Rating: Both were innovators for next-generation tech
This week [April 2012] two former giants in the consumer electronics business – Sony and Nokia, have made announcements which indicate that all is far from being OK. Lots of people ask themselves the question – why have the might fallen? But Ajay Bhalla, a professor of global innovation management at the Cass business schoo has bravely tried to provide us with some sort of answers. After all, who would have thought a mere two years back that both Nokia and Sony would lose their respective mantles in the consumer electronics space? The curious thing is that neither company stopped trying to innovate. But somehow both have obviously manged to lose their focus.Bhalla observed, “Struggling Sony and Nokia made dire announcements this week which begs the question – “What is the payback from allocating substantial resources to innovative projects?”
He argues that both firms have poured billions of dollars into R&D and churned out new products at a much faster rate than their competitors.
Nokia, for example, introduced touch screen phones into the market long before Apple’s iPhone made its humble market entry back in 2007.
Likewise, Sony’s achievements are legendary. It introduced ground breaking products which range from the likes of the Walkman (way before the iPod) to the Playstation (way before the Xbox).
“So why have both Sony and Nokia failed to capitalise on their investments? Why do they have no ‘star’ products left in their portfolio? Is it the way their R&D is organised? ” Bhalla asks.
He argues that maybe it is because both firms competed in multiple product categories and therefore lost focus – both internally and externally.
Or maybe it is that both turned their attention towards fast growing emerging markets, and in the process lost focus in building a next generation firm.
In essence he is arguing that focussing on the BRIC [Brazil, Russia, India & China) markets was a mistake.
For example, Bhalla argues that, "Nokia measured its success in marketshare in countries such as India where it was for long an undisputed leader, and could afford to ignore Apple, which had focused on the USA and selected European countries."
"Today it [Nokia] is losing its bread and butter in both emerging and developed markets as consumers shift to Android or iOS devices,” Bhalla observes.
This is just a new spin on that old chestnut which GoMobile News has always publicised.
If a market wants a diesel engine, then if you want to stay a top car manufacturer, offer one.
The mobile device market is obviously crying out for Android devices – given that they have collectively snaffled over 50 per cent of all new smartphone sales patterns.
So why is Nokia so insistent on competing in less than 50 per cent of the market by ignoring Android?
Which is what happens if you don’t have an Android device in your portfolio – like Apple and W7 Mango phone..
It maybe that Nokia and Sony reckon that they can weather the storm. But as Bhalla insists, “Both the giants are now awake but the Ice Age melt down may have already begun.”