Nokia Has Become Uncool?
How incredibly quickly things change. It was not long ago at all that Nokia was the leader in all things mobile phone related. They definitely had the coolest phones that everyone wanted, and the products they had coming to market were considered the best as well. However, in the last couple of months, Nokia (though they still dominate the overall market) has suddenly discovered that fads change, and what was once cool, can quickly become very uncool. Now, the question is whether or not Nokia can get their cool back. So far, it looks like Nokia realizes the challenges they face and are doing whatever possible to overcome them. However, consumer tastes can be finicky – and the rise in competition may eat into Nokia’s ability to do what it does best: creating very popular standard phones. As customization becomes more popular Nokia could lose out on its highly efficient manufacturing process that is designed to handle very large runs. Making smaller batches of handsets, while also offering price cuts will clearly cut into Nokia’s margins. While this upsets Wall Street, it shouldn’t be a huge surprise. When one company has margins that are so much higher than their competitors, something is out of whack, and the market usually finds a way to correct it. Still, the biggest issue of all may be the growing power that the carriers’ exert over who actually owns the customer. While Nokia has always tried to own more of the customer relationship, over the past year or so, the balance of power is shifting, and if that trend continues, it could be quite damaging for Nokia.
