Nokia has chosen to focus on the mid and low end of its device portfolio at this year’s Mobile World Congress, adding two new Lumias to its Windows Phone line up – including a new entry level Windows Phone 8 handest, the Lumia 520 — but also adding a splash of colour further down its product portfolio with two new, enhanced Series 40 devices.
Ahead of its press conference today, Nokia CEO Stephen Elop sat down with TechCrunch to talk about the company’s dual OS strategy, expanding product portfolio — with its full family of five Windows Phone 8 Lumias — and the evolving competitive landscape of smartphones and smart devices.
“There’s now the Royal Flush of Lumia devices – will it evolve? Absolutely. Will there be more? Absolutely,” he told TechCrunch. “We’ve gone through this restructuring and the changes in the company [and] we’re able to say here’s a beautiful full range of great experiences and of course you will continue to see them evolve — at all price points.” For now, it sounds like this means he and Nokia will continue to rule out Android and newer platforms like Firefox OS.
And, if you have an issue with that, you can send him an email. He reads them all, he says.
TechCrunch: What is the lifespan of Series 40? Do you see Windows Phone/Lumia overtaking it at some point — with feature phones effectively becoming obsolete?
Stephen Elop: I think what we’re seeing is that in the lower price bands of affordability we’re seeing, clearly, more and more of those price bands taking advantage of smartphone capabilities so with our new Asha products various organisation declaring them as smartphones at those very low price points. My expectation is that you’ll continue to see innovation, new products, new evolution at what’s happening at those very low price points for a long time to come — my expectation is there’s a lot of continued work in that space.
TechCrunch: So you mentioned HERE… I was just at the Firefox press conference –
Elop: Gary [Kovacs] and I used to work together years ago at Macromedia.
TechCrunch: You’ve talked about a third ecosystem… he actually said the same thing in reference to Firefox OS. So do you think there’s a place for four ecosystems, and if not, what about you doing something with Firefox given how malleable a type of OS it looks to be?
Elop: First of all it’s really important to define, when I talk about a third ecosystem, everything that that comprises. It’s obviously the hardware, it’s the software, the operating system, be that Windows Phone or Firefox OS and so forth. It’s also the many applications you need to fill out that capability – but it’s also the full range of cloud based capabilities and services, so for example around Windows Phone there is – whether it’s office productivity, location based services, music, entertainment, games, unified communications, the list goes on and on. It’s all of those things that need to be brought together to deliver a complete ecosystem and so I think it takes a tremendous amount of effort and investment to bring everything together that’s necessary and indeed that was a major driver of our decision to partner with Microsoft because we believed we needed to combine assets to do that.
It’s not about whether the market can’t sustain the different ones, it’s really more important as to where is the capacity to build and deliver and get the critical investment levels necessary behind that, and so I think it’s a time where from our perspective we continue totally focused on Windows Phone as our smartphone in the upper price bands effort. There’s no question about that.
The one thing I’d point out though is, and this is I think to our advantage with our efforts with Microsoft, is the market is still not settled in any way shape or form. A lot of people would say hey is the market already stabilising around a couple of ecosystems… Then there’s many other things that are all sort of chipping away, saying is there a role for this, or a role for that so I think what’s exciting about our industry is there’s that much dynamism.
TechCrunch: How low in terms of pricing can Windows Phone go? I know you’re working with Microsoft on driving this down – what are the biggest barriers here to pushing it as low as Android, which obviously goes very very low. They’re saying sub-$50 for an Android smartphone.
Elop: It’s hard to compare to different things like that. And the reasons is you also have to consider the quality of the experience that you’re delivering so part of the question is correctly stated – in terms of what are the barriers to driving a particular user experience, I’ll hold up the 520 as an example, further and further. And obviously it’s brilliant work in terms of software engineering, it’s the cost of chipsets, it’s the cost of memory, it’s the cost of display, it’s innovation and how we manufacture the devices, all of those things come together to take it lower and lower. But what you also have to consider is what are your standards from an experiential perspective because whether it’s Windows Phone or whatever you can deliver really cheap implementations of just about anything, but of course the problem is whether it’s acceptable or whether it’s been greatly denigrated relative to what the standard is.
We do hold the Windows Phone experience to a very high standard. It has to be responsive, it has to be consistent from an application perspective, and so I think while there’s always the hardware barriers, what’s most important in our minds is ensuring we deliver a great Windows Phone experience at lower price points. Many of those very inexpensive Android devices that you see, if you take a look at the version of the operating system, the application compatibility, the quality of the experience it’s different – quite a bit different – than some of the other devices.
With the Asha products what we’ve essentially said is we can deliver a different but really great experience for people who are interested in devices at [lower] price points, so for example introducing browser capabilities that do significant data compression – that’s really important in those price bands. Incredible battery life. An operating system that’s been taken from the higher price points, and the higher configurations and sort of jammed down doesn’t know as much about how to manage a battery so it lasts for 30 days or whatever the case may be. And so when you look at our strategy you’ll see yes we’ll keep pushing down Windows Phone but that’s why the answer to the earlier question about the longevity of Series 40 – it has some brilliant innovation that is correct and appropriate for a great experience at those price points, so you can have a great Facebook experience on an Asha device because of the innovation we’ve applied there.
