Nokia's North American troubles continue

Barely 12 hours since i posted my article on North Amercia (NA) being the Achilles Heal for Nokia, my observations stand vindicated by Fortune the magazine. Here are the excerpts:

http://money.cnn.com/2009/01/12/technology/hempel_nokia.fortune/index.htm?postversion=2009011209

To revise the first lot of observations:

1. Over the last 2 years, Nokia has conceeded 50% of its market share in NA to competition. A fall from 15% to 8% to the Blackberry's and iPhones of the world says it all. To cut it short: Nokia has not been able to get its act together in the NA market.

2. Nokia's hopes of being recognized as a technology leader would underfall if it is not able to place the right bets in the NA market. Afterall the NA is the world's fastest growing smartphone market. Moreover, by being a marginal player in this market, it is loosing the attention of software and application developers.

3. Nokia's venture across the Atlantic had a false start in terms of getting the design element right which is where Razr stole the show.

4. Nokia's pre disposition of being directly in touch and controlling its consumers doesnot go well with the NA market dynamics where operatos bundle device with services and lead the launch. Thus operators dont carry any of the Nokia smart phones in North America even though N 95 and E 71 are one of the smartest devices these days.

5. Presently Nokia seems to be missing the technology bus where i Phone and Blackberry are driving off smartly. A latecomer to the "touch technology", even after 1.5 years of iPhone Nokia doesnot boast of a multitouch phone (The 5800 is not a multi touch phone)

The N 97 as a device and Ovi as a service looks to break the NA jinx and this is one front that could well decide Nokia's future. If Nokia's products in NA fail in 2009, it should probably focus on the developing markets more and cream them as a mass player instead of playing as a technology player.

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.