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INTRODUCTION

What was the most successful European company of the 1990s? Easy: Nokia The Finnish
mobile-phone manufacturer captured the emerging market for mobile phones and built the
industry's most powerful brand. Its handsets virtually defined the industry from the time it
launched its first GSM phone, the 1011, in 1992. From 1996 to 2001 its revenues increased
almost fivefold, and by 1998 it was the world's biggest mobile manufacturer. In 2005 it sold its
billionth handset, an 1100 to a customer in Nigeria.
Politicians lined up to praise Nokia as an example of how Europe could prosper in the
21st century. Romano Prodi, president of the European Commission, drew attention to the
success of Nokia and its rival, Sweden's Ericsson in a speech in 2002. "Their achievement in
mobile telephones helped to create two vibrant clusters, around Oulu in Finland and Stockholm
in Sweden, which have attracted a large number of startups as well as investment from foreign
companies," Prodi said. "These examples demonstrate that European regions are capable of
developing new, high-tech clusters."
Now, what's the most disappointing company of the 2000s? Easy again: Nokia. The company
has been in steep decline²a point underscored by its Sept. 10 announcements that it was hiring
its first non-Finn as chief executive officer.

WHAT DID OPK INHERITc

OPK took over from Ollila to run Nokia in the summer of 2006, four years ago. What was the
mobile world like back then? Nokia was the world¶s bestselling mobile phone maker. For the full
year 2005 they had achieved 35% market share. Their big rival was Motorola who was nearing
20% market share with their surprise hit phone µRazr¶ and many analysts were accusing Nokia of
having missed the boat on flip phone design ± thinking the world would soon all have Razr look-
alike phones (how quaint, isn¶t it. Today most phones are still candybar phones ± the Nokia
staple ± even Apple¶s iPhone is a candybar form factor, not a flip phone, as are most
Blackberries and most Androids..).

In addition to Motorola¶s Razr surge, the two big trends in mobile phones in 2006 were 3G
phones and musicphones ± and in both, Nokia was accused of having falled seriously behind.
SonyEricsson was launching Walkman phones, Motorola its Rokr. And in 3G Nokia had only
about 25% market share vs 35% in all phones where the South Koreans LG and Samsung had
taken a surprising early lead.

In 2006 the tech world was not very impressed by µsmartphones¶ ± the category of superphones
that Nokia had invented exactly 10 years before ± and most analysts felt that the very expensive
smartphones would only sell to enterprise/corporate users with business-oriented smartphones
like the Blackberry and various Palm, Windows Mobile etc devices. US analysts didn¶t even
believe in mobile data services in 2006, as the USA was the last country to discover SMS text
messaging and didn¶t really believe in SMS until the Obama Presidential campaign of 2008. And
here was Nokia with its crazy notions of expanding the expensive smartphone market to
consumers ± the N-Series ± with the cameras and music players and user-installed applications
and video recording and forward-facing second cameras for 3G videocalls and internet surfing
and picture messaging ± all that was seen as a dangerous and costly gamble by many analysts.

But Nokia believed in its views. It had set up the Symbian partnership with its rivals (something
we don¶t see Apple or Microsoft or RIM even trying today) where all of Nokia¶s biggest rivals ±
Motorola, SonyEricsson, Samsung, Panasonic etc were invited to join as part of the Symbian
family ± as co-owners! By 2005 there were 60 different smartphones manufactured by ten major
phone makers using the Symbian OS, which powered almost 7 out of 10 smartphones. Nokia
was the biggest minority shareholder in Symbian ± but only minority, it couldn¶t dictate Symbian
development. The OS was being developed to meet the varying demands of the partners,
including Motorola asking for improvements based on the laggard USA market, to NTT
DoCoMo asking for improvements based on the world-leading Japanese mobile market. Nokia
was there in that mess, but determined to keep it a partnership that helps all, rather than having
the mobile phone industry fall into an all-out war of a dozen duelling smartphone operating
systems and immense fragmentation.

So when OPK took over, Symbian powered most smartphones in the world. Nokia¶s market
share in smartphones was a fraction of that, obviously, being 48% for the full year 2006.
Microsoft Windows Mobile based smartphones were the second biggest platform behind
Symbian with 14%. RIM¶s Blackberry had 8% of the market and Motorola who made both
Symbian and Windows Mobile smartphones had 6%. Previous global number 2 smartphone
maker Palm had fallen to 5%. The total worldwide smartphone market in 2006 was only 80
million handsets, about 8% of all mobile phones sold. Of the world¶s Global Fortune 500 brands,
only 7 were involved in manufacturing or selling smartphones, so the competition was not very
fierce.

