The Economist has an analysis:
Nokia really faces three distinct problems, argues Ben Wood of Gartner. It has lost its edge in design: many of its handsets look staid and dated. Today’s phones from other vendors are more stylish than many of Nokia’s chunky-looking models. This has nothing to do with clamshells, says Mr Wood. If they had been able to stay ahead with candy bars, they wouldn’t have this problem.
Second, Nokia is partly a victim of its own success. It is hard to be cool if you are also the industry’s incumbent. Nokia’s dominance has made it a target for everyone else in the industry. Network operators, wary of being too reliant on Nokia, are increasingly turning to smaller vendors from Asia to supply handsets. Nokia’s reluctance to customise phones for specific operators, a policy it has since reversed, did not help. Finally, a reorganisation late last year, which created separate units for mass-market, business and multimedia phones, caused Nokia to take its eye off the ball. The reshuffle made sense strategically, but amid its enthusiasm to create snazzy new devices, such as music-player and gaming handsets, Nokia briefly forgot that most people simply want phones.
Russell Beatie has some suggestions: “The focus on the basic phone though has to be job number one. They need to try simplicity and standardization first and innovate on the inside instead. Functionality over form. Go back to the basics of the 7650 and start again. Nokia has such a fear of becoming just another commodity-phone producer that they’ve been trying to differentiate themselves on every little design decision instead of just proving to all of us they know how to make a solid phone. Well that hasn’t worked, so it’s time to go back to basics.”