NEW YORK (TheStreet) - In an effort to stave off bankruptcy, Nokia (NOK) is trying to maintain its foothold in the smartphone race, competing with the likes of Apple (AAPL) and Google's (GOOG) Android. The company hopes that its recent aggressive actions will allow it to compete and survive. If not, it risks fading away.
The Finland-based phone maker has been floundering for months; shares have dropped more than 54% since early April. In attempt to "return the company to profitable growth," Nokia plans to shakeup senior leadership, cut 10,000 jobs by 2013, close 3 factories, improve Lumia, its smartphone, and sell Vertu, its luxury mobile phone business.
Despite these major restructuring plans, analysts (and investors, if the 11% post-announcement share plunge is anything to go by) are struggling to see how Nokia will fit into the mobile phone landscape.
"Nokia made some bold decisions. Right or wrong, only history will judge," said John Jackson, Vice President of Research at CCS Insight in a recent interview. "They'll certainly have to continue to get smaller before they have a chance to get bigger."Nokia has lost more than 70 billion euros in market value since Apple introduced the iPhone in 2007, according to a Bloomberg report. In an attempt to compete with Apple's iOS and Google's Android operating system dominance, Nokia phased out its homegrown Symbian operating system and adopted Microsoft's (MSFT) Windows Phone last year. The decision failed to give Nokia the competitive edge it was seeking - Nokia shipped more than 2 million Lumia smartphones using the Windows Phone operating system last quarter. Apple sold 35.1 million iPhones in its most recent quarter. As such, the smartphone market seems to remain a two-horse race. The mobile supply-side has completely transformed in recent years, according to Jackson. "The economics of the old line has been fundamentally undermined by platform companies with business models anchored in a cloud," such as Apple and Google, he said. "What is Nokia?" Jackson said. "Nokia has an alignment with Microsoft, but if this is now a platform game, where is Nokia's platform? Nokia is in this critical spot."
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