Nokia still sells more phones than Samsung, LG, and Research in Motion (RIM) put together, but its inability to produce high-margin, high-end smartphones that can compete head to head with Apple's iPhone and Google Android-based smartphones is causing it major problems.
Since April 22, when Nokia announced its first quarter results and the delayed launch of its first competitive smartphone in more than three years -- following that up in June with a lowered outlook for the second quarter -- the company's share price has almost been cut in half on the New York Stock Exchange. Last week, Nokia's latest reorganization went into effect. It divides the company structure into three units: Mobile Solutions, Mobile Phones, and Markets. The aim is to accelerate the development of new phones and services.
The company's status stands in stark contrast to the end of 2006, when Nokia dominated the market -- even though it was criticized for a lack of slim phones -- and was gearing up to ship its most iconic product yet, the N95. However, 2007 was a year that would shake the mobile phone market to its core. In January, Steve Jobs unveiled the iPhone and in August Google announced Android.
Nokia didn't take the iPhone seriously, let Symbian languish
Nokia was getting complacent and its first mistake was not taking the iPhone and Android seriously early on, says Nick Jones, a vice president at Gartner.
Nokia completely underestimated the impact that the iPhone was going to have on the market, concurs Ben Wood, director of research at CCS Insight. So did most of the telecom industry, but matters were made worse for Nokia when it took too long to realize that the mobile OS it was using -- the Symbian OS -- was a big problem due to its lack of a user interface for touchscreens, Wood says.
In June 2008, Nokia made its first big move to turn around the platform and announced that it was acquiring Symbian, with the intent of turning the OS into an open source project.
Two years later, the move to open source has proved to be a miscalculation that is slowing down Symbian's development. It would be better for Nokia to take full control of the OS, Wood says. A lack of support from other vendors means Nokia has to do most of the work itself, while the open nature of the platform allows competitors to keep a close eye on its progress.