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Has Nokia turned the corner? Is a new range of handsets and a new operating system enough to reverse the mobile maker's slide?

Posted: 26/10/2011 17:28

It's been a tough year for Nokia. The company's stock sheet from the last 12 months looks like a downhill skier's dream, and boss Stephen Elop has had to watch Nokia's slice of the 'Market Share' pie chart become slimmer in the markets vital for his survival.

But, in London today, a glimmer of silver appeared in the lining of the enormous raincloud that has sat above the Finnish firm's headquarters in Espoo. The first fruits of the Nokia/Microsoft partnership arrived in the form of the Lumia 800 and 710. And they're not bad.

The former is a high-end smartphone with a 3.7-inch touchscreen, 8-megapixel camera, and 16GB worth of memory. The latter will have the same processor as its bigger brother, but with half the memory for Nokia's resurrected music service.

When Elop announced he was forsaking the operating system (Symbian) his current employer had struggled to modernize for that of his former employers in February this year, eyebrows were raised. Not only was Nokia going to have to politely tell the 100-million odd users that its future wasn't in the operating system currently sat on their phones, it was going to have to tell, in slightly more stern terms, that thousands of software developers were out of the job.

Nokia was also going to have to deliver results on its new partnership, and fast. Since Apple's introduction of the iPhone in 2007, Nokia has watched in agony as €63 billion in market value fell of its balance sheet. The rot had to stop, and fast.

What personal hells the teams involved in today's unveiling went through in the past eight months to deliver a new phone, OS, and ecosystem is anyone's guess, but they did do it. We have to applaud them for that.

But, the overwhelming impressions of Nokia's first tentative steps out of its self-induced funk have been that they are baby steps at best. Windows Phone 7.5 - or Mango as it was codenamed - has been around for a while, and the features aren't exactly mind-blowing. By choosing Windows Phone OS, Nokia isn't just competing with Android and iOS, it's also competing against other handset makers who also offer the platform, but with better hardware to go with it.

Instead, these releases feel like tasters or prototypes of a far more impressive line of phones somewhere down the line. Which is fine, you can't expect a company to completely redefine itself in eight months. But, as the stock markets have judged - an initial rise of 3% before slumping back to close on 0.7% above the day's starting price - this isn't enough to excite people weaned on the yearly advances of Google and Apple.

The head of Nokia in the US has already told potential buyers these phones won't be crossing the Atlantic, and almost seemed to suggest that when the next-gen Nokias do arrive Stateside, they will be a new offering entirely. America was the Finns' most prized market, is it holding out for a better range of phones before it cautiously wades back in? Time will tell.

While the Nokia/Windows grand unveiling was the focus for the media, the announcement of three, Symbian based phones is a far more telling story about Nokia's future. In his speech at the launch, Elop indicated these phones were for the next billion people who have yet to buy a smartphone.

Nokia has been quietly gobbling up market share in emerging markets in Africa and Asia, providing cheap, simple phones that perform tasks well, if un-spectacularly. While this isn't likely to grab any headlines, it represents a way out of Nokia's stagnation.

But, there is another Scandinavian rival who is also capitalizing on this revenue stream, Sony Ericsson. The collaboration between the Swedes and the Japanese firms has just reported a 17 per cent rise in sales year-on-year, along with a four per cent leap in profits. How? By admitting the two-horse race between Google and Apple is not the only race out there. Instead, the firm has heavily invested in the Chinese market and mobile infrastructure. Glamorous? No. Profitable? Yes.

I hope Nokia does recover from its slump, but it might not be via ways we in the UK might expect. IBM went through the painful process of selling off its PC manufacturing division - the very thing that defined the company in the first place - choosing instead to focus on services and infrastructure. By spotting emerging trends early enough, Nokia too can follow Big-Blue's climb back up the blue-chip ladder.

 

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