[sleepngbear]

Yes, I am aware that this is a Nokia news article. But the parallels between what Nokia and RIM are both trying to do are pretty obvious:

HELSINKI (Reuters) - Nokia warned its phone business would post losses in the first two quarters of this year as it struggles to revamp its product line to compete with Apple and Samsung <005930.KS>, sending its shares 19 percent lower.

Earlier on Wednesday, the struggling firm said it had found a software bug in the new Lumia 900 smartphone, its big hope to take on Apple's iPhone, and was effectively giving the model away until it is fixed.

Nokia shares fell as low as 3.10 euros, their lowest level since 1997. The stock had already crashed more than 50 percent since Nokia announced in February 2011 it was dropping its own Symbian operating software and switching to the largely untried Windows Phone system developed by Microsoft .

Nokia said its phone business, which is launching a raft of new products running Windows Phone to make up for the decline of the Symbian lines, would make an operating loss of around 3 percent of sales in the first quarter, having earlier forecast around breakeven. It predicted a similar or larger loss in the second quarter, below all 29 analysts' forecasts gathered by Reuters.

On average, analysts had expected a profit margin of 0.4 percent for the first quarter, and 2.1 percent for the second.

"It's a disaster," said Thomas Langer at WestLB. "Shipments of Symbian devices are declining faster than we anticipated ... (and) the ramp up of Lumia devices is not fast enough to compensate for the shortfall."

"Nokia's challenges have been exacerbated by rampant competition - notably Apple and Samsung, who are extracting a disproportionate amount of margin from the industry at present," said Ben Wood at CCS Insight.

Nokia said competition was particularly tight in the emerging markets of India, the Middle East, Africa and China, which have been an area of strength for the company, even as it suffered in more developed markets.

Though still the world's biggest volume maker of cellphones, Nokia lost the top spot in the lucrative smartphone market last year to Apple and phones running Google's Android system, in part due to its weak performance in the United States, where its smartphones have less than 1 percent of the market.

It sold a total 12 million smartphones in the first quarter, with gross margins slipping to 16 percent from 20 percent in the previous quarter due to the fast decline in the Symbian portfolio. It still has a mountain to climb to match the 37 million iPhones that Apple shifted in the fourth quarter.

LOST GROUND

WestLB's Langer expects the problems to extend into the rest of the year.

"In Q3 we will have the iPhone 5 and (Samsung's) Galaxy S3 and so on, so EPS (Nokia's earnings per share) for 2012 is now somewhere in limbo. I think they need to start the second or maybe the third phase of a restructuring program. It's a very difficult situation for them."

The group has already announced 30,000 job cuts since Chief Executive Stephen Elop took the helm in late 2010.

"It does take time to turn around the product portfolio and so forth, but what you see is us very aggressively going after that," Elop told analysts.

Nokia said it sold over 2 million units of all its Lumia smartphone models in the quarter to end March, up from over 1 million in the overlapping November-to-January period, but analysts said they had expected a faster uptick in sales.

Mikael Rautanen from research firm Inderes said he was expecting twice the sales volume.

"This poured a lot of cold water on investors, and I think the stock is reacting accordingly," he said.

Nokia said it would focus increasingly on Lumia phones, a task made a little harder by the data connection bug in the Lumia 900, its first 4G phone, which it markets with the strapline "an amazingly fast way to connect". Nokia said a software update to fix the problem, a "memory management issue" related to phone software, not to hardware or the Windows operating system, would be available around April 16.

It is offering anyone who has bought a Lumia 900, or who buys one by April 21, a $100 credit on their AT&T bill. The operator sells the phone for $99.99 with a two-year contract.

The Lumia 900 is currently only available in the United States, where it was launched on April 8, and is key to Nokia's comeback there.

"It's like they stalled their engine when everybody is looking at them at the start of their race," said Gartner analyst Carolina Milanesi.

It is the third Nokia phone to run the Windows system and is due for a wider global launch this quarter. The model won several awards at the Consumer Electronics Show in Las Vegas in January.

COSTLY GLITCH

"I must say I have not encountered anything, but I have been impressed by their forthright, aggressive, and undoubtedly costly response," said Boston-based analyst John Jackson from CCS Insight, who uses the Lumia 900.

Though one analyst who asked not to be named said it would only cost Nokia at most $10 million on likely sales before the fix, it will be a big disappointment to a company struggling to revive its brand. Its share of the global smartphone market tumbled to 12 percent in the fourth quarter of last year from 30 percent a year earlier.

"To have a memory issue causing disruption to what was otherwise, apparently, a fairly good launch, with prime time ads and reasonable reviews, is the last thing they needed - particularly in the U.S.," said Tim Shepherd, analyst at Canalys, before the loss warnings.

Nokia created the smartphone industry in the late 1990s with its Communicator models and was the undisputed leader until Apple's iPhone entered the ring in 2007 and Google's Android system was released in late 2008.

Nokia had to be painfully aware of the criticality of a flawless product launch, yet a costly bug got through anyway. This is exactly the kind of thing that RIM needs to make every possible effort to avoid with BB10, which in my mind further validates the development of the PlayBook.


