Can Nokia Compete With Apple And Android?
Source: Elizabeth Woyke
Stephen Elop joined Nokia as CEO in September 2010 with a clear mission: Save the once world-beating mobile phone company from oblivion. The challenges are obvious: Nokia has been losing ground to Apple iPhones and to Google Android-based models from HTC, Samsung and others. Once a major player in the U.S., Nokia now has close to zero market share.
Before Nokia Elop spent almost three years running the Microsoft Business Division, the arm of the software colossus that sells Office. In February, in a decision by which the success or failure of his tenure at Nokia will be judged, Elop announced a plan to phase out the company’s Symbian operating system in smartphones, choosing instead to adopt Microsoft’s Windows Phone software. In recent weeks Nokia has provided a few peeks at the first fruits of the partnership with Microsoft―devices that will go a long way toward determining both Nokia’s fate and Microsoft’s ability to stay relevant in mobile phones.
The two companies are allied―Microsoft is paying Nokia billions of dollars to support its switchover to Windows Phone―but they aren’t quite in lockstep. In early November, for instance, Microsoft held a one-day event in Manhattan’s Herald Square to promote the latest version of Windows Phone. Lured by music, free food and a 55-foot replica of a Windows Phone device, the plaza bustled with people, who were handed flyers touting six new Windows Phone handsets and offering discounts at U.S. carriers. Too bad there weren’t any Nokia phones on display―they weren’t quite ready. Instead, the event focused on new Windows Phone handsets from Samsung and HTC.
As it happens, at that very moment Elop was elsewhere in Manhattan meeting with reporters. The 47-year-old Canadian, Nokia’s first non-Finnish CEO, was in town to talk up his plan to revitalize the company. At the top of his to-do list: leverage the debut of its Windows Phone devices to return Nokia to the U.S. market. The first models should arrive here early next year.
That’s progress, but Elop has a long road ahead. Though Nokia for now is still the world’s leading cellphonemaker, it has been ceding share for at least two years. Apple passed Nokia in smartphone shipments this spring. Samsung, which did the same, is poised to surpass Nokia in overall mobile phone sales in 2012. In three years Android has amassed double the global market share as Symbian, according to market researcher IDC.
As you might imagine, the market-share losses are hurting the bottom line. Nokia lost money in each of the last two quarters, including a staggering $661 million shortfall in the June quarter. Since peaking in 2007 annual revenue is down 17%, operating profit 74% and per-share earnings 73%.
In discussing the company’s situation with analysts on a conference call in April, Elop outlined how he plans to stabilize the company with a “three pillar” strategy.
The first pillar was the decision to adopt Windows Phone software for smartphones.
| }
|