Nokia: Doomed to be a zombie company?

Nokia: Doomed to be a zombie company?

Summary: Nokia reported a mixed fourth quarter, gave a weak first quarter outlook and hinted that it may consider another mobile operating system to become more competitive. Here's a look at a few potential scenarios.

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Will Android make you buy this phone?

Nokia reported a mixed fourth quarter, gave a weak first quarter outlook and hinted that it may consider another mobile operating system to become more competitive.

The financial picture is decidedly so-so. The short version: Nokia's market share was 32 percent in mobile devices in 2010, down from 34 percent in 2009. Nokia's fourth quarter sales were €12.7 billion, up 6 percent from a year ago. Fourth quarter profit was €745 million, down from €948 million a year ago. As for the first quarter, Nokia projected first quarter profit margins of 7 percent to 10 percent, down from 11 percent a year ago.

The big question: What exactly is Nokia going to do to become more competitive?

Nokia's master plan is allegedly going to be revealed Feb. 11 at a strategy session. The tech buzz revolves around Nokia CEO Stephen Elop's comments on a conference call hinting that Android or Windows Phone 7 may be in the company's future.

Via Reuters, Elop said "we must build, catalyze or join a competitive ecosystem." Naturally, those comments led to the idea that Nokia would launch an Android phone and enter the U.S. market.

It's really hard to get wound up about this Nokia-Android enthusiasm. When I look at Nokia, I have to wonder if it's just a zombie company. Elop acknowledges that Nokia "faces some significant challenges in our competitiveness and our execution." Elop added that "the industry changed, and now it’s time for Nokia to change faster."

So let's project forward a few days and see how Nokia is going to launch its big turnaround project. Here's a look at a few likely scenarios:

Scenario 1: Nokia goes Android happy. Nokia could go with Android and use that OS as an entry to the U.S. market where the company is a no-show. Nokia's hardware and Android could create a killer device. Meanwhile, Nokia could put some structure around an Android app marketplace.

  • The pros to this approach: Nokia would outsource its software. Today, Nokia is a hardware company that dabbles in software (much like Research in Motion). With Android, Nokia could focus on scale.
  • The cons: A Nokia Android phone would enter a crowded marketplace. Nokia, which is under fire from HTC, Motorola and Samsung, would just be another handset on an Android shelf.
  • Wild-card: Carrier support. Nokia would have to give carriers big subsidies and a bunch of other carrots to get any marketing support. In the U.S., consumers barely know Nokia. What would Nokia have to do to get the cool kids to try it?

Scenario 2: Nokia goes with Microsoft Windows Phone 7. Under this scenario, Nokia could offer Windows Phone 7 devices. Microsoft has a fine mobile operating system, but it's unclear how the market is receiving them.

  • The pros: Familiarity and skin in the game. Elop is a former Microsoft man. There's comfort there. Nokia and Microsoft could need each other. Nokia gives Microsoft a mobile lift. Microsoft gives Nokia an OS. It could be a match made in mobile heaven. And the Windows Phone 7 app ecosystem is credible.
  • The cons: Can you take two middling players in the mobile market (at least in the U.S.) and create a juggernaut? History says you can't.

Scenario 3: Nokia makes a big push in the U.S. and devices hit Verizon, Sprint and AT&T. Elop has noted that the U.S. market is a big problem. The charts below tells the tale. Nokia is pathetic in the U.S.

How will Nokia reverse that picture? Elop could schmooze carriers and offer big subsidies for promotion. If Nokia is going to be a player it will have to pay up.

  • The Pros: Nokia could get exposure to the U.S. market.
  • The Cons: Just because Nokia is in front of U.S. consumers doesn't mean they will actually buy devices when the two largest carriers have the iPhone and an army of Android (not to mention BlackBerry and Windows Phone 7) devices. Nokia's OS choice may allay some of these worries.

Scenario 4: The company continues to chug along as a global player and makes a lot of headway in China and emerging markets.

  • The Pros: Nokia could still be a profitable company without the U.S. hassle.
  • The Cons: Nokia becomes a zombie that can't recapture its glory days.

None of those aforementioned scenarios give me any gadget lust for a Nokia phone. And I'm probably not alone. Android isn't going to lift Nokia up all by itself.

Related: Android stomps Nokia's X7 at AT&T

Topics: Nokia, Android, Google, Operating Systems, Software, Windows

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37 comments
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  • RE: Nokia: Doomed to be a zombie company?

