Nokia Needs To Re-Tool Its R&D, Not Ramp It Up


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Some rather damning numbers crunched today by Horace Dediu, the independent analyst at Asymco. According to his calculations, Nokia (NYSE: NOK) currently has as many people working on its smartphone software, as Apple (NSDQ: AAPL) has working on all of its products: around 8,000 people.

How does he get to that number? According to Dediu, Nokia spent 13.4 percent of its phone sales in 2010 on phone R&D, while Apple spent only 2.5 percent. Using numbers from previous research from analysts at Sanford Bernstein, Dediu says that Nokia had about 8,000 people working on smartphone R&D. “Applying a similar formula ($240k/employee) to Apple’s estimated iPhone R&D (from Bernstein’s chart) yields a headcount of about 3,200 and a total Apple company R&D headcount of 8,200,” writes Dediu.

Here’s a breakdown of how the spend looks:

If they are accurate, the figures point to how Nokia has tried to put a lot of effort (in the form of money and people) into its products, but has little to show for it.

The figures also underscore the sentiment that a lot have that the company seems bloated and in need of a serious rethink on a number of levels — R&D being just one of them, as pointed out by a recent post by Robert Scoble.

The numbers come a week before Nokia’s Capital Markets Day presentation to analysts in London, in which CEO Stephen Elop is expected to lay out the company’s plans to reverse its decline in market share in a world getting increasingly dominated by the likes of ODMs developing Android-based devices, Apple, and RIM.

The meeting on February 11 has renewed speculation about whether Nokia will announce plans to work on another platform.

Some advocate Android, while others are still cheerleading for a tie-up with Elop’s former employer, Microsoft (NSDQ: MSFT) — an old idea now, but one that picked up new steam this week when Adnaan Ahmad, an analyst with Berenberg Bank in Hamburg, published an open letter in the FT advocating that the two partner exclusively for future Windows Phone 7 devices.

On the other hand, Nokia could use February 11 to detail plans for a more comprehensive roll-out of its Meego operating system. Or something else completely different.

What would you like to see Nokia do next?



Nokia has experienced this situation before and could well learn the lessons from history. It once made the transition into phones.

The market has shifted. Nokia must shift too.

A radical shift is required.

Apple made the shift. Netflix is making the shift. So is Google. Singer corporations made the shift. And at one time, Nokia did too.

Lucian Armasu

Go Android. Much better match for the type of company Nokia is, even if Elop is from Microsoft. Also Android is in high demand and keeps surging, while WP7’s already slow sales, are slowing down.

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