Nokia's Meltemi Disappears - A Feature Phone Alternative We Fortunately Never Knew

The feature phone market has been in a steady and significant state of decline for several years, and the decline reflects a great deal on Nokia’s unabated revenue declines over these same last few years. One of Nokia’s massive failures, following the launch of the original iPhone, was to double down on the feature phone market in an attempt to fully own it. It was a strategy that had an early payoff as smartphones other than the iPhone struggled to gain true mass market consumer share, but when the tide turned in 2010 and smartphones emerged as the de facto standard for most consumers, the feature phone market and Nokia’s strategy became an albatross around its neck.

By the end of 2010 competitors from Samsung to LG to HTC (which is currently working with Facebook on a Facebook-branded mobile device) and Motorola began to flood the market not only with high end phones, but also low end Android smartphones at price points highly competitive to feature phones. These low end smartphones completely trumped feature phones on capabilities and especially user interfaces and ease of use. These new smartphones essentially eliminated the high end feature phone market, leaving Nokia with only a low end, low margin market in third world global regions for what we might charitably dub as “dumb feature phones.”

Nokia’s CEO Stephen Elop has not tried to mask what he thinks about Nokia’s feature phone strategy – he believes completely that doubling down on feature phones and leaving Apple, and eventually Google to innovate and to define the high end smartphone market was a critical strategic mistake. Elop believes this is a root cause of Nokia’s rapid decline.

Microsoft Matters…a Lot

Fast forwarding a bit to 2011, once Elop signed his deal with Microsoft – which was the right thing for Nokia to do – the entire Nokia feature phone strategy came up for serious review. What is critically important to understand here is Microsoft’s own motivation for partnering with Nokia. Yes, most certainly Microsoft sees a partner in Nokia that will eventually deliver a masterful Windows Phone 8 super smartphone. But what Microsoft also wants and desperately needs is to be able to claim a huge number of Windows Phone 8-based devices on a worldwide scale.

Microsoft sees in Nokia the means to achieve this – what company is better positioned than Nokia to deliver hundreds of millions of new low end Windows Phone devices? How so? Through Nokia’s still firm and captive grip on the global feature phone market – a market now ripe to be sold low end Nokia-Microsoft smartphones. Elop not only understands Microsoft’s motivations, but in fact has the same motivations (and aspirations) himself for Nokia. It is the right move for Elop to make, although he has faced internal Nokia intransigence on it.

Noikia is famously known for spending billions of dollars on R&D but often having little to show for it. Recently, it has come to light that Nokia’s internal strategizing, review, and development processes for R&D and how to monetize whatever comes out of R&D are hugely cumbersome and in fact harmful to the company. Elop has been working to overcome these issues, but it cannot happen overnight – he is getting there however, through re-allocation of developer resources and through focusing on Windows Phone 7/8.

So then…Meltemi

Nokia is of course entirely well known for both its deep support of Symbian and various feature phone interfaces, in particular what is known as the Series 40 interface (some folks refer to these phones as low end smartphones, but we do not). If you’ve ever had a Nokia phone you probably know the UI (or its Series 60 cousin). Although now an entirely antiquated operating system/UI combination, it was a perfect environment for old feature phones – but also an ecosystem that could never scale up to meet today’s consumer needs and demands.

So Nokia, true to its R&D spending ways and inability to ever focus on a comprehensive but well-focused strategic approach, began to quietly work on what has become known as Meltemi (which Nokia has never acknowledged publically to exist), a Linux-based alternative OS and UI that was to become the basis for Nokia continuing to build low end, low manufacturing cost phones, albeit phones that were more 21st century that could be called smartphones, something Series 40 devices could never be. Nokia’s other Linux-based effort – this one for high end smartphones – and known as MeeGo, was a much more public effort and was the first overt casualty of Nokia moving to Windows Phone 7.

The decommissioning, so to speak, of both MeeGo and Meltemi provide developer resources for Elop to use elsewhere – on Windows Phone 8 devices, and without a doubt a tablet effort. We also want to see Nokia deliver a Windows Phone-based smartphone that delivers on the Symbian-based Purview’s 43 megapixel camera – the underlying technology for doing so is non-trivial, and perhaps with re-allocated developer resources we can hope to see this happen.

An aside to the Meltemi disappearance is the confirmed departure of EVP Mary McDowell, who had joined Nokia in the mid 2000s to lead its mobile enterprise efforts (when Nokia still had dreams of a Symbian-dominated North American mobile business world) and who had recently been leading Nokia’s low end phone efforts. Her departure clearly suggests that Nokia will indeed deliver on highly focused Windows Phone projects as its core strategy across all price points and across all global markets.

It will be very interesting indeed to see what Microsoft’s Windows Phone market share will be as we move into the second half of the decade. Meltemi never had a chance.

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