Stephen Elop sheds light on the scale of change necessary at Nokia

10Feb11

Nokia’s new CEO, Stephen Elop, has clearly flagged the difficulties faced by the brand in a leaked internal memo Here.

The scale of the decline in market share has been accute over the last 3 years, dropping from 38% market share in 2009 to 28% in 2010 alone according to IDC. Apple, Blackberry, HTC and Samsung have been dominating the smartphone space. But Elop has also highlighted the loss of ground Nokia has seen in the value for money handset market.

While I believe it unlikely that the established players will completely vanish over the next 15 years. Their market share and long term relevance will probably be unrecognisable by the standards of the last 5 years; as market entry to this sector is growing easier.

From a software perspective there are better performing operating systems, currently such as Android Gingerbread and Microsoft Windows Phone 7, that are easy to licence; as well as Apps that are delivering great functionality. At the same time Chinese and Taiwanese manufacturers are producing competitively priced, high quality hardware.

So whether white label manufacturers choose to create brands with more compelling products, or the mobile networks themselves help to differentiate themselves through the development of more unique handsets. It’s possible to believe competition in this sector will come as much from new players, as it currently does from the existing set of manufacturers. HTC and INQ provide evidence of this approach.

Brands that have faltered in recent years, such as Motorola and Sony Ericsson, have also shown that recovery in the mobile telco market is very difficult. Even when a brand starts to devlier competent and innovative products again.

On Friday Nokia are due to announce their new strategy to the media.

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