REASON FOR DOWNFALL ARE AS FOLLOWS

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The first thing that happened during OPK¶s reign and changed µeverything¶ in the phones market
was Apple entering the phones space, with Steve Jobs demonstrating his prototype iPhone in
January of 2007. OPK had only had half a year in control, when the whole mobile world changed
forever. And all the rules changed too.

Up to 2007, the best marketing machine in mobile telecoms had been Nokia, hands down. It was
loved by the tech media and had the best customer loyalty in the world. But Apple is far better
than Nokia in marketing. And Apple¶s customer loyalty is legendary. A new kid was in town.
Steve Jobs is the master showman even back home in the USA, where marketing and
presentation is given far more relevance than in OPK¶s home country of Finland, where you are
expected to conform to the rules and stick to the facts. Not to brag, not to show off.
The iPhone 2G was not the best phone in the world. Apple has since made 15 major technical
improvements to the original, over the past 3 years, and Apple itself has celebrated those 15
changes as radical and important. Nokia¶s flagship N95 which was being sold before the iPhone
2G even launched in 2007, had 14 of those 15 technical abilities as standard features. And the
N95 had tons more features and abilities that even the latest iPhone 4 does not support. By every
reasonable comparison, the N95 was the superior phone in 2007. Except for one very visible
drawback ± the N95 didn¶t have a touch screen. And most head-to-head comparisons of
smartphones by international reviewers in 2007 found that the N95 bested the iPhone 2G.

But somehow with Apple, the facts no longer matter. The iPhone was the ultimate best phone
ever ± according to Steve Jobs ± and because Steve Jobs says so, that started to become the
storyline. The truth didn¶t matter. That the iPhone 2G was not even a proper µsmartphone¶ ± it
didn¶t even offer users the ability to install apps (this ability came a year later) and didn¶t support
industry standards like MMS and even today doesn¶t support Adobe Flash. The iPhone 2G was
not a 3G device, making it instantly obsolete for example for the Japanese market and didn¶t
have such abilities as GPS and stereo bluetooth. But that didn¶t matter. If your smartphone didn¶t
have the one cool thing the iPhone did ± a touch screen ± it seemed that your phone was old-
fashioned.

Nokia was manufacturing over 50 phone models when OPK took over. The iPhone was
outrageously expensive and with that price point, it could µafford¶ to install a touch screen. Nokia
sold a wide range from superphones more expensive than the iPhone (yes thats true) to far
cheaper dumbphones with basic T9 keypads. It would have been prohibitively expensive to
abandon the existing product lines of its existing 50 or so phone models at Nokia in 2007 and
migrate them all with reckless abandon to touch screens (and a dumb move too ± even today in
2010, more QWERTY based texting-oriented phones are sold than touch screen phones; and
more basic T9 keypad based phones than all QWERTY and touch screen phones put together).

But it was not only about the phone with Apple, i.e. the hardware. And no, I¶m not talking about
the UI or the apps or the App Store or the iOS eco-system. Something far more devastating
changed with Apple¶s entry to phones. For Nokia, someone changed the rules of the game in
January 2007 and didn¶t bother to tell Nokia. Because Apple was in the game, now anything
Steve Jobs said was the word from god. And no matter how severely deficient the first iPhone
models were, because they were Apple phones, that meant they were the world¶s µleading¶
phones. And if you didn¶t match the current iPhone model with a potential µiPhone killer¶ ± then
you were obsolete. Suddenly in 2007 Wall Street lost its respect for facts, and started to believe
Apple¶s version of the story, ignoring the truth. And most analysts who would study the iPhone
would come from the PC side of the tech industry, far more familiar with the relatively simple
and easy PC industry than the remarkably complex mobile telecoms industry. Those PC industry
experts were very familiar with Apple¶s accolades and could see in the iPhone the long-held
promise of the pocket PC. Again it didn¶t matter that Nokia was the first phone maker to boldly
call its smartphone a µmultimedia computer¶ ± the truth no longer mattered in 2007, when all
stories were now spun by Apple¶s PR machine. Besides, with Apple¶s touch screen, the µpocket
PC¶ metaphor seemed far more compelling than with Nokia¶s early smartphones with keypad
based navigation.
I do not mean this as a criticism of Apple, I mean it with admiration. Apple are masters at
marketing. They know how to wow the investors and Wall Street. They know how to play THAT
game. So for example, RIM has sold more Blackberries every single quarter since Apple
launched. The past 3 quarters when Apple¶s iPhone unit sales have been flat or declining, and the
iPhone market share has shrunk from 17% to 14%, in the same time Blackberry¶s unit sales have
grown and its market share has grown. How does Wall Street report the story? They keep
repeating the factually opposite from the truth story ± they keep repeating the myth that RIM is
losing market share to Apple¶s iPhone. The exact opposite is the truth. Apple is losing market
share to RIM! But with Apple, Wall Street is hypnotized. Facts no longer matter, it is what Apple
says.