    Nokia is one of those companies that are just there. Kinda like T-Mobile and Boost. They may entice a few folks, but for most, AT&T and Verizon is where everyone is at.
    The one and only, Cylon Centurion
    • RE: Nokia: Doomed to be a zombie company?

      @Cylon Centurion 0005

      Nokia has always been a fantastic hardware maker. Everytime I bought a feature phone the nokia's have always been the best of the bunch.

      But their software is from the dark ages now. I personally would love a Nokia built WP7 or Android phone.

      But, as the Nokia exec once commented, using someone else's software on their phone is like "a little boy in winter peeing in his pants to stay warm, nice at first, but turns cold quickly."

      Yes, actually publicly said that.
      SlithyTove
      • I was underwhelmed with my Nokia phone.

        @SlithyTove

        6800 series or something like that. Hated it. Quality was poor. Usability was poor.

        As for the ecosystem. I would be on option #2. Windows Phone 7 on Nokia hardware.
        Bruizer
      • RE: Nokia: Doomed to be a zombie company?

        @SlithyTove
        You don't want Nokia putting android or WP7 on their phones. Their software may not be as polished as others out there, but they also give you a lot more options than all the others. We don't need another locked down phone.

        And, I'm fine if Nokia is never a huge competitor here in the united states, as long as I can buy them unlocked! Seriously, the only way for them to become a big player in the US market is to give all kinds of concessions, to get rid of the free GPS from OVI maps, and to start letting the phone carriers install crap ware on their phones. So, I hope they don't do that. I'll suffer with a not so polished OS that is still very capable to avoid all the crap ware, locked features, and software companies like MS telling them what their hardware can and cant do!
        mgrubb@...
  • Scenario 5: Nokia ports the Davilk application environment to Nokia smart

    phones and tablets. They tap the other ecosystem, but, maintain the differentiation. All very doable.
    DonnieBoy
    • Scenario 6: Nokia produces a new Smart phone OS ...

      @DonnieBoy <br>Scenario 6: Nokia produces a new Smart phone OS in cooperation with another major player and promote this new OS like there is no tomorrow.<br><br>One major player that come to mind is Intel. As for the name of this new OS I think "MeeGo" would be a great name if it's not already taken. <br><br>(Note to self: do a google search for "meego")
      stfs@...
    • RE: Nokia: Doomed to be a zombie company?

      @DonnieBoy : thanks for recommending Nokia what they must NOT do
      nomorebs
  • Just like MS...

    ...Nokia kept it's head in the sand and the world passed them by. Now they are doomed.
    james347
    • Definitely not like MS

      @james347

      Actually Nokia has been reinventing itself in a way very few other companies have ever managed (inside or outside of IT). They were founded in, wait for it... 1865!! (got the name Nokia in 1871)

      First a paper mill, then a rubber company (rubber boots among other things), then from 1960 an electronics company and even so they managed to stay at the forefront as the business changed. I remember Nokia TV from my childhood being among the top quality on par with Sony.

      Take a look at the nokia wikipedia page. It's amazing what they've done I wouldn't dismiss them just yet.
      stfs@...
    • and we know where you keep your head

      @james347, but I won't say as to not embarrass you too much. ;)
      John Zern
    • Yet another idiot that can't do the maths or read???

      @james347

      Did you notice 32% of world market? You compare that to any other manufacturer. It's a huge position and lets be serious.. My iphone is in my bag and has no SIM in it because I get hacked off charging it every night[; My Android is a little better but 3G and bluetooth kill it too; I only need a few apps and I use the android when I have a need. For business my BB Torch lasts twwo days+ with both Bluetooth and 3g on auto (excellent enterprise product). Once the hype goes.... most folk just want a phone that makes calls, does a few tricks and lasts a few days on 1 charge and plenty use (ie NOT an iPhone and NOT an Android).

      Nokia is still in the game, everyone is still in the game. Most folk I see with an iphone or Android see it as a trophy and do zippo with the full features. Me... I have RAC road info, a newspaper headline app, sky news, ebay, a cracking wifi app which I use to test connectivity every time I get a problem job, angry birds is great on my iphone; crap on my HTC, and a few others. A days battery life is RUBBISH though..... whatever platform. And please dont bore me with the comments like switch off 3g or bluetooth co I aint interested. Blackberry can do it, Nokia can do it, and good luck to everyone pushing this market along.
      johnmckay
  • HAHAHA... In a word NO! Android would make me run very far from any

    phone, Nokia or otherwise. Dont need any android malware or pwnage. WP would be interesting but they also need to get some new designers to get away from their brick handsets and to leap frog the htcs and samsungs. They should partner close iwth MS to be the first to hit the next gen spec plus add extras. And they should out source some great apps to bundle...
    Johnny Vegas
    • Windows propeller heads are a small percentage of users. Nothing to worry

      about. The mainstream uses iPhone and Android.
      DonnieBoy
      • They will partner with MS.

