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(Left) Nokia CEO Stephen Elop, Microsoft CEO Steve Ballmer.  (Source: Wikipedia)
Company needs to act fast to avoid going down on "burning platform"

As anyone who's been following Nokia's descent knows, the Finnish mobile manufacturer is in trouble. Finally, executives at Nokia are admitting it and are making efforts -- a little late in the game, true -- to do something about it.

Yesterday, we reported Nokia CEO Stephen Elop's message to his employees in a memo: The company is "standing on a burning platform" and must change course. "Android came on the scene just over 2 years ago, and this week they took our leadership position in smartphone volumes. Unbelievable." he wrote.

Today's Nokia news suggests that the company might be acting on those strong statements. According to a Bloomberg Businessnews report, Nokia might be close to a software partnership with Microsoft. Elop, a former Microsoft executive himself, has met with Microsoft CEO Steve Ballmer to discuss the possibility of powering Nokia smartphones with Microsoft's Windows Phone 7 mobile software, an unidentified source said. Elop has also held talks with Google CEO Eric Schmidt, but those discussions are not likely to lead to a partnership with Android.

A possible deal -- rumors of which we reported on all the way back in December -- could be likened to a late-game Hail Mary pass, but it could benefit both companies. Nokia, the longtime leader in the worldwide mobile market, has been back and forth with its plans to unleash its new mobile OS, MeeGo. The new OS was supposed to replace Symbian -- until recently, the most widely used mobile OS in the world -- on all of its smartphone devices. But Elop pushed its launch back to 2011. And while Nokia is still the world's largest mobile phone vendor, it's market share dropped from 36.4 percent in 2009 to 28.9 percent last year.  

Microsoft, too, could benefit from a deal. Despite launching a revamped mobile OS with WP7, its stock has remained relatively flat. It moved 2 million licenses for WP7 in the last quarter of 2010 -- not enough to trigger a turnaround. But Nokia still claims 37.6 percent of smartphone sales, according to Gartner, potentially opening up the playing field for Microsoft.

One thing Nokia doesn't want to do is adopt the strategy of HTC, Samsung, and Motorola. That is, Nokia refuses to simply license Android from Google for its own devices -- a move a former Nokia exec once likened to "peeing your pants to stay warm". Rather, Nokia is aiming to forge a "strategic alliance" with a software company. 

"We need an attitudinal shift," Elop said last month, according to BusinessWeek. "We must improve the quality of our execution, accelerate the speed at which we execute, and enhance the effectiveness of our partnerships."

The changes Elop wants to implement could also mean additional changes to its executive leadership. The company's top executive losses have been well documented here on DailyTech and elsewhere, but a necessary "attitudinal shift" at Nokia may require additional shakeups. 

"Stephen Elop does realize what the problems are, but the question is whether there is a credible strategy and whether they can execute it without compromising their existing sales," Stuart O’Gorman, an investor at Henderson Global Investing Ltd., told BusinessWeek. "They’ve done the easy step that previous management didn’t take, which is realizing the problem. The harder steps are still to come."



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RE: Peeing your pants to stay...
By Suntan on 2/10/2011 10:01:08 AM , Rating: 2
Yes and no.

Perhaps what Nokia really means (but doesn’t want to say publicly) is that, “We don’t want to (or can’t) compete, based solely on price, with the likes of HTC.”

If so, then they would seem to be making a prudent choice by staying out of the Android-phone-a-month rat race.

Whether or not they can make a better return going with WP7 remains to be seen. If WP7 picks up popularity, you would expect all those manufacturers, currently stepping on top of each other to come up with the latest Android phone, to jump into the WP7 arena too.

-Suntan


RE: Peeing your pants to stay...
By SSDMaster on 2/10/2011 10:16:26 AM , Rating: 2
They got ousted from the top by Android. They want to take their crown back. They could be making boat loads of cash in a very short time if they supported android. Why don't they?

These execs aren't stupid. They realize the popularity of Android. Unfortunately they are undervaluing the choice of the OS. Honestly I think they need to go out and buy an Android, or iPhone and then a Windows phone and give them to their kids. Could save them millions+ seeing first hand what phones end up getting the most use.


RE: Peeing your pants to stay...
By Tony Swash on 2/10/11, Rating: 0
RE: Peeing your pants to stay...
By SSDMaster on 2/10/2011 11:50:29 AM , Rating: 2
quote:
Samsung and Nokia profit per device is quite small but they “make it up in volume”.


So they noticed that the strategy they've been using this whole time is working? Nokia's profit should be much much higher. Nokia needs to move a lot of phones in order to keep itself afloat. A big company like that only has one option at the moment. WP7 is not going to suddenly explode in popularity..

Also, if those numbers include apple's app market at all, then there's no comparison.


RE: Peeing your pants to stay...
By Tony Swash on 2/10/2011 6:48:39 PM , Rating: 2
quote:
So they noticed that the strategy they've been using this whole time is working? Nokia's profit should be much much higher. Nokia needs to move a lot of phones in order to keep itself afloat. A big company like that only has one option at the moment. WP7 is not going to suddenly explode in popularity..

Also, if those numbers include apple's app market at all, then there's no comparison.


Nokia's strategy is not working but the Android option may not be great for them, the WP7 option is also not good for them, they are between a rock and hard place. Nothing is going to be good, easy or safe for Nokia.

Check this out re trends in handset maker sales. Very interesting.

http://www.asymco.com/2011/02/07/smartphone-users-...

The Asymco blog is maintained by Horace Dediu an ex-Nokia executive. He seems to know his stuff and his articles are always interesting and informative.


RE: Peeing your pants to stay...
By kc77 on 2/10/2011 7:01:49 PM , Rating: 2
Maemo / Meego / Android / and to some extent Web OS all make some kind of sense because of the their market position and their support environment. WP7 makes none. Let's say Nokia puts WP7 on their flag ship. Who in the UK who is used to Symbian is going to buy a phone with less features in it? WTH are they going to use for Nav? Telmap? While Symbian needed some help OviMaps blows that away..... in spades.


RE: Peeing your pants to stay...
By Fleeb on 2/10/2011 12:21:47 PM , Rating: 2
By theapparition on 2/10/2011 12:36:19 PM , Rating: 3
Funny that the only company in your own link who didn't make any profit was LG, who was famously late to the Android party.

The other handset makers are profitable.

Your second fail is singling out Nokia, who on a per phone sold basis makes signifigantly less than HTC, and HTC is almost on par with RIM.

But who needs facts when you can twist your commentary.


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