So suddenly the rules of the game changed. Now its the ultimate game of hype and spin-the-
story. And Nokia was Finnish to a fault, being the µstick to the truth¶ very honest and open story,
any problems too, bring them into the open and volunteer as much truth as possible. This had
been a good strategy back in the Era Before the iPhone ± when the rivals were other very
engineering oriented, facts oriented rivals like Motorola, SonyEricsson, Samsung etc. Now there
was a new kid who seemed to play µunfair¶ and start to distort the market opinion with all sorts
of bizarre claims and facts and µinnovations¶ which certainly were not invented by Apple and
often were simply established industry standards. Look how Apple handled the Death Grip
problem. First, it denied the problem and told customers to hold the phone differently. Then
Apple said there is no hardware problem, there was a software bug in the display of the phone.
Only after Consumer Reports verified the problem, did Apple do a formal acknowledgement of
the issue, but then, Apple blamed the press (for supposedly spreading a false story) and then took
the child¶s excuse ± everybody else is doing it too (which turned out not to be true) and then
finally said the problem is miniscule (again not true). This is the modern spin-doctor way to
handle a crisis. That is the Apple Way. Fight the story, control the story, deny it all, change the
story, blame the reporters, blame the rivals. Spin doctors that Donald Rumsfeld and Dick Cheney
would be proud of.

When facing a rival like Apple, what Nokia needed from a CEO, was a showman and a brawler.
OPK is not that showman and its not in Nokia¶s ethos to go out and fight. What Nokia needed
was over-hype and super-celebration of its huge legacy of achievements and every possible new
tidbit it was doing. Nokia has a trophy cabinet full of innovations and patents and true world
leadership it could celebrate with every major phone launch, but Nokia doesn¶t do that well. It is
understated. It is the wrong rival to Apple, Nokia can¶t win in a marketing-spin game. Not with
OPK in charge. That is not his style (nor the style of previous CEO Ollila either). It is anathema
to Finnish management style. They want to µdo it¶ rather than µsay it¶. They want actions to
speak rather than words. They believe in cooperation, not competition. They want to work with
their rivals, not fight with them in public like Apple does with Adobe and Microsoft and now
HTC and Samsung etc. And then Nokia are bewildered why is Apple getting all the accolades for
deploying solutions and systems that are industry standards and Nokia has had on its
smartphones for years already.

This was a total change and it hit OPK and his team hard. There was an unreal aspect to the
coverage of the phones market, in particular the smartphones market, after the iPhone launched.
Nothing was the same, and still up till today, Nokia has not adjusted to the press relations and
analyst relations and investor relations side of the new world order in the iPhone Era.

Consider how unfair this issue is. Apple has today 2% of total phone market share. Nokia has
34%. Apple has 14% market share in smartphones ± and has lost market share now for 3 straight
quarters. Nokia has 41% market share in smartphones and has been growing market share in the
same period. Of Apple¶s flagship phone the iPhone 4 ± with its 5 major improvements now in
2010 ± Nokia has had 4 of those in its phones long before 2007. Why is Apple given any credit
as the µleader¶ and Nokia accused as µhaving lost the lead¶?

But Nokia doesn¶t know how to sell itself to Wall Street. Not to match Apple¶s amazing PR spin
machine and Steve Jobs¶s stage presense.

Apple yes is the most profitable phone maker (it is the most profitable tech company too) but it is
100% certain that Apple could not sustain that level of profits if it sold 20% of the world¶s
phones. That is classic µniche¶ luxury bracket market share profits ± its what Porsche does in
cars. Nokia is not a Porsche, its more like Toyota. Nokia¶s motto is not µconnecting rich people
of the West¶. Nokia is connecting people. Period. All people including the poor in Africa. Selling
new phones as cheap as 25 dollars, unsubsidised. Selling 3G smartphones as cheap as 100
dollars, unsubsidised. Thats one sixth the price of an iPhone, yet its a 3G smartphone. And Nokia
is still doing it profitably. It is patently unfair to do any financial comparisons of Apple¶s niche
smartphones-only luxury goods strategy to Nokia¶s mass market strategy.
Apple will never, ever, have 20% of the global mobile phone handset market. Never. It cannot
hope to have it, why? Because Apple has a huge investment in its design and look and feel,
which is expensive to maintain with its expensive California based designers. Apple¶s price
points are far above the industry average in anything it does. Look at the Mac line of PCs. The
Macs have always been premium priced PCs. The Macintosh sells in the 3% or 4% market share
globally. That is what Apple is good at. The Mac has never had even 15% of personal computers.
Never, not one quarter in 26 years since launch. That is Apple. It is a luxury premium design
brand. That is not a true rival to Nokia! And if Nokia abandoned its 35% market share in the
mass market, and put all its effort to win some share in the small 4% luxury bracket where Apple
currently is, I¶d get a shotgun and go shoot the CEO myself. No, Nokia has been doing the right
strategy (for a mass market brand). It has had to manage its global dumbphone market share
(profitably) while migrating its customers to smartphones (profitably) and has been able to do
that, where Motorola, Samsung, SonyEricsson and LG have been spectacularly unable to do that.