        @DonnieBoy

        It makes sense from a historical standpoint (office already on Symbian).
        Bruizer
      • DonnieBoy, how fast is your propeller spinning?

        You know DB's getting backed into a corner today because it only 11:13 AM and already out of things to defend Android with, so the insults have stated! <br><br>First Honeycomb's UI being trashed by even Android users, and now Nokia not wanting to use Android.<br><br>Hey, DB, you could probally mow your lawn with your propeller considering how fast it's spinning!
        :) LOL!
        John Zern
    • Whats wrong with implementing Android or HPs

      @Johnny Vegas

      Why would anyone invent a new OS if the current ones are doing the job? Why not just implement something they can control in their own space, and add to it, like Android. Imagine and iphone or android that lasted three days on 1 charge without a huge battery; something that sat nice in the hand. I sit here looking at my Nokia 8210 whih remains to edit SIMs and graphics when I need to. Its an old phone but tiny and smaller than your average mouse. It weighs a few onces AND I have noticed colleagues buying similar devices for evenings out as their smart phones are NOT compatible with a quick pint. There is more to phones than the current trend, and certainly no apparent need to go overboard when there is clearly a healthy choice of OS. IOS, Android, WM7, HP, RIM6 (fantastic on my torch I should add), and plenty more I know even less about I'm quite sure. And as they retracted the mobile mapping software from a free ANdroid app I'm quite sure they have a few ideas in their heads. ANd lets not forget the great Nokia Commander of 15 years ago. I couldn't afford one but boy it was a tool many of us dreamt about owning !
      johnmckay
  • Over the years I have had...

    a variety of phones by Nokia, Motorola, Samsung, LG and Sony and have always had good luck with the Nokia phones. The one thing that has differentiated them from the rest is they have been durable. With 6 phones spread throughout my family that all get replaced at the minimum every 2 years for the last 10 years we have had quite a few diffenent models and hands down the Nokias have held up the best. I still have a 5 year old Nokia from 2 upgrade cycles back we keep in a drawer as a spare in case someone's phone dies. Say what you want about the OS but their hardware just keeps working.
    Scubajrr
  • RE: Nokia: Doomed to be a zombie company?

    I still get "old timers" who come into my store asking if we have any nokia phone or if we will be selling them soon. These same people are still using 6 year old nokia phones.
    Bedfordew
  • Better styling, more coherent products

    Android? No, it's a commodity market and quite a messy piece of software.<br><br>WP7? No, lacks basics like multi-threading, so threaded software can't be ported to it, it has no market success. If customers reject it, why should Nokia accept it?<br><br>IMHO,<br>Their QT Designer is far superior to the Visual Studio jack of all trades. C++/QT is far superior to the Java offering on Android.<br><br>The styling of the current handsets is not great, only the E7 looks good to me, I do not like the Soviet CCCP era stylings of the N8. Do unsightly bulges look good on anything? The why on the N8?<br><br>Maemo? MeeGo? Why? They somehow felt the need to FUD their Symbian OS?... CHOOSE ONE OS AND STICK TO IT.<br><br>The prototype I've seen of the MeeGo phone (the silver thing), again CCCP design, belongs in a cheap chinese market.<br><br>Documentation, still not good, topics sorted by date not the order they should be read. Shallow beginners guide dropping into deep confusing legacy docs. Nice to see they've put a shallow gloss on the top but it needs to be structured properly top to bottom.<br><br>Price, too expensive, trying to command a 100 euro premium, screen resolution less than competitors, no unique selling points. <br><br>Alienated EU software developers, trying to patents even DLL linking FFS... don't launch new ideas on that platform, lest Nokia nick it and patent it as their idea.<br><br>Online music, still DRM'd long after Jobs showed people won't buy that. <br><br>Restyle, Clarify, Reduce, Invent.
    guihombre
    • RE: Nokia: Doomed to be a zombie company?

      @guihombre WP7 supports multithreading, and almost every Silverlight and XNA app by design is multithreaded (UI thread, compositor thread, and working threads). You are confusing with user-shell multitasking, which the OS currently does not support (navigating away from an app closes it).
      OxBAADFOOD