Over the weekend, Finnish start-up Jolla came into the spotlight, with its plan to launch a smartphone powered by the MeeGo platform Nokia abandoned as part of its switch to Windows Phone. The company has a number of key staff from Nokia, and intends to work with other efforts such as the Mer project to bring a device to market later this year.
According to reports, the company is being backed by a Nokia incubator fund set up to help would-be entrepreneurs freed from the shackles of regular employment by Stephen Elop.
Just looking at the numbers involved show the kind of hurdles Jolla is facing. According to The Wall Street Journal, it is looking to raise around US$12 million from private investors to develop the device. This contrasts with reports last year that Nokia was spending ten times that amount on just the ad campaign to support its initial Windows Phone launches.
In addition, Jolla said it needs to sell a modest “50,000 to 100,000” devices to break even, indicating it is not looking for the device to be a mass-market proposition. But without the ability to deliver a significant user base, developers are unlikely to spend too much time working with the platform, and without scale, operators are also going to be unmoved.
Nokia’s last MeeGo-powered device, the N9, was certainly well received, and how successful it could have been globally is an interesting question – Nokia only offered it in limited markets, missing out many of its key territories. It also picked up a following among the “enthusiast” community, drawn by the combination of Nokia’s undoubted hardware prowess and the more open MeeGo platform.
But this does not create a market. While Jolla may pick up some early sales from those already converted to the cause, and with some exceptions, it takes volume and scale to make a handset business profitable. As it stands, the company will be dealing with limited production runs, and limited device shipments to recoup its investments from – smartphones are by-and-large high volume, low margin products, whereas Jolla appears to be working in the low-volume, low margin space.
In an interview with the Wall Street Journal, Jussi Hurmola, the company’s CEO, noted that “in the modern world, you can't just make a device, you also need a platform and a full ecosystem including applications and services. Our intent is to run the full ecosystem”. While it is difficult to question the assertion, it is also hard to ignore the fact that many companies with far greater resources have tried – and failed – to pull off this trick.
Building an ecosystem is no easy task – just ask Microsoft and Nokia. Even with millions of Windows Phone devices shipping each quarter, and support of both a computing giant and a smartphone pioneer, the companies have failed to generate the kind of momentum generated by iOS or Android in the early days.
Another smartphone pioneer, Palm, has also fallen by the wayside, even when it ended up under the auspices of IT giant HP – although the webOS effort does appear to have suffered at least in part due to getting caught up in wider strategic upheavals. It is also difficult to consider the challenges of the smartphone market for too long without coming to RIM, the once great BlackBerry maker which is now facing a bleak future.
And when it comes to device platforms, there are numerous other casualties – SavaJe, Palm OS Cobalt, LiMo Platform, Access Linux Platform – to show how difficult the market can be.
Another ecosystem to rival iOS and Android would certainly be a way to keep Apple and the Google cohort on their toes, and choice is – almost universally – a good thing. But with Windows Phone failing to ignite the market, and RIM struggling to launch BlackBerry 10 devices despite the resources and years of experience at its disposal, why should Jolla be able to succeed?
For those looking to continue the MeeGo line, the Linux Foundation-backed Tizen project may prove a more lucrative gamble. Unlike Jolla, this effort has some big supporters in the shape of Intel and Samsung – with the number one handset vendor seemingly looking to mitigate its current dependence on Google’s Android. But it also has some important differences to MeeGo, not least its focus on HTML5 as its developer platform.
Of course, there is always the possibility Jolla is looking to deliver its first device as a proof-of-concept, before looking either for greater engagement with operators or retailers or being acquired by a handset maker on the lookout for its own – ready-to-roll – platform. And in its press release, the company did reference “partners”, although there was nothing in the way of detail.
Whatever the outcome, the next few months will certainly be interesting for Jolla, as it embarks on its David versus Goliath battle – especially when several more Goliaths have failed previously. I wish them luck.
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