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Nokia: When pigeons fly home to roast

Don't blame Elop or Microsoft for Nokia's catastrophic fall from grace

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The pipeline was the result of a paralysis that choked the company from 2008 onwards. By 2009 the competition had been given two years to polish its touchscreen products. Apple was able to add many missing features, some considered essential such as UMTS and MMS, to its iPhone. In 2009 Apple dropped the exclusive carrier deals and the sales rocketed. Google had the time to turn Android around into a fairly slick, iPhone-like UI.

Yet Nokia stumbled on with poorly specified hardware and still unable to put a modern UI over Symbian, despite thousands of man-years of labour. Even more importantly, competitors were adding value at the application layer, so that, for example, every phone can get the user to Facebook very quickly and easily. Nokia's engineers were still squabbling over which toolkits it might want to use.

Nokia's entire software engineer capability was created by Jorma Ollila and built around the idea of a "software factory", with teams creating a base platform from which product managers could pick their components. When Nokia was churning out 30 Symbian phones a year, all largely the same, it had some merit. But it was unsuited to the rapid development of distinctive, individual products.

On 25 May, Nokia announced it was bringing its first dual-SIM products to the Indian market – where dual-SIM phones are now almost a third of the market. Again, the lack of competitiveness has been a problem.

This is the legacy of the previous management – and it left Elop with little choice. The Microsoft decision effectively bypasses the remaining Nokia engineers. He's got rid of, or sidelined most of the "Indians". But what about the "chiefs"? Elop still has most of the executive management around him that got the company (and its shareholders) into the tank.

None of this was a secret, and it's a poor reflection on the analyst community who only just cut their formerly bullish ratings on Nokia.

This week Elop pledged to bring a Windows Phone to market sooner rather than later, suggesting it would most likely appear in 2011 after all. But why rush? Nokia will have two more bad quarters in 2011, and this may turn into three or four. In the 1990s, Apple saw its revenue halve, and in one year endured losses of 15 per cent of revenues. A company can crawl back from the brink. But a poorly differentiated or buggy range of new products will have much direr consequences for Nokia, and make it very difficult to tell any kind of "comeback story".

The idea of Windows-on-Nokia has great support from the operators, who have already counted out RIM, and don't wish to be faced with a duopoly of Android and Apple. Pundits should be more concerned that Microsoft, now Nokia's most important supplier, can maintain a reasonable place of development.

It's only taken a year for Microsoft to bring support for obscure languages such as Russian, Japanese, Brazilian Portuguese and, er... Finnish to Windows Phone. When the Chinese can produce an iPhone knock-off overnight, that should be worrying somebody. ®

The smart choice: opportunity from uncertainty

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