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Thursday, February 20, 2014

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If the tech business were fair, you would be considering the Nokia Icon for your next smartphone.

The Icon, which goes on sale this week for $199 with a two-year Verizon contract, has a lot to like: a graceful design, a brilliant display, a remarkable camera and an innovative set of microphones to make better-sounding home videos. The Icon runs Microsoft’s Windows Phone operating system, which has a cleaner and more coherent user interface than Google’s Android, and a more flexible and more informative home screen than Apple’s iOS.

But the tech business isn’t fair.

While the Icon is nice, you should not make it your next phone if you expect to be able to do everything with your phone that you can do on Android or iOS. Like any Windows Phone, the Icon is a fundamentally hobbled device, all but locked out of the teeming ecosystem of new apps and smartphone-powered gadgets that are expanding tech’s frontiers.

While this disadvantage might not be apparent in your day-to-day use of the Icon — you’ll have no problem making calls and sending texts — the phone’s shortcomings will haunt you whenever you want to try the next great thing.

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Stuart Goldenberg
If you want to use your phone to play the latest games, to experiment with new social-networking apps, to try the newest ways to pay for merchandise or to control the newest smartphone-connected devices (say, a smart thermostat), Windows Phone isn’t for you, at least not now. If you do choose a Windows Phone, go into it with your eyes open to the fact that you are most likely volunteering for a second-class digital existence.

The Nokia Icon illustrates the tragedy of Windows Phone — and, in a larger sense, the tragedy of Microsoft and Nokia, two companies of once-legendary prowess that have struggled to find a foothold in the market for smartphones and tablets.

Two years ago, the two entered into a strategic partnership, and last year, Microsoft announced a plan to acquire Nokia’s mobile phone division.

Judged by their products alone, the partnership has been a staggering success. The Icon is just the latest in a series of fantastic Nokia Windows Phones, which have combined deep technical innovations (like the 41-megapixel camera in Nokia’s Lumia 1020) with a striking design sensibility. Nokia is making just about the best phones on the market today. Its lineup beats Samsung, HTC, and Motorola, and it is nearly on par with Apple.

The tragedy is that the technology industry is not a meritocracy. Making great products is often not sufficient for success, and sometimes it’s not even required. In tech, marketing, branding, partnerships and timing can be as important as how well your product works.

What’s more, how a company’s product works is largely dependent on the company’s position in the market. Microsoft and Nokia’s consumer businesses are governed by the vicious rules of network effects — the economic idea that products get better as more people use them. The more people who use a particular operating system, the more likely an app developer is to build for that system. And the more apps that are developed, the more the operating system appeals to consumers. The cycle builds on itself.

For more than a decade, Microsoft rode a network-effects engine to great success; you used Windows and Office because everyone else used them. But in the smartphone business, Microsoft and Nokia were caught flat-footed by the popularity of the iPhone and its Android imitators, and they were far too late in creating similarly powerful touch-screen smartphones.

Now, despite their daring efforts to catch up, Microsoft and Nokia find themselves on the wrong side of the Android and iOS network-effects steamroller. Figuring out how to avoid getting crushed in the smartphone business is one of the first problems that Satya Nadella, Microsoft’s incoming chief executive, needs to solve. He doesn’t have many great options ahead of him.

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