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Opinion: 4 million Lumias sold enough to prove Elop's Windows Phone decision was the right one

Looking beyond the obvious

Opinion: 4 million Lumias sold enough to prove Elop's Windows Phone decision was the right one
With another "difficult" financial quarter over (a $1 billion loss), a "challenging" one expected next, and its shareprice at a 15 year low, you'd be forgiven for thinking it's almost game over for Nokia.

Certainly it has plenty of tough times ahead, but in a situation where all but two phone manufacturers are struggling, there's a strong argument Nokia will see itself through to eventually take the industry's third spot behind Apple and Samsung.

Yellow brick road

Of course, the problems started with over confidence when the company ruled the feature phone market in the early and mid-2000s, making over 35 percent of all phone sold globally.

With that level of dominance, there was little reason to revolutionise the market and push on to make an early transition to smartphones.

This was also the thinking that lead to the N-Gage: Nokia didn't believe it could fail.

It become a bloated corporate monster that spent billions on innovative R&D but couldn't make decisions.

One way

The arrogance of those days is long gone and good riddance.

Instead, with Stephen Elop as CEO and the hard decision made to nail the company's future to Windows Phone, it's an all-or-nothing struggle for Nokia. Exactly as it should be.

For the fact remains, difficult as the past couple of years have been, Elop made the correct decision.

Symbian and MeeGo were going nowhere, and while Android has market share, only Samsung's massive manufacturing and marketing muscle and Amazon's online retailing tablet model has created a sustainable business from it.

Sony Ericsson (now Sony Mobile), LG, Motorola, HTC, ZTE, Huawei etc can't compete (at least in the west), have to pay significant sums to the likes of Microsoft for key patent licences, and there's the threat of even more litigation.

Android would not have worked for Nokia.

The only other option was to attempt some sort of 'build an new OS while you're in the air' operation. As can be seen from the likely company-splitting issues being experienced by RIM with BlackBerry 10, that's the hardest approach of all.

Harder road

No. Choosing Windows Phone may not have been a popular decision - and it comes with its own issues over the Windows Phone 7.x versus Windows Phone 8 bifurcation - but it was the correct one.

The first green shoots have been seen with the critical acclaim lavished on the current Lumia range.

Nokia has even had a small hit in North America, while the news it's sold 4 million Lumia devices during Q2 demonstrating growing consumer appeal.

It absolutely doesn't herald a turnaround for the company though.

Over the hump

Nokia is having to discount heavily in the US, in the face of strong downward pricing from RIM and Android OEMs, but with the uplift from Windows 8 due in coming months, its chances of making it are now better than 50:50.

As always in these situations, cashflow remains key. Nokia has €4.2 billion ($5.3 billion) in net cash and liquid assets, which isn't much in the circumstances. And shareholders could still demand a breakup of the handset, the location-based services and the infrastructure divisions.

But Nokia has proved itself to be heading in the right direction, has a strong product range, and is now key to the success of Windows Phone.

Even in the worst case scenario, then, it's now too important for Microsoft to let it fail.

And - if nothing else - that's the backstop reason Elop's decision was the right one.




Contributing Editor

A Pocket Gamer co-founder, Jon is Contributing Editor at PG.biz which means he acts like a slightly confused uncle who's forgotten where he's left his glasses. As well as letters and cameras, he likes imaginary numbers and legumes.

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