Stephen Elop's keynote at Qualcomm's Uplinq

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At Qualcomm's recent Uplinq conference, Stephen Elop, Nokia's CEO, gave a keynote in which he described the decision process that led to Nokia's February 11th smartphone strategy shift and outlined the five key elements of the third mobile ecosystem that Microsoft and Nokia are building. In this news story we have transcribed the key passages and here you will find Elop's answers to many of the most commonly asked questions about Nokia's new strategy and vision for the future.

Yesterday, Elop repeated much of the keynote, for a European audience, at the Open Mobile Summit conference in London. The Open Mobile Summit keynote included a question and answer session, moderated by CCS Insight's Ben Wood, that added some additional details. You can view some of these in the Storify version of James Parton's tweets from the event.

Video of Stephen Elop's keynote at Qualcomm's Uplinq

Here's how the Uplinq keynote was described:

The world of mobility has shifted from a device battle to a war of ecosystems. Nokia President and CEO Stephen Elop will discuss how the mobility industry is addressing the new competitive battleground, and the opportunities this new environment creates for handset manufacturers, developers, media and content providers, operators and chipset manufacturers.  

You can also view the video of the keynote on the Qualcomm website.

Key points from the keynote

  • Elop talked about the emergence of ecosystems, for which he gives credit to Apple.
    "[It] really all began with Apple. In 2007 Apple introduced the iPhone, along with supporting services, most notably iTunes. And they began this process of delivering a complete user experience at a level, from an experiential perspective, that was much higher than anyone had seen in the mobile industry. But Apple, being Apple, took an Apple approach. They said, we are going to keep our ecosystem to ourselves, we are going to keep it closed. Developers can participate within certain boundaries, within a box. But still it's going to be quite a closed experience."
  • Elop believes Apple created the conditions necessary for Android to happen.
    "Apple, by creating a wonderful user experience that everyone began to aspire to, created a vacuum, which Google stepped in and filled. Google said we're going to take a different approach with Android. They said this is an open approach and you too can participate in this experiential revolution in mobility."
  • Elop showed a slide with two boxes: the Apple box had the flaps of the box closed, the Google box had the flaps of the box open. However, Elop pointed out that:
    "The flaps are still there and it remains to be see how open and how for how long".
  • Nokia's strategic premise is that:
    "There is an opportunity for a third and competitive ecosystem to emerge".
  • Nokia remains a strong company in mobility with more than 1.3 billion people using Nokia mobile devices.
    "But the trends have been shifting in the smartphone business. As a result we recognised that we needed to go through the same transition. This same transition from the device battle to the ecosystem battle. And we had to make some changes in order to re-establish our leadership position".
  • Nokia, internally, went through a series of assessments, firstly with Symbian.
    "For example, we evaluated our options with Symbian. Symbian is the world's largest operating system, in terms of the number of devices currently using it. And yet we knew we faced some challenges. One of the things that became very clear was that Symbian had some engineering challenges. It had served us very well, but something had happened. As developer you will know how this can happen in a body of code. It begins to get fragile over time, it gets a little bit crufty. Every time you make a change, it takes a bit longer to stabilise the code. Well, that had been happening to Symbian for a number of years. It became clear it was taking longer and longer and longer to make the critical changes that need to be made in order for it to being competitive. So we were very, very concerned about our prospects with Symbian.

    Secondly with MeeGo:
    "We also had a second effort underway and that was an assessment of MeeGo. We had a lot of good work, a lot of innovation that had taken place around the MeeGo platform. But what we assessed was that we could not create a portfolio of devices, covering a full range of price points, fast enough with MeeGo, in order to respond to the competitive threats that we were facing. Because it is the case, in this marketplace, that a company like Nokia, certainly serving the high end, but also all the way down the price point ladder, in regions all around the world, that is the nature of our global position... While MeeGo helped us at the high end, we couldn't see it coming down fast enough, in order to help us solve all of our problems."