But now that Apple is in the game, and as Apple is the master at stealing the spotlight, suddenly
Nokia is being compared to Apple! How unfair is that? Its like comparing Toyota¶s total range of
cars and their average engine performance, to the performance of the Porsche! Giving no credit
that some Toyotas have four doors or big cargo ability or diesel engines, etc. Just on Porsche¶s
particular one advantage! Come on, Toyota sells taxis and family sedans and rugged off-road
vehicles and cheap city cars and luxury sedans and hybrid eco-cars and minivans ± and some
sports cars too. Porsche cannot offer anything in almost any of those other categories. Porsche is
pure performance at luxury niche prices, profits and markets. Toyota cannot be compared to
Porsche, not fairly. Compare Porsche to Ferrari or Aston Martin, and compare Toyota to Ford or
VW or Nissan. But no, Nokia finds itself now constantly compared to Apple.
And then that bizarre and cruel twist of the facts. While Nokia¶s market share in smartphones is
growing and Apple¶s is declining, the storyline for nine months now and counting, has been from
Wall Street ± that Nokia is µlosing market share to Apple¶s iPhone¶. This is absolutely
categorically factually untrue! For the past year the exact opposite has been happening. Apple¶s
market share peaked in Q3 of 2009 and is in decline. Nokia has turned its market share decline
back into growth. And with any other tech brand as Nokia¶s rival, there would be sanity with the
tech reporters and business press. But its Apple and their hypnotic way to change the perception
of reality.





Which brings us to OPK and Nokia profits. When he took over, Nokia had 21% profit margins.
Last quarter (Q1) Nokia reported 4% profit margins. During his tenure Nokia reported for the
first time in more than a decade, a quarter of making losses (last year). And twice this year Nokia
has already issued profit warnings. This is a very valid Nokia investor concern and the CEO has
to take very strong leadership in profits.

So again, the nemesis. Apple makes ever bigger profits one quarter after the next. But Nokia is in
three businesses, in the µdumbphones¶ business, in the µsmartphones¶ business and in the
networks business. In the dumbphones business, since OPK took over, almost for the full 4 years
Motorola has reported losses. SonyEricsson has reported losses about half the time. LG has
reported losses several quarters and even Samsung reported losses a few times. Nokia¶s handset
business has never reported a loss! Does Nokia master its core business? Yes. Does it get credit
for it? No, because a luxury niche smartphones-only maker called Apple makes tons of profits.

In smartphones Nokia has been making profits too. Not all its rivals do that. Yes, Apple and RIM
make profits, but HTC and Palm have been making many quarters of losses, Palm did them for
three years straight until bought out by HP. The smartphones business is no guarantee to make
money ± witness how quickly Google pulled out of the market with its Nexus One µsuperphone¶
and even more astonishingly Microsoft, who pulled the plug on its own smartphone µKin¶ project
in only 6 weeks. Nokia keeps making profits in the smartphones space ± a market it invented and
it utterly dominates ± selling more smartphones than Apple and RIM combined. But because
Apple makes massive profits, and Nokia only modest profits ± Nokia is punished. It is not
compared to the other major handset makers like SonyEricsson, LG and Motorola who have
struggled deeply in attempting to shift to smartphones.

