Time Not On Nokia's Side
Nokia faces some very significant challenges. The game has changed from a battle of devices to a war of ecosystems, and competitive ecosystems are gaining momentum and share. The emergence of ecosystems represents the broad convergence of the mobility, computing and services industries. In short, our industry changed, it’s time for Nokia to change faster.
The transition from Symbian to Microsoft’s Windows Phone platform is one of the more challenging parts of Nokia’s new mobile alliance with Microsoft. Implementing a new strategy like this takes time, something that’s in short supply in the fast-moving mobile market. And with Nokia complicating its roll-out with joint product roadmaps and shared responsibilities, some observers are beginning to wonder if the company will suffer more smartphone market share losses before it enjoys any gains–if it enjoys any at all.
Bernstein analyst Pierre Ferragu says he expects Nokia to lose 2 points of market share sequentially in smartphones in the first quarter. And he thinks that trend will likely continue in the quarters that follow, and perhaps even accelerate.
That might seem an overly-pessimistic view of Nokia’s situation, but Ferragu has his reasons, top among them the belief that Nokia’s alliance with Microsoft won’t solve the company’s fundamental problem: the lack of innovation and agility fostered by an overlarge company hamstrung by bureaucracy.
“For a company unarguably overstaffed, with an over-engineered organisation, a lack of reactivity clearly acknowledged by management, a partnership with another heavy giant doesn’t sound like the right remedy,” Ferragu argues, noting that Nokia’s worst enemy going forward is time. “The partnership with Microsoft will first take time to implement. Even if the largest areas of the partnership seem to have been decided, a few more months to agree on the details seem a minimum. Moreover, comments made by management [recently] on how the partnership is likely to work are not reassuring: joint product roadmaps, interactions at all layers of both organizations, interlocked areas of responsibilities. All these elements point at likely slower decision making processes and higher risk on the quality of decision made.”
Not the best spot to be in when your leadership position has been eroded by the likes of Apple and HTC, which earlier this month surpassed Nokia in market cap.