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15 December 2008

Accelerating out of molasses

Filed under: disruption, modularity, Nokia, time to market — David Wood @ 4:00 pm

Michael Mace has posted a characteristically thoughtful article on his Mobile Opportunity blog:

Every time I think about Nokia and Symbian, I can’t help picturing a man knee-deep in molasses, running as fast as he can. He’s working up a sweat, thrashing and stumbling forward, and proudly points out that for someone knee-deep in molasses he’s making really good time…

The posting is entitled “Nokia: Running in molasses“. It arose from Mike reflecting on some of what he heard at the recent Symbian Partner Event (SPE) in San Francisco. The posting is well worth reading. I appreciate the issues that Mike raises. These issues are significant. But as you might expect, I have a somewhat different perspective on some of them.

Large software doesn’t mean that software development has to go slow

Charles Davies, Symbian CTO, pointed out to us that Symbian OS has about 450,000 source files. That’s right, half a million files. They’re organized into 85 “packages”…

There are economies of scale as well as dis-economies of scale. The point of the careful division of the Symbian Platform software into packages is to enable each of the resulting packages to have greater autonomy – and, therefore, to progress more quickly.

There’s one subtle point here. Many of the packages include teams from both Symbian and from S60. This applies to cases where the separation of functionality between the two formerly distinct companies resulted in sub-optimal development. Now that Nokia’s acquisition of Symbian has completed, these boundaries can be intelligently re-designed.

Disruption, size, and organisational design

This brings me to a comment on the ideas of Clayton Christensen. Here’s another extract from Mike Mace’s article:

If the folks at Nokia really think they are well positioned to crush Apple, they need to go re-read The Innovator’s Dilemma. Being big is not a benefit in a rapidly-changing market with emerging segments.

Agreed, being big is no guarantee of being able to respond well to changing market conditions. That’s why I’m personally a big fan of Agile. Agile can help established companies (whether large or small) to launch and embrace disruptions. As Scott Anthony, one of Christensen’s co-authors, has recently commented in his article “Can Established Companies Disrupt?“:

The data suggests that it is increasingly common for an established company to launch disruptive innovations. More and more incumbents are learning how to embrace disruptive principles such as:

  • Put the customer, and their important, unsatisfied job-to-be-done at the center of the innovation equation
  • Embrace the power of simplicity, convenience, and affordability
  • Create organizational space for disruptive growth businesses
  • Consider innovation levers beyond features and functions
  • Become world class at testing, iterating and adjusting

As I said, being big can have its advantages as well as its disadvantages, so long as individual parts of the company have sufficient autonomy. The hard part is knowing when to seek closer ties, and when to seek looser ties. One of Christensen’s later books had some very interesting advice on that score. I can’t remember for sure whether that book was “The Innovator’s Solution” or “Seeing What’s Next“. The advice was that where performance remains a critical differentiator, you should look for a tight coupling. Where performance is already “good enough”, you should seek a loose coupling – with open APIs and a choice of alternative solutions.

As soon as I read these words, some time around 2003-2004, I had a gut reaction that, one day, the relevant teams in Symbian software engineering and S60 software engineering ought to be combined. It took a long time for that insight to be fulfilled. But now that it’s happening, there’s plenty of good reason to expect the resulting combined company to start accelerating its development.

Development in parallel with change

Back to Mike Mace, commenting on the SPE presentation by Charles Davies:

Davies talked about the substantial challenges involved in open sourcing a code base that large. He said it will take up to another two years before all of the code is released under the Eclipse license. In the meantime, a majority of the code on launch day of the foundation will be in a more restrictive license that requires registration and a payment of $1,500 for access. There’s also a small amount of third party copyrighted code within Symbian, and the foundation is trying to either get the rights to that code, or figure a way to make it available in binary format.

