Fusion has support for employees to use a single device for both work and home, the ability to manage multiple devices per person — critical in an era where individuals routinely use smartphones, tablets and notebook PCs in tandem — and self-service for individual employees to lock their phone if it’s lost or stolen.

But consumer smartphone owners already routinely have many of these abilities, even if their smartphones are not used for work, or provided by their employer. While RIM has been slow to extend its core expertise into the consumer market, other than with BlackBerry Messenger (BBM),  numerous other companies have jumped into the fray and offered consumer versions BlackBerry’s enterprise features upon which RIM’s phone success was originally built.

The ‘ITization of the Person’ is already well underway. Here’s a selection of the many examples where consumers have corporate-style IT tools to manage their digital lives:- 

• Enhanced account and password access. Valve’s Steam games system by default sends a code to a user’s email account each time Steam is launched for the first time on a new computer. In response to hacking from China, Google has a similar but optional two-step verification process that’s available as an option in each user’s Google Profile settings.
• Remotely controllable device security. Remote locking, remote wipe & find my device functions are available online for Windows Phone , iPhone, iPad, Lion-based Macs, or any personal device connected to an Exchange server etc. For Android, Lookout’s Plan B app has remote find functionality and can be installed even after a phone has been lost.
• Internet device backup. There’s a setting in modern Android smartphones — Gingerbread onwards, I think — for apps, preferences, wifi network access and a number of other settings for back up to Google’s servers. Apple’s iCloud offers this for iPhones & iPads.
• Cloud-based network file sharing. Examples: Dropbox; Microsoft SkyDrive for PCs, tablets and smartphones; Google Docs; iCloud; box.net; Sugarsync. For cloud-based music storage, Amazon, Apple and Google all have services although currently only in the US.
• Central application management. The web-based version of Android Market allows owners to remotely install apps. Facebook, Google, LinkedIn, Microsoft, twitter, WordPress and numerous other web sites now have control panels which manage which other sites or apps can access a user’s information without requiring a password.

Widespread consumer smartphone adoption has driven this ‘ITization of the Person’ because of:

• High smartphone replacement costs. iPhones and other smartphones are expensive to replace if lost or stolen. Apple has an average revenue per device of around $600 but that excludes the effect of sales taxes and operator contract lock-ins on the real consumer replace cost. An unlocked iPhone 4S costs between £499 and £699 in the UK including UK sales tax.
• Greater digital storage of personal information due to smartphone adoption. They have extensive amounts of information that would be valuable to identity thieves: addresses, passwords, often credit card details as well as the potential of course for a thief to make numerous high cost premium rate or international calls.
• Mobility puts information and devices at greater risk. The rise of mobile devices increases the likelyhood that information and devices will be lost or stolen compared with older stay-at-home devices. Consumer desktop PCs are unlikely to be lost and hard to steal without breaking into a property and lugging away the heavy case. Smartphones are taken everywhere, are vulnerable to pick pockets, while laptop PCs are often left behind in bars, on trains or left at risk in parked cars.

These numerous new security services should lead to a wondrous world of greater security and convenience for consumers. Unlike paper, digital information is easy to recover from a backup if lost: Imagine the chore of photocopying a paper calendar and address book.

But the explosion of these personal IT tools is creating thousands of control panels for different web sites, devices, and services which I suspect few consumers visit and most do not even know about.

Calling this a battle, or “The Great Tech War of 2012″, misses the point. It’s far too negative a sentiment when these companies’ main focus is on long term strategy. They are aiming to construct a future in which their products and profits will prosper.

These great digital powers are now building Digital Civilizations, rather than a series of mere products, individual platforms or even ecosystems (around a platform). They are pursuing strategies that reach far beyond the confines of existing markets. They are causing widespread market collisions as they push industries to overlap, merge or cease to exist. They are outflanking and disrupting companies that follow less ambitious corporate strategies.

These new Digital Civilizations use identity to tie numerous disparate products, many devices, multiple platforms and product portfolios together into their long term strategy. Each Civilization has hundreds of millions of active users — often with credit cards attached — far more than even the largest telecom operators or media companies. They straddle industries rather than operating within legacy market sectors. They have an organizing ideology underlying their strategy that motivates and attracts talented employees, excites partners, and is the foundation for the marketing that entices users to become their customers.

What defines these Digital Civilizations? What makes them new and different? Many organizations, companies, industry consortiums, and companies have parts of this strategy in place within their current products. But the new Digital Civilizations have all of the following characteristics: 

• Geography. Unlike past platforms or ecosystems Digital Civilizations are not tied to a single device or class of device. They work across fixed and mobile. They run on devices created by rival civilizations. This is where Sony has struggled: Too often, Sony’s strategies have been silo’ed around TV, mobile, PCs or consumer electronics although Sony may be set to change now. Examples: Apple has developed iTunes for Microsoft’s Windows PC. Amazon has an app store that runs on the rival Android tablets and its own Kindle Fire. Google develops multiple apps for Windows Phone and iOS as well as its own Android. Microsoft does too: it makes Office for the Mac; Bing, Messenger and Hotmail apps for almost everything.
• Citizenship. Each civilization has a strong system for identity, usually tied back to a payment mechanism, which is used to recognize members, store preferences and media in the cloud, and deliver a quality experience on any device. Often these identities originated on a single web site, device or application but have now been extended for numerous other uses. Examples: Amazon’s ID has moved from enabling purchase of physical goods for home delivery to being the foundation for its Kindle and app stores. Apple’s iTunes ID now powers both its Mac and iOS app stores, iCloud, the Game Center mobile social network, as well as underpinning digital music sales and TV sales. Facebook’s ID is now used to further the company’s ambitions across the Internet and mobile apps by enabling Facebook’s citizens to log in to numerous web sites and mobile apps and taking their social graph and Facebook’s business model with them.
• Ideology and culture. Companies used to have vision statements. Few employees and even fewer customers believed in them. The great Digital Civilizations instead have ideologies that are ingrained in everything. Google believes in the power of technology, of open source, and of doing no evil. Apple puts the creation of great products before all else, including profits. Facebook aspires to connect people. For Microsoft, this is the area where they struggle most under Ballmer. While Microsoft has strong identity services with Xbox Live, MSN Messenger and now Skype, it lacks a single organizing ideology that motivates everyone. It has several: profits, Windows everywhere, stop Google and Apple. Microsoft needs greater clarity.
• Government. Every civilization has a system of government. It’s essential to provide a roadmap for partners; to arbitrate between product teams working in different portfolios; to ensure that legacy products do not suffocate the innovative disruption that large companies need to succeed long term; and to make hard calls about what is and isn’t allowed. Prior to Larry Page’s return as Google CEO early in 2011, this was Google’s weak spot: the company spread itself too thin. The rivalry between the computer-like Chrome OS and Android demonstrates the failure too. But Google’s role as the spider at the heart of the Open Handset Alliance (that nominally runs Android) has successfully ensured that Android has gained momentum among operators, device makers and app creators despite the iPhone’s head start. This is an Apple strength: under Jobs, the system has been either paternalistic or enlightened despotism, depending on your sentiment. But whatever you feel, it’s indisputably proved very successful to date.
• Religion. Everyone thinks of Apple when I say this — given recent events I’m not going to develop the thinking on the Apple religion further for fear of alienating readers — but Google has its own religion too. Google demonstrates idolatry for Android, see the numerous Android figurines. Similarly, Amazon’s existentialism is most strongly shown by its belief in the (S3) cloud to solve everything, even the small local storage capacity on the Kindle Fire tablet.

