Mistakes, heavy competition forces Nokia to reboot
Microsoft is helping Nokia to further lower the cost of its smartphones, as it aims to better compete with Android
IDG News Service - Nokia is betting on camera functionality, navigation technology and further price reductions for its Windows Phone-based products to turn the company around after a round of cost cuts. Breaking Apple's and Samsung's stranglehold on the smartphone market won't be easy, however.
Nokia's announcement Thursday that it will lay off 10,000 workers by the end of next year to cut annual operating costs by an additional 1.6 billion euros ($2 billion) doesn't surprise analysts.
"It is definitely a move where Nokia is facing up to reality. The size of its business needs to reflect the market opportunity the company has today, and that is very different from Nokia in its heydey," said Ben Wood, director of research at CCS Insight.
Richard Windsor, global technology marketing analyst at Nomura International, agrees: "The company needed to announce something fairly drastic in order to realign itself with the reality it faces."
Earlier this year, Nokia announced that it would be laying off workers in Europe and Mexico and move some manufacturing capability to Asia to be more efficient.
For Nokia, a combination of factors have put the company in an increasingly difficult situation. Nokia's strategy simply isn't playing out as well as it had hoped, according Wood. Sales of its Windows Phone-based Lumia smartphones haven't taken off to the extent it needs, the appetite for Symbian-based smartphones has disappeared very quickly and Nokia has also struggled in the feature-phone sector.
In general, for companies that aren't Apple or Samsung Electronics, today's smartphone landscape is pretty grim.
"It is such a difficult, competitive market. The stranglehold that Apple and Samsung have on the market in terms of both units and profits is just leaving crumbs for the rest of the market to fight over," said Pete Cunningham, principal analyst at Canalys.
"The fundamental challenge has been breaking through the strength that Android and Apple have in the retail environment," Nokia CEO Stephen Elop said during a conference call related to the changes.
Ultimately, Nokia has to make its feature phones and smartphones more attractive to consumers. To achieve that, Nokia is betting big on imaging and location technology.
The Symbian-based PureView 808, with its 41-megapixel sensor, has changed the game in photography and will appear in the rest of Nokia's smartphone line-up in the future, according to Elop.
Nokia also plans to acquire imaging specialists as well as all technologies and intellectual property from Swedish company Scalado to boost its capabilities.
"The problem Nokia faces is that other manufacturers have really seized the agenda with camera capabilities ... But we are seeing signs with the PureView technology, although on the wrong software platform, that Nokia still has a very strong competitive edge," said Wood.
- 15 Non-Certified IT Skills Growing in Demand
- How 19 Tech Titans Target Healthcare
- Twitter Suffering From Growing Pains (and Facebook Comparisons)
- Agile Comes to Data Integration
- Slideshow: 7 security mistakes people make with their mobile device
- iOS vs. Android: Which is more secure?
- 11 sure signs you've been hacked
- HP HAVEn: See the big picture in Big Data HP HAVEn is the industry's first comprehensive, scalable, open, and secure platform for Big Data. Enterprises are drowning in a sea of data...
- What Datapipe customers need to know about the new PCI DSS 3.0 compliance standard This handy quick reference outlines what PCI DSS 3.0 is, who needs to be compliant and how Alert Logic solutions address the new...
- The 12 PCI DSS 3.0 requirements addressed by Peer 1 Hosting This handy quick reference outlines the 12 PCI DSS 3.0 requirements, who needs to be compliant and how Alert Logic solutions address the...
- Defense Throughout the Vulnerability Life Cycle This whitepaper provides insight into how to leverage threat and log management technologies to protect your IT assets throughout their vulnerability life cycle.
- Meg Whitman presents Unlocking IT with Big Data During this Web Event you will hear Meg Whitman, President and CEO, HP discuss HAVEn - the #1 Big Data platform, as well...
- The New Way to Work Knowledge Vault This Knowledge Vault focuses on how, in today's increasingly virtual world, it's more important than ever to engage deeply with employees, suppliers, partners,... All Smartphones White Papers | Webcasts