Tuesday, 24 April 2012

Where Did Nokia Go Wrong?

Steve Jobs shows off the white iPhone 4 at the...
Steve Jobs shows off the white iPhone 4 at the 2010 Worldwide Developers Conference (Photo credit: Wikipedia)
Ratings agency Fitch has just this minute cut Nokia's stock to junk bond status, reports Reuters. Five years ago Nokia was the undisputed world market leader in mobile handsets. Today it's routinely referred to as a 'struggling Finnish handset maker'.

Where did it all go wrong? How on earth can you take global market dominance, a near-faultless track record of innovation and product excellence and a loyal base of customers around the world and simply blow it?

The answer is Steve Jobs and a small issue of perspective.

Jobs saw the mobile as a computer. Nokia saw it as a telephone. Nokia was working on making your phone smarter, Jobs was putting a content access device in your hands. Even Nokia's early N series phones tacked a keyboard onto a phone, a bit like a mobile One Per Desk rather than using the powerful combination of smart access device, applications and content wrapped up into a flawless user experience.

For me, the rot truly set in when Nokia first started shipping 'smart phones' that could link to its Ovi store and download apps and stuff. The store was pretty much empty for a very long time indeed. Nokia seemed to miss the whole idea that the mobile was to a handset manufacturer what a SIM is to a mobile operator - a cash cow. Ovi could have been an open platform for application developers and content owners. It should have been.

On June 29th 2007, Jobs took to the stage in his turtleneck sweater and launched the iPhone. Nokia's executives must still have been laughing when, in September, Apple sold its millionth iPhone. They must still have been laughing when Time named it Invention of the Year in 2007.

Apple's iTunes and Jobs' app-centric approach created a revolution. Nokia, in common with mobile operators around the world, persisted in a circuit-switched mentality. When Google joined in with Android, the writing was on the wall. They started fitting the brass handles when Elop announced Nokia was ditching Symbian a year before it was ready to replace the operating system with the Great White Hope - Microsoft's Windows, the operating system that never 'got' mobile. Remember Windows CE anyone?

Today, Apple and Samsung between them account for something like 50% of the global smartphone market. And Nokia is a junk bond. Its first Windows based 'phone, the Lumia, has a name that means prostitute in Spanish.

Am I writing Nokia's obituary too early?
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kenna said...

This may be true for Nokia as a mobile phone maker, but Nokia manufactures all kinds of telecommunications equipment which the Apple and the other mobile phones use (a good no. of cell sites in the UAE are Nokia, the calls and messages are routed and connected by Nokia equipment as well). Neither Apple, nor Samsung nor HTC has that. Alcatel, Ericsson and Nokia have. And not everyone can afford and needs a mobile slash computer. There are still those who prefer a mobile phone that functions as a phone rather than a computer (smart phone). So no, this is not Nokia's obituary, but rather, this means decline in earnings and job loss.
I think RIM's demise will be sooner than Nokia.

Luke said...

I wanted to say RIM is heading the same way too. The only asset of any value RIM has is the messenger service. If I wert CEO, I would quickly make it available on every platform before Whatsapp wipes them completely.

PS I have 2 phones, one of which is a Nokia, which cost me €20 and goes for 3 weeks on one charge.

Stephen King said...

Read this a couple of days ago and wanted to respond - congrats on the new book btw, hope it does really well for you.

Five years ago Nokia was the undisputed world market leader in mobile handsets. Today it's routinely referred to as a 'struggling Finnish handset maker'.

Where did it all go wrong?

--- remarkably around six years ago I moved from MS&L and stopped working on their account... maybe, just maybe...

Or... you could be right and it was Steve Jobs 'and a small issue of perspective.'

I think you are right here a bit, but it's more on the user interface than anything else.

Nokia was the dominant user interface because it hit the youth market in the 1990s when we were all beginning to use mobiles. We became Generation Nokia and no-could assail them.

I would argue, even Apple wouldn't have been able to come close, if it hadn't been for the Ipod.

Erm... yes I know, Ipod no SIM, no phone... not much more than a fancy MP3 player...

But actually it changed the UI and put human-friendly technology into people's hands and made them accustomed to using Apple products.

Once this happened, Nokia was dead.

It didn't matter how much they copied or reverse engineered, they would always be second to Apple's UI.

Nokia also had a 'mobiles-as-computers' vision and launched many devices N90, N91 Nthis Nthat, E-Something or other... they had very very powerful phones from even 2000 - remember the Communicator?

The problem was getting mass adoption of these devices and there Nokia got its market wrong. It's management got old, and perhaps suffered the Peter Pan syndrome.

Nokia can still turn it round if they go back to challenging Apple for the youth segment.

Junk - for now, but from the ashes doth the phoenix fly!

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