In networks the story is truly bleak. Ericsson has been barely profitable countless quarters and
making lossses in many more. Alcatel has reported many quarters of losses. Canadian Nortel and
American Lucent were making losses and were sold. Motorola¶s networks division was deeply in
the red until sold to NokiaSiemens Networks now. But Nokia¶s networks division has been on
the threshold, making mostly slim profits, but falling into losses several quarters. Is it fair to
compare Nokia¶s brave and mostly successful performance in this deeply unprofitable industry
against Apple¶s niche smartphones performance? I think not. But networks do about a third of
Nokia¶s total business and is a heavy drag on its profitability. To put it another way, the handsets
business (dumbphones and smartphones) are far more profitable than Nokia¶s corporate
profitability. But the networks unit has hurt Nokia¶s corporate performance.
Is that the responsibility of the CEO? Yes, definitely. Is it something OPK could have done and
fixed? Yes, he could have sold the unit or spun it off. Or he could have instituted severe staff
cuts to reduce costs. Or he could have increased networks division prices trading NokiaSiemens
Networks market share for better profits. Yes OPK could have been a more ruthless CEO and
made painful cuts and forced the networks unit into better profitability, helping Nokia¶s bottom
line immensely. He didn¶t do that. He was a more µFinnish¶ CEO respecting the individuals and
giving the division time. Was he too soft? Its a tough call, but this is management difference very
strongly between US and European managements. OPK is definitely a European manager.




Then we have the Symbian operating system. The analysts seem to hate Symbian. There are
continued calls for Nokia to abandon Symbian and adopt Google¶s Android. There were many
who suggested Nokia should have bought Palm to get its operating system and replace Symbian
with Palm.

Here life is utterly cruel to OPK, to Nokia and to Symbian. A decade earlier, Nokia could have
very easily developed its own OS for use with only Nokia branded smartphones. That would
have been the better thing for Nokia but not for the industry. Nokia has believed in open systems,
partnering and industry standards (where Apple, RIM, Microsoft and Palm have all been
pursuing proprietary solutions that create industry fragmentation). So rather than create only its
own OS, Nokia invited its rivals to join in the Symbian Partnership: Motorola, Sony, Ericsson,
Panasonic, Samsung, etc. Who does this? Especially where Nokia had invented the smartphone
and had a huge lead in smartphones, and Nokia very much in public said it believed that in the
future the smartphone market would be enormous? Why µgift¶ this advantage to rivals? But that
is the Nokia Way. They believe in cooperation with rivals, especially on standards. Nokia
wanted a global standard OS. They had 10 handset manufacturers providing Symbian phones by
the time OPK took over Nokia in 2006.

So what did Nokia and Symbian do when the iPhone appeared? They first started to develop a
touch-screen oriented Symbian evolution. Note that if you compare the µadvanced¶ Apple OS/X
or iOS of the iPhone 2G in 2007, Symbian was MILES ahead of it in 2007, in everything else
except touch interface (and please please remember, even today in 2010, the majority of all
phones do not use touch screens, not even smartphones). In 2007 Symbian supported apps
(Apple added app support in 2008); cut-and-paste (Apple added in 2009); folders and multi-
tasking (Apple added in 2010). Even today, Apple doesn¶t support Adobe Flash, the internet
industry standard which Symbian has supported for most of the decade. Why is Symbian
µaccused¶ of being old fashioned and Apple¶s iPhone OS µcelebrated¶ as being modern?

But the Apple interface looked futuristic, and its touch interface was µintuitive¶ and definitely
modern. Far more modern than keypad navigation. But this is only one aspect of the OS. By any
other measures, Symbian was ahead in 2007. But this was now the Era of Apple¶s iPhone, and
nothing mattered except Apple. So no matter what else you had, if you didn¶t have touch
interface, you were obsolete. That was suddenly the new thinking in 2007. No matter how unfair,
that is how the world reacted to Apple¶s spin.
Yet consider what Nokia did. Symbian was a partnership. Nokia spent a billion dollars to buy out
its partners, and then Nokia would have owned Symbian to do anything with it. What did Nokia
do? This is totally Nokia philosophy ± the best thing for the industry, not just for Nokia¶s short
term interest? Nokia turned Symbian into a Foundation and made it fully open source. Apple¶s
iOS is not open source. Microsoft¶s Phone 7 is not open source. Neither is RIM¶s Blackberry OS
or HP¶s Palm. Who is µadvanced¶ and who is retarded? Who is the true leader? But this is how
Nokia does things. The Symbian OS is still used by leading smartphones made by Samsung,
SonyEricsson, various Japanese phone makers ± and of course Nokia. Apple, RIM and Palm do
not license their OS to anyone else. Is this the µright thing¶ or the µwrong thing¶ for Nokia to do
with its smartphone OS strategy?

