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The Cloud, a Disruptive Technology? Just Ask Nokia!

Nokia just recorded its first quarterly loss in over a decade

It’s often said that the Cloud will be a game changer and disruptive and that statement is put out there for the future but I believe we have already seen a huge example of this in the mobile telecommunications domain.  We have seen in the last twelve months the beginning of a fundamental change in a users relationship with services because of the ability of real time delivery over mobile and fixed broadband. Apple single handedly changed the perception of, not only what dollar value a user would pay, but that they would actually pay at all. In the first 60 days Apple had 100 million downloads from their App Store.  Just think about this…60 days, 100 million downloads ! At the end of September 2009 the app downloads had topped a staggering 2 billion - Phenomenal ! Even more phenomenal is they ripped up the script of the established model and implemented their own.

We have quickly seen other providers such as RIM, and Google quickly adopt the same model, with Nokia lagging behind and then news filtering out that they would launch an App Store at the Mobile World Conference in Barcelona and when they did,  well lets just say that it was not exactly a success.  Microsoft, late to the party as always, are also jumped on the bandwagon with the launch of their “My Phone” service . Samsung have also now launched their own Mobile Applications MarketPlace. This shift has hugely changed the whole model of the Telco market. Nokia, the 100 pound gorilla, is losing market share hand over fist as it struggles to get to grips with this new model. Motorola has lost $3.6 billion as they too struggle to get to grips with this new consumer model.

Yesterday Mobile Crunch ran an article outlining Nokia’s first quarterly loss in over a decade. Nokia made a loss of $834 million and their shares dropped by 6.02 per cent. Apple however, in just over one year,  has become the eighth largest mobile phone vendor in the world (source: strategy analytics). This whilst only competing in the smartphone market and, at the time of the report, not selling into markets such as China. Overall during the past March quarter mobile phone sales fell 13% worldwide, the fastest rate of annual decline since record began, but in contrast sales rose 10% in the US, largely because of Apple. The top 5 handset vendors saw their market share fall from 83.5% to 78%, a decline that is predicted to continue as Android comes of age and Apple continues it’s dominance with low-end entry points into the consumer market.

The whole notion of how to sell to an individual has changed, it has become from the edge and back rather than the reverse i.e. it has proved that users are wiling to not only pay for real-time services and just-in-time applications, but will actually choose their handset provider based on the perceived value and breadth of those services. How many times have you read of a competitive phone review, “In some ways it is a better handset than the iPhone but it just cannot match the App Store for breadth of Applications”. Interestingly not everyone agrees. MobileCrunch also ran an article, “Not every Company needs an App Store“.  I believe they miss the point. The rules have changed and the humble phone has changed to become a platform to deliver services aided by on-demand cloud applications and services.  Apple’s advertising tells you “want to this, that or the other ? We have an app for that”. Well behind all those apps there are hundred if not thousands of individual developers supplying the “app for that”, and guess where the backend of many of these are hosted ? You’ve got it, on cloud services.

I agree that ideally we would be able to write against one platform for services delivered. Unfortunately the mobile phone OS market is very segmented with lots of players such as Symbian (Nokia), Microsoft, Google, iPhone etc. Having said that their are some initiatives to try and provide some abstraction to allow code / services written for one platform to run on others, such as PhoneGap, which supports iPhone, Android and Blackberry. Ultimately the Genie is out of the bottle and new mobile companies can see the carrot, that is new revenue and business models, which Apple has made reality. Ultimately the vendors will have no choice, with an Open Source OS model in Android squeezing them from one side, and Apple on the other, the landscape is being changed and the 100 pound gorilla is starting to look like an endangered species. Figures compiled by Gartner show that Apples Market share more than doubled in 2008, whilst Nokia’s Market share of the global smartphone Market fell from 47% in 2007 to 31% in 2008, and based on projections in the Gartner analysis, this would make Apple the leading global smartphone provider by 2011.

Syndicated from my original blog post on Cloudiquity

Read the original blog entry...

More Stories By Jim Liddle

Jim is CEO of Storage Made Easy. Jim is a regular blogger at SYS-CON.com since 2004, covering mobile, Grid, and Cloud Computing Topics.

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