How large are these rising Digital Civilizations? Each has hundreds of millions of citizens:

• Amazon. Globally Amazon has over 121 million active buyers (November 2010). They have not disclosed the number of Kindle users but it likely numbers in the low tens of million.
• Apple. There are over 225 million Apple accounts with credit cards attached (June 2011) and there are likely many times more that have an account but either only download free content or use top-up pre pay cards. Apple also claims 67m Game Center users (October 2011) but there will be a strong overlap as the same Apple ID is used for both apps and Game Center.
• Facebook. There are over 800 million active Facebook users (November 2011). Half of these log on to Facebook daily. There are over 350 million active mobile users.
• Google. Gmail used to be the main driver for Google accounts: Gmail is estimated to have had 193 million accounts at the end of 2010  In the future, Android will be more important. The latest version, Ice Cream Sandwich, prompts new users to set up Google accounts with credit cards attached on initial device set up and there are over 550,000 new Android devices being activated daily. Its new social network, Google+, is small by comparison with just tens of millions of users and significantly most of whom will likely already have had Google accounts.
• Microsoft. There are two main drivers for Microsoft accounts: Hotmail and Xbox. The former is the biggest due to its longevity. Microsoft has over 350 million Hotmail users globally (July 2011). As of November 2, 2011, Microsoft reports Hotmail is installed on over 2 million iOS devices and is growing at a rate of one hundred thousand a day.

There are other companies building a Digital Civilization: Most notable are Valve’s Steam gaming system (around 35m citizens); Sony, who are extending from their PlayStation network into a complete media service; eBay with commerce; and perhaps RIM with BlackBerry.

What must other companies do? They must decide how to respond to the rise of these great digital powers, the rise of the Digital Civilizations. There are three main strategic approaches:

• Build a rival Digital Civilization. This is a horribly expensive to thing to do. That’s what it took HP so long to realize with Palm’s Web OS and is why they are having such a hard job selling it now: Having a mobile-only operating system and mobile ecosystem is no longer sufficient to compete, it’s under scale and will be outflanked. HP has spent well over a billion dollars so far and has little concrete successes to show. RIM faces the same problem with BlackBerry: is it possible to create a sustainable future with a platform that is purely mobile? I worry. Last year the CEO of one of the largest mobile handset makers told me they couldn’t afford to create a smartphone OS, the problem is building a civilization  is an order of magnitude more costly. The new strategies have to straddle markets or risk being outflanked. This is why Microsoft is so focused on Xbox and mobile, to ensure a long term future it needs to extend its success with the Windows PC to become something much greater, to become a Digital Civilization. In the future, we will see the fight back of smaller companies that band together in industry consortia to build rival civilizations.
• Partner closely with a Digital Civilization. This is a classic strategy. Nokia has done this with its choice to use with Microsoft’s Windows Phone as its main smartphone platform and in future Nokia will likely use Microsoft software for tablets too. Many telecom operators have close historic ties to Microsoft as well. Google and Apple have made much trickier partners. Google has been too unpredictable while Apple has been well, single minded, though under Cook this could evolve. Now is the time to talk with them and find out. By contrast, Facebook has already tied many small knots, including with Microsoft.
• Support intra-Civilization trade. Consumers will be citizens of multiple civilizations for years to come. Companies have a clear opportunity to help consumers to avoid the pain of taking their preferences media across civilizations. Historically, the clearest examples of this have been accessory makers that create and sell physical adaptors. There’s a need for the same role for software and digital content too. Due to their relationships with multiple vendors, and a mass market customer base, telecom operators have a particularly strong foundation for succeeding with this strategy.

Whatever companies decide to do. The most important takeaway from the digital struggles of 2011 is that we are seeing the results of long term strategy by a small number of highly disruptive digital companies.

The fighting is a distracting diversion. Instead, companies must understand the implications from the creation of these new Digital Civilizations and develop their own long term corporate strategy to navigate around the new digital great power landscape.

Companies now must  have an integrated strategy to drive how their products respond to the rise of the Digital Civilizations. Otherwise they risk being outflanked as old market boundaries collapse or failure because they fight the wrong battles.

Unlike other manufacturer’s SIM-free phones, “unlocked” iPhones continue to behave differently based on the network SIM inserted — see the screenshots below. This sets a precedent for future iPhones that may dispense with any need for a physical SIM card.

An unlocked phone allows a consumer to use their phone with any operator. Such iPhones have long been on sale in many European and Asian countries and Apple US has just started selling unlocked and contract-free iPhones on the online US Apple store. As consumers pay the full unsubsidized price for these iPhones, buyers expect to have complete control over their devices. Network operators should have no say on how they’re used. But that’s not the whole truth.

Apple has just secured a patent that will allow them to ship an iPhone with no need for the for the tiny operator-provided smartcard known as a SIM. This is being widely reported as an attack on operators by threatening their customer relationship.

