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Nokia shareholders tell Stephen Elop to 'find a new road.' Should this new road lead to Android?
Here we go again! Joining the evergreen list of smartphone debates that includes such greats as “Android vs iOS,” “Apple vs Samsung,” and recently, “plastic vs metal,” is the question of whether Nokia should have gone the Android way, and if it isn’t too late, maybe still should. This debate makes it to the forefront every time Nokia releases its quarterly financial results, and while things may ever so slightly be looking up, not surprisingly, a lot of shareholders are looking for better results.
For most of us, a Nokia device was our first phone, and while the mobile landscape has changed a lot with the emergence of the smartphone, there is always a nostalgic twinge behind all the “only cockroaches and the Nokia 3310 can survive a nuclear explosion”-type jokes. When asked the question of whether I’d buy a Nokia smartphone running Android, I, without any hesitation, said yes. Granted, Nokia does have to catch up to the hardware specs offered by current Android devices, but I’m sure for a lot of people, Nokia and Android would be a match made in heaven.
But will that actually ever happen, and even if it does, it is already too late? Let’s take a look!
How is Nokia doing right now?
Since signing a deal with Microsoft back in February 2011, Nokia took up the cause for the Windows Phone OS, and things have been far from easy. 2012 hasn’t been a good year for the Finnish company, with estimated losses of around $3 billion for the period, but still managed to end the year with an ever-so-small glimmer of hope with a profitable Q4 2012.
Nokia reported a Q4 profit of $585 million (on total revenue of $10.73 billion). Granted, a lot of credit goes to the company’s Nokia-Siemens Networks division, but the Devices and Services department posted a (less) profitable quarter as well, in part due to the well-received Windows Phone 8-running Lumia 820 and Lumia 920 smartphones. The numbers aren’t crazy of course, with Nokia selling 4.4 million Lumia smartphones, with only 700,000 units in North America. But, it was a start.
Nokia delivered a preliminary Q1 earnings report last month, with good news as far as the Lumia lineup of smartphones is concerned. While only 400,000 Lumia units were sold in North America, overall sales were up to 5.6 million, beating the number from the previous quarter. But, while this number has gone up, Nokia managed to sell 55.8 million handsets overall, which includes all devices offered by the company, down a whopping 30% from the previous year. The report also mentioned an even worse Q2, with margins expected to fall by 2%.
Nokia promised a turnaround of 2 years, and with that time period passing, things haven’t gone as smoothly as expected.
Nokia shareholders are unhappy
Needless to say, the overall poor performance of the company, which once promised to be able to compete successfully against the likes of Apple and Samsung, has left shareholders unhappy. These shareholders were given the opportunity to express their dissatisfaction during Nokia’s Annual General Meeting held in Helsinki, and they certainly didn’t pull their punches. As reported by Reuters, nothing sums up the past couple of years Nokia has been having, than a statement made to Stephen Elop by Nokia shareholder Hannu Virtanen:
[quote qtext=”You’re a nice guy…..and the leadership team is doing its best. but clearly, it’s not enough. Are you aware that results are what matter? The road to hell is paved with good intentions. Please find a new road. ” qposition=”center”]
And while many may agree, Elop reiterated his commitment to Windows Phone, stating that WP is what will help the company compete with Samsung and Apple. But the comment about finding “a new road” raises, once again, the two-year old question of, should Nokia have switched to Android, and is it too late to do so now.
Should Nokia switch to Android, or is it too late?
It’s very easy to shout “YES!” to Nokia switching to Android. After all, Nokia has proved itself when it comes to hardware, and adding Android along with it would be amazing, at least from the standpoint of a (ex-) fan. But, it obviously isn’t as easy as “release an Android smartphone, rule the world” as many hope.
Things would have been a lot different if Nokia had moved to Android in early 2011, when the Windows Phone deal was done. It was just before Samsung began in it’s meteoric rise to the top of the Android hill, completely overshadowing market leaders HTC and Motorola. Maybe, just maybe, Samsung wouldn’t be where it is now if Nokia had thrown its hat into the Android ring. But as we know, that wasn’t the case, and the Android scene is very different now. Samsung has completely dominated the Android race since late 2011, with competitors HTC, LG, Motorola, Sony, and others struggling to make any headway. So if Nokia does decide to switch to Android now, or at some point in the near future, it might just be too late.
It’s difficult to ignore the fact that the competition in the Android world is absolutely fierce now, and will only get worse. A small misstep could make or break a device. Nokia is known for its amazing smartphone camera technology which could be a huge selling point, but it’s not like Android device manufacturers are that far behind. Of course, Nokia will also have to upgrade device hardware to match flagships from other Android manufacturers. With competition the way it is right now, it’s difficult to speculate on how successful a high-end Nokia Android smartphone would be.
That being said, even though the numbers have only begun to fall, Nokia still dominates the feature phones and low-cost smartphone market, especially in emerging markets such as India. The Nokia Asha series of smartphones are certainly popular, and low-end to mid-range smartphones from Nokia would certainly do well. But then again, they’re doing well even now, so Android wouldn’t necessarily help in that regard anyway. Entry-level Android smartphones from the company could be a good starting point for Nokia to eventually build up to manufacturing high-end devices.
As you can see, there are numerous scenarios and possibilities on how Nokia could, or could not, regain its previous position by becoming an Android device manufacturer. It’s a difficult call to make, but at this point, it might be worth the risk.
With or without Android, what’s next for Nokia?
Nokia has certainly bet the house on Windows Phone. In its annual financial report Nokia submitted a few months back, the company revealed that it will end up paying around $650 million in Windows Phone licensing fees to Microsoft over the remaining contract period. For now, the platform support fees Microsoft pays to Nokia, about $250 million per quarter, is more than what Nokia pays Microsoft in return. This will reverse soon, and Nokia will have to continue to pay the licensing fees until the contract expires.
The big amount is a little strange because companies usually pay licensing fees per handset, but with a complete payout like that, it’s up to Nokia to make up for it. If Lumia starts to sell well, the eventual “fee per phone” amount will be less, but if things don’t work out, it could get very difficult for Nokia. Granted, the extent of how stressful this scenario is for the company, is difficult to gauge since the exact length of the contract is unknown. For example, if the contract lasts till 2016, it’ll be easier, but if it’s only till say 2014, Nokia will need close to a miracle for everything to work out.
Which means that a lot is riding on what Nokia has planned next. The Lumia series has been picking up the pace a bit over the past couple of quarters, and Nokia is hoping to continue that growth with the upcoming announcement of the Nokia Lumia 928 on May 14. While not much is known about the specifications of the device, a teaser page of the device is up on the Nokia website, which stresses on the amazing camera of the Lumia 928 – an 8.7MP PureView camera, with Carl Zeiss optics and Optical Image Stabilization – which can “outperform leading smartphones in all kinds of lighting condition.” The Lumia 928 has also been confirmed to be available with Verizon in the U.S., but as we know, sticking to one network carrier hasn’t always been the best decision by OEMs.
And who knows, once the Nokia – Microsoft contract expires, we may get to see a Nokia Android smartphone after all.
Now it’s time for you, our readers, to tell us what you think! Do you think Android can save Nokia? Would you buy an Android smartphone by Nokia? Sound off in the comments section, and don’t forget to vote in the polls below.