support loyalty and commitment and make Apple its own ecosystem definer. Very rarely you can tempt developers to competitors´ side. Here the ecosystem is somewhat closed.
- Nokia has bad history through Forum Nokia FN and C++ language in caring about developers. C++ is extremely difficult coding language, FN gave only technical support to struggle with C++, FN did not support developers´ businesses, FN was arrogant enough not to listen to developers´ needs, FN was led by very incompetent person (Ms. Lee Epting) during the change making years 2003-08 when competitors attacked. Now when Nokia (or Microsoft) comes too late to application markets it has to fight to captivate developers´ minds.
- Unfortunately the ecosystem is open. Nokia and Microsoft do not have an own ecosystem but they are a small part of a wider global ecosystem where we already have strong partners like Apple and Google with AppStore, iTunes, Android Store etc. Apple and Google can easily dominate at the expense of Nokia/Microsoft and they are way ahead in engaging developers. Nokia/Microsoft may never manage to create so strong bond with developers that it could be called ecosystem. Conclusion:Nokia/Microsoft is part of global ecosystem where Apple and Google are controlling the markets. To the detriment of Nokia/Microsoft in an ecosystem you may be killed, eaten or enslaved. Nokia/Microsoft is at the bottom of present food chain.
- Microsoft is the host of Microsoft-Yahoo-Skype-Nokia group. Yahoo, Skype and Nokia are enslaved by their own business success to Microsoft’s ecosystem. From Microsoft’s perpective Nokia doesn’t offer satisfactory portfolio of screens to display access, media, content and services on the Internet.
As a result I think the main reason for Microsoft to swallow Nokia was the early emanation from late 1990’s: /www.siliconinvestor.com/readmsgs.aspx?subjectid=8007&msgnum=16042&batchsize=10&batchtype=Previous" sl-processed="1" style="color: rgb(184, 91, 90); text-decoration: none;" title="In fact, Ollila is hedging his bets. Nokia has three agreements in place with Microsoft to use Windows CE as a base for phone solutions, with some fruition anticipated in 18 months to two years." rel="noindex nofollow" target="_blank">let Microsoft conquer the mobile Operating System as they had done with the PC by Windows. This may be the reason why Microsoft allows even big losses and prolonged hanging on loose gallows.