If operators are smart, this won’t be the outcome. Instead, end users will be the ones whose freedom is squeezed by such a future iPhone.

Why? Current “unlocked” iPhones show that Apple is prioritizing their carrier relationships over end users, even for those that buy iPhones at full price, with no operator subsidy or contract lock.

On these “unlocked” iPhones the network settings available to the phone’s owner depend on what operator SIM is placed into the phone. On some operators, “unlocked” iPhone owners are able to see and use PC tethering or WiFi “Portable Hotspot” connection sharing, but not on others. On some carriers, “unlocked” iPhone owners are able to change their phone’s network settings (i.e. APN, username, and password) but not on others. Remember: this is the experience on unlocked SIM-free iPhones, as well as for those iPhones tied to an operator contract.

Example: On 3 UK, the owner of an unlocked iPhone has full access to tethering and personal hotspot, but has not access to APN settings. If the carrier decides to route all iPhone traffic through one choked APN, then a 3 UK “unlocked” iPhone owner has no choice but to suffer it. By contrast, on the same unit if a Vodafone SIM is inserted, then the “unlocked” iPhone offers full access to APN settings, but prevents use as a portable hotspot or PC tethering, at least using this particular Vodafone SIM. Apple directs users trying to enable portable hotspot to contact Vodafone.

That’s the real extent of freedom with current “unlocked” iPhone models.

		All of these screens were taken on the same unlocked iPhone 4S. The only difference is the SIM. I’ve seen the same things with both unlocked iPhone 4 and iPhone 3GS models. With a 3 SIM the unlocked iPhone offers full access to personal hotspot, but lacks an option called “Cellular data network” which leads to APN settings, see the screenshots in the left hand column. On Vodafone, unlike 3 where the iPhone offers WiFi hotspot as standard, with the Vodafone SIM inserted the user sees a special alert should they wish to use share their mobile connection.

There are other settings that may vary between operator SIMs on “unlocked” iPhones too. Many iPhone applications behave differently on cellular vs WiFi connections. Email, for example, doesn’t download complete messages for larger emails unless the phone is on WiFi. App, podcast and video downloads have a maximum size if attempted on cellular. Originally, this limit was set at 10MB but was subsequently raised to 20MB, at least on O2 UK who were the lead iPhone operator here. There’s nothing to prevent Apple from altering these behind the scene settings — that the phone’s owner has no control over — on an operator by operator basis, even for “unlocked” iPhones.

Given this, why should a future SIM-less iPhone cause Apple to attack operator control in the future? Already, Apple are choosing to help operators in preference to the buyers of “unlocked” iPhones. Why would this change?

Apple still really needs the operators, despite all of the iPhone’s success. Apple depends on carriers for the subsidies that make iPhones affordable. In most countries, iPhone are sold with very significant subsidy that converts the full up front price of around $600 to under $300. This places carriers in an enormously strong position. Should Apple make the iPhone less attractive, all a carrier needs to do is alter the amount of subsidy they offer accordingly.

That’s not to say that Apple isn’t a threat to operators. It very much is. But Apple is picking its battles carefully. On voice, video telephony, messaging, network settings and other core operator businesses Apple is choosing to tread softly. That’s why Facetime doesn’t work over cellular networks although there’s no technical barrier. That’s also why iMessage cannibalizes SMS but is no threat to operators. Apple is being careful. In more significant growth areas where carriers have struggled — apps most notably — Apple is bypassing them with abandon and securing those markets for themselves.

So what are the true reasons for Apple to develop a phone that no longer needs removable SIM cards?

• Removing the SIM will reduce costs. Apple tightly manages its bill of materials. Dropping the SIM card reader from a device removes a tiny bit of cost. Similarly it reduces a little operator cost too. While this cost is small, in the economic climate now removing all costs are valuable. I’ve seen one operator choose not to supply iPhone 4-style micro SIMs due to cost and rely on crowd sourcing by its customers. I’m sure they’re not the only ones poring over every cost line item now.
• There are practical industrial design advantages with avoiding moving parts. Removable SIM cards require parts that move and may break. Any movement may lead to wear and tear, necessitates extended life testing… whether the part is a hinge, a SIM tray holder, or a pivoting little plastic cover. Any joins or seams on a device offer a way in for moisture and dust that could cause a device problems. Opting for an even smaller SIM card than the iPhone’s current micro SIM adds as many new problems with SIM card availability as it might solve.
• Apple configuration improves the experience in countries where phones are normally bought SIM-free. Not all countries have mobile markets dominated by operators as they do in the US or France. In many Asia countries, and some European ones — such as Finland or Italy — phones are bought without an operator lock. With a weak or non-existent operator retail channel, it’s harder to ensure mobile data works. With Apple taking control, they can ensure that APN, username, password and other necessary setting just work.

As Apple already exerts control over “unlocked” iPhones to ensure good relations with the operators that subsidize iPhones, it will continue to be consumers whose freedom will be squeezed by the arrival of iPhones that dispense with the need for the SIM-card. Not operators. Unless, of course, operators play their hand really badly.

This move is even more important for Sony group than for Sony Ericsson itself.

Mobile phone technology is becoming ubiquitous. Similarly, digital media is becoming personal as smart mobile devices are a mainstream way of reading, viewing, and listening to media. Mobile phone connectivity is being integrated into everything from eReaders, tablets computers, to portable games consoles and beyond. Soon, no area of consumer electronics will be untouched by mobile’s reach. Sony group makes many of these consumer devices, including the upcoming PSP Vita handheld games console that includes a 3G mobile phone radio and eReaders that compete with the 3G-enabled Amazon Kindle.

The future is mobile and personal. Sony needs the competencies that Sony Ericsson has worked for years to nurture. Equally SonyEricsson needs the unreserved commitment of Sony to ensure that its smartphones — now 80% of Sony Ericsson’s shipments — intelligently tie into all of a person’s digital life: on Sony TVs, on notebook PCs, tablets, music, gaming and other media.