Ignore the history rewrite of the last paragraph which may tend to otherwise undermine the writers' credibility.

Nokia shares tumble after loss forecast - Yahoo! News

[popeyesmotto]

I Reply as solely a Playbook Tablet user,
My frustration with the flaws in the pb specifically the browser crashes and especially problems with the email client are leading me to abandon my pb and buy a new battery for my laptop which always works, flawlessly. I understood and accepted that switching to the pb meant that I would be restricted in functionality from what my laptop provides. Still, browser crashes that are so catastrophic that the device must be restarted in ten percent of the crashes is hard to overlook. I am currently having the problem of the email client asking for the password for one or more of my email addresses and a failure to reconnect despite re entering the password and even restarting the playbook. A specific problem now and several times in the past indicates that the password contained in the account information does not match in the number of characters to the password that is used for an account; this will shortly be posted to the official rim playbook forums. If an update is released soon that solves most of the browser problems and ALL of the email problems I may stick it out for a while. Otherwise I will flee the RIM ecosystem. To address the specific issue as outlined by the article in the original post, I may find a use for owning a smart phone, in my case it must pay for itself, and the idea of purchasing a BB OS10 device has been on my mind. Vertical integration in an ecosystem has good logic concerning interoperability. My current experience with my playbook tablet running what is described as essentially OS 10 has soured me on this pursuit. I love how the Playbook works. It is an extremely solid form factor. The size is great. The screen has a great picture. By these criteria I judge the Playbook as very good. The browser crashes often. The email client fails frequently and in some cases in ways that cause concern. Additionally the lack of fine control over the settings for the Playbook's functions is an irritant. By these criteria I judge the Playbook to be poor. Like a smartphone, I expect to use my playbook primarily as a communications device whether for email or consumption on demand of web content, without the voice/cellular service. To refer back to the article and Nokias problem with a Microsoft product, I am not surprised that issues are already occurring as Microsoft has generally attempted to make their products do as many things as possible for as many users as possible on as many platforms as their product can be formatted for. I have a hope, or perhaps had, past tense, that RIM having a focus on communications on a limited number of devices could release a product that would COMMUNICATE flawlessly. RIM in my opinion does indeed face a cliff edge with OS10. The release of a smart phone with flaws in the ability to communicate whether messaging, voice, or consumption of content will result in a plunge to it's death in the handheld market.
Post Script: my laptop is 1700 miles away and needs a new battery. 10 days from now I may abandon my playbook .... With reluctance.

[JRonin]

The situation is slightly different IMO. Nokia and RIM had more in common when Nokia was still trying to transition from and old OS (Symbian) to a new one (Meego), before Elop's insane "Burning Platform" memo. It's the equivalent of Heins coming out and saying BBOS is not working and we're going to have to leave it and BB10 and adopt Android/WP7. If sales of BB6/7 phones are slow now, imagine the total collapse that would happen internationally once consumers/resellers found out RIM was dumping it in the near future.

That's what happened to Nokia, Symbian shares have totally collapsed. It's to avoid this kind of nightmare scenario that RIM has been reluctant, according to this article at least, to talk about BB 10 devices given the risk putting too much focus on them will hurt sales of existing devices before the new ones are even ready.

Tech News - The Globe and Mail

[lnichols]

No I don't think the situation is the same. Nokia had one of the most popular smartphone OS's, and while it was still on top said that it was abandoning Symbian, abandoning Meego which was to be the followup, in favor of Windows Phone OS. Windows Phone has never had traction in the market! They went from a "burning platform" to one that has been smoldering for years. Nokia MeeGo phones got pretty good reviews too.

RIM's biggest mistake was when they told people that BB10 would be out early 2012, after just releasing BBOS7 devices that were just trickling to the market and late. It killed a lot of potential sales because a lot of people thought they could just wait 6 more months and get the latest greatest from RIM, not go to BBOS 7 which is seemed to be a dead end platform. I think OS7 adoption would have been a little higher if RIM had just shut up.

[Rootbrian]

Well @lnichols. You can blame wall street for that one. Wanting more and more, rumors spreading/leaking out, etc.

Not everybody has control over everything that happens.

[Economist101]

Ignore the history rewrite of the last paragraph which may tend to otherwise undermine the writers' credibility.

No need; the last paragraph is correct if we look at smartphone sales. The only platforms to ever outsell Symbian are iOS and Android; neither RIM, Palm nor Windows Mobile ever did.

[murnende]

Nokia had to be painfully aware of the criticality of a flawless product launch, yet a costly bug got through anyway. This is exactly the kind of thing that RIM needs to make every possible effort to avoid with BB10, which in my mind further validates the development of the PlayBook.

No launch is flawless, no platform is ever bug-free.

On the other hand, the response of Nokia has been amazing during this incident. The first most people heard of the flaw was from the company itself, they've already made a patch available, and they are already proactively providing compensation.

We could only wish that RIM would be so communicative, quick or contrite. If this had happened at a BlackBerry launch, we'd get to listen to how awesome the launch went and how many users they added before they snuck a patch out several weeks later.

