Monday, 18 June 2012

Nokia Had To Choose Windows Phone, Can They Make The Strategy Work?






This week’s news from Nokia, including corporate restructuring, lowered income projections, and losses for Q2 2012 expected to be in the hundreds of millions, would not have made comfortable reading for the Finnish company. Switching to a new mobile operating system was always going to cause a lot of necessary financial pain, the question for CEO Stephen Elop and the Nokia Board is simple. Will they be able to follow their chosen strategy, and will Windows Phone deliver for them?

It’s important to remember just how bad the market perceptions of Nokia were on February 10th 2011, the day before Stephen Elop announced the new direction for the Finnish company. Ewan McLeod summed it up succulently:

    What is clear is that something big has to happen. When even the credit rating agencies start sabre rattling, it’s time for a significant change in strategy.

    As far as many are concerned, Nokia is well past the ‘written off’ stage and wading through the swamp of irrelevance as far as many are concerned. The N97 didn’t help. The N8 (despite selling pretty well) solidified the market’s perspective: Change, please.

    The fact the company is still shipping hundreds of millions of devices means next to nothing in the eyes of the Western tech/media/marketplace. It would have been fine if Nokia announced it was only focusing on the developing markets by only producing feature phones. The market would have left Nokia alone.  Nokia’s inability to at least half-delight the tech media/market with smart, exciting and fun devices and services, especially in the high end, has made life very, very difficult for them.

The choice was simple. Android or Windows Phone. Whichever would give Nokia the most benefit in the medium to long term would be the sensible choice.

Android would have allowed Nokia to turn around a new handset in short order, but locked them into an ecosystem where they would struggle to be a leader – they would be subservient to Google in terms of the core software, and both Samsung and HTC were already established hardware players who understood what was required to make the grade with an Android handset.

Microsoft’s newer Windows Phone platform would allow Nokia to significantly influence the direction of the platform. Nokia would be the biggest fish in the pond, although they would have a huge responsibility to grow that pond in conjunction with the Redmond based company.

Nokia went for the latter, and I still agree with that decision. It gave the Finnish company a far better shot at being a distinctive smartphone player in the second decade of the twenty first century, rather than yet another company churning out Android devices.

What has pulled Nokia down is not the choice of strategy, but how the changeover from Symbian to Windows Phone has been implemented. The ‘Burning Platform’ memo committed Nokia to winding down Symbian and gave a clear message that the future of Nokia was Windows Phone. Nokia’s expectation of Symbian sales slowly descending as Windows Phone took over was measured in years… the market reaction was measured in months.

Nokia have to live with the mistakes made in the transition and must remain committed to their strategy. The parts of the company that are surplus to requirement are being stripped away; the Asha handset range (powered by Nokia’s Series 40 OS) continues to deliver solid sales and volume; and the next major step in the strategy will happen in a few months time… the reveal of Windows 8 and whatever handset Nokia have designed around the next version of the mobile OS.

Nokia is far from finished playing out the Windows Phone strategy. Whatever you do, don’t count them out of the match yet.






Raj Rajput  [  MBA ] 
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