To be quite honest, Nokia probably knows the way out. But here's what I think should be done:
1. Get a new group of designers on board - Lets face it Nokia phones are now synonymous with the word 'ugly'. Their devices are nothing short of ghastly compared to the finesse and design of the iPhone(s). Getting a new group of designers on board will be the first thing the company needs to do. Nokia needs to realise something basic here: people need functionality as well as a sexy design in their smartphones. Unless Nokia offers them that, its doomed. The smartphone market is no longer the same as it used to be half a decade back. Nokia needs to keep up with the times, desperately.
2. Focus on one OS - Symbian S60 v3, Symbian^1, Symbian^3, Maemo and now Meego. The last thing Nokia one can say about Nokia is its platform uniformity. Almost each of its high end device keeps coming up with a new OS. Thats not just impractical for the consumers but a terrible thing for the developers. What should the developers work on? Meego, maemo, symbian? Thank god I'm not an official developer, else I would have gone crazy by now! Anyway, what needs to be done is to go for ONE particular OS for all its smartphones. Also, Nokia's Android allergy is something beyond my comprehension. Judging from the astronomic growth predictions of android, the world is now divided into two groups: the android and the non-android. Nokia prefers the latter somehow, completely ignoring the fact that android is infact the only OS which has been built for touchscreen devices from the word go.
3. Giving customers value for money products - Lets face it, Nokia phones, especially the recent ones are insanely ugly, insanely slow, insanely dysfunctional and last but not the least insanely under-powered. If Nokia respects and loves its customers it needs to come up with products which have a good balace of feature and price. Android devices and the iPhone(s) are this popular only because the manufacturers are giving consumers a great product which is worth every single penny they are spending. Can't say that for Nokia unfortunately. The N97 Mini is one of the most dysfunctional phones of the planet (I'm currently using one, unfortunately) and still Nokia dares to release this crap and wiat it gets better, price it at around $400-$500. An HTC Legend around the same price is a much better product than that. And well, Nokia phones are reputed for their crap processing capabilities which Nokia fanboys explain as the lack of need of good processors for something as lightweight as Symbian. The statement although partially true, has no practical significance. Symbian OS do need less system resource but for its multitasking capabilities to work (eg. Playing a game and listening to music and downloading content simultaneously) one does need a pretty hardcore powerful processor and RAM. But the great men at Nokia refuse to come to terms with this concept. They are which intent on praising the simplistic UI of Symbian (the ugliest on the planet by the way, if you didnt know) and the fact that its open source (wait, isnt android open source as well? Bloody hell yes! Why the hell then these Nokia folks staunchly supporting Symbian, still?). Nokia needs to do away with this stupidity and be more practical. And for heaven's sake show some respect to your valued customers. What sin did people commit when they bought the 'craptastic' (the word now made famous by Symbianguru) N97? The least Nokia could have done was to ask unhappy customers to return their phones. But NO, Nokia once again proved that it was living in a utopic world where everyone would still be a Nokia fan even if it kept churning out idiotic dysfunctional devices. 'I'm just a dreamer', the famous Ozzy Osbourne track doesnt work in the corporate arena. Nokia would do itself justice by realising that.
Anyway, those were my suggestions. Sure one can agree or disagree with a few points mentioned here but without a doubt Nokia needs to do something and take drastic measures if it wants to sty at the pinnacle of the smartphone market.