Nokia comments by Clay Christensen on 26 June 2001, WR Hambrecht
wrhambrecht.com
at 25 minutes
I worry about the future of Nokia, in the sense that when the product, I go back to this thing I just gave about when the product is not good enough, the architecture is inter dependant, the way you compete it is to make better products and being an integrated provider is a big advantage. And then as it becomes more than good enough, an industry standard architecture emerges. Nokia, with it's products has been in the first camp on the left hand side and the architecture of it's products is inter dependant, and during that era the people that make the product itself that the customer uses, they are the ones that make all of the money and their suppliers get hammered. So when General Motors was the dominant integrated maker of cars, which was in that era, they were the ones that made all the money and the suppliers gat hammered and IBM made all the money and their suppliers got hammered and the same thing is true of Xerox, RCA and others. But then when the product becomes more than good enough and you develop this modular industry standard architecture, then the company that makes in the stage of the value added, where you used to make the money, which is designing and assembling the product that the customer uses, it becomes very difficult to make money. And a good way to visualize that is if you were an engineer at Compaq and your boss told you to go and design a better computer than Dell, how would you do it? You would put a faster microprocessor, higher capacity disk drive and anything you can do, the competition can do instantly because if the industry is integrated around the industry standards it just becomes that all of the functionality resides in the subsystems and not in the assembled product. And I think that Nokia is about at the point where they begin overshooting the functionality that people can actually utilize in those handsets. And what you will see happen is that the handset itself will become more and more economically and technologically the equivalent of a desktop computer. And the ability to make money in that value system will migrate back to the companies that used to not be able to make money like Agilent, because they will then begin to provide subsystems to the cell phone makers which themselves are somewhat equivalent to the Intel inside. So I would have a bias that the ability to make money in that world is going to migrate away from Nokia in the future.
--
Comments?
His comments on Dec seemed correct. I was rather close to DEC, watched them go from 120k employees to almost nothing in a couple of years. The last is now over with Compaq ditching the Alpha chip.
Try to get support on your VMS OS lately? |