And compared to the sheer derision that Apple demonstrated for their customers during Antennagate, this is world-class customer service.

I think Nokia will ultimately benefit from their response to this bug.

[Laura Knotek]

I actually think one could compare RIM more to Palm than to Nokia. Nokia's issues are not entirely related to its smartphone sales, since it also makes feature phones. Nokia could be more closely compared to Motorola.

I do believe the outcome for RIM will be better than it was for Palm.

As for feature phones, I see Motorola and Nokia abandoning them altogether.

[Geeoff]

I actually think one could compare RIM more to Palm than to Nokia. Nokia's issues are not entirely related to its smartphone sales, since it also makes feature phones. Nokia could be more closely compared to Motorola.

I do believe the outcome for RIM will be better than it was for Palm.

As for feature phones, I see Motorola and Nokia abandoning them altogether.

I totally agree with you about Palm. There is a niche market for Blackberry to hold if they want to.

[the_sleuth]

7/24 blogs and news/rumour media try to satisfy the appetite of gadget lovers.
Wall St. didn't create the wet appetite. Analysts want execution and sales/profit growth.

Samsung and Apple seem to have their act together. Why can't Nokia and RIM execute?

Well @lnichols. You can blame wall street for that one. Wanting more and more, rumors spreading/leaking out, etc.

Not everybody has control over everything that happens.

[_StephenBB81]

7/24 blogs and news/rumour media try to satisfy the appetite of gadget lovers.
Wall St. didn't create the wet appetite. Analysts want execution and sales/profit growth.

Samsung and Apple seem to have their act together. Why can't Nokia and RIM execute?

Not to defend RIM or Nokia,

BUT, Samsung doesn't have to answer to wall street, beauty of not being publicly traded,
and Apple has been a media darling as the under dog for decades, now that they are on top, people can't change their stripes.

[the_sleuth]

Samsung Electronics Co Ltd (005930.KS) Quote| Reuters.com

Can your Retirement Savings Plan have Korean Won stocks?

[_StephenBB81]

Samsung Electronics Co Ltd (005930.KS) Quote| Reuters.com

Can your Retirement Savings Plan have Korean Won stocks?

well now! learn something new, I forget where I had heard samsung was not publicly traded, and clearly I've never cared to check for myself

[sam_b77]

The more I use my PB, the more skeptical I have become about BB10 on phones.
The little things is what made BB strong, and they seem to be missing on OS2.0.
For example:
1) On the BB when you copy some text and then go to where the text needs to be pasted, when you press the menu key it is automatically on the paste option.

2) Email and messaging is always on. It takes ages for the mail prog to open on the PB. The BB is instant.

3) The way the email is handled by the PB.... normally the PB gets the mail first and BB later. But just yesterday the mail came on my BB and failed to show up on PB.

4) App integration. This seems to be completely missing from the PB. Snap a pic, open facedbook application, click load pic, find it and upload. BB is simpler...snap, click BB button and send to Facebook. Done.

Don't get me wrong, these things are fine for the tablet experience. I'm not complaining about the PB. It works for me. But I wouldn't want see the PB OS on the BB in its current form. I'm hoping that the BB10 is not just a different UI skin, but also addresses issues which won't be tolerated on a mobile phone. A mobile phone is a quick fire need. No one would wait for the email app to load.

[anjali_jain]

RIM has been trailing market share globally for a few time. In fall 2010, iPhone worldwide sales beat BlackBerry, and in spring 2011 Android sales did the same. And now days the main competition is only between Apple & Android. And if you see the 1st quarter reports then you can analyze Samsung has reached on 3rd number position it means Blackberry has been out of competition. BlackBerry sales as a percentage of mobile sales are now in single digits worldwide. Recently RIM has decreased its price range for some of its model up to 26%..... This is really poor condition presented by them. RIM is not trying to be everything to everyone. But the tablet market is very dissimilar than the phone market where contracts and carriers contain a larger impact on device purchases. I think they should improve the PlayBook. The PlayBook software updates had been delayed for months, putting it at a disadvantage against competitors such as Apple and now Kindle. Lets h ope for the best with BB10. RIM must think resources and power on building quality.

[sam_b77]

RIM has been trailing market share globally for a few time. In fall 2010, iPhone worldwide sales beat BlackBerry, and in spring 2011 Android sales did the same. And now days the main competition is only between Apple & Android. And if you see the 1st quarter reports then you can analyze Samsung has reached on 3rd number position it means Blackberry has been out of competition. BlackBerry sales as a percentage of mobile sales are now in single digits worldwide. Recently RIM has decreased its price range for some of its model up to 26%..... This is really poor condition presented by them. RIM is not trying to be everything to everyone. But the tablet market is very dissimilar than the phone market where contracts and carriers contain a larger impact on device purchases. I think they should improve the PlayBook. The PlayBook software updates had been delayed for months, putting it at a disadvantage against competitors such as Apple and now Kindle. Lets h ope for the best with BB10. RIM must think resources and power on building quality.

what does your MBA case study have to do with the challenges and risks of BB10?

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