ON THE BURNING DECK

Lisa Creffield, Sky News Business Reporter

10 February 2011

You don't have to be a telecommunications analyst to predict - and witness - Nokia crashing and burning over the past few years. No wonder that new CEO Stephen Elop, in a leaked internal memo, admits the company "fell behind, missed big trends and lost time".

Looking back, there are so many questions, and so few answers.

1. Why cling to the candy-bar?

Tiny Asian clamshell phones became insanely popular in the early 2000s, and the Motorola RAZR was initially a sensation. Nothing remotely like it ever appeared out of Nokia's factories.

2. Why not try a Pocket PC phone, like Palm did?

In the mid-90s, manufacturers weren't making money from software, the business model was hardware. Palm realised the threat of Windows Mobile and RIM's Blackberry alongside its own OS weakness, and unveiled a Windows Mobile-powered Treo in 2006. Nokia could have done likewise, at least to retain some of the lucrative business segment.

3. Why such poor US market penetration?

Having a North American (Canadian) CEO may be a start, but there's a long road to travel. Nokia phones make up just 7.8% of the US handset market, according to comScore. One reason given is Nokia's reluctance to negotiate with US telcos over handset design. But that didn't stop Apple.

4. Why no iPhone killer?

Why wasn't Nokia, given its specialisation and expertise in mobile hardware, and vast R&D, able to bring out anything remotely like an "iPhone killer" in the year after the iPhone was unveiled? Even if it didn't expect the iPhone to succeed, as it publicly stated at the time, why was there no secret Plan B?

5. Why the OS schizophrenia?

Nokia has been venturing into various different operating systems (MeeGo, Maemo) when Symbian's dominance has long been shrinking. Given Android has clear dominance among Linux-based mobile OSes, why not bring out an Android device? Or even Windows Mobile. Interestingly, new CEO Stephen Elop previously headed Microsoft's business division.

6. Why Ovi?

Nokia now claims its Ovi web services and app store are a success, with one billion downloads by the end of 2010. In comparison, Apple's (far smaller) iOS userbase downloaded ten billion apps in the same time. But the jury is still out on Ovi. After all, there are much better, more popular, longer-established services (Google Maps, Flickr, Gmail) and where's the Mac version of Ovi Suite, promised since 2008 and increasingly looking like vapourware? While there's some optimism around Nokia's internet services offering, closing down the Ovi Files cloud storage service late last year didn't inspire confidence.

7. Where's the money gone?

Why, despite tens of billions of dollars in research and development, and a huge head start in the market, has Nokia failed to remain innovative and relevant? Was it being walled up in icy and mountainous Finland, rather than the sunny openness of Silicon Valley? Was it complacency? Stubbornness?

And most critically: can Stephen Elop and his team turn Nokia around, or is it too late?

Finally a bonus question: Vertu, wtf?

Or maybe that's the answer. Any tech company that countenance being associated with a device that is 99% overpriced vulgar bling and about 1% technology can't be headed on a particularly stellar trajectory.

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