Critical List: Nokia

Gone are the days when every other person was walking around with one of Nokia's 8210 blowers permanently pressed to their ear.

by
Last Updated: 09 Feb 2011

In recent years it's faced stiff competition from the likes of Apple, with the iPhone, RIM's BlackBerry and more recently Google's Android. Phones have moved on: a game of Snake and a cool ringtone are no longer enough to woo customers. Now, it's all about apps and Nokia is in danger of being left behind.

Danger signs You can be pretty sure there is trouble brewing when a company announces a management reshuffle less than six months after the last one. This latest reorganisation is aimed, like the last, at improving its lacklustre performance in smartphones. Its core business in mobiles is suffering too: in the first three months of this year, the Finnish group continued to lose market share to its rivals - its global share of the mobile market was 33%, down from 35% at the end of 2009, as appetite for its wares faltered in Europe, Asia, and North America.

The markets haven't responded kindly to Nokia's woes. Since it lowered its profit guidance a month ago, shares have lost nearly a quarter of their value and nearly £5bn was wiped off the valuation of the company in a day after it warned of delays to the launch of its new range of smartphones. Ouch.

Prognosis Nokia seems to have lost its way as far as its smartphone strategy is concerned and it's even losing its hard-won reputation for ease of use and reliability after a number of technical glitches. And this is reflected in its figures: while overall sales were up 3% in the first three months of 2010, it will be hard pressed to make up on the lost revenue from last year, as sales from its devices and services division fell 21% to £24.2bn in 2009. All hopes will now be pinned on its high-end MeeGo platform, due out later this year. It may not be too late. Nokia still has 40% of smartphone sales, so it has volume. It just needs to rediscover desirability too.

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