Nokia’s fresh focus on cost cutting may have staved off a potential take over by Facebook in the near term, Informa Telecoms & Media research analyst Julian Jest claims.
He believes plans by Nokia to cut another 10,000 staff as part of a commitment to slashing operating costs will buy the firm time to execute a turnaround in its devices and services business. Ironically, though, the vendor’s strong heritage of producing solid devices means Nokia remains a prime target for acquisition, Jest argues.
“Facebook, for example, have plenty of cash to invest as a result of their recent IPO. In regards to its business in the mobile space, Facebook has not had much success, and may be considering new strategies, including developing their own phone.”
Nokia yesterday detailed plans to lay off 10,000 staff at device facilities in Germany, Canada and Finland as part of a new strategy designed to return its device business to profitability. Jest’s colleague, principal analyst David McQueen, believes the vendor had little option but to focus on cost cutting, noting it remains heavily reliant on its device business for income generation.
However, McQueen believes Nokia must do more with its location services, pointing out the firm has seen little return on its $8.1 billion (€6.4 billion) acquisition of Navteq in 2005. “Nokia’s mapping offers a better experience than Google’s, plus new applications like Nokia Maps, Drive, Transport and City Lens should be at the forefront of its marketing.”
Analysts from rival firm Canalys claim Nokia’s cost cutting is a positive step, stating that Nokia “needs more support from Microsoft to compete in a tough market,” in a company Tweet.