TechCrunch: Shifting from the low end to what you’ve not chosen to focus on here at MWC, why are you not showing off any high-end devices? There were some rumours going around before MWC that there might be a PureView Windows Phone…
Elop: Really? Hahaha!
TechCrunch: Why have you chosen not to show off any of high end devices today?
Elop: We think very carefully about the portfolio, we think very carefully about the role that different devices play at different times, so the Lumia 920 is still in a mode where it’s launching in countries around the world. It’s very much still in that early build, very significant demand, huge consumer excitement and when we considered what we needed to do to fulfil our belief and our role in the mobile world we wanted to get that full portfolio out there so when you look from the Lumia product line, and the reason I only half jokingly rattled off the numbers is, there’s the Royal Flush of Lumia devices – now, will it evolve? Absolutely. Will there be more? Absolutely. But at this point as we’ve gone through this restructuring and the changes in the company we’re able to say here’s a beautiful full range of great experiences and of course you will continue to see them evolve — at all price points
TechCrunch: Obviously you focused on the high end first with Windows Phone – and today you’re bolstering the mid and the low end — so was it maybe a mistake to focus on the high end first, which is an extremely competitive space, rather than the mid/low tier. Could you have switched that strategy around?
Elop: The answer is no. And it’s really important why. We needed to accomplish a couple of things – one is to really push our limits from an engineering perspective, whether it’s in photography, location based services, new things like wireless charging. We wanted to really establish the gold standard for ourselves, and then continue with the, interestingly enough, even harder engineering to take those experiences and for example to deliver a great low light photography experience in a less expensive device or digital camera lenses in an even more inexpensive digital camera device.
And so by starting there and then continuing with the hard engineering to push it down because that’s actually the harder challenge. With lots of processor and a big screen you can do all sorts of things but bringing it down is hard work. The other reason that it was a very conscious decision to start with flagship devices, and you’re right it’s very competitive, but we believe it’s very important for a consumer to see what the total aspiration could be. What’s the gold standard. And we needed to, also for ourselves, say – you know what, to really test Windows Phone to test our engineering we need to be able to put out devices that stand up at the high end against any competition out there. And so we were bold enough to say the world’s most innovative smartphone – the Lumia 920. [Now we’re saying] the most innovative portfolio of devices. I think we’ve really taken the right approach here. And so there may be people out – actually I know there are people out there, many people, because they write me, I get emails flowing constantly where they can’t afford a Lumia 920 or it’s not available in there country or they’re in a country where it doesn’t have LTE or whatever and they say boy wouldn’t it be great if you could provide some of that at a more approachable price point and that’s a lot of what we’ve accomplished.
TechCrunch: You’re saying you’re very responsive to those emails? You think about them and they help you make your decisions?
Elop: Oh absolutely. The more important thing is I read every single one of them because it is – and it may just be oh, ok I’ve heard this a thousand times before on a particular I want this or we love that, but that’s what shapes your opinions so when you’re in those discussions with your team members about where should the portfolio go, what thing do we address first you’ve got that basis of knowledge. And you can get that certainly when you’re in a store helping to sell the devices but frankly when someone’s used the device for 30, 60, 90 days and then they’re writing saying I love my Lumia 920, it does this so well, or people share a photograph with me, or you can’t believe what I took at my kid’s wedding, look at this, and by the way it’s really cool – it’s very emotional in some ways – but by the way we’d love to see this, or that, that’s what shapes the portfolio. You get so much good information that way. The product teams love when I intervene and say hey but that’s not what I’m hearing.
Techcrunch: Nokia had a great last quarter, you had a little turn, you exceeded expectations. If I remember correctly the next quarter may not be quite as good. But it may not be traditionally for a lot of operators –
Elop: Yeah, there’s seasonality.
TechCrunch: Putting that to one side though, do you see yourselves as turning that corner?
Elop: I think we’ll only ever know with the benefit of history. We’ll look back and say what was that turning point? But what I will say is that I will say as a company to field the range of devices that we are, to see the consumer reaction, to know in our heart that we are doing our best work… This is unquestionably a time where a person at Nokia stands up proudly and says let me show you whatever it is – for whatever purpose. And that degree of pride, that quality of workmanship, and seeing the full portfolio take shape – combined with what we know is still ahead – and I know everyone at Nokia saying ok we got to keep going so, we’ll see.
TechCrunch: Tablets? Where are the tablets?
Elop: Well, so tablets…
Nokia PR interjection: We haven’t announced any tablets.
Elop: We haven’t announced any tablets.
TechCrunch: What innovations could Nokia bring to tablets?
Elop: That would be something which if we were to announce a tablet would become evident then if there were such a thing but… There’s lots that lies ahead. We, obviously we’re looking at this market very closely. Like right now there’s a lot of shifting and things going on with all of us getting our first exposure to Windows 8, both from a PC perspective and a tablet perspective and we’re watching that very closely and based on what we’re learning there – and correctly answering the question you asked, what innovation because just a tablet by itself? Ok, so there’s many other tablets and so we have to make sure that in the same way with Lumia we said no we’re going to stand out, we have to make sure we’re thinking about that. So we’re watching that market – but haven’t announced a thing.