Have a read of this text from MSN Money:
Moody’s Investors Services is considering Nokia Corp. for a possible downgrade as the Finland-based cell phone maker steadily loses market share to Apple Inc. and other companies.
Although Nokia is the world’s top cell phone maker, with particularly strong brand recognition outside the U.S., it has struggled to compete against the likes of Apple, HTC Corp., Research In Motion Ltd. and Motorola Mobility Holdings Inc. in the growing smartphone category. Apple’s iPhone is the world’s best-selling smartphone.
“The rating review was caused by the gradual but steady weakening of Nokia’s business profile and competitive position in mobile phones which has started to pressure profitability,” Moody’s said in a statement Friday.
For everyone who keeps thinking I’m absolutely nuts when I talk about Nokia’s failure to manage perception in North America (and Silicon Valley in particular), here’s where it gets really interesting.
I thought Nokia posted reasonably healthy results — especially in the context of the whole year. The company’s handsets are continuing to sell like hotcakes in many markets. Hotcakes, I tell you.
But, not in the market that matters for media. Not in the States… this is where reputation is key. I’m always surprised when I meet fund managers or influential analysts and find them completely sold on and Apple-and-Android future, incapable of parsing the words ‘Nokia’, ‘half a billion handsets a year’ and ‘successful’ into the same reality.
For a long time now I’ve been remarking on Nokia’s complete lack of focus on the American marketplace. I get the fact that the company has been focusing — sensibly — on the emerging markets. That they’ve established a phenomenal base amongst the feature phone world. I understand that America is quite a small market comparatively speaking. The failure at the high end, the failure to better — or at least equal — the likes of HTC/Samsung/Apple’s lead devices (in the eyes of the mainstream media) is now taking a toll. Instead of hot air from the media citing Nokia’s demise, it’s the turn of the ratings agencies.
A shot across the bows from Moody’s? Goodness me.
Interesting, isn’t it, that Moody’s are just mulling the downgrade. That there’s nothing specific they can point to beyond the phrase ‘gradual, steady weakening‘.
This is the kind of news, however, that Nokia’s Board of Directors will have to closely evaluate.
You need these ratings agencies on side. You need the analysts and media too. That’s because, at some point, the prophecies of doom become self-fulfilling when they’re being repeated over and over again.
If you’d like another example, check out John Dvorak’s ‘second opinion’ column at MarketWatch. It will make shocking reading for many diehard Nokia fans:
Here’s the deal: There has been a reboot in the phone business, and the app-oriented smartphone (what I like to call an app phone) is the new, plain-old phone. The market is not looking for a bunch of competitive smartphones; it wants an app phone with a reasonable selection of free applications that people can download as they see fit.
This means iPhone or Android. The battle is over.
John then goes on to outline how Nokia will — in his mind — announce both Windows Phone 7 and Android support shortly. And that WP7 will probably go the way of the Dodo.
It appears there is no question in John’s mind that Nokia will announce at least Android support. No question at all. John’s way past that decision and is busy evaluating what would happen if the company played the Windows game too (given Elop’s heritage).
So make no mistake: In the coming weeks, if Nokia doesn’t announce Android/WP7 or something flipping amazing, the marketplace is going to tear the company to shreds. Moody’s have already signalled their position.
These are serious people weighing in. This is not the time to argue. It’s not the time to tell the market it’s wrong, to try and explain Nokia’s continued strategy. If anything, it’s time for some grand announcements.
I’m tempted to suggest that Nokia should knock out a few Android devices for the fun of it. To keep the market on side. To shut the media-up. They should really, really invest a good bit of time and attention delivering a phenomenally good Nokia Android phone. Something at the 700 Euro/800 dollar mark that really, REALLY puts the iPhone and HTC’s finest to shame. 20 megapixel camera, 24-hour battery, super-HD-something-or-other, running Android 3.0, with the Ovi Store front-and-centre serving Android apps. I’d do it just to shut the market up.
I’m looking to Nokia for the next generation. I’m not convinced MeeGo is necessarily it. Indeed if MeeGo is announced to the planet looking anywhere near some of the leaked screenshots we’ve seen, the Moody’s team will have their scissors out before Mr Elop can finish his keynote. I do think Nokia can deliver at the top end. I think they could introduce a higher-plane, beyond the point-and-click app world of iPhone and Android. They’re entirely capable.
Right now I reckon it’s time to give the market what it wants. Do that and carry on innovating strongly with MeeGo, Symbian and the next generation.
What do you think? I still speak to many highly informed Nokia watchers who tell me that Nokia and Android is simply ridiculous. About as ridiculous as a Moody’s downgrade warning.
It’s what Moody’s believe though. It’s what they perceive. And perception is 9/10ths of the law.
One thing is for sure, the next few weeks (including Mobile World Congress) are going to be some phenomenally exciting ones in the industry.