Difficulties and Challenges of Nokia Company - Essay Example

There is uproar about Nokia's bad quarter, but decreasing revenues and mobile market extinction is indicating that worst is not arrived yet, said Forbes' Erik Savitz. Jean-Louis Gassee(2012) highlights three life-threatening challenges that Nokia is facing now. Nokia's largest business, mobile phone market performance is also getting towards the bottom (Gassee, 2012).This paper briefly explores the difficulties and challenges of Nokia, the company. First is that Nokia is burning money, its NetCash went down by 24 percent in one year. Net cash and value of liquid assets declined by $2 billion year-on-year, while it decreased by $9 billion as compared to the same quarter last year. Moreover, Microsoft assisted Nokia with $250m for "platform support payments", it implies that Nokia's operations have consumed $1.15 billion. According to Henry Blodget, if the situation remains same, Nokia is estimated to go bankrupt within two years. Henry's idea is a bit too extreme because Nokia can convert its assets into cash for recovery. However, once market losses confidence on a company's future, vendors demand payments and customers become hesitant that leads to nothing but crisis (Gassee, 2012). Source: Jean-Louis Gassee, 2012. Huge volume of mobile phone is decreased by 16 percent. Even worse, average selling price (ASP) also declined by 18 percent to $44. In developing countries, Nokia is overtaken by Huawei and ZTE which are marketing smartphoens and feature phones at a very low price. According to the chart above, Nokia's smartphone ship is also sinking. The volume is -51 percent as compared to the volume in same quarter last year. With $189 ASP, it cannot make give any financial boost since this is the production cost of one unit. However, Nokia is planning to counter them through Asha family of mobiles. Another hope for Nokia is the new Window Phone "smart device". Nokia's latest smatphone, Lumia's performance is also unidentified (Gassee, 2012). Another rumor, though well-supported by Mary Jo Foley, an authority on Microsoft, and The Verge, a credible blog, is that existing Lumia phone will not be upgraded to the next OS version, Windows Phone 8.The existing Windows Phone OS is based on the venerable Windows CE kernel. Regardless of veneration, Microsoft would have gone for a modern alternative for Windows Phone 8.It's better be rumor for Nokia because they have already convinced their customers that Symbian-based phones are useless in future. If they deal with Lumia in the same way, future would be even bleak (Gassee, 2012). Considering the rise of Android and iOS, an ex-Microsoft executive said that Nokia is not in the competition for devices but in a battle of ecosystems. Stephen Elop also announced that Nokia is moving from Symbian and Meego software platforms to Microsoft Windows Phone ecosystem (Gassee, 2012). According to Koch, Nokia is a hardware manufacturer that hates software. A former Nokia's software engineer, Gruber said that Nokia has to select one software platform for mobile devices (qtd. in Kotch, 2012). It is likely that Gruber's source is Jean-Louis Gassee, he points out that Nokia's current devices are using old Symbian S60 stacks, comparatively new Symbian^3 and Symbian^4 engines, and Meego. He criticises Nokia and says how Nokia expects to stay in competition with the likes of Apple, Google, and HP when playing such a disorganized game (qtd. in Kotch, 2012). On the other hand, Kotch(2012) finds that prevalaing perception that Nokia cannot handle two OS is unrealistic since other companies do it very successfully. The only problem with Nokia is that it is not an American company. He identifies that Nokia has more than two operating systems, for instance, S40 and some others for cheap features and basic phones. According to Kotch (2012) Nokia's problem is not with the OS, but with the execution. While stating that Symbian is a feature, not a bug, Kotch(2012) confirms that it is useless, its UX is distorted, its architecture is bizarre and complicated, and its touchscreen attempts are terrible. All this leads to the conclusion that Symbian has no competition with Android, Windows Phone 7, or web OS. Even if we consider that Symbian has no competition with any OS since it is supposed to be MeeGo's job and Symbian is for mid-range market, Symbian cannot stand with BlackBerry and bada. Despite all that, Kotch (2012) believes that Symbian caters to the low market of developing countries. It can run on low-space, and cheap hardware. What is wrong if Symbian exploit a market that is ignored by Apple, HP, or Android? Nokia's high-end smartphone OS is MeeGo, however, it has no devices. There lies the true problem of Nokia; it is not efficient enough in software development. Nokia's N900 ran on MeeGo's precursor Maemo and its descendant could have become a competitor to iOS, Windows Phone 7, Android, and web OS. However, even after one year, there is no successor to N900.It is crucial that Nokia take MeeGo as a software platform.Nokia has admitted that it is slow in responding to the change. Slow response to competition and struggle to catch up won't work for Nokia. Apple and Android won't wait for Nokia to catch up and this gap will widen in future (Scott, 2011). Nokia is facing challenges not only for mobile devices and regions, but also in its reluctant attempts to reclaim its premium market share from competitors through its Window-based Lumina range. However, sale record does not seem promising. Despite claims, immediate future is certainly challenging, with downbeat margin forecast and warnings (Thomas, 2012). Nokia has been a world leader in mobile phone market for more than a decade, but it is in hot waters, it is burning cash, its racing to the bottom in mobile phone market, and its recent jump into the Microsoft ecosystem are certainly not very promising. The future is bleak for Nokia, many claim. According to Kotch (2012) despite the uproar of Symbian failure, Nokia must not embrace Android or Windows 7 phone. A more realistic approach is to incorporate a new OS, develop prototypes, and launch new product in the market. However, it will take time and Nokia's competitors will come up with even advanced devices. Nokia's strategy for Meego, Symbian, and S40 for different markets is sound, but it has to execute this strategy in a realistic way. Nokia’s basic OS strategy is sound: MeeGo for the high-end, Symbian for the mid-range and S40 for the low-end. But now it has to actually execute this strategy instead of fooling around. Works Cited Gassee,Jean-Louis. "Nokia: Three Big Problems for Deposed King of Mobile Phones."Guardian. Guardian New and Media Limited.,23 April.2012.Web.20 November.2012. Scott,Matt. "Photos: The Downfall of Nokia-11 Reasons why it is doing so badly."Techtarget.23 Aug.2011.Web. 18 November.2012. Koch,Peter-Paul. "Nokia's Problem."Telecoms.com.Informa telecoms & Media.Web. 20 November.2012. Thomas,Daniel. "Nokia Faces Premium Challenge."Financial Times Limited.19 April,2012. Web. 20 November.2012. http://www.businessinsider.com/rim-nokia-hp-smartphone-struggle-2012-6 Read More