    So Nokia were in a tough spot:
    "Our internal options were challenged... still possible, but challenged. So what we needed to do was to evaluate our other strategic options. And if you have an ecosystem point of view on this, there were essentially two other options: one was Android, the other was to build, essentially a new ecosystem, jointly with Microsoft.

  • Nokia spent time with both Google and Microsoft:
    "We spend time with Google to learn as much as we could about the pros and cons of us taking a substantial market share position towards to Google environment. With Google, we believed we would be joining an ecosystem that is on a winning trajectory. So that was positive. We also felt, very quickly, we could re-enter the US market with force... We also thought there were a number of opportunities, perhaps, to differentiate around Android. But in the final assessment our big concern was that we would not be able to differentiate enough. That there are so many companies already piling into that space, all very innovative, doing interesting things, that it would be hard to stand out amongst them. And I think that is a challenge that will be generally faced in the Android ecosystem... So Android - viable option, but not really compelling to us."

    "At the same time we were talking with Microsoft... what we found was that there was a remarkable symmetry in our relative strengths and weaknesses, the assets and capabilities that we had between our two companies. For example, in the construction of the actual mobile device... we have a huge strength in the hardware and supporting technology. While Microsoft, with the Windows Phone operating system, has something to contribute. In many respects we had much of what they needed and they had much of what we needed."

    "But it goes beyond that when you're thinking about ecosystems. It goes to search, advertising, entertainment and productivity services. We have mapping, location and navigation services. So there were a lot of complementary elements, that when you brought the two companies together in a partnership, you could say wow, all of this could define the third ecosystem."

    "Most important though was the fundamental belief, established in our agreement with Microsoft, that we could differentiate. That we could have a unique point of view relative to Android, relative to Apple. That we had something that we could do to truly change the marketplace, in the eye of our consumers."
  • Elop talked about how Nokia and Microsoft would create, differentiate and deliver the third ecosystem. He outlined five key elements:

    1. Delight consumers
      "Nokia has a long history of being able to do this through the delivery of iconic hardware of all forms of innovation. For example, in the areas of optics, the N8... the best optics, photography, HD video capable device on the planet... and yet that is just a fraction of the optics and photographic capabilities in our labs... that we can bring to market."

      "The Microsoft side of this is the Windows Phone software. The Mango release is a great example of the pace of innovation and the advance in Windows Phone."

      "There are a lot of questions out there: why is Windows Phone, so far, somewhat challenged? Doesn't have a lot of pick up yet, why is that? That was a big part of our assessment... at the heart of the assessment is that the majority of manufacturers are doing their best work for Android. It has momentum, so it attracts attention. Windows Phone has been a second place player for many of these manufacturers. The unique nature of our relationship with Windows Phone is that we have said that Windows Phone is the environment for which we will do our best work."

      "The other thing you have to judge is the quality of the user experience... now that's a very personal judgement. But there have been extensive surveys of people who are already using Windows Phone devices and it has the highest NPS (Net Promoter Score) of any of the operating platforms that are out there today... Windows Phone is landing well with reviewers, but it needs scope and scale, it needs a manufacturer to do great hardware to support it and to take it around the world."
    2. Complete the ecosystem.
      "It is not just the device, or the software on that device. These ecosystems that I described are so much more than what you are holding in your hand. Nokia will be contributing mapping, navigation and various location-based services... and you know what... all the manufacturers of Windows Phone will be taking advantage of that... I want HTC and Samsung to be successful with Windows Phone because our principal competitor is not each other, but Android. So we are contributing service elements for the benefit of everyone in the ecosystem."

      "Equally, Microsoft is contributing a number of services and capabilities... for example: Bing, AdCenter, Xbox, Office productivity experience, unified communications (voice, video etc.) You will have heard about the acquisition of Skype ten days ago, clearly that will be part of the Windows Phone ecosystem".

