5 Questions to Stephen Elop

The winds of change are blowing on the Finnish mobile giant.

The recent replacement of Olli-Pekka Kallasvuo by Stephen Elop, and Anssi Vanjoki’s departure so soon after his appointment as Mobile Solutions Leader, is being met with anticipation and concern equally. With the shakeup happening on the eve of the company’s most important Nokia World, it feels as if the Old Nokia is leaving place for a New Nokia to be born.

Earlier this year, we suggested 7 ways Nokia can win again. We believe there is no better time than now for these changes to happen. However, the question remains whether the company can win the trust of shareholders and the public.

Can Elop bring sexy back?

The recent announcements of promotion with Pamela Anderson, partnership with Yahoo and demos of Meego have all failed to ignite the public’s interest. Nokia has been criticized for not having a vision and lacking a Steve Jobs. With the departure of Vanjoki, can Elop sell a credible and powerful vision?

What will happen in Finland?

Nokia’s importance in Finland cannot be underestimated: it accounts for 1.5% of its GDP, and nearly 60,000 jobs. Elop commented: "This is the home of Nokia, it will continue to be the home of Nokia, and I just love being in these facilities," Elop said. "At the same time recognizing that while it is a Finnish company, it is also a global company, and there are employees and partners and customers of Nokia all over the world."

What will happen to the Finnish jobs and the companies that collaborate with Nokia?

Is Symbian dead?

Vanjoki was seen as one of the main evangelists of Symbian. At the same time, the platform has been perceived as one of the main reasons for Nokia’s lag in the smartphone market. With the N8 receiving mixed reviews, will Nokia focus on Meego, leverage Android’s existing ecosystem and user base, or partner with Microsoft?

What of Nokia’s older service offering?

Ovi is a notoriously difficult platform to develop for and sell on. The company also decided to pull the plug on Ovi Files last week. Dopplr is dying through stagnation, and Nokia comes with Music is being severely undermined by Spotify on the European market. Will these services be maintained? Will there be more cooperation with young and promising startups? There has been a significant lack of innovation from Nokia’s service offering. Will they be improved?

Is Nokia for sale?

The shakeup indicates a drastic change of course for the company, in contrast with veterans such as OPK who joined in 1982. The possibility of a merger or partnership with Microsoft doesn’t seem so farfetched. Would the company’s strengths in engineering, manufacturing and distributing phones internationally be an asset for a software giant?

Conclusion

This is Tabula Rasa. One thing is for sure: there hasn’t been so much buzz and speculation about the company in years.

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vesterinen September 13, 2010

Symbian is a broken product and Nokia should move to Android before its too late. If its not too late already. I hope Mr. Elop is the slippery hot dog and cool cat he is claimed to be and can bring some sense into the Nokia House.

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Aape September 13, 2010

Two comments:

1. If Nokia wants to be a successful hardware company they need to focus on selling as many devices as possible.

The tough question obviously is: what devices should they sell. Luckily there is a simple answer to this: manufacture the devices that users are buying. If it's Android they want, put Android on your devices.

2. If Nokia wants to be a successful service provider they need to focus on what they do best.

The tough question obviously is: what services should they then provide. And luckily there is a simple answer to this one too: leverage your devices as a service to all service & software developers.

What I am trying to say is that Nokia needs to reinvent itself, like Apple did when Stephen P. rejoined. I hope they succeed.

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Kristoffer Lawson September 13, 2010

While I generally see eye to eye with Ville, this is one issue we disagree on. I think moving to Android would be a huge mistake. Let's remember: Nokia is still the largest phone manufacturer in the world. For years they were the most innovative and considered to be the company with the UI to beat.

To move to Android would mean to lose all hope of real innovation and proper differentation. In other words, losing the exact things Nokia was traditionally famous for. Moving to Android would just be jumping on the bandwagon of the day.

Sure, to go by yourself is risky. If Nokia is unable to innovate then even Android would be better. But if they want to continue to be the leader, they have to, and they have to be able to better utilise and integrate the super resources that they have. There is simply no other way to go about it.

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Contador Harrison September 13, 2010

Ville,when I heard that Nokia has finally ditched the man who had overseen the Finnish giant’s decline, which culminated in the announcement earlier this year that operating profits had crashed by 40 per cent and appointed Elop because of expertise in software and “change management”. Indeed, it is not for a slice of Microsoft’s track record in mobile phones that Nokia has hired Elop.The challenges the new man at the top will face are two fold, and possibly by some definitions conflicting, too. That means Elop must manage sales of massive volumes to burgeoning developing markets, while also concentrating on the new handsets that are likely to be unveiled in soon, based on a new operating system Meego.However,despite critics view on Symbian OS for the next five years it will still be the world number one. Android has become the darling of many but it has long way to go.

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vesterinen September 13, 2010

"However,despite critics view on Symbian OS for the next five years it will still be the world number one."
...Now, Symbian is not number one in anything but volume - Nokia's profit margins are sinking faster than Greek's economy. Being number one in India does not equal successful global technology company no matter how hard Finland hopes it would.

