Tuesday, September 4, 2012

Nokia and the Survival War

(For PCWorld Pakistan)

Things have gone from bad to worse for Nokia in recent times. Once a top leader in the mobile market, it lost its position to Samsung as world’s no.1 and then its shares keep falling…..18% in just one trading day. It recently announced a massive job cut around the world â€"10,000 job cuts in June in its handset workforce. Like Blackberry, the fortunes are not good for the Nokia as Francisco Jeromino of IDC research firm said: “If Nokia doesn’t grow by the end of this year, it will be in a very dangerous position. Many people are saying Microsoft will acquire Nokia.”

In addition to it, the worst news is recent price cuts in its new Lumia 900 phones. Nokia reduced price of its new device to half….just after a month of its launch, signaling the desperate measures by the company to keep its ship going. The Lumia series was seen as one of the last hopes by analysts to rescue Nokia, but now with its lack of demand, does it mean the end of Nokia?

The Nokia Decline

Till 2007, Nokia was the top selling name for mobile devices in the world. Even in 2010, it had little to worry about its position. In 2007, Nokia was not much affected with the introduction of Apple’s iPhone because the high price Apple products fail to challenge its market in the developing world. Nokia reigned supreme in most of the developing countries like Pakistan and India till 2010 unless Samsung brought its Android devices to these markets. Not just Android products compare fairly with Nokia in terms of cost; it beats its easily in services and features.

Considering the growing demand of Smartphones, Nokia introduced its Lumia series to preserve its market but little could change things for Nokia. The Android devices spread rapidly causing Nokia shares to fall further. More over, Apple also pushed Nokia behind in the market. Then came the HTC devices, and all simultaneously start slipping from Nokia.

However, Nokia Lumia series comes in collaboration with Microsoft offering windows to the Smartphone users. Having Microsoft on its back was a strong point unless Microsoft unveiled its Windows 8 phone in its developers’ conference this year. This was a blow for Nokia which recently introduced its new Smartphone with windows 7. Even Microsoft agreed to release an update for Nokia 7.8 devices; it wouldn’t have some of the features of Windows 8. In this ever competitive market of OSes, who would go for an older version of Smartphone when a new version is available?

Even in Pakistan, Samsung is now the most popular name in the Mobile market. The reduced price is Nokia’s effort to sell its handsets more….the demand and supply ratio for Nokia has interchanged. Even the Nokia head Stephen Elop is frustrated with the lack of sales as he said: “We have truly great products but aren’t getting the traction that we would prefer.”

It won’t be wrong to say that decline of Nokia doesn’t rest on its shoulders as nothing on part of Nokia goes wrong. It is simply because of emergence of more creative and innovative products like iPhones and Android devices that entice consumers more. The market is dominated by demands of Android and iOS devices and there is little demand of windows phone…..maybe it would change with the windows 8 phone. But the prospects are not bright for Nokia….it is expected to lose its €4.9bn reserves soon….as the things are going. Moreover, it’s not about generating profits for Nokia now but to generate revenues to keep its business going. Like Francois Jeremino, most of the analysts see a Microsoft acquisition of Nokia in near future, considering the Microsoft entering the Smartphone war.

The future is unpredictable especially in Smartphone industry; maybe Nokia will find a way to survive as Carolina Milanesi of the research firm Gartner believes:  ”There’s a big party saying Nokia is dead. I’m not one of those. I still think there is a lot of value in Nokia.”

With the recent victory of Apple over Samsung â€"Nokia’s potential rival â€" the tables could turn for the company. The verdict could usher a decline of Android devices and new life to Nokia Smartphone series. More interestingly, the new Nokia Lumia with windows 8 is expected to enter the market in October. So with all these news pouring in, maybe it will not take long enough to know the climax of ‘Nokia and the hard times’.

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