Yesterday Nokia's management kicked the company in the stomach and then self-immolated. At the most important meeting in the history of the company, Nokia's management blew it.
Why was this meeting so important?
Nokia has become a classic investor's value trap. Theoretically it trades below book value, but that "book value," even with a valuable patent portfolio, is difficult to monetize. Meanwhile, it's burning cash. This is despite Nokia's selling around one million handsets per day in the lower end of the market. Its smartphones are a different story. Apple and Android have 85 percent of worldwide market share, and Nokia has other competitors beyond that.
Moreover, Foxconn's subsidiary, the one that manufactures a good chunk of Nokia's (but not Apple's) products, reported a record loss for the first half of 2012. It's moving farther north in China to cut its costs. It's struggling.
Nokia's debt has been downgraded to junk after years of losing market share. It's in a competitive market wherein target customers often already have contracts with carriers and won't switch, if they'll switch at all, until their contracts are up, and Nokia's competition is much more savvy at marketing their products. You can have the best product in the world, but it counts for nothing, if you don't sell it. Nokia developed great Windows 8 Lumia smartphones, and it needed to ROCK the presentation.
I made a speculative bet on Nokia when the stock got crushed a few weeks ago. If Nokia nailed its presentation, the company would have a shot at not just pulling out of its tailspin, but persuading investors it would provide a reasonable return. It would be icing on the cake if Microsoft announced an investment for debt relief, maybe even a merger.
But shortly after Nokia's management mounted the stage to deliver their inept presentations, I laughed out loud at myself, and I dumped the stock. Throughout the day other investors threw in the towel, and by the end of the day, the crazy-volatile penny stock was down 16 percent. It was as if someone had challenged Nokia's management to kill the company in one day with an anti-sell campaign.
Throwing Away Success
First let me say that Nokia makes a honey of an attractive smartphone, and Apple admits that unlike Samsung, Nokia's flagship product won't invite a patent infringement lawsuit. Nokia's Lumia 820 and 920 models have ultra-bright high-resolution displays with true black contrast. Nokia claims one can read the display in ultra-bright sunlight without worrying about glare. It's protected with gorilla glass. There's no jitter on the display when you move; it's the smoothest display delivery in the business. It has Pureview, a high-res camera with a floating Zeiss lens and will take great low-light photos. You have an option for cordless recharging. The specs say the phones weigh just over 7 ounces.
But there's more. Many businesses, including mine, use Windows (over 85-90+ percent of the business market), and having a Windows 8 compatible ecosystem -- phones, tablets, computers and more-- is a plus for business owners.
Nokia's management could have ROCKED their presentation, but they have a special genius for deflating expectations about their ability to sell phones.
We Can't Hear You Now
Nokia's smartphones have a lot of great features, but they are -- first and foremost --communication devices. They are phones.
Yet on the most important presentation in the fight for Nokia's survival, the sound cut out. Really? Technical glitches are forgivable by your audience if you're selling, say, soap, but if you're a tech company selling phones, you must demonstrate your technical ability to deliver sound. Listeners in remote locations couldn't hear for a time, and many may have tuned out because of this SNAFU.
More than that, once people can hear you, you must deliver a good presentation. Can't Nokia put someone onstage who looks cool and who seems to have passion for the products?
Nokia's Stephen Elop looked as if he were casually dressed for a funeral. EVP of smartphones, Jo Harlow, looked like the anti-Harlow. She dressed as if she were a frumpy version of Ninotchka. This was their moment to shine and explain to consumers how excited and happy they are about their own products, not to suggest that they arrived to bury them. Microsoft's Steve Ballmer later threw his arm over Elop's shoulder doing his Uncle Fester impersonation. Between Ballmer and Elop, Elop looked like the cool guy in the photo. It's as if Microsoft's lack of marketing savvy is contagious.
One might have been able to get past the appearance of Nokia's management, if it hadn't piled on with zero presentation skills. If they bothered to get any media training, it didn't show. Aren't you sick of hearing about a "journey?" When Elop pulled out this tired marketing sound bite, I was ready to write Nokia's board to suggest they encourage him to hit the road.
Everyone wanted to know when the phones would be available, the identity of the carriers, and the price of the phones. Unfortunately, Nokia didn't tell us. Instead it said the phone will be available in select markets. But Nokia wouldn't tell us which ones.
We Can Hear Apple Now
Apple is hard on Nokia's heels, and it will present its new iPhone 5 next week. Apple does what Nokia can't seem to do. It gets people excited and talking about its iPhones, it can put the phones on store shelves shortly after its presentation, and it can sell the bejeezus out of its iPhones. Apple sells more smartphones in a week than Nokia sells in an entire quarter.
Nokia's Madness Continues: Fake Ad
If Nokia hadn't already done enough to lose the respect of investors, it put another nail in its marketing coffin by faking a Lumia smartphone ad. The idea of the ad was to show the Lumia's optical image stabilization when the smartphone is in motion (the ad's bike rider was using the device). Nokia used the fake ad at its press conference yesterday.
The Verge, a tech site, uncovered the ruse when it noticed a window reflection of the man in a van holding a camera, obviously not a smartphone -- great detective work. Nokia's previous smartphones proved the Pureview technology, so the reason for Nokia's faking the ad is unclear. You can't make this stuff up. Nokia admitted to the fake ad and apologized.
Nokia's stock tanked another 6 percent after the apology.