Nokia’s choices:Death by a thousand cuts or Sell-off
Over the last month or so, Nokia’s share tumbles are in excess of 27% from a peak of $3.02 to $2.20 as of today. Even while the Windows7.5 powered Lumis is not in the same breadth as Galaxy SIII or HTC One or iPhone, the Lumia dished out some hope to Nokia in terms of survival in the smartphone space. Now with Windows8 working on a completely different kernel compared to Windows 7.5, Microsoft has essentially killed all the Windows7.5 smartphone sales, as retailers and operators will put off their next Windowss Phone purchase till such time when Windows8 smartphones are launched.
Windows8 will run on Nokia, Samsung, HTC and Huawei. While others may still take things in stride, Nokia which has run a “Windows Only” strategy has the most to lose. Already in its death spiral, Nokia is rapidly running out of time, cash, options and sales. And the overt dependence on Windows has left them high and dry with no options to fall back upon. I am not sure, but Nokia’s dumping of Meego (given its brilliant acceptance) will be haunting Stephen Elop. For all that Nokia has risked in the last year and half, Microsoft hasnot really given Nokia any great hope in terms of Windows on Nokia being a differentiated offering (vis-à-vis Samsung, HTC and Huawei). A stark contrast in this comparison is Samsung which has stakes across Android, Windows, Bada and Tizen as well. Nokia may have to bleed profits to sell off the Lumias in the channel and markets.
With depleting cash reserves, a smartphone line-up which is not as invigorating, a junk rating for its credit rating, a double cut (in 6 months) on earnings guidance, Nokia’s H2, 2012 will be the worst double quarter on record. Given the current strength of the Samsungs and Apples around, it is unlikely, that Nokia will recover any lost glory 2013-14. For Nokia, it’s a Hobson’s choice- Death by thousand cuts or a sell off. A sell-off could still make money for Nokia even now.