The slide of Nokia and the future of Facebook

The once mighty Nokia seems to be on the brink, announcing in mid-June that it will be slashing 10,000 jobs over the next 18 months following falling sales and losses this year. This, from a company that once utterly dominated the mobile phone market and was convinced that touchscreen phones “won’t replace traditional phones” (with thanks to @artsamaniego). We know now that Nokia’s slide follows a failure to anticipate the onslaught of smartphones — touchscreen smartphones…

Smartphones of course are the cause of Nokia’s problems. It’s being crushed in the marketplace by Apple’s iPhone (AAPL) and phones running Google’e Android (GOOG) operating system.

The Nokia gaffe, is the equivalent of the famous claim allegedly made by former IBM CEO Thomas J Watson in 1943 that “there is a world market for maybe five computers” [NB: that quote has since been discredited as a myth]. Interestingly, Watson’s real contribution to IBM — and perhaps much of the corporate world — was his slogan “THINK” which the IBM culture internalised fully, and which became a ubiquitous feature in all company paraphernalia going down all the way to inspiring its successful line of notebook computers, the IBM ThinkPads.

With the benefit of hindsight, one can argue that it was IBM’s thinking ethos that accounted for its ability to survive and re-invent its way through decades of seismic industry paradigm shifts, not unlike the one Nokia is going through today.

Then again, for every success story that lulls most of us into a false sense that every story has a happy ending, there are thousands of failures that have languished in history’s dustbins of obscurity. Just a short time ago, at the crest of the first Internet hype tsunami in the late-1990s, the craze was on-line retailing. Every “expert”, every “analyst”, and every “consultant” — and their dogs — pontificated about the demise of “bricks-and-mortar” enterprises which were supposedly going to be swept away by a wave of “New Economy” digital businesses with their “virtual storefronts” that would supposedly “cut the middleman out” and usher in a new age of low prices for the consumer.

None of these “experts”, of course, foresaw the Facebook and Twitter future where the main online activity wasn’t filling digital “shoppingcarts” but clicking on “Like” and “Share” buttons and “Re-tweeting” snippets of wisdom to a vast network shared by other modern-day philosophers.

But while it took decades before that mythical 1943 forecast was debunked, Nokia’s hubris was turned upside down within just three years. Indeed, just days before Facebook’s disastrous IPO, the social media giant topped up a $300 million cash offer with more than 21 million of its issued shares as currency to buy Instagram in a deal that would have place the photo-sharing startup’s value at more than $1 billion if Facebook’s $35 share price held after the IPO.

Then just like that, Facebook’s gloss was dulled by a market less-than-enthused by uncertainty around how much of its network could really be turned into money-in-the-bank — and, more specifically, around how much of the much-vaunted migration of users’ social media activity to smartphones Facebook is prepared to “monetise”.

The point therefore, is that “analysts” have pegged their sights on this supposedly anticipated massive ramp up of smartphone use for everything and anything worth living for — like the way they gushed about how online retailing was supposed to turn malls and main streets into museums by the middle of the noughties.

Social media as it had come to dominate how people experience the Web nowadays was nothing like anything these analysts had anticipated — or forecast for — back in 1999. So who’s to know what the next couple of years — or the next couple of months — hold for those who seek to “monetise” the Web?

Certainly not the “experts”.

benign0

benign0 is the Webmaster of GetRealPhilippines.com.