Nokia needs to pick a market, consultant says

In order for Nokia Corp. to rebound from its current struggles, the handset manufacturer has to narrow its focus and target either the consumer or enterprise market, according to a business consultant.

Dave Niles, president at New York-based consulting firm SSA & Company, said a recent slew of downgrades from financial ratings agencies and the constant barrage of acquisition rumours in the media should be a huge cause for concern at Nokia. In addition to these distractions, some financial forecasters predict Samsung Corp. will overtake the company as the world’s top smart phone maker later this quarter.

“Nokia is still operating in a 1990s fashion,” he said, adding that while Nokia has handled the product development cycle adequately, it has largely ignore the changes occurring in the mobile OS and app development space.

Niles added that the handset maker’s partnership with Microsoft Corp, which made Windows Phone 7 the principal mobile OS for Nokia, felt a little like a “Hail Mary.”

Earlier this month, Nokia CEO Stephen Elop defended his company’s decision to support the Windows Phone 7 platform at the Open Mobile Summit conference in the U.K. The chief executive also shot down weeks of speculation that either Microsoft or Samsung is set to purchase the company.

Elop said that a top priority for Nokia is to compete with the Android and iOS platforms and collaborate with other mobile players working to grow the Windows Phone 7 ecosystem. Nokia is even collaborating with Samsung “on various things related to Windows Phone,” the CEO said.

While the verdict is still out whether this strategy will work, Niles said, any step toward actually defining its new business focus is a good move.

To try and turn things around, Niles said, Nokia needs to figure out which market they want to own: consumer or business.

For Niles, the biggest upside to the Microsoft partnership would be if Nokia refocused its efforts and become an enterprise mobile phone player. This includes taking advantage of its ties with Microsoft to build out an extensive app universe that has more relevance to the business community than the current popular app store’s from Apple and Google.

“Microsoft has great relationships beyond basic connectivity,” he said. “If I’m Nokia, I can own the business market and unlike RIM, I can work with the computing operating systems, laptops, and everything else that Microsoft brings to enterprises.”

Niles added that RIM’s similar struggles in the industry might also persuade Nokia to choose an enterprise-focused strategy.

But Richard Windsor, a global technology specialist at Nomura Securities, who also attended this month’s Open Mobile Summit, said time is of the essence for Nokia and its Windows Phone 7 devices. The new phones, he said, will be expensive and cheaper models won’t arrive until next year.

“It is not too late for Nokia, but time is running out,” said Windsor, adding that while many potential customers have not decided which smart phone they will buy, when they do the OS they choose will stick with them.

– With files from Mikael Ricknas, IDG News Service (Stockholm Bureau)

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