After a difficult year, Nokia is closing its two U.S. flagship stores, in New York and Chicago, Reuters is reporting, as well as its flagship store on Regent Street, in London.
“Flagship stores are important in fashion industry: Apple is fashion. Nokia is consumer electronics,” John Strand, chief executive of Danish consultancy Strand Consult, told Reuters, highlighting a factor in Nokia’s struggles. As Apple has gained market share in the global handset industry, Nokia’s has been slipping.
In a Nov. 11 report, research firm Strategy Analytics announced that Apple had surpassed Nokia to become the world’s most profitable handset vendor. “We estimate that Apple’s operating profit for its handset division stood at $1.6 billion in the third quarter of 2009,” wrote Alex Spector, a Strategy Analytics analyst.
On Oct. 15, Nokia, still the world’s largest handset maker, announced losses of 559 million Euro, or more than $838 million, for the third quarter of 2009, reflecting a loss of approximately 19.8 percent year over year.
“Nokia has recognized that its weakness in smartphones extends beyond the U.S., as consumers worldwide continue to turn to the iPhone and other choices,” Ken Hyers, and analyst with Technology Business Research (TBRI), told eWEEK.
“I think that Android-based devices will [also] become a major threat to Nokia in 2010. The underlying weakness for Nokia is Symbian, its handset OS, which is outdated and increasingly difficult for developers to work with and for consumers to use,” Hyers continued. “It is slow, non-intuitive, and does not lend itself to supporting the kinds of applications that users demand now.”
During its annual Capital Markets Day, held Dec. 2 in Helsinki, Nokia executives detailed a plan to overhaul Symbian.
“In 2010, we will drive user experience improvements, and the progress we make will take the Symbian user interface to a new level,” Nokia CEO Olli-Pekka Kallasvuo said, according to a statement from Nokia.
“As an operating system, Symbian has reach and flexibility like no other platform, and we have measures in place to push smartphones down to new price points globally, while growing margins,” Kallasvuo continued. “I see great opportunity for Nokia to capture new growth in our industry, by creating what we expect to be the world’s biggest platform for services on the mobile.”
Nokia also announced it would deliver a device based on the Maemo 6 operating system. TBR’s Hyers, while believing Maemo to be “significantly better” than Symbian, believes developers will find it less worthwhile to develop for than other operating systems, such as the iPhone OS, Android, BlackBerry or Palm’s WebOS.
“The quick-fix is to immediately shift to Android, but if Nokia does this it will be one among many developing to that platform,” said Hyers.
“However, if Nokia does switch to Android, it can bring its superior phone hardware expertise, its ability to manage component supply chains in order to keep costs down and its global brand leadership and marketing into play and become a first-among-equals in Android,” Hyers continued. “It would also immediately benefit from a vibrant and growing application developer community surrounding Android.”
While abandoning Symbian in favor of Android may be the key to turning Nokia around, Hyers says he doubts that it will do it, at least not in 2010.
“Nokia will continue to try to tweak and improve its existing platforms, and will suffer painful market losses in 2010,” said Hyers.
The year has been a busy one for Nokia, which is currently also involved in two closely watched lawsuits. On Oct. 10 it announced it had filed a complaint against Apple, saying that the iPhone infringes on 10 of its technology patents. Around Dec. 1, Nokia additionally filed suits against several makers of liquid crystal displays (LCD) and cathode ray tubes (CRT), whose products are used in Nokia handsets, accusing them of being involved in illegal price fixing.
On Dec. 9, TFT-LCD maker Chi Mei Optoelectronics, based in Taiwan, pled guilty to conspiracy to fix prices in the sale of LCD panels.
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