If you were Nokia with Symbian after Apple¶s sudden success of its App Store in 2008, what
would you do? You¶d want an app store, wouldn¶t you? The Apple iPhone App Store has
received all the big press and attention. Did you know Nokia launched its first app store in 2003?
Yes, five years before Apple¶s App Store. And then while Nokia was carefully working with its
carrier/operator partners ± where Apple rudely bypassed the operators/carriers and deployed its
App Store to bypass the carriers/operators ± Nokia still was able to build an app store ± with
operators/carriers. Again that Nokia mindset of cooperation, not abuse. And how is Ovi doing? It
was the world¶s third most successful app store behind Apple¶s and GetJar¶s. Still, where is LG¶s
app store? Samsung¶s app store? Motorola¶s app store? SonyEricsson¶s app store? Nokia has the
world¶s 3rd most used app store and gets no credit for that, while Nokia started before Apple and
works through its partners, not against them. And Apple gets all the accolades as it thumbs its
nose to the industry and bypasses the chain. Yeah I like Nokia¶s approach more, even if it takes
more time.

And the first Symbian touch screen version was not very good. Nothing first generation usually
is (remember all the missing µstandard¶ parts in Apple¶s iPhone OS in 2007). But what is Nokia
and Symbian doing with it now? They do as they always do, keep improving. The touch interface
is getting better. It need not be as good as Apple in the touch department, as long as it is good
enough. Nokia is not trying to become a Porsche of supreme performance only in one type of
vehicle; Nokia does the full line of phones to all market segments. So as long as its µsports car¶ is
reasonably good, if that same platform (Symbian) also supports business phones and youth
phones and cheap Africa smartphones, etc, then it is far more suited for Nokia¶s vast market ±
and its partners who make smartphones for other markets! And you know what? Nokia is now
selling more touch screen phones than Apple does. Yes.

Then if you were Nokia, what is the perfect strategy? Seeing the new operating systems like
Google¶s Android and Samsung¶s Bada and Microsoft¶s Phone 7 ± all operating systems
developed after the iPhone ± what would you want in an ideal world? You¶d want Nokia to
embark on its own super OS for µmodern¶ touch-enabled smartphones. But not to do it like Apple
or Microsoft with proprietary systems. And you¶d want Nokia to license the new OS to rivals,
not like Apple and Palm and Samsung, but more like Google¶s Android and Microsoft¶s Phone
7. And you¶d want Nokia to use Linux as the basis of that new OS, like Google Android.

Better than that, you¶d want Nokia not to abandon its vast Symbian developer community. So
you¶d want the tools to be made compatible for Symbian developers also to be able to develop
on the new OS,wouldn¶t you? That is opposite of what Microsoft did, when it abandoned
Windows Mobile developers when switching to Phone 7. And where there is a Linux heritage to
Google Android and Japanese Linux Mobile phones and Nokia¶s new OS, you¶d want Nokia to
pursue µcompatibility¶ into the future, among all Linux OS platforms including Android,
wouldn¶t you?

And if you could ask for one more thing, a partner, a global giant partner, so Nokia isn¶t doing
this alone. That theoretical smartphone OS strategy is µeverything you have in Google¶s
Android¶ ± but more and better and even more kind to Symbian partners and Nokia¶s heritage.
That is not the quick solution and not the cheapest solution, but it is by far the best solution for
Nokia, its developer partners, its handset manufacturing partners and Nokia¶s future ± as well as
the industry. When Apple and RIM and Palm and Samsung all selfishly release smartphone
operating systems only for their own platform, that only hurts the industry with unnecessary
fragmentation.

So now Nokia. This is exactly what Nokia is doing with MeeGo, the Linux based totally new
smartphone OS, developed together with Intel. They have over 20 manufacturers already signed
up to release devices using the MeeGo operating system. The development tools for Symbian
will be harmonized with MeeGo to allow smooth migration. This is Nokia¶s future smartphone
OS. Isn¶t this the µperfect¶ strategy for Nokia?

Isn¶t this a very prudent, well thought out, strategic path for the brand whose smartphone OS
(Symbian) in Q1 of 2010 still sold more than Apple and RIM and Android ± combined! Give the
developers a growth path into a cutting edge touch-oriented Linux OS, but along the way, don¶t
abandon the Symbian platform and the Symbian handset partners and developers.

Because Nokia has a strategy already in place for MeeGo, there is utterly no point in even
considering going Android. Buying Palm would have been idiotic in this environment. But then
consider true Nokia rivals SonyEricsson, LG and Motorola ± they do not control their destiny.
They don¶t even make a smartphone OS. They are utterly dependent on Google or Microsoft (or
Symbian or MeeGo) for their smartphone future. Which is the right strategy? And what of
Samsung? Nokia saw smartphones as a strategic direction in 1996. Samsung launched its own
smartphone OS, Bada, now in 2010. Is Nokia not miles and years and yes, lightyears ahead of its
real rivals, Samsung, LG, Motorola and SonyEricsson, when it comes to smartphones? But no,
now there is an Apple in the market, suddenly Symbian is µobsolete¶ and Nokia is µlost¶ in its
smartphone strategy? No, OPK, life is not fair. Wall Street is giving you no credit for the best
strategy in smartphone OS¶s and is rewarding Apple for very sub-optimal, proprietary, industry-
dividing, hurtful, excluding smartphone OS strategies that even refuse basic internet standards
like Adobe¶s Flash being supported.

