Nokia Case Study

The difficulties faced by Nokia as shown by the financial ratios

The pains that have afflicted Nokia in the smartphone space in the last few years have been well documented: declining market share, device resourcing mis-steps (most notably in the N97), developer frustrations and a poor service layer implementation.

Above all, it has been clear from the above ratios that Nokia has been unable to sustain its position at the high end of the smartphone market. This is best seen when drawing a comparison with Nokia's dominant smartphone market position five years ago, exemplified by the release of the Nokia N95, with its position today.

To an extent, the severity of the issue facing Nokia has been glossed over by the impressive growth into the midtier and low end smartphone space. The growth here means that Nokia has remained the biggest manufacturer of smartphones by some distance.

Nokia's current position is not untenable, but the contention is Nokia cannot continue on its current path. The biggest concern is not the position now, but what it would be in two or three years' time if no changes were made. Strategy changes of this nature are not about the now, they are about the next. This means things are likely to get worse before they get better.

We can safely conclude that Nokia has failed to keep pace with market disruptions from its rivals and is therefore lacking in competitiveness that the battle of devices has been superseded by a battle of ecosystems and that Nokia has lacked accountability and leadership to drive the company through changing times.

A common theme in recent assessments of Nokia is that bureaucracy has directly impacted on its ability to execute strategy. This might not be an unfair assessment, but it is sometimes a too convenient catch-all for a wide range of issues. Going forward, the importance of fixing the execution issue is common to any strategy that is to be followed.

The Road Ahead (Partnering with Microsoft to stay alive)

The discussion around Nokia's smartphone strategy decision comes down to this simple question: Could Nokia be successful in the smart devices space by following a 'go it alone' strategy? There are two answers to this question, each of which leads to a different strategy. If yes, continue the Symbian-MeeGo-Qt strategy. If no, a strategic partnership with Microsoft and a switch to Windows Phone offers the best way forward. In both cases, Nokia will need to improve upon its execution.

The trouble is that there are so many factors and uncertainties involved that it is just not possible to give an absolute answer to the question above. To an extent, it means the decision then comes down to assessing relative risk and potential return.It is possible to make a strong case that Symbian-MeeGo-Qt remains a viable option from a pure technology perspective; indeed,