Remember when Nokia was top dog?
I can remember the days when solid corporations could withstand economic up and downs for decades going from strength to strength. This was and era when shareholders considered ‘blue chips’ a solid long term investment – and they usually were. However, times have changed.
Take the case of Nokia, for example. Top of the mobile phone tree for a long time, now staving off constant rumors of its demise and takeover by any number of suitors.
So much emphasis today is on the CEO of big corporations and Nokia opted to bring in Microsoft stalwart, Stephen Elop, in a bid to revitalize and refocus the company’s direction, and what a direction he took!
It was a bold, yet unsurprising move when he jumped onto the Microsoft bandwagon. By taking the WP7 route, Elop was able to ‘legitimately’ eliminate the massive cost centers Nokia was funding in developing platforms like Symbian that were being clearly outpaced by Apple's iOS and Google’s Android.
Yet, despite doubts about the relatively new and slow-starting Microsoft platform, he gambled the whole company’s future on it, disregarding the apparent popularity of Android. His argument was that he didn’t want Nokia to be a follower, or ‘me too’ company.
Presumably, he felt more comfortable with the devil he knew, especially one as generous as Microsoft that made the decision more palatable with a reported $1 billion (€684 million) ‘encouragement’ advance against future license fees. It must also have looked good to the ultra-conservative Nokia board that went along with it.
What a great show Elop and his old boss, Steve Ballmer, put on at this year’s Mobile World Congress in February. They could have been finalists in that most popular of TV series, ‘Dancing With the Stars.’ Sadly, like Microsoft itself, Nokia may have been a little too early in making the big announcement.
Placating investors and board members with big promises is one thing, but delivering them quickly appears to be another. Like WP7, the first Microsoft powered Nokia phones will not make an appearance until at least ten months after being announced. That is an eternity in the mobile phone business.
Unfortunately for Elop, all that hoo-ha could not disguise the fact that Nokia sales were dropping at an alarming rate, not just in the smartphone sector that the Microsoft alliance would be addressing, but in its core basic and feature phone markets as well. That was explained away as being caused by intense competition from low cost handset makers in Asia, and particularly China.
Wow, what appears to have been a surprise to Nokia was common knowledge to almost every other manufacturer, many who produce their handsets in greater China as well.
So, it should be no surprise that we are hearing rumors that Nokia is a takeover target by somebody. First, and almost believable, was the Microsoft potential purchase. If Nokia was to falter at this stage it would most certainly be a great embarrassment to Microsoft and with its massive fund chest available for international takeovers, a buyout could be easily achieved.
The latest, and least likely, was that Samsung was showing interest. What value Samsung would see in acquiring Nokia is a complete mystery. Samsung, like LG and HTC, once staunch supporters of earlier Microsoft mobile operating systems, have all experienced success with Android. They are challenging Nokia in every market ad have well-established distribution chains of their own. What possible benefit would they find in Nokia, apart from the brand, and even that is starting to lose its shine?
Taking into account that Nokia’s woes are being exacerbated by a reduction in its credit ratings and a subsequent increase in the cost of insuring debt, the number of potential suitors will be limited.
It may be too early to report the demise of this once great company, but the signs are really not looking that good and no amount of marketing hype and PR is going to change things in the short term.
What, for years, was the bastion of mobile handset technology and brilliant sales achievement is now looking decidedly ordinary and well past its prime. Times have certainly changed.