Innovate or die: Lesson from Nokia
Board decisions could make or mar business interests. The impact can either be rewarding or debilitating. At the introduction of GSM in Nigeria, Vodacom spurned the then fledgling Nigerian telecoms market, an action they later regretted after MTN which took the bold steps, is today flourishing.
In April this year, Microsoft acquired mighty Nokia for $7.2bn, a deal which was not surprising to market analysts.
In a clear narrative account of how the acquisition started, Atumu Marho, an analyst gave a vivid picture of the acquisition journey on Omojuwa.com, a popular blog. It started with the iPhone.
“When Apple launched its ground breaking device in 2007, Nokia was the king of the mobiles, claiming over 49 percent of the market share with its Symbian operating system. However, due to over-confidence and a lack of willingness to be innovative with their smartphone software, Nokia began to lose its lead as numero uno.
“To make matters worse, competition from Asia in the form of Samsung and LG began eating away at their market share in the developing countries by offering affordable smartphone loaded with the Android, the newest software from Google. By 2011, Nokia’s market share had dropped by more than half to about 23 percent so they decided to change their strategy and hire a new CEO in the person of Stephen Elop, who was a former Microsoft employee,” Marho said.
In the narration, Marho said that Elop inadvertently started a process that led to the acquisition by dropping Nokia Symbian software and forming a “partnership with Microsoft, another company struggling to re-invent itself in the mobile space.”
In exchange for access to Nokia’s phone hardware and mapping services among other things, Marho said Microsoft will offer Nokia an enviable position as primary hardware partner for its Windows Phone operating system.
“Nokia fanboys around the world cried foul. Some blamed Microsoft for condemning their beloved Symbian OS to extinction, others wailed on Nokia for betraying them and siding with the Microsoft. Lots of tech pundits predicted that this partnership was the step in a series of moves that will eventually lead to the outright purchase of Nokia by Microsoft.”
Today, as Marho said, those predictions have all but come true and by first the quarter of 2014, Nokia will no longer be in the business of making phones of any kind. It is now riding on Microsoft train.
How did the 147-year-old Finnish company which was synonymous with phones get it wrong? It failed to innovate early enough. “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. .
“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 publicly committed to Microsoft”. According to another analyst in the report “Nokia needed to have MeeGo ready to go into the market two years or even now perhaps three years ago,”
“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,” Natasha Loma, another analyst discusses in a report.
Nokia may have declined joining Android on the excuse that there were too many players already hooked to it.
After acquisition of the firm, Microsoft is repositioning to reclaim Nokia’s market as it rolls out next generation phones across markets. It recently introduced Lumia 930, a touch screen phone, into the Nigerian market as part of its plans to bounce back, some of its officials have said.
“It is our current flagship device, together with older devices such as the Lumia 1020 and the Lumia 1520. The Lumia 930 builds on our core pillars of design and imaging, while offering an overall fantastic experience on the Windows 8.1 platform. However, the Lumia story is far broader than the 930.
“It stems all the way from the Lumia 520 to the 630, 730, 830 and 930. Microsoft is building a portfolio of devices across price points. They are also driving innovation down to the lower price points. This is part of the strategy to win and create a formidable third ecosystem,” Airiafo Fred Oriunuebho, communications Manager – West and Central AfricaNokia West Africa (Nigeria) Limited, a subsidiary of Microsoft Mobile told BusinessDay.
He said the acquisition opens up significant opportunities for its employees and customers. “Microsoft is a globally recognised company with an enormous breadth of products and services, a strong brand and a wealth of resources. With the Nokia devices team now onboard, it brings weight to the new strategy announced in July last year. Microsoft is the platform and Productivity Company for the mobile first and cloud first world,” Oriunuebho explained.
The market waits to see how Nokia, which is now a subsidiary of Microsoft, will reclaim the phone market it once led as Samsung, the Korean firm, powers on in the phone market.
Daniel Obi