With Symbian, Nokia has failed in communicating clearly its strategy. It didn¶t defend
Symbian¶s reputation when it should have. It has ignored Apple¶s µimprovements¶ and let them
enter into the folklore of Apple¶s supposed leadership. This is as much OPK¶s and Nokia¶s PR
failure as it is a failure of Wall Street in understanding Nokia, Symbian and MeeGo. If more
QWERTY phones still are sold in 2010 than touch screen smartphones, then isn¶t there at least
some merit in saying that Symbian will allow excellent QWERTY use, for enterprise/business
phones ± where Apple utterly fails ± and for the youth segment that is addicted to SMS. No,
Nokia doesn¶t know how to fight a PR war and with a better OS and a far superior OS strategy,
they lost the perception war. Now all think that Symbian is a dinosaur in its death-struggles..

x x

x  x 

Then we get to the straw that broke the camel¶s back. High tech is difficult. All tech companies
stumble at some point. Mercedes Benz once made a car unsafe at any speeds (remember the
launch of the A-Series which tipped over when it turned around corners?). Toyota was making
cars recently which didn¶t seem to have any brakes. And even Apple failed in phones now with
the first phone ever in history, that Consumer Reports tells us the iPhone 4 has such a bad Death
Grip problem that it cannot be recommended. So yes, in tech there will be the occasional failure.
And while Nokia has had a great hit parade of awesome flagship phones, during OPK¶s short
reign, there was one failed flagship, the N97. The N93 was superb in 2006. The N95 was a
technology showcase in 2007. The E90 was so far ahead in 2008, it still today beats most
smartphones. And the N900 of 2010 is highly praised and the early previews of the upcoming N8
are also highly positive. In that string of superb hits, comes one blemish ± the N97.

And the problem is, that the N95 and the E90 Communicator were never even suggested as
µiPhone killers¶ and were not touch screen phones. They were in a different class, like comparing
a Range Rover to a Ferrari. But the N97 was offered to the world as an iPhone beater, being
Nokia¶s first touch screen flagship phone (with a slider QWERTY as well). On paper compared
to its contemporary iPhone 3G and the later iPhone 3GS, the N97 seems to tower and indeed
µdevour¶ its rivals (as from the LL Cool Jay rap lyrics). The specs sheet is impressive. But the
N97 is not. It was a dud. A rare failure in Nokia¶s long history of premium phones, but one of its
worst. And Anssi Vanjoki even openly said so.

When any analysts, not just US analysts, were offered the side-by-side comparison of the N97 vs
the iPhone, the faults and shortcomings of the N97 become blatantly clear. Most of all, its touch
screen (resistive and not multitouch) is slow and non-responsive. The touch screen Symbian OS
seems slow and counter-intuitive. And then there were bunches of other technical faults and this
flagship smartphone from Nokia¶s N-Series was indeed a flop. Nokia did as it always does, it
kept fixing it, better software and hardware, and the final N97 version is not bad, but even then,
its no match to the iPhone 3GS.

When Nokia finally did an µiPhone killer¶ ± that project failed. And this falls onto the feet of
OPK. The N97 was a rare disaster phone for Nokia and with hind-sight, its clear to see, Nokia
would have been better served by delaying the N97 until it was more-or-less bug-free, than
hurrying the phone to the market. The lessons from the N97 were very painful to Espoo and no
doubt those lessons are why Anssi Vanjoki delayed the N8 launch now, knowing its not good
enough yet, and wanted to refine it before releasing it.

But for most US analysts, the µcurrent¶ flagship smartphone from Nokia is still the N97 and the
µnext¶ flagship will be the N8 (they mostly have not taken notice of the N900 which obviously is
not targeted nor sold to the US market but we have for example here in Hong Kong as the
current flagship Nokia smartphone). So the more the iPhone gets amazing news stories from
Apple¶s PR machine (how many billion apps downloaded or how awesome is the iAd platform
or the new version of the iOS operating system etc), the US press is reminded that Nokia¶s entry
in the touch screen smartphones is that expensive and failed N97 with the old Symbian OS and
its lousy touch screen. If the N8 had been released for Q2 (and assuming it was not very flawed
haha) probably OPK would have survived, by the skin of his teeth. But that the US market still
thinks in July 2010 that the N97 is the best Nokia can do, that was too much. The straw that
broke the camel¶s back.

