Nokia's new strategy fails to impress

The CEO of Nokia has attempted to calm shareholders' worries by claiming the company is fundamentally changing its business model to transform both the company and the industry. While Olli-Pekka Kallasvuo made grand assertions the company would be successful by offering consumers "irresistible solutions that improve their lives," the debt ratings agency Moody's remained unimpressed and revised its long term outlook. The agency even said Nokia might not be able to keep its A1 credit rating.

Speaking at Nokia's annual investor meeting, Kallasvuo stated the company would continue to compete with existing cell phone vendors and new entrants from the PC and internet industries. "The focus would now be on integrated services in five key areas--maps, music, messaging, media and games." He claimed combining these services with high quality devices will increase customer retention and add value, whether through the operator channel or less traditional routes to market. "Our estimated consumer retention rate of around 55 per cent is almost twice the rate of our global competitors," he said, saying retention had increased every quarter since the start of 2007.

Interestingly, Kallasvuo pointed to the recently launched 5800 Xpress Music touchscreen musicphone and its integrated Comes With Music (CWM) service as the first great example of the integrated device/web service model that he, along with Apple, probably spotted first in the mobile world.

While the 5800 is reported to have sold over three million units since being launched in November 2008, rumours are beginning to surface that consumers are less than enthusiastic about the CWM aspect. The BBC has stated that CWM has only attracted 23,000 subscribers in the UK and many analysts believe the value proposition has been poorly communicated so far, despite heavy media promotion.

However, mention was made of the recently acquired Symbian OS with Kallasvuo saying it would be used to expand smartphone features into the mid-range, and into new product categories. "We believe that mobile computing should not be limited only to expensive, high-end devices. Expanding Symbian into lower price points is the right thing to do. We see this as a tremendous opportunity to increase efficiency, to get more scale for Symbian, and gain market share."

For more on this story:
Cellular News and ReThink Wireless

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