Since departing Nokia two years ago, I've posted to this blog a number of times on the company, at first reiterating thoughts related to what seemed (to me, at least) strategic mis-direction, later recalling key missteps and suggesting course-corrections, yet later wondering about potential Hail Mary solutions, and now, well, just wondering...
Nokia's share of the value-oriented smartphone market has plummeted from 49% prior to the 2007 introduction of the iPhone to 25% in the first quarter of 2011, with no bottom in near-term sight. Nokia's revenue and net income have declined by 10% and 39%, annually, on average, since 2008, and Nokia's market cap now rests somewhere around $23 billion - a gonad-shriveling fall from the peak of around $145 billion in late 2007. And, this year alone, Nokia's share price has dropped a whopping 35% - 19% in the last five days following the announcement of surprisingly "okay" first quarter results accompanied by very, very gloomy forward-looking guidance.
Damn.
On the upside, Nokia remains an Interbrand "Top 10 Global Brand" (#8 in 2010 - although this is an iffy measurement of Nokia's brand "value," which is generally acknowledged to have collapsed over the last three years)) and is still the world's largest mobile phone manufacturer, selling as many as a million entry-level and feature (non-smart) phones a day. But, alas, even the slim margins on such volume-oriented product are increasingly at risk as a host of lower-cost rivals powered by disruptive enablers like Mediatek are eating away at Nokia's last bastion.
Damn (again).
It makes you realize that the Nokia fealty to Redmond pledged in February really is a make-or-break play.
I wonder, however, if we'll even get to see if it might work, as rumors of takeover abound. Last week, Microsoft was rumored to be contemplating a $19 billion buyout - both parties denied the possibility. Huawei, HTC and ZTE were mentioned as other possible suitors - none deigned to comment on market rumor or speculation. This week, Samsung has been suggested as yet another potential contender (doubtful, but, then again, snapping up the newly WP7-committed Nokia could address Samsung's historical hiccups related to Windows Mobile and could make them a leader in two of the three dominant mobile OS's). And, of course, Google has also been referenced as potential buyer (other than to derail Microsoft's near-term plans, I have a hard time imagining why Google would consider this. Maybe three years ago. But not today - they've got a healthy stable of venders building to Android, they don't need to own one).
All interesting possibilities, some more likely than others, but, long story short, I don't see any of this happening until Nokia does some serious housecleaning and experiences some additional and significant pain that no suitor would likely be willing to stomach. For instance, if Nokia were to bail on NSN, lay off a few more thousand employees and offload the low-end and feature phone business and related assets, the resulting newly-fit and trim Nokia "smartphone" business (incorporating the in-retrospect-remarkably-overpriced Navteq assets) with a market cap around $10 billion (and retaining a significant portion of today's $8-9 billion in cash) could be an attractive purchase.
Just wondering...
1 comment:
It's obviously safe to say that the Nokia that most of us remember is no more. Of course, I think there will still (perhaps always?) be a Nokia.
The minute they announced the Windows Phone partnership, I knew it was a make-or-break play - it has to be. In my mind, though, it's a make-or-break play by both parties, which is why it just might succeed.
Look at how big of a change 'Mango' is. It's the upgrade that Symbian always needed but never could quite accomplish (from the first S60v5 device onwards, which lasted over the three latest 'organizations' of Symbian (separate but part of Nokia, as an 'open-source' entity, and then as an in-house project). They never could quite execute such an advanced software update. Even now, the current crop of S^3 devices have been promised an update for so long that the update itself has changed names a few times (it was originally PR2.0 (and referred to as that by public Nokians), now being called 'Anna'.
From my short experience within Nokia, I have to say that a drastic streamlining can only be a good thing.
Unfortunately, from my perspective, they're 'streamlining' the very people they need to keep on, but of course that's another argument altogether.
In any case, onwards and upwards. I'll camp out with my Android phones in the meantime. :)
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