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Earlier this week it said it may not make a profit in Q2. It’s usual 6-9% operating margins may be gone with the company saying Q2 could be a break-even quarter.
The shares have now fallen 75% in four years to around €4.50. In October 2007 they stood at $27.7. At €4.50 they are at a 13 year low.
Nonetheless Nokia still makes a quarter of the world’s phones.
Why is it all so gloomy? Well handset makers using Android, have taken 36% of the smartphone market, and appear to be making their handsets more profitably than Nokia can which forces Nokia to cut prices and kill its profits.
Nokia has done some weird stuff – like making its lawyer the CEO, positioning itself as a ‘software and services’ company rather than a handset maker, and calling in an outsider to sort itself out.
When your focus is on software and services it’s easy to neglect manufacturing efficiency and handset design.
There must have been people inside Nokia who knew what was going wrong – if only the top people had listened to them.
Now people are saying that the imported Microsoftie who is Nokia’s new CEO may walk if things don’t improve.
Nokia is banking on a Microsoft-Nokia phone due in Q4 to pull them out of the mire.
Anyone who thinks a handset designed by a Microsoft-Nokia committee is going to win against products like the iPhone or HTC Desire is dreaming.
Corporations are not like people in that you can’t bury them just because they are dead and stinking up the room. Unfortunately you have to wait until all the money is exhausted before it is legal to dispose of corporate remains.
For Nokia this means finding innovative ways to ****-up fast. Fortunately NOK’s management seems very adept at ****-ups and the MS import is also well groomed for his required tasks.
For me it is almost a corporate replay of DEC’s death spiral.
Thanks, Watcher, I couldn’t agree more. Unfortunately for Nokia, a year before the iPhone came out, Nokia promoted the company lawyer to be CEO and I assume the lack of any meaningful response to the iPhone was because he didn’t realise its implications for Nokia’s business model.
Thanks, Watcher, I couldn’t agree more. Unfortunately for Nokia, a year before the iPhone came out, Nokia promoted the company lawyer to be CEO and I assume the lack of any meaningful response to the iPhone was because he didn’t realise its implications for Nokia’s business model.
I think Nokia’s problems are due to them being unable to adjust their business model.
Nokia’s business model, which served them very well at the time, was to have a large range of mobile phones to cover all market price and functionallity points.
That worked when mobile phones were closed platforms.
Then came Apple with the iPhone, and a one phone fits all strategy.
Nokia never managed to adjust to this – they still have multiple phones, even though that limits the sales of each phone and causes problems for app development.
I can’t see Nokia coming back now – Apple and Google have the right products and right business model, and have the software developers behind them.
Thank you, cheese, I learnt a very great deal from that
“When your focus is on software and services it’s easy to neglect manufacturing efficiency and handset design”
iPhone is not about manufacturing efficiency. And handset design is all (!) about software. Yes, there is still the aspect of industrial design (so close to Steve’s heart), but the sweet smooth scrolls and all the so-cool animations are all software. Apps are software. App frameworks are software. App performance is software (think of the romantic relationship between Adobe and Apple). Software is what makes a phone smart..or stupid.
And software is where Nokia messed up. First they chose to look inward only (Symbian) while they allowed sundry / step-motherly attempts towards a Linux garage. Then they jumped into bed with Intel – a silicon company that barely knows how to spell software. And while the app revolution was on (think of millions of downloads etc), Nokia was debating whether a semaphore acquire takes more time on Linux or on Symbian.
Nokia knows a lot about hardware-centric phones and barely anything at all about the app economy. Imagine Intel doing it all alone – it would have been impossible without the guile of Bill Gates. Why would one ever consider Nokia can do it alone ? Am not saying they need Microsoft, but it clear they always needed a software major to succeed in a software-centric market. Motorola found their mojo back with Android. And HTC happily stumbled upon as well. Apple being Apple are not short of the software mojo. But poor old Nokia thought they can grow this mojo in their kitchen-garden. Well, they tried. You can’t accuse them of not trying, but you can expect them to succeed either.
I very much agree. I used Nokia phones for ten years, up to the smartphone days. The phones were great and did their job well and conveniently.
Then it was heartbreaking to see them not ‘get it’ with the advent of real smartphones like the iPhone and instead keep plodding away at their pace, not the industry’s. Not sympathy-inducing ‘heartbreaking’ but the pain of watching someone in a fantastic position of advantage throw it away so sluggishly and deliberately. It must have felt a lot worse to many of the Nokia employees who surely could see their company sailing towards the edge of the world, convinced there wasn’t one!
It reminded me of Palm, who also had the PDA market to themselves at the turn of the century and proceeded to do nothing innovative with it. That market was eventually sunk by smartphones anyway but nonetheless they had a lot of years of good trading ahead of them and they wasted their chance.