HTC demonstrates the importance of digital media for smartphones and tablets:

In 2011, HTC has bought cloud gaming company OnLive and Beats to boost its gaming and music credentials. Additionally, these acquisitions will help raise the profile of the HTC brand among high growth consumer segments. Sony Ericsson — or whatever the brand will be now – will now not need to buy such assets or negotiate at arms length with its half-parent. Now Sony Ericsson will be part of the same company that owns PlayStation, music, movie and other media businesses.

In the past, SonyEricsson has often competed with one hand tied behind its back. The clearest recent examples of problematic brand and product integration are:

• Sony Ericsson’s Xperia Play smartphone. It’s a PlayStation phone in all but name. The design even includes the iconic four gamepad buttons that Sony Computer Entertainment have often placed at the heart of their PlayStation advertising. But the Xperia Play lacked full use of the brand. The PlayStation-branded games store and games didn’t ship at the same time the phone went on sale. Now Sony takes charge of the mobile phone division there will be no excuses for such awkward product execution.
• Sony Electronic’s Android tablets. They have been created and sold by Sony group, not Sony Ericsson, although both of these initial Sony tablets and all of Sony Ericsson’s smartphones use Google’s Android software and ARM processors, quite unlike the Intel and Windows-powered PCs that Sony group creates. Duplication of such similar product development makes no sense. At best, it will cost more, at worst it will cost more and take longer to bring both tablets and smartphones to market. Given the speed of innovation that’s currently happening across all markets, achieving a fast time to market has become a critical competency. Sony Ericsson’s rivals, smartphone-makers HTC, Apple, Samsung, and LG all maximize synergies between their tablet and smartphone strategy. Sony needs to do the same.

What the end of the joint venture demonstrates, is that Sony now realizes that mobile is no longer a side story as it was ten years ago. Mobile is central to Sony group’s future and as such it’s too important to be left as a part-owned joint venture. Google has a “mobile first” strategy now. The end of Sony Ericsson means Sony is able to do the same. It must.

Now, Sony should be able to speed up decision making and neatly integrate between mobile phone, PC and consumer electronics products. Sony’s corporate history suggests this is easier for me to write than for the company to implement. Combining business units and ensuring that  co-operation across groups delivers products that are greater than the sum of their parts is really really hard. Very few companies have cracked it. Sony now has the opportunity to be one of them.

Buying out Ericsson does not make such successful product integration a certainty. Yet it will make the job of creating integrated products a great deal easier with Sony in full control. And, if Sony products fail in the market, now Sony will have no one else to blame.

On the eve of Mobile World Congress 2011 — the mobile industry’s main conference — new Nokia CEO Stephen Elop overturned Nokia’s previous smartphone strategy. Rather than building smartphones based based on in-house Symbian and MeeGo software, Nokia instead embraced Microsoft’s Windows Phone. Nokia’s future rests on the success of this decision, at least in developed countries across Europe, Asia and North America.

Alongside their initial Windows Phone handsets, Nokia today announced a new range of smarter feature phones aimed at emerging markets. This new Asha range includes more dual SIM devices, more full keyboard designs, and more touch screens. “Asha” means hope in Hindi but Nokia’s real long term hopes rest more with the new Lumia smartphones than with these evolutionary Series 40 handsets.

With Windows Phone, Nokia hopes to regain market share in the high end part of the mobile phone market because today’s high end technology and features become tomorrow’s mid market mainstream. If Nokia loses to Android and Apple in the high end, then the danger Nokia faces is that it will lose in the mainstream just a few years from now.

Early signs are that Nokia has regained credibility and is on a path to recovery with its Nokia World announcements:

• Dual SIM is now a foundation of Nokia’s emerging market strategy. Nokia was slow to offer consumers the ability to switch SIMs — essentially run more than one number on a phone with different pricing — compared with LG, Samsung and numerous small phone makers. In the second quarter of this year their phone shipments suffered dramatically: down 34% compared with the previous quarter. But the arrival of dual SIM enabled a full recovery in Q3, although admittedly with lower average price per handset. Nokia shipped just 2.6m dual SIM handsets in Q2 but 17.9m in Q3 and has launched five new dual SIM handsets since June. Across Asia, the Middle East and Africa Nokia phone unit shipments rose 32% in Q3.
• Nokia is finally executing quickly. The Lumia 800 Windows Phone is already shipping from Nokia’s factories just eight months after the major strategy change. It will be available in November. By contrast, Nokia unveiled 2010′s flagship phone, the N8, in April but failed to ship in time for Nokia World 2010 that September.
• The Lumia 800 Windows Phone has a strongly differentiated industrial design. The Lumia 800 has an impressive, but unusual, unibody polycarbonate (plastic) shell where the colour is integral throughout the plastic and will not scratch off. Avoiding metal has another important advantage: the antennas have nothing to hinder them. There is simply nothing quite like the visual quality of this construction from any other phone manufacturer. The Lumia 800 is the most outstanding example of phone industrial design to arrive in 2011, bar none, Apple included. In the six lead European countries 31 operators and retailers will range the Lumia 800 and will devote significant marketing spend: Nokia claims they have agreed to spend three times the total amount spent on any previous Nokia launch. If true, and implemented, this proves operators are both impressed with Nokia’s phone and want there to be a successful alternative to Android and Apple. It’s good news for both Nokia and Microsoft.
• Nokia is making Windows Phones price competitive. The cheaper Lumia 710 takes the same high speed 1.4Ghz processor and graphics hardware as the 800 but will sell for approximately Euro 270 (note – before taxes and operator subsidy) compared with circa Euro 420 for the Lumia 800 (again excluding operator subsidy and sales taxes). This places the 710 into the smartphone mid market. Compared to similar-priced Android smartphones it’s a compelling package with high performance hardware. The only downsides with the 710 design is that it has a more modest 5 megapixel camera compared with 8MP for the 800, and less storage capacity, 8GB versus 16GB. Yet it still has a high resolution capacitive touch screen with full access to all the same add-on apps from Windows Phone Market.
• Windows Phone delivers a strong selection of Apps. Nokia struggled to secure sufficient variety and quality of apps with its store for Symbian and MeeGo. On Windows Phone, Nokia no longer has to worry as Microsoft delivers strong developer support. Plus, unlike Android, Windows Phone has an excellent set of games and gaming brands. It’s the only operating system with an established games console brand — Xbox — central to the platform. (Sony’s half-hearted use of the PlayStation brand on their Android Xperia Play phone is a sideshow that simply emphasizes Android’s fragmentation problems.)

