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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: Licensing an OS...and old OSes...
By kc77 on 2/10/2011 6:31:21 PM , Rating: 2
Simple because the CEO is a former Microsoft Exec. When this was announced last year I knew this would happen. Think about it. Just listen to what he's talking about..."adopt smartphone platform which has a strong ecosystem" .....um that's not Windows Phone 7. As of right now WP7 DOES NOT even compare to the amount of developers behind Android or the iPhone at this time. Yet you're going to move your entire line up to a new OS that's behind both of the market leaders? Even Web OS would have made more sense as it has more features than WP7 has, and it's development community is pretty strong. From what I recall Google doesn't even charge for Android so I'm not quite so sure it even makes sense from a profit point of view.

Nokia has a market segmentation / marketing problem. It does not necessarily have a software problem when it comes to features. If anything Symbian, and Maemo for that matter have MORE features than WP7.


RE: Licensing an OS...and old OSes...
By usju on 2/11/2011 4:14:37 AM , Rating: 2
I've been using symbian phones for eternity and IMHO, they really DO have a large feature set. But the OS itself feels inefficient, as though there is a large CPU overhead for running anything. Can't open a pdf without heavy slowdowns on my Nokia 5800. I've tried that on a 600mhz android and the pdf files work like a charm with text anti aliased to fit the screen and all...


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