Nokia Corp. (NYSE: NOK) is not shipping enough of its Lumia smartphone to make a dent in the market or pull itself up to be more competitive. CEO Stephen Elop has said as much in a statement pre-announcing the company's first quarter results.
I also pointed out in a previous blog that the company faces major hurdles and may find itself chasing the tail of the opponents as Apple Inc. (Nasdaq: AAPL) iPhones and Google (Nasdaq: GOOG) Android devices accelerate market gains.
Nothing in the above is new. However, analysts are beginning to question Nokia's ability to regain market share and even doubt the strength of its alliance with Microsoft Corp. (Nasdaq: MSFT). That relationship was supposed to help Nokia better compete against Apple and Samsung while breathing new life into Windows smartphone operating system.
I found a recent report on Nokia by Ian Fogg, an analyst with market research firm IHS Inc. both educative and alarming. I have reproduced it below. Nokia's shareholders and other stakeholders (employees, suppliers, and customers) need to forcefully prod management for the kind of shakeup that may revive the company's fortune.
The concerns Fogg raised about Nokia are similar to the ones many identified in the case of Motorola Mobility Inc. (NYSE: MMI) years ago. The company failed to stem the losses and ended up being acquired by Internet search engine provider Google. Nokia may be able to turn itself around -- if it gets the correct treatment. The following paragraphs were excerpted from Fogg's analysis:
Nokia stands on the brink of failing with its smartphone strategy, again. Just over a year ago, in February 2011, Nokia chose to switch from Symbian to Windows Phone as its primary smartphone software. Now, Nokia's Lumia range have been on sale for four months, but Nokia is struggling to achieve sales traction. For every Lumia smartphone shipped in Q1, Nokia shipped five smartphones running the legacy Symbian OS that Nokia is winding down.
Nokia's smartphone revenues make for no better reading. Across all of Nokia's smartphones their gross margins were poor at just 16 percent. The problem for Nokia is that when poor phone shipment results combine with poor revenues at the same time there is little room to maneuver. Nokia has a little tactical room, but it will rapidly vanish unless the results improve in Q2 and Q3.
Nokia's poor results with Windows Phone are not due to Nokia's failures. The Lumia devices have attractive and differentiated industrial design, in a smartphone market where every handset maker is struggling to stand out. Nokia shipped the launch devices on time and at attractive prices. Nokia's problem is that Microsoft appears to have stood still. A year and a half after Windows Phone 7's debut, it has changed little. In effect, the gap in features between Windows Phone and Android or the iPhone has widened and not shrunk as Nokia needed it to.
This current second quarter is the critical time for Nokia and for Microsoft. The Lumia 900, Nokia's first Windows Phone flagship in the US has just gone on sale. The Lumia 900 has to succeed. With large US sales will come a large attractive market of consumers that will encourage the US-headquartered Internet companies to build the quality apps that Windows Phone so desperately needs. With US failure, Nokia will be locked out of the premium part of the US handset market, again, and Windows Phone will need a complete rethink.
When [Nokia] CEO Stephen Elop made the brave move to embrace Windows Phone, he said there was no plan B. Given the results to date, IHS Screen Digest believes that now is the time for Nokia to create a back up strategy to the current Windows Phone endeavor.
I am feeling sympathetic to Nokia over and over again. While being the pioneer of quality and cheap phones in the last 2 decades, I cant believe that within 3-4 years time it stands nowhere esp in the smartphone category. And failing in the smartphone category means failing in the future.
Meanwhile, with rocks thrown from all over the place, Nokia needs to believe in its ability to build user-friendly and quality phones and it will not be for the first time that it has to do it. It carries tons of experience which other manufacturers dont have, atleast that to Nokia's extent and this should be a big plus for Nokia to make a come back.
Also, its worth mentioning that Nokia has still not lost its reputation that much in many developing and under-developed economies, which are and have been big markets in terms of units sold and Nokia should make them their target market if it needs to capture some of smartphone market's ground.
"A year and a half after Windows Phone 7's debut, it has changed little. In effect, the gap in features between Windows Phone and Android or the iPhone has widened and not shrunk as Nokia needed it to".
I think Nokia will need to come up with a quick strategy here. It is unlikely Lumia 900 will bring Nokia the leverage anticipated at least not in the US by all accounts.
Nokia's LUMIA model is being advertised very agreesively in India market with a lot of TV commercials and it seems to have made some imapct here . Recently I saw my niece buying this phone and it looked really sleek , light weight compared to the Samsung Galaxy and elegant.
In India Nokia brand very popular because of a very sturdy and durable design of its phones and I am sure with agressive marketing here Nokia can regain its leadership position.
"Nokia can look for new and different market and will get eventual breakthrough in near future."
Easier said than done. This new and different market is called "emerging countries". But there Nokia can just sell its low-cost products. Obviousely, that cannot help the company compete with its rivals.
It seems that the end is coming for the Finnish company. When you have little tactical room with no apparent backup strategy, you have certainly reached a critical point in your business.
"Nokia stands on the brink of failing with its smartphone strategy, again." Despitethelackinshipment,IbelieveNokiaisinthegoodpathrightnow.IhavechangedmymindsinceIheardexcellentreviewsaboutthenewwindows7fortablets(somethingsimilarwillseeonthemobilesalso).
That would probably dependent on how consumers see attractiveness in the phone. In US and Europe Apple has the total control, where in Asia and Africa market portion has been slashed into pieces to scramble for --- there competitive seem far dictative by low income earners unlike in US and Europe.
@Nemos: Nokia's success with Windows is still a speculation and no concrete results are out yet which can indicate how profitable the move was for Nokia. I still think Nokia made a very premature decision by signing up for a Windows-based tablet without properly assessing the success with Windows-based smartphones.
By moving to the core of the industry and offerings services that keep the system humming, a group within the electronics market has rendered irrelevant the question of ownership and control of the supply chain.
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Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
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