It’s more than a year now since Nokia lost its title as the world’s top-selling mobile phone maker. Truth be told, it only hung on to that title for so long because of the dying feature phone market, which was thoroughly dominated by the Finnish manufacturer. Nokia has been disastrously slow to jump on the smartphone bandwagon, and when it finally did the decision was taken to dump its own platform and hitch the wagon to Microsoft’s Windows Phone.
Why Windows Phone?
Microsoft paid a lot of cash to tempt Nokia to go Windows Phone exclusive and the partnership has resulted in some great hardware. There are definite signs that the Lumia brand is taking off, but it’s slow and Nokia continues to suffer financially. Just a month ago the Wall Street Journal reported that Microsoft had been in talks to buy Nokia outright, but couldn’t see the point. Nokia is already effectively dependent on Microsoft and accounts for around 80 percent of sales of Windows Phone devices.
Ever since Nokia did the Microsoft deal there have been questions about why the company went exclusive. The Nokia N9, which ran Nokia and Intel’s MeeGo platform actually looked promising. In fact a start-up called Jolla, with a number of ex-Nokia employees is still working on it. There was much talk of Nokia CEO Elop’s previous employers (Microsoft), and the idea that he was a Trojan horse sent in to pave the way for an acquisition has been floated.
Why no Android?
One of the main questions raised about Nokia’s strategy concerns the lack of an Android device. Putting all your eggs in one basket is always risky, but we can safely assume that the payments from Microsoft would not have been so large if Nokia hadn’t embraced Windows Phone as an exclusive.
When pushed on why Nokia didn’t adopt Android Elop told the Guardian recently, “I’m very happy with the decision we made. What we were worried about a couple of years ago was the very high risk that one hardware manufacturer could come to dominate Android. We had a suspicion of who it might be, because of the resources available, the vertical integration, and we were respectful of the fact that we were quite late in making that decision. Many others were in that space already.” And he continued, “Now fast forward to today and examine the Android ecosystem, and there’s a lot of good devices from many different companies, but one company has essentially now become the dominant player.”
He’s obviously talking about Samsung. The South Korean giant has been sucking up over 90 percent of the profits in the Android handset market based on selling around 75 percent of the smartphones. This has largely been achieved thanks to marketing muscle because the top offerings from rivals, particularly HTC, are comparable in terms of quality, and Samsung’s budget range is hardly top of class.
No stomach for the fight
It’s sad that Elop felt Nokia couldn’t carve out a slice of the Android action. IDC reported Android accounting for 75 percent of smartphone sales worldwide in Q1 2013 compared to 3.2 percent for Windows Phone. Is Nokia really better off with a big slice of a small pie? Could it have competed against Samsung?
Looking at the other manufacturers who tried and failed in the face of Samsung’s bombardment of the Android smartphone market, you can find other reasons why their performances have disappointed. It’s not so much down to Samsung’s brilliance, as their failure. One area where Nokia could have provided some much needed competition is in the mid-range and budget end of the market. Nokia has always excelled at producing low cost devices that are higher quality than its competitors. It could have cleaned up doing that for Android because HTC, Sony, and Motorola have all focused on the premium end.
Going in to the fight Nokia was a market leader. Given a choice between Nokia and LG, Huawei, or even Samsung, a lot of consumers, especially in Europe, would have chosen Nokia.
It probably is too late now. Nokia went all-in with Windows Phone. It made its bed and it doesn’t look very comfy, but it seems unlikely that Microsoft would allow it to switch sides now. If Nokia wanted to produce an Android smartphone on the side would Microsoft continue to make payments and promote Nokia devices so heavily? The answer is – probably not, and so Nokia is effectively trapped.
Goodwill for Nokia
My last two feature phones were made by Nokia and they were great phones. The Nokia N95 in particular was an awesome device. The HTC Desire was the phone that tempted me away and, at the time, Nokia simply didn’t have a smartphone option. If they had produced an Android back then it would have definitely been top of my shopping list.
I’ve owned phones from HTC and Samsung since then, but I would genuinely love to have had the option of buying a Nokia. My experience with Nokia was definitely better than my experience with other manufacturers, to the extent that even now, if Nokia released an Android smartphone I would buy it. What I won’t do is switch from a platform I’m invested in, with a huge range of apps and games, and a tie-in to Google’s ecosystem, to a platform with serious limitations. It’s not that Windows Phone is an awful operating system, it’s just not Android. Nokia’s embracing Windows Phone means they are dead to me and there are a lot of customers out there who feel the same. There’s still a lot of goodwill for Nokia as a company and there’s no doubt that could have been translated into sales, maybe it still could if it was handled right, but Elop is clearly not willing to do it.
It’s sad to see Nokia struggling. They’ll probably survive by dominating Windows Phone, but they aren’t going be a big player again anytime soon.