1 post • joined 20 Sep 2010
Don't Blame the Messenger
This article is very interesting, but I disagree with several of its premises.
Nokia’s current problems do not “lie in listening to the market too hard”, in fact I would suggest they may lie in not listening hard enough. Because they didn’t listen very well, Nokia misallocated billions of R&D spend over the past few years (spend which by the way dwarfed that of Apple and Google in their mobile divisions) and allowed iPhone, and now Android, operating systems to emerge to capture not only the fancy of technologists, mobile operators, and investors, but of actual consumers of mobile phones.
Moreover, Nokia didn’t “run off to get” a new CEO after being told to do so by the investment community. Nokia in fact has heard suggestions from investors that they should become a little less Finnish for quite some time now. The signal that likely tipped the scales against Mr. Kallasvuo was from former customers. Customers who replaced their Nokia handsets with those of other vendors, particularly at the high end. Consequently, Nokia’s market share, particularly in “smart” devices, plummeted drastically, and in short order.
Also, point of fact, the appointment of Elop did not “boost Nokia’s share price”. The stock indeed tried to rally sharply on the announcement, but closed the day up less than a percent; and by the end of last week was down 1.5% since the appointment was made. Mr. Market isn’t interested in superficial pandering, he is interested in results.
I agree that the debate about whether or not Nokia requires a significant US presence is arguable from either side. However, I would suggest that Motorola’s lack of penetration in Europe is not a blueprint for potential long-term global success at Nokia. Believe you me, Nokia doesn’t want to end up like Motorola. In just three years since Motorola stopped selling the original RAZR – when Motorola’s was the number two handset vendor globally – they have practically fallen off the map. Motorola should be no one’s poster child.
Nokia’s head has been in the sand during this period too, and they ceded share in “smartphones” in dramatic fashion. The concern today, of course, as that the “low-end” phones of today (where Nokia still has significant share) will become “smart” devices tomorrow, and thus Nokia will suffer a fate similar to Motorola’s.
Contrary to the title of this article, Elop must listen to the market very carefully, and learn from it. Otherwise the potential consumers of Nokia’s phones or investors in their shares will stay way.
He must swiftly and correctly determine which platforms will attract developers (and thus, the US presence might be a little more important than suggested in this article). Apple and Android are clearly attracting attention from the development community, and thus iPhone and Android apps are better than those on Nokia phones. That’s simple mathematics. Meanwhile, Microsoft isn’t going to sit idly by either, and the early line on Microsoft’s latest offering is that it is even easier to develop for than iPhone (and maybe Android too). So, there is competition for Nokia from Android, iPhone, Windows Phone 7, and don’t forget Blackberry. Does anyone really think that developers will write code for five different mobile operating systems? If not, where will that leave Nokia? Perhaps Nokia’s customers and investors have already figured that one out.
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