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eewiz
IMO its not too late for NOKIA to fix things. The entire buzz around smartphones ...
alan.varghese
Part of the problem is what Menon alludes to as Nokia's "engineering expertise". ...
Analyst: Five challenges for new Nokia CEO
Rick Merritt
9/10/2010 6:34 PM EDT
SAN JOSE, Calif. – Nokia Corp.'s new president and chief executive Stephen Elop faces five challenges, according to one analyst. The company needs to become more nimble, and refocus on high-end smartphones, applications processors, its app store and its U.S. business, said Satish Menon of market watcher Forward Concepts.
Elop, former president of Microsoft's business applications group, arrives at what Nokia's chairman Jorma Ollila said in a press conference today "is a particularly difficult time." Indeed, Nokia is the cellphone market leader, but has been losing market share while Apple, Google and others re-define the smartphone.
"With the right commitment and leadership Nokia, with its broad engineering expertise, has the ability to develop cutting-edge smartphones, but the question is if it is going to be too little, too late," said Menon.
Nokia was slow to react to the trend toward touch-screen handsets with open Web browsers, said Menon. "They tend to have much longer product development cycles," he said.
The handset giant is particularly vulnerable in the high-end smartphone business, he added.
"Nokia still talks about its almost 40 percent global market share, but the cruel truth is that all its growth is coming from low-margin, low-end devices in emerging markets while the high-end market share even in its home market of western Europe is declining, " Menon said. "This has resulted is above average erosion in average selling price and declining margins," he added.
Specifically, Nokia has fallen behind in mobile processors. While competitors are fielding smartphones with ARM Cortex A8 handsets, Nokia is still releasing smartphones using the ARM11, "even in their new flagship, the N8, to be formally unveiled next week at Nokia World," Menon said.
"I can’t think of a single other major smartphone OEM whose flagship device is currently based on an ARM11 processor," he added.
Nokia also needs to bolster its Ovi Store which does not get the attention developers give the Apple App Store or Google Android Market. "The company needs to mobilize a large contingent of third party developers," said Menon, noting Nokia's Qt cross-platform development framework will be a key tool for that job.
Finally, Nokia needs to gain traction in the U.S. market, the current driver of high-end smartphone sales, Menon said.
"Hiring Elop is an indication of reinvigorated commitment to the U.S. market at the highest levels in the company," said Menon. "But Elop’s background seems more focused on business rather than consumer products where the real need is, and he does not seem to have any prior background working with operators who really control the U.S. market," he said.
Elop and Ollila declined to talk about Nokia's past mistakes or give any specifics about the company's next steps at the Helsinki press conference where Elop was introduced.
"The challenges and answers are well understood here within the walls of Nokia," Elop said. "My job is to surface them," he said.
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rick.merritt
9/10/2010 6:58 PM EDT
What's your Rx for Nokia?
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Baolt
9/10/2010 8:01 PM EDT
When S.Jobs showed up new touch screen, fliping pages,which are basic for nowadays smart sets, even much before the reveal of iphone i assume nokia's top admins were not aware of such huge demand. They simple overlooked. They had more than enough time to jump back in the line, besides still we dont see tangible products on hand.
We used to get bright product/technology ideas from Nokia's reveals, used to wait for their fairs, however the sense of innovation is gone/out to for holiday at Nokia which is for me the most important thing to focus. Decline at sales, market margins, in paralel immediate swap of suppliers in trouble, new highend products, regain of smarties etc. should be concentration points of new CEO. Especially in order to grab more share from the highend market they have to focus on new operation system platform with totally new hardware set. The one which they shape with intel still not here, no need to mention about sybian. Most wise idea would be a JV/team up with WebOS/HP. Besides are we really going to see a brilliant OS platform from Ex-Microsoft guy...questionable in fact
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yalanand
9/11/2010 6:33 AM EDT
I totally agree with this article. Nokia will soon be found in history books if it doesnt udpate its technology content in its smart phones. Surprising to know that nokia didnt go for Android supported handsets. Android mobiles especially samsung handsets are sold like hotcakes in india. Nokia wake up....
