Nokia needs to shape up

Nokia, however successful, needs to fix a few big problems to retain its spot as the world's number one cellphone manufacturer.

This is according to Gartner vice-president and analyst, Nick Jones, who says the problem is threefold; the smartphone, mobile services and investor perceptions.

“The first, and probably the most pressing problem, is the smartphone,” he says. “Nokia does not have a competitive model to go head to head with the likes of Apple and Android.” Also, Jones states, the mainstream Symbian operating system is not competitive and the good hardware is being let down by Symbian not being as usable as Android.

“One of the things Nokia needs to do in the area of smartphones is to fix MeeGo,” he says. However, MeeGo - a Linux-based open source mobile operating system project - is still under development.

Earlier this year Nokia stated that it plans to use no other software than Symbian and MeeGo, which Anissi Vanjoki, head of its mobile solutions unit said in a blog post.

“Nokia intends that MeeGo will be the high-end platform that can compete with Apple, and, in my view, will likely enable Nokia to get into new device types such as tablets,” says Jones.

However, it's rather late for an overhaul, which is a problem for Nokia as it needs a viable competitor to iPhone as soon as possible, because it is quickly losing ground, especially in the all-important US market, he says.

The second thing Nokia needs to work on is the service business, according to Jones. At the Nokia World conference held in London - more about strategy than apps and handsets - the cellphone manufacturer revealed much of its strategy to cling to the top spot in the cellphone market.

However, he says, Ovi is lagging behind Apple's app store, and the main events in apps at Nokia World were in the area of the app store rather than apps themselves.

“Nokia has refreshed the store user experience and made it easier for a wider range of developers to create and submit apps. It has also improved the billing experience with better support for operator billing, which is likely to make it easier for people to buy apps in markets such as SA which have a strong pre-pay user base.”

Apart from a very few exceptions such as Nokia's own apps like mapping, apps are not announced at Nokia World because most aren't written by Nokia, Jones says, and this is a problem; Nokia isn't focusing on services.

The Ovi developers have not generated applications that can compete with Apple and Android, and thus have not generated an interest in outsiders creating apps for Nokia.

This, he says, leads into Nokia's third issue, which is investor perception.

According to Jones, Investors have become disillusioned with management not doing enough, and want to see reaction to other brands. “Nokia needs to work on making investors and developers believe that it is going to turn around.”

“Don't get me wrong,” Jones sates, “Nokia is still doing well in terms of low-cost handsets, life tools [such as AppCraft's e-literacy app] and emerging technologies, but is lacking severely in the smartphone platform. It is moving, but not gaining share.”

Nokia's smartphone challenges aren't so much around apps as devices, platforms and expectations, he says. “In my view Symbian 3 is still not as good as Android and certainly isn't as good as iPhone. Until the devices and platforms catch up, developers will be less keen on writing apps for them.”

Jones says Nokia needs to get a cycle going so that people will write apps, and users will, in turn use them, which will make developers create more.

As to Nokia's standing in Africa, Gartner reports Nokia as being very strong and holding about 95% of the market share in the Middle East and Africa.

Because of the market share in Africa, the improvements in the app store, the wider range of developers and easier payment options should (in the long term) translate into more app choice for SA users, says Jones.

Also, Nokia will implement more intelligent recommendation engines in the store which will take into account factors such as location when suggesting apps to users. “Nokia's entry-level e-mail offering will also likely be attractive to SA users who have don't have Internet access.”

Several new Symbian devices were announced at Nokia world, including the N8 which is a high-end touch-screen consumer device and the E7 which is a business device. Jones says both will be interesting to users at the top end of the market.

Although it wasn't discussed at Nokia World, Jones says, the company has, in recent months, introduced some low-priced smartphones, which could open up the smartphone experience to new customers. “Also non-Symbian devices such as the first touch-screen S40 will be attractive at the lower end of the market.”