Nokia: It may be time to turn out the lights
Once the darling of the mobile phone world, Finnish company Nokia is now as low as a company can get. ZDNet's Zack Whittaker has the latest picture of Nokia's financials by the numbers, and they are about as grim as they can be. Andrew Nusca sees nothing but lemons in Nokia's situation, and rightly so. The situation calls for drastic action if the company is to survive, so what can it do to stay afloat?
A company in such dire straits must take drastic action to stem the losses and keep operating. While the reduction in staff of 10,000 is a good start, it's not enough to stop the cash from flowing out faster than it is coming in.
The Wall Street Journal has a good look at the bad strategic decisions over the past decade that brought Nokia to the grim position it is in today. Unfortunately, rehashing those decisions doesn't help Nokia get out of the horrible position it occupies today. The look must be forward, and it's not very encouraging.
Nokia's situation is so bad it requires drastic action to have any shot at turning things around. When you break down the actions needed to have any chance at improving things, you realize how bad things really are.
- Reduce staff by significant numbers.
- Completely change smartphone platform to try and ramp up interest.
- Partner with an industry giant to get technology and insider help needed to jumpstart the new platform.
- Get said partner to pay hundreds of millions of dollars for the partnership.
- Design a totally new line of smartphones to capture market interest.
- Use new line and platform to regain lost smartphone market share.
This may seem like a drastic course of action because it is. To have any chance at turning the giant losses around, Nokia must throw out everything it has been doing wrong and start over. It must do this in record time, thus the need for the partnership and new smartphone platform adoption.
Those who have been following Nokia's slide into the abyss will recognize that Nokia has already done all of the must-do things on the list. That's the problem, and one that the company may no longer be able to recover from. It has already completely changed everything about its smartphone business, and it's just not working.
The alliance with Microsoft has brought hundreds of millions of dollars into Nokia's coffers yet it's not enough to stop the negative cash flow. The move to Windows Phone for the company's smartphone line has not generated significant sales as hoped.
Microsoft didn't help Nokia at all with the recent admission that none of Nokia's fancy new Lumia smartphones would be able to run Windows Phone 8 when it appears late this year. That admission in effect orphaned Nokia's entire smartphone line even though they are still up for sale. It's no wonder that at least a portion of those 4 million Lumias "shipped" last quarter are no doubt the ones being dumped by AT&T for just $50.
Nokia has already totally changed course in an attempt to get back on track, and it has failed. Not a little, it has been a total, complete failure according the latest financial information for the company. As much as we'd like to see Nokia turn things around and recover, it is a giant task and one that may not be possible.