Those are all typical problems when a project is moving to open source, and the upshot of them is that Symbian won’t be able to get the full benefits of its move to open source until quite a while after the foundation is launched. What slows the process down is the amount of code that Symbian and Nokia have to move. I believe that Symbian OS is probably the largest software project ever taken from closed to open source. If you’ve ever dealt with moving code to open source, you’ll know how staggeringly complex the legal reviews are. What Nokia and Symbian are doing is heroic, scary, and incredibly tedious. It’s like, well, running in molasses.

I have four comments on this:

  1. Even though the full transition to open source may take up to two years from the initial announcement of the foundation (that is, until mid 2010), there are plenty of other things happening in the meantime – with a series of interim releases that progressively convert more of the software from the community-source Symbian Foundation Licence to the open-source Ecliplse Public Licence;
  2. There will be new technologies and new UI features in these interim releases;
  3. The interim releases should already achieve at least some of the considerable benefits of both open source and community source; the first packages which will become available under the EPL are being chosen so that independent developers can do useful things with some of them (including contributing back working code enhancements);
  4. The legal reviews may initially seem daunting, but with the help of modern code-scanning tools and with the advantage of “practice makes perfect”, the process is likely to speed up considerably along the way.

Cool stuff in the lab

Mike ends the main part of his article as follows:

Nokia still has a lot of time to get it right. But do they really understand what needs to change? I can’t tell, because all I usually get from them is monologues on how big their business is and how much cool stuff they have in the lab.

I accept that analysts must inevitably hedge their bets, regarding the extent of future success of the main mobile operating systems, until a period of proving over the next 12-24 months has shown what these operating systems can actually accomplish. I eagerly look forward to the day when more of the Symbian and Nokia roadmap of stunning new technology, new services, and new user experience attains greater visibility. When that happens, analysts are likely to come down off the hedge.

My own expectation is that the moves to integrate Symbian and Nokia, and to create the Symbian Foundation, will see a substantial speed up of innovation over that time period. But I’m not taking this for granted. After all, I’m well aware of the original subtitle of “The Innovator’s Dilemma”: “When new technologies cause great firms to fail“.

24 August 2008

Market share is no comfort

Filed under: disruption, innovation, iPhone, Nokia — David Wood @ 9:55 am

In the discussion of whether Symbian and Nokia are fundamentally threatened (or even “irrelevant”) in the face of the huge market buzz around the Apple iPhone, I take no comfort in the fact that Symbian’s share of the global smartphone market is an order of magnitude larger than that of the iPhone. Therefore I disagree with those replies to my previous blog post that highlighted Symbian’s very considerable market share lead, worldwide (but admittedly not in the USA), over the iPhone.

At first sight, strong market leadership should count for a lot. It should trigger a virtuous cycle effect. More phones should attract more developers (who are interested in their apps running on large numbers of phones) which should result in more software tailored to that platform, which should in turn increase the attractiveness of these phones to end users. And that should result in even more phones being sold, and so on – virtuous cycle.

And in reality, a powerful virtuous cycle effect does exist. An experienced and sophisticated ecosystem (“ES”) has grown up around the Symbian operating system (“OS”) and is continuously adding more value to this platform. The OS-ES virtuous cycle does work. However, it’s not invulnerable.

The history of the technology industry is full of examples of companies who were in similar leadership positions to that currently held by Symbian, but whose markets were transformed by disruptive new entrants. Harvard Business School professor Clayton Christensen is deservedly applauded for his description and analysis of how market disruption takes place:

  • Celebrated examples include how the leading providers of mini-computers, such as DEC, Data General, Wang, Nixdorf, and Prime, failed to appreciate the significance of the initially small market that grew up around fledgling personal computers. These manufacturers saw little profit in that market. But when PC technology improved and the surrounding ecosystem matured, it was too late for these erstwhile computing giants to take leading roles in the new industry (despite lots of effort which they eventually but unsuccessfully expended on that new cause).
  • An earlier example, also told by Christensen (in “Seeing what’s next: using theories of innovation to predict industry change“), concerns the disruption caused by the invention of the telephone to the communications industry of that era (1870s): market leader Western Union evaluated the new technology created by Alexander Graham Bell, but concluded it lacked the power to handle the long-range business communications from which the company made most of its profits. Again, technology improved and new business relationships formed, faster than Western Union could respond – with Western Union being plunged into decline as a result.

