Application is King; Why Nokia is Fading?
Olli-Pekka Kallasvuo, chief executive of Nokia, in an interview with Financial Times mentioned his company wants to be a music and application supplier (http://www.ft.com/cms/s/0/2b1204ea-9009-11de-bc59-00144feabdc0.html). I guess Mr Kallasuvo has bought an iPhone recently! As the market leader, Nokia has seen its average handset selling price fall to $80 from $108 in the fourth quarter of 2007. Nokia’s lack of success in mid to high-end phones (smart-phones particularly), push the company to focus on developing countries as its main market. This will reduce Nokia’s profit margin even further in a brutal market with a shrinking margin.
While its new phone releases turns into disappointments; N97 was the latest flop, Nokia’s latest ventures into application domain was another disaster. Ovi application store started with a crash and dramatically lost the vibe. Nokia needs to understand, iPhone success is part to hardware superiority, but mainly it is because of Apple’s successful application delivery platform. Apple developed vertical value chain before launching its iPod and iPhone line of products. I guess its time for Nokia to go back to its root; rubber and shoe.