      "Parts of the ecosystem, as well, are the chipset and other hardware contributors. Which is why Qualcomm, ourselves, Microsoft, are all working together to deliver the best experiences for this ecosystem."
    3. Operator friendliness
      "An important part of the ecosystem story relates to the operators. If you look around the world, the role of the operator varies. In the US, there are small number of operators, who provide a critical role in the value chain. It is similar in Western Europe. As you go into the East, the role of the operators is somewhat less... So it is clear to us that we have to be the most operator friendly ecosystem of the three."

      "What does that mean in practice? Well, Nokia has some very specific expertise, having worked with these operators for many years. For example, we have 132 operator billing relationships. This has an amazing positive impact. There's also, for operators, opportunities for operator stores within the app stores and for local content - this is something we will support more than any other ecosystem. Some operators also have an interest in RCSe - and we're working with them on those kind of things too."
    4. Extending the ecosystem
      "How do we take the ecosystem beyond the mobile experience? We believe that, fundamentally, we are just at the beginning of the mobile revolution. The mobile platform, with a variety of sensors and capabilities associated with a device, is giving opportunities to create entirely new and extended experiences that are only possible on that mobile device. So we are only at the beginning of mobility and have an opportunity to extend the ecosystem in different directions to make that even more compelling."
      "Of course, this ecosystem is not just about mobility and the smartphone, it is also about tablets, it's about television sets, gaming platforms, automobiles and all the different places where people expect to have a fully connected digital experience."

      "And so we at Nokia definitely recognise the importance of delivering on this broader promise of the larger connected digital experience."

      "Perhaps the first and most notable of these today relates to tablets. So there's a lot of activity and hype about tablets in the marketplace. But the market conditions are not yet optimised... Say there are 201 tablets being sold today, only one of them is being sold out a furious rate... and being very successful. The other 200 tablets... are not really landing with consumers. For Nokia, when I get asked about our tablets strategy, the first thing I say is that I don't just want to be tablets number 202. Because, really, if we cant differentiate from that pack... then we're not going to be successful. So as we look at it, we believe we have to do something that is fundamentally differentiated. And we have some options to do that, given our market penetration, our strengths in emerging markets... so watch this space, you will see some interesting things."
    5. Developers
      "It is so critical and has been well demonstrated with Apple and Android that the developer community needs to embrace an ecosystem for it to reach escape velocity. So it is absolutely our focus to make sure we attract you into this environment. So the question we are constantly asking is: how do we make this the most compelling development environment and monetisation opportunity for developers around the world?"

      "We do have the ability to reach out to very large numbers of well identified consumers. With our existing smartphone operating system we have, today, over 200 million registered users, 60 million of whom are active in our apps and store environment on a [rolling] thirty day basis." 

      "Around the world we have tremendous reach. It is today that we are adding 140,000 new registered users [every day]... and they are downloading 5 million items a day [now 6 million]."

      "Now part of the reason, in many parts of the world, that this has been attractive is because of the focus we have had on monetisation enablers. I mentioned earlier the operator billing relationships - we are able to measure the uplift for developers in areas where there is operating billing, compared to those where there is not. You get a three and half times uplift in the volume of money you can make when we have an operating billing relationship. The reason is simple... it is much easier for consumers to just click the button."

      "A lot of other things we are doing for developers: removing the registration fees to participate in Windows Phone development, all sorts of thing to make it easier to publish and distribute your application. We are also hoping you will recognise the extended opportunity, even beyond Windows Phone, to monetise your application on other platforms [Symbian, Series 40] that reach into China, India and Russia."
  • Elop concluded by saying:
    "There is absolutely an opportunity for Nokia to disrupt the current trajectory of what is going on in the mobile industry. We can redefine the meaning of the word ecosystem and we can expand the participants in that environment. Now this requires that we establish a platform that is attractive to consumers, is a target for developers, is profitable to all of us. As a result, I believe the mobile leaders have an opportunity to link up to a much broader set of opportunities."

    "Let me end with a quote from Henry Ford: 'Coming together is a begining, keeping together is progress, but as we are now doing, working together, is success'. I look forward to working with all of you."