Nokia World 2011 marks just the start of a new Nokia. Nokia has progressed through the first stage of a transition. It’s now where it needed to be after February’s announcement. But there’s much much more to do. These two Lumia handsets are just the first two smartphones of what Nokia intend to be an entire product family that will spearhead a revival in the US, Europe and Asia.

Here are the areas to watch in the coming months as Nokia extends its Windows Phone product range. It’s here that Nokia needs to improve their products even further:

• Nokia needs effective marketing to make Windows Phone a success. So far, Microsoft’s phone software has struggled to gain consumer awareness. Microsoft needs Nokia if anything even more than Nokia needs Microsoft. Much of Nokia’s efforts are being placed on ensuring that Windows Phone succeeds, that’s why Nokia’s navigation software and maps are being placed as part of the overall Windows Phone software that is available to other handset makers that create Windows Phones. Nokia needs to revive their own brand while boosting Windows Phone awareness. The creative work Nokia is showing that leverages a Windows Phone UI tile design in the interactive visuals is impressive. We’ll have to see if consumers think the same as me and other Nokia World attendees.
• In the US, absolutely everything about Nokia’s future is still uncertain, today has changed nothing. Nokia desperately needs to reverse its fortunes in the US. Out of 107m phones Nokia shipped in Q3, just 700,000 were delivered in the whole of North America. Neither of these initial Nokia Windows Phone models will launch in the US this year. Nokia is correctly holding its fire until it has completely compelling products. This should happen early in 2012 provided, of course, that Nokia secures the US carriers it needs to subsidize and market its handsets. To do that, Nokia needs phones with LTE/4G network support. Windows Phone does not yet support LTE. Again, Nokia depends on Microsoft.
• The compellingly-priced Lumia 710 is not launching in Europe yet. Nokia is pushing early 710 production towards Hong Kong, India, Russia, Singapore and Taiwan with other markets to follow in 2012. This is really disappointing for Nokia. So, for now Nokia is relying on a single model — the more expensive 800 — to deliver improved Nokia performance in Europe.
• The jury is still out on Nokia’s ability to differentiate from other firm’s Windows Phone products. For now, what matters most for Nokia is that Windows Phone succeeds. Once it does, Nokia will need to ensure its products are differentiated from other people’s devices that use Windows Phone software. When Stephen Elop and Microsoft CEO Steve Ballmer announced their partnership, Nokia placed great store on their ability to customize Windows Phone but were short on detail. These initial products have only light Nokia-specific adjustments: Nokia Drive navigation app, a music streaming service, and a sports app from ESPN. It’s too soon to expect that Nokia could have delivered deep software customisation this fast. Most likely, Nokia and Microsoft are waiting for the next major version of Windows Phone.

Nokia is about to unveil the results of its decision to use Microsoft’s Windows Phone as its main smartphone, rather than Symbian or MeeGo. CEO Stephen Elop will be  leading the keynote at Nokia World 2011 in London.

The presentation starts at 1am San Francisco / 4am New York / 9am UK / 10am Berlin / 4pm Hong Kong / 5pm Seoul / 7pm Sydney.

Here’s the list of sites with live coverage:

• Nokia official webcast
• This is my next / The Verge: Liveblog
  (lots of great ex-Engadget folks)
• Engadget: Liveblog
• ZDNet: Liveblog

Everyone looks to Apple’s current dominance — who could have imagined writing that phrase a decade ago — and contrasts it with the troubled mid 1990s period when the company almost failed. The iPod was the turnaround product that proved that Apple could diversify outside of the computer business. It established a new revenue source and boosted morale. Without the iPod, Apple would not have tackled the smartphone and tablet markets in the way they did.

For those seeking to understand the iPod and learn from Apple’s turnaround in the last decade, here are the ten key iPod takeaways:

1. Success does not happen overnight, companies have to persevere with a strategy. In its first year on sale the iPod sold just 376,000 units. To compare, in Apple’s most recent quarter it took on average five days to sell that many iPods. Also, RIM shipped 700,000 tablets in its first six months — many more than the initial iPod — and yet that product line is widely considered to be troubled and struggling.
2. Product quality is more important than being a first mover. The iPod wasn’t the first mp3 music player. The market had started in the late 1990s. Apple launched the iPod against multiple players and initially it cost much more than other devices that had more features. What Apple executed differently was that the iTunes sync software made it supremely easily to transfer music from a Mac or PC onto the player. Apple set sync to be automatic once a user plugged their iPod into a computer. At the time, competitors argued ‘drag and drop’ was easier. They may have been right that it was easier to set up initially as users did not need to install any new software on their computer, but drag and drop took much longer to do each time a person wished to update their iPod than a painless automatic sync. Drag and drop was a hassle in day to day use. Apple’s solution was fast and elegant.
3. Apple leveraged openness and compatibility to establish the iPod and maintain its lead. Like Sony, Apple has the reputation of being highly proprietary. While there is truth in that generalization, it’s far from the whole truth. Apple has repeatedly leveraged open standards in its products and been selective about which parts of a product to keep closed and where to allow third party development or standards. The original iPod was mp3-compatible, unlike Sony’s ATRAC-only portable media players of the same era. Apple’s adoption of the AAC format and DRM copy protection was added much later. Apple rapidly moved to offer a Windows version of the iPod in July 2002 which dramatically widened the addressable market for the iPod, rather than tying the iPod to be solely a Macintosh peripheral as would have been the reaction of many companies. With the third iPod design, Apple added the dock connector and created a vibrant market for third party accessories that acts as a significant barrier to competitors seeking to overtake the iPod due to the numerous  iPod peripherals available as a result.
4. The iPod drove people to the iTunes music store, not vice versa. The music store launched 18 months after the iPod, but to begin with only in the US. By the time the store opened in three European countries in spring 2004, Apple had already sold 3.7m iPods. Unlike competitor music stores of the time, Apple integrated the music store into their PC and Mac app — rather than delivering it as a website — this placed the music store right alongside the tools people used to update their iPod and listen to music. In retail, store location and in-store product placement is everything. Apple made sure their digital store emulated traditional retail strategy.
5. Apple disrupted its own iPod range, rather than leaving  a portfolio gap for rivals to exploit. Apple launched cheaper and smaller models that could, and did, cannibalize the more expensive classic iPod models. Yet the new Mini, Nano and Shuffle lines expanded the addressable market for the iPod by appealing to people that desired smaller and lighter devices or who were prepared to spend less. This was more important than the risk of cheaper product substitution. More recently, the iPhone is the ultimate disruptive product that replaces the iPod for many people.
6. The iPod’s execution ensured the iPod was greater than the sum of its parts. Apple products are akin to a team sport while rivals play golf or tennis. With the iPod, Apple focused on the little things that combine to deliver a great product: The scroll wheel made navigating thousands of songs fast; using the mp3 file metadata added automatically when a CD is ripped, enabled the iPod to automatically organize songs by album, genre, artist; use of an 1.8 inch hard drive allowed the iPod to be smaller than rivals but offered vast song capacity; bundled iTunes sync software enabled Apple to tie the computer and portable music experience into feeling like a single product. Together, all of these little things delivered a differentiated and better experience for iPod owners.
7. More features does not make a better product. The iPod has routinely offered less features than rivals. For years, Apple’s iPods lacked an FM radio, it didn’t matter, the iPod sold in vast numbers. Now, with the recent touch screen Nano model Apple has finally included a radio, but it happily dropped video playback capability from the older Nano design to make way. Product features only deliver a better product if the execution is excellent and the features do not clutter and damage the overall experience. Many companies add many features but that barely work. This may help sell initial units but the critical word of mouth recommendations of those early buyers will kill subsequent sales.
8. The iPod line has regularly innovated. Unlike many companies, Apple did not rest on its success, it kept driving to improve and evolve the iPod range. For example, Apple switched to flash memory and away from the hard drive that had enabled the original model to be a success. Over time, Apple has added photo capability, podcast support, and more recently apps and touch screens. The Apple App Store that is popular now on the iPhone, iPod Touch and iPad was essentially trialled on classic iPods where previously Apple offered downloadable games for sale.
9. Apple exploited economies of scale to deliver low iPod prices. Many observers believe Apple will never launch a cheap smartphone or any other product. The original iPod was a very expensive device, just like the iPhone today, but Apple didn’t allow the iPod to remain a super premium product for all of the last ten years. Apple expanded the iPod portfolio with the Mini, then Shuffle and later Nano. These models Apple reached low prices that caused competitors significant problems. Due to previous iPod unit volumes, Apple was able to secure low prices for flash memory that allowed Apple to be price competitive yet still have good margins. When newly launched, iPod Nano models routinely match competitors’ prices for the same music storage capacity, although as Apple rarely amends prices during a product’s life iPod models are often price uncompetitive shortly before being replaced. Either way, Apple expanded the iPod line so that prices now start at just $49.
10. Declining markets can still deliver profits and warrant new products. In 2011, the iPod has passed its peak sales: In the first nine months of 2011, Apple shipped 23m iPods, much lower than the same period in 2007-2010 when iPod shipments ranged between 29m and 32m units. Yet, Apple continues to innovate with the iPod and generate strong margins and products. The touch-based iPod Nano and the success of the iPod Touch — essentially an iPhone that lacks a phone — demonstrate Apple thinking. The iPod Touch now comprises over half of iPod unit sales and is delivering Apple new revenues through App sales and acting as a bridging device to iPhone purchase. The Nano has been improved with better fitness features which smartly positions it as a robust companion device to more expensive iPod Touch and iPhone units.

A bit of fun, this is a great video comparing a traditional Microsoft approach with Apple on the iPod, “Microsoft designs the iPod package” -

And here’s the original iPod announcement ten years ago when Steve Jobs articulated a prescient iPod and digital hub strategy, “a thousand songs in your pocket” -

A new version of Android will be available in November, initally on the Samsung Galaxy Nexus smartphone. Much of the analysis of this Ice Cream Sandwich version of Android is focused on the implications of it running on both smartphones and tablets, where older versions of Android ran on one or the other (1), as well as shiny new gimmicks such as face recognition to unlock a handset.

This unification of smartphones and tablets is a red herring. Other things matter much more for Android.

Android tablets are failing in the market, while Google’s smartphones sell in enormous numbers. This is a major issue for Google.

In tablets, Google’s own numbers show the extent to which Android is struggling. There are approximately 3.4m Android tablets running the official version of Android intended for tablets (2). This is small compared with the tablet market leader from Apple. Over 39.9m iPads were shipped up to the end of September this year. In the third quarter of 2011 alone, Apple shipped over 11m iPads, almost three times that of all official Android tablets to date.

Android smartphones are a massive success. Given the above Android tablet figures, the vast majority of the 550,000 Android devices activated each day must be smartphones. Google has already caught Apple in smartphone adoption. There are 190m Android devices in use compared with 250m Apple iOS devices. But in smartphones the adoption numbers show that Android is already ahead: Apple has shipped a total of 146m iPhones to date (end September 2011) — some of those units are over three years old and will no longer be in use — while there are approximately 180m Android smartphones (3).

Google is succeeding with smartphones, but not tablets, as a solid media strategy isn’t essential for success in the smartphone market.

Why?

Smartphones remain a highly communication-centric device. Google’s Android delivers a great phone, messaging and social network experience with a broad app store for utilities that matches and in some areas betters the iPhone. Android communication apps are able to integrate closely with the built-in apps unlike the iPhone’s design (4). Plus, Android smartphones are much more affordable than the iPhone. Android smartphones are sold at a very wide range of prices which increases their potential market. For example, on pre-pay in the UK Android smartphones start as low as £49.95 (no contract commitment). At a slightly higher price of around £100 there are multiple models available.

Google’s media strategy has been a bit of a mess compared with its competitors. Google has taken different assumptions to the media strategies of Apple, Microsoft, Sony, and of the media industry itself.