And there’s more. MIT professor James Utterback elegantly recounts many intriguing and salutary examples in his book “Mastering the dynamics of innovation: How Companies Can Seize Opportunities in the Face of Technological Change”. The book shows how familiar technologies such as refrigeration, electrical lighting, and plate glass, were all clear underdogs at the time of their initial market introduction, and faced serious competition from entrenched industrial alliances whose technologies (such as large-scale ice transportation, or gas lighting) themselves appeared to be regularly improving.

Could the iPhone fit into a similar pattern? It might. There are possible futures in which, say, more than half of all phones sold in the world have iPhone technology inside them. I don’t see that as the most likely future – far from it! – but it does have a certain logic to it:

  1. The iPhone is in many ways a simpler product proposition than existing smartphones (just as PCs were simpler than mini-computers). There are considerably fewer applications built into the iPhone than you can find in a standard S60 phone. That relative simplicity means that some feature-focused users will decide not to use the device. But the device taps into a new market that is arguably underserved by previous offerings. This is the very considerable market of users who don’t need every bell and whistle in feature-packed smartphones, but who are ready for a better experience than can be had from ordinary phones.
  2. The iPhone uses physical components that “break the rules” regarding cost: they’re considerably more expensive to manufacture than most other smartphones, and this makes the device more expensive to purchase. However, again, it may be that now is the right time to break this rule: a greater number of users may be willing to bear this additional cost (in view of the additional benefits that buys them).
  3. The iPhone isn’t growing its ecosystem from scratch; it can benefit from a crossover effect from various components that were already in place in Apple’s pre-iPhone product offerings. Principally, the highly-evolved iTunes distribution mechanism plays a big part in ensuring a good end-user experience with the iPhone.
  4. The iPhone has put special emphasis upon a number of usability aspects, including the graphics “wow”, the UI itself, the mobile web browsing experience, and the discovery and installation of new applications. Users have been drawn to these aspects of the device, even though the device lacks other aspects that are present (and well-evolved) in other smartphones.
  5. Despite what some critics have said, these innovations aren’t (all) easy for other companies to copy. The “look” can be mimicked, but the “feel” is the result of countless small design and implementation details, that are anchored in a sophisticated underlying software system.

For another analogy, the iPhone is similar to the initial Palm Pilot devices, which fared much better in the market than earlier attempts at pen-input handheld devices. The Palm Pilot delivered less than these other devices (such as the Apple Newton, the Casio Zoomer, and the General Magic “Magic Cap”) but provided a much more usable experience.

So, let’s evaluate this scenario. Do disruptive new market entrants always succeed in reaching market leadership position? Of course not. Although it is difficult for market leaders to respond to this kind of change of rules in their industry, it’s not impossible.

Here’s one counter-example: Microsoft and the Internet. Initally, it did look as though Netscape was succeeding in building an impregnable position by bringing a compelling new product to market in an area that Microsoft had previously ignored – an Internet browser. But Microsoft managed to turn around the situation, by dint of two measures:

  1. Clear internal recognition, from the highest leadership, of the fundamentally changing market landscape
  2. Swift and effective execution, continued over many years.

I’m loathe to compare Nokia/Symbian to Microsoft, but in this case the comparison has merits.

What’s more, I expect that it will become clear, over the next year or so, just how much the Symbian Foundation is itself changing the rules of the mobile industry – and (crucially) enabling companies who use this software to change the rules even further. If you think the iPhone is innovative, you’re right, but you ain’t seen nothing yet.

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