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Spillikins #108. How to Destroy a Successful Company in Two Years
This week happened to be quite calm and devoid of dramatic events.
Every year I become more and more convinced that all unsuccessful companies fail differently. Nevertheless, their downfall features several typical stages if companies work in the same market. When I analyze any development I imagine how a CEO takes a book of recipes to destroy a company off the shelf and reads out from it in his office:
In fact I can continue this list on end. When Siemens Mobile was dying many readers gave me stick. Some people could not believe it even when the company was officially shut down. They thought Siemens would come back with a bang, but it never happened. Other recent examples include a deliberate destruction of Sony Ericsson and the retreat of Motorola to its home market. In all cases CEOs were instrumental in the demise of their respective companies. Sony Ericsson fans believe as the company is profitable half the battle has been already won. At the end of 2010 SE started its financial experiments to show their market share was stable despite profits fluctuations. This game has no winners, but the issue is often handled by another CEO.
Why do I mention old developments? I got my hands on Nokia plans for 2011. These plans were developed under the auspices of Stephen Elop, who came from Microsoft. He is indeed a Trojan horse sent by Microsoft to Nokia. So far all actions of the new CEO are aimed at the deliberate destruction of Nokia, its portfolio, market share and value. The only goal could be taking care of future customers of the new Nokia when the legendary company finally gets destroyed.
Remember the number of models announced by Nokia after the arrival of Elop! What did Nokia announce in Barcelona when other companies displayed their abundant products? Market leader decided to ignore the congress and the PR department of Nokia said they had nothing to show at the time. Which models were unveiled since the appointment of the incumbent Nokia CEO? Even more important are the models, which did not see the market shelves.
On October 14, 2010 Nokia C5-03 was announced. This accessible smartphone turned out to be the most expensive in its segment. One of our readers remarked that C5-03 was hopeless and could not enjoy popularity whatsoever. I fully agree with the judgment.
Two models were shown on November 22, 2010: C2-01 and Nokia X2-01. Both of them are merely carbon copies of earlier handsets. These phones can be popular, but they do not offer anything new. The only objective is to adjust prices.
During the last 5 months the market leader announced only 3 models all of which offer nothing new. Why boost the disappointment among customers? I am not going to mention the number of phones unveiled by others and their technological advantage. Even a troubled Sony Ericsson announced twice as many handsets. What does it mean? Nokia has phones, but is reluctant to announce them.
What Nokia is planning to offer in 2011? Surprisingly, until the 4th quarter of 2011 we cannot expect innovative models. New phones will only replace the existing offerings. Even these models will be not numerous. I cannot give you a sensible reason for that. For example, Nokia has no plans in the lower end of touchscreen phones unlike all its rivals. Main players remain the same: Nokia 5228 and Nokia 5230. These models have come to the end of their lifecycle and Nokia cannot decrease prices any further.
The most interesting events are still to come. All key models (for example, Nokia 6700 Classic remains to be quite popular) in Nokia lineup were discontinued. In the second quarter of 2011 the company will be selling odds and ends without any adequate replacements. The goal must be to show the market share decrease, which requires getting rid of best models or offering weaker ones instead. I do not like conspiracy theories, but the management of the company deliberately turns Nokia into a defenseless creature. I hope they will not kill the animal itself.
Do you want 8000 series? There is a wonderful continuation, which is bound to impress… The price and image elements are crazy. We will get Nokia C7 with the maximum of memory, back cover of steel and leather. The solution for rich users is ready! Who cares that 8000 always had sliders with a special click. These handsets always had image instead of impressive specs. Now iPhone 4 has a rival of steel and leather. Everybody gets crazy individually.
I can enumerate more silly models and weird solutions, but it makes no sense. Unfortunately, Nokia decided to go down like a led balloon and lose all its strong points along the way. Think for yourself, what is the rationale behind the solution.
