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IN THE ICT UNIVERSE ** My prelude to CEO Stephen Elop’s talk on Nokia’s corporate strategy.  A part of BRIE-ETLA collabora...
It’s all about                             coded info…                                                      … and ways to ...
… but any map is hopelessly 2D… real competition is at least 4D                       How did we get here?             Dyn...
History:How Did WeGet Here?“In the northern skunkworks called Finland,the 21st centuryis in beta...”Steve Silberman,Wired ...
The Foundations Were Laid Over 100 Years Ago• Telephony Decree of the Finnish Senate in 1886   – Numerous private operator...
1775 Global Handset Sales      Millions of phones p.a.                                                                    ...
Nokia’s Global Handset Market Share, %Data: Gartner                                              41                       ...
Towards Industry/Technology Convergence      Source: Hernesniemi, Lammi, Ylä-Anttila & Rouvinen (ed.) 1996.               ...
Phases of Competition in the Mobile Handset Industry     1990s                   2000s               2010s  Separate secto...
I’ve seen the God…                 January 2007                 Photo: v.gd/D1ZYvo… or is it the Devil?
Market Shares of Smartphone OSs100%       Windows90%       Other80%70%    RIM (Blackberry)                                ...
Note: Most Phones in Use Remain ”Dumb”                                                            6 billions              ...
Operating Profit Margins, %  80  70  60  50  40  30  20  10   0       2007            2008               2009             ...
PC, Smartphone & Tablet OSs Together100%90%                                                         Android80%70%         ...
&
“The importance of Nokiato Finland looks like aone-off [in globalcomparison]”            Economist. (25 August 2012).     ...
Nokia’s Share of Finnish GDP, % Source: Ali-Yrkkö, ETLA GDP = Value added = + Operating profit (shown in Finland) + Deprec...
2000 2011Nokia’s share of Finnish…Source: Ali-Yrkkö, ETLA                                           GDP      4.0   0.5    ...
ICT Sector Employment in Finland 70,000 60,000 50,000                                                                     ...
Conclusions
Photo: v.gd/1zLk63Digi + Converge: Opening of a huge unconquered domain Titans clash over dominance of ”Internet of Everyt...
Telecom operators &    Platform competition manufacturers with    Re-shuffling of value stacks  end-to-end control   Hardw...
In early 2000s Nokia grew lazy …… in the new landscape it wascaught in a difficult situation &had to choose: Android, MS o...
Thank You!fi.linkedin.com/in/petrirouvinen/           Petri.Rouvinen@ETLA.fi              +358–50–3673474
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Game of Thrones in the ICT Universe

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Transcript of "Game of Thrones in the ICT Universe"

  1. 1. IN THE ICT UNIVERSE ** My prelude to CEO Stephen Elop’s talk on Nokia’s corporate strategy. A part of BRIE-ETLA collaborative research (www.brie-etla.org). Petri Rouvinen, ETLA Aalto University Course 21C00600 Nokia House, Espoo, 9 April 2013
  2. 2. It’s all about coded info… … and ways to monetize it A narrow US-centric view: Amazon, Apple, Google & Facebook fight the main battle Nokia & Microsoft are falling back …Source: The Economist (1 Dec. 2012). Technology Giants at War (Briefing): Another Game of Thrones. Vol. 405, No. 8813, Pp. 23-26.
  3. 3. … but any map is hopelessly 2D… real competition is at least 4D How did we get here? Dynamics of competition in ICT?Nokia’s path and its implications for Finland?
  4. 4. History:How Did WeGet Here?“In the northern skunkworks called Finland,the 21st centuryis in beta...”Steve Silberman,Wired Issue 7.09,September 1999http://www.wired.com/wired/archive/7.09/nokia_pr.html
  5. 5. The Foundations Were Laid Over 100 Years Ago• Telephony Decree of the Finnish Senate in 1886 – Numerous private operators – Competitive operator & equipment markets• Industry’s / hobbyists’ interest in radio technology since 1920s – Salora, Finnish Cable Works, Radio Laboratory (Ministry of Defense)• Word War II & subsequent war reparations – Advanced Soviet demand (DX200)• Keen interest in digital technologies particularly in banking – Advances in computing & data transmission• Two rounds of standardization: NMT & GSM (shift to digital) – Nordic authorities: analog cellular NMT standard in 1981 (roaming, caller pays): The Nordics became the biggest & most advanced market worldwide (Mobira) – European authorities & industry: digital cellular GSM standard: rolled out in the early 1990s (the first GSM network/call: Radiolinja)• Worldwide deregulation & liberalization since the 1990s – Keen competition & crazy market expansion: Nokia outperforms (bets on winning standards; focus on consumers & developing mkts; excels in logistics/manuf.)
