New Nokia's Smartphone Strategy

Nokia's chief executive Stephen Elop left the stage quickly after his speech last week, when he set out how the Finnish mobile phone company planned to build the "third ecosystem" in the fast-growing smartphone market.

Richard Windsor, global technology marketing analyst at broker Nomura, was unimpressed. Meanwhile the company's credit rating has been cut by Fitch and Moody's rating agencies to just a notch above junk. If Nokia were a European country, you would be thinking of Greece, not Finland.

The company's market value is now $24bn (£15bn) having fallen to its lowest level since the first half of 1998. It is a shaming situation for a company that was once the Goliath of the mobile market. "We believe the new guidance [from Nokia] is a strong indication that our worst-case scenario for the company, of accelerating market share and gross margin decline, is crystallising," said Bernstein analyst Pierre Ferragu. "The Nokia brand is at risk of losing visibility and the opportunity to create a third ecosystem based on Windows Phone is rapidly vanishing."

The only light in the darkness is that the company has been discussing the sale of part of its share of Nokia Siemens Networks, a joint venture building telecoms infrastructure, which represents about 30% of revenues but is barely profitable. The promise that Microsoft's Windows Phone, a new mobile operating system launched in October 2010, will spark a whole new ecosystem to rival Apple's iPhone and Google's Android is viewed with scepticism by many. "Windows Phone offers a nice experience, but nobody has bought it," said Windsor. Windsor reckons Nokia's Windows Phone device, expected in the autumn, will therefore be "irrelevant, because it will be an expensive device, and the top-end market is effectively lost to Apple's iPhone and Android phones such as HTC. During that time, he thinks, cheap Android smartphones made in China will take over the bottom end of the smartphone and "feature phone" market.

Dean Bubley, who runs the research company Disruptive Analysis, said: "I think the ecosystem will happen, but in a different timescale to Nokia's revenues. Developers are starting projects to write apps for Windows Phone. The headline on the original suggested that Nokia had recently released a new smartphone. The story text said that Nokia has been discussing "the sale of its share" of Nokia Siemens Networks. 

Source : Guardian