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Nokia heading for its “Kodak-moment”

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Nokia’s recent earnings release has been dismal. The worldwide recession is hurting the industry in general and Nokia in particular. It’s market share has gone down from 40% a year ago to 37% in Q1 2009. This trend is continuing for past several quarters and it is my belief that Nokia is headed for its “Kodak moment”.

Remember way back in 2006, the digital camera revolution was in its infancy and a ton of competitors from Sony to Fuji to HP were producing digital cameras. However, Kodak was the king of cameras, selling the most cameras in US and winning awards for its products. “Really!”, you say. “Wait, I don’t remember that!”, you say. It is sad but true. Kodak was still considered a film company despite having invented the 1st Megapixel camera, won awards for its product design and had the biggest market share. But, it was struggling to become a leader in digital camera. Its business model was failing.

Now, fast forward to today. Nokia is the market leader worldwide, its products win awards too and it basically ruled the market (though did not invent the mobile phone) for a long time and there are a bunch of upstarts that are eating away at its market share. All the while, Nokia is struggling to keep its place. It has not recognize the challenge RIM & Apple pose, it has been slow to innovate and has failed to recognize the shifting consumer tastes. 

As Bruce Nussbaum suggested in this 2006 blog post, Nokia, like Kodak, needs a business model innovation. Its device strategy is not working and needs overhaul, RIM & Apple are eating its lunch with smartphones, the next baseline phones. Nokia smartphones have not outshined the competition, even HTC, LG & Samsung have better, more popular offerings that are doing better than Nokia.

How does Nokia change its strategy? First, it needs mid-market smartphones to compete with HTC, LG & Samsung. Second, it needs to overhaul its flagship N series and the E series to be at the leading edge to compete with Apple & RIM. It should take a leaf out of Palm playbook and design a new device that not only improves upon the rival’s offering, but has that extra special feature that the world wants. Third, it is time to dump Symbian from its smartphone lineup. Symbian has its place in the mid-to-low market phones, but it is not upto snuff on the top-line smartphones. The user experience is just not there. Good news is that Nokia has several options on this front: – Design a new user interface from ground-up to sit on top of Symbian much like LG S-class. Or get on the Palm’s WebOS or Android bandwagon or do incremental improvement on Symbian. This last option just maintains the status quo and does nothing dramatic. Finally, it needs to take the battle to the competitor on their home-turf, ie. US. Nokia has not been successful in the past. However, it needs to try again or go down fighting.

This is probably the last chance Nokia has to avoid its Kodak “moment”. So, will Nokia change the game plan or will the game change Nokia?

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Written by dvdand

July 22, 2009 at 5:55 am

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