  !"#$#"%

Nokia has a wide range of products than any other mobile manufacturer. Its wide product
portfolio is clearly not helping to improve its market share. Nokia in an anxious attempt to regain
its lost market is heaving the market with a myriad of products. A broad product portfolio will
consequently boost its overall cost, reduce its profit margins and spread its customers slim across
each product line.
To successfully capture the market, it essential that the company recognizes the right customers
and also realize adequate number of consumers for each segment, which acts as a basis point for
consumers to differentiate between consecutive product lines.
"$&%

Nokia manufactures distinct products for the smart phone user segment. The µN¶ series caters to
the Entertainment users while µE¶ series targets the communication user segment. Internet usage
is a common aspect for both entertainment and communication users. Entertainment users are
more likely to use internet to download applications and games, music, and to connect to social
networking sites. On the other hand, communication users ' services to access e-mails,
video conferencing and instant messaging. Internet is critical for both the users. In comparison
with its competitors, the statistical data for internet usage on Nokia smart phone handsets is
substantially low.
() $*+#)'""%

Telecom operators¶ collaborate with various mobile manufacturers to provide data and 3G plans
with the smartphone and use their distribution #&, for its sales. Voice ARPU (Average
Revenue Per Unit) is losing its gleam Data ARPU slowly takes over in the future, as a result of
which telecom operators are particularly interested in marketing bundles that improve data
ARPU. The low internet usages on Nokia phones do not provide any incentive for telecom
service providers to provide Nokia handsets with their packages. This has negatively impacted
Nokia¶s potential consumer base, can be attributed for its low market share especially in the US.

#%

Consumers¶ perception of Nokia as a µ2G¶ Mobile phone manufacturer has an adverse effect on
Nokia¶s image. Is µBrand Perception¶ a show spoiler for Nokia? Should Nokia be sub-branding
its products to change consumer perception? µNokia¶ as a brand has a high global recognition
and creating a sub-brand to market its values on a global scale might be an excruciating task.
Branding their products as low-end and high-end mobile phones differently may or may not cast
any magic on its declining market share.




How Nokia will survive?
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"$ *,$#"%

In countries like India, China, Brazil, Russia, Indonesia, Africa, etc., there is a huge market for
smartphones which will be addressed by incorporating Symbian into lower cost phones, which
will be targeted at the mid price segment.

'-%

Nokia is pinning its hope on MeeGo and believes that it can be a key strategic tool that can help
iron out a lot of concerns that has stagnated Nokia¶s growth. MeeGo is developed in partnership
with Intel; it combines the best of Android, Windows OS and iOS features. It is a ground-up OS
optimized for touch screen smartphones, which are application oriented. The fact that it is Linux
based makes it an open sourced platform, which provides a high degree of flexibility and
customization options. Though this development path is cumbersome and expensive due to the
parallel development of two smartphone OS, it will benefit End Users, Nokia distributors and
Nokia App developers.

,"#$%

Nokia identified a blue ocean by coming up with a customer oriented App Store ± OVI. But, they
failed due to the lack of support from the service providers and distributors as they feared that
Nokia was entering their market space. It is estimated that 6.674 billion applications will be
available through application stores by 2014. Hence Nokia cannot show any slack as far as the
application development and distribution is concerned. Currently OVI is the second best app
store for mobile applications and hence this is another reason why Nokia should not switch to
Android OS.

#,,%

Nokia¶s can use its financial stability to employ itself in a price war. It produces 13 cell phones
per second and with the manufacturing economies of scale, Nokia can afford to push smart
phone prices down while still remaining profitable. Instead of engaging in price wars it can set
an industry yardstick for operating profits in mobile phone industry which can exert considerable
pressure on its competitors through investors and shareholders of the respective companies. In
the race for increasing operating profits competitors might stumble through hasty decisions.
Nokia has to adopt an aggressive competitive strategy to take on dominating smart phones
players in the market.
(,"$'$%

Nokia has been diluting some of its business units that do not add value. Nokia has to continue
divestments and focus its resources and vigor on smartphone business. The growth potential of
the smartphone industry is huge and it can add considerable value to the company.

In conclusion, it can be said that Nokia¶s strategy has been meticulously planned for long term
sustainability. Their strategies are aligned in the best interest of the demand of their end user
community, distributor, suppliers and developer community. Its current strategy to have an
integrated solution of Symbian, MeeGo, QT and OVI store will help Nokia not only capture the
lost market share but also continue to be a market leader.
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