Helsinki: A popular video on YouTube shows a “concept phone” that could—literally—bend to fit your wrist. Called Nokia Morph, it’s also an image of how the world’s largest mobile phone maker, Nokia Oyj, wants to change. As the Internet goes mobile and companies such as Apple Inc. and Google Inc. find cool ways to embrace the trend, the mobile market leader is rewriting its product development rulebook. Instead of working in secrecy and isolation, it wants to start sharing.
“For Nokia, this is probably the biggest throw of the dice since they entered the cellphone business,” said Ben Wood, research director at CCS Insight, who has followed the Finnish firm since 1994.
Besides putting up futuristic ideas on video-sharing sites—such as the Morph concept, which imagines a stretchable, flexible, solar-powered, self-cleaning device, which also has a sense of smell—Nokia has invited bloggers and tech-savvy media specialists to brainstorm on future mobile products.
Seeking approval: A Nokia concept phone made almost entirely of recycled material at a trade show in Barcelona in February. The firm is starting to flash and test new concepts on select consumers.
“We realized in early 2005 that if we only focused on innovation from within, we were limiting our scope for real breakthroughs,” chief technology officer Bob Iannucci said. “We want more wild ideas.”
At stake is a share of the next phase of Internet growth, to offset the commoditization of Nokia’s signature product. Forrester Research expects the number of mobile Internet users to triple over next five years to 125 million in Western Europe alone, while Nokia knows its double-digit margins on handsets will shrink.
To make its move in Internet services, Nokia plans to use its base of one billion customers—one-sixth of humanity—to consult on what works, what wows, and what doesn’t. Compared with Apple’s much-hyped iPhone, which has sales of just five million so far, its customers put Nokia in a strong position.
The market for Internet services is approaching €100 billion (Rs6.4 trillion), and Nokia is the first big cellphone manufacturer to embrace the Internet media business. Close rivals Samsung Electronics Co. and Sony Ericsson Mobile Communications AB could follow, but are a couple of years behind.
The process of developing and testing new phone models was once like a state secret. Wood of CCS Insight said that in the past Nokia would develop products “behind closed doors in a room with no windows. With some products I asked them: had they shown them to anyone?”
In 2003 reviewers and customers laughed at Nokia’s gaming phone, which had to be held awkwardly, sideways, to make calls. The same year Nokia introduced its first media phone, the bulky 7700, but withdrew production plans after heavy criticism.
The Morph concept, which Nokia is exploring with researchers in nanoscience at Cambridge University, is one example of a more consultative approach: combining know-how about tiny particles and electronics to see, for example, if a stretchy circuit could be made. Another was the way Nokia in February floated the notion of a phone made almost entirely from recycled materials.
“The ability to include large numbers of users into the development cycle means you can have a much more collaborative approach to development and you can try ideas out, refine them and move forward—or fail fast and get out,” said Nokia’s Iannucci.