How Nokia Blinked in America: The classic Sun Tzu (Part I)

The second statistic up there is the more relevant one to the point. Worldover Smartphone sales jumped 11.5% 07 to 08 and yet Nokia lost 3.1% in the race. Thats a swing of 15% that Nokia will not be too happy about.

Nokia enjoys 38% of the global mobiles market and for the 2008 calendar year, it sold a combined total of Samsung and Motorola and Sony Ericsson sales. Thats big by any yard stick. Thats enviable and thats some leverage, they have there. However, Nokia's market dominance has been more pronounced in Developing countries in Asia, Africa, Middle East, Asia Pacific and China. To be precise it is its total dominance in India and High market shares in China, that Nokia is able to garner its 38% of the global pie.

However, the story in North America is distinctly different. In essence, Nokia has not been good in developed markets and operator strong economies. Its not as if the it lacks the technology edge: N 95 and E 71 are one amongst the favourite smart phones around the globe. However, Blackberry and i Phone and from the looks of it Google Android have made greater impacts in the operator markets.

An analysis of the Nokia weaknesses from the Sun Tzu perspectives (from Sun Tzu: Art of war)

1. Nokia straddles all segments in the market and is present all across the 6 continents. Thats some size and some leverage. However, as the industry multiplies and proliferates, it could become the fatal flaw as well. In the NA (North American) context, there were segments of the population which needed more specialized services. Something that Nokia missed and other capitalised upon.

2. Sun Tzu emphasizes knowledge of the battlefield/terrain/other conditions. Thats Nokia's first undoing in NA, where the technology preference is CDMA and not GSM which is where Nokia is at home. Inadequacy in technology had a very important role to play in the sense that it did not allow Nokia to get a foothold in NA.

3. Sun Tzu emphasizes alliances. Sadly, while Nokia phones are fielded by most of the major operators in NA, the alliances are mostly very loosely transaction, product bundle based. Operators in NA believe in working with the OEMs in terms of product development from the scratch before putting the steam behind those products through their network.

4. Sun Tzu emphasizes Moral Influence: This sounds strange in the NA context, but there is a inclination to the RIM Blackberry and the Apple iPhone because of their Americaness. Controversial? Yeah Right. You need to look at the previous best: Motorola to understand how the Americans probably favour Americans.

5. Sun Tzu emphasizes Flexibility: Back in 2006 Motorola was whipping Nokia in the market with a single product called the Razr. It went to become one of the most cherished line of phones (After which Moto could not keep with the market). Nokia was selling candybars and kept selling candibars and still kept selling candibars 1.5 years after Steve Jobs came with the ground breaking IPhone. In retrospect the inability to flex their product lines to keep up with consumer choices gave Nokia the Grand dad image.