Does Nokia Have The Guts?

Over at Daring Fireball, Gruber referenced this article at Engadget about the future of Nokia.

Gruber:

Count me as a Nokia pessimist. I think their leadership lacks the balls to move ahead strategically.

He may very well be right, but Nokia has been in a similar position before, and – like Apple – they had to hit rock bottom before bouncing back.

Nokia has been around since 1865. In the past century-plus, they have made everything from tires to cabling to toilet paper. In the 60’s they got heavy into electronics and telecommunications and later TVs, PCs and eventually mobile phones.

By the late 80’s, they still had a sprawling product line, but no real identity – they had been around so long, and produced so many different products, they were the Finnish equivalent of General Electric. Sure everybody knew who they were, but they weren’t dominating any markets. (I still remember visiting the Helsinki Zoo in 2001 and seeing a paper towel dispenser with “Nokia” written on it in Bell Bottom. They hadn’t made paper towels in probably forty years or more.)

In 1988, Nokia’s CEO, Kari Kairamo, committed suicide. The company went into mourning for a time and, soon after, the new management determined to focus their product line on mobile phones and infrastructure. They divested everything else. Imagine GM only making the Volt from now on. That’s how radical it was.

But that singular focus gave them the strength and momentum to dominate the mobile phone market for more than a decade. To the point where in the early 2000’s, there were rumors of Nokia putting Motorola and Ericsson out of business (at least the mobile phone business).

Now, a scant nine years later, Apple is the rising star. RIM is the established leader in business phones. Android is making interesting inroads, and Windows Mobile is scooping up whatever it can get. (I honestly don’t know how well the Pre is doing.) More and more people are buying smartphones over the cheap/free feature phones that are Nokia’s bread and butter.

Nokia is still producing a majority of the phones purchased in the world, but they’re essentially disposable, and their efforts at the mid- to high-end have been also-rans at best (I know they make some quality smartphones, but nothing that’s really made headlines in the past six or seven years). Their platform strategy is ancient and fragmented (Symbian? Maemo?), and their hardware designs are pedestrian.

They need to do what they did twenty years ago (minus the suicide, of course): step back, focus, divest and innovate. Essentially the same thing Apple did with the return of The Steve.

The only problem is that Nokia has a dominant position in the mobile market right now (and all the legacy/support problems that that entails), whereas Apple was barely hanging on  to a few percentage points of the PC market in the late 90’s and could afford to make a break from the past to move forward.

Nokia management had the balls to do it twenty years ago. The question is, do the have them now?

I worked in the Nokia Enterprise Systems division for six years. If their management during the years of 2000-2005 reflects their management now, I have to agree with Gruber – I’m pessimistic.

They had no strategy, no long-term vision. They thrashed back and forth between supporting competing product lines in a single division. The one thing they did really well was lay people off.

It would be a shame for Nokia to fail, in whatever measure, because they are such a big part of the fabric of the Finnish culture (at one point they employed 1% of the population – think about that). I hope the executives can see the writing on the wall and make some drastic changes before it’s too late.