I was part of the Nokia Bloggers program for several years, and I am unsurprised that Nokia has shed 75 percent of its market value in the past 4 years. I was in Barcelona at the World Mobile Congress in ‘08 when Olli-Pekka Kallasvuo gave a lackluster talk about Nokia’s plans, and his contempt for the iPhone was evident. I knew then they were doomed.

Peter Burrowes, Stephen Elop’s Nokia Adventure*

Nokia’s initial reaction to the iPhone is the most embarrassing example of what went wrong. When Steve Jobs unveiled the device in January 2007, “it was widely disregarded,” says former manager Dave Grannan, who now runs Burlington (Mass.)-based voice recognition company Vlingo. “The attitude was that we’d tried touchscreens before, and people didn’t like them.” It had no multimedia messaging (MMS) capability. The reception and sound quality were poor. It couldn’t be used with one hand. There was nothing to fear.

As iPhone sales took off, Nokia remained strangely detached, say a dozen current and former executives. The company didn’t sit still, exactly. It opened its own app store, Ovi—but never put marketing muscle behind it. With no runaway hit like the iPhone, app developers largely ignored it. When Elop euthanized the Ovi brand name on May 16, it had 50,000 apps; Apple had 500,000. “It was an ignorant complacency, not an arrogant complacency,” says Nokia human resources head Juha Akras.

Whichever variety, complacency was rampant, and it left Nokia particularly vulnerable to Android. While Apple cleaned up the high end of the market, Google flooded the low and middle by giving away its sophisticated software to all of Nokia’s handset rivals. Nokia executives seemed content trumpeting their success selling marginally profitable low-end phones in Asia, until Android’s smartphone share flew from 4 percent to 23 percent in 2010. Says Elop: “It’s often hard to see a challenger when you’re dominant, but what happened with Android was faster than anything we’ve ever seen.”

This is going to be the biggest train wreck ever. Compares with Google fumbling the ball on social, but that hasn’t actually driven Google out of business, which is what Kallasvuo and Elop have done.

A year ago I wrote this about Nokia:

Stowe Boyd, Nokia: The General Motors Of Phones?

They are the leading producer of cell phones in the world, but at one point GM was the largest producer of automobiles. Like GM, they are confronted with a span and scope issue: should they pour their time and money into a few niches and build highly differentiated products? Or should they continue to have many product lines, leveraging production scale and common platform components?

GM is going to be down to Cadillac, Chevrolet, and GMC Trucks before too long, selling off or closing down a long list of brands.

Could Nokia specialize at the high end, like the very best camera phones? (I talked to them about a line with interchangeable high quality lenses, but they haven’t gone there.) There is certainly a growth area there, and they have invested heavily in services for social sharing of images and videos.

Or should they focus on the low-end, and become the Toyota or Honda?

Or develop breakthroughs in modular phones, where people can roll their own, upgrading different elements of the phone independently of the others?

At any rate, I think they need to pick and focus, or they will find their future defined by the choices that others make.

2 June 2011 7 Permalink