WAR ON EVERY FRONTLet's take a look at second World War. Hitler started the war fighting in Europe against several armies each of which was bigger than his - France, England and the Soviet Union. Those armies even had better equipment - French tanks were stronger than German tanks, etc. But Hitler's Nazi Germany was able to win the early years for a great part because he took care of his enemies one-by-one using infamous Blitzkrieg strategy; Poland first, then splitting England and France - forcing England to retreat across the channel. When he need not fear England to attack him, he went against the Soviet Union. If Hitler had faced all four nations in 1939, the Second World War would have been over in weeks, not years.
Nokia somehow managed to offer some of the most innovative phones, with the best customer satisfaction, while also offering many of the cheapest phones and be profitable. What we know from applying competition theory - is that it must be, that Nokia was not really facing 'full competition' up to 2006. Motorola was a weak rival, they were drastically lost in the transition from 1G to 2G, and they had their brief hurrah moment with the Razr, which they could not carry further and fizzled away. Several of Nokia's traditional rivals, Siemens, Philips, and Panasonic - quit the handset business. In Smartphones the biggest rivals to Nokia came from North America - where smartphones were still considered only to be business phones - hence RIM, Palm were the main offering. And then there was the little HTC out of Taiwan with the quirky Microsoft Windows Mobile OS. Nokia's 'real rivals' [Samsung, Motorola, LG and SonyEricsson] - all made smartphones primarily on the Symbian operating system where Nokia was biggest co-owner, so Nokia would never be 'blind-sighted' by rivals doing something wild and weird - like Apple managed with its bizarre touch-screen phone.
Military strategists advise that you should at all costs try to avoid a multiple-front war. That is what Nokia now faces. In 2006, Nokia was head and shoulders above all rivals in 'customer satisfaction'; after Apple came out, the highest loyalty today clearly is with the iPhone. The worst part is that its "partners" all abandoned Symbian and went to support Google's Android - so Nokia smartphones are not even 'second best' in that category. While Symbian is getting better, this is a race of catch-up, and Nokia also has to prepare MeeGo, which is the only one that can hope to fight for the future. Nokia is not fighting on even terms for customer love. Last year, we saw that in the UK customer satisfaction survey, even among Nokia owners who stated that they wanted their next phone to be a Nokia - were not willing to recommend Nokia to friends - they were, in effect, ashamed to own Nokias. This is not a recipe for market success in loyalty. Compare that to Apple owners - who will stick their brand new iPhone in front of the noses of anyone, to show how incredibly cool and clever their latest iPhone is. That is the difference. While Apple owners proudly display their iPhones, Nokia owners hide their gadgets in shame... If Nokia managed a come-back, then in fourth quarter 2010 they should have sold Nokia N8 models in comparable numbers to Samsung Galaxies and iPhones and HTCs - they did not. Not even close.
LOSING THE INNOVATION FRONT
Nokia has been promising us wonderful things - but did not deliver. Rather, Nokia has issued apologies and delays. Take the N8
. It would have been a hot phone before the iPhone 4, facing off against the iPhone 3GS and very early Android devices. But it got onto store shelves competing against the 'Retina Display
' iPhone 4, magnificent Galaxy series of Samsung phones, Motorola Droids, and vastly upgraded Blackberries and HTCs. Nokia was not fast enough, or - its rivals had learned to become faster than Nokia, whichever way you want to see it. Now what of the truly hot new phones? Apple created the phone in 2010 that had the sharpest screen ever produced [not Nokia]. Among the major brands, Hitachi created the world's first phone with a 3D display [not Nokia]. Samsung's Galaxy Beam
was launched in 2010 as the first phone with built-in Pico Projector [not Nokia]. Between
2005 and 2008 Nokia top end N-Series and E-Series phones astonished the industry with phenomenal technology - remember the N93? It came out with a QR reader, TV-out and the best one - a 3x optical zoom - the 'real' zoom that only 'real' cameras have. A technology masterpiece, years ahead of rivals. Today, Nokia has lost this lead; N97, N8, N900 or E7 are only 'me too' devices, nowhere near the real global leadership. Nokia has lost the battle in the second of the corners.
And what of the last of the three fronts, the low cost corner? ZTE, Huawei and G'Five and other Chinese and Indian manufacturers are carving up the low-cost markets. Nokia is there, but is losing the low price war. Part of it is Nokia's brand, trying to do 'world phones' but these markets need their own peculiarities, like dual SIM slots. Samsung was there a year before Nokia doing dual SIM slots for its low-cost phones. Low cost smartphones? The 'marketing spin story' sounds good, "Symbian was designed to run on phones with modest technical requirements,"
i.e. weak CPUs and low memory; but Moore's Law moves on, we now have faster CPUs at low cost, as well as more memory at low cost. Samsung introduced its Bada OS to target low cost phones - and had the most successful new OS launch ever selling over five million Bada devices in its first half-year. In meanwhile Android being free - is being used by the low cost manufacturers like ZTE, Lenovo, G'Five etc. to sell cheap smartphones in the Emerging World markets. Nokia is fighting a three-front war, and is losing at all three, much like Germany in 1944, when it faced the Americans, British and free Polish coming from the South in Italy, the British, Americans, Canadians and French attacking from the West after D-Day, while the Soviet Union was pushing in from the East. A three-front war, where each of the countries alone could afford to match an army the size of Germany's... An unwinnable war.
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