Nokia in doldrums


Mobile phone maker Nokia Corp posted a loss of 368mil euro in the second quarter and for the first time in history was overtaken by Apple Inc's iPhone in smartphone shipments. Nokia posted a profit of 227mil euro in the same period last year and overall the revenue fell 7% to 9.3bil euro from 10bil euro last year.Nokia shipped 88.5 million mobile devices in April through June, down from 111 million a year ago and 108.5 million in the previous quarter. Its smartphone volumes fell to 16.7 million units, which means Nokia is no longer No 1 in the smartphone sector.According to statistics I have been comparing this morning Apple sold more than 20 million iPhones in the same quarter, lifting its net income to a stronger-than-expected US$7.31billion.In his address, Nokia CEO Stephen Elop said the challenges they are facing during company strategic transformation manifested in a greater than expected way during the quarter. However, even within the quarter, Elop believe Nokia actions to mitigate the impact of these challenges have started to have a positive impact on the underlying health of our business. However,as a shareholder I was impressed to see Nokia's share was up 3% at 4.21 euro on the Helsinki Stock Exchange immediately after the report.

Nokia said it was accelerating its cost-cutting plan to exceed the previously targeted savings of 1bil euro in 2013.Nokia said the reductions would be achieved through cuts in staff and outsourced professionals, facility costs and various improvements in efficiencies. This trend of losing market share is worrying me because Samsung of South Korea could also surpass Nokia in smartphones when it releases its second-quarter earnings next week.The Espoo based company is hoping to regain momentum through a linkup with Microsoft, whose Windows Phone operating system will replace Nokia's Symbian software.There is no objection that Symbian has been losing ground to Google's popular Android platform. I still find it hard to understand as a developer the decision to kill Symbian and go exclusive with WP7 because it is absolutely killing Nokia market share like in Asia and Africa. One of the other big mistake was Nokia not realizing that they cannot make decent software and would have embraced the switch much earlier.This assessment of Elop is so rose-tinted that one could almost smell the petals when he claimed they are making better than expected progress towards their strategic goals and that he is optimistic about the Windows Phone potential in the long term.Frankly speaking,the real picture is entirely different as I can see it.

I have off late come to think Elop is Microsoft’s undercover agent who has an agenda to wreck Nokia from within for the benefit of Microsoft.Another problem that has engulfed Nokia is the quality of their handsets which declined significantly over the last few years.In late 90s and early 2000,Nokia phones used to be robust enough to withstand being carried in the pocket and even Nokia N900 like many others are not. In my opinion,Nokia should compete on quality and specifications.The company should overhaul the design and marketing strategies which has failed miserably especially in Africa and Asia.Nokia should produce something that can compete with an iPhone but as a developer it should be without Apple's restrictive philosophy. With such a plan Nokia will sell a smartphone that works the way people want it to and not vice versa as has been the case with it’s smartphones. Nokia should also get it’s internal and external developers working on Nokia applications and services. I just want to remind those who thinks am against Elop that while I was still in school Siemens made great phones and even better than Motorola as well as Nokia and still have one that works after a decade but as we all know the phone division has folded. If the same is repeated Nokia will be history in a few years time and I stand to be challenged five years from now. No offense but Nokia is now looking down the barrel.

Comments

  1. MacDecember 14, 2011 at 3:18 PM

    Nokia need to make new trendy phones and come up with unique features for a phone.


    Small business outsourcing

    ReplyDelete

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