The Return of Hardware Differentiation

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IoT Slam 2015 Virtual Internet of Things Conference - Smart Things GroupIn 2003 Qualcomm recruited me from Nokia to lead their security efforts. Nokia and Qualcomm provided me with a unique insight into Apple’s rise at the expense of Nokia. As many of you know, every iPhone shipping today has a Qualcomm modem in it.

In 2007, Nokia shipped more phones than its next 3 largest competitors combined. It’s revenue was almost double that of Samsung. And it made as much profit as all the other mobile phone companies put together. In 2011 Nokia still shipped more units than it’s next 3 largest competitors. But its lead over Samsung had eroded. It’s revenue lagged behind Apple and Samsung. Nokia was barely profitable. It had fallen to 5th place. Apple was capturing more profit than the rest of the mobile handset industry combined.

What happened?

What had led to Nokia’s incredible success was the key element of its downfall. Nokia excelled in hardware, operations and peerless execution through excellent management. They were masters at market segmentation. Nokia designed and launched a new phone design every single week of the year. Their hardware prowess could not be beat. Nokia dominated their value chain, from design and manufacturing to its marketing and positioning. But they were weak in software.

The mobile industry changed in June 2007 with the launch of the iPhone. It wasn’t targeted to a segment rather it was made to address all segments. It was a connected computer with a rich software platform and sensors. Applications proliferated, one of which was a phone application.

Nokia never imagined the phone would become one application out of many.

Apple designs a new phone every two years, and now offers a cost reduced version in the in-between years. Quite a contrast from the 100 phones Nokia would design in a 2-year period.

The Silicon valleys of the world have set their sights on industry today. Apple is entering the market for cars, wearable health sensors, and the smart home.  Google has its autonomous car initiative,  and made a large investment in UBER. There are hundreds of startups seeking to disrupt transportation, manufacturing, energy and healthcare. I lead product initiatives at one called TeMeDa.

IBM’s Watson has proven to predict failures in GE turbines using raw data feeds and sensor data. Cognos from IBM provides sophisticated data analytics as does Tableau and now SalesForce. Might there be new entrants into the service market? Perhaps armed with machine learning and data analytics? Companies that can make the promise of zero unscheduled downtime and optimized performance?


Julian Durand
CEO at Smart Things Group

Julian is the CEO of the Smart Things Group — a small extremely focused group of IoT subject matter experts. He also leads product initiative as TeMeDa, lighting your world. He has led product initiatives at the UN, Nokia, Qualcomm, and several startups. Julian is an engineer and holds an MBA from the University of Southern California. He is an inventor with 10 issued patents and numerous pending.

An innovative and strategic leader with over 25 years of product management and business development experience delivering outstanding customer experiences. Proven results in opening new markets for both Fortune 100 companies and startup ventures in emerging technical fields. Extensive international experience and interpersonal skills in communicating complex value propositions in clear, compelling ways.

Session Tags

End-User, Government, Enterprise, Small / Medium Enterprise, OEM,

Hardware, semiconductors, sensors, new business models,

CxO, VP / Director, Middle Management, Technical, Business Line Management, Operations,

Expert, Advanced, Intermediate, Beginner,

Industrials, Healthcare, Automotive

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