In short, with media and content-based products Google:

• Fundamentally believes in the power of computer code to deliver content services. For Google, the problem is all of the successful media services rely on human curation. Google’s code has not yet matched the nuances of human editors. It likely will do so in the future, but hasn’t yet. Google News is a great example of Google’s way of thinking: by default Google uses algorithms to create content services. Google News successfully shows the most popular stories from many publishers, but due to its use of a popularity ranking, it routinely fails to spot exclusive scoops that news publishers use as their very top stories and will be highly read. Now, link sharing on Google+ (and the older Buzz) is intended to help improve Google’s understanding of what matters to people.
• Has operated a centralized global media strategy. Media strategy needs to be tailored to country-based rights availability. This takes time and humans to drive content deals, not computers that can’t lunch or do coffee. It takes longer. Strangely, Google has long understood that media sales teams need to be regional to drive advertising revenues, but is only slowly realizing that it needs the same approach for media content. This has hindered Google’s TV initiatives where securing TV content is critical, and has delayed Google TV’s launch outside of the US. The evolution of YouTube with its increasing inclusion of traditional media content shows that Google is changing now.
• Has often acted first, asked permission later. Google’s decision to digitize the world’s books antagonized publishers. More recently, Google’s music locker service — in the admittedly beta Google Music — encourages individuals to upload their music to Google’s servers but was undertaken with minimal discussion with the music industry. Steven Levy’s book, In the Plex, recounts a similar story about YouTube’s early years (Or see this reaction from Belgium publishers)

Tablets are strongly media consumption devices. Amazon gets this by building what I described as the first true media tablet. Apple has strengths here due to its iPod heritage and existing ties to the music, movie, TV and publishing industries for iTunes and iBooks.

If Google is to succeed in tablets, what the new Ice Cream Sandwich version of Android needs above all else is to re-kindle Google’s media strategy. And yes, I did mean to use the word “kindle” there. Amazon has led the way. Google needs to improve.

I’ve written in the past that what makes devices smart is their software soul, and not the shallow exterior of hardware design, however great it may be. Steve Jobs used the same phrasing more recently (although I doubt he read my report first).

There’s another phrase of Jobs which is even more relevant to what Google needs to do in tablets. At the time he said it, most thought Jobs was needling Microsoft, the old enemy. I disagree. I think this was aimed at Google’s belief in the power of computer code above human curation:

It’s in Apple’s DNA that technology alone is not enough—it’s technology married with liberal arts, married with the humanities, that yields us the result that makes our heart sing, and nowhere is that more true than in these post-PC devices.

Google’s obsession with algorithms and code runs counter to a liberal arts relationship. Google needs a better media strategy. Google needs to evolve to find a media software soul to place at the heart its Android tablets.

Of course, for those building Android tablets and Android smartphones — HTC, Samsung, Sony and the rest — Google’s media strategy omissions provides room to differentiate at the cost of some significant spending to create a media product offering.

(1) Previously, the v3.x Honeycomb version of Android was only available for tablets, and all smartphones ran the older Froyo or Gingerbread Android software.
(2) This is based on the data Google publishes on the proportion of Android devices using each version of Android OS and the reported data on the total number of Android devices in use. As v3.x Honeycomb is only shipped on tablets, this enables an estimation of the number of Honeycomb Android tablets to be made across all of the different device makers that ship Honeycomb tablets: Motorola, Sony, HTC, Samsung, etc. Data on Android OS versions in use is published here: http://developer.android.com/resources/dashboard/platform-versions.html .  Since I wrote this piece, Android head Andy Rubin has stated there are about 6m Android tablets in total in the wild. The difference represents those tablets that run Android v2.3 Gingerbread or v2.2 Froyo rather than the tablet-optimized v3 Honeycomb.
(3) Reasons: There are a small number of Android devices that are portable media players, for example from Samsung and Philips among others, plus there are also a few tablets shipped with the smartphone version of Android, such as the original Samsung Galaxy Tab and the HTC Flyer…. It’s not possible derive an exact number of Android smartphones in use from these publicly stated figures from Google.
(4) Voice over IP (VoIP) apps such as Skype run more consistently with Android multitasking than they do on the iPhone where iOS routinely decides they are no longer needed, and shuts down such background apps without asking the user.

The way iMessage works is extremely interesting. In so doing, iMessage cannibalizes carriers’ SMS and MMS services:

• Any messages sent from an iPhone to another iPhone with iMessage installed are automatically sent by iMessage over the Internet rather than via SMS. This bypasses carrier text messaging (SMS) charges but requires a working data tariff.
• Similarly, any photos or videos sent over iMessage bypass costly operator MMS systems. There’s even an iMessage preference option for users to switch off MMS so they do not inadvertently incur MMS charges when they’re intending to send for free via iMessage.
• Messages can be sent to or from iOS devices that lack SMS capability, such as the iPad and iPod Touch.
• Users can address messages to an email address rather than a phone number. This is essential to send messages to an iPad or iPod Touch. New iMessages sent to a phone number only appear on an iPhone. Any messages addressed to an email address are sync’ed to all iOS devices tied to that Apple ID.
• Users can change their iMessage “Caller ID” to be their email address so that any replies go to all of their devices. This is very similar to the way Apple’s video chat service, FaceTime, setup works. Additionally, users can attach multiple email addresses so that iMessage will receive messages sent to any of a selection of email addresses.
• By default, iMessage does not report whether a message has been read but there’s an option to set this to “on”. There’s also an optional ‘Subject’ field that starts out “off”.

iMessage is clearly Apple’s take on BlackBerry Messenger (BBM), small messaging players such as Whatsapp or eBuddy, and Internet instant messaging systems such as Microsoft Live Messenger or AIM. But iMessage does not the deliver the precise same mix of product benefits as any of those alternatives.

Apple has a number of differentiated twists on their execution that guarantee iMessage will be a success:

• iMessage setup is automatic. The user does not have to do anything for iMessage to work. I can’t overstate how important this will be to driving uptake. An iPhone will automatically detect if a recipient is also using an iPhone with iMessage. To signify that iMessage is in use sent messages appear with a blue paper background, rather than green for SMS, and in the text field where users write new messages the word “iMessage” appears faintly. This ensures that all iOS5 users will end up using iMessage without having to install any extra app or alter any setting.
• It’s completely integrated with SMS and the rest of Apple’s OS. On the iPhone, only Apple has this capability to effectively replace a standard app. With Android, other messaging app creators could mimic iMessage. They should.
• iMessage’s support for the iPod Touch will extend its appeal to young consumers unable to afford an iPhone. The installed base for the iPod Touch is over 60m (we’ll know how much more when Apple announces its Q3 2011 results). This will act as an acquisition driver to encourage iPod Touch users to switch to the iPhone.
• Message sync between devices enhances the value of owning an iPad. When Apple announced the iPad it pitched it as the third device. But without great sync there’s always a danger that the iPad is the Gooseberry to the iPhone and notebook PC. iCloud and iMessage’s sync removes this convenience barrier to increased iPad use.

