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Summary:

After 14 years as the world’s biggest mobile phone maker, Nokia has lost the top spot to Korean rival Samsung. The question facing the Finnish company’s bosses now is whether they can ever regain the momentum they’ve lost.

StephenElopNokiaCEO

Fourteen years after it became the world’s most popular handset maker, Nokia has finally been eclipsed — pushed down into second place by Korean rival Samsung.

According to data from iSuppli, the Finnish shipped 83 million mobile phones around the world in the last three months — nine million fewer than Samsung, which managed to ship 92 million units.

But this change in leadership is not because Samsung is doing particularly well — although it’s making a ton of profit, in fact, worldwide shipments from the Korean company were down 13 percent in the last three months. The crown was passed along because Nokia is doing significantly worse than everybody else — dropping 27 percent from the last quarter of 2011.

As you can see from this iSuppli chart, every manufacturer took a hit in the last three months, thanks to the post-Christmas lull. But while Apple managed to mitigate much of that fall, dropping just 5 percent of sales from the end of 2011, the rest of the market took a much larger hit.

But things were particularly bad for Nokia in smartphones, where it recently said it had to act with “urgency”, where volumes dropped by 39 percent quarter-on-quarter. And that’s with a range of new handsets which, despite the lack of sales, are actually pretty good.

So what does this really mean?

The big question is whether any company that loses so much momentum can ever regain it — or even bolster its position to remain afloat. The shine has been coming off Nokia for a few years now, but the one thing it could rely on — its size and penetration — seems to be deserting it too.

In an interview with CNet UK earlier this week, former Nokia and Symbian executive Lee Williams was very critical of chief Stephen Elop, and pinpointed a part of his strategy that he feels is particularly weak.

“There’s no overarching vision for this company. That to me is akin to stepping completely out of the leadership role and running behind the bus now… Before Elop, Nokia would never give up that leadership position and role in the marketplace, would always talk about the future.”

“When I was at Nokia and we shipped a Symbian product and it was bad, in its worst incarnation we knew that if we just flipped the switch, we could move 2.5 to three million units — overnight, no matter how bad the product,” he tells me. “That was Nokia. That was Nokia’s brand, we knew we could count on that.

This has been characterized as a disinterest in creating good products, but what it really says is that Nokia used to have industry-beating penetration. It can’t say that any more, and with a relatively tiny number of smartphones sold and weakening power in emerging markets, it can’t coast.

While some critics of Elop — many of them former Nokia employees — suggest that he started the boat sinking without any lifeboats, that’s an assertion that is impossible to back up.

But what is clear is that the name Nokia meant something to people: a mixture of ubiquity, simplicity and reliability, depending on who you were and what you looked for. But these were all really a function of size: its products were everywhere, had to market themselves to everybody, and even if they weren’t more reliable than competitor prpducts, they were so common as to be easily replaced.

So if it’s not the biggest any more, then what does Nokia really stand for?

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  1. A great consumer company, slowly fading away into the twilight. Bad business decisions,arrogance in the belief of their reach and the biggest mistake of the century in selling out to Microsoft.

  2. First Post, good thing they ditched their disruptive Linux Meego devices… Otherwise they would have a plan B.

  3. Nokia have no more value. After the “WP only” switch Nokia basically put the “Nokia” logo on Qualcomm hardware running Microsoft software. Microsoft continue to add patent on the software. Qualcomm continue to add patent on the hardware. Nokia can’t add any patent. Nokia is left with no a single chance in to coming patent war.

  4. It stands for a company that has offloaded software development to microsoft.
    It stands for a company that may attempt to broaden its offerings, (nokia music).
    It stands for a company that has to deliver a quality product.

  5. Funnily enough, Samsung embraced Android wholeheartedly and with just hardware (which is what is needed much more right now, not software differentiation), managed to achieve what Nokia wanted to stay away from becoming – just another Android OEM. Except Samsung has far more clout, something Nokia would also have had if they had chosen to make Android handsets when they should have.

    Anyone talking about ‘differentiation’ in software is essentially just trying to lock customers down to their platform, so that they do not need to innovate and compete as much in future once customers have bought into their schemes and do not have any easy way out.

    I am really interested in seeing where Samsung heads after this. Do they become complacent after a while, as every company that reaches the top tends to be? Or do they continue to drive hardware with newer displays, battery, radio and form factors?

    1. I’m not sure that’s true. Remember the apparent invincibility of the “Quietly Loaded” HTC as it went from record quarter to record quarter (and Samsung’s comparative irrelevance) in the Android space pre-Galaxy?

      If you are a hardware differentiator in a ‘halo device’ ecosystem, you are just one mediocre launch (and/or a great competitor device) away from significant hardship. Samsung’s crown can fall at any moment. Who knows – maybe 2 years from now we’ll be singing praises to Huawei’s Nexus Ascend.

      1. Bobbie Johnson aepxc Friday, April 27, 2012

        Both good points, really. It depends on whether you believe you can avoid mediocre launches and get some blockbusters along the way. Of course, the trouble is that everyone thinks they can do that — but very few (if any) manage it.

  6. It is impossible not to link these problems back to the beginning, when Nokia bought EPOC and proceeded to do nothing of real interest. They had the beginnings of the NetBook in their hands. They proceeded to create the least interesting technologies that suited a broad base that got them a certain distance. Hell, UIQ was interesting because it was Symbian with style. Anybody interested in mobile had either 6820 or a SE P series.

    How can one not look at the N series tablets and say that these people had a clue past putting out something marginally useful? You can witness and read the DoCoMo sagas and come out realizing that services were going to be the killer platform. It took Apple to see that a limited ecosystem with solid consumer experience services would penetrate the American market. We were the third world of mobile, caught between disinterested telecoms, and Motorola Star Tacs. This is the worlds largest consumer market! Anybody could win by creating an excellent product, but end to end integration was sorely lacking.

    I’ve said it before, the only way Nokia is getting back as a world platform is to get web browser based devices into the third world as fast and as cheaply as possible. The rest of te world will catch up to seeing the mobile web as a viable platform in a few years. A script-able development platform needs to be built. Somebody can do better than Apple and particularly Android with Eclipse. Partner with freaking Adobe on a mobile HTML publishing platform! Make it easy for people to create. You’ ll even sell one to me for between my two iPhones.

    Nokia always made nice devices, and never made an elegant platform. Welcome to 2012. It took you a dozen years to blow it…

  7. Nokia should merge with Sony.

  8. So you asked the question. What’s your answer?

    What does Nokia stand for? What’s the word that they own in your mind?

    Nothing comes to mind? That’s what I thought.

    Elop thing a disaster…

  9. Known for its robustness, reliability and always fitted with relevant features. But apparently, lack innovation and competitive survival. It put up a competitive fight with Samsung, but ignored indirect competitors such as its early encounters with Apple.

  10. Petter Martin Monday, April 30, 2012

    The new lumia series is awesome. won’t be long before Nokia gets its foothold back in the mobile market.

    Airline Reservation System

  11. It’s very sad to me I loved Nokia. but this company hasn’t good futures.

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