Can Nokia Recapture Its Glory Days?
IF there’s anywhere left in the world where it’s still impolite to flash a BlackBerry or an iPhone, it’s Nokia’s annual analyst meeting.
But earlier this month, as executives talked up the company’s plans for 2010, the optimistic message from the stage was belied by the behavior of the audience. In the back of the room, one money manager after another distractedly toyed with a competing device, typically a BlackBerry, even as cheery PowerPoint slides promoted Nokia’s latest offerings.
Francois Meunier, an analyst with Cazenove in London, whispered doubts about the presentation as he tried to catch the eye of one of the floor managers handing out microphones for the question-and-answer session. Finally, it was Mr. Meunier’s turn, but before he could ask an actual question, he couldn’t resist declaring publicly what he’d been muttering all afternoon.
“I don’t think anyone in this room is expecting an improvement in earnings next year,” he told the assembled executives, before asking whether Nokia’s 4 percent dividend is sustainable.
Mr. Meunier’s downbeat assessment of the once-mighty mobile phone maker’s prospects in 2010 comes after an equally gloomy 2009, a year the company would just as soon forget.
Although Nokia, based near Helsinki in Espoo, still commands 37 percent of the world’s handset market, it’s facing bruising competition in the lucrative high end of the industry, where Apple’s iPhone and Research in Motion’s BlackBerry have grabbed the cool factor in smartphones that can surf the Web and handle e-mail.
“The whole user experience is a nightmare,” moans Nick Jones, a senior analyst with Gartner, which tracks the technology sector. “It’s just not in any sense a competitive experience with iPhone.”
Olli-Pekka Kallasvuo, the company’s taciturn chief executive, admits the mood out there is gloomy, especially on Wall Street. “We are not getting the benefit of the doubt,” he said in an interview the day after the analysts’ meeting. “We need to change that.”
Nokia’s problems are especially acute in North America, where its hold on smartphones equals a barely visible 3.9 percent, compared with 51 percent for Research in Motion and 29.5 percent for Apple, according to Gartner. As if to underscore its problems in the United States, Nokia announced Thursday that it would shutter its flagship stores in New York and Chicago.
“We made wrong decisions in the American market,” says Kai Oistamo, executive vice president for devices. For example, Nokia was slow to make the change to so-called clamshell phones, sticking with “monoblock” models even as consumers abandoned them.
And while Nokia first offered touch-screen technology in 2004 — three years before the debut of the iPhone — Apple’s models quickly made Nokia’s competing products look stodgy. Most of Nokia’s touch-screen phones can’t quickly transform their screen with the jab of a finger, which is among the factors that make the iPhone seem so much more slick.
Until recently, according to both Nokia executives and industry experts, the company didn’t want to produce phones specifically tailored for American consumer tastes, and it resisted demands from the major carriers to come up with phones based around their brands and individual specifications.
“The market in the U.S. has always been dominated by the carriers, so they call the shots,” says Carolina Milanesi of Gartner. “And Nokia has had a difficult relationship with the carriers.”
Nokia has also been hobbled by its traditional weakness in phones employing C.D.M.A., the wireless technology offered by Sprint and Verizon Wireless that’s used by about 50 percent of American consumers. (Sprint’s current lineup does not include any Nokia models.) Nokia focuses instead on G.S.M. phones for AT&T and T-Mobile. However, AT&T’s exclusive deal with Apple has hurt Nokia in the high-end smartphone market.
And though Nokia sells a lot of smartphones elsewhere in the world, its share of the global smartphone market has fallen to 39.3 percent, down from 42.3 percent a year ago. Even in Nokia’s home base of Europe, the iPhone is rapidly gaining in popularity.
Nokia is finally responding — its lithe, BlackBerry-like E72 appeared in the United States on Tuesday — but it is facing looming threats in other segments.
Google is offering Android, a rival to Nokia’s own operating system, which has been picked up by competitors like HTC, Motorola and Dell, while Asian manufacturers are turning up the heat with low-priced handsets in emerging economies where Nokia has long enjoyed outsize market share. Meanwhile, Apple and Nokia are locked in a legal battle over patents.
“Nokia faces competition everywhere,” says Sherief Bakr, a Citigroup analyst. “At the high end from Apple, in the midrange by Research in Motion, and by the Koreans and the Chinese in the low end.”
ALL in all, it’s enough to make the mood as grim as a December day in Helsinki, where the sun struggles to get above the horizon by 9 a.m and night falls at 4 p.m.
