Nokia's management screwed up royally on several fronts. But it's not too late to save the company.
NEW YORK–Is it too late to save Nokia?
It isn't. Call me naive or in denial, but I’m not prepared to accept a “new normal,” where there exist only two big design sockets–Samsung’s and Apple’s–for the smartphone market.
It’s just too painful to watch these two handset giants–through their dominance in the only market with meaningful growth for semiconductors–shut out practically every chip company who designs modems and apps processors, except for Qualcomm and Samsung.
I suspect I’m not alone in this feeling.
Don’t get me wrong. I’m not here calling for a Nokia bailout. Nokia’s where it is today through Nokia’s own doing.
Looking back, Nokia’s management screwed up royally on three fronts: 1) clinging to Symbian for too long; 2) losing the battle in China; and 3) not choosing Android as an operating system for the company's smartphones.
Many pundits pin Nokia’s failure on the company having been too slow to accept the emergence of smartphones. They believe Nokia’s lack of presence in smartphones has triggered its downfall.
Nokia’s grip on the feature phone market had begun sliding way before smartphones became mainstream. While spending a lot of engineering resources perfecting a variety of feature phones for the global market, Nokia unfortunately missed the cues for two key opportunities.
One was the advent of the dual SIM mobile phone, designed to hold two SIM cards. It took Nokia almost a decade before fully embracing this trend. Dual-SIM operation essentially enables mobile phone users to use two services without carrying two phones. Using multiple SIM cards allows a user to take advantage of different pricing plans for calls and text messages to certain destinations, as well as mobile data usage.
Nokia’s close relationship with mobile carriers, however, blurred Nokia’s vision. It stayed off the dual SIM bandwagon out of misplaced loyalty to large operators, who preferred customers to use one network exclusively.
“Symbian in China” was another missed opportunity for Nokia. Before Android took the world by storm, there was reportedly a groundswell of demand for Symbian-based phones among handset vendors in China. But the decision by Symbian (and by Nokia) to make Symbian an open source operating system was too little, too late.
By the time Chinese OEMs could have embraced Symbian, there wasn’t enough engineering talent left at Symbian to make serious inroads into the China’s smartphone ecosystem. Meanwhile, what’s left of Symbian was later acquired by Accenture.
Then, Nokia made the unpopular decision of going with Microsoft for its smartphone strategy.
Nokia’s sin, however, wasn’t in partnering with Microsoft. Rather, it was its stubbornness in not acknowledging the rising tide of Android.
Although industry observers understood Microsoft’s powerful influence on Nokia (Stephen Elop who replaced Nokia’s previous CEO, Olli-Pekka Kallasvuo, in 2010 came from Microsoft), they could not comprehend how Nokia could possibly ignore Android. It seemed almost a willful act by Nokia’s management to miss Android’s unmistakable momentum so completely.
One engineering executive working for a leading mobile chip company said, "I just don’t understand why Nokia couldn’t develop Android phones--even in parallel with Microsoft’s Windows phones."