Will Nokia’s big gamble pay off?


After Nokia’s disastrous 2010, its tie up with Microsoft  was one of the industry’s biggest talking points for years. As the manufacturer tackles the future, analysts tell Paul Withers if it was the right move

The Nokia/Microsoft alliance has arguably been the most talked-about topic in global mobile-phone manufacturing since the launch of the Apple iPhone in June 2007.

Opinion is divided if it will restore Nokia to its past glories or has come too late to stop it sliding down the pecking order of handset vendors.

The announcement, made on February 11, dominated the mobile world in the lead-up to Mobile World Congress in Barcelona that began on February 14, despite heavy speculation of a plethora of handset announcements from the likes of Samsung, HTC and Sony Ericsson, to name a few.

Nokia was to undergo major organisational changes and form a partnership with the US-based IT software company, which sees the Windows Phone operating system adopted as Nokia’s main smartphone platform.

The news perhaps shouldn’t have been a big shock. At the end of January Nokia announced its financial results for the final three months of 2010, and the findings were so grim, recently installed Nokia chief executive Stephen Elop warned of difficult times ahead, as well as the need for revolutionary change at the company.

Then, just two days before the big announcement, in a memo leaked to The Wall Street Journal, Elop compared Nokia to a man standing on a “burning platform”, and said the company needed to take a “bold and brave step into an uncertain future”.

Yet a further clue of things to come.

He added Nokia was not bringing products to market fast enough and admitted that by the end of this year it might only have one high-end smartphone in the marketplace. We now know that to be the N8, effectively its ‘hero’ handset for 2011.

Then came the Microsoft announcement. But among all the hype, something the industry didn’t really discuss was where it all began to go wrong for Nokia.

Bad strategy

One opinion is that Nokia has been far too slow to market with new form factors on its phones, and stood still while manufacturing rivals have moved through innovation.

Some even say there was a touch of arrogance on Nokia’s part, that it didn’t think it needed to move as quickly as others because of its standing.

One well-placed manufacturing source reckons its failure to recognise the importance of touchscreens to smartphones until it was too late, ultimately cost it.

“Individuals at Nokia I personally know very well, said: ‘Touchscreens aren’t ready yet and when we bring them out they’ll be ready.’

What they meant was they didn’t know what was going on. Nokia didn’t recognise that touchscreens were ready for the market and its rivals, particularly Apple, absolutely slaughtered it on touchscreen development.

“It had already lost so much ground and it wasn’t just inept, but arrogant in thinking everyone wanted a Nokia therefore all these touchscreen innovations wouldn’t come to much. Of course we all know that it did come to an awful lot.”

More recently, the same source also pins a lot of blame on Nokia’s launch of Ovi, its application store, in May 2009. He brands it a “shocking strategic decision”, claiming Nokia was not in a position to compete against the likes of Apple.

“Nokia thought it could create something that could compete with the types of things Apple and RIM were doing in the application space, but it was wrong.
“Many praised Nokia for getting involved in software, but a lot of people also counterbalanced that by questioning whether Nokia was able to do this.

What was proven was that it wasn’t able to do this, as it never got off the ground. Backing wrong horses such as Symbian and Ovi have proven it is strategically inept, despite being a fine manufacturer.”

Full article in Mobile News issue 485 (March 28, 2011).

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