As you know, there was a time when Nokia, the mobile maker used to have high sales as well as profits and was leading the mobile phone market. But times have changed since then and now we hear Nokia reporting an operating loss of about 826 million Euro which is nearly $1 billion. It accompanies a good news which is that its operating loss is compensate through the licensing royalties as well by receiving a cheque from Microsoft on regular basis. This brings net cash rise of about US $125 million.
A year earlier Nokia had enjoyed an operating profit of about 344 million Euro but the company announced Q2 results presenting a 4 million worldwide sale of Lumia and 600,000 handsets sold in the USA. At a point of time, Nokia was the best mobile phone company in the world but now it has lost its position with Samsung selling maximum mobile phones in comparison to former. In the emerging markets, Nokia is likely to lose its low-end devices and when we look back to 2007, the company had a market share of about 40.4% which had degraded to 27% in the previous year and to 21% in the very Q1 of this current year.
However, Nokia is putting too much of efforts in order to innovate and has expended $40 billion in terms of R&D which is nearly four times of the expenditure of Apple. Nokia made this expenditure in order to work and develop new technology devices but the problem is with not many of these making to R&D. A former designer at Nokia named as Frank Nuovo is envisaged a smartphone with a color touchscreen and a single button seven years before the introduction of the iPhone. Nokia had also put efforts for an iPad-esque tablet in the 90 but that does not come up and Nuovo said “We had it completely nailed.” He said that the company culture gave courage to the research “but squandered opportunities to bring the innovations it produced to market.”
Off course, Nokia expended loads of money in terms of innovations but it had no ways to come up with productive devices or software. But, it now has a minimum of two neglected operating systems as well as a handful of patents which worth nearly $6 billion and are likely to build the overall value of the company. Stephen Elop said that if they had “been landed in products…I think Nokia would have been in a different place.” According to him, the company spent a lot of time and efforts unveiling and selling the low-end devices but did not give much importance to the selling of the high-end devices and this is what led to this disaster as the iPhone gobbled everything as it arrived.