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GREAT-Terry
9/11/2010 12:40 PM EDT
Agree that Nokia is kind of out now! I have used Nokia for over 13 years but finally I have changed to iPhone. Anyway I still keep a cheap simple Nokia phone which is just for phone call as Nokia simple phone is still very reliable. I still think there are many ex-Nokia users who are longing for Nokia to release a competitive smart phone. Of course, if they don't put more effort to catch up, this company will no longer in the play in just 3-5 years.
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Warren
9/11/2010 1:41 PM EDT
At least Baolt touched on it with his comment, but to read what's here in the article you'd think that Satish Menon hasn't a clue on what Nokia's got in the works on several of the key challenge areas.
Now I don't see anywhere in the article where there's been a repudiation of the direction that Nokia has already set in motion; "the question is if it is going to be too little, too late," but not wrong. So Elop seems like an excellent choice; move along with haste with what is right and without blinking, with a fresh eye find areas where more should be done and get it going ASA, and evaluate all aspects of the companies biz and make tough calls without dragging things out to the point where it's guaranteed to be too late.
Feels to me like Nokia's got what it needs to be wildly successful. They do have market share, good engineering, and they're deeply involved in what is an amazingly popular segment with a tremendous growth outlook. Execute. Think big. Move fast. That's all they need do.
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goafrit
9/11/2010 2:24 PM EDT
Move into mobile business services. The future of making phone looks not so exciting. They must look beyond core competence and look for new markets. IBM reinvented and today has a new business line. I think Nokia needs a to think if it can compete in this high end phone business.
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KB3001
9/11/2010 5:10 PM EDT
I would not count Nokia out completely but I bet they will lose their market dominance. Great news for consumers and long may competition continue!
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chanj
9/11/2010 5:13 PM EDT
I don't have any doubt on the engineering capability of Nokia. The business unit has been failing to react to market demand even though it has produced one of the first smart phones in the world. I am looking forward to the first MeeGo phone which is scheduled to release towards the end of 2010. I would like to see better MMI and better processing power from the device. On top of all these, I believe the US market penetration is crucial to Nokia's future.
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yalanand
9/12/2010 12:27 AM EDT
I have been avid fan of nokia till I bought Samsungs Galaxy handset. Agree that nokia has the engineering capability, but surprising to know that they have failed to read the beat of market. Is it complecency or something else ?
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elctrnx_lyf
9/12/2010 2:10 PM EDT
I have come across the comment from the external story where the Nokia engineer who wrote a book about Nokia mentioned that the company is big and it takes some time to change the things. (http://professional.wsj.com/article/SB10001424052748703597204575482902836750116.html) Elop, hired as new CEO for Nokia will have a challenge to change things and change them fast. Otherwise Elop will be leading a company which is going to be a company of low cost, highly rugged phones made for the low end market with lower margins.
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yalanand
9/13/2010 12:21 AM EDT
So Nokia has become like a giant elephant taking lot of effort to put its next step ?
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garydpdx
9/13/2010 4:19 PM EDT
Maybe Nokia will provide the smartphone platform that MS Windows Phone 7 desires. Certainly the choice of new CEO, and departure of the current smartphone division head, would help to expedite such a process.
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alan.varghese
9/13/2010 7:32 PM EDT
Part of the problem is what Menon alludes to as Nokia's "engineering expertise". The company got into the mobile phone space in the early 80s, when cellphones were about the hardware & software to enable mobile telecom. Now it is all about the Internet, email, and social networking; so Nokia needs to start thinking top-down from the applications and content and user-experience. Elop's challenge is to hold on to some of the engineering legacy in order to preserve market share, even as he begins radical new design initiatives that reflect the requirements of today's mobile consumer.
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eewiz
9/16/2010 2:48 AM EDT
IMO its not too late for NOKIA to fix things. The entire buzz around smartphones revolves around the availability of useful/localized apps.& Apps are developed by 3rd party vendors based on number of phones/users which it can be installed in. Since Nokia still commands 40% market share, if they focus on to 1 OS, i.e. either Symbian^3/^4 or Meego and make it reasonably touch friendly & intuitive then i dont see why the developers wouldnt want to develop apps for these platforms.
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