Interesting article from Der Spiegel.

The article is a one of the most objective ones I read in long time about Nokia.

"Nokia was developing about two models a year. But that changed in 2000. Ollila wanted to serve the booming market more comprehensively, and the new marching orders from Helsinki called for between 40 and 50 new models a year -- that is, a model for every type of person and every taste. And it is this same strategy that the company is still pursuing."

This is the biggest issue with Nokia; it needs to have 2-3 models a year if they want to regain the market share.
 
Only 2-3 models a year...?
the upteen different models is what makes Nokia the global sales leader....
they could shave off a few models per year, but to go down to 2-3 a year would be suicide....
 
They need 1 MeeGo for High end, one Symbian for Mid-range and S40 as cheap phone. It would make easier for Nokia to develop Software and it would make easier for developers to make apps/games for Nokia phones. Qt is attempt by Nokia to solve problem of having too many phone models with different versions of the same OS.
 
I disagree. Maybe a maximum of 2-3 top-end smartphone models. Nokia is pursuing a very sensible strategy of pushing its existing smartphone platforms down into very low cost segments of the market. These products have very low marginal R&D costs but deliver decent margins. It would be crazy to toss this market aside because it's these devices that will replace mobile phones almost completely in a few years.

As for the article, it's a pretty accurate representation of Nokia's journey until now. My only points of contention are:

(a) Nokia is one of, if not the, lowest-cost producers in the world.
(b) It's silly to compare any company's market capitalization at the peak of a massive bubble to now and imply that there is some significance to this. Obviously we know Nokia's fortunes have turned south, but the stock prices of 2000 were not representative of its former fortunes either. They were more representative of absolutely crazy retail investors than anything else.
 
This is why:

"The number of people involved in decision-making swelled with the number of devices, and middle management ballooned. Hundreds of vice presidents were expected to prove their worth, and competing sometimes meant torpedoing the good ideas of a rival. Even worse, project managers avoided taking risks because their departments were classified as independent profit centers, meaning that they would be judged by their production figures on a quarter-by-quarter basis.

It was Nokia that had developed the touch-screen cell phone. Three years earlier, it had introduced the 7710 model, which boasted a large, touch-sensitive color screen. Still, since it didn't sell well, it was dropped from production. And eight years ago, the Finns were already offering small downloadable programs like the apps that currently dominate the market. But, once again, since they didn't enjoy immediate success, all further development was aborted."
 
The article overall is a summary of basically everything said around here for the last couple of years. IMO it should be stickied for all new users to read to get 2 years worth of posts caught up in 10 min.
 
Sounds good but is it realistic with all the shareholder vultures swirling around above it? A month can't go by without somebody screaming for Android or now even Windows 7 on it.



I sincerely hope Nokia can stay the course and put all of their efforts and full focus on Meego without another (OS) distraction to screw with it...
 
The answer is to change the competitive development environment to a collaborative one, not shelve all product differentiation. Differentiation is a key principle in extracting money out of consumers.

Imagine a scenario in which that one mid-end phone that Nokia makes is missing some feature you want. Now imagine that there are a hundred people like you and each one has a different feature in mind. The answer for Nokia is to either include a very large assortment of features to cover its bases, which would be costly, or to create several similar models with slightly different bills of materials that they can sell for similar prices to consumers who might want this as opposed to that. The cost of making copy phones and the time it takes to do so is very low but the benefits are high.

This business model is responsible for all of Nokia's success to date. Either Nokia would have to completely abandon huge segments of the market and the profit that they bring or it should continue this model at the low end while concentrating its top-end offerings. The high-end and low-end market segments are very different. Treating them as if they were the same has been Nokia's major malfunction.
 
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Basically what he said.
 
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