Nokia’s transformation depends on success in emerging markets

Posted on January 15, 2010  /  2 Comments

What I like about the new economy is that no one is king of the hill for too long. IBM, the target of Apple’s famous 1984 ad, almost went under and reinvented itself as an open source champion for the comeback. Microsoft is no longer looking like a big bad bully. And Nokia who seemed to own the mobile space is scrambling. It is getting hammered not only in the network equipment space (where the alliance with Siemens did not do much good) but in the main game which is handsets. What is truly interesting is that the success of the comeback strategy depends on emerging markets and therefore on the BOP. No wonder we have lots of readers from Northern Europe on our website.

Last February Nokia’s management kicked off what is internally known as a “transformation project” to address all these concerns. “We needed to move faster. We needed to improve our execution. And we needed a tighter coupling of devices and services,” explains Mary McDowell, Nokia’s chief strategist. The firm has since introduced a simpler internal structure, cut its smart-phone portfolio by half, ditched weaker services and begun to increase Ovi’s appeal to developers by allowing them to integrate Nokia’s services into their own applications. While giving Symbian a makeover it is also pushing a new operating system, called Maemo, for the grandest, computer-like smart-phones.

All this will no doubt help Nokia come up with better, if not magic, products. The firm may even reach its goal of 300m users by the end of 2011 because its efforts are not aimed just at rich countries, but at fast-growing emerging economies where Nokia is still king of the hill, such as India. There, services such as Nokia Money, a mobile-payment system, and Life Tools, which supplies farmers with prices and other information, fulfil real needs, says John Delaney of IDC, another market-research firm.

Full story in the Economist.