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Nokia's plan to slowly phase out Symbian for Windows Phone 7 and continue selling Symbian devices during the phase out, is increasingly looking like a colossal blunder.  (Source: Nokia)

"Never let go." "I promise."... Apparently customers aren't buying this philosophy when it comes to the quickly sinking Symbian platform. They're jumping ship to Android or Apple.  (Source: Paramount Pictures)
Company's slow transition to Windows Phone 7 may cost it the global lead in smart phone sales

Finland's Nokia Oyj. (HEL:NOK1V) is the world's largest smartphone maker.  Nokia also has a very big problem.

The company recently tied the knot with Microsoft Corp. (MSFT), promising to phase out its proprietary Symbian smartphone operating system for Microsoft's slick new Windows Phone 7 OS.  The company insisted that the move had nothing to do with the fact that an ex-Microsoft Canada executive recently became Nokia CEO.

Regardless of the move's origins the question quickly became when would the switch to Windows Phone 7 be made?  Nokia has opted for a "gradual" transition in which it slowly phases out the operating system.  At the same time it will release Windows Phone 7 handsets, which will live side by side with Symbian handsets.

The approach has its merits, when looked at from a certain perspective.  But Nokia badly underestimated a major issue raised -- nobody will want a phone on a dying platform.

According to reports Nokia's market share loss has accelerated from a slow bleed to a pouring stream.  

Signs of this have crept up in recent financial filings.  Nokia has lowered its Q2 2011 outlook[press release] for devices and services.  It went from predicting 6.6B € ($9.5B USD) to 6.1B € ($8.8B USD).  That's a big drop.  The drop is fueled by lower predicted volumes -- which seem to be stemming from poorer than expected Symbian smart phone sales.

At the same time the company's operating margins have dipped from a predicted 6 to 9 percent to "around breakeven."

Annual targets are also being scaled back.

If there's one ray of sunshine among the storm clouds it's that Nokia reports an "increased confidence" level that it will deliver Windows Phone 7 handset(s) by Q4 2011.

The question, though, is whether that will be too late.  For now Nokia will have to continue trying to pitch customers a dying platform -- Symbian.  Nokia predicted sales of 150 million more Symbian smartphones "in years to come."  Now, as customers defect to Apple, Inc. (AAPL), Research in Motion Ltd. (RIM), and Google Inc.'s (GOOG) Android, it seems like a matter of time before that number becomes the latest financial figure to be slashed at the Nokia headquarters.



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RE: poor decisions
By mondo1234 on 5/31/2011 6:59:34 PM , Rating: 2
They shouldn't have said the word "transition". They should have said they were adding WP7 their portfolio of OS's and phased out sybian later. It will get worse before it gets better.


RE: poor decisions
By mcnabney on 5/31/2011 8:32:55 PM , Rating: 3
Microsoft didn't write a check for a few Billion to get Nokia to 'add' WP7 to their lineup. They wrote that check to be the public and defacto smartphone OS for the #1 mobile device manufacture. MS is doing the equivalent of drowning the rescuer to prevent themselves from going under in the mobile marketplace.


RE: poor decisions
By mondo1234 on 6/1/2011 12:16:30 AM , Rating: 2
quote:
MS is doing the equivalent of drowning the rescuer to prevent themselves from going under in the mobile marketplace.


Whether their intention or not, the stock drop would make buying Nokia a better deal.


RE: poor decisions
By drycrust3 on 6/1/2011 11:51:06 AM , Rating: 2
quote:
Whether their intention or not, the stock drop would make buying Nokia a better deal.

Assuming they continue to make a reasonable profit. One of the "products" Nokia sells is they write cellphone software for other companies. As soon as they said they were going to phase out Symbian those other companies would have started looking for alternatives that they can do inhouse. Regardless of the timeline, my guess is that by the end of this year most of those other mobile phone companies would have moved to other Operating Systems, which would mean even less Symbian work for Nokia.


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