Nokia Needs A Good Contingency Plan

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.