Why Nokia Is Toast 475
CWmike writes "It's hard to remember now, but there was a time when Finland was at the center of the cell phone universe. No more. Nokia is being killed by complexity. Along comes Microsoft with Windows Phone 7, delivering more complexity. My view is that Microsoft doesn't matter, writes Mike Elgan. Although Windows Phone 7 is a way better operating system than Symbian, Nokia's problem isn't Symbian, and the solution isn't Windows Phone 7. Nokia's problem is that it follows the losing strategies of the other losers in the market, and rejects the only two known winning strategies. There are way too many Nokia phones. This causes either choice paralysis, sending buyers screaming to Apple for relief, or buyer's remorse. Nokia should take the advice Steve Jobs gave to Nike CEO Mark Parker: 'Just get rid of the crappy stuff and focus on the good stuff.'" And maybe Nokia isn't toast at all:
reader high_rolla points out an interesting bit of speculation that the Nokia-Microsoft pact is part of a grand plan "to become the exclusive manufacturer of hardware for MS phones and tablets."
These articles say the same thing. (Score:4, Informative)
Both the "Nokia is dead" and "Nokia will thrive" articles say the same thing. They only differ in whether or not the authors think Nokia will follow the strategy.
The first article says that Nokia should ditch everything and release 1 really nice WP7 phone. This article says its their only chance, but they won't do it because it is against everything Nokia has ever stood for.
The second article says they will become the exclusive WP7 shop. Maybe they'll have more than 1 phone, but they'll be the only WP7 game in town, and they'll make really nice integrated phones that provide a slick experience (ala Apple). This is exactly what the first article says they should do, article #2 just says he thinks they will be smart enough to take this route.
Re:what about ericcson (Score:4, Informative)
Comment removed (Score:4, Informative)
Re:This is way over the top (Score:2, Informative)
I'd be shocked if Nokia were "toast". They're still one of the biggest handset makers in the world, and their name recognition alone is worth billions in the market.
Being the biggest handset maker means nothing if you can't make money from your customers. As shown here [gigaom.com], Nokia's share of profit in the mobile arena has dropped from 63% in 2007 to 22% in 2010. That is a huge drop in profit when compared to other companies. Basically, Nokia is selling tons of cheap phones but not many expensive ones where all the profits lie. Moreover, companies in China and India are gearing up to move into the cheap phones market also. This means that Nokia would be squeeze from both ends. At the high end by Apple and Android and the low end by the Indian and Chinese phone makes. Nokia's future is looking rather bleak.
Re:This is way over the top (Score:5, Informative)
It's been called the Paradox of Choice [ted.com] (TED video link). The problem is that when you are spending a large amount of money (such as on a cell phone), the costs of getting it wrong can be large (since, unlike a box of cookies, replacement isn't cheap). Having to choose between dozens of nearly identical models can be confusing or at least taxing.
Steve Jobs gets this. When he came back to Apple he got rid of the dozens of similar products that were just slightly different (Performa 600, 610, 700, 720, 720CD, 730AV, 590HSBCPDBA, 617BBQFTW) and replaced them all with a handful of models. Things may not have matched your exact criteria as closely, but it was much easier to find something close to your criteria than it was before. Car companies can be quite guilty of this too. Mercedes sells 5 sedans/coupes, each in 4 or 5 trim levels. After that you get to options, and other companies are the same. So if you want buy a car, and price isn't a big object, and you want to look at Mercedes, BMW, Volvo, and Audio you could be looking at comparing 80-100 cars just to get a sedan, and thats without the individual option packages.
There was a great picture on a gadget site a year or two ago. It was a picture of Sony's lineup of earbuds. Between different styles, ear loops, colors, etc there were over 100 combinations of products they were selling. There were just too many choices.
This has always been a bit of a problem for Sony. Right now, their site lists 13 point and shoot cameras, 23 handycam camcorders, and 11 clock radios. They have at least seven different 46" TVs.
Do you know why Flip video succeeded? They made a simple little video camera, but they made ONE. Right now they have 3. One with a touch strip, one with HD, and a smaller one with HD and a rechargeable battery. Easy to pick. With sony, you need to decide form factor, 3D, resolution, pop-out screen....
Re:This is way over the top (Score:4, Informative)
"Indeed, look at top handsets in top20 countries of this report [opera.com]. Just look at them; beyond some probably fairly atypical (but vocal and visible) place. Curious way of being "toast"... "
This data is wildly skewed. It's take from Opera mini/mobile use. For that reason alone you are unlikely to see phones with a good browsers (iphone/android) showing up on the list as folks with those phones simply won't be using Opera.
Re:In that case, MS has failed beyond belief (Score:4, Informative)
Nokia could have done other things: (1)Push Meego. (2)Push Symbian. (3)Adopt Android. (4)Develop their own OS.
(1) Tried, it's not ready enough yet. (2) That platform is a zombie walking around asking for more brains... I mean, R&D budget millions to gobble. (3) Join the race to the bottom, compete in services with Google who happen to control your platform. Feel the fragmentation. (4) What? Create another R&D sinkhole, while MeeGo is still around? Just what Nokia needs now.
True, but making a deal like this with Microsoft isn't a viable No. 5, when you get right down to it. Pact with the Devil and all that. And the GP is correct when he says, "like most companies, MS is only really interested in how the Nokia deal serves them." And that's okay ... the question is, is Nokia's leadership interested in how the deal serves Nokia, or just in how it serves Nokia's leadership? Something smells here, but I can't put my finger on it.