Noodle XI: The Rise of Design and Fall of Nokia, RIM and Motorola

The Rise of Design Signaled the Fall of Nokia, RIM and MotorolaThe rise of design signaled the fall of Nokia, RIM and Motorola describes how engineering is becoming less important in distinguishing hightech and other products from each other. It also presages a seismic shift away from product towards customer experience in determining market leaders for people-oriented products and services. A very large portion of product companies will follow in the footsteps of these three former mobile phone titans unless they transform their focus from product features (engineering) to customer experience (design).

By no means do I imply that engineering is not important—in fact, it is more important than ever—I assert that it is less important than design in differentiating people-oriented products. Engineering is abstracted away from the customer/user of the product, and design explicitly addresses how the customer uses the product to attain outcome(s).

Design is to the Knowledge Economy what engineering was to the Industrial Economy.

Reflecting on the Fall of Motorola, RIM and Nokia

All of these companies have exceptional engineering cultures because their products encompassed telecoms infrastructure and devices, and all once dominated huge markets. However, their engineering cultures also led them to develop “we build it, they will come” attitudes toward people-oriented products, and all three missed critical user-oriented technology shifts.

  • Motorola rejected digital mobile phone technology and clung to its market leading analog phones while Nokia powered past it with digital during the 2000s. Motorola had a couple of significant successes (Razr), but it never recovered and was bought by Google for a relative pittance in 2012. It still has a successful infrastructure business.
  • RIM developed a lock on the security-conscious enterprise and professional services market for mobiles, which it successfully evolved into smartphones over time. Its offer was built on robust enterprise infrastructure and servers as well as devices. RIM was so strong in the enterprise that it missed the consumerization of IT. Its focus on the enterprise led it to err on the side of stability, not flexibility. Today the company is on the ropes, shopping itself to buyers; notably, Microsoft did not move on it.
  • Nokia dominated global markets for many years, largely driven by emerging markets, until it was displaced by Samsung in 2012; it is now #2 in global mobile phone sales but not even in the top 5 for smartphones. It missed the importance in smartphones and has not recovered from that. Management’s agreement to the Microsoft acquisition serves as an admission that Nokia could not become a first-rung smartphone maker independently. It still has a telecoms infrastructure business.
  • Palm was an interesting deviation to the engineering pattern because the company had much more of a design ethos and culture, although it couldn’t seem to stay out of its own way.

Design Lessons

  • Apple changed the smartphone market with the iPhone in 2007. Although Palm (Handspring) had arguably created the smartphone market in 2001, its management failed to execute and dominate, largely due to mismanagement of hardware and software businesses. Apple executed brilliantly and, since 2007, it has set the standard for the “smartphone experience” and extended it into tablets.
    • Apple has succeeded due to its commitment to design, customer experience focus, ability to scale and Steve Jobs’ understanding of content (notably the ability to seed iTunes with a critical mass of music). By controlling hardware and software and having a lock on content through iTunes, it became unassailable for several years although it appears to have lost momentum after Jobs’ death. It earns an overwhelming portion of smartphone and tablet profits.
    • Similarly, although Apple has a relatively small portion total market share, it has consistently had over 9/10 of the market of personal computers that retail at $1,000 or more.
    • Apple’s iLife was a pioneering customer experience-focused integrated offering that fused hardware, software, services and customer-oriented use cases (sharing photos, music, movies and even work ;^).
    • Most mobile phone customers historically used few of phones’ features because they were difficult to use (mediocre customer experience). iPhones have higher feature utilization.
  • msoft-nokiaGoogle‘s Android experience may be less seamless than Apple’s, but it has other advantages. Largely powered by handset maker Samsung’s excellent hardware design of Android-based phones, Android now dominates the mobile operating system market share, but not in profit. Google Play (its app store) continues to gain momentum.
  • Microsoft is another excellent example of an engineering-dominated company that has struggled with experience design for many years. From a corporate strategy perspective, I can see reasons for Microsoft’s acquisition of Nokia’s mobile business, but from a user viewpoint, I predict that Microsoft mobile will continue to disappoint. It will play a distant #3 to Android and iOS. I expect the next disruptor to emerge from Asia, where huge markets enable ultra-fast innovation and huge R&D investments. My former colleague Lawrence Lerner has a fascinating IoT take on the combination.

Apple and Google have succeeded in the mobile device market because they provide the most frictionless and relevant user experience. Their engineering is good to excellent, but the majority of users want ease of use for things they like to do. Obviously these terms are relative, and the market evolves rapidly, so tight innovation cycles are critical.

Engineering and Design

Engineering and design are inter-related, but understanding some of their differences is the key to influence and profit in the 21st century’s Knowledge Economy. According to Wikipedia:

  • Engineering is the application of scientific, economic, social, and practical knowledge in order to design, build, and maintain structures, machines, devices, systems, materials and processes.
  • Design is a specification of an object, manifested by an agent, intended to accomplish goals, in a particular environment, using a set of primitive components, satisfying a set of requirements, subject to constraints.
  • Notice that engineering is focused on products, and design explicitly addresses user outcomes.

Having analyzed thousands of interactions in digital social venues during client work, I observe that users of products and services share their experience and goals about every situation one can imagine (and many more that one can’t ;^). Their experience sharing has made them more aware of outcomes and has increased their expectations of products and services. Engineering provides the raw materials for customer experience, but design starts with the user and works backwards, so it is the critical discipline.


  • The engineering-design shift reflects a more profound change. In the waning Industrial Economy, fabricated products were relatively rare, novelty was fairly easy, and products astounded customers. Product life cycles were long. In the Knowledge Economy, people take products for granted and focus on their experiences of using them. Product life cycles are short and getting shorter.
  • In the post-product age, successful companies collaborate with users in digital social venues to accelerate innovation cycles, and they use explicit experience design approaches. User collaboration provides tremendous influence and power to differentiate in The Social Channel.
  • Although I appreciate Apple’s amazing user experience, I have long observed that it has been weak in open networks. It succeeds by controlling variables and rigorous user design. Microsoft is similarly challenged. Their DNA is proprietary technology.
  • Google has a significant advantage because it’s a far more network-focused company, and the network drives a huge portion of disruption and innovation. The network is disrupting the proprietary technology orientation that imbues Apple and Microsoft.
  • IBM is a useful example of an engineering-focused company that has learned to open up and to interoperate with open source development and open networks. I don’t know how much of an explicit design ethos it has developed, but openness serves it well.

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