One business lesson from the smartphone bloodbath

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Growing up as a student, my father always told me when it was time for exams, “Do the easy questions first. Then you can tackle the hard ones later.” I found that to be very good counsel, seeing that I have failed very few exams in my life. Likewise, in business, tackle the easy markets first, then push in the tougher ones. This is simple common sense. Yet, some of the most outstanding technology companies of our time failed at this.

Permit me to paint the picture with even more depth. When you are weak is not the time to attempt to conquer hostile territory. Don’t go being an aggressor in hostile territory right away. Build up your strength by taking out easy targets first. Build capacity as you go. Go for the low hanging fruit, and use whatever gains you make on that to tackle the higher placed fruit.

Years back when Nokia adopted Window Phone as their smartphone platform, they made a decision to attempt to conquer the US market. I said back then that it was a bad idea. They needed to focus on where their strengths lay, and then build. They were in a position of weakness. Investing too much resources in conquering a hostile market was a bad idea. They tried. And it failed. Today, Nokia still does not have the US market, but their Lumia phones are doing well the most in regions where Nokia has traditionally been strong – emerging markets. Lumias are flying off the shelves in South America, India and Nigeria.

How about BlackBerry? This was a company that has struggled in recent years for a number of reasons. They addressed one of them – creating a new modern OS, then failed woefully by ignoring this simple lesson. Rather than push the new OS10 smartphones in the markets where they were traditionally strong, BlackBerry decided to – in the words of a friend – outApple themselves. The new BB10 devices were overpriced and unrealistic in BlackBerry’s strongest markets. Fail.

When in a fix, push where your strengths lie and where you have a ready market. Then attempt more difficult markets from there. It really is very simple. While Nokia and BlackBerry fought futile battles on the US front (a market that is currently hostile to them), new entrants went for the easier markets and are thriving. TECNO is making money from Nigeria and other African countries. Xiaomi, Lenovo and others are reaping huge profits from other emerging markets.It would have been foolish for TECNO or Xiaomi to have taken on the US market from the word go. Huawei tried it (sort of) – and failed woefully. Huawei still survives because they did not throw too much of their resources at the US market while ignoring their traditional areas of strength. They were smart enough. Mobile manufacturers can thrive outside of hostile environments and still be a force to reckon with. But should any decide to make an attempt on such hostile markets, they need to at first focus on the markets where they are strong and have ready buyers.

If Microsoft wants to succeed after acquiring Nokia’s mobile divisions, they need to implement this strategy. If not, a few years from now, this acquisition will be a certified failed adventure. Emerging markets hold the key to smartphone success for Microsoft.

As a business person, I have found dad’s advice to be sound. There were times that under pressure, I ventured out of my area of competence and ready market. It always ended bad. Eventually, I learned that the lesson was true for business as it is for exams. Are you a business person, or an entrepreneur? Remember this lesson from Grandpa Mo: In an exam, always solve the easy questions first, and then tackle the tough ones after that. When low on resources or in a weak position, focus on your strengths and easy markets. In other words, discretion is the better part of valour.

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10 comments

  1. Great advice, I think..

    But…

    How about Management People who advise that you tackle the most difficult jobs first?

    It is human nature to gravitate and stick to familiar areas. Areas of strength. Of advantage.

    It is why most run_of_the_mill Marketers love to market to individuals with which they are familiar or in familiar territories

    But the hard charging individuals / corporations often love breaking tough and virgin grounds.

    Short term, they may not make much headway (may even fail), but long term, they often stand out (if they succeed)..

  2. Mr.Mo, I think I still remember when you once said “what will it profit Nokia to win the US market, but loss the other market?” While I will not want to call you the prophet of doom like Baba Iyabo once called one man of God, sad enough your prophecy has come to pass. It actually profited Nokia NOTHING, in fact, it cost them their life.
    A good lesson for others and for some of us too.

  3. Nokia and Blackberry’s strengths not only lie in Latin America, Africa and the Asian markets, but in chunks of Europe as well. Nokia has been selling well in Italy and even in Finland, which means they must be doing something right. But this all consuming desire to win back the market lost in North America is the big fail.

