Open Source Software

What Nokia should have done

From rubber boots they innovated to videorecorders and mobile tech; Nokia has reinvented itself several times. Nokia is a very strong brand. As for mobile services; they make great phones and provide a lot of the infrastructure for mobile service providers with the Nokia-Siemens joint-venture. It’s an important player in the mobile field. Lately a lot of things have been happening that I will be analyzing in this article. My main focus will be on Nokia’s ability to innovate.

What Nokia dropped/stopped doing
In the past two years Nokia has dropped a lot of innovation and went for just one mobile platform: Windows Phone. That platform is fully developed by Microsoft. All of their previous operating systems were in-house or collaborative/community built. So Windows Mobile is a big change. They stopped building their own platform. They started extending an existing platform. It is a dangerous bet. I was always told to never ever put all your eggs in one basket. If something goes wrong, it will make you very vulnerable. The upside can be added focus.

Nokia’s diversity was a big part of it’s strength. It created an environment that nurtured creativity and innovation.

Let me first look into some numbers to state the urgency of the current state of affairs for Nokia.

Stock market
Also the stock dropped over the past couple years. The company is currently (2012-08-23) vallued at less than 10 billion instead of the 40 billion four years ago. IN 2012 the company lost 3 billion and only has cash reserves of 6 billion dollar.

Nokia’s dropped projects
These are the projects Nokia has dropped in the past two year:
Nokia hardly can differentiate and innovate anymore. In the long run this will hurt Nokia.

Investments in Research and Development have been going down sharply.
2012Q1 — 1.309 million euro
2011Q1 — 1.461 million euro

When Stephen Elop came in office he ‘cleaned house’ by dropping all of these projects. Thousands of developers were ‘sold’ or laid-off. Nokia also closed down all of it’s retail stores around the world. These are the employee stats for the past period:
2200 employees closure of Nokia’s manufacturing facility in Cluj, Romania
Closing of Nokia retail stores wordwide
QT office Australia
2012-08-09 QT sold to Digia
2012Q4 Bonn in Germany and Malvern in the U.S. approximately 1.300 employees

2011-03-31 130.951 employees
2011-06-30 138.562 / 138 634 employees (different numbers in results reports)
2012-03-31 122.148 employees
2012-06-30 113.562 employees

Big changes
2.300 Symbian employees went to Accenture.
2010-05-31 129 746 people at June 30, 2010
Data will be added later
Many developers have left the company. Innovation will be much slower and innovation is needed for a tech company to survive.

Smartphone market shareWill add data on smartphone market share later.
Dumb-phone market share
Will add data on Symbian and other lighter OSses later.

Stephen Elop previously worked at Microsoft. His former employer made big contracts with Nokia, so they went exclusively for Windows Phone phones. Along came big bags of money and Microsoft promotion of the platform. Even with these big bags of money making Nokia stronger, the opposite has been happening; the cash position of Nokia has been dropping drastically.

Windows Phone 7 hasn’t been a succes (and will never be great because phones are not upgradable to version 8). That’s just shortterm sales problem until Windows Phone 8 phones are widely available. Even if the future of Windows Phone 8 turns out great; Nokia is now a hardware phone company only. Diversification on Windows Phones will be more difficult because of Microsoft strict hardware rules for design.

A conclusion will be added later

This document is a work in progress and will be updated.

Latest update: 2013-01-25
2013-01-25 Some additional data
2013-01-02 Some additional data
2012-08-23 First release