NEWS ANALYSIS: Nokia needs new time-out

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By Petri Sajari
     
      Nokia’s greatest challenge is to regain the confidence of consumers and to get them to at least test its new smartphones.
      A large percentage of consumers probably do not even know what operating system their phones have. It is likely that the kinds of telephones their acquaintances recommend and show is of greater significance for the consumers.
     
It is hard to anticipate consumers’ buying behaviour, and Nokia cannot force them to buy their telephones.
      Nokia has largely lost the confidence of its investors. In five years the value of the company’s shares has fallen by more than 90 per cent, and during one year, it has fallen by nearly 60 per cent. On Thursday the company’s share price declined by three per cent on the Helsinki Stock Exchange.
     
In February next year it will be two years since Nokia said that it would change the operating system of its smartphones.
      It is virtually certain that in February 2013 Nokia will be far from the profitability of its best years. In the first quarter the company’s result will probably be only slightly in the black, or still in the red.
     
Nokia is undergoing a big change. The manufacturer's dizzying plummet from the status of the unrivalled leader in its field to that of a company in crisis that people look upon disparagingly is a story of a miscalculation beyond compare.
      There is no point in looking for one or two people to blame. This is about an accumulation of errors.
     
In 2007 nobody could have anticipated Nokia’s decline, and if anyone had done so, it would probably have been a pure coincidence. There is no shortage of soothsayers.
      Windows Phone 8 is a different kind of operating system. So were computer and mobile telephone manufacturer Apple’s iOS and software company Google’s Android. They were successful partly because consumers were eager for change.
      It was not until just over a year after iOS and Android appeared on the market that demand for the phones started to grow sharply.
     
It is still too early to say what the fate of Nokia and of the Windows Phone operating system will be.
      The company is literally fighting against time. Its steps forward have been painfully short.
      Nokia would need to make a great leap to dazzle consumers, as it did many times in the 1990s and in the early part of the following decade.
     
Competition is much more severe and much more complicated than it used to be. It’s not just about devices, characteristics, programmes, applications, or outside appearance. It’s also about the perception that consumers have of the manufacturers.
      The last Nokia smartphone to be considered a truly big success was the N95, and that was in 2006.
     
It would not be too much of an exaggeration to say that Nokia has until the end of next year to make its way back to the top.
      The constant danger is that the company might suffer the same fate as its American rival Motorola in 2007, which is one of dwindling into the margins.
      Perhaps the phones showcased by the company on Wednesday really will be big hit products, raising Nokia to the status of a consumer favourite.
      The success of telephones is decided by consumers, and not by investors or analysts.
     
     
Helsingin Sanomat / First published in print 7.9.2012
     


Previously in HS International Edition:
  Nokia introduces two new phones (6.9.2012)
  Investors remain unimpressed by new Nokia phone launch (6.9.2012)
  Nokia and Microsoft to launch new Windows Phone 8 handsets in New York today (5.9.2012)

PETRI SAJARI / Helsingin Sanomat
petri.sajari@hs.fi