Death of Nokia and RIM in 2013?

Good Night RIM & Nokia

Research In Motion

Once the king of the smartphone market RIM could run out of cash and ultimately fail, even with the launch of its now-delayed BlackBerry 10 device early next year. It was late to the consumer market, where Apple and a legion of Google Android phones have crushed it. BlackBerry 10, considered to be RIM's make-or-break product, was originally slated to be launched in the first quarter of 2013 and the delay has already contributed to a 40 percent drop in the company's stock price so far this year. The delay also caused its US market share to dip from 44% in 2009 to only 10% in 2011. Data from research group Comscore shows that share has fallen further this year. RIM cannot survive as a standalone operation in the face of these trends. The Wall Street Journal recently reported “outright buyers could include Asian handset makers like HTC or online retailer Amazon.com which has recently jumped into the tablet business.



At this rate of RIM’s cash depletion BB10 cannot come soon enough. RIM said it would lay off 5,000 workers, about 30 percent of its workforce, as it tries to save cash, although some analysts noted that this would come at a short-term cost and that instead of firing it should be hiring people in order to get products ready in time. However, by most indicators it seems that RIM’s only options will be either to sell its network or to partner with the likes of Microsoft.

Nokia

Once the giant of the mobile phone industry and the absolute king of the market in the last decade is now scraping the bottom of the barrel looking for any morsel of hope to save it from the imminent demise. The recent marriage to Microsoft did not help matters at all; according to the latest sales figures (only 300.000 Lumias were sold North America) it may have even accelerated its downfall. Stephen Elop’s ‘burning memo’ in which he buried the in-house platform, Symbian, was the beginning of an accelerated fall. His short career at the Finnish corporation is replete with conspiracy theories; a Microsoft’s mole whose entire purpose is to drive Nokia’s value down to the point where it could be taken over for pennies on the dollar. Microsoft, whose own future as the world’s premier software supplier hinges on the success of its mobile operating system, Windows Phone 8, is highly unlikely rock the ship that carries its new OS as the only cargo.

The mobile wars are at their peak; Android and iOS are so deeply entrenched that it will take a mighty competitor with billions of dollars in app development and marketing expenditures to unseat them. Is it possible? Well, yes. But Microsoft’s record so far leaves one in a doubt. Windows Phone 7, a successor to Windows Mobile, debuted two years ago. Touted as a refreshingly sleek alternative to both Android and iOS it has managed to capture only a small fraction of the market, 3% to be exact (which also includes Windows Mobile users). In the post PC era it is paramount to conquer the mobile market, be it the tablet or the mobile phone. As more and more users go mobile so do advertisers – the biggest factor in revenue. A highly sophisticated operating system and rich ecosystem is what will keep the tech giants afloat. Microsoft is aware of this, as the mobile and cloud computing eat away at its core business, Windows and Office. The absolute rulers of this new tech playground are Apple and Google.

And where is Nokia in all this? Nowhere! 

Its ‘dumbphones’ are still selling but it is only a matter of months before Samsung knocks her off her pedestal. And seriously, how much money is there in the dumbphone market? Would it be enough to save Nokia from bankruptcy which given its rate of cash depletion is slated to occur in January of 2014. The massive layoffs which it had resorted to coupled with cash crunches have taken their toll on quality of its products; Nokia was tied for lowest overall satisfaction in JD Power’s 2011 Wireless Traditional Mobile Phone Satisfaction Study. It also has received the lowest ACSI score for wireless telephones.

It is not Stephen Elop or (mis)marriage to Miscrosoft which has brought Nokia’s downfall. Rather, it is its own hubris, the lack of vision and a timely response to the market trends, which is fast sending this company to the dustbin of history.

Good night Salo!