Kodak filled for bankruptcy protection, but is Nokia about to follow? I claim that Nokia can avoid Kodak’s fate, but the window of opportunity is small.
Lets take a closer look at Kodak first. Analysts suggest that Kodak’s situation was evident for several reasons. On the one hand, their failure to embrace digital photography because of fear of cannibalizing their profitable core business. On the other hand, their inability to expand into new business areas with costly and unprofitable acquisitions. In short, Kodak failed to reconfigure its market by focusing only on products.
Kodak is a big corporation which, at the time, was set to produce traditional photography only. It is very hard for management to fight the inertia of such a big structure, specially since it was still making money for the quarter at hand. Like dinosaurs, the body was so big, that the dinosaur was dead way before the brain acknowledged it.
Kodak was clever enough to see themselves as producing moments instead than artifacts (a photo). Kodak actually invented digital photography. Kodak’s marketing spoke of special moments, not pictures. Then, what happened? Kodak failed to embrace digital photography for fear of loosing its more profitable core business. This myopia was described already in 1960 by Levitt. Levitt suggested that focusing on the product, instead of the market, was myopic leading toward trouble. It is easy to analyze the past, but what about a complex situation such as that or Nokia?
What does this means for Nokia?
Like the “Kodak moment”, Nokia’s “connecting people” refers to a larger practice than a device. From my point of view, Nokia can thrive by remembering that it should be set to connect people, instead of just making devices. The mobile device, regardless of how smart a device can be, is just an artifact. Whether the mobile phone has a touch screen, or uses certain software is transitory. Instead, Nokia can capitalize on its expertise to connect people regardless of the mode of operation.
Nokia, right now, is set to make devices. This situation is evident in a speech by Nokia’s CEO. Mr Elop speak of all the problems of its market, as if Nokia’s market consisted exclusively of devices. Analysts are eager to point all of Nokia’s failures around smartphones, yet these analysts only focus on specifications. I see an alternate path. Nokia can reconfigure its market around different modes to connect people. In this way, Nokia can focus again around truly connecting people. For example, inside offices, among parents and children, or even in a long-distance surgery.
Nokia can make the difference in several practices. Nokia does have the expertise, and the proven ability to reinvent itself; the company used to make rubber boots. This does not mean to abandon mobile devices, but such devices can be seen not only as communication tools; for instance, fashion statements. Cynics will point out that it is a battle of ecosystems, as if the software would be the central issue. I observe, instead, a dilemma of “density” where technologies converge to better connect people.
Unfortunately, Nokia does not have the luxury of time. The communications industry moves extremely fast, and Nokia needs to choose its market carefully. Nokia can decide to reinvent its market.