So, why is iMessage not a threat to telecom carriers now?

Because Apple is playing a bigger game than competing in telecoms. Plus, operators are already moving on from SMS. They’ve known this day would come for years. Specifically, iMessage isn’t a major issue to carriers because:

• The quantity of SMS messages bundled with iPhone contracts is so great that there’s virtually no revenue cannibalization risk. In the UK, Vodafone and O2 offer unlimited texts with all bar the cheapest of their iPhone contract tariffs. With such large bundles, carriers have nothing to lose if some users send some texts via iMessage across the Internet rather than through SMS. Operators also continue to have the option of tweaking the amount of subsidy they offer new iPhone owners if they are concerned about ongoing revenues.
• iMessage iPhone users still need an SMS tariff. Text messages are used behind the scenes by Apple to set-up iMessage connections, so users have to have SMS capability to use iMessage.
• Apple is focusing beyond the phone and beyond the mobile industry. iMessage’s support for non-phone devices such as the WiFi-only iPod Touch and iPad shows that Apple is competing with Internet players and not carriers.
• iPhones will comprise a minority of any carrier’s user base. Even with the massive success that Apple enjoys, most phone users will not use iPhones. So, the universal support that SMS enjoys — a benefit of being able to text anyone anywhere — will continue to be essential for all phone owners, even those with iPhones.
• Apple still needs the carriers. Almost all iPhones are sold with operator subsidy in countries where phones are sold that way, for example the US, France and the UK. As the iPhone is such a very expensive phone this won’t change any time soon. Carriers still have the ability to influence Apple, for example to ensure that iMessages addressed to a phone number are always delivered to a phone and to ensure that fall back to SMS continues to exist.
• iMessage could help grow photo messaging. Operators could lobby Apple to remove the option for users to switch off MMS fall back, in which case iMessage could actually help drive stalled MMS revenue growth by making photo messaging easier. A precedent to this is the way iPhone’s handle WiFi tethering or APN settings: What options a user has visible in the iPhone interface depends on which carrier’s SIM is inserted into the iPhone (interestingly, this remains the behaviour even with legitimately SIM-unlocked iPhones).

So, iMessage places Apple in the unusual position of replacing a cash cow mobile operator service, SMS, with their latest app but does not make Apple any more of a threat to carriers than they already are.

Instead of operators, the companies that should worry about competition from iMessage are those that have been trying to replace SMS with instant messaging for many many years: Notably RIM, because of the importance to them of BBM, and their vulnerability due to the large service outage they had last week; and the numerous messaging-centric start-ups such as: Whatsapp; eBuddy; Nimbuzz; Fring; Palringo; BeeJive IM; Xava’s Yak Messenger; Shape’s IM+ and many many more.

This isn’t the first such problem with BIS (or see here), but the timing is horrific, for multiple reasons:

• BBM rival iMessage arrives tomorrow on Wednesday, October 12. iMessage is a part of the iOS5 update for iPhones, iPads and recent iPod Touch models. Similarly to Facetime’s integration with voice telephony, iMessage replaces an iPhone’s SMS app and automatically delivers the improved messaging experience if the phone knows a recipient is also an iMessage user. It also uses Apple’s cloud service to sync messages across the iPad and iPod Touch that lack SMS messaging ability.
• The new version of Android, Ice Cream Sandwich, is imminent. While Apple is the key competitor for all high end smartphones, it’s Android-powered phones that threaten to eat into RIM’s Curve & BBM toting young customers.
• RIM is suffering a fall in device unit shipments. That’s perhaps too mild a summary, RIM has reported a terrible set of results for its most recent quarter combined with appalling sales for the PlayBook tablet. RIM needs to be able to devote its resources and prestige to expand with new innovations and not run to stand still by patching old services such as BIS for existing users.
• RIM is midway through a risky technology transition. Current BlackBerry smartphones run an evolved version of the same software they have for years. The new QNX software is in development and is on which RIM’s future depends. RIM will have to persuade current users to transition to this new product range that will almost certainly have some irritations for long term users, even if QNX smartphones are excellently executed. Long term users often dislike small changes that new users wouldn’t notice.

What’s clear from the metrics I analyzed yesterday is that the rapid growth of Android is squeezing RIM, Microsoft and Symbian tremendously while Apple is holding its own. RIM has to fix these outages fast and resolve the customer relations disaster or its customer retention levels will drop.

RIM shipped 10.6m devices in its Q3 2011, down from 13.2m the previous quarter. If these outages cause customer satisfaction to fall further then RIM will have an even harder transitionary period. Re-acquiring lost customers will prove much more expensive than upgrading current Curve and Bold users when QNX smartphones ship in 2012. RIM is in danger of becoming its own worst enemy if it is unable to reliably operate the communication services that have differentiated it. BBM is the reason many young consumers stay with BlackBerry. If it doesn’t work, they will leave RIM.

RIM’s competitors must avoid schadenfreude. Too many of their new services borrow the centralized design and thinking of RIM’s to date successful services (BIS and BES were essentially mobile cloud services far ahead of their time that delivered lower data usage, effectively faster mobile data speeds, and high security).

Apple’s iCloud is the most pressing near term example. It goes live tomorrow (October 12). The last time Apple tried something like this with MobileMe it had numerous bugs. Steve Jobs uncharacteristically described MobileMe as, “it wasn’t our finest hour” during the iCloud announcement last June. Microsoft and Google have similar centralized services that increase users’ dependency on their smartphone’s software’s creator.

But Apple does not rely on iCloud to differentiate, at least for now.

For RIM, the services that are down today are precisely those with which it differentiates its consumer offerings.