Time is rapidly running out for Nokia. On Monday, the rating agency Moody’s downgraded the company’s senior debt to one notch above junk. This came after the company warned last week that it would make greater-than-expected losses for the first two quarters of this financial year.
Notwithstanding the launch of the high-end Lumia range of smartphones, Nokia is on the verge of becoming an irrelevance in the world mobile devices market. Bluntly put, nothing the brand is doing seems to be working for it. Over the last 12 months, ever since the company signed on new chief executive Stephen Elop, it has tried to execute several seemingly bold strategic initiatives. These initiatives were welcomed, at best, with cautious optimism.
These initiatives don’t seem to be working. And with each passing quarter the walls are closing in around Nokia. Elop’s two-pronged strategy involved, on the one hand, focusing on low-end, low-cost phones to bring in volumes and maintain a toe-hold in emerging markets, while simultaneously trying to somehow tap into the lucrative smartphone market with the Lumia range.
The problem is one of crippling irrelevance. In the low-cost business, Nokia is being aggressively priced out by Chinese brands. And in the high end, it is simply getting blown away by the dominant iOS and Android manufacturers. Nobody, at either end of the market, seems to be taking Nokia seriously.
Nokia’s predicament illustrates the company’s one great mistake: It was never innovative when it mattered, and now when it is trying to innovate, the company itself doesn’t matter. For years Nokia could afford to not step up to the challenges posed by the iPhone and Android as long as it kept selling millions of simple feature phones in emerging markets.
Nokia desperately needs a top-end device that will not only be noticed, but will also sell. In other words, it needs to rediscover an ability it has all but forgotten completely.
Is it too late for Nokia? Tell us at email@example.com