Mobile // Mobile Devices
Commentary
7/2/2012
08:36 AM
Eric Zeman
Eric Zeman
Commentary
Connect Directly
RSS
E-Mail
50%
50%

Nokia Needs A Good Contingency Plan

Nokia chairman suggests the struggling smartphone maker has a contingency plan in the works should its Windows Phone business fail.

Nokia Chairman Risto Siilasmaa dropped hints during a live television appearance that the company has a back-up plan in development that could be used to save it if everything collapses with its Windows Phone business. Siilasmaa didn't say what the plan is, but restated Nokia CEO Stephen Elop's stance that "Plan B is that Plan A is very successful."

Nokia adopted Microsoft's Windows Phone platform in February 2011 and delivered its first such smartphones to the market in November 2011. It now has four models in the market, the Lumia 900, Lumia 800, Lumia 710, and Lumia 610. The 900 is for sale in the U.S. through AT&T and the 710 is sold in the U.S. through T-Mobile. The other two models are only being sold overseas.

Nokia has managed to move several several million of the devices in the six months they've been available, but it is still selling more Symbian phones. During the first quarter of the year, for example, Nokia shipped 2 million Windows Phones and 12 million Symbian phones. Symbian, of course, is Nokia's old and out-dated platform that it is eventually abandoning.

[ Nokia isn't the only smartphone maker facing challenges. Read BlackBerry 10 Delay Could Spell RIM's Doom. ]

Windows Phone 8, codenamed "Apollo" launches this fall and is timed well with Microsoft's broader launch of the Windows 8 platform. Nokia has committed to Windows Phone 8, and will surely launch new devices later this year to coincide with the new platform's debut.

Nokia has already made one critical mistake with respect to Windows Phone 8, though admittedly it is Microsoft's doing: None of its existing Windows Phones will be updated to the new platform. That's bad news for early buyers who took a chance on Nokia's Lumia line. They may feel burned about the lack of support from a company that very badly needs to retain customers. Instead, Nokia will offer Windows Phone 7.8, which brings the new platforms revised Start screen, to the Lumia 900.

So, what on earth is Nokia's contingency plan?

Really, it can have only one. Sure, the company might divest certain business units or properties, spin off divisions into their own corporations, and so on. But none of these will resurrect Nokia's core business of selling smartphones.

If Windows Phone fails to help turn Nokia around, it has to adopt Android. Nokia would be insane if it isn't already working on Android smartphones. Despite the fact that such a pursuit would cost sparse development resources and may ultimately be scrapped, it's really the only way Nokia can reasonable expect to sell smartphones if consumers don't begin to adopt Windows Phone en masse.

At this year's InformationWeek 500 Conference, C-level execs will gather to discuss how they're rewriting the old IT rulebook and accelerating business execution. At the St. Regis Monarch Beach, Dana Point, Calif., Sept. 9-11.

Comment  | 
Print  | 
More Insights
Comments
Newest First  |  Oldest First  |  Threaded View
ANON1237925156805
50%
50%
ANON1237925156805,
User Rank: Apprentice
7/2/2012 | 7:54:12 PM
re: Nokia Needs A Good Contingency Plan

One imagines that Nokia took a hard look at Android before choosing Windows to replace Symbian. I've read speculations about some unspecified grand conspiracy theory in which Elop came over from Microsoft to pull Nokia into Redmond's orbit. There's another way to read this.

If Nokia had gone with Android they'd likely be back in the thick of it already, given their positive genius for designing hardware long on quality and user appeal. But for the first time they'd be just a face in the crowd, no longer a thought leader in a universe they had dominated for years.

Elop was no doubt an evangelist for what he knew to be a top drawer product, but Nokia mgmt was receptive to Windows because with no one else fully embracing it, they could maintain their distinctive identity: We'll be THE guys with a great lineup of Windows phones from cheapo to high end.

With RIM imploding there's a chance that Microsoft can use its leverage in the enterprise to slide Windows 8 in there very nicely. If that happens then Nokia will look pretty smart in hindsight. Despite Microsoft's mis-step in not making Windows 8 backwardly compatible, Microsoft loyalists will jump on board and like what they experience. Others will surely follow.

On the other hand, if Windows Phone flops, then Nokia's very survival is at risk. Restructuring, spinning off segments of the company, etc. would be irrelevant and useless. It's hard to imagine that Nokia isn't planning for that by taking a hard look at Android. I'll bet that they have at least a cople of working prototypes and a narrative to explain the new direction, if the decision is made to go in that direction. They won't be hasty but Microsoft must not take them for granted.
ldentz
50%
50%
ldentz,
User Rank: Apprentice
7/2/2012 | 6:03:36 PM
re: Nokia Needs A Good Contingency Plan
blah blah blah how do you now they do not have a plan , and i suppose you know how to run ms better than they do.
worleyeoe
50%
50%
worleyeoe,
User Rank: Apprentice
7/2/2012 | 3:37:26 PM
re: Nokia Needs A Good Contingency Plan
MS, you have to see the trend here. You need to bring the Tango model to these low-end devices that Nokia still relies on in 3rd world and developing nations. If you're getting $5-7 from Android, then you need to license WP8 Tango to Nokia et al at similar prices. Moreover, YOU HAVE TO GET WP INTO PREPAID IN A BIG WAY HERE IN THE U.S. Instead of beating Apple to the punch by at least a year, you're now going to be playing catch up in that market, with no real indication that you even intend to get into it. So a viable Nokia escape hatch is to purchase them and go hardcore with pushing WP down to these low-end devices. Just limit the number of tiles that these devices can have on their small screens.
Building A Mobile Business Mindset
Building A Mobile Business Mindset
Among 688 respondents, 46% have deployed mobile apps, with an additional 24% planning to in the next year. Soon all apps will look like mobile apps and it's past time for those with no plans to get cracking.
Register for InformationWeek Newsletters
White Papers
Current Issue
InformationWeek Must Reads Oct. 21, 2014
InformationWeek's new Must Reads is a compendium of our best recent coverage of digital strategy. Learn why you should learn to embrace DevOps, how to avoid roadblocks for digital projects, what the five steps to API management are, and more.
Video
Slideshows
Twitter Feed
InformationWeek Radio
Archived InformationWeek Radio
A roundup of the top stories and trends on InformationWeek.com
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.