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VIDEOWhat Nokia's Failure to Innovate Means for Investors
By
Bob Faulkner Jun 17, 2010 9:50 am
Apple produces game-changing devices, and competition that can't keep up will go the way of the dinosaurs.
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Most, like Motorola (MOT), Sony-Ericsson (SNE) (ERIC), Samsung and LG, have opted for some sort of Android-based strategy. With the exception of Motorola, these players have massive operations in other product lines that are the primary source of revenue and profits. Some of the also-rans like Toshiba and Fujitsu are merging their meager cell-phone operations together in hopes of providing some scale.
Still others like Research in Motion (RIMM) are back at the drawing board hoping to develop a new device that will generate more sales than yawns. That’s something Research in Motion should probably have done a couple of years ago but it was too occupied defending its entrenched position. Now with the iPhone (AAPL) opening the doors to corporate networks, the company is scrambling. Let’s say for the sake of argument that Research in Motion comes out with a fabulous new family of devices. They’d still likely be number-three in the battle for mindshare among consumers and software developers.
In July 2007, I wrote that I’ve never seen a product generate the interest and enthusiasm as the original iPhone did, and I’ve seen quite a few product introductions over the decades. My gut feel at the time was that it was a game-changer, and now a full three years later, its “competition” is still struggling to figure out what hit them.
There’s an old saying in the technology industry that if you don’t eat your own children someone else will. In this case, someone else did because of the inability of the entrenched competitors to take risks and innovate. Their management preferred to make minor changes around the periphery and milk their cash flows. But when real change arrived, they were the proverbial deer in the headlights.
This process has played out in the past and it will do so again. There once was a huge industry for companies like DEC, Data General, Apollo, Prime and Wang. They were the hot growth stocks of their time but they disappeared very quickly, just like the dinosaurs. Nokia, Research in Motion, Motorola, and others are the minicomputer companies of the current era. They just don’t know it yet -- nor do their investors.
No positions in stocks mentioned.
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