Stumbling Giant: Where does Nokia go now? Geeks? Emerging markets? Elsewhere?

Noah Kravitz
 from  Oakland, CA
| December 23, 2009

Once upon a time Nokia made the coolest high-end mobile phones on Earth. I remember reviewing the camcorder-shaped N93 during a vacation to Hawaii back in '06 - I shot video clips and emailed them to family back on the mainland, and despite it taking about nine hours to send each movie over T-Mobile's EDGE network (okay, slight exaggeration), it was still just about the neatest mobile phone trick I'd ever seen. Back then, Nokia's S60 Web browser was the state of the art, their N-Series devices defined the intersection of luxury and killer technology. I'll never forget watching a clip of Howard Chui (he of HowardForums) on some news talk show being grilled about iPhone Fever a few years back. When the host asked him if he, of course, used an iPhone he very matter of fact-ly pulled an N95 out of his pocket and explained how it better suited his needs.

Three years later, it's a different story for the Finnish phone giant. Nokia is stumbling. While the company retains a huge user base across the globe, including strong footholds in emerging markets and die-hard fans of both its top-shelf Symbian devices and low-end voice-and-text-only handsets, Nokia is losing the race for the hottest segment of the mobile market: the mainstream smartphone user. Like RIM in the U.S., Nokia remains strong in the European business geek sector, but when it comes to Digital Moms and mobile twenty-somethings with money to burn on monthly data plans, phones like the N97 and 5800 rarely enter the conversation. It's an iPhone and Android world, and Nokia's just playing catch-up in it.

Nokia still sells a ton of phones - even a stumbling giant is still called "giant" for a reason, mind you. But during Q3 of this year, Apple surpassed Nokia in total handset revenues by a half billion dollars, and Nokia posted an $834 million loss before canning its CFO. That's a bad sign for the one time king of the cell phone jungle, particularly considering that Apple took a product made for the US market and went global with it in the most successful of ways, whereas Nokia's struggles to break through in the US market are well-documented.

Missing The (Trendy) Boat

In a word, Apple prompted the touchscreen smartphone revolution, and everyone except Nokia jumped on board. As such, we've got a revitalized Motorola, we've got Palm sitting on the best OS in the mobile game, and we've got HTC building one-offs for Google. And we've also got trainwrecks like the Nokia N97 and 5800 which are examples of powerful multitasking computers rendered useless by entirely unusable touch-screen interfaces.

So what's Nokia to do in 2010? Their recently released N900 shows promise in the high-end market with its new Maemo 5 operating system, but the device is quite honestly for geeks only (even by Nokia's admission). There's nary a hardware button on the phone's front bezel, and the UI is so lacking in user-friendly icons and labels that the process of jumping out of an app or Web browsing session to make a phone call would literally be impossible for more than half of the US consumers used to their iPhones and Droids. 

The company's line of Symbian S60 smartphones has long been showing its age, and while Nokia has promised an overall to the OS' look and feel, the company's recent attempts to graft touchscreen functionality onto the platform resulted in the aforementioned trainwreck devices. And I haven't heard much about release schedules for Symbian Foundation devices beyond a steady uptick in OS version numbers (i.e. S^2 OS phones coming in 1H 2010, but just you wait for the killer S^3 phones later next year!). 

But Nokia still knows how to build a smartphone. The E72 is getting solid early reviews as the successor to the BlackBerry-alternative E71 (which was one of my favorite devices of 2008), and the N86 is widely considered one of the top two or three cameraphones in the world. The hardware on Nokia's N-Series devices is by and large excellent, even if the design and OS behind the phones is getting stale.

Eroding in All Markets

To make matters worse, Nokia's bread-and-butter, those low and mid-range voice/text phones, are also seeing competition. As BusinessWeek pointed out a few weeks ago, "The company's main business of mid- and low-end handsets, which accounts for 55 percent of devices revenue, is also being eroded by Chinese and emerging market rivals."

So what's next for our Finnish friends? I'm not really sure. On the one hand, it's not like the company's about to go bankrupt. And with every character of this post that I type, I can hear another Nokia fanboy throwing darts at my picture on his wall - the company has legions of users, and loyal ones at that, who aren't about to give up their rock-steady, multitasking E- and N- Series devices in favor of some touchscreen trendmaker. Or, if they do want to go capacitive-touch, they can now do so via Nokia's own X6 music-centric smartphone.

On the other hand, however, Nokia's in some serious trouble. The global phone market is moving towards smartphones for everyone, as evidenced by Apple's leap to the top of the US market and huge gains gains globally, and both them and RIM grabbing big chunks of the "dual mode" handset market (phones with cellular and WiFi data capabilities) from Nokia this year. As smartphones go more and more mainstream, high specs and hardcore multitasking need to be matched by ease of use, style, and trendy features. Apple, Palm, and HTC/Motorola are rising to that challenge, matching sophisticated operating systems with sleek, finger-friendly hardware that's easy to use. Nokia's still trying to figure out how to catch up without losing their geek cred.

What's Next? 

I hope they figure it out, and soon. My first cell phone ever was a Nokia (I forget the model number, but I bought it at Radio Shack in Manhattan and I could play "Snake" on its greyscale screen), and like I said, when I first started working at PhoneDog, I was floored by the likes of the N93, E70, and - as recently as last year - E71. I'd really love to see Nokia get back to the top of the mobile handset game. I mean, come on, it's where they belong.

Isn't it?

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