Nokia is the number one seller of cell phone hand sets. I suggest that Nokia gained this lofty status as the un-cola of computer software. In the decades when I and others had no real choice but to buy Microsoft upgrade after Microsoft upgrade for PCs, there was determination by consumers to not let Microsoft gain a monopoly on phones and or on TV set top boxes. While Nokia's symbian software was an easy alternative to chose, it has never become much more than "telephone" software.
Thursday, July 16, 2009
Google's Android is starting to appear in all the kinds of applications futurist have talked about for decades. Android, mobile phone software is good for things like web connected thermostats, web connected music players, web connected door locks and web connected lights. Of Google software advantages, NO LICENCE FEE, is certainly near the top of the list. Add FREE software just when the price of computer chips suitable for running "web connected appliances" drops and suddenly the demand for these goods is set to soar.
A few years ago, security systems that included whole house lighting, whole house music, and electronic door locks and monitoring might cost $20,000 or more to install. It does not take a masters in econ. degree to appreciate that when price falls, demand soars.
My running analogy to the paradigm shift from horse and buggy to auto offers all the insight we need. In 1908 when Henry Ford adopted Old's idea of standardized parts, he was able to offer Model T Fords for $850. In 1908, $850 was a very large amount of money but suddenly cars were no longer the play toy of the supper rich. We should not forget that the rich build scores of "makes" of cars from 1865 to 1908, before the first Model T was sold. 100's of these models were steam or battery driven. Both Mr. Daimler and Mr. Benz were making excellent internal combustion engine machines by 1886. The first gasoline car production was accomplished by Mr. Duryea. As an interesting aside, it should be noted that hybrid, electric-gasoline models, were a temporary rage in the 1920's.
The use of standardized parts drove the price of a Model T down from $850 in 1908 to $440 by the time the assembly line was up and running in 1915. By 1925, a Model T could be had for $290. By 1925, the market share of other producers was growing faster than Ford's because the price had gotten so low that consumers were opting for the more expensive offerings of competitors in order to get things like better brakes, better heat and better starters.
In the past quarter, Nokia's market share declined from 40% to 38%. Two percent of a huge market is a huge amount of money, an enormous amount if one calculates the net present value of a long term shift of such magnitude.
The Apple iPhone is perhaps the Cadillac of the phone business. It has taken market share but it is pricey. I submit that Apple will continue to take gain market share but the Google Android is closer to the General Motors in this comparison. Some of the features of the Android are being made available on both Apple and Nokia devices, however, as consumers adopt "pure Androids", the price of service plans will fall. Microsoft is not the only firm seeking to corral a niche.
I have to run, but I'll come back to edit and complete this draft.
Posted by Jack Miller at 7/16/2009 11:36:00 AM