Sony Ericsson just reported a $300 million loss for the second quarter of 2009 and Nokia reported a 71% decline in profits for the same period. Times are tough for the (shrinking) mobile giants.
Gee, wonder why…? Let’s start this off with an illustration:
Yes, ALL those cell phone models in the top picture are from just ONE mobile maker: Sony Ericsson. And Nokia has a similar number of models.
The above image reveals the huge contrast between Apple’s iPhone strategy and that of the traditional mobile makers. Apple has “one phone to rule them all,” while Sony Ericsson and Nokia have a gazillion models to try and cover every little market segment imaginable.
Here’s what’s wrong Nokia’s and Sony Ericsson’s current approach:
- Giving consumers too many products to choose from just creates confusion.
- It’s simply not cost effective to have that many different cell phone models; not from a marketing standpoint, not from a product development standpoint, and not from a production standpoint.
- Having one unified, consistent platform makes it easier to provide a compelling user experience.
- From a third-party developer perspective, the iPhone with its consistent interface and features is a no brainer (not to mention the infrastructure in place to push out those applications).
- Both Nokia and Sony Ericsson are careful to also cater to budget-conscious consumers. Apple only has its relatively expensive iPhone. But guess what? Apple does have a budget option after all: older models of the iPhone. So they are slowly seeping into that end of the market as well.
We were discussing this over lunch today because Sam Nurmi (Pingdom’s founder and CEO) was amazed at the total inability of both Nokia and Sony Ericsson to adapt to an evolving market. And it’s not like he doesn’t want them to do well; he’s Finnish-Swedish so he has emotional ties to both companies (Nokia being Finnish and Sony Ericsson Swedish). Those loyalties hasn’t stopped him from getting an iPhone, though.
We want these companies to do well, so consider this an open letter to both of them. Nokia and Sony Ericsson, if you’re reading this, can’t you see that you’re shooting yourselves in the foot with your current strategy?
We’re not saying that you only need to have ONE cell phone model, but how about abandoning today’s hit-and-miss tactics and focusing your considerable resources and expertise on just a couple of strong projects with a clear strategy?
If you did that, then Apple would have reason to worry.