"For years they were the most innovative and considered to be the company with the UI to beat."
...That was also years ago. There was also a time when Detroit was considered to be the company with the cars to beat. Neither is no longer true.

"Moving to Android would just be jumping on the bandwagon of the day."
...When the option is covering your ears and insisting on sitting on the broken bandwagon of yesterday, there's little wrong with today's version. Oh, and that one actually works and is getting better by day. Google will not drop the development of Android as long as iPhone sales are strong and I can't see them but growing with the iPhone 4.

"If Nokia is unable to innovate then even Android would be better.
...Yes, that's my point too.

I might sound a little harsh on Nokia, but I really think this is the eleventh hour for the Finnish giant to get its act together. There's risks involved in betting something completely new, but there's a lot bigger risk of not betting at all. Nobody knows better that big companies can fade and become obsolete better than someone coming from Microsoft.

Finland has historically been at its strongest in crisis be it the economic depression of 90's or our winter war. Mr. Ollila and Mr. Elop assure Nokia's back bone is still made out of Finnish character. I hope they can put the company on a new trajectory, but I don't it will happen without drastic measure. Android is a drastic measure and a realistic one at that if Nokia would consider it.

I believe it was Albert Einstein who said insanity is doing the same thing over and over again and expecting different results.

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Kristoffer Lawson September 13, 2010

Ville, I agree that Android is better than the current situation. But Nokia has the resources and the talent to go beyond that. The thing that has been missing is the top-level vision and drive to fulfill that potential.

Going the Android path will simply mean joining a pack full of other companies, and not being in the driving seat. Nokia could be more.

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vesterinen September 13, 2010

Kristoffer,

I hope you're right and I'm wrong. And if not, I promise the come back and say 'I told you so'.

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mikikuusi September 13, 2010

I love the speculation about Microsoft acquiring Nokia, as Nokia's market value is now down to about 30 billion euros, while MS stands at around 160 billion euros. Nokia's market value has dropped after 2008 far more than Microsoft's, leaving a theoretical opportunity for M&A.

But I still doubt it's likely. Or what do you think?

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Antti Vilpponen September 13, 2010

I have to agree with Kristoffer on Symbian here, even though it was one of the reasons that made me a recent switcher to iPhone 4.

The only way for Nokia to keep themselves competitive, clearly above all other players betting on Android, is to make the most of the combination of proprietary hardware and software.

The task is extremely difficult though. Going head on with a company with the best search engine in the world (and increasingly great online apps) as well as a company that constantly creates the best consumer products in terms of user experience, Apple - is not easy. Jason Calacanis said that he'd shoot himself if he was appointed the CEO of Nokia (in This Week in Startups #76). That's a lot said coming from one of the most well known and experienced entrepreneurs out there.

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Miikka Kukkosuo September 13, 2010

Mikikuusi, I think it could make sense strategically, considering MS would really want to get all the emerging new users in developing countries to use MS services and SW - the users most of which will never have an actual PC, just mobile phone going forward. For Nokia it would mean much much stronger access to the US markets, and strengthening the business segment offering big time. Not sure if I'd like to see that happening, but from strategic perspective the synergies would be pretty good.

Ville, if Nokia was to start now developing Android phones, they'd be 2 years behind the other guys, and it would mean a massive learning curve.
They've been building the current technology bet for 4 years or so (too long obviously but still), i.e. building Maemo/MeeGo as the next-gen platform, and combining it and Symbian as development platforms (Qt) - the next year will show whether that actually works or not from developer ecosystem point of view. MeeGo's anyway been already declared as the #1 smartphone platform for them. If they switched to Android now they'd need to spent again the next 3 years catching up again with very little tangible results in the meantime. Perhaps unless they bought someone who has the Android dev expertise already, e.g. Sony Erisson, that is...

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vesterinen September 13, 2010

Miikka,

Not suggesting going Android 100% day one. It's not a binary choice. But starting from the higher end where they don't really have a credible offering at all.

Next year might be one year too late.

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Martin September 14, 2010

Based on latest Gartner stats, Android is going head on head with Symbian, both will have about 30% market share by 2014. Followed by iOS 15% and Blackberry (RIM) 12%.

Further details from: http://androidandme.com/2010/09/news/gartner-android-will-finish-the-year-as-the-2-mobile-os-with-world-domination-in-sight/

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Mrinal Singh September 14, 2010

Nokia might be the market leader by volume but a key reason behind the ouster of Olli was its insignificant market share in the smartphone market.

The scenario at present is that, except for Apple no other device manufacturer is relying solely on its own operating system.

Nokia can adopt multiple strategies

-> For low end phones they already have a robust operating system that will hold them good for years to come.

-> With a bit of tinkering they should be able to stand up-to the middle range phones focusing on entertainment

-> For the smartphone market, Nokia has to move quickly or be left behind, in my opinion with the resource pool available to it, it does stand a chance of competing with the likes of Apple and RIM. And as an interim measure it can always leverage on the relationship that Elop brings from Microsoft.

If Android which is an opensource platform cam achieve rapid growth because of Google's support. Their is still a long way ahead for Nokia.