David WolfBy David Wolf
Will the last sane person leaving Nokia house please lock the doors?

The world's ostensibly leading manufacturer of mobile handsets has recently announced results for a quarter that were, depending on which analyst you spoke to, disappointing at best and dismal at worst. Admittedly part of the reason for these results is cyclical. But the other, probably bigger part is that Nokia has made a series of bad strategic decisions, and it is just beginning to pay the price.

The problem is, rather than getting better, those decisions are going from bad to, well, stupid.

First, CEO Jorma Olilla indulged himself in a one-way feud with QUALCOMM CEO Irwin Jacobs, and in so doing allowed his company to get so badly blindsided by CDMA that it may never recover. Nokia has no appreciable presence in Korea, or in the rapidly growing CDMA-2000 1x markets in Japan, China, India, and the United States. That's bad enough. What is worse is that in W-CDMA markets, with the 3G standard Nokia was supposed to endorse, Nokia isn't on the map either. And we're not just talking about Japan. In Europe, Nokia's traditional back yard, W-CDMA carriers are specifying non-Nokia phones and consumers are beginning to realize they like Samsung a lot better.

Next, Nokia missed the boat badly on camera phones, beaten to the punch by Asian manufacturers. In its efforts to rebound, it has launched a dozen models with cameras and will launch even more, with its Olilla waxing rhapsodic about the convergence of "imaging and mobility." Did Nokia catch the wave, or is it too much, too late? We'll see.

But there is surely a tinge of desperation — if not a hint of deeper issues — when you look at Nokia's last three major mobile phone products:

– A combined MP3 player and mobile phone. Has anyone added up how much it costs to get an MP3 downloaded onto the phone in the first place? And how many songs can that phone hold? Not nearly enough to make me want to chuck my dedicated MP3 player.

– A combined phone and mobile game player called N-Gage, It plays network games badly, plays far fewer games than a GameBoy (with an inferior playing experience), and is the lamest looking and performing phone in the Nokia line-up (no small feat for a company that took 5 years to figure out how to make a clamshell phone. But I digress). All for the low price of $600.

– A combined phone, video camera, and FM radio that will allow users to watch television. When you consider that that the only television worth watching (cable or satellite) would not be accessible, and that FM radio is a highly North American phenomenon, you're paying $500 for a big phone with a mediocre video camera.

Forget that the success of hybrid products is incredibly rare. It is more than a little disappointing to see the world leader in mobile phone production reportedly blowing over $100 million combining their handsets with mature consumer electronics products rather than on creating platforms that will help carriers drive revenue-per-subscriber and will allow consumers to select the features, services, and applications they want on their phones.

More than anything else, Nokia is consistently demonstrating that it is horribly out of step with the rest of the industry. Maybe Olilla should shut the company's glass-house headquarters in Espoo Finland and get his people out into the real world. It could hardly do worse.

About the author:
Silicon Hutong is an ongoing series of thoughts and commentaries by David Wolf, President and CEO of Wolf Group Asia'a management advisory firm providing strategic communications counsel to technology, media, entertainment, and telecommunications companies in Greater China and the Asia-Pacific region. David's opinions are his own and do not reflect those of either WGA or it's clients. Past articles can be found at www.chinatechnews.com, the Silicon Hutong Blog can be found here and David himself can be contacted at [email protected].


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