Nokia In Make-Or-Break Moment

After being the top seller of cellphones in the world for 14 years, Nokia failed to meet the challenge when Apple in 2007 introduced the dazzling iPhone that caught the imagination of design-conscious customers and rattled mobile markets, said experts.

For Nokia, it comes down to this: Is Microsoft’s new phone software going to get it back in the smartphone race, or is it going to be too late?, they added.

The Finnish company hit a downward spiral that has led to shrinking sales and market share, plant closures, thousands of layoffs and downgrades by credit agencies to junk status.

Research firm IDC said that in the July-to-September period, Nokia slid for the first time off the list of top five smartphone makers in the world. It’s still the second-largest maker of phones overall, but sales of non-smartphones are shrinking across the industry, and there’s little profit there.

Chief executive Stephen Elop sees Microsoft’s new Windows Phone 8 software as a chance to reverse that trend, describing it as a catalyst for the new models.

Microsoft Corporation is hosting today a big launch event for the software at an arena in San Francisco.

The launch of Windows Phone 8 follows on the heels of Windows 8 for PCs and tablets, which Microsoft released on Friday.

That operating system has borrowed its look from Windows Phone, meaning Microsoft now has a unified look across PCs and phones. The company has also made it easy for developers to create software that runs on both platforms with minor modifications.

Analysts are calling this a make-or-break moment for Nokia.

“Nokia is placing a huge bet on Microsoft and if the gamble doesn’t pay off, the losses can be high,” said Neil Mawston from Strategy Analytics, near London. “It’s putting all its eggs in one basket and that’s quite a high-risk strategy.”

In February last year, Nokia announced it was teaming up with Microsoft to replace its old Symbian and next-generation MeeGo software platforms with Windows. This move was made in the hope that it would rejuvenate the company and claw back lost ground.

Eight months later, they produced the first Nokia Windows Phone. Consumers didn’t warm to it, and it soon became clear that these phones, based on Windows Phone 7, were going to become obsolete. They can’t be upgraded to Windows Phone 8. Lumia sales slumped to 2.9 million units in the third quarter after reaching 4m in the previous three months.

Nokia says its Lumia 920 and 820 phones are just the beginning of a new range of Windows Phone 8 devices.

Mawston says that in theory, Nokia and Microsoft have a good chance of success as they offer an across-the-board system that stretches across home computers, mobiles, laptops, tablets as well as in the office, backed by Nokia’s strong distribution and hardware and Microsoft’s multi-platform software.

“If they can exploit that underlying market platform … and tie it all together in a good hardware portfolio, then potentially Microsoft and Nokia could be a very, very strong partnership.”

Reuters