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Nokia Trying to Emerge from the Dust

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The phone company has been getting lapped for years, any burst of energy now is futile.

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"Nokia must accelerate the pace of its strategic transformation."

That was a comment on Nokia's (NOK) third-quarter conference call by CEO Olli-Pekka Kallasvuo. The transformation being referenced is into "a solutions company." To that I ask the question, where have you guys been for the last two years?

In January 2007, the first iPhone was shown to developers at MacWorld. In the 22 months since then, Nokia has done little other than wander the marketplace talking about what it's going to do and where it's going to go.

The company's N97 -- it's first real answer to the iPhone -- has inspired little interest. Yes, they shipped 1.8 million units in the third quarter, but that number is relative to what? We don't know! The real question is just how many will be sold when it starts going head-to-head with the iPhone at Orange and Vodaphone in the not too distant future.

Nokia has been talking all year about the Ovi Store, its applications, and services delivery platform. This is to be the critical cog in the new mobile industry that it believes can be "shaped" by Nokia. According to its press release back in February, the Ovi Store, "is a scalable media distribution network unrivaled in size and opportunity, with advanced content-targeting capabilities and monetization options that allow content providers and application developers to leverage the power of Nokia's global scale in devices." Wow!

Now how does that rhetoric compare with this comment from Thursday's conference call? At its September Nokia World conference, the company "took a meaningful step forward as we helped our developer and operator partners to see how we can together create a sustainable and mutually beneficial services ecosystem." What planet has Nokia been on? Why is it just starting to take "meaningful steps"? Why is its Ovi SDK (software developer's kit) still in beta? Does it have anything to do with the fact that it was only able to attract 345 software developers to its Developers Summit back in the spring?

I think the quick answer to my rhetorical questions is that the company is lost. Nokia moves like its feet are encased in concrete. Yes, it's hard to bring an aircraft carrier up to top speed, but it didn't stop Apple (AAPL). A plodding approach seems to be in its DNA.

Aside from the lack of urgency, Nokia also seems to lack vision. It seems to be stuck in the mode of skating to where the puck is (to paraphrase the Great Gretzky). By the time Nokia arrives, the market, like the puck, has moved on.

Nokia believes that its sheer size in the mobile-phone business will provide it a dominant place at the table of the mobile Internet. So many firms over the years have made that same false assumption as their market changes. What history tells us is that they're wrong far more often than not.
No positions in stocks mentioned.
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