Death of Nokia? Little Cuts – 1,2,3…

precarious nokia lumia in casual jeans pocket

Is Nokia’s Lumia Positioning Dangerously Casual? (Photo credit: twicepix)

Richard Lee’s earlier post provocatively took Nokia to task, questioning whether the Finland-based handset manufacturer had placed itself on a path to irrelevance with some recent business decisions, as well as its unscientfic, but no less dreaded, “lack of pizzazz”.  Recent news of some missteps by Nokia cause some people to question whether Nokia’s small errors would lead to the unfortunate scenario of “death by a thousand cuts”?

This week some misinformation on Nokia’s relationship with Microsoft led to a small crisis, but even incorrect news can have negative consequences, or can foreshadow events that might happen down the road.  A ZDNet article picked up on chatter surrounding statements Nokia CEO Stephen Elop made, which were negatively construed as a red flag for sales of the company’s newest smartphone, the Lumia.  The article underscored the misinformation that arises from taking statements out of context.  Nokia has in some ways bet their future hopes by maintaining an alliance with Microsoft and its Windows Phone platform, for better or worse.  After Microsoft’s acquisition of Skype, some interpreted that development as a bad omen for Nokia, based upon the claims that carriers would not support the Lumia (and other models) out of concerns that Skype support on Nokia devices would lead to cannibalization of the carriers’ wireless revenues.  A thorough and reasoned review of those claims would illustrate some of the faulty logic in that premise, but Nokia had suffered damage from another manufactured crisis.

However, the company endured another setback recently of its own making, when early shipments of the Lumia were found to have erratic behavior that caused the screen to have a purple hue.  While the potential financial and PR disaster of a hardware recall was avoided when the problem was revealed to be a software setting that was readily fixed with a software patch, the damage was (again) done.  See Link.  Although the hard costs of a recall appear to have been mitigated, there is now even more pressure on Nokia.  The competition of the marketplace is fierce enough, but now they must contend with a potential shareholder revolt as well.   Wired.com recently described the class-action  shareholder lawsuit as an almost pitiful example of “Kicking Nokia When It’s Down“, and the whole mess now throws yet another potential trap in Nokia’s path.

Let’s hope that the stumbles don’t lead to any permanent threats on the company’s viability.  It’s reasonable to expect that handsets become obsolete, but handset makers should not be looked upon as being so disposable.

nokia stock chart with Lumia and microsoft timelines

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PRIOR POST 

Death of Nokia?    By Richard Lee

nokia handset

A few weeks ago, I wrote a post of Death of Blackberry, and it caused some stir…  While many applauded the content of the post, there were others who accused me of being brainwashed by Apple.  For the record, neither SMBmatters nor PARR is an Apple exclusive shop, nor are we sponsored by them (although we’d love to be – are you listening Tim Cook?).  Our partners possess Blackberry, Windows MobileiPhone and various Android-powered devices.  Our laptop / desktop choices also vary – from Dell to Toshiba to Mac (I am writing this article on Lenovo Ideapad, formerly known as IBM Thinkpad).   With that full disclosure aside, I am sure to get a few more hate mails for this post, especially from my wife’s cousin who happens to be a senior legal counsel at Nokia…   So here it goes – short and sweet.

NEW YORK, NY - APRIL 09:  People walk past an ...

Nokia was my first cell phone back in ‘95 when AT&T Wireless gave me the phone for free after signing a 2-year contract.  During the early days of Nokia’s North America expansion, it seems like every major wireless carrier gave away its phones with a signed contract.  The first Nokias (pictured above, 5100 series I believe, I still have it somewhere as a keepsake) did just fine with the basics – calls and texts – as it quickly captured market share.  But the same strategy that helped to establish the handset maker as #1 in the world by volume is now getting the company in little bit of hot water with the investors.

Nokia recently reported that it lost 1.2BN in Q1 with the revenue dropping 29% vis-à-vis same quarter the previous year.  As it’s about to be eclipsed by Samsung as the #1 volume producer in the world, Nokia’s CEO Stephen Elop announced that he plans to “deeply” lower prices of its new line of Lumina smart phones.

Too little, too late…   Much like Blackberry, Nokia jumped late into smart phone segments with too many models that are not just derivatives of a single model, but also lack consumer appeal….

For me, Nokia was replaced by Blackberry – and if you read my last post, my Blackberry was replaced by iPhone.  As always is the case, we welcome feedback.  Better yet, please feel free to submit an article expressing your views to rlee@parrllc.com and we are happy to post on the SMBmatters site giving full credit to you as a guest contributor.

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2 Responses to Death of Nokia? Little Cuts – 1,2,3…

  1. I have a Lumia 900. Love the phone. If Nokia keeps making phone like this and the 800, they’ll be just fine.

    • Rico – Thanks for your feedback. Good to see that there are more of “us” out there using Windows Phone devices like the Lumia. I couldn’t comment on that model, since I’m still using my HTC HD7 (about 1-2 years into that product lifecycle), but I tell many people that it was tremendously improved by the WP7 Mango update. It was a bit of frustration initially when I actually lost some useful features when transitioning to WP7 from my very old HTC Wing. Since Mango, I can say that the OS is finally capable as a platform, and I look forward to the platform maturing further, and (crossing fingers) that a developer base can really take root to offer more applications.

      To all of you Windows Phone 7 users out there, be sure to take advantage of Microsoft’s free SkyDrive update from the base 7GB to 25GB currently going on. I found a link in an article, but it’s probably available to you when you next log on.

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