if connected

This post was originally published on my Forrester blog.

Background – Today Palm announces the first major operator partner for its European strategy with an O2 partnership.

Back in January, when Palm unveiled the Palm Pre and its new Web OS platform, Palm’s innovation was clearly differentiated and ahead of the competition. Palm had pulled a rabbit from the hat. The Pre integrated social networks with its ‘Synergy’ interface in an extremely modern overall touch user interface. The hardware was different too: The Pre offered wire-free charging with the add-on Touchstone and managed to combine both a capacitive (multi)touch screen with a QWERTY keyboard in a phone the same size as the iPhone.

Nine months is a long time in mobile.

Now, most of the key Internet phone makers have launched social network integration (most notably Motorola with Motoblur on the Cliq/Dext; HTC’s Sense UI on Android and Windows Mobile; and INQ Mobile’s various models; and others about to announce plus operators). Offering a capacitive touch screen is now table stakes for a high end Internet phone.

Palm’s product strategy was smart when put in place several years ago. Unfortunately, others thought the same way. This is a key challenge for developing a product strategy that takes several years to move from inception to launch. How do you stay ahead of the game when you’re stuck behind the fog of the product strategy war? (It’s a great reason to use research firms to develop that strategy).

Now, Palm does retain differentiation, but mostly in how the Palm Pre does what it does. Palm has to work hard to communicate that its execution is different.

Today’s announcement of an exclusive deal with O2 in various European countries will help. As a small firm, with a new launch product, Palm will benefit from the co-marketing support to evangelize its product differentiation.

Palm’s other key challenge is how to maintain the r&d spend needed to ensure its next products are more innovative than its much larger competitors, while shipping significantly less handsets than any of them every quarter.

For more insights into why so many firms are integrating social computing and social networking into mobile handsets, see this report: How Mobile Handsets Will Deliver 24×7 Social Computing.

For analysis of the Internet phone category and how Palm compares with the other handset makers please read this key report: The “Smartphone” Is Dead: Long Live Smart Phones And Smart Gadgets

Orange are promoting social networking and Internet access on pre pay so-called ‘featurephones’ (see photo on the right). Consumers care about what their phones can do not what artificial term the mobile industry chooses. No one can define the term ‘smartphone’ unambigously and no one defines ‘smartphone’ the same as anyone else. It’s meaningless.

On various briefing calls yesterday Nokia defended their (tenuous) position in high end phones by repeatedly claiming to be the leading maker of ‘smartphones’ — but 45% of a non-existent category is a useless metric. Consumers certainly don’t get it: Series 60 (“smart”) and Series 40 (not, ‘featurephone’) look virtually identical on the surface, and neither looks comparable in their online abilities compared with Android, iPhone, Palm, the INQ1 or even Windows Mobile.

Instead, what matters is how good phones are at doing the Internet or for Facebook. Everyone must focus on ‘Internet phones’ in developing mobile strategy or mobile phone marketing.

Orange’s in-store Internet-centric messaging is strong, but they are missing a trick with their online store as there’s no option there to filter phones by features such as ‘Facebook’ or ‘Internet’.

Update Friday, August 14 – See this Forrester report by me for more on “smartphones”: The “Smartphone” Is Dead: Long Live Smart Phones And Smart Gadgets

Nokia is in danger of trying to execute on a strategy that is spread too thin. The story today about Microsoft office arriving on Nokia phones joins yesterday’s piece in the FT Germany that Nokia plans to replace Symbian in its high end phones with Linux-based Maemo. Last month, a story appeared about Nokia offering Android-based phones — swiftly denied — that appeared to miss out on Nokia’s long term Maemo strategy. Beyond phones, Nokia has invested enormous resources into Ovi (maps & nagivation, digital music sales, email, media sharing, and the app store).

I struggle to see what benefit Microsoft Office will deliver on Nokia phones. Word, Excel and the rest are niche applications on mobile phones. Few use them as anything other than a document viewer even on those devices where the implementation is good. A better approach for Nokia would be to improve and enrich their phones’ Exchange support to improve email folder access and group calendaring. Perhaps, Office on Nokia is destined for a different class of device — a netbook — if so, Nokia must take care to avoid irrelevance.

Nokia must quickly revive its execution in core business areas such as high end Internet phones. Those devices may be small beer today, relatively, but they are tomorrow’s mid range phones, and next months’ entry level. If Nokia loses that high end Internet phone battle today it cedes its future.

Maemo should be a critical part of Nokia’s Internet phone strategy. It should be the device and software component of Nokia’s shift to Internet thinking and business models. And, given the pressure from rivals — Google & Android, Apple iPhone, Palm’s Pre, even Windows Mobile — the sooner Nokia brings new mobile phones to market that deliver a step change improvement in people’s experience of Nokia phones, the better.

Forrester clients will know I’ve analysed Maemo’s rise several times over the past couple of years — please get in touch for advice — most noticeably in these two reports:

“The N810′s importance is vastly greater than the niche, savvy, youth audience, to which it will appeal or that small sales of previous tablets indicate. With the Internet tablet range, Nokia is incubating both desktop-quality technologies, and a new business model that is independent of the constraints of the traditional mobile value chain.” Nokia Embraces the Whole Internet with the N810, November 2007.

“The Maemo-based tablets are a strategic play by Nokia. They are one of the most visible MIDs currently available. As Forrester advises, they deliver a strong communication and navigation application focus. With the extension of the platform to include cellular radio standards, future models threaten to replace high-end Internet-centric mobile phones.” Nokia to Evolve the Internet Tablet Range to Include Mobile Telephony, December 2008.