Nokia Looks to Cap Smartphone Market Share Leak
Nokia may still be the world's top smartphone vendor, but it has seen its market share points slip away in recent months, and officials are looking for ways to stop the leaking.
Most recently, reports have surfaced that the company is looking for a new CEO. While a U.S. spokesperson for Nokia wouldn't comment on the matter, the Wall Street Journal reported that it learned of the move to replace current CEO Olli-Pekka Kallasvuo from "people familiar with the situation."
Industry analysts have been saying for a while that Nokia officials need to make changes in how the company approaches the market. While a new top executive may be a step in that direction, it isn't the only one needed to help it better compete with the likes of such heavyweights as Apple and devices running Google's Android operating system.
Analysts have attributed Nokia's losses to its inability to compete at the high end of the smartphone market, where Apple's iPhone and other Android-based smartphones rule.
"Nokia has been losing marketshare in the U.S. and it has been losing profitshare to American firms like Apple and [Google], which in turn is unsettling the powerful U.S. investment community and many investors are now calling for a change at the top," Neil Mawston, an analyst with Strategy Analytics, told eWEEK.
The type of CEO required for such a task, Mawston added, will not only be difficult to find but will face a tremendous number of challenges from day one, including keeping "existing clients in almost 200 countries happy, while simultaneously delivering a decisive strategy to regain lost customers in the United States, the world's most important handset and services market."
Added to that, "the new CEO will need to understand not just cell phones, but also computers, fashion, software, Internet services and mobile advertising," he said. "There are very few people on Earth who can meet those criteria, so Nokia is probably going to have to pay big bucks to get the right man or woman, and they will likely come from a high-profile American or European company such as [Hewlett-Packard], Cisco [Systems], Qualcomm, Motorola or even within Nokia itself."
More than bringing in a new chief executive, Jack Gold, an analyst with J. Gold Associates, said what Nokia must do is re-evaluate its smartphone strategy and step away from its investment in the Symbian operating system.
To a degree, Nokia is already moving in this direction. In June it announced that going forward, its N-Series handsets - its most advanced devices - will run MeeGo instead of Symbian. In February, Nokia, partnering with Intel, introduced the MeeGo OS, which is a combination of the respective companies' Maemo and Moblin platforms.
In a June 24 report, Gold suggested Nokia take two-fold action: adopt Google's Android OS and release a line of phones that runs Android with a custom Nokia user interface, the way HTC does with Sense and Motorola does with Blur; then, make Android the platform for Nokia's lower-end smartphones and MeeGo the platform for its highest-end devices.
"Nokia, it's time to cut your losses and move on," Gold wrote - advice that may also apply to Kallusvuo. "If not, you will be relegated to a me-too vendor in the smartphone space where most of the profits lie and be forced to primarily compete head on in the cutthroat low-end consumer device space against the many up-and-coming vendors from the Far East."
Nokia is scheduled to report its fiscal second-quarter 2010 earnings July 22. In June, however, it had already warned of lowered profit expectations, due to the "competitive environment, particularly at the high-end of the market," and analysts still very much have this in mind.
Analysts with investment-firm Jefferies have warned that the second half of 2010 will be similarly challenging for Nokia. The firm told investors in a July 21 research note, "We see Nokia struggling to re-capture consumer interest in high-end handsets and cap its own market-share leak."