Reproduced from a Forbes article by Lionel Laurent:http://www.forbes.com/2009/07/27/nokia-mobile-motorola-intelligent-technology-nokia_print.html
No one at Nokia is sleeping easily these days.
While reporting a second-quarter sales drop of 25% and a profit dive of 66% earlier this month, the mobile phone giant admitted that it had to “develop new skill sets.” And how.
Despite its weak quarter, the Finnish company is still at the top of the sales charts, moving 100 million units on a quarterly basis. Industry watchers are worried that it is starting to look a lot like Motorola in the mid-1990s–a mighty incumbent losing its edge to rival upstarts. There’s concern that Nokia is a hardware whiz living in a world increasingly dominated by software; and despite its forays into online services and application stores, it needs a big refresh to catch up.
So, what should Nokia do?
Improving its user interface for handsets would be a good start. Nokia’s Symbian operating system is still widely used, but the “S60” interface is showing its age. Gartner Research analyst Carolina Milanesi says that while Apple’s rival iPhone interface is very smooth and “horizontal,” requiring only one or two steps from the start menu to perform a function, S60 takes the user “deeper and deeper” into a Web of choices and processes. The problem is exacerbated by Nokia’s attempts to shoehorn S60 into new touch-screen phones, whereas Apple’s system used touch-screen technology from the beginning.
A better interface would also help Nokia close the gap between its online services, which offer everything from applications to music, and its technology-rich handsets. For instance, Nokia’s high-end handset, N97, has a more powerful camera, better map navigation and wider multimedia capabilities than the latest iPhone. But N97’s less sophisticated interface limits the user’s ability or desire to connect with Nokia’s services, giving Apple a clear advantage.
DnB Nor analyst Fredrik Thoresen says the gap makes it nearly impossible for users to access Nokia’s online services. “It’s a hassle. I’ve never done it,” he says.
It’s surprising that Nokia has fallen behind, given that it first announced its foray into online services back in 2007 with an app store it would call Ovi. Indeed, the company appeared ahead of the game in controlling the end-to-end chain from hardware to software. But integrating these services has proven difficult, partly due to resistance from network operators–fearful that Nokia is stealing their thunder–and also because Nokia’s user base is so broad that even something as simple as a one-stop online shop threatens to become an unwieldy behemoth.
But if Nokia can keep hammering away at Ovi, which launched in May, giving it mass-market appeal with an improved and easy-to-use handset interface, all the company would need to add is a killer touch-screen design. Oppenheim analyst Nicolas von Stackelberg thinks Nokia should use capacitive touch technology, a la iPhone, which responds more accurately to the finger’s electrical conductivity.
In terms of Nokia phones’ display screens, MKM Partners analyst Tero Kuittinen says the ideal size is 3.5-inches, which would make playing games and browsing the Internet a lot easier. He also believes Nokia should release more touch phones at $200 and below, like the music-oriented 5800 and upcoming 5530, to gobble up users in low-end emerging markets before Apple and BlackBerry maker Research In Motion get there.
“The game of migrating new features into cheapie phones is the one that turned Nokia into a behemoth in 1997 to 2007,” says Kuittinen. “That is the game that must be the core of the comeback plan in 2010 and beyond.”
And a comeback is exactly what Nokia should be planning. For the past two years, the company has rested on its laurels in the face of Apple’s success. By admitting it has new skill sets to learn, perhaps Nokia is ready to fix its problems, catch up to Apple and maybe even surpass it in the software and design arenas.
Let’s hope Nokia can silence, once and for all, its comparisons to Motorola.