Click to read the rest of the article
But earlier this month, as executives talked up the company’s plans for 2010, the optimistic message from the stage was belied by the behavior of the audience. In the back of the room, one money manager after another distractedly toyed with a competing device, typically a BlackBerry, even as cheery PowerPoint slides promoted Nokia’s latest offerings.
Francois Meunier, an analyst with Cazenove in London, whispered doubts about the presentation as he tried to catch the eye of one of the floor managers handing out microphones for the question-and-answer session. Finally, it was Mr. Meunier’s turn, but before he could ask an actual question, he couldn’t resist declaring publicly what he’d been muttering all afternoon.
“I don’t think anyone in this room is expecting an improvement in earnings next year,” he told the assembled executives, before asking whether Nokia’s 4 percent dividend is sustainable.
Mr. Meunier’s downbeat assessment of the once-mighty mobile phone maker’s prospects in 2010 comes after an equally gloomy 2009, a year the company would just as soon forget.
Although Nokia, based near Helsinki in Espoo, still commands 37 percent of the world’s handset market, it’s facing bruising competition in the lucrative high end of the industry, where Apple’s iPhone and Research in Motion’s BlackBerry have grabbed the cool factor in smartphones that can surf the Web and handle e-mail.
“The whole user experience is a nightmare,” moans Nick Jones, a senior analyst with Gartner, which tracks the technology sector. “It’s just not in any sense a competitive experience with iPhone.”
Olli-Pekka Kallasvuo, the company’s taciturn chief executive, admits the mood out there is gloomy, especially on Wall Street. “We are not getting the benefit of the doubt,” he said in an interview the day after the analysts’ meeting. “We need to change that.”
Nokia’s problems are especially acute in North America, where its hold on smartphones equals a barely visible 3.9 percent, compared with 51 percent for Research in Motion and 29.5 percent for Apple, according to Gartner. As if to underscore its problems in the United States, Nokia announced Thursday that it would shutter its flagship stores in New York and Chicago.
“We made wrong decisions in the American market,” says Kai Oistamo, executive vice president for devices. For example, Nokia was slow to make the change to so-called clamshell phones, sticking with “monoblock” models even as consumers abandoned them.
And while Nokia first offered touch-screen technology in 2004 — three years before the debut of the iPhone — Apple’s models quickly made Nokia’s competing products look stodgy. Most of Nokia’s touch-screen phones can’t quickly transform their screen with the jab of a finger, which is among the factors that make the iPhone seem so much more slick.
Until recently, according to both Nokia executives and industry experts, the company didn’t want to produce phones specifically tailored for American consumer tastes, and it resisted demands from the major carriers to come up with phones based around their brands and individual specifications.
“The market in the U.S. has always been dominated by the carriers, so they call the shots,” says Carolina Milanesi of Gartner. “And Nokia has had a difficult relationship with the carriers.”
Nokia has also been hobbled by its traditional weakness in phones employing C.D.M.A., the wireless technology offered by Sprint and Verizon Wireless that’s used by about 50 percent of American consumers. (Sprint’s current lineup does not include any Nokia models.) Nokia focuses instead on G.S.M. phones for AT&T and T-Mobile. However, AT&T’s exclusive deal with Apple has hurt Nokia in the high-end smartphone market.
And though Nokia sells a lot of smartphones elsewhere in the world, its share of the global smartphone market has fallen to 39.3 percent, down from 42.3 percent a year ago. Even in Nokia’s home base of Europe, the iPhone is rapidly gaining in popularity.
Nokia is finally responding — its lithe, BlackBerry-like E72 appeared in the United States on Tuesday — but it is facing looming threats in other segments.
Google is offering Android, a rival to Nokia’s own operating system, which has been picked up by competitors like HTC, Motorola and Dell, while Asian manufacturers are turning up the heat with low-priced handsets in emerging economies where Nokia has long enjoyed outsize market share. Meanwhile, Apple and Nokia are locked in a legal battle over patents.
“Nokia faces competition everywhere,” says Sherief Bakr, a Citigroup analyst. “At the high end from Apple, in the midrange by Research in Motion, and by the Koreans and the Chinese in the low end.”
ALL in all, it’s enough to make the mood as grim as a December day in Helsinki, where the sun struggles to get above the horizon by 9 a.m and night falls at 4 p.m.
Click to read the rest of the article
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