Nokia on Its Way up or Out?

Many years ago, I had an old VoiceStream phone. It couldn’t hold more than 25 numbers in it’s address book, didn’t have digital encryption, and had a small door that flipped up to protect the keys. I used it as much as I use my cellphone now, which in 1999 means I racked up a small fortune in overage costs and text messaging fees.

Back then, there were only two types of cell phones; Nokia, and everything else. Nokia was that brand that everyone HAD to have. They were the holy grail of phone ownership.

Fast forward a couple years and I have a new job working at Sprint PCS. Since I now work for a phone company, I’ve learned a little more about them. There are more brands on the scene, and there are a LOT more features, but Nokia is still king. However, the company had learned how much people wanted their phones and had developed some cheap and reliable phones bearing their name. These phones would go on to become some of the most popular handsets in the world; they were reliable, ruggedly built, and were practically free with your service plan.

Then things got weird.

See, in another couple years, Blackberry came on the scene with their PDAs. And Palm. And HandSpring. Then Microsoft wanted in on the embedded market. Seeing all these other people in the market made Nokia want in, so they developed their own Mobile OS. It wasn’t all that great, but frankly, nothing back then was! Fast forwarding again, Palm buys Handspring, HP buys Palm, Blackberry stops making PDAs and makes phones, Sony embeds powerful cameras into their phones, and some California Fruit Company makes a device that changes everything.

The problem is that in all this booming technology, Nokia stopped caring. While that may not be accurate, it’s certainly how it feels to anyone who looked at their phones in the last 5 years. Their mobile OS (named Symbian) never evolved past that of a really old Blackberry. Their hardware was on par with a Windows Phone 6 handset from 3 years ago. The only thing that has managed to keep up with the competition has been their prices, which when you consider what they are bringing to the table has made it downright embarrassing to own one.

I last owned a Nokia three years ago. I owned it for two days. It was a 6126 and it was a nightmare; the only port was at the top of the phone and was covered by a flap that required you to remove the back cover to open. It had next to no useful features, and the ones it did have were buried under 5 menus. Menus were unintuitive and navigation was only done via the D-pad. Sound was horrible, and no one could hear me unless I used the included headset . . . which was plugged in via the useless top-port. The one gimmick the phone advertised like crazy was the fact it had a little button on the side that would spring the phone open for you. You know, in case you didn’t know by 2007 how to open a flip-phone. That “feature” also worked when you didn’t want to open your phone such as when it was in your pocket or holding it. It also answered incoming calls.

It took 3 minutes to boot up.

It killed my inner child.

We all know that since 2007, the mobile world has been completely changed; iPhone, Android, iPads, 3G, Angry Birds, etc. What hasn’t changed is that Nokia has still been selling the same crap while only changing the price. Nokia hasn’t just been resisting change, they’ve actively bashed it (a former EVP called using Android “like peeing your pants for warmth.”).

Deciding it was time for a change, the executive board hired a new CEO (and former Microsoft employee) to help them out. This week, the new CEO sent out an memo to the entire company basically stating what the rest of the world has been thinking about Nokia:

“The first iPhone shipped in 2007, and we still don’t have a product that is close to their experience. Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable.”

“We have some brilliant sources of innovation inside Nokia, but we are not bringing it to market fast enough. We thought MeeGo would be a platform for winning high-end smartphones. However, at this rate, by the end of 2011, we might have only one MeeGo product in the market.”

“…Symbian is proving to be an increasingly difficult environment in which to develop to meet the continuously expanding consumer requirements…”

“We poured gasoline on our own burning platform. I believe we have lacked accountability and leadership to align and direct the company through these disruptive times. We had a series of misses. We haven’t been delivering innovation fast enough. We’re not collaborating internally. Nokia, our platform is burning.”

So, that’s good right? When the person at the top sees what is happening and has decided to kick his company in the pants to change things, that can only be good!

Sure enough, the next day Nokia announced that their new MeeGo phone was cancelled and they were actively pursuing partnerships with OS manufacturers. Considering their only choices were Apple iOS (not likely), Google Android (who were still not happy with the “pee your pants” thing), and Microsoft Windows Phone 7 . . . it shouldn’t be all too surprising that Friday morning they announced a partnership with Microsoft.

This is good. Really good. So good, I’m willing to ignore the fact that the new CEO was from Microsoft and might have had this in mind the whole time. It’s the right move to make. So why am I wondering about it all?

Because in the wake of the announcement, over 1000 Nokia employees walked out. Granted, these were mostly people who had been working on Symbian over the last few years (so it was the people whose fault it was in the first place), but that’s still a large number. The CEO may have changed, the direction Nokia is taking may have changed, but the culture at Nokia still very much has its collective head in the sand.

The good news in all of this is that with a mature OS already built for it, Nokia can pump out a new phone very quickly. So while time will tell if this will be a rebirth for Nokia, at least it will be a short amount of time.