    Blackberry were on point by rewarding the UK, who diligently supported them when the North American market abandoned them, with the first releases of the Z10 and Q10. But they got the pricing so wrong I wonder who it was that advised them. It was like the price was designed to make up for the entire lost market in North America!

    When Nokia decided not to ignore Africa and Asia with the release of the L520, I’m sure that was an eye opener – it was like a wave that caught on elsewhere. This time around the last was the first, it was priced right and caught on.

    Apple have learned the hard way, if the rumoured 5C is true, that you can’t ignore the low and mid end of the market. We will find out for sure when the price of the rumoured 5C is announced next week.

  4. @eyebeekay I think what MrMo is essentialy saying is that take on the smaller figures FIRST then move on to bigger things: you have a bigger chance of success that way. Where Nokia and OS10 failed (are still failing?) is by ignoring these areas of strength almost entirely…

  5. Emerging markets will not save anybody. Let us stop deluding ourselves. Despite the fact that Nigerians buy cheap smartphones, many buy used smartphones, how many smartphones do we have in Nigeria? Just 4 million! After years of blackberry popularity, the figures show RIM was only able to just over a million “new” phones after at least three years of dominance. How will a figure like that save anybody. The attraction of the smartphone market is the very large profit margin it offers. You can attempt to gain market share by subsidizing your devices like Google does but that option is only for companies will lots of spare cash to burn not a company that is selling its assets to stay afloat. You cant compete in a market where Techno offers smartphones at a price range of 12-30k. Let us accept the fact that it was too late to save either Nokia or Blackberry. Nothing was going to save them, not even attampting to conquer the emerging markets.

  6. For months I argued that there was no way Blackberry could have overtaken symbian so quickly. Little did I realise that the number of symbian phones in Nigeria wasn’t even up to scratch in the first place. We shouldn’t forget also that one of the major reason Blackberry was popular was because it was considered to be a status symbol. You had to have one to “belong”. People started losing interest when the brand was diluted and Blackberry was no longer considered top dog.

    Another crucial factor we haven’t considered is the fact that emerging markets copy the developed world. If android didnt get popular in the developed world, it would not have made it here.Nigerians are buying techno today because they want to use android and their pockets can only afford techno. Richer Nigerians buy Galaxy Notes and Iphones.

    Finally, the two emerging markets that would have at least made a dent in the smartphone battle (India and China) have their own formidable local manufacturers that you cant beat when it comes to pricing. I saw a report a few weeks ago that Micromax is poised to become top dog in India. You only have to visit a chinese online store to see the massive number of local android devices available. Competing with those local players is suicide for a company like Nokia which has 38,000 Europe based employees. It has like boring a bigger hole into an already sinking ship

  7. Efe said it all. The profit that these companies would have made from emerging markets would not help them remain in business. I went around to ask phone vendos what phones are hot cakes, guess what they said! That it was nokia torchlite phones, tecno phones and used blackberry phones that masses requested for. What puzzled me the most was the rate at which secondary school students are still rushing for used os5, os6 and os7 blackberry phones. Everyone knows blackberry’s selling point is bbm, tecno’s is android and dirt cheap price and nokia torch lite at the lowest price. Even nokia’s asha series are really not selling fast. PLS MARK MY WORDS HERE, WINDOWS PHONE WILL NOT SELL MASSIVELY IN NIGERIA, reason is that windows phone has no major selling point. Ordinary gmail app is not on the windows store BUT I BET MY LIFE that tecno will over blow by the end of the month when bbm comes to android and ios. MARK MY WORDS. In nigeria, price and popularity is everything, hence the reason why people buy iphone and android phones. Windows will just be number 3 if they are lucky.

  8. When i meant gmail app, i meant OFFICIAL gmail app. Windows phone is really struggling when it comes to value added apps. Eg. bbm and others.

  9. Mr MO said it all, go to the school of Technology and learn it all. It’s not just about Android- gionee makes better android phones yet they can’t get pass the tecno spell! Tecno is already over priced, being their reward for being local!

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