So where did it all go wrong for Nokia? The cause of the company’s
decline looks very simple with hindsight: Nokia should have moved off
its smartphone platform Symbian and onto its next-generation platform,
MeeGo, much sooner than it did.
Years sooner.
By the time Nokia released its first MeeGo-powered smartphone – the
N9, in 2011 — it was far too late to compete with Android and iOS. In
any case, by that point Nokia had already publically committed to
Microsoft and in starting down the Windows Phone path, Elop made the
decision to abandon in-house alternatives such as MeeGo – meaning the N9
was effectively DOA.
“Nokia needed to have MeeGo ready to go into the market two years or
even now perhaps three years ago,” says Leach. “They needed to be on
their new platform probably round about 2008, 2009. If you think 2008
was just when Android entered the market, it was just a year after
iPhone was finding its feet. Nokia really needed to be there at that
point with its platform for growth — offering some kind of computing
experience on the device.”
Leach describes the mindset he encountered when working at Symbian,
between 1999 and 2004. “Symbian was always very phone-centric,” he tells
TechCrunch. “In my own experience of being at Symbian working with
Nokia there was always a frustration of [Nokia saying] ‘it’s got to be a
phone first, it’s a phone, phones sell.’ And we’d be saying ‘there is
different stuff you can do, you can adopt more of these kind of
computing paradigms’ — and they really didn’t want to hear that.”
The core problem that brought Nokia low is not unusual for successful
public companies that have worked their way into a position of
marketplace dominance over a period of years (see also: BlackBerry maker
RIM, for instance). Nokia’s business was cooking on gas in the mid
2000s, with massive profits and phone shipments keeping their
shareholders happy and clamouring for more of the same. But this success
evidently made it harder for them to change their business to react to
the looming threats from internet-focused companies. You could also
argue their view of the landscape ahead was clouded by their “blinkered,
phone first” view, as Leach puts it.
Point to the CEO — apart from Steve Jobs – who relishes telling the
shareholders it’s time to retire the gravy train, and start out afresh
on a hand-cranked cart. But that, in effect, is what Nokia needed to
have begun doing in the mid 2000s to survive disruption by a new
generation of web companies who understood the future was data, not
voice.
“What Nokia was looking at was their feature phones, which were still
selling healthily then,” says Leach. “That mid-range feature phone
market was the sweet spot and [their view was that] Symbian had to, in
some way, be a feature phone with a little bit extra. That thinking
really stifled them. And the problem then, when they realised they
needed to do more, was that Symbian was a bit too old and wasn’t
extendable enough to do the things they really needed to do.”
IHS Screen Digest analyst Daniel Gleeson makes a similar point: Nokia
wasn’t thinking big enough when it really counted – and without a grand
plan they weren’t able to act decisively to fix the strategic
weaknesses that were being exploited by others. “Their emphasis was on
incremental innovation of existing products rather than aggressively
pushing a disruptive innovation,” he says.
“Their smartphone strategy was muddled at the time to put it
politely,” he adds. “Symbian was the principal OS, but with Maemo/MeeGo
also in development; Nokia was far from clear in its long-term
commitment to either platform. Even if it could execute well, overly
risk-averse management prevented Nokia making this decision. By
attempting to juggle both, Nokia showed another fundamental problem, it
did not understand the importance of ecosystems.”