Posted in Marketing & Strategy Articles, Total Reads: 4440
, Published on 10 February 2011
Nokia - the market leader in the mobile phones industry in the first decade of the millenium. New phones, celebrity associations, extensive branding and a supreme control over the mobile phone market till now. But is the Nokia empire crumbling with competition?
This article has been highly inspired from the memo written by Nokia’s CEO Stephen Elop to its employee regarding its current state. The CEO has compared the present day Nokia to a burning platform.
Nokia has suffered 21% drop in the profits for the fourth quarter of 2010.
In the memo, written to employees, Elop has compared Nokia to a burning platform relating it to a story in which a man finds his wooden platform (loaded with oil barrels) on fire. He jumps into the icy water of the North Sea below and gets saved.
Why Nokia is dropping in profits and market share? Why a CEO has to write such a memo? Why Nokia is not happy even after being the number 1 in the mobile phone market?
Nokia is number 1 as of now but this lead is fast slipping from their grip. There are known reasons for it but Nokia is not able to do anything about it. Or are they not trying enough?
Reasons are both external and internal.
1) iPhone : The rise of iPhone actually hit the first blow to Nokia in the high end market. Now iPhone is everywhere. Not only the phone but the apps and software revolving the iPhone world are a cause of concern. Nokia has nothing to match it.
2) Android: From the past two years, a new OS by Google has come up known as Android. It has taken the mobile world by storm. Android not only has challenged Nokia but also Apple is facing the heat.
3) Symbian OS : The internal reason is that Nokia is not letting go of its old Symbian Operating System which is not able to keep pace with the new age devices.
Most of the people would say that iphones and the androids all play in the high end market, but Nokia is still the unchallenged leader in the economy, lower end devices. But this assumption might not be true.
In the memo, Elop talks about the Chinese phone manufacturers who can make a new phone in the time Nokia executives are busy polishing their PowerPoint Presentations.
In India also, the market is undergoing change. There are countless home grown companies which are challenging Nokia in the market in the economy, low end device segment. There is micromax, lemon, lava, karbonn and many more who offer feature loaded phones and half the prices. The phones are sturdy, work well and are economical. So the lower segment user is switching quickly to these brands and overlooking Nokia.
When it comes to high end segment, Apple and Android are taking the pie. Nokia is still stuck to its Symbian which is now totally obsolete. Nokia had announced a new OS sometime called MeeGo in partnership with Intel. It was positioned as the next big thing after iOS and Android but the things didn’t turn the way Nokia expected them to be. MeeGo not only got delayed but also rumors have it that Nokia has scrapped the first MeeGo phone.
One more battlefront is the App World. Apple had started this trend with the Apple iStore. Nokia has this app concept from 2005 but it never really picked off like it has today. Nokia apps were mainly java apps. Now Android with its android market is taking on the market.
Nokia tried to strike back with Ovi App Store but still like Nokia its going down and never picked up, Ovi doesn’t attract the developers also.
One more cause of concern for Nokia is the rise of android in lower end market. There are a lot of phones in the market which are not as costly but support Android OS. These phones are selling like hot cakes for the craze of Android.
The memo does not mention Blackberry which is also entering the mid segment with phones for general audience and just not the office guys in suits.
So Nokia is really on a burning platform but what are they doing about it ?
What can they do?
1)Nokia can develop some new OS which is as fresh and good as android or iOS.
2)Nokia can tie up with Android as android is free and open source.
3)Nokia can revive MeeGo as it’s a good OS and showed promise.
In the end of the memo, Elop talks about a new strategy that will come out on February 11, 2011. Experts say the strategy is to become Microsoft's ally and start manufacturing phones that will have Microsoft's windows 7 mobile platform. This could be a win-win situation for both Nokia and Microsoft.
This memo seems to be a start point of something good which is about to happen.
And hopefully a wave of hope will revive Nokia as the brand which helps in ' Connecting People'.
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