Nokia: A rudderless giant

Recent history is littered with technology giants that have lost their strategic direction and become near-invisible bit-part players, or have failed completely. IBM would be a contender for the first category, and Nortel a firm candidate for the latter.

The question of whether Nokia has the ability to reset its strategic course is now being asked by many commentators as this king of the handset jungle comes under attack from more agile competitors, and seems unable to respond.

The company, which is known for being a market follower as against leading it, seems intent now of launching an ‘iPhone killer' handset. Why is it only now that Nokia has realised that Apple and RIM are setting the agenda? Surely, Nokia should be looking for the next evolution, not attempting to mimic the iPhone or Blackberry at this late date? Its latest N97-mini has been labelled by analysts as being only a small step towards winning in today's smartphone market.

The company claims that global sales of the N97 have surpassed expectations, gaining more sales of the device at launch than did its predecessor the N95, and prompting the CEO, Olli-Pekka Kallasvuo, to state: We have a unique position in the smartphone market. Nokia is the undisputed leading player in the smartphones space," neglecting to add that the company has been losing market share in this smartphone segment for many quarters.

Regardless, at last week's Nokia World event in Germany, Kallasvuo attempted to calm an increasingly worried audience that the company was undergoing a transformation that would see Nokia emerge as a leader of integrated mobile Internet devices and services; and taking it into the highest growth markets before other challengers get a foot in the door (albeit that Apple and RIM are actively playing in this space and others attempting to do the same).

Key to this evolution is the success of Ovi. Nokia maintains that this initiative has been an enormous success, and yet fails to provide data to substantiate the claim.

Its Comes with Music service has been slated for its disappointing uptake in its first 10 markets, with its US launch now seemingly slipping into next year. Any perception that this service is a viable competitor to iTunes should be forgotten, despite "dramatic growth" assertions from Nokia, without any supporting data.

The same can be said of Ovi Store itself. The company will not release any download statistics, although its VP of devices did eventually admit that users had downloaded 10 million pieces of content and applications since Ovi Store was launched. Compare this to Apple which surpassed 100 million downloads in the first two months of the app store's existence and 1.5 billion downloads after a year.

In one refreshing display of modesty, Nokia has now admitted that the store had performance issues from launch and the UI is poor in comparison with its competitors.

To further damage confidence, the company has announced it will not be attending the world's biggest exhibition of mobile products and services--Mobile World Congress in Barcelona--next February, and would instead spend its marketing millions on other forms of marketing - especially direct marketing to users.

Regardless of its non-attendance at Barcelona, for a company that set so many benchmarks within the cellular industry Nokia now looks to be at a crossroads in terms of its future, and whether it can remain the giant player it has become.-Paul

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