  6. 6. 1775 Global Handset Sales Millions of phones p.a. 1141 Data: Gartner 4056.21991 1994 1997 2000 2003 2006 2009 2012 Year-to-Year Growth, % 42 64 82 65 60 56 56 64 47 2 18 37 24 7 35 7 32 111991 1994 1997 2000 2003 2006 2009 2012
  7. 7. Nokia’s Global Handset Market Share, %Data: Gartner 41 38 38 38 38 36 34 33 32 32 29 28 24 23 20 191997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
  8. 8. Towards Industry/Technology Convergence Source: Hernesniemi, Lammi, Ylä-Anttila & Rouvinen (ed.) 1996. Advantage Finland: The Future of Finnish Industries. Taloustieto (ETLA B 113, Sitra 149).
  9. 9. Phases of Competition in the Mobile Handset Industry 1990s 2000s 2010s Separate sectors Weakening Convergence, boundaries Ecosystems Official standards, symbiosis of Industry consortia, Apps, content, operators & innovation at the platforms, equip. providers edges of sectors services Industry leaders: Industry leaders: Industry leaders: Nokia, Ericsson, Nokia, Motorola, Apple, Google, Motorola, Samsung Samsung, MS, Siemens Nokia
  10. 10. I’ve seen the God… January 2007 Photo: v.gd/D1ZYvo… or is it the Devil?
  11. 11. Market Shares of Smartphone OSs100% Windows90% Other80%70% RIM (Blackberry) iOS (Apple)60%50%40%30% Symbian (Nokia)20% Android (Google)10% 0% 2008 2009 2010 2011 2012Data: Gartner
  12. 12. Note: Most Phones in Use Remain ”Dumb” 6 billions Dumb 1 billion Smartphones All mobile phones Sources: Business Insider, Strategic Analytics, International Telecommunications Union.
  13. 13. Operating Profit Margins, % 80 70 60 50 40 30 20 10 0 2007 2008 2009 2010 2011 2012 -10Sources: Business Insider, Canaccord Genuity estimates, Company releases.
  14. 14. PC, Smartphone & Tablet OSs Together100%90% Android80%70% Other60% RIM50% Apple40%30%20% Microsoft Windows10% 0% Source: Business Insider, Gartner, IDC, Strategic Analytics, company filings
  15. 15. &
  16. 16. “The importance of Nokiato Finland looks like aone-off [in globalcomparison]” Economist. (25 August 2012). One-firm economies: The Nokia effect. Page 57.
  17. 17. Nokia’s Share of Finnish GDP, % Source: Ali-Yrkkö, ETLA GDP = Value added = + Operating profit (shown in Finland) + Depreciation + Labor costs + Rent0.5 0.3 0.5 0.7 0.8 1.1 1.2 1.8 2.5 3.1 4.0 3.3 3.6 3.8 3.0 2.9 3.1 3.2 2.6 1.2 1.2 0.5 -0.11990 1994 1998 2002 2006 2010 Nokia contributed 1/4 of Finnish economic growth in 1998–2007 (4.0% p.a.)
  18. 18. 2000 2011Nokia’s share of Finnish…Source: Ali-Yrkkö, ETLA GDP 4.0 0.5 2.5 Contribution to GDP growth -1.4 Total exports 21 9 Corporate tax revenues 14 0 Total employment 1.0 0.7 Corporate R&D 43 43 Helsinki Stock Exchange’s market cap. 70 12
  19. 19. ICT Sector Employment in Finland 70,000 60,000 50,000 Software, IT services 40,000 Equipment 30,000 manufacturing Telecommunications 20,000 Wholesale 10,000 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Data: Statistics Finland.
  20. 20. Conclusions
  21. 21. Photo: v.gd/1zLk63Digi + Converge: Opening of a huge unconquered domain Titans clash over dominance of ”Internet of Everything” Early positions established – Uncertain future ahead
  22. 22. Telecom operators & Platform competition manufacturers with Re-shuffling of value stacks end-to-end control Hardware commoditization Dumb-pipe operators Photo: v.gd/gPtce3
  23. 23. In early 2000s Nokia grew lazy …… in the new landscape it wascaught in a difficult situation &had to choose: Android, MS or ???Windows 8 provides the power ofunified industry-strength ecosystemMicrosoft (Back-end IT, PC domain, Office etc. ) &Nokia (“owns” mobiles; IP; manuf./logistics)retain many assets & strengths …… but are they able tocapitalize on them?
  24. 24. Thank You!fi.linkedin.com/in/petrirouvinen/ Petri.Rouvinen@ETLA.fi  +358–50–3673474
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