Nokia is feeling pressure from a combination of lower-cost Google Android smartphones and Apple's iOS, with questions about whether it can execute a turnaround.
It seems as if every other week a new Google Android phone
arrives on the market, ready to join its ever-expanding family. The latest is
T-Mobile's HTC Wildfire S, which features a 3.2-inch display, Android 2.3
(codenamed Gingerbread), and a 5-megapixel camera. It will debut Aug. 3 for $79.99 after mail-in rebate.
Android's proliferation is a much-lamented issue among
Google's rivals-unless you're Microsoft, which could receive significant
revenue from its newfound strategy of coaxing Android manufacturers into
royalty agreements. (Microsoft claims that Android violates its intellectual
property, making it very clear to those manufacturers that it's more than
willing to fire off a lawsuit if a deal isn't reached.) For Apple,
Hewlett-Packard and others in the ecosystem, the sheer size of an Android Army
threatens to blunt the market impact of their newest projects or swamp them
And if you're Nokia, Android represents an existential
There was a point, not too long ago, when Nokia dominated
the global market for phones. And even as the company lost ground at the high
end of the market to Apple's iPhone and similar competitors, it could still
count on an Alamo of sorts at the lower end-something that's also at risk,
thanks to devices like the HTC Wildfire S and its $79.99 price point.
Nokia's solution is to change the game entirely, abandoning
its homegrown Symbian operating system in favor of Windows Phone. But thanks in
part to that general pressure from Android, Microsoft's smartphone platform is
experiencing a notable lack of marketplace traction. For its part, Microsoft
hopes that its upcoming "Mango" update, which contains some 500 new tweaks and
features, will help change that story. For
the moment, however, it looks as if Nokia's exchanging one struggling platform
Nonetheless, Nokia executives are putting a brave face on
their current predicament.
"The challenges we are facing during our strategic
transformation manifested in a greater-than-expected way in Q2 2011," Nokia CEO
Stephen Elop wrote in a July 21 statement accompanying his company's latest
quarterly results. "However, even within the quarter, I believe our actions to
mitigate the impact of these challenges have started to have a positive impact
on the underlying health of our business."
(Nokia reported a net
sales decline of 7 percent and an operating profit decline of 41 percent-to $556 million-over the
He claimed that a "more responsive approach to product
pricing," along with a shift in sales focus and marketing resources, helped
create what he termed "healthier sales channel dynamics." That being said, the
company sees no relief from the competitive pressures squeezing its bottom
line, at least in the near term. And even as Android eats away at Nokia's
lower-end market share, Apple
has apparently overtaken Nokia to become the world's largest smartphone
producer by volume.
In June, Elop offered an audience a glimpse of what looked
like a Nokia N9 smartphone running Windows Phone. The N9, which currently runs
a MeeGo operating system slated for mothballing by Nokia, married a curved
3.9-inch AMOLED (active-matrix organic LED) screen to a body engineered from a
single piece of polycarbonate. Presumably, other devices are in the pipeline,
But it could take a lot more than a few new smartphones to
reverse the company's current trend.
Nicholas Kolakowski on Twitter
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.