Last week Nokia tried to measure the market reaction towards plans associated with the discontinuation of Symbian. According to Stephen Elop this OS is not contemporary enough. Unlike futile discussions on forums Nokia measures sales, which were not impressive. After February 11 when the new Microsoft based strategy was unveiled only one week has passed, but it was enough to feel the trend. The plan to sell 150 million handsets within one year is now under threat. A weak PR department, which suffers alongside the rest of Nokia Empire, is trying to make amends. They promise the brave new world, but the date of its arrival is not known. Current Symbian^3 models will get an updated interface one day. Widgets will have different size like those in Android. The status bar borrowed from Android will show info on events if you drag it down. Ironically, this solution is already available on all touchscreen models apart from Nokia (and accessible Samsung models without Android).
Moreover, Nokia changed the icons. Old or new they are strange nonetheless. Look at the sample photo. Nokia is deliberately destroying itself. Forget about plans to sell 150 million Symbian handsets. Nobody will finance such a feat as the company is dreaming about MS Windows Phone. The only way is forward and down.
I like senseless research data, which is quoted by all media outlets. Last week the share of mobile browsers in February 2011 was in spotlight. The British company iCrossing used Statcounter installed on web pages under consideration.
This is what they write about Statcounter data: "The counter deals with 15 billion of pages every month from 3 million web sites worldwide". The statistics looks impressive, but there are some mistakes. I know that in Russia Nokia has 28% instead of 47% and other companies have different figures as well. Sony Ericsson has only 2.5%, which is not surprising taking into account the number of their devices.
The number of web sites has already reached 200 million, while the number of Google indexed pages exceeds 13 billion (unique pages). Which share of the real pie is handled by Statcounter? Less than 1%? Even Google Analytics cannot claim they have the full picture, though it is installed on higher number of web sites. It is similar to resources boasting about their Alexa stats, which shows not the international ranking, which does not exist, but the share of people who use Alexa and visit a particular web site. In some countries Alexa is not present and the data supports this phenomenon accordingly.
Think twice before you quote any data and try to understand what it means.
I do not know what is happening inside Motorola. I will try to find it out during the week, but the company seems to be in a great hurry. First, Motorola moved the launch of Motorola ATRIX 4G in USA several weeks forward. Instead of the beginning of March ATRIX hit the shelves on February 22. Another example of the same trend is represented by the sales of Motorola XOOM. Motorola together with Verizon offer the tablet for $599 with the price reaching $799 if purchased contract free. There is no point to purchase this version in Europe as you will pay extra money for the module you don't need (look for European version or a WiFi only). Another unpleasant news for US customers is connected with the fact that an upgrade to LTE requires you to return the tablet to Motorola service centers for hardware upgrade. It will take you around one week, which is not convenient for consumers. Some will postpone the purchase for quite a period of time.
Who are the imaginary rivals of Motorola it was competing against in its attempts to launch XOOM earlier? It is the first Android 3.0 device and other companies will sell their gadgets later on and at a higher price. Why bother?
The only answer is associated with the announcement of Apple iPad2 slated for March 2. It is clear that after the day many will look at their new model, though the price will remain the same. Nobody awaits a true breakthrough. We are likely to get a different body, two cameras, more RAM, powerful processor and a new iOS version. I am definitely planning to purchase a device as one iPad is not enough for my children and me. I prefer not to play guessing games and wait until Wednesday. Motorola decided to hurry up because of Apple. May be they know more. I think Apple will come out on top anyway.
This week also witnessed another conflict for brand names. It happened that there is a certain Xoom Corporation, which deals with money transfers. They seem not to like a product with a similar name. I think it is way too much as a tablet and money transfer systems belong to slightly different worlds. Nevertheless, Xoom Corporation decided to launch a complaint. They are unlikely to succeed, but will definitely give it a try.
Microsoft keeps on playing its old tricks. They launched a minor update of Windows Phone 7 to insure that future updates are installed easier. An update for future updates. It sounds funny, but many owners of Samsung Omnia 7 (and carrier versions of the phone) were not completely happy when during stage 6 of 10 their handsets suddenly stopped working. Some were lucky to return back in time before the update was installed, but the rest had to contact service centers. The nature of the error is still unclear. It must be some mistake on behalf of Microsoft. Go to Microsoft website to read about the description of the issue and attempts to solve it.
Have a nice working week! On our behalf we will try and offer even